Credit deflation and the reflation cycle to come (part 3)

[WICAO]

2 hours ago, wherebee said:

I made 6500 AUD in dividends in 2021 on a startpoint of 190k at Jan 2020.  That's over 3%, according to my shaky maths.  Less than it will be going forward, because I traded in and out a fair bit in the first half of the year, pushing the 190k up to 225k.

I'm aiming for 10k dividends on 200k.  That'll do me, pig.

So you're looking for about a 5% divi yield.  That sounds really aggressive given the current environment.  Do you realistically think you'll achieve it without have to buy companies that might just blow up?

[WICAO]

8 hours ago, spygirl said:

One of the bets financial decision Ive made is designing our life around only needing 1 car.

0 at the mo, but thats another story.

Youd be amazed at how many people go - Oh, only 1 car. You must save a fortune ...

We do, relatively. 2nd car seems to cost families about 4k/y

We also run only 1 car and keep accurate spend records including realistic depreciation.  Last year we spent £3,640 ($6,801) so your about £4,000 sounds right on the money for a non-flashy car.

[wherebee]

41 minutes ago, WICAO said:

So you're looking for about a 5% divi yield.  That sounds really aggressive given the current environment.  Do you realistically think you'll achieve it without have to buy companies that might just blow up?

I'm in oilies, BAT, and some miners for growth.  That's it.  I got in so low that it's already running strong.  For example, Shell - bought 17k in the lows.  Getting just over 1k a year in divvies at the moment.  That's 5.8% on my original investment.  I expect that to rise as inflation just pushes everything up on the income side for the inflation-strong investments, where income runs ahead of costs.  I could easily see that 1k a year for shell becoming 2k a year by end 2023.  

BAT - 23.5k paid, now generating about 2000GBP in dividends a year, if things stay the same.  That's about 8%.  And again, I expect the price increases for tobacco to be running ahead of costs, which should mean same or better divvies.

I don't expect to buy any more; I might sell on some peaks and buy back in on dips (what I have done with exxon, turning 200 odd shares into almost 250 shares by doing that).  

That's probably the wrong way to 'officially' look at it, but it's my way

And it's all thanks to DB and making me really think about inflation proofing.

[Starsend]

13 hours ago, spygirl said:

And swimming pools - 

The 82ft pool is up to three metres deep and reportedly costs £164,250 to keep the water heated to 30C all year round.

Residents living in a two-bed flat pay a service charge of up to £9,000 a year, with a large chunk of the money going towards the Sky Pool and another pool on-site.

 

Two residents have now apparently claimed that it is barely being used due to the cold weather.

Daft cunts.

No way I'd go for a swim in that, what if you look down and Jason Statham's looking up at you with a drill!

[WICAO]

16 minutes ago, wherebee said:

I'm in oilies, BAT, and some miners for growth.  That's it.  I got in so low that it's already running strong.  For example, Shell - bought 17k in the lows.  Getting just over 1k a year in divvies at the moment.  That's 5.8% on my original investment.  I expect that to rise as inflation just pushes everything up on the income side for the inflation-strong investments, where income runs ahead of costs.  I could easily see that 1k a year for shell becoming 2k a year by end 2023.  

BAT - 23.5k paid, now generating about 2000GBP in dividends a year, if things stay the same.  That's about 8%.  And again, I expect the price increases for tobacco to be running ahead of costs, which should mean same or better divvies.

I don't expect to buy any more; I might sell on some peaks and buy back in on dips (what I have done with exxon, turning 200 odd shares into almost 250 shares by doing that).  

That's probably the wrong way to 'officially' look at it, but it's my way

And it's all thanks to DB and making me really think about inflation proofing.

Are those oilies, fags and miners your total wealth or just a subset of your investments?

Full disclosure: My 2.1% divi yield is my total wealth including Super/Pension but excluding cash and cash like holdings which will be spent on the home build.

[JMD]

12 hours ago, Lightscribe said:

I agree. Different opinions on here of course, buts that’s what makes this thread what it is.

Some believe the government will tighten and benefits will be frozen and lose in real inflation terms for the foreseeable, all because the government will be forced to do so.

I believe that the government would rather blow the whole economy and run it into the ground, before they are seen to discriminate against the benefit classes in the face of inflation.

Working and paying taxes is just so pre-2020. Everyone knows HPI is the real economy and the country can run with everyone sitting at home on Zoom. 

Lightscribe I would until recently have agreed with you, that politicians would rather look good than actually do* good (*because after all doing good involves making unpopular decisions).                                                                               ...But then 2020 came along and the last two years have plainly shown that a government can inflict all kinds of dire harm on an economy, along with suspending by mere decree, laws, rights and social conventions - and that all this can be done under the guise of 'saving the NHS'!!                                                           I personally (tragically) don't think I have oversimplified what happened, but please tell me if I am being crass. However my point being that given the 'right' conditions (social conditioning?) - maybe next time it will be financial crisis, or perhaps even reds/novichock under every bed/door handle - but surely given the public compliance shown last time, all bets must now be off as to what brazen activity we could expect from government next time?...  Of course the timeline is uncertain, perhaps we just suffer austerity/inflation until end of decade, and only when the can eventually runs out of road, might we get monetary collapse and full on authoritarianism. 

[wherebee]

48 minutes ago, WICAO said:

Are those oilies, fags and miners your total wealth or just a subset of your investments?

Full disclosure: My 2.1% divi yield is my total wealth including Super/Pension but excluding cash and cash like holdings which will be spent on the home build.

about 70% of my active investments.  My super in Australia is shit, I'm setting up a SMSF this year; accountant advising on best timing for tax (as I want to move c400k of investments into it, three supers, 200k investments, etc).  I then have another 300kish overseas in shit small pensions which I will move across slowly as I can get them out; the different tax rules in different countries kill me if I withdraw at the wrong time..  If you took all my 'investments and pensions' I'm probably like you on 2%.

edit: I'm also 4k down on argo blockchain.  That's my sole loss in terms of stocks.  I'm beginning to hate it.

Same as you, I'm forced to hold a bucket in cash right now as we pay for home improvements, insulation, fencing repairs, rewiring, etc etc, ahead of inflation.

[WICAO]

20 minutes ago, wherebee said:

about 70% of my active investments.  My super in Australia is shit, I'm setting up a SMSF this year; accountant advising on best timing for tax (as I want to move c400k of investments into it, three supers, 200k investments, etc).  I then have another 300kish overseas in shit small pensions which I will move across slowly as I can get them out; the different tax rules in different countries kill me if I withdraw at the wrong time..  If you took all my 'investments and pensions' I'm probably like you on 2%.

edit: I'm also 4k down on argo blockchain.  That's my sole loss in terms of stocks.  I'm beginning to hate it.

Same as you, I'm forced to hold a bucket in cash right now as we pay for home improvements, insulation, fencing repairs, rewiring, etc etc, ahead of inflation.

Thanks for sharing.

I also now have the overseas pension problem including managing tax in multiple countries - specifically UK SIPP's.  My understanding is I can't do anything with them until age 55.  My current thinking is I'm then going to get the 25% out sharpish and already have a plan to minimise Aus tax on that which generally is retire fully before 50 and then use concessional contribution carry forward rules to get the growth since I arrived in Aus into Super.  As for the remainder I'm thinking to just put it into drawdown at a starting rate of about 7% (my long term return on my portfolio is now 6.6%).  That should mean I don't get into LTA problems in the UK at age 75 while paying the least Aus tax I can by making concessional contributions into Super from it.

One of my missions in life is to always legally pay the least tax I can.

May not be the best way but it's what I have so far.  I have a few more years to figure it out...

[Lightscribe]

3 hours ago, JMD said:

Lightscribe I would until recently have agreed with you, that politicians would rather look good than actually do* good (*because after all doing good involves making unpopular decisions).                                                                               ...But then 2020 came along and the last two years have plainly shown that a government can inflict all kinds of dire harm on an economy, along with suspending by mere decree, laws, rights and social conventions - and that all this can be done under the guise of 'saving the NHS'!!                                                           I personally (tragically) don't think I have oversimplified what happened, but please tell me if I am being crass. However my point being that given the 'right' conditions (social conditioning?) - maybe next time it will be financial crisis, or perhaps even reds/novichock under every bed/door handle - but surely given the public compliance shown last time, all bets must now be off as to what brazen activity we could expect from government next time?...  Of course the timeline is uncertain, perhaps we just suffer austerity/inflation until end of decade, and only when the can eventually runs out of road, might we get monetary collapse and full on authoritarianism. 

Well yes, many on here know my thoughts on the issue as I’ve posted them over the years. It is an unpopular one however because it involves monetary collapse, digital IDs, social credit scores, crypto and CBDCs, so it derails the thread.

My view is that it capitalism will be wound down by the end of the decade. Therefore the global economy will be dismantled over that period into one of UBI and socialism (on paper). 

By raising interest rates and continued QE, uncontrolled hyperinflation can be avoided and at the same time the masses will continue to default on debt (due to cost of living) which will enable asset forfeiture (removal of capitalism).

This is also a reason why I think the government will continue to play to the benefit masses, because as more and more businesses close (through costs/inflation/debt/revenue - stagflation), and going through a global depression (bigger than 1920s) the majority of the country will be dependent on the government for income anyway - a precursor for UBI (so they will actually want this to happen as a longer term solution)

I don’t think the restrictions/power that have been put in place will be relinquished anytime soon and I think it’s only the beginning. So not rainbows and unicorns by any stretch and I don’t pretend it to be, but that’s my view and the timeline I see.

Until then it’s just the continued polices to extract capital from those either working or with pensions and assets to placate the benefit masses.

https://www.examinerlive.co.uk/news/uk-world-news/fears-free-nhs-prescriptions-to-22646561.amp

 

[MrXxxx]

17 hours ago, Harley said:

Had a recent heating oil delivery now the Xmas price hike is over.  All covered by my O&G divs.  Oh the simplicity! 

And that my friends is a fine example of hedging! :-)

[MrXxxx]

15 hours ago, janch said:

I'm in profit (yay) with the Scottish share (viz Centrica) and just wanted to share my euphoria

It was the first share I bought in Jan 2019 after taking the plunge to start my investing journey.  Then came March 2020 and the downward spiral.  I hung on until finally giving up and selling at a loss in April 2021.  But I rebought and invested even more when the gas price started to rise in November 2021 (plus I now feel a bit more confident with what I'm doing).

Today I've top-sliced enough to cover my previous losses so now it's profit all the way(until the BK perhaps)

Maybe it can now be taken out of the cupboard and given back it's proper name.

:-)))...well I have just got to wait for GOG to do the same and we will be in the same club...think I will be waiting for a while given current circumstances!

[MrXxxx]

21 hours ago, Boon said:

This is a good thread:

https://www.mumsnet.com/Talk/property/4443826-Just-gas-alone-has-cost-us-170-last-month

I reckon there must be quite a few financially illterate people out there, who think because their direct debit to their power company is £60 a month, therefore they must be using £60 of power.

I expect that within the next couple of months this will be like the cladding stuff, a daily story in the newspaper about how people have been forced to go cold. For extra effect using a young woman and throwing in mental health problems.

...and I am sure it will all be somebody else fault, and they will be asking for the tax payer to bail them out/subsidize them!

[M S E Refugee]

https://www.miningweekly.com/article/energy-starved-france-mulls-burning-more-coal-to-keep-lights-on-2022-01-05

I will keep buying a few shares of Thungela everyday in my Freetrade account.

Countries keep saying they won't use Coal but end up burning more because of all those stupid Windmills only work when its windy.

[MrXxxx]

20 hours ago, DurhamBorn said:

Im gutted that mine is over £100 for the first time £112 for December.Gas is only £37,its electric mainly due to all the subs on it.Iv got a long fix.I got my dad a 3 year fix with EDF in August as well.These huge bills seem to be detached houses.

Basically getting a long-term fix on energy prices is quite easy you just need do what somebody else did on here, overestimate your meter reading and so overpay whilst prices are lower [and you think they are going higher in the next 6 months]...assuming that 1. you are not planning on moving in the near future, and 2. you remember to keep on increasing the figure gradually as if between two bills you have only used £10 of energy they would get suspicious.

[MrXxxx]

20 hours ago, Yellow_Reduced_Sticker said:

FFS ...NOT again!!!

 

Their auditing seems to be like their trains...always late and then pretty grubby!

[MrXxxx]

20 hours ago, WICAO said:

Early on in my journey I decided BTL just wasn't for me for a number of reasons including ethics.

In contrast around the same time he was thinking about broken toilet seats I was figuring out that my investments were just about to give me a Christmas present of £4,500 worth of lovely dividends for which I had to do precisely nothing.  I sealed the deal with a lovely cup of coffee...

That said I suspect my journey to FIRE was probably a little more difficult than his as I didn't play the get rich quick with leverage via debt game so I can't be smug.  Instead I figured out how to earn more, how to spend less, how to invest wisely in a way that worked for me and then put my head down for 9 years.  Difficult but incredibly rewarding particularly now that I'm on the other side.

..and although some would be scathing/jealous of you, you actually did it 'on your own back' rather than that of others directly or via government 'support'/initiatives [read 'giveaways']....respect!

[MrXxxx]

19 hours ago, reformed nice guy said:

I floated a new term for this called a Rashford spiral, a dosbods exclusive:

1. inflation pushes up costs of food or fuel (a consumable that cant be ignored like rent can)
2. papers have stories of single mothers with sad faces complaining
3. Rashford and co start a campaign to stop this evil poverty, stories about the England team not scoring goals in the future because single mums are now the feedstock of brown professional ball kickers
4. Tories feel pressure and eventually cave see a vote winner and so 'jump on the Bandwagon'
5. benefits increased
6. GOTO step 1

FTFY

[spygirl]

8 hours ago, WICAO said:

We also run only 1 car and keep accurate spend records including realistic depreciation.  Last year we spent £3,640 ($6,801) so your about £4,000 sounds right on the money for a non-flashy car.

And this is me applying a strict 5yo car policy - Honda normally.

Its not uncommon to come across people with no savings (pension, or otherwise) who are spending ~500/m on a PCP 4x4 + running costs of ~200/m

 

 

[MrXxxx]

6 hours ago, WICAO said:

One of my missions in life is to always legally pay the least tax I can.

Its interesting I have been of the same mindset [almost religiously], and was all for taking this approach at all costs with pension planning. Recently though I reevaluated my situation [via some Excel spreadsheets], and found that the 'giving the government as little tax as possible' was not the optimal solution, and in I could end up with a higher monthly sum post-tax by actually paying some tax; this 'hurts' as I despise the government and their wastage but it seems silly to 'cut my nose off to spite my face'.

[belfastchild]

51 minutes ago, MrXxxx said:

...and I am sure it will all be somebody else fault, and they will be asking for the tax payer to bail them out/subsidize them!

Happening from tomorrow here in NI. Applications open for 2m pot of 'govt' money for 20k households to apply for (only if you are on benefits).

[CannonFodder]

2 minutes ago, belfastchild said:

Happening from tomorrow here in NI. Applications open for 2m pot of 'govt' money for 20k households to apply for (only if you are on benefits).

That sounds a lot of money till its not. 2m split 20k ways is £100. 20k households seem low too for amount of people at risk of impact.

If bills are going up 600 to 1000 quid, it doesnt remove the pressure.

Plus the cost of admin for 20k applications and running the scheme. Especially if that comes out of the 2m first before the split.

I DON.T know anything about this but on face value it seems a massive waste of resources for very little impact. MORE of a political headline grabber as everyone thinks the 2m will pay their bills than anything else.

[belfastchild]

19 minutes ago, CannonFodder said:

That sounds a lot of money till its not. 2m split 20k ways is £100. 20k households seem low too for amount of people at risk of impact.

If bills are going up 600 to 1000 quid, it doesnt remove the pressure.

Plus the cost of admin for 20k applications and running the scheme. Especially if that comes out of the 2m first before the split.

I DON.T know anything about this but on face value it seems a massive waste of resources for very little impact. MORE of a political headline grabber as everyone thinks the 2m will pay their bills than anything else.

Exactly. Its being administered by a Charity so probably less than 100 quid each and there will probably be a lot that goes unclaimed and it has a weird closing date of the end of March!
Of course they did ask for 50 odd million IIRC but that hasnt been approved yet.
 

[kibuc]

12 hours ago, M S E Refugee said:

My Wife and I have been looking at property over there, houses don't appear to selling very quickly.

Hopefully a few more rate rises will yield some bargains.

Are you planning to move or buying as an investment? Whereabout, if I may ask?

 

Ukrainians are still pouring in and Belarusians are starting to join them which should help keep upwards pressure on the market. As far as mortgage costs are concerned, a significant portion of them (20% at the moment, used to be more than 1/3rd a couple years ago) is denominated in CHF so they are not affected directly by this raise, and there's a lot of 5-year fixes as well. They might be for a rude awakening in a few short years but not just yet.

[DurhamBorn]

10 hours ago, WICAO said:

We also run only 1 car and keep accurate spend records including realistic depreciation.  Last year we spent £3,640 ($6,801) so your about £4,000 sounds right on the money for a non-flashy car.

Is that including fuel,tax and insurance?.Over the last 20 years iv averaged £16 a week for a car,buying to value at sale (£250 scrap usually) and all repairs.£800 a year.Insurance average £180 a year,tax £130,fuel roughly £900.£2k a year all in.

That will be much much harder going forward though as the big repairs you need to do on older cars,clutch changes etc are getting very expensive.When my PUG dies im going to get a 3 seater van.Much easier to work on and fix yourself and much less to go wrong on them.

[M S E Refugee]

13 minutes ago, kibuc said:

Are you planning to move or buying as an investment? Whereabout, if I may ask?

 

Ukrainians are still pouring in and Belarusians are starting to join them which should help keep upwards pressure on the market. As far as mortgage costs are concerned, a significant portion of them (20% at the moment, used to be more than 1/3rd a couple years ago) is denominated in CHF so they are not affected directly by this raise, and there's a lot of 5-year fixes as well. They might be for a rude awakening in a few short years but not just yet.

We are looking around Wejherowo and Kartuzy areas.

We have both had enough of the UK and plan to move there permanently,I'm currently waiting for my Polish Citizenship to come through.