Month-End: October 22

A month of ups and downs. Visited amazing Wales, had a great Hallowe’en and even managed to remortgage at a semi decent (4.45%, 5yr fix) rate. Success in my eyes

Family Activities

October brings the kids’ birthdays as well as a two week break from school (tattie fortnight). And one of the privileges that I have as a semi-free man, is that I don’t have to work when I don’t want to work. So, taking 2 weeks off was an easy – certainly compared to the dystopian “Retreat” post from Indeedably – a shockingly relatable post.

Enchanted Forest

We visited Glasgow, Blackpool (UK’s largest indoor swimming poo),
Manchester (amazing city and home of Weenie – but didn’t see her), Wales (Snodownia, Bertys-y-Coed – stunning) and Chester (beautiful city). It was a great trip and the kids loved it. We saw some great museums, plays, waterfalls, took a bus past Old Trafford, ate in some great restaurants (Chinatown in Manchester is a foodies paradise) and learnt a lot about Slate!

Wales was particularly surprising because as an adopted Scot, I have my pick of mountains and the small hills of the Lake District or Pennines don’t impress me.

But Wales was just beautiful, and I hope to come back again. There’s a lot to do (probably due to the number of Saesneg tourists) and it’s a mecca for miniature railway enthusiasts.

Remortgaging

Parallel to our holidays and everything else, I’ve been trying to remortgage our home. I was counting down the days to the 1st of October when I’d be able to renew with the Nationwide at the same time as interest rates were spiralling. I’ve had 3 mortgages with the Nationwide over the years and they tend to be among the cheapest and remortgaging in the past was simple and straightforward.

However, they stuck up their 5 year fixed rate from three point something to five point something in a week or so and I began to panic.

If you Panic, Panic First

This was all around the time of Liz and Kwazi trashing the pound and I decided to apply for a mortgage in principle with the best available lender. In this case, Lloyds had one at 4.45% with no fees – I got the ball rolling and it’s all gone through now – mortgage ready to go on the 1st of January.

The monthly saving in interest of the Nationwide will be about £100. Woo Hoo! My only regret was not remortgaging (in principle) sooner as Lloyds had a 5 month period where the offer can be still accepted. But I’m a house is half-paid off person in that I’m an optimist.

It is a big jump from our 1.79% at the moment and I suspect that higher interest rates will do more damage than energy bills. But inflation is double digit, homeowners have had a massive decade long free ride – that’s come to an end. Expect complete chaos (or 10% falls in house prices).

Family Finances

Net worth is marginally up on the month. I did get a poor valuation on our house as part of the remortgage process – my post on it is worth a read for a chuckle.

The stock market is all a bit up and down. If you were to obcess over the numbers – you’d go crazy. Day on day or week on week changes can be substantial but if you zoom out a bit you can see that what looks like giant crashing waves are just gentle ripple.

Then gain, the performance of anything valued in pounds flatters and then there’s the fact that rising interest rates and biting inflation are putting pressure on all stocks (& bonds). Growth stocks are being hit, value stocks are being hit and my own favourite – renewable energy investment trusts – have been decimated recently. Where to invest to avoid losing money? I know that many (and that includes me) invest in big, boring ETFs like VWRL or HMWO – but these only invest in the biggest companies globally. What if the growth doesn’t come from the behemoths? Or what if the bigger they come the harder they fall?

To that end, I did invest some money in a VCT this month. I have a guide starting here and for a small fraction of your portfolio it can add some (risk and) balance.

For balance, Finumus wrote a good post on why VCTs are bad. Although he suggests that instead of VCTs you invest in something safer like Scottish Mortgage Trust (down 51% in 1 year) which goes to show the danger of picking winners.

My basket of VCT holdings are sitting on a XIRR of 13.0% after all taxes etc… but only make up 6% of net worth (and falling). In the last 12 months their value is flat – this despite some AIM VCTs being hit bad by the slump.

My VCTs have now fully paid back all the money that was invested in them – after tax rebate, dividends and sales and they provide a nice tax free income. Whether they are good investment in a recession? I don’t know. I’d like to think that money isn’t wasted in a recession but in boom times – and if (zombie) companies go to the wall, it’s stupid money that is lost and the right investments now will be what brings future growth. Maybe VCTs have a part to play in that.

But, I’m fairly comfortable with our asset allocation and falling share prices aren’t such a bad thing when you are still putting money in. And the house price fall (estimated or predicated) is largely immaterial.

Children’s Birthday Parties

I’ve been meaning to write a good post about the pros and cons of spending (or investing) a lot of money in children’s birthday parties. The frugalistas will warn that it’s just money down the drain. But I do think that the birthday’s we threw served as money well spent. It gave us the chance to spend time with our friends.

We threw a birthday for both of the kids and had a house party for Hallowe’en too. The house party was a riot with about 40 guests and almost everyone in costume. It was a lot of work but it cements relationships with our friends.

Considering the amounts of money we are willing to spend on ourselves (think long-haul backpacking trips or short-haul city breaks or a new phone or the extras in your car) it’s a small investment that you are spending on your friends & your kids.

Emigration and Moving On

Good friends of ours are moving from where we live to the South of England. In part due to family pull-factors, part due to work push factors here. It’s maybe good for them – but it will be a shame to lose friends that we’ve grown quite close (and drunk) with.

It does reopen the spectre of emigration for us. Is the grass greener elsewhere? Yes is the obvious answer but at the same time, we’ve now got something where we live which you can’t just get if you transplant yourself into a new town/city/country. We have a deep network of friends and that would be something we’d be hesitant to just give up.

There’s practical issues around moving elsewhere too – but for the time being, I feel that where we are right now is the best place in the world to be.

Thanks, GFF.