plonkee money an english-er's thoughts on personal finance

May 31, 2007

class and money

Filed under: philosophical — plonkee @ 7:08 pm

Some personal finance bloggers and commentors have been talking about the NY Times class calculator. It splits you into a specific class (bottom fifth, lower middle, middle, upper middle, top fifth) based on occupation, education, income and wealth.

Any true Englishman knows class well. It was George Orwell who stated that “England is the most class-ridden country under the sun.” I’m a big fan of Watching the English by Kate Fox. It’ll tell you more that you ever wanted to know about the English rules of queuing, buying rounds and the peculiarities of class.

In particular, class is essentially unrelated to either income or wealth in the sense that having more or less of these things doesn’t determine your class. Class is determined by your pursuits, how you speak and the language you use, where you live, where you aspire to live, the food you eat and the food you admit to eating. Even the names you give your children are class indicators. None of this is intentional by the way, its just that we all act as we think people like us should do – and people like us almost always means people in our own social class.

By, the by, on the NY Times graphic I had no consistent class, but I am aware that I’m lower middle class possibly pushing at middle middle class. And none of this has anything to do with my money.

touting for carnival of personal finance posts

Filed under: OT — plonkee @ 6:50 pm

Clever dude is touting for more submission to the next carnival of personal finance. If you’ve written or are about to write a post on a blog on the broad subject of personal finance and you think its quite good, submit it to the carnival.

Give everyone the chance to hear what you say.

May 30, 2007

index funds are good

Filed under: investment — plonkee @ 5:50 pm

Lately I’ve been hanging out at the forums on money saving expert. As I mentioned in my review, IMO they aren’t the best feature of the site, in part because the articles are so good, but also because two or three prolific members hate index funds.

I probably shouldn’t pick on them, but i will anyway. Their main arguments seem to be thus:

  1. a FTSE All-Share tracker is not sufficiently diversified
  2. a tracker will not beat the average in its sector by design
  3. if the market crashes by 40% you will lose money

I say that they are wrong. In answer to these points I have my own:

  1. no single fund is truly diversified but a FTSE All-Share tracker is well diversified in its sector (since it holds shares in all the companies in its sector)
  2. a tracker will by design perform no worse than average
  3. if the market crashes you will probably lose money anyway, this is why you invest over a 10 year time period

Its been stated before, but index funds have another huge advantage: they are cheap.

One of my biggest complaints about the index fund naysayers is that they often state that pursuing average returns is a poor idea. Quite frankly, I doubt my ability to consistently pick a fund that will perform above average when professional fund managers cannot pick stocks and shares that perform above average. Therefore I go for the simpler option, I simply go for the average – note that I’m not aiming for the average, I’m actually getting the average in my sector (minus fees, which as stated above, are low). I think that’s a perfectly reasonable strategy.

 If you are earning and investing in £ sterling, you could do a lot worse than make use of an index tracker like a FTSE All-Share tracker for your UK Equities investments. They’re cheap and they won’t perform worse than the average.

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