Wednesday, 1 May 2019

How the rich do it.

Insurance is the business of transferring wealth from the middle class to the very rich.

Insurance is like the umbrella we remember to carry with us in good weather but forget when it is raining.

The towers in the distance are the insurance district of the City. You are paying.

Insurance companies are old and this makes them seem solid. They present themselves as conservative and cautious but are anything but under the skin.

Insurance is seen as sensible thing to do but the very rich seldom buy insurance.

Insurance companies and 'names' seek a risk free return by trading the risks they hold. Generally this works but it can go spectacularly wrong.

Many of us assume that if a company promises to pay us £100,000 in a certain event then that company must have reserves of this magnitude.

Insurance is a game of probability. It can only protect you against events that are in line with probability. If ten houses are normally destroyed in a year then the company will keep funds available for eleven. This is all very well until a real disaster occurs that destroys one hundred homes. What then?

Maybe there will be reinsurance arrangements with other companies that obliges them to help if they cannot pay. This helps if the crisis is national in nature but not if if is global. What if all of the companies are in trouble at the same time?

Reinsurance contracts (companies insuring one another) practically guarantee a major crisis at some point.

Company A promises to pay out. If they cannot then company B will pay company A. If company B cannot pay then company C will fill the gap.

In other words.. either no company goes belly up or they all do.

The good news.

The good news is that we can create our own insurance company! It will be more more solvent than the one we are paying premiums to right now. Furthermore, if we never need to claim we will receive our money back!

Simply create an investment fund (nice and liquid with low risk) and draw upon it if needed. If not- the money is yours to keep.

This avoids all the form filling and insurance premium tax that 'normal' people have to bother with.

Poor people buy insurance. Rich people self insure. Rich is better.

I am tired, and it is a good feeling.

Old Money spends its money very carefully. The emphasis is on passing wealth to the next generation rather than showing off.

A great deal of the happiness we receive in life comes from getting our stress levels just right- neither too high nor too low. I have just 'raised the heat' a little and feel content in my tiredness.

Get paid to view art.

Old Money cultivates a love of art- in part because it is often free. I have gone one better.

I have an app (go withYamo) that directs me to the lesser known galleries and pays me to view the art- in points rather than cash unfortunately, but still I am paid something.

Be an ethical consumer- not a virtue signaler.

The difference is in the motivation. Ethics is internally driven while virtue signaling is approval seeking.

I eat Red Tractor certified meat and drink Fairtrade tea and feel quite smug about it but this comes from my own values and research rather than the need to show off- authough I have now blogged about it so maybe I can no longer say this.

Fairtrade is usually quite useless because the premium goes to pay inspectors and marketeers rather than the people we like to think we are helping. This is why it is generally favoured by well meaning Guardian readers for whom motivation is more important than results. Fortunately I no longer need to worry about effectiveness when the 'ethical' premium narrows to almost nothing.

The cost of  Essentials fair trade tea bags from Waitrose are about 40% more expensive than the Morrison equivalent that are not Fairtrade. Morrison are not bad. Refreshing but with a slight bitter edge towards the end. The Waitrose equivalent smooth and rounded and probably better tea but I have come to enjoy cheap tea as I am used to it. I will probably go Morrison once they are finished.

The Red Tractor scheme appeals to the nationalist in me. It supports British farmers and humane farming. The two tend to go together as we are sentimental about animals in the UK and have higher standards than almost anyone. Free trade agreements prevent us from blocking imports from countries with lower standards and so we must make this decision on an individual level. Fortunately, the premium over mystery meat from unknown sources is usually 10% or less. The consumer may enjoy fresher meat that has been slaughtered locally and maybe get their money back via reduced spoilage.

An additional benefit is that my preferred supermarkets throw out very little food. Most goes to the homeless.

Getting some 'Yee Ha' from the yanks.

I bought some CD's from various Americans who promise to make me rich/happy/sexy/enlightened. This is a very New Money thing to do and I am not sure how much I believe them. Old Money keeps its feet on the ground and looks for proven value but I will persist and see if I notice changes in my life.

Cheap travel is possible in the UK.

This is me on a recent trip to Oxford and nothing is more Old Money than Oxford. Food, travel and accommodation cost me about £71 for four days. We must remember that these are the only real expenses needed. Once we are there, entry to most places is free.

The world of luxury is the world of women.

Women do luxury well. They shop in groups to magnify the retail experience and they enjoy luxury in private as well as in public. Men tend to use luxury as a status symbol. This seems a joyles thing in comparison.

This opens an interesting possibility. If a man can learn to enjoy luxury for its own sake and not to prove anything- could a man move into the world of women and learn more about them?

An interesting thought.