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What Keeps You Up At Night?

I’m very much macro or trend investor. While I’m happy rooting around a balance sheet or combing through a cash flow statement most of my investment decisions are based on or at least initiated by ‘big ideas’ or long term trends or strategies.

At the same time as seeking out opportunities, I’m always on the lookout for the next big thing that might damage my portfolio. There are almost limitless things that could happen in the world tomorrow that could seriously impact the money tree. Here’s what is currently keeping me up at night….

The World’s Debt Problem

If you believe this debt clock the US Federal reserve are borrowing money like it’s going out of fashion. Well they are, and we all know they are. It is no secret that both the US and the Chinese governments are running with extraordinarily high levels of debts.

When the credit crisis struck in 2007-2008 the cause was too much personal debt, particularly lots of US citizens with big mortgages they couldn’t afford. They stopped paying so the banks started going bust and most of them had to be bailed out. Sure some like Lehman’s went to the wall but most were bailed out.

A similar thing happened in the Eurozone Sovereign crisis. All the governments had borrowed too much money and rather than going bust they were bailed out. As this article explains perfectly (the 1st in the search  result) the worlds debt problems haven’t been solved, but simply kicked down the road.

So how will it all pan out? Well maybe China’s so called ‘shadow banking sector’ will blow up spectacularly or some Eurozone states (cough…my money’s on Greece to start us off) will finally default once the bail out money runs out.

Any big default events like this might just trigger another global credit crisis, only this time one that can’t be kicked down the road. Or just maybe central banks will manage to inflate the debts away slowly over time and we’ll all have to live with anaemic economic growth for the next 10-15 years.

Interest Rates

I’ve documented before on the site how I’m currently benefiting from low interest rates by overpaying my mortgages. When interest rates are at 0.50%, and have been for so long,  it’s inevitable that they’ll have to rise soon.

Whether it’s concerns over a London house price bubble or concerns over inflation at some point soon(ish) interest rates will rise.

Given my conservative Buy to Let strategy I’m reasonable sure I can weather any rate hikes in the future. However what worries me is the rest of the population aren’t so cautious when it comes to loading up on mortgage debt. The UK recently saw an alarming spike in personal insolvencies, and this was before any rate rise.

With tentative growth in the UK economy, any rise that comes too soon or is too aggressive could spook the markets and more importantly cause a lot of households even more financial strain. If/when that causes a house price crash then I’m afraid we’ll be back in recession for another couple of years at least.

Keep Calm & Carry on Investing

Retirement Age

As I write the current state pension age is 65 for men and 61.75 years for women. The government already has plans afoot to increase the age for both sexes to 67 by 2028 and to keep increasing this as life expectancies increase.

Well in 2028 I’ll be 50 so still some way off collecting my state pension. Realistically I’ll most likely be >70 by the time I’m entitled to a state pension. This in itself is one hell of a motivation to grow the money tree and fund my early retirement. By the time I reach the entitlement age there is also a fair chance that the state pension might be means tested and I might not be eligible anyway.

For my own financial planning purposes I have assumed I’ll be receiving no state pension. I do however worry about certain family and friends have not considered the uncertainty outlined above or the implications of ‘worrying about pensions later’ on in life.

Not so NISA

A key part of the money tree plan is to stuff as much cash as humanly possible into my (and my wife’s) NISA accounts. By following the NISA rules we aim to build a substantial tax free income stream that will fund a decent chunk of our early retirement expenses.

There have been worrying murmurings in the past that government officials have considered introducing a cap on lifetime ISA contributions or size. The supposed rationale behind such a cap is presumably to limit the tax breaks granted to the wealthy. While this argument seems to be born from reasonable intentions, the potential ramifications could be huge for responsible savers saving for their futures.

If any future government did put a cap on the size of individuals NISAs the potential future income I receive could be  seriously affected. While I think this is unlikely to happen you can never escape the fact that politicians often make idiotic decisions if it means they’ll win a few more votes.

Viral Infections

Back in 2010 we saw evidence of Stuxnet, the worlds first virus [allegedly] deployed by a nation state. It was the first time that such a sophisticated computer/virus attack had been made on such a specific target (allegedly Iran’s nuclear power plants).

While Stuxnet had no real impact to the financial world (or my investments) it did make me think about future threats. With so much of the worlds financial transactions and records existing only in digital form part of me does worry about when the world will face it’s first truly serious virus attack that would have a material impact on the financial markets.


A lot has changed since 1945, the end of world war two. The rise of China as an economic super power, globalisation, unabated technological advances and nuclear proliferation amongst other things. But what does all of this mean for the future?

Well, the positive side of me thinks this makes WW3 a less likely scenario. I’d like to think that globalisation has reduced nationalism, racism and suspicion of Jonny Foreigner.

As I write this post and cast my eyes around the office I take great pleasure in the fact that the colleagues in eye shot hail from the following countries: England, India, China, France, Sweden, South Africa, Australia, Iran, Turkey, Japan, Austria, Germany, America and Ghana. You know what, we all get along. Race or culture is never an issue.

What troubles me is that when you throw poverty/religion and or politics into the mix, suddenly tensions and suspicions rise. You only have to see the rise of nationalist political parties in Europe post financial crisis to see evidence of this.

This highlights an obvious weakness in human nature….when the tough gets going we want to blame someone else. Slightly further afield you only have to look at what’s happening in Iraq, Syria or Ukraine to see the terrible consequences of these factors at work.

The most recent set of sanctions on Russia will likely have a material impact on British companies and the investments I hold. Should Vladimir Putin continue his idiotic stand off with the West who knows where the situation will end.


Maybe I’ve come over all melancholy today, so apologies for the incredibly bearish post. For a risk averse investor like me there is always a list of big macro things that cause me worry from an investing point of view. What is ceratin is that there will be another large market collapse sometime soon (i’m not defining soon though!).

On the upside, all big market sell offs can provide some wonderful buying opportunity if you’re brave enough go run against the heard…

So, what’s keeping you up at night?

{ 2 comments… add one }
  • BeatTheSeasons August 1, 2014, 12:29 pm

    Real viruses like Ebola.
    Personal health & fitness.
    Relationship/family breakup

    • Under The Money Tree August 1, 2014, 8:27 pm


      What’s great about that list is you can almost certainly eliminate the last two possibilities. Avoid holidaying in West Africa and ebola shouldn’t trouble you. Finally if you really want to hedge against inflation go out and get a whopping great mortgage you can’t afford*!

      *maybe not actually!

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