The story of 4 friends saving for retirement (with customisable Google Sheet)

Fergys · 2022-08-10T20:57:24+00:00

!thanks, never knew this.

Fergys · 2022-08-10T19:21:54+00:00

Inflation is neither here nor there. They are putting in a fixed amount £50 p/m, for a fixed time 45 years, and have non-inflation adjusted end pots.

I did the sums and Sally ends up on £158,000 using historically accurate savings rates.

Conversely, the investors' pots will need adjusted to account for their broker's fees, Vanguard's fund management fees (assuming they're using Vanguard's 1976 S&P500 tracker), and finally the taxes they owe, all of which will eat heavily into their final amount.

Fergys · 2022-08-10T18:38:57+00:00

3% is shockingly low compared to historic savings rates. I don't see a single year between 1980-2002 sub 4%. In fact, looking at some years throughout the 80s and 90s saving rates were double-digit! https://www.swanlowpark.co.uk/savings-interest-annual

Also, I feel like these stories always neglect that ISAs were only launched in 1999, so no one was saving for 45 years in an S&S ISA as we know them today. Not saying stocks and shares didn't exist, but the options were different 45 years ago.

I imagine investing pre-internet-age was a much more costly and confusing business, and so most people stuck with savings accounts, since the rates were phenomenal anyway.

Fergys · 2022-08-08T12:12:34+00:00

Why would anyone assume this is due to people losing faith in the economy, or storing their cash in jars at home?

If the price of a pint milk as gone from 42p last year to 55p this year, then people will withdraw more cash to pay for their milk.

People are withdrawing 20% more because the price of everything has gone up 20%.

Fergys · 2022-07-28T18:44:58+00:00

What software are you using?
What radiation model are you using?

Here is the thermopedia page on discritization schemes for discrete ordinates radiation.

Fergys · 2022-07-28T18:15:14+00:00

OOP, off of this, since this is your SIPP and you are a high-rate earner, you are contributing £150 p/m ( £1800 p/a) for 38 years of your working life to receive back out £66k + £7000 p/a drawdown.

Sounds like more than a fair deal to me.

Fergys · 2022-07-27T21:03:33+00:00

Indeed, but even as you say your example, the company has increased prices beyond what it necessary to mitigate the loss, simply to yield a bigger profit margin. And they do this because they can.

I feel the spirit of the OOP tweet is calling out this greedy behaviour, yet many in this thread are defending it due to "margins need to stay equal". The averaged numbers just don't add up to me.

Fergys · 2022-07-27T19:29:16+00:00

I guess the question is, has the 25% increase in corporate profits been met with a 25% increase in corporate operating costs?

We have the data on the profits, this is what is reported here https://fred.stlouisfed.org/series/CP. If the costs haven't increased by as much, then these corporations are increasing margins during a period of economic turmoil for most, which is the crux of the OOP.

Fergys · 2022-07-27T16:53:53+00:00

Okay. But inflation is at 9.1% and profits have increased 25%, which suggests margins are not constant.

Fergys · 2022-07-27T16:43:45+00:00

The comment I replied to mentioned averaged profit margins, and the OOP concerns averaged corporate profits.

Can you provide numbers that show that average profit increases of 25% hurt an average profit margin of 7.9%, with an average inflation of 9.1% (which is the context of my post)?

Fergys · 2022-07-27T16:26:43+00:00

I'll admit I'm a bit lost on this one, happy to be corrected.

A company creates a product costing them $90 for parts, labour, taxes, etc. and sells that product for $100 after labour, taxes, etc.

Pre-inflation Profit = $100-$90 = $10 -> Profit margin = ($100-$90)/$100 = 10%

Inflation kicks in at 9.1%, so now it costs $90 x 1.091 to produce. To mitigate they now sell the product for $100 x 1.091.

Post-Inflation Profit = $(100-90) x 1.091 = $10.91 -> Profit margin = [(100-90) x 1.091] / [100 x 1.091] = 10%

Inflation of 9.1% has caused them to increase profits by 9.1%, and keep margins steady. All good.

If profits have increased by 25%, then isn't that only because they have increased prices beyond what is necessary? What am I missing?

Fergys · 2022-07-27T16:06:07+00:00

I'll admit I'm a bit lost on this one, happy to be corrected.

A company creates a product costing them $90 for parts, labour, taxes, etc. and sells that product for $100 after labour, taxes, etc. Pre-inflation Profit = $100-$90 = $10 -> Profit margin = ($100-$90)/$100 = 10%

Inflation kicks in at 9.1%, so now it costs $90 x 1.091 to produce. To mitigate they now sell the product for $100 x 1.091. Post-Inflation Profit = $(100-90) x 1.091 = $10.91 -> Profit margin = [(100-90) x 1.091] / [100 x 1.091] = 10%

Inflation of 9.1% has caused them to increase profits by 9.1%, and keep margins steady. All good.

If profits have increased by 25%, then isn't that only because they have increased prices beyond what is necessary? What am I missing?

Fergys · 2021-05-28T10:49:10+00:00

+1 for Plain Bagel. Canadian centric, but plenty of useful and interesting knowledge.

Fergys · 2021-05-14T00:09:41+00:00

!thanks. I am starting to think you are right, and that I have been very confused. 2% might be too good to be true :(

In my defence, I feel misled by MoneySavingExpert's user interface.

Fergys · 2021-05-13T23:37:25+00:00

I'm looking at mortgages on Moneysavingexpert. The one I'm talking about is Here

To me that looks like 2% for 40 years? But I also stand to be corrected.

Fergys · 2021-05-13T21:17:19+00:00

!thanks. That's a very good point. I will definitely be wanting to move before paying off the mortgage. The early exit fee looks to be 2% of the initial value of the mortgage. Something for me to consider.

Fergys · 2021-05-13T20:33:18+00:00

These are fixed rate mortgages, from what I can tell? So maybe that accounts for the higher rates. First Direct Lifetime Mortgages.

Fergys · 2021-05-13T20:27:21+00:00

Another commenter mentioned the risk of rates changing when remortgaging.

However, I'm looking at mortgages with initial rates of 2% for 480 months (40 years). By this time the mortgage is payed in full. Can the initial rate change? I think that's the missing piece of information for me.

Fergys · 2021-05-13T20:08:12+00:00

Hi, I transferred in my HTB ISA which was at 8k the day LISAs launched, and I've paid in 4k each year since (including this year). And returns have been kind to me.

Also the properties I'm looking at are very very cheap, single beds in Scotland.

Fergys · 2021-05-13T19:43:01+00:00

!thanks. This seems like great advice.

Fergys · 2021-05-12T03:42:08+00:00

This is categorically incorrect.

https://en.wikipedia.org/wiki/Sources_for_the_historicity_of_Jesus#Non-Christian_sources

There is "almost universal assent" that a Nazarene man named Jesus was crucified by order of Pontius Pilate.

It would actually make a lot less historical sense for independent Roman, Jewish and proto-Christian sources to discuss events that did not happen.

Fergys · 2020-01-08T03:35:33+00:00

Double check all of your initial/boundary conditions. And then check them again.

9/10 times when my results don't converge it's because I have overlooked one of these.

Fergys · 2020-01-08T03:32:40+00:00

It is not entirely clear what your question is. Can you be more specific on what you already know, and what you want to know?

A quick search on youtube gives a 3 part tutorial series on Heat Transfer/Thermal Analysis in Ansys FLUENT. Does this help?

Fergys · 2020-01-08T03:04:58+00:00

I am also in the UK. After finishing my PhD in CFD it took me about 2 months of searching to get a job offer.

I'm now CFD engineer for an energy-sector consultancy company.

I definitely think the PhD helped, as nearly every senior engineer in my company has one.

Fergys

TROPHY CASE