Its terribly difficult I agree. Still potential for the GBP to fall a lot too - some commentators even say to parity with the USD (5 cents below its mid 80s lowest ever) and parity with the Euro looks nailed on. The latter kills me with my expenses in Poland as the zloty pretty much tracks the Euro unless the Polish government does something wacky.
They are a populist government, anti immigration with some socialist beliefs and very much tied to the church too - so I’m looking for them to save me. With the Polish economy racing along at c.5% GDP growth p.a. I’m not too optimistic.
Personally I doubt we’ll ever see GBP at pre-referendum levels again, not for a generation at least, even if we were to somehow Remain. The damage done is already literally incalculable and the UK has fallen behind in many, many areas as other countries have forged ahead in an ever-faster moving world of commerce.
Despite my previously described strategy to sell out to realise profits from growth every year, I’ve also kept a notional running total (not counting dividends except in my SIPP) for over 10 years now and I finished today (U.S. close) at my highest ever value.
If today were the end of the tax year and that was my ending total I would have averaged 17.96% return per year. that includes my worst ever year (approx 15% down), one other losing year and one year that was break-even (actually around +1%). That other big losing year was the big crash surrounding the credit crunch, but I was back in profit the next year.
I’ve been told that was a quicker recovery than many professionals - although my losses were probably much smaller initially as I had realised very large profits from housing (because of my taking-profits-as-you-go strategy) before they all crashed too badly - although I did lose a lot of profit in some (800% in one unfortunate case where my holding was on paper, I was living abroad and my paper certificate broker had stopped dealing unbeknown to me). I was in America so saw what was coming earlier than many, and had to fly home and set-up a new broker to sell out of certain stocks causing a delay of some weeks, which proved to be very expensive.
Losing profits always seems more painful than a normal loss. Possibly because it can be more than 100%! You can bet I have all my stocks online now (actually i still have two on paper - must do something about that!)
Unfortunately my two prolonged recent absences from the markets due to personal reasons resulted in the biggest loss above, at least in great part, just last year, so no salary for me for 2018/19. I made it all back a couple of weeks ago so hopefully I’m back on target for earnings to be taken again next April. A lot can happen before then of course! It doesn’t count for anything until the finishing line is crossed in April 2020 - except to encourage me a bit.
17.96% a year to live on from a static lump sum (now rising each year by inflation taken from profit, a recent innovation) is pretty good going I think, because I reckon I can live comfortably on 12%. At least that was my original calculation. With the GBP where it now is 12% doesn’t cut it anymore and I think probably 15-18% is more like it for the future.
That’s not just because of the GBP but also inflation is going to be much higher than it has been - I am all too aware that most of the years these figures cover have been bull market years (extraordinary bull markets at that) and unless I master spread betting and shorting the years ahead are looking potentially lean indeed.
The silver lining is that as my inheritance comes in I will up the base lump sum figure I’m working from, possibly ultimately adding perhaps 75%-100% to it, so my percentage take will go further. But inflation is already eating into those profits, and looks set to continue as the GBP devalues more and buys less abroad where most of my expenses now are (-19% since the day before the referendum).
Some tough times ahead. I’m almost entirely reliant on what I make in the markets now and still 12 years away from my state pension - if such a thing still exists by then which I have severe doubts about, but at least have never banked on it.
If Brexit forces me to become resident in Poland I’ll also get taxed on any income after their personal allowance of about £350 p.a, so a double-whammy potentially there.
Still, all I can do is focus on the immediate future and things I can control. At least with 25+ years experience behind me I make fewer mistakes with my investments than I used to.