Friday 10 January 2020

Insanity and 2019 in review

“Insanity is doing the same thing over and over and expecting different results” – not Albert Einstein as I always thought but actually Rita Mae Brown 
2019 represented my first full year of FIRE, albeit with a slip-up back to FI during the year, which was then later corrected.  Despite a lot of my pre-FIRE posts being financial in nature finances actually occupied very little of my mind through 2019.  Having my wealth increase by £148,000 and my spending, albeit profligate, significantly less than this certainly helped here.

What did occupy a lot of my mind, as regular readers will be well aware, was the psychological, emotive and decompression elements of FIRE.  So let’s start here first and take a snap shot of where I find myself.

Nearly 14 months into my decompression I would have to say that while the days are getting easier I am still very much deep in the decompression mud.  There are still many unanswered questions and much soul searching (or is that naval gazing) going on.  To help with that I’ve tried to continue with the human being while changing only one thing at a time theme I started mid-year.  One conclusion I’ve come to, and started to accept, is that it’s unlikely that I have a “silver bullet” single purpose in me and I’m really ok with that.  My purpose doesn’t have to occupy 60 hours per week, like my previous job, so why I was thinking that is beyond me.  Instead I’m starting to take great joy in many small “successes” that without FIRE I wouldn’t have been able to do.  That extra 3 miles of hiking into the forest, seeing something new, because I have the time...  That 3 hour lunch with a loved one that builds a stronger bond because I have the time...

The one change I have made is that an old friend asked me to help with a very short term very temporary job.  I never expected it to be purposeful (so it’s a job and not work) but I did think it would be interesting so took it on.  I just hope that is helping with my decompression and not clouding it.

Where we are struggling is with our current location in the South East of England, which is pretty much the same location as pre-FIRE.  Having experienced a coastal Mediterranean lifestyle we are now finding our location difficult.  The weather, despite having experienced the coldest and wettest winters Cyprus had ever seen in late 2018, is terrible which doesn’t help.  On top of that we are also struggling with the busyness along with the constant noise that comes with that.  We also now find the people very individualistic (possibly coming from being time poor) which then brings a certain level of coldness with it.  In the last quarter we’ve also had a meaningful friend emigrate for pastures new – thanks Brexit!  I’m not sure they’re the type of person the UK actually wanted to lose but that’s for another day as Monevator does a much better Brexit rant than me...

With that in mind Mrs RIT and I are starting to conclude that this is not a place we want to call our FIRE home.  Now we’re not insane, so are not going to pack up and leave again quickly, but what we have done is applied for the visa we’ll need to relocate to the country hinted at in a few previous posts.  It would give us similar weather to Cyprus, access to some meaningful friends/family and we think lifestyle wise fall somewhere between Cyprus and the UK.  The reason we’ve applied now is that the approval process can take many months, even years, so it would be useful to have that in hand when we make our final conclusion rather than to then have to impatiently wait.  The only downsides were it took a long time to provide what was required (that’s ok, I have time) and cost many thousands of pounds (that’s ok, I have money and this just might be something we’ll value greatly).

On the subject of money let’s now take a brief look at how 2019 played out.


Spending in 2019 probably could be described as insane at a huge £45,500.  Although, if I net the move costs to and from Cyprus plus the visa mentioned above from that total spending falls to the mid-£20k’s.  Better but not an excuse.  Of that spending I ‘only’ had to drawdown £28,700 from my wealth with the remainder being covered by the jobs mentioned.

Measured against my planned 2019 drawdown of £25,872 it’s still a small blow out although not something to start panicking about as £28,700 represents 89% of the dividends received over 2019 and 2.0% of my wealth at year end.

RIT Spending
Click to enlarge, RIT Spending 

Spending Sensibly score: Fail.  Trying to figure out where in the world we want to live and renting while we do it is expensive!


Some of the great bloggers I follow have already posted some pretty impressive returns for 2019.  FvL started us off with an impressive 2019 annual return of 22.7%!  John over at diy investor then weighed in with 21.9%.  Then finally The Accumulator revealed the Slow and Steady passive portfolio’s more humble 16.3%.

In comparison I managed a derisory 13.8% (05 January 2019 to 04 January 2019).  At the headline level it warranted a recheck of the numbers and a deeper look as that is a lot of underperformance.  FvL runs a bit of leverage, has active elements (angel investing for example) and frankly is a much better investor than I’ll ever be so I always expect to see him(?) outperform me.  We used to always compare ourselves as we had similar strategies but John in recent times has now moved his portfolio to one that is 100% environmentally conscious.  I 100% applaud why he’s done this but it’s not something I am yet prepared to do as I want the broadest diversification I can get.  I’m therefore also not surprised to see John diverge (in either direction) from me.  The one I was surprised about was the Slow and Steady passive portfolio as that’s a very similar strategy to what I’m all about.

In the end it is easily explained if I split my wealth into two.  The first piece is the portfolio of equities, bonds, gilts, REIT’s, gold and cash that funds my FIRE.  Crunching the numbers and that portion returned 17.0% which is close to the Slow and Steady passive portfolio.  The second piece is the portfolio of cash, P2P and Index Linked Savings Certificates that will fund my eventual home purchase.  That returned 2.0%.  In comparison home prices in our new most likely FIRE location increased 0.6% over 2019.  That now relaxes me somewhat.  My passive diversified by asset type and country portfolio is on par with a ‘similar’ passive portfolio and my home purchase fund has kept pace with house prices.

Living off just the dividends remains an important part of my overall FIRE plan.  2018 total dividends were £28,693.  In comparison 2019 ended up at £32,398 which is a healthy 12.9% increase.

RIT Annual Dividends
Click to enlarge, RIT Annual Dividends

For completeness this is what my asset allocation looks like today.

Current RIT Asset Allocations
Click to enlarge, Current RIT Asset Allocations

I continue to invest as tax efficiently as possible with my tax efficient holdings from a UK perspective now consisting of:
  • 45.7% (was 43.5% at end 2018) held within low expense SIPP Wrappers
  • 8.2% (was 8.7% at end 2018) held within the no longer available NS&I Index Linked Savings Certificates (ILSC’s)
  • 17.2% (was 14.6% at end 2018) held within a low expense Stocks and Shares ISA.  
Tax efficiency score: Pass.  As I spend from non-tax efficient areas of the portfolio and bed-and-ISA from the same areas I expect to see the SIPP and ISA percentages increase until I am as tax efficient as possible.  If the portfolio then gains more than the NS&I return I’d also expect that to decrease.

Investment expenses also continue to be considered the enemy.  2018 finished with expenses at 0.22% and even with Vanguard lowering some of their expenses 2019 only finished at 0.21%.

Minimise expenses score: Pass.  It’s continues to now pretty much be an autopilot story unless a current provider moves unfavourably or a new cost competitive appropriate product appears on the market.

In the scheme of a lifetime of investing this year is insignificant.  I’m all about time in the market and not timing the market so let’s zoom out and look at my performance since I started down this DIY road.  My long run nominal is 6.7% which is a real (using RPI) return of 3.9%.  The chart below tells the story.  Note that the chart assumes a starting sum of £10,000 which was not my portfolio balance at that time but is instead simply a nominal chosen sum to demonstrate performance.

RIT Portfolio Performance vs Benchmark vs Inflation
Click to enlarge, RIT Portfolio Performance vs Benchmark vs Inflation

Long term investment return score: Pass.  My whole investment strategy since 2007 has been about generating a long term annualised real return of 4% with 3.9% after 12 years being right in the hunt.


Wealth as I write this sits at £1,433,000 which, even after inflation and spending, is a long way from the £1,304,000 when I first FIRE’d in November of 2018.  My complete journey is shown in the chart below.
RIT Progress Towards Retirement and In Retirement
Click to enlarge, RIT Progress Towards Retirement and In Retirement

My drawdown plan continues to be based on spending the lesser of a ‘safe’ withdrawal rate (SWR) of 2.5% or 85% of the dividends received.  In 2019 my SWR, ex investment expenses and ignoring the wealth allocated for the home purchase, ended up targeting £25,872.  Let’s increase that by inflation giving £26,454 for 2020.  In comparison 85% of the £32,398 worth of dividends becomes £27,538 for 2020.  So for 2020 target spending is driven by the SWR and becomes £25,872.

Given we expect to be renting for a large portion, if not all, of 2020 that just might be a difficult ask but let’s see how we get on.  We’re certainly not going to sacrifice spending on things that gives us true value to hit that number given wealth is currently buoyant and with planned home ownership (which we have the funds for) within a couple of years which should take the pressure right off the spending.

Piecing everything together and we end up with the drawdown tracker below.  The spending explosion caused by the Cyprus relocation and sunnier climes visa application is clearly evident but through 2020 they’ll fall out of the numbers.  Even with them in and assuming I didn’t earn any money via jobs or work in 2019 it’s still ‘only’ a withdrawal rate of 3.2% (plus investment expenses) of current wealth, which is still less than the much talked about 4% Rule.  I’m ok with that.

RIT’s Drawdown Tracker
Click to enlarge, RIT’s Drawdown Tracker

While 2019 has at times been difficult I am so glad I’ve managed to experience it warts and all.  I’ve learnt a lot about myself than I otherwise would have and I think I’m a better person for it.  The top level plan for 2020 is to continue my decompression by ‘human being’ not ‘human doing’ while continuing to change one thing at a time.  Then let’s see what happens about getting a bit more permanent sunshine and meaningful friends/family in our lives in the back half of 2020. 

This FIRE lark really is an adventure and it looks like it’s not going to stop for the foreseeable future.  I’m grinning from ear to ear.

As always please do your own research.


  1. Many thanks RIT for being so candid - so helpful to hear from someone who has FIRE'd and about the non-financial challenges that have to be faced.

    A couple of financial questions though. First, I notice that you have almost 50% of your FIRE assets in a SIPP, which presumably can't be touched until at least 55 (or possibly later)? Presumably that means that half your dividends cannot be accessed and that situation will remain so for some years? Do you therefore have to raise the rest of your income through selling stock or do you always keep enough cash on hand to cover expenses?

    Second, given the substantial size of your SIPP are you concerned about breaching the lifetime allowance (currently about £1m) before you can access the funds (since I guess you must be at least half way there already)? Are there any ways to mitigate this problem in order to avoid a substantial tax bill?

    1. Hi Anon

      So far I've been able to use non-tax efficient dividends and cash (Cyprus helped us build confidence in how much home will be enough and I had likely over saved here) to eat so have not had to sell stock. Once that transition is over I intend to sell the equivalent outside the SIPP (first in trading account, then in ISA) as I earn in dividends in the SIPP. The dividends in the SIPP will be then used to purchase the worst performing asset class. This should keep me "living off the dividends" but also help with rebalancing.

      The size of my SIPP was carefully managed pre-FIRE to try and ensure I wouldn't exceed the LTA and ensure I had enough outside the SIPP to carry me until I could access the SIPP. I've worked on 60 being the year I can access my SIPP so hopefully conservative. Based on current projections, which uses my historic investment performance and assumes annual SIPP LTA CPI uplifts, I just exceed the LTA in my 60th year. Backtesting my non-SIPP using cFIREsim (which is US focused so possibly bullish based on history) and I also don't run out of non-SIPP wealth before 60. Hopefully I therefore have the optimum amount in the SIPP.

      Does that help?

  2. Cracking post, RIT, as usual. Thanks for the kind words. For the avoidance of doubt while yes I do active investments, and angel investing, my angel investments are "off balance sheet" ie not included in my published portfolio returns. Any funds I invest in an angel investment is a Withdrawal from my portfolio, and the illiquid investment is not tracked as part of the liquid investment portfolio I report on monthly on my blog. The occasional exits then produce funds which, if invested in the liquid portfolio, is treated as a fresh deposit of funds.

    The main reasons for the better performance I've seen than you in recent periods are a) my lower exposure to the UK (and in fact higher exposure to the US equity markets) and b) my much lower use of cash / NS&I / etc. The leverage made a difference back in 2016 but is much reduced now so not nearly as material.

    1. Hi FvL, thanks for clarifying that the angel investments are off balance sheet. When I built my porfolio I was an amateur and so I largely followed the 1st Edition of Tim Hale's excellent Smarter Investing. If I interpreted/remember correctly (don't currently have to hand to check) it was deliberately setting up the portfolio to have a 'home bias' thus my UK equity exposure.

      These days I see a lot of talk about just owning a global equity tracker which would have given me circa 50% to the US. As I shared a couple of posts back I have really never changed my strategy since inception as I don't want to always be whipsawing to the next latest and greatest. That be active investing or picking last years winners for potentially some guaranteed under performance...

      Having under performed for some time let's see if the UK can do some catching up in 2020. I don't believe it will but then I've proven I'm hopeless at trading...

    2. RIT - you are not hopeless at trading - look at last weeks post.

      So given the HYP is doing its job on the income front if it comes close to matching the total return (dividends + capital gains) of a simple FTSE tracker over the long term I’m still happy to stay with it. If it can’t I’d be better off selling up and merging the funds into my ETF tracker asset allocations.

    3. FvL . Being fully invested has been the way to go for the last 10 years. NB that certain OEIC's and IT's hold cash in their " investment " portfolio. So - an apparent 100% equity fund may be holding 4/5% cash and IT's may have even higher levels ( and they may be geared as well and paying high rates of interest on their borrowing from years ago "

      So investors who have been in tracker funds(and many etf's as well) have been 100% exposed to equities and benefitted as a result.

      A balanced portfolio run by an Investment or Wealth Manager would be very unlikely to have many ( or any ) clients 100% in equities - as that is anathema to the principles of asset allocation.

  3. Always enjoy reading your posts as am on a similar path and likewise struggling a little with the "RE" part and how that will take shape... one note on your proposed relocation, if this is Australia, which having an informed guess at the tree photo in a previous post, do try to get an accurate handle on the time frame. We have friends who are going through this process and the time frame is in 2-3 YEARS before they get a case office assigned to look at the case and then possibly a year on from there before a green light. The process likely going to take them 3 years from start to finish... so if this is the case then you are wise to get this in hand, but may also give you some thought as to how you will spend this possibly lengthy process. (I may of course have guessed wrong or it may be a different visa process (they have family there))...

    1. Thanks for sharing this Traviss. You've just nicely demonstrated one of the reasons I stay at this blogging lark - the sharing of experiences. I'm following a couple of forums that share peoples processing times for the country visa we've applied for and I don't think we'll be as long as that. More like 12-18 months from application date so we're now under that time.

      We don't really want it to be much faster than that anyway for reasons mentioned in the post. If times were faster we probably would have just delayed the application. There is still a lot of 'human being' to do here first.

      There is also a chance we will be refused as the application is so long and cumbersome it is impossible to tick every box. I guess that gives them the opportunity to refuse who they need to refuse to meet their immigration targets.

  4. Great to hear how you're getting on RIT. Very interesting as always to get some insight into how you're grappling with post-work life. I was moved by your description of 'small successes' or meaningful moments. Those are the kind of things I hope to do more of once I launch the ejector seat. They're also the things that our society forgets to value, while being, perhaps, one of the joys of life.

    I hear a lot of people talk about the coldness of life in the south-east - I mean socially, not so much the weather. Especially from friends who've moved there from other parts of the country and then struggled to adapt to a less communal place. I remember you considering Shropshire or Herefordshire a while back... I guess the weather wouldn't do it for you, but I think it's possible you could find other parts of the country to be friendlier.

    1. Hi TA, there is definitely something in the 'small successes' or meaningful moments. I don't know if it's enough as I'm definitely not there yet but I now know it's important. What I do now know is that I'm not going to set my life up as RIT's search for the 'silver bullet'. If it happens then great but if it doesn't I'd be going back over old ground and I know how that ends up...

      Funny you mention Herefordshire. We've been back a couple of times already. It's definitely not forgotten but again not rushing anything to avoid insanity. A small self build energy efficient oak-framed home with a little garden for some fresh veggies walking distance to the local pub could just be the ticket and is within our budget. The weather would of course be a compromise and the locals might just about accept us after 5 years or so :-)

  5. Spend Sensibly , Invest Wisely , Retire Early . Be Nice to Yourself.

    Come on RIT ! Give up your silly game of pretending that you and your wife are not ever going to receive a State Pension - and put it into your database.

    After such a long bull run , extremely low interest rates but poor global economic growth rates- the UK already being in recession and plagued with past years of low productivity and looking forward to the disastrous economic consequences of Brexit and a weak ( and weaker ) £ - why not welcome some real wealth into your portfolio ? Your State Pension should never get smaller once it is in payment minimum and will increase annually - that is real wealth on which robust financial decisions and future plans can be based on - not so current " values " that may all be over-inflated by asset price inflation.

    While interest rates are as low as they are - income earning assets will increase in value as they promise returns far in excess of money on deposit or Govt Bonds ( IL Gilts and Bonds excluded ). But that situation cannot last for ever - and you are looking a long way into the future with your planning ( age 60 and beyond )

    So - give yourself a break and have a look at your spreadsheets with your State Pensions included. It may allow you to take a bit of pressure off yourself - and stop feeling that you need to make those pips squeak quite so hard.

    1. I disagree. I also don't bank on getting SP, but like RIT, pay voluntary NICs so as not to deliberately disbar myself. If I get at (at 67/68, over 20 years away) then it will be great having a few extra £k, but don't want to rely on it.

    2. I think there are 2 issues in play for me. The first is that I am still 20 years away from my current State Pension age. That is still plenty of time for government to increase my State Pension age (they have form here) and do something like means testing (there is form globally for this). I do not believe the State Pension will go away unless it's replaced with something like a 'citizens income'.

      The second is that if we do leave the UK for sunnier climes then there is a real chance that the pension would lose its triple locking. Today it's only increased if you're in the EEA, CH, Gib or a country that has a social security agreement with the UK that allows for it. Post Brexit the EEA/CH may of course change.

      So given the above I'm comfortable to continue to pay my NI contributions as an insurance policy but I don't think I want toinclude it in spending/wealth calculations (yet, maybe when I'm 10 years or so out).

  6. First paragraph, "proliferate" should, I think read, "profligate"

  7. Thanks for sharing the update RIT. Best of luck going forward.

  8. I have read and have a sneaky personal suspicion that weather isn't the key contributing factor to whether people are happy or not. I'm not totally sure generalising about the friendliness of a contry/region of a country is super-helpful in the decision making process. You only really have to find say 2 to 12 people who you can be friends with, so say you live somewhere with a local population of a few tens of thousands of people, the odds on you finding some mates who you can get on with are pretty good. One way of getting those mates is hanging around with people with similar interests/outlook, i.e. join clubs, go to open mic nights, go surfing, biking etc. stuff like that. Improves your odds. Worst strategy I've found to getting new mates is just relying on who your neighbours are.. Long haul relocations may, possibly counter-intuitively, make it harder to find a good bunch of mates? You're more dislocated culturally so its not as easy. The other thing about the weather is that UK is good in the summer, and anywhere thats good in the winter is too hot in the summer. What I'd have a go at is just beggaring off for a month or two over winter and staying put in the UK. I think that could be very sweet.. Other option is to move to the south coast, i.e. the UK med, where its red-hot all year round!

  9. If you're thinking of moving to Australia, I will share a post I wrote just after leaving Australia nearly 12 years ago.

  10. Hello RIT, fantastic post as usual and an enjoyable read. From your previous posts I'm making an educated guess that it's Australia you're looking at and would be interested in hearing about your experience of the visa process. I would like to relocate out there with my family (after spending a few years working in Sydney when I was younger), but the whole process is bewildering and I'd be very interesting in hearing how you manage to work your way through it. Best regards and keep up the great work!

    1. The devastation we have seen in Aus over the past couple of months is not a one-off. Unfortunately with the climate situation, it's going to get worse over the coming years. I suspect many people will be thinking of leaving as the east coast could be uninhabitable by 2030. The temperatures reached 50C in December...and no rainfall for the first time ever.

  11. You seem confused. What you do is what you are. A human being is always DOING something just pay attention to what.