Downsizing

Solomons-financial-advisor-wimbledon-blogger

Downsizing

Imagine a world where your wealth is sufficient for the rest of your life to fully support your lifestyle. Throw in the benefit of massive improvements to the environment and waste reduction and you have the plot summary of Alexander Payne’s new movie “Downsizing”.

This is a movie that is tipped for the OSCARS, given that it will be released in December in the US and January 2018 over here in the UK. Whilst having potential for perhaps both comedy and a sense of hope, this is a film that gets loses itself in a story that is both too big and too small. It’s a pity as the premise is pretty good and the trailer is typically engaging

As a financial planner, my job is to help clients figure out how much is enough to support their lifestyle (as they determine it) for the remainder of their lives. Most people do not appear to have a financial plan, very few have a clear idea about how much would be enough.

Side Effects

Downsizing begins with the scientific discovery that means it is possible to shrink cells without harm or side effect to about 3% of their original size. The one problem being that it is an irreversible process and not available to anyone that has a body with additions (implants, prosthetics, pace-maker etc) as these will not shrink.

Living the Dream

Paul Safranek (Matt Damon) is your average American, he was once on the path to a career in medicine, but his dreams were thwarted by an ill mother who needed his care. Now a somewhat frustrated physiotherapist, he is living in his late mother’s home, with wife Audrey (Kristen Wiig) and struggling to get by. At the perfectly imperfect setting of a school reunion, he is persuaded to consider Downsizing, the solution to his financial struggles.

Paul and Audrey head off to Leisure Land and receive a masterful sales pitch that extols merely the benefits of Downsizing, ignoring all of the drawbacks. The Safranek’s have assets of $52,000 but in the Downsized world this translates to $12.5million, to live on for life! The numbers do all the talking. Packing a delightful red keepsake box with their family treasures (wedding rings etc) the same box is delivered to the house in Leisure Land, but of course gold wedding rings now appear the size of buoyancy rings. I have to admit, that if I could arrange such a return for our clients I’d be winning every award under the sun. However, as with all things, there are no guarantees.

The Bigger Picture

The plan to save the world is to gradually miniaturise everyone over the course of 200 years. Despite a safe procedure (assuming removal of fillings etc) there are very real side effects in the larger world – economic, political and social. Its all very well that a mansion may now only require the space of a dining table, but property in the larger world still needs to be sold and therefore bought. Taxes need to be paid, production needs to continue and there is a debate about whether the Lilliputians should have a full-sized vote.

The film attempts a stab at all these issues as well as a rather fruitless assessment of a life of pleasure, the poverty divide, immigration and those that remain outside the system, where standards are never the same. Add a touch of impending environmental disaster and the naive, blancmange-like character of Paul Safranek who seems to lack either any sense of self-determination or self-awareness, chasing every ball thrown by anyone willing to bother. Ironically, all of the issues are far too big for the film which becomes as microscopic as its characters, lost in a world of complexity. It’s a pity. Much like Safranek, it appears nobody asked what it was that Alexander Payne wanted from this. Instead it’s a journey of happenstance, rather than any course being plotted. I suppose that this is the reality for most people, who live from day to day, month to month, year to year without any deeper sense of direction, like Safranek, frustrated through not identifying purpose. Nobody asks the right questions and so the thinking is as shrunken as the inhabitants of Leisure Land.

Here’s the trailer, the film is released in the UK in January (following its showing at the London Film Festival this month). Oh yes, the trailer is the best bit.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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DownsizingDominic2023-12-01T12:18:21+00:00

Where does the time go?

Where does all the time go?

It’s the holiday season. All being well in a couple of days I will be poolside, reflecting on the year so far and what I still need to do, (being a couple of things that readily come to mind) and no doubt I will wonder, yet again “where does all the time go?”

Holidays are a little like landmarks in time. My daughters often use holidays as a reminder for helping us recall when other things happened, for example, a recent question about our aging cat (who went to move in with the neighbours when the dog arrived) was answered by recalling where we were and what else was going on when we picked him up… all referenced by our family holiday of that year.

So this week I will be reflecting on the a small milestone. It will be 16 years since I formally received permission from the regulator to open the doors at Solomons. Sixteen years. It seems that I have endured rather longer than the regulator, which is in its third revision or Doctor Who like regeneration in the same period.

Taking Stock

I hope that this doesn’t sound twee, but I really enjoy helping my clients. I love real stories and helping clients plot new ones – or rather the life that they want in the future. Of course I don’t make it happen – they (you) do that. However I have the opportunity to prompt thought, vision and help clarify it, occasionally acting as a type of permission-giver due to being able to demonstrate what would happen if…

That’s what I love about financial planning. Like most people, I find financial products rather dull and invariably remain sceptical and suspicious of the wider workings of the financial services industry, which resulted in the formation of the company and the business model of transparent charges and a “level playing-field” approach.

It is with some degree of surprise that I read my trade press suggesting a further 22% of advisers will close within the next year because more changes to commission are coming or feared. The change being that it will be turned off…. yet this is what we did 16 years ago.

Woodstock …. or out in the Wilderness

At the weekend I attended “Wilderness” a festival held in Oxfordshire. It was my first visit (its fifth year) and having been to quite a number of different festivals over the years, it was interesting to experience the evidently more affluent middle-class approach. I was struck by the irony of it being located near Woodstock and connotations with the east-coast American hippy counter-culture festival started in 1969 of the same name. What was once counter-cultural has become both “fashionable” and highly commoditized over the last 46 years. Sadly I missed the V&A museum’s take on this observation, which is true of many, if not all festivals, not simply Wilderness, who have by far the best on-site food (I admit to indulging in a superb banquet fit for a King at the Hix on-site restaurant and the odd glass of champagne at the Lauren-Perrier orangery) all of which you won’t find at your typical summer festival. Nobody dared mention the phrase champagne socialism too loudly.

Anyway, one of the talks/seminars I attended was called “State of the Nation” hosted by Jolyon Rubinstein which raised questions about business, stock markets and economics. Despite festival attire, many of those attending are probably the sort of people (of all ages) that seek out financial advice, yet few seemed to really appreciate how much financial services eeks out of their wealth in charges…. something that I hope is evidently clear to our clients and why I set out 16 years ago to be transparent and use low-cost investing techniques. I guess it is good that finally others are waking up to better understanding of economics, wealth and planning. As many festival revellers seemed to come from the London area, perhaps rethinking or dare I say even re-imagining financial planning resides within striking distance of Wimbledon…. and we’ve been walking the talk – living it for some time.

What Wilderness has done is to break into the imagination of those more right of centre, higher earners, who are also desperately aware of the unfairness of the “system” and have found some comfort in various, albeit expensive forms of alternative…. a sure sign for hope.

Do share this with your friends..

Dominic Thomas
Solomons IFA

Where does the time go?Dominic2023-12-01T12:20:02+00:00

Blue pill or red? time to decide about The Four Horsemen..

The Four Horsemen

Having recently seen The Renegade Economist film “Four Horsemen” I’m reminded of the moment in the film “The Matrix” where the character Morpheus says “This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes”. So at the risk of sounding like Morpheus, I’m giving you an opt out, right now. However if you’d like to be exposed to some alternative explanations of how the world works today, why you cannot actually buy the house you now live in and perhaps why you are feeling somewhat fed up with the amount of tax you pay, then perhaps I could encourage you to order or download this film.

Classical Capitalism v Neo Capitalism (not Marxism)

Contrary to some of the press that the film has received (it is a documentary) it is not an irrelevant rant by a bunch of Marxists. Indeed, it seems that anyone with a difference of opinion is currently branded a Marxist at the moment. This film is not anti-capitalism, it is about the form of capitalism that we currently live with. There can be few on planet earth that at some point are not prone to question why there are such huge paradoxes, vast amounts of wasted food and yet there are millions that go to bed hungry and starving. What has this to do with financial planning in Wimbledon? Well the film is engaging and inspirational. Financial planning is about creating the life you want, whilst enjoying and really living it today, this is an optimistic message and approach to life.

Eloi and Morlocks, sleepwalking into debt

I don’t know how much of what is said is true or accurate, but it makes interesting points. I am not a conspiracy theorist, I am a capitalist, yet I do believe that unbridled capitalism is gradually enslaving us all to debt, be it nationally, personally, socially or environmentally… dare I even say… spiritually? You will know that I place a great deal of emphasis in clearing personal debt, including mortgages. This is a slavery that we seem to be walking into in a trance-like, perhaps numb… state… rather like the scene from the 1960 film “The Time Machine” when the Eloi are summoned and enter the domain of the Morlocks. We don’t have the advantage of a time machine, though we do have the advantage of the lessons from history and our own minds. As ever, I welcome the conversation and debate.

So here’s the trailer… its up to you… blue pill or red? over to you..

Dominic Thomas
Solomons IFA

Blue pill or red? time to decide about The Four Horsemen..Dominic2025-01-21T15:56:43+00:00

What Is Evidence Based Investing?

What is evidence based investing? in short it is the use of data and mathematical formula to prove a rationale for investing. The Efficient Market Hypothesis says that market prices are fair: they fully reflect all available information. This does not mean that prices are perfect; some prices may be too high and some too low, but there is no reliable way to tell. In an efficient market, investors cannot expect to earn above-average profits without assuming above-average risks. Market efficiency does not suggest that investors can’t “win.” Over any period of time, some investors will beat the market, but the number of investors who do so will be no greater than expected by chance.

Successful investing, like many things, begins in the mind…

It is important that an investor has an investment philosophy, for this guides and shapes decisions. Even if the theory is one of random chance, this would require a consistent approach to implement it. The problem with investing is that it becomes an emotional experience – and it shouldn’t. When you see your portfolio rise or fall in value, you have a gut reaction, often this is not good for you. There is a temptation to believe that beating the market is due to additional skill or knowledge, a belief forcefully proposed by active fund managers, who make their living by beating the market – or trying to. The sad reality is that few of them do (really few) and when taking a long-term perspective it is very difficult indeed to pick those Managers that can consistently outperform. Most Fund Managers don’t hang around for long, many funds get closed and when you consider the charges they apply, few (and I really mean a few) actually outperform.

Would you prefer evidence or guesswork when planning for your future?

My role is to help investors achieve the market returns for the various assets into which they invest. The main point being that when investing your money, I do not see any advantage in putting it at additional risk. This is essentially what most investment managers have to do in order to beat the market. Economic theory has backed up and evidenced this approach over the long-term and you may have seen me recently tweet at Eugene Fama was awarded a Nobel prize for economics. His research and theory together with that of others has helped inform the research used and investment philosophy that we adopt for our clients. Here is a short video about his pioneering work.

Dominic Thomas: Solomons IFA

What Is Evidence Based Investing?Dominic2023-12-01T12:38:31+00:00

How Reputations Are Ruined Over An Easy “A”

2010: Easy A – Will Gluck

There’s the good news and the bad news… which would you like first? let’s start with the Eurozone bailout fund, which had its Standard and Poor’s credit rating downgraded last night from AAA. This makes the bail out fund less attractive (solid) and therefore more money is needed to put things right. The IMF might not have enough money either… so could they have some more? Mr Osbourne is being asked to contribute another wad of cash to prop up the financial house of cards. He is keen to ensure that other nations (in particular China) also put more into the tin.

The Italian PM Mario Monti is sounding more than a little anxious as he is suggesting that Germany needs to still do rather more to support the system, which in translation means provide more cash so that new borrowing arrangements are not so punitive as to make them unworkable for Italy. This is not looking much good is it? Add this to the fact that on Friday night France had its AAA status downgraded and we now have the scenario of politicians bleating that the credit rating agencies are wrong and making the situation worse, a situation that they themselves had effectively allowed to occur. The bleating is getting louder and it is my opinion that the blaming will begin rather shortly.

The financial crisis is now akin to the each credit card being maxed out and no one is left able to pay the monthly payments. That is of course unless new money is “created” which is the preferred choice of most Governments except Germany, who are all too aware of the calamity that inflation can bring. Perhaps news of China’s rate of inflation decreasing together with Britain’s rate reducing considerably to 4.2% and set to fall to around 3% by March if Bank of England Monetary Policy Committee Member, Spencer Dale is right, will provide some comfort that inflation is not out of control. That said the Bank of England has a target rate of 2% which it still fails to achieve. Perhaps the signs of falling inflation may move the Germans to relax their views about printing money, though as one of the only growing economies in the world, why they should change policy would surely be questionable. That is until you consider that in this global economy Germany needs to sell manufactured goods to make their own numbers work. Angela Merkel will no doubt be reflecting on how she can pull off helping Eurozone neighbours without ruining her own reputation.

So what does this mean for investors? well frankly more caution. It is important that clients keep in mind when cash (capital) is required from a portfolio – planning withdrawals and ensuring that there is enough in reserve. I also advise checking that you remain “comfortable” with the level of risk within your portfolio and that you discuss with me any changes in your capacity for loss.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

How Reputations Are Ruined Over An Easy “A”Dominic2025-01-21T15:34:16+00:00