Anti social media

Dominic Thomas
April 2024 • 4 min read

Anti-social media

Confession, I am a hypocrite. As with most things, nuance is often lost in the polarity of opinion. My ability to pontificate is at least as good as yours, so I start with an apology and an admission … that I am far from perfect.

Social media is something I enjoy and loathe. In reality, it is designed for precisely this experience, to push your buttons of joy and despair. I used to be a regular Twitter user but as it became increasingly incendiary, I gave up the habit. Some things lost, but mainly time gained. I kept my Facebook and Instagram accounts open, which I largely use to share images that are born from a love of photography, you can see these if you wish.

Judging by most people’s terrible profile pictures, it would seem that many people use their phone’s camera much like they used their film camera, apparently unaware of the tools to edit or help. In short, the art of re-presentation. We are all aware of this idealisation towards perfection, it’s nothing new and whilst many think of glossy magazines and advertising, perhaps the foundations lie in early religious art, the Renaissance and the hundreds of portraits of the ruling classes.

In many respects, social media is nothing new. Ancient frescos are the Facebook of their day. More time was spent in their crafting, so arguably more deliberate with their nuanced messaging.

Scroll forward to the present day and we have opinion offered as fact by people who have little (if any) training or qualification in their chosen subject. ‘Finfluencers’ are the group that garner my attention. Those who talk about money whilst evidently unqualified to do so. We can of course pass this off with a “so what, I’m not mug enough” which may be true; maybe. To my mind it’s the speed of the message and lack of processing that is done; accepting as true without challenge. Life is too short, but I wonder what the long-term impact is on those less able to distinguish … after all, the impact is already a problem in politics.

By way of example, recently I saw a video post about building a deposit for a house and how saving £40 a day would enable you to buy a house in the north-east of England after 12 months. This is aimed at those aged under 35. £40 a day saved over a year is £14,600. If we assume this is for a 10% deposit for a house. That would imply a 90% mortgage of £131,400 and an income of £37,542 to borrow that amount.

Someone earning £37,542 (which is above the national full time median wage £35,464*) should have a personal allowance of £12,570 but would pay income tax, national insurance and pension payments. At best, opting out of the workplace pension and having no student loan, the net (after tax and NI) take home monthly income would be £2,504 (£2,323 if you have a student loan and 5% auto-enrolment pension). If you save £40 a day that’s £1,216 a month, leaving £1,288 (or £1,107) to live on each month.

Of course to earn £37,542 you need to work (and get to work) which means to retain your employed position, be healthy, rested and clothed and for any sense of a balanced life you probably have a holiday, buy presents for loved ones and perhaps attend a celebratory event, maybe the wedding of a friend. I am sure that it is possible to do all this on £297 a week, but it isn’t easy and if you happen to live in the South East it’s probably impossible unless you are living rent-free somewhere.

It’s also a challenge to find a home, flat or garage to buy for £131,400 but more possible in the North East. I ran a search on property for sale in Surrey, excluding buying schemes (which are a false economy at best, scam at worst, don’t get me started on leasehold v freehold) these started with listing a £175,000 which is basically a static home (shed). The cheapest listed terraced house £400,000, bungalow £315,000 and semi-detached £395,000. As ever, location is all and context is everything.

Even if you can buy for say £350,000 you would need a £35,000 deposit and a mortgage of £315,000 requiring an income of £90,000. Heck let’s try £200,000, you would still need a mortgage of £180,000 and income of £51,428. The deposit is only part of the problem, the other is your income to justify (qualify for) the loan. A smaller deposit simply means a larger mortgage, which needs a higher income to justify it. Of course this is much easier for a couple who both earn than someone who’s single. The entire housing market then relies on properties rising in value (as well as increased incomes) to ‘move up the ladder’, making it even harder for the next tranche of first time buyers.

Money provides choices, the lack of it limits options considerably. Yes it is possible to save £40 a day and build a deposit of £14,600 over 12 months or £29,200 over 24. Short-term pain can be bearable, but is it realistic when we all know that food and energy inflation are much higher than stated by Government figures. This requires the sort of discipline that few of us actually possess (even fewer in Government!). Spending money is easy, saving it is really quite hard.

*Median UK wage April 2023 data, based on earned income ages 16-State Pension Age – reference HERE

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Anti social mediaJemima Thomas2024-04-13T15:18:01+01:00

What can investors learn from sport?

Solomons-financial-advisor-wimbledon-blogger

What can investors learn from sport?

I apologise to those of you that do not like sport, the purpose of this post is not to bleat on like some bloke at the pub who is attempting to name his best eleven… again… but to make an observation about the way people behave and in particular what investors can learn from sport.

I wonder if you watched the final of the T20 World Cup at the weekend. It was a thrilling match – (spoiler alter) England were eventually beaten by the West Indies. The “English” team (nationality in sport is debatable) started badly, losing Roy, Hales and Morgan very quickly. At 23 for 3 things looked pretty bad.

These days I delude myself that I can multi-task, so flicked between TV stations, watching football, Grand Prix, the cricket and keeping an eye on the social media (yes it would appear that I’m rather sad and lacking an attention span). However, getting to my point – social media exposes an array of reactions (commentators term them emotions) that people reveal as they experience an event.

Too early to call

Many had written off England with the fall of the third wicket, several used terms like “game over” before the team had even completed their attempt to score as many runs as possible within 20 overs. The game had not even reached its half-way point, but thousands had already conceded victory.

Its not over until its over

The English fortune turned around equally as quickly once the West Indies began to bat, crumbling to 11 for 3 and struggling for runs. Suddenly there was “hope”. Indeed by the end of the 19^th over (of 20) another 19 runs were needed, which seemed out of reach for Carlos Brathwaite, the facing West Indies batsman, who had 10 runs to his name. England were in the proverbial “driving seat” and now expected to win. Brathwaite had other ideas and promptly smashed each of the next deliveries for six runs, resulting in a dramatic victory and tournament win. Of course sad and desperate for Ben Stokes, the English bowler.

Investor behaviour is invariably no different from those on social media at the weekend. Reacting too quickly, feeling depressed, exasperated, then gaining some hope , followed by over confidence, followed by…. Repeat.

Your goals, not someone else’s

Investing is not a hobby, it is not a sport (unless you really are very rich). It is no way to learn about yourself and no place for reactive emotions. We approach the end of the 2015/16 tax year tomorrow. The deadline invariably pushes prices up. Whilst I am obviously (I hope) of the view that allowances ought to be used when appropriate, any investing should only be done if it helps you to reach your goals, not those set by HMRC.

Part of my job is to keep clients disciplined, avoiding mistakes and sticking to their own plans (not mine). This has been termed “adviser alpha” and adds an unquantifiable amount of value, though many attempt to quantify this.

The media in all its forms constantly stirs feelings of anxiety or missing out on opportunity. The vast majority of commentary about investing is about as relevant to your financial plan as any sporting event – completely irrelevant! Trying to perfectly time the market (the opportune moment to buy and sell) is frankly impossible to achieve with consistency. In practice few do so and fewer still can demonstrate this as skill rather than luck.

Have a Successful investing experience

Unlike sport, investing does not have to be about “winner takes all”. Everyone can win if they are investing in a way that fulfils their financial planning goals. They key is remaining calm, disciplined and clear about what you are really trying to achieve.

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

What can investors learn from sport?Dominic2023-12-01T12:19:18+00:00

Bonfire of the Vanities and Awards

Perhaps you watched the BAFTAs at the weekend? It was certainly hard to miss Monday morning headlines, which largely featured Leonardo DiCaprio clutching his award for best lead male actor for his role as Hugh Glass in The Revenant.

The double-edge sword of social media is that anyone gets to have a say, which frankly is often unwise. If you follow twitter or any social media, you will probably be aware of the proverbial storm in a teacup following remarks the host Stephen Fry made about Jenny Beavan’s appearance. If you didn’t see it, well, she is a brilliant costume designer and was perhaps the only one that didn’t appear to dress up for the awards, which is generally regarded as a black tie/cocktail dress event. Though some men wear a regular tie rather than a bow tie. Ironic gesture, couldn’t be bothered, making a point, or didn’t read the memo. I have no idea, but as someone that was in London at the same time, one might consider another view that she was appropriately dressed for the weather on 14th February 2016. The truth is I have no idea.

Fury Road

Anyhow, she won a BAFTA for costume design for the film “Mad Max, Fury Road”. Mr Fry made a comment about her attire, which was met with gasps from the audience and a tidal wave of comment on social media. Mr Fry then chose to tackle this head on, saying it was a joke, with a close friend and people should.. well, find other uses for their time…. In fact had this all happened before the film was released, one could have been forgiven for thinking it was a PR stunt (Mad Max, Fury Road).

Et tu Brute?

So why bring this to your attention, what has it to do with financial planning? Nothing and everything. There isn’t a connection, but there is an observable behaviour that took place – that of the herd mentality. It seems that there are a great many people who are very quick to pass judgment without possession of all the facts and very quick to pronounce others as something unpalatable. There was the equivalent of a stampede to get one’s knife in… et tu Brute? The exchange between sides was fairly unsavoury, albeit without a single physical blow.

Investor Behaviour – the herd mentality

This happens with investors too. They panic in a herd and run for the lifeboats, just because someone seems to have yelled “lifeboats?” (or crash). There appears to be little thought of whether the facts are accurate, the context or whether to the lifeboat option is actually the safer approach. If you are RBS and your portfolio is full of rubbish, you might understandably say “sell everything” but if you don’t it makes little sense.

Investor panic is understandable in a world where the media is reporting doom and gloom, red exchange boards and falling stock markets. But remember that the media is there for a variety of reasons, not simply to provide “the truth”. It will never be held accountable for predicting the future other than in a joke about previous blunders.

As I hope you know by now, most investors underperform the market by attempting to time the market – trying to second guess when is the right time to buy and sell. They underperform by around 3%-6% a year. Yet all the time, there are those screaming – do something, sell, buy… whatever the herd is doing. If you don’t believe me check some easily found research at Dalbar.

The Subjectivity of Art

The BAFTAs and any other award ceremony is frankly nice, but just silly. They are highly subjective gongs for a very small number of people, selected by a lightly larger group of people. Yet even within the hallowed walls of such organisations, one wonders if everyone that voted actually saw the films they voted on. Frankly I suspect not. It is the only way I can rationalise some of the winners…. But then its subjective and nobody gets hurt… right?

Dominic Thomas
Solomons IFA

Bonfire of the Vanities and AwardsDominic2023-12-01T12:19:23+00:00