Most of the original financial independence blogs have long gone the way of final salary pension schemes. But stalwart Monevator commenter Ermine\u2019s Simple Living in Somerset<\/a> has been standing strong since 2010\u00a0\u2013 albeit with cross-country and domain name moves \u2013 and so is nearly as ancient as we are. Known for his iconoclastic views on property, compound interest, and retirement, <\/em>and for his inimitable rants at modernity, I\u2019m delighted to have Ermine pull up a chair to give us the bigger picture.<\/em><\/p>\n Hello! How do you feel about taking stock of your financial life today?<\/strong><\/p>\n Odd one out! I started very late. No Slow And Steady <\/em>progression here. And there\u2019s little learning value in this tale, because it\u2019s from half a working lifetime ago.<\/p>\n My story begins in 2009, when I saw a bat signal<\/a> go up over the smoking wreckage of the Global Financial Crisis (GFC).<\/p>\n How old are you<\/strong>?<\/p>\n When I started the journey 15 years ago I was in my very late forties, so you guys can do the maths! Mrs Ermine<\/em> is ten years younger, and is of independent means in her own right. I speak solely on my behalf and on my numbers. Not as a couple.<\/p>\n We\u2019ve been married for nearly 13 years, though we were together a little before then.<\/p>\n Do you have any dependents? <\/strong><\/p>\n No, child-free by choice. Both sets of parents have passed.<\/p>\n Where do you live and what\u2019s it like there?<\/strong><\/p>\n In a town in rural Somerset. The nearest city is Bristol. We were drawn westwards by the closer proximity to the hills and prehistoric sites of the west. Plus it is easier to join the motorway network from here than it was in Suffolk. This matters when you are retired. Travel is often a larger part of what you do.<\/p>\n Housing is cheaper than where there are well-paid jobs. Though Londoners do seem to get out and they are lifting prices\u00a0\u2013 as well as improving the restaurants!<\/p>\n When do you consider you achieved Financial Independence and why?<\/strong><\/p>\n Technically in 2012, but it was a fragile FI.<\/p>\n My job went bad as a result of HR consultants targeting older employees to save money. Yet\u00a0I had more than 10 years to bridge from when I started in 2009 to my being able to draw the company pension.<\/p>\n It took me three years to get out. Looking back, if I were air traffic control I would not clear my younger self for take off. But hindsight shows that while you wouldn\u2019t file the flight plan, tailwinds came my way.<\/p>\n Low stock market valuations in the GFC helped. Then in 2016 Osborne changed the pension regime so you could take a SIPP at 55 without buying an annuity. That meant I could convert defined contribution (DC) AVC pension savings into a SIPP and burn that to the ground \u2013 mainly under the personal allowance \u2013 over eight years, preserving my defined benefit (DB) pension.<\/p>\n Like this the DB pension was reduced by the fewer years accrued but not through drawing early.<\/p>\n Combining my redundancy, the profits from a maxed-out Sharesave<\/a> 2009, and the SIPP, I was able to fully fund my ISA across the gap to the DB pension and to live off the non-ISA funds over seven years.<\/p>\n Why did you retire? <\/strong><\/p>\n In 2009 the GFC was in full swing. American consultants were engaged to reduce costs. They installed a new broom at the top. My own boss said my utilisation was down after a project was canned. He threatened me with moving me to the bench and a performance improvement plan (PIP). I applied for other internal jobs, but hardly anything was happening due to the credit crunch.<\/p>\n Late in March 2009, two weeks after I saw that bat signal, my boss called me in and said he was putting me on a PIP. I figured I had a year maybe before they could force me out.<\/p>\n Using salary sacrifice into AVCs as a higher-rate taxpayer, for every \u00a358 net I gave up I\u2019d accumulate \u00a3100. Most retail investors were scared witless by the stock market during the GFC. But I figured that I could eat a lot of loss if 42% were underwritten by HMRC.<\/p>\n I filled 2008\/9\u2019s ISA \u2013 split cash and shares \u2013 and told the company to salary sacrifice a significant lump of the salary before the tax year-end. And then to do the same in the next tax year.<\/p>\n This must have all been a tremendous mindset shift?<\/strong><\/p>\n Well, once that boss showed me I was out of options I saw that I was a supplicant. It was about power, and I wanted out of the trap. Financial Independence (FI) and Retiring Early (RE) would free me.<\/p>\n I could not un-see the worm at the bottom of the glass I\u2019d ignored all my working life \u2013 first through necessity, then through complacency. If you need to work you are owned.<\/p>\n How did this go down at the office?<\/strong><\/p>\n I passed through another six months of intimidation. Then three months off sick with stress.<\/p>\n I recall a phone call at home from one odious higher punk who started off telling me times were hard, but he had a great offer for me.<\/p>\n Three month\u2019s gardening leave \u2013 no redundancy.<\/p>\n I asked him clearly: \u201cAre you threatening me?\u201d<\/em><\/p>\n He concluded the call and I never heard from him again.<\/p>\n I got a telephone recording coil soon after. Things like that should be taken down in evidence and used against this sort of\u00a0lowlife. Apparently it\u2019s called constructive dismissal<\/a>.\u00a0<\/p>\n Then the internal job I had applied for using a legacy skill for back of house video networks for the London 2012 Olympics came through. My ex-boss tried to hide it so he could hang my pelt to his score of people offed, but that division had money and they went up the chain to override him.<\/p>\n I was shepherded and shielded from the intimidatory Success Factors performance management system by two line managers who needed their project delivered on time. I saved them a lot of money from errors and price gouging. On my last day I was in London resolving a problematic optical trunk.<\/p>\n How did the shift affect your lifestyle outside of work?<\/strong><\/p>\n I effectively left the middle class soon after that meeting with my boss in 2009. I lived on a little over minimum wage, decanting the rest of my gross salary into AVCs, my Employees Savings Investment Plan (ESIP), and net into Sharesave.<\/p>\n The power of a desperate old git on a decent wedge saving full bore should not be discounted. The depths of winter sometimes hold an invincible summer if you look hard enough.<\/p>\n I\u2019d lost a lot to negative equity buying my first house at the 1989\/90 market high. Where most generally consider houses a money tree, I see a Hellmouth<\/a> that devours every third generation\u2019s leveraged dreams. I wanted free of leverage before the Hellmouth opened again, and so I paid down my mortgage to all but \u00a31,000 \u2013 20 years after stupidly signing for my first.<\/p>\n Living on a shade over minimum wage is a lot easier when you\u2019re paying just \u00a35 a month as a mortgage. After that, nobody was going to foreclose me like I saw happen to neighbours in the 1990s.\u00a0<\/p>\n How did Mrs Ermine\u2019s<\/em> financial independence affect your own decision to get out? <\/strong><\/p>\n It didn\u2019t at all because it wasn\u2019t the case in 2009. It took her until just after the pandemic to get there\u2026<\/p>\n What is your current net worth?<\/strong><\/p>\n My investible assets are a bit shy of \u00a31m, to which could be added the net present value of the income flow of my DB pension, which would take it over \u00a31m if rated at 16x the net annual payout. (This is how HMRC used to qualify the lifetime allowance.)<\/p>\n What makes up your net worth? Any mortgages?<\/strong><\/p>\n No debt or mortgages. I pay my credit cards in full as they fall due.<\/p>\n As for assets:<\/p>\n Some of my cash is deposited via Mrs Ermine<\/em> since she doesn\u2019t pay tax on cash interest. The deal is she takes the interest and spends it on spas and nice things and I get to access the cash should I need it \u2013\u00a0perhaps on the A.I. crash that\u2019s yet to come!<\/p>\n I\u2019ve tried to shift to a Permanent Portfolio<\/a> spread of assets. That means far too much cash, in my view. But valuations are high \u2013 and Harry Browne would still give me stick for my over-heavy equity allocation.<\/p>\n My GIA holds a lot of gold in ETF form.<\/p>\n I hold no bonds because I view the DB pension as very bond-like. My bond allocation is in the Permanent Portfolio ballpark if my pension is valued at 16x net.<\/p>\n What\u2019s your main residence like?<\/strong><\/p>\n Three-bed detached house, owned outright. I\u2019ve heard too much of other people\u2019s kids and dogs and TVs through party walls, and Mrs Ermine wanted more garden.<\/p>\n Do you consider your home an asset, an investment, or something else?<\/strong><\/p>\n After my rotten experience early in life with residential property, I consider it neither an asset nor investment. And it does not appear in my listing of net worth, because I have seen property value disappear like summer rain.<\/p>\n My home has use value but I am not clever enough to tally it in financial terms.\u00a0<\/p>\n What was your old job?<\/strong><\/p>\n Technician, BBC studio engineer, Electronics research engineer, software design, optical transmission network design, leading an international research team \u2013 that sort of thing.<\/p>\n I switched companies in my twenties to go up the value chain. Internal promotions after that.<\/p>\n What was your annual income?<\/strong><\/p>\n The Bank of England inflation calculator tells me it was about \u00a370,000 in today\u2019s money.\u00a0<\/p>\n How did your career and salary progress over the years?<\/strong><\/p>\n I earned about three times as much in real terms at the end of my career relative to my first real job.<\/p>\n Why did you not change job in 2009?<\/strong><\/p>\n Ah, you confident young high-flyer, you! There weren\u2019t equivalent paying jobs nearby at that time. I would have had to go to London or Cambridge. Or eat a significant loss in salary.<\/p>\n Your options close down at nearly-50. Also the GFC was a terrible time to look for a job because money had seized up.<\/p>\n Once I had taken the first nervous breakdown the die was cast. Long empty days when nothing works, nothing makes sense, there is no point. You fall back for weeks and hope the fire restarts.<\/p>\n I retained some intellectual capacity but I struggled to maintain drive. Once the mainspring is broken, it can never be made whole against the cause of the break. You can patch it up, and it sorta works. Then it flashes over in erratic ways reminiscent of the original issue.<\/p>\n All this limited my employment options. Also, I remembered what happened so some of my colleagues in that age group. I was better off flinging my residual resources to become free of the hamster wheel than jumping to a slower one where freedom would be further away.<\/p>\n I declined part-time for the same reason.<\/p>\n Did you learn anything about growing<\/strong> your career and income you wished you\u2019d known earlier?<\/strong><\/p>\n Again, I was never one of your high-flyers. Most salary wins come from changing firms. I didn\u2019t do that after 30, though I rose a few levels up the greasy pole.\u00a0<\/p>\n Do you have any sources of income besides your main job?<\/strong><\/p>\n I had a small multimedia operation that did web design, when there was money to be made in that. Pin money \u2013 something to learn the ropes.<\/p>\n Why did you never go into contracting<\/a>?<\/strong><\/p>\n I\u2019ve been a full-time employee all my working life. I\u2019m an introvert who hates hustle. I didn\u2019t know how, and I didn\u2019t want to do it.<\/p>\n Many people make a success of contracting and good luck to them. It\u2019s not me. And it still suffers from the worm of the power balance in a different way. I would still be selling my time for money.<\/p>\n Did pursuing FIRE get in the way of your career?<\/strong><\/p>\n I guess it drew it short \u2013 that\u2019s retiring early for you! But I was burned out anyway.<\/p>\n What is your annual spending? How has this changed over time?<\/strong><\/p>\n Mine is probably \u00a330,000, including half the bills. It\u2019s up of late. People near to me have had health challenges so it has been a spendy year as a result.<\/p>\n Spending rose when the floor of the DB pension came online. Before that there was a splurge on the house move, which I write-off. The leanest years were 2009 to 2016.<\/p>\n Do you stick to a budget or otherwise structure your spending?<\/strong><\/p>\n No. The \u2018don\u2019t borrow money\u2019 principle was good enough while I was earning. If you\u2019re borrowing then you\u2019re overspending. Simples.<\/p>\n From 1998 I used the software Quicken<\/em> to add my numbers up. I looked in the rear view mirror every month. Was my net worth falling or growing? I tried to adjust course as I went along to stop it falling.<\/p>\n That was okay when I didn\u2019t hold investments, but the variation in market valuations would turn that into insane noise month to month.\u00a0<\/p>\n What percentage of your gross income did you save over the years?<\/strong><\/p>\n Not much until I decided I wanted to retire early, quickly. Then it shot up to 60-70% depending on how you compute salary sacrifice.<\/p>\n I also have the defined benefit pension which is deferred pay. So there is an argument I was saving from when I was 29.<\/p>\n I\u2019m living proof that the old saw<\/a> about Sensible Susan who saves from 21 to 30 and then stops to let compounding carry her to 65 is not universal. She does not beat out all Johnny-Come-Latelys.<\/p>\n What\u2019s the secret to saving more money?<\/strong><\/p>\n Two rules, inherited from my parents. Don\u2019t borrow money other than for a house. And when I replace a car, I start saving for the next one, in a savings account. I\u2019ve never bought a new car. I buy them cash and run them a long time.<\/p>\n Also, you must want freedom more than you want the consumer doodads, holidays, and services you give up to get it. Start with Wilkins Micawber<\/a><\/p>\n At the bottom end, earning more is probably the way. But I started on the FI\/RE track when my earning power was fairly well-defined.<\/p>\n Do you have any hints about spending less?<\/strong><\/p>\n Don\u2019t live in London unless you earn loadsamoney<\/em>. I grew up in London and went to university and began work there. I had a decent career progression but it didn\u2019t compound due to the high cost of living.<\/p>\n London\u2019s a great place to be young in, but some of the attraction palled as I got older. I recall one fateful late-1980\u2019s lunchtime in the BBC Broadcasting House bar. Surrounded by people yammering on about how much their houses had gone up, I sank pints of ESB, trying to drown out knowing that in the evening I was going to get on my bike and cycle along the Westway and then up to Hanger Lane to go back to my rented Ealing bedsit with a Belling-Lee pie heater and a meter that ate 50p coins.<\/p>\n I started looking for work outside London the next day.<\/p>\n Nowadays spending less means getting the attention economy out of your face. Don\u2019t view the world mainly through a smartphone screen.<\/p>\n Also, if a great idea involving you spending money comes to you unsolicited, bin it. Doubly so if it is an investment idea. If you didn\u2019t seek it out then you can live without it.<\/p>\n How has your spending and saving changed in retirement?<\/strong><\/p>\n Someone who runs across a bridge that falls behind them never yearns to run back over it.<\/p>\n In the early years after retiring, I earned sporadically. About \u00a315,000 over seven years.<\/p>\n I did not trust these earnings. All I did was either invest it or give it away so that it would not trap me into working. If I was going to throw my lot in with ratty intermittent income then it\u2019d be in the stock market.<\/p>\n For me FI without RE is valueless. All of us are running out of time 24 hours every day. I can think of better ways to use those hours than working.<\/p>\n In Healing the Soul through Creativity<\/a><\/em>, Jungian writer David Rosen postulates that in times of a crisis the impasse can be resolved by \u2018egocide\u2019. That is, destroying the old form of the persona \u2013 part of the ego that presents its face to the world \u2013 that no longer serves, or is maladaptive to the changed situation.<\/p>\n I\u2019ve seen many people retire from professional jobs, only to suffer a loss of identity and meaning. I was spared this existential crisis because I surrendered my work persona in 30 minutes with my boss in 2009.<\/p>\n In my 40s I saw some colleagues in their late 40s and 50s manifest stress in cardiovascular problems. Strokes, heart attacks. These people looked fit to me \u2013 runners, cyclists and walkers. By my early-50s I\u2019d already stood by several little mounds of earth summing up the life and times of a colleague.<\/p>\n It seems men lose resilience to stress in that final decade before retirement.<\/p>\n You can\u2019t buy health \u2013 or maybe I did by getting out of the workforce ahead of time.<\/p>\n I\u2019d put on a lot of weight through stress and excessive drinking. As an early retiree I shook that off. I\u2019m not yet the weight I was at 21 but I\u2019ve covered three quarters of the distance!<\/p>\n Any other tips on a successful transition?<\/strong><\/p>\n We had a community farm at the time \u2013\u00a0a passion of Mrs Ermine\u2019s<\/em>. I gained a non-financial return because I was doing things with other people.<\/p>\n That softened the transition from work. For men work can be a large part of their social life.<\/p>\n Having said that I\u2019m going to Suffolk to celebrate one colleague\u2019s 70th and then to drink beer with some other guys from work. It doesn\u2019t all have to disappear, but it will probably thin out.<\/p>\n Do you have any passions or hobbies or vices that eat up your income?<\/strong><\/p>\n Photography and tools \u2013 what is now called \u2018maker\u2019 stuff.<\/p>\n A camper van to see interesting and out of the way places.<\/p>\n I guess travel should be added. But I\u2019ve done much less international travel than my working self foresaw as I\u2019ve grown to detest the increasing aggravation of air travel.<\/p>\n FIRE dreams are made of this: Callanish Stones on the Isle of Lewis, by Ermine.<\/em><\/p>\n What kind of investor are you?<\/strong><\/p>\n In the Dotcom boom and bust I was the classic active retail muppet that Pete Comley<\/a> talks about in Monkey With a Pin<\/a><\/em>. I burned about \u00a37,000 \u2013 \u00a313,000 in today\u2019s money \u2013 perpetrating every stupid mistake you can make and then some. Churn, chasing momentum, technical analysis, the lot.<\/p>\n In hindsight I was too emotionally invested in the result. Concentrating on what I wanted and not listening to the song the market sang. I was looking for a way to get out from under the negative equity in my mortgage. And I had a tendency to overthink things that persists today.\u00a0<\/p>\n The gap between the Dotcom bust and 2009 helped me gain perspective. I brought my mortgage down by overpaying the residential property Hellmouth until it was sated. <\/p>\n When the student is ready the master appears. I came across The Investor<\/em>, the investing ju-jitsu tutor that is our host here. He was more useful to me in the early days when he dared talk active investing. Sometimes I just read between the lines and used Monevator<\/em> as a tip sheet which the small print<\/a> explicitly tells you not to do. (I am Ermine<\/em>, I answer to none, not even TI<\/em>!)<\/p>\n This gradually piloted my embryonic ISA through the GFC wreckage, at that time focusing of getting income because that was what I was trying to replace.<\/p>\n I worked out that my AVCs should be as global as possible. For me that was a 50-50 split between Global and the FTSE 100. As opposed to 100% FTSE100 or money market funds, the other options.<\/p>\n So you were making tactical allocations decisions?<\/strong><\/p>\n Yes, and I stayed unashamedly active in the early days. I was too old and too poor to get from there to here any other way. Having said that, part of the reason my job went bad was the GFC, which improved valuations. That was pure situational luck, for good and bad.<\/p>\n The post-GFC lift was very kind to neophyte investors because of the benign starting valuations. But as the market stabilised, it got more boring. I read Lars<\/a> and he gave me a decent place to park equity funds, so I am also a passive investor. I retained the high yield portfolio \u2013 but didn\u2019t add more \u2013 as income was important to me.<\/p>\n Retail investors must keep the faith. If you jump on a fast horse that you can\u2019t stay on, it will not end well.<\/p>\n Ten years later I was faced with a mortal threat \u2013 Covid<\/a> \u2013\u00a0which was a higher risk for my age group. The economic clouds darkened as fear possessed the world, and I shorted parts of my ISA, then letting go as it started to race back faster than any bear market I\u2019ve seen. I was eventually buying VWRL in the GIA opened with the proceeds.<\/p>\n That all helped me catch up with VWRL on the networth chart below<\/p>\n Everyone says that market timing does not work but it served me twice. Of course you should not infer the general from the particular. It could be pure luck.<\/p>\n The problem with timing is that the only measurable signal is valuation, but you must listen to sentiment too, without losing yourself to it.<\/p>\n The opportunities are rare. The vast majority of the time, you are best sitting in a global ETF like VWRL. If you can follow TA<\/em> and Do Not F\u2019ing Sell<\/a> <\/em>when all around you are losing their heads, you will generally be all right in three to five years\u2019 time.<\/p>\n Provided you don\u2019t become a forced seller. For example, if you lose your job. My GFC experience shows there is a positive correlation between the market and job security. In a crash they fall together.<\/p>\n I don\u2019t think we\u2019ve had anyone explicitly sing the praises of market timing before<\/strong>.<\/p>\n Through experience I\u2019ve learned that I had zero company selection advantage. I am a retail schmo who has never worked in finance.<\/p>\n But I learned to listen to the heartbeat of the market. The Investor <\/em>gently taught us that by sharing his thinking \u2013 and the uncertainty in it, something finance pundits very rarely do.<\/p>\n I learned the sound of collective capitulation in the GFC. I was a dispassionate observer with what I thought was a stable job, and no skin in the game. That helped me to hear \u2013 sort of \u2013 when to short Covid and when to stop. And my ISA built up in the bull run removed some of the emotion from shorting by being a counterweight.<\/p>\n In theory if you short assets you own, you lock the price in. I had participated in the collective capitulation of the Dotcom crash so I knew what it felt like. But the bat signal<\/a> showed me how to think differently about a crash. You can\u2019t fight that feeling but you can choose your reaction to it. Run towards fire.<\/p>\n As Warren Buffet said, the \u201ceconomic clouds darken and the skies rain gold\u201d<\/em> only for fleeting weeks or months, about every ten years. I have only got one self-defined timing strike at that to my name. It could be sheer luck. There are only one and a half data points. Most of the time I hold and let capitalism do its work.\u00a0<\/p>\n As I say, I\u2019ve shifted away from 100% equities towards Harry Browne\u2019s Permanent Portfolio multi-asset spread. Another truism from Warren Buffett about the bright sparks behind LTCM<\/a>: \u201cBut to make money they didn\u2019t have and didn\u2019t need, they risked what they did have and did need.\u201d<\/em><\/p>\n I am not a multigenerational endowment fund. De-risk when you have enough. You will give up return, but you will sleep easier.\u00a0<\/p>\n What was your best investment?<\/strong><\/p>\n Buying gold in stages before 2016, on the principle that Brits would not commit economic hara-kiri by voting Brexit but if they did I wanted to preserve GBP assets until I could work out which way was up. And then buying more before the recent run-up to try to get to Harry Browne\u2019s Permanent Portfolio split.<\/p>\n That was again situational luck not skill. I was diversifying as I had reached enough, and US valuations give me the creeps. I\u2019ve already been through one tech \u2018it\u2019s all different now\u2019 in the Dotcom bust.<\/p>\n In terms of pounds gained, it would be buying the Vanguard World Tracker ETF (ticker: VWRL) across many years. I\u2019ve never sold it other than in the GIA, swapping for HSBC\u2019s HMWO equivalent to harvest capital gains.<\/p>\n Shorting bits of my ISA in Covid gave me a valuable lift to catch up with VWRL on the net worth chart despite my spending over seven years. But there\u2019s no one investment associated with that.<\/p>\n Any notable mistakes?<\/strong><\/p>\n I thought the US was overvalued coming out the GFC. It was but it was also exceptional, so I gave up some return. Luckily the GFC was broad and deep enough that you didn\u2019t have to be right with what you bought, you just had to make yourself buy. I\u2019ve course corrected the ISA into VWRL as time has passed.\u00a0<\/p>\n I made lots of mistakes in the Dotcom boom and bust but apprentices must pay their dues.<\/p>\n Buying a house in 1990 was the biggest financial fail of my life. It blighted a decade<\/p>\n What has been your overall return, as best you can tell?<\/strong><\/p>\n Below is my net worth chart from Excel:<\/p>\n The chart shows my inflation-adjusted net worth \u2013\u00a0blue line \u2013 rescaled to 2023 and normalised to \u20181.0\u2019 in 2023.<\/p>\n This includes my spending across the seven years when I had virtually no income from earnings.<\/p>\n The run up from 2009 shows the power of Saving Hard as well as investment gain. The fillip in 2012 was the redundancy money, and Sharesave coming onto my books.<\/p>\n The other two lines are also inflation-adjusted.<\/p>\n Yellow is what would have happened if I\u2019d taken all I had in cash and flung it all into VWRL in 2012 when I left work and sat on it, living on the dividends and thin air.<\/p>\n Green is where I\u2019d be if I stuffed all the 2012 net worth into cash under the mattress on retirement and slept on it, spending nothing.\u00a0<\/p>\n A lot of my GFC gain was in my AVC\/SIPP, which I ran down between 2012 and 2019. This is all gone now. But it contributed to my ongoing net worth, as part of it went into the ISA.\u00a0<\/p>\n So I can\u2019t tell you the overall return \u2013\u00a0hence the indirect net worth approach. This rolls all of the gains up, depreciated by my spending when I wasn\u2019t earning from 2012-2019. And income returned from end November 2019 when I started drawing my DB pension, which roughly balances my spending.\u00a0<\/p>\n It\u2019s sampled every year at the end of March to be close to the end of the tax year. Nominal net worth is derived from Quicken which marks investments to market about every two weeks. VWRL is not total return, though you can\u2019t live or die on its 1.5% yield. Some net worth went off my books moving from a semi to a detached house in 2017. I do not have a line for house value, so my part of the difference will appear as a net worth loss. That\u2019s easily enough to wipe out about \u00a315,000 earned in total between leaving work and drawing the pension.<\/p>\n Note I inherited some money after the Covid short. This and any gifts I made from it have been excluded from the chart. It is included in the assets above, less the outgoing gifts. It\u2019s a notable change but doesn\u2019t dominate the total, which is mainly the fossil record of my human capital, amplified by the market after it faded to zero in 2012.<\/p>\n The catchup is partly shorting in Covid, but mostly drawing my DB pension from late-2019 stopped my spending denting returns.<\/p>\n We should remember that this is a bull run very long in the tooth. Not all of this is real.<\/p>\n How much are you able to fill your ISA and pension contributions?<\/strong><\/p>\n Fully, since 2009 \u2013 ISA and SIPP via AVCs. It\u2019s easier now to fill a SIPP as a non-earner when you can only put in \u00a33,600 a year.<\/p>\n To what extent did tax incentives and shelters influence your strategy?<\/strong><\/p>\n They dominated until 2019. I still use them fully and will do for several years hence. I have a much shorter run due to the late start.<\/p>\n How often do you check or tweak your portfolio or other investments?<\/strong><\/p>\n I automatically download stock prices and update Quicken, say once every two weeks, and only look at the change in net worth.<\/p>\n I change things with events \u2013 Reeves\u2019 reversal of the tax wisdom of income in the ISA and cap gain in the GIA caused shuffling between ISA and GIA.<\/p>\n How have you kept hold of so much money?<\/strong><\/p>\n Spend less than you earn! For most of my career my plan was quite pedestrian. Work until 60 and retire in the normal way. Then in 2009 I had to grab hold of the big red ejector handle and pull that sucker.<\/p>\n On retiring I\u2019d earned all the money I would ever earn. It was uncomfortable in my 50s to slowly surrender net worth over years. You see that suck-out in the net worth graph. I had the benefit of the lift out of the GFC but that starts to fade after 2015.<\/p>\n I did not know what the future held and hindsight shows I underspent. Perhaps by a lot. But I won back eight years of my life that I didn\u2019t watch the world go by through the office window.<\/p>\n Free time<\/a> is the ultimate consumer good. They\u2019re not making any more of it for you. I saw ancient stones, played, and learned. Those things you planned as to do as a kid when you grew up \u2013 before you signed up for a job and a 25-year mortgage to make sure you stayed there.<\/p>\n Which is more important, saving or investing, and why? <\/strong><\/p>\n Initially, saving. Three years from a standing start to outta there makes compounding irrelevant. You need ten to 20 years accumulation for compounding to show.<\/p>\n I do see it now, after 15 years. It\u2019s one reason why in real terms my net worth hasn\u2019t reached the inflection point of starting to turn down.<\/p>\n Was financial freedom a goal with a timeline?<\/strong><\/p>\n I saw I had three years to clear the workplace. If I could have done it in one or two years I\u2019d have gone for it. I sliced and diced Excel spreadsheets every which way but I could never bring that number down.<\/p>\n Eventually I had to take my chance. 2012 was the year partly due to how much more workplace I could stand, and partly the natural cutoff of the last project.<\/p>\n Did anything get in your way?<\/strong><\/p>\n The GFC. Its winter face was the shattering of my career. But the summer face was the broad reduction in valuations \u2013 a benign environment for me to re-enter the fray with a pilot leading the way while I shook out some of my excess muppetry left over from the Dotcom days.<\/p>\n Are you still growing your pot?<\/strong><\/p>\n I\u2019ve never drawn from the ISA. I front-ran it with the old AVCs as a SIPP, and drew the DB pension six months shy of the normal retirement age of 60 when the SIPP ran out.<\/p>\n Then pandemic hit. The DB pension covered my needs and wants in the pandemic, and a while after.<\/p>\n I shorted some of my ISA, but I left much of the ISA itself to its own devices. Most of it came good. I built up a GIA balance with the cash from shorting.<\/p>\n Some time after that I inherited some money from my mother. (It did not involve paying inheritance tax!) I gave half of it away to improve a rotten situation for someone and since then I have used more to improve people\u2019s lives a bit. I didn\u2019t need it \u2013\u00a0by then it was reasonably clear I was FI.<\/p>\n The residual amount leftover increased my risk tolerance. It\u2019s one reason why I have twice the amount of equity allocation at today\u2019s nosebleed valuations than the PP dictates.<\/p>\n Do you have any further financial goals?<\/strong><\/p>\n I\u2019d like to clear \u00a31m in investible assets!<\/p>\n On spending I just about clear the 4% safe withdrawal rate (SWR), ignoring both the DB pension and the State pension, which is still a while off. I\u2019m probably FI with the pensions providing a floor<\/p>\n I\u2019m not looking to hit it out of the park. My lease on life is well past its halfway point. I\u2019m lucky enough to have good health, but I have seen infirmity steal other lives. So I want to appreciate having enough and to share some of the good fortune.<\/p>\n What would you say to Monevator readers pursuing financial freedom?<\/strong><\/p>\n The halfway part of the journey is the toughest<\/a>. So much resource committed, not much to show for it. <\/p>\n Keep on keeping on \u2013 but moderation in all things. You\u2019re only young once, and the things you regret when you look back are often the things you didn\u2019t do.<\/p>\n Life is a dance between opportunity and threat. If you\u2019re going to YOLO every day or borrow more and more money then you\u2019re probably overspending. But if you\u2019re stuck in your counting house not going out with your mates then perhaps look for more balance.<\/p>\n In general financial freedom is a marathon, though in my case it was a sprint.<\/p>\n When did you first start thinking seriously about money and investing?<\/strong><\/p>\n Late in life. I thought I\u2019d got it about right: I worked to live, not lived to work.<\/p>\n I was okay with what I was doing and pursued interests outside work. (Though a project with an ex-girlfriend took us touring the States for a while, and the problems of not having enough holiday leave started to make itself felt.)<\/p>\n I was an average guy in a reasonable paying job with a decent work-life balance. I dallied with the market in the run-up to the Dotcom crash, making all the usual mistakes. The education was cheap, there are some things you cannot learn any other way. I packed it in after that \u2013 other than doing Sharesave.<\/p>\n Then some unknown pundit quoth thusly<\/a>, \u201cIf not now, when\u201d <\/em>and two weeks later I found my back against the wall and figured it was worth a long shot<\/p>\n Did any particular individuals inspire you to become financially free?<\/strong><\/p>\n Two, in quick succession.<\/p>\n One was that ex-boss with the PIP \u2013 ably abetted by the odious gardening leave git.<\/p>\n The other was your good self, keying up your dark transmission over the wreckage of the GFC.<\/p>\n I heard \u201cif not now, when?\u201d <\/em>and decided in 30 minutes it was now.<\/p>\n Can you recommend your favourite resources for anyone chasing FIRE?<\/strong><\/p>\n Other than Monevator<\/em>, I can\u2019t think of any. Many of the ones I followed have gone. I started my journey half a working lifetime ago.<\/p>\n Post-GFC, FIRE aspirants believed we could achieve FIRE by saving hard through frugality and investing into the stock market at valuations that could support a 5% SWR.<\/p>\n But today\u2019s market is not that gentle one blowing wind beneath our wings. The frugalistas were run out of town as SWRs dropped with valuations drifting up.<\/p>\n FatFIRE became the in-thing, because fewer ordinary folk could take the falling SWRs.<\/p>\n What is your attitude towards charity and inheritance?<\/strong><\/p>\n Be no King Tut<\/a>. Don\u2019t be buried with your gold. You really can\u2019t take it with you.<\/p>\n Give the money to people that matter to you while you are still alive. It also helps with IHT, plus you get to see it in action. <\/p>\n One caveat: give without let or hindrance. If you don\u2019t want to see it spaffed away then choose the character of your recipients well. Then let them live by the light of their own lamps.<\/p>\n What will your finances ideally look like towards the end of your life? <\/strong><\/p>\n I\u2019m older than some of your FIRE-Side subjects but I haven\u2019t given this much thought.<\/p>\n Yes, I will live higher on the hog. I will monitor the net worth chart. I\u2019m not averse to throwing it over the wall to an adviser at a later stage.<\/p>\n An age gap means I would expect Mrs Ermine <\/em>to inherit anything left over. That makes this easier for me.<\/p>\n At the end of your life when you look back it won\u2019t about the money you made or lost but about the people whose lives you touched.<\/p>\n Despite how much we differ on key fundamentals \u2013 property as an asset, the wisdom of fully retiring, the utility of compounding\u00a0\u2013 I always learn from Ermine\u2019s writing and this interview was no different. Long may it continue! Please add your thoughts in the comments. Remember that while Ermine is more battle-hardened than most of our FIRE-side chatters, baring your life takes guts and so please keep your feedback constructive. Personal attacks of any sort will be deleted. Read our other FIRE\u00a0case studies<\/a>.<\/em><\/p>\nA place by the FIRE<\/h3>\n
Assets: Perma frosty<\/h3>\n
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Earning: Salaryman<\/h3>\n
Saving: Just don\u2019t do debt<\/h3>\n
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<\/a><\/figure>\nInvesting: Actively passive<\/h3>\n
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<\/a><\/figure>\nWealth: Managing with money<\/h3>\n
In the weeds<\/h3>\n