It’s been almost two months since I last posted, so rather than leave it any longer, I wanted to say something. But I’ll keep it quick – my attention has been focused elsewhere, although I hope that to change again in the coming months.
First off, work has been busy. 80% in a good way, 20% in a frenetic way, as I’m about to move into a new position for someone who is retiring, while we’re also in the midst of going live with a project that I’ve been working on for two years (and it isn’t going quite as smoothly as I’d hoped). Nothing existential, just keeping me busy. And of course I still have my family, and two little kids can demand some attention!
The other big draw on my attention has been Ukraine. This isn’t a political, military, or international relations focused blog, so I won’t spend any time on my thoughts on the war. However, international relations and security studies are one of my long-term interests, as much as investing and personal finance, so I’ve been spending a lot of time thinking about Ukraine. Suffice to say, my thoughts go out to the people of Ukraine, some of my dollars/pounds have gone to the Red Cross to help them, and to the Ukrainians fighting, I wish them good hunting.
From an investing perspective, the last few months have been turbulent, but while things are more volatile than they have been for some time, nothing has changed my fundamental approach. Inflation is higher than I’ve really seen (I was a child the last time it was this high), but I’m very fortunate to be somewhat insulated – not driving much, 5 year fix on the mortgage, 2 year fix on the electricity and gas, groceries up a bit but not breaking the bank. The Government is messing around on the margins, but the Spring Statement isn’t even worth a post- tiny tweaks for those of us fortunate enough to be investing for the long term, not enough to make much difference for those less fortunate.
And the markets have been volatile but not that volatile, if you’re generally a total market investor. FTSE 100 almost flat for the year now, after the recent recovery. VT (Vanguard All-World/All-Cap) down 6%, just noise – still a little up from a year ago. Unless you’re in particularly growth-y stocks, or a Russian ETF, none of this is huge.
Bonds are a bit of a conundrum – BNDW (world bonds) down almost 6% for the year (excluding the piddling interest), looks almost like equities. UK gilts looks the same. I’m honestly not quite sure what to think of bonds right now. Rates are still very low, feeling like it’s an asymmetric risk profile (rates can’t fall that much more, but have plenty of room to rise), but I’m also not a proponent of 100% equities. In practice, that means almost all of my fixed income allocation remains in the TSP G fund, EE bonds, and cash (none of which has any risk to principal, although plenty of risk to loss of purchasing power through inflation), with only a small, slowly growing allocation to gilts in my UK pension. Searching out higher risk bonds for a higher yield feels like too much risk for the reward, so I don’t see much in the way of alternatives. Curious to hear how you are all managing your bonds/fixed income allocations these days.
Put that all together, and you get some very hard times for a lot of people, and a great deal of geopolitical uncertainty. But from an investing perspective, it’s the same lesson as usual: stay the course. Trying to respond to world events is a fools errand, and few of us have the foresight to anticipate them. Broad diversification at a low cost remains the best approach for almost all of us, with an eye on how to keep taxes to a minimum.
For me, January to April is the “active” season for investing. My Roth IRAs have been done since January (in Interactive Brokers for the first time). Interactive Brokers turned down my application to be a professional investor, so I’m keeping my ISAs with Hargreaves Lansdown for now – will fully contribute to those with the monthly savings option in early April, with a little cleanup to use up remaining cash after that. And my company pays bonuses in March. This year, I salary sacrificed the vast majority to my pension, rather than paying 62% to HMRC, so I’m waiting for that to show up in the next few days. There’ll be a rebalance in the midst of this, since none of those new investments goes into US equities and I want to keep the overall equities/fixed income allocation broadly stable.
But by the end of April, it’ll be all sorted, and, aside from monthly pension contributions and additional savings, the “busy” period of the year for investing will be done. US and UK taxes will be the next order of business – more to come on that.
Hope you’re all keeping well, and I promise not to keep it quite so long for the next post!