Tag: investment

Jan ’26: Greenland saga doesn’t disrupt tax bill

FIRE v London2 Comments

January media seemed dominated by Greenland and Davos. As part of my efforts to avoid amplifying unstable narcissistic media-whore leaders, I haven’t got much to comment about. London has been pretty wet and miserable, as is January’s reputation.

Meanwhile, markets were up quite a bit in January, for those of us measuring in GBP. This is despite widespread mayhem over Greenland – which the markets shugged off – albeit with a mid-month wobble.

Mid-month wobble around 20 Jan

My target allocation’s markets grew 2.4% on a constant currency basis. But their currencies fell by 1.4%, meaning my benchmark rose 1.0%. Against that my actual portfolio was flat. I am a little bit underweight USA equities, and a little bit overweight International equities, which in theory is not a bad tactical position to be in. In any case, I took a couple of hits on larger individual holdings.

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What’s the ideal level of leverage?

FIRE v London18 Comments

I’ve used portfolio leverage to help me buy two properties in the last 10 years.

To recap the most recent episode, very briefly, it goes as follows:

  1. In December 2021, I borrowed about 25% of my portfolio’s value to buy my Coastal Folly. I targeted reducing this to a 20% ‘loan-to-value’ (LTV) as soon as practicable.
  2. Only a few weeks later, Russia launched its full-scale invasion of the Ukraine. This disrupted the stock market, and energy markets. The energy market disruption led to a spike in inflation, which caused central banks to hike base rates. It also caused my LTV to go up, not down.
  3. I steadily paid off a bit of the loan, but the higher rates meant that my interest expenses went up 2.5x over the following 20 months.
  4. Since then however my portfolio has gained in value, and my loan has reduced, leaving it today at about 13% of the portfolio value. My interest costs are about 1.5x the January 2022 starting point, which is mildly annoying but very manageable.
  5. I’m left feeling firmly under control, with a relatively low level of risk. The two key risks that I need to consider are
    1. a hike in interest rates – which feels very unlikely
    2. a plummeting stock market – this feels a lot more likely, particularly in October 2025. But with my loan being only 12.5% of the portfolio value, even if the portfolio suddenly halved in value (a very rare and unlikely scenario) the loan would still amount to only 20% of the reduced portfolio value.

This leaves me wondering what the long term idealised level of leverage is for my portfolio.

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July ’25: New high watermark

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There wasn’t a huge amount to report from July.

Politically/economically I fear the most important event in the UK was the Labour government’s failure to enact its intended welfare reforms. This leaves the government a) unable to control spending b) unable to nudge the economy towards more jobs and more growth and c) facing politically expensive tax rises later in the year. For now, this hasn’t impacted the stats or portfolio very much, but it will have more of an impact over the next few years.

Meanwhile, it was a nice pleasant summer month in the UK. I managed to get to Wimbledon for the semi finals, which was a delight. I also explored the bird sanctuary at Arne, near Poole, and other bits of Dorset. I even visited Italy, which was surprisingly good value for money.

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