FIRE v London

May 2020: A sunny month

2020-06-022020-06-27 FIRE v London18 Comments

Well, May 2020 was the month that highlighted, as the Economist put it, Boris’ short-Cummings. Remember much else happening that month?

In May the UK started unlocking, slowly. The government(s) has(ve) been slowly releasing the strait jacket to fit what people (in London at least) have been doing anyway for a week or two. I’ve stayed healthy, and my boundaries have enlarged slightly – by which I mean I had my first Zoom party, and there are slightly more restaurants available on Deliveroo.

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April 2020: A mad bounce

2020-05-03 FIRE v London6 Comments

It’s been a much calmer month in the markets.

Of course it’s been the month that the UK’s Prime Minister went to hospital, with a “50:50” chance of making it out alive.

Lockdown has been the word on everybody’s lips. I spent the entire month working (hard! Even a bit over the long Easter weekend) from home. And, while the UK extended its lockdown from 3 weeks to 6, by the end of the month the lockdown mood music from across Europe and beyond had noticeably improved.

Markets up almost 10%

And, my, how the market’s mood had improved. The US, the S&P rose from 2462 on 1 April to 2923 on 29 April, a rise of 19%. In a month. If you had the courage to burn dry powder on US equities in late March you could have seen over 20% gains since. My (slightly leveraged) “US tech” equity subportfolio rose about 25% – led by Amazon breaking to new highs above $2400.

US equities were in fact the standout winner, up 13% in the month, while other equity markets rose 4-6%. In part, this reflects ‘big tech’ (which account for >10% of the US market). Bonds had a pretty good month too, aside from in Oz – where the currency recovered 4%.

What’s going on : is it QE?

I have been finding the market hard to fathom.

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My ISAs need a topup

2020-04-19 FIRE v London13 Comments

It’s that time of year again. The start of the new UK tax year (for ancient reasons, UK tax years begin on 6 April). My favourite time in the financial calendar.

It’s time to top up the annual ISA. ISAs are the tax-free savings accounts we are – unusually in the world – blessed with in the UK. While the funds we put into an ISA are net of tax, with no pension-like tax relief when we save, all subsequent returns are tax free. Forever. If you are fortunate enough to have £20k lying around, and you move it into an ISA…. by the time it has doubled, say, four times (which it probably will, if you invest in low-cost equity trackers and live long enough) it may well be producing £20k a year of tax-free income. If you can do this enough times, when you are young, your ISA will knock your pension into a cocked hat.

There are no upper limits on how much you can have in your ISA pots, unlike pensions. Hence, one of my ambitions is to (live long enough to) build an ISA pot worth potentially $100m.

However, with markets melting down over the last two months, it is definitely a case of two steps forward, one step backwards. Nonetheless, my ISA’s income is £24k – up about 10% on last year – so our (two) ISAs are generating more than one of us can top up every year.

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