When the Stars Align

It’s not always sunny on The Med

The past few months have seen me pass through my annual work performance review, my annual salary review and a new HR initiative which seems to have been designed to suppress salaries (read suppress the salaries of the highest performers).  The results of all that for me were that despite my strong work ethic (first into the office, last out of the office and 60-70 hour work weeks) and strong results (but which fell short of very ambitious/impossible? objectives) I managed to receive the worst performance review since I entered the world of work which nicely dove tailed into an annual salary increase well below inflation.

This most definitely doesn’t fit into my Saving Hard by Earning More strategy, which in the past has resulted in healthy earnings increases.  I’m not sure what objective the company were trying to achieve but my interpretation is that it’s now time to move on.  Normally, that would have been a new job in a new company for more reward but this time around that’s not necessary as I now have another option – FIRE.  The stars really are aligning nicely.

Click to enlarge, RIT earnings improvement since saving hard by earning more

On the topic of FIRE my One More Year, after a slow and frustrating start that now seems to be passing quickly and without a worry in the world.  Financial plans between now and a summer FIRE are also synchronising nicely:

• collect one more bonus;
• maximise my pension contributions to just below the tapered annual allowance for 2018/19;
• which if my annualised returns continue as they have since starting on this journey should see me nicely just on the underside of the Pension Lifetime Allowance (LTA) by age 55; and
• then use that bonus (plus some salary) to fill my and Mrs RIT’s 2018/19 ISA allowances of £20,000.

Snakes and Ladders

Well it looks like asset prices don’t always go up.  Of course I’m not surprised by this revelation but the mainstream media did seem surprised with headlines such as “Dow loses 7 million points in the session” and “Worst market performance since dinosaurs roamed the earth” but then of course they need sensationalism as they’re attention seeking.  The market action even meant that it made the first news item on the radio for a couple of days.  It could almost be 2008 again.  It would be enough to scare people off investing if they did nothing more than listen to news sound bites.

What has really happened thus far?  I say thus far because the market can of course continue to fall...  Or it might flat line...  Or it might go up again...  By my calculations this week the S&P500 has fallen 5.2%, last week it fell 3.9% and the week before that it actually gained 2.2%.  In contrast the FTSE100 this week fell 4.7%, last week fell 3.9% and the week before that fell 0.8%.

This is what has happened to a couple of single indices and makes for great news items but how has this impacted a long term investor who buys, holds and rebalances a variety of global asset classes.  I like to think I’m one of those so let’s use my real world portfolio as a comparator.  This week my wealth has decreased by 2.3%, last week it decreased by 1.5% and the week before that it decreased by 0.4%.