October 2024 Update
In the thing called ’news’, the UK budget happened. Some people seemed shocked because politicians lied. It seems to me that stuck between a rock and a hard place, they made the best of a bad job. Talking of lying, after numerous interrogations they’ve finally, just about come clean now on the effects of the budget on ‘working people’ admitting that it will indeed affect them. However, it’s worth just a moment to point out what a terrible idea using this catchphrase was. It was a fantastical idea that had no root in reality and treated the population as stupid. Ironically it made them look less than smart as they had to answer endless questions trying to define ‘working person’ using all kinds of unrealistic definitions. Somewhat optimistically lets hope they learn a lesson from this debacle.
The part of the budget that caught my attention was the twiddling of fiscal rules to enable more borrowing by changing the rules on what are considered assets and liabilities. This seems like a high risk strategy to a moderately risk adverse personal finance geek. UK national debt as a percentage of GDP is marching on towards 100%, growth has stalled and the population is ageing. Tricky situation. I’m not in a position to make a judgment on the outcome, so I’ll keep my house in order and watch on. The chart below shows the yield on UK 10 year gilts . . this was after Rachel Reeves had to earn her money by going on Bloomberg to carry out some ‘market calming’. My understanding is this is not good news for those expecting continued interest rate cuts.
Interesting Read
Sticking with the budget, a BBC article asked various people about their thoughts. I’ve summarised below in ascending wage order, but this highlights what a difficult job the UK is having adjusting to the financial condition the country is in. Monthly wages of people interviewed varied from £1200 to £7600 but every single person either liked an increase in spending or had ideas for how to spend more. Repeating myself from last month, but UK chancellor is a job I wouldn’t want. https://www.bbc.co.uk/news/articles/cwyv8y68e25o
| Monthly Earnings | Comments |
|---|---|
| £1200 (retired) | Wanted an increase to top rate of tax. Not happy about inheritance tax changes. |
| £1500 | Happy that apprentice wages are going up. |
| £1590 | Wants minimum wage to increase to £15/hour |
| £1800 | Happy with fuel tax freeze, but disappointed that NHS pay/benefits weren’t increased |
| £1920 | Not happy about inheritance tax change |
| £2750 (benefits!) | Wanted incentives for employers to make accommodations for people with health issues |
| £4088 + £1993 (estimated from joint £100000 salary) (a couple) |
“I actually don’t hate it”. Disappointed with no allocations for childcare. |
| £7600 | “50% happy”. Wanted a rise in minimum wage to incentivise nursery workers to stay in the profession. |
Net Worth Comments
Back in the world of my personal budget, all media noise has been ignored and things continue as normal. More money invested in the market no matter the situation and a chunky savings rate. In summary, a good month with the portfolio at an all-time high. My proxy for assessing equity performance (VWRL) has climbed higher over the last couple of months and has again broached all time highs before retreating slightly. At time of writing it’s at 105.96p. More funds were deployed into the market keeping the cash position under control. A reliable and reasonably cost effective method has now been established to get funds into the market so a regular drum beat of investment should now continue.
Adding to the positive equity markets, crypto has also had a run-up over the last week or three along with gold.
