Bloggers on FIRE – FIRE v London
In our Bloggers on FIRE series, we interview European FI bloggers to find out what makes them tick. Our aim is to build up a “who’s who” directory for the European FI blogging world. We hope you enjoy the series and discover some new blogs to follow. You can find a full list of our Bloggers on FIRE interviews here.
Please briefly introduce yourself to FIREhub.eu readers
I didn’t grow up in London, but I’ve been a Londoner since I left high school. I have lived in the same suburb of London for around 20 years (yes, I’m a middle aged man!), and am very settled here.
Some of my family are now in Australia, and some are in the USA, so I travel more than average. I don’t have kids of my own, but do have quite a few nephews/nieces/similar who I see frequently.
What is your backstory?
I grew up feeling relatively poor. In point of fact my family was not ‘poor’, but we had only average income (the equivalent of around £30k p.a., today) and my parents prioritised what money they had on two things: housing and education. There was no travel, no holidays, no car, no takeaway meals/eating out, not even a TV until I was 11. But I went to a private school for a few years in my teens, where almost everybody else was (apparently) better off than my family was.
I have always been interested in business, and studied it at university. While at university I had the realisation that being self employed, even in a ‘lowly’ trade, could earn me more money than a ‘respected employment’ (professions, civil service, etc). It wasn’t until a couple of years after graduating that the notion of setting up my own business even dawned on me. I set up my first business in my 20s, and was fortunate to sell it, for a lot of money, while still in my 20s. That gave me financial independence, at least for the foreseeable future. Yet I didn’t quite think that way around until I read, a few years after selling my business, Rich Dad, Poor Dad. The concept of ‘making money work for you’, not ‘working for money’, hit home. Nonetheless, it was still some years before I would learn how to manage my money sensibly.
Why did you want to reach Financial Independence?
I was always a natural saver. I made some money in my teens, and I saved it. I worked while at university, and bought Jupiter PEPs with my spare cash. Money has always motivated me, and continues to do so.
Having made a lot of money in my 20s, I enjoyed the ‘F U’ concept – that I would never need to be Fed Up with a job. I’m not a natural ‘sucker upper’; I’m impatient, not diplomatic, and can have an intolerance for fools. This makes me unlikely to survive in most corporate environments for very long, unless I am the boss.
In my 30s I realised that I didn’t know for sure whether I was really financially independent – i.e. in all scenarios. What would happen if I had four expensive kids? What would happen if inflation resurged? Or the markets crashed? I started to track my spending and income transaction by transaction, and resolved to answer the question.
It has taken several more years to build the confidence that, yes, I really am financially independent – at least on most definitions, and under most scenarios.
How much is your “enough”?
I put out a post on this topic recently.
My ‘enough’ is deliberately a very stringently defined. The saver/hoarder in me wants the nest egg to be able to continue to grow, even if I am fully reliant on it for my daily spending. To this end, I want to know that my investment income (only – no capital) can more than cover my foreseeable spending.
I make this harder than most FIRE people because I want to be able to live my nice life, in London, until I die. If I need care, I want good care. Daily spending on a nice life, in London, is expensive.
The only assets I measure against ‘enough’ are those investment assets that produce disposable/investable income. So I do not include my primary residence, nor any currently illiquid investments (e.g. angel investments in startup companies).
Even more than that, I want it to be able to fund me and Mrs FvL maxing out our tax-free saving benefits indefinitely. Under current UK rules, that means having at least £40k (£20k for each of me and Mrs FvL) of spare after-tax cash flow, to top up my tax-free ISAs. That means having around £70k of ‘surplus taxable income’ over and above my daily spending, or raiding the nest egg of £40k pa.
Ideally I would not consider my tax-sheltered investments (pensions and tax-free accounts) either, insofar as withdrawing money from them by definition means not maximising my tax-free benefits. This means that, in principle, £70k of surplus taxable income must itself come from ‘normal’, unsheltered assets, and that any tax-sheltered income is ignored. This is very Fat FIRE, I accept. Obese FIRE, I can concede.
As a round number, this means that my ‘enough’ number is over £10m. £10m should, even if reduced by a significant market downturn, generate around £300k per year of gross income. That is definitely enough for me to live off, pay taxes, and not worry about money.
Where are you on the road to Financial Independence?
I’m more or less already FI, under most people’s idea of FI. I probably don’t need to work again, and given that I probably will work again, I can do whatever I like – preferably paid at least something!
What do you do all day now that you’re FI?
I work. Right now, reasonably hard – I have three projects ongoing – one of them is very all-consuming. All are in the IT sector, in/near London.
What was your strategy for reaching Financial Independence?
It wasn’t the strategy for FI at the time, but my route to FI has been entrepreneurship, and diversified investments.
My major windfalls have come from helping to create companies, which have been sold.
However, I have made about as much money from investing, in diversified way.
Initially I experimented with managing my money via several different approaches (a small bit was DIY, more was given to advisers, some invested in property, more invested in funds, etc), and measured/monitored progress.
Gradually I realised that long term equity-driven investments, largely managed ‘DIY’, offered the best combination of returns, liquidity, volatility, fit with my temperament/knowledge, etc.
What is/will be your financial strategy after reaching FI?
I will keep my investing strategy the same. It will be a diversified global basket of equities, fixed income and cash/margin loans.
What was your biggest financial mistake?
I invested a six figure sum in a Wealth account of Goldman Sachs. They advised me to put the money into a tech fund. In early 2000. That didn’t end well.
What advice would you give to your younger self?
Don’t bother with any advisers/wealth managers who charge on an % AUM basis. Just do it yourself.
What’s your wildest dream?
I’d love to become a billionaire, just by passive investing and compounding doing their thing.
Then leave it all to a couple of key charities – famous ones – that would be transformed, Wellcome Trust style.
What is your favourite just-for-fun activity that brings you joy?
An annual party that I throw. It has developed a momentum all of its own.