The Financial Frolicker Social Pension Portfolio - A Personal History
For those of you who have made it this far, we are about to go on a fairly wild journey of global baldashery and regulatory arbitrage. It has been quite a frolic... Soon, you are going to learn just how cost-effective and fully featured a portfolio concept in social pensions can be, and take some perspectives away on special features. That's all coming in the next episode, but first I am going to give you the personal tale of how it all came to be. The accidents, the motivating reality, and the conscious decisions along the highway of my life.
This financial frolickers journey to enlightenment began long before he was ever conscious of it. Way back in Brisbane, Australia, and not even in the senior phase of high school at age 16. He was quietly unknowingly building years of adult residence record towards the australian social pension. It was costing him nothing. Society was intermediating on his behalf. Please hold that concept of some individual or group or broader society intermediating to provide benefits. We will return to it, again and again.
Your financial frolicker swept blithely on in life with the normal concerns of study and university and jobs and family, blissfully unaware of the concrete details of his accruing social pension. Life happened, as it often does, and the best laid plans of mice and men amounted to very little but economic disappointment...
Your financial frolicker needed a job, had family who had emigrated to London who enjoined on him to exercise another individual's intermediation, on this occasion for a British Ancestry Visa through his English grandmother. He rocked up in london at the tender age of 27, completely unaware that he had indeed already qualified for an australia social pension. He could have got on that plane to London over 18 months earlier, actually...
Your financial frolicker has become something of a champ at timing intermediations since then, but he was just getting his sea (or plane) legs. The australian social pension had cost him nothing, beyond growing up and attending university and working in the country for a few years after that. It had never cost him a direct dollar. It is a very fine act of social intermmediation of the country for the individual. Think deeply on this, readers. When we get unlucky in life, all we have is intermmediation. It is a formal base in collective management of the hard non-elective risks of life.
In those days, i had not learnt the financial frolick and did not know what a righteous weapon intermmediation was. It took me 3 years to even bother going down and getting a National Insurance number and as a result several years of record were lost as dues were paid under a notional temporary number.
Nobody has ever accused Whitehall of mass efficiency and effectiveness to my knowledge. One of the unique features of the british social pension is the propensity for lost years of record and incorrect calculations. Let the payer beware! - and check his record regularly.
Life evolved and over a decade and a half of freelance work in London and across europe, i must admit that work skills and access, tax management, and wildly escalating house prices with no apparent basis in reality concerned me far more than did social pensions. I could not have told you the first thing about them except that they existed, and you got paid for being old, basically.
I wish we got paid for being young, don't you? There were a few years in my 20s and 30s when that would have been most helpful. Thinking on it, i was fortunate enough also to have received Austudy (a student income assistance benefit) for 4 of my 6 years at university. Another fantastic form of australian social intermmediation in the form of transfer income payments. It kept my rent paid, and my bus tickets purchased so i could focus on study and becoming an engineer, rather than ending up driving those same buses. Social intermmediation again folks, at its very best. We do not want the brightest kids driving buses. It is not in society's interest - or theirs. Intermediation matches those interests.
Life moving briskly along, the GFC happened, London turned into a wasteland of unemployed smart kids (and the british of course, who were rarely unemployed and even more rarely well educated smart kids, in my experience.) I decided to exercise a little bit of brinksmanship-standard intermediation, this time on my cost of living during what i saw as a prolonged economic downturn, and flipped off to asian beaches and a bit of remote study. Geolocational intermediation of the cost of living is a theme we will be returning too eventually.
Let's just say that i lived for several years without declining my capital base at all. I thought i had it all figured out with this geolocation arbitrage on cost of living stuff. Then interest rates tanked and i realised i still had plenty to learn. Sadly, it was time to bid adieu to cheap beaches and get a real job again - fast.
London had apparently transformed into a third-world post-apocalyptic state where the only people making any regular income were hookers from european accession states and british investment bankers. It was sometimes hard to tell which was which for a simple colonial boy to be honest, but the hookers were prettier, had much better teeth, and were significantly more honest in general. I eventually immigrated to the USA - relying on individual intermmediation again for a Green Card.
Surely there would be jobs for smart talented engineers with heavy tech and finance experience in major capital markets right? You heard the buzzer didn't you? America was an absolute disaster. The one thing you absolutely do not want to be in the great USA is a highly educated engineer with a background in investment banking technology and mathematical finance, white, foreign, and older than 45. It is a recipe for long-term unemployment. You really would have been better off driving the buses...
However, around about this time your financial frolicker had figured intermmediation out pretty seriously, and had seen the opportunity in social pensions. He had always known that the long end of the game dwarfed the short end of the game. He had always know that geolocation was a useful strategy for the financial frolicker and he had acquired british and american passports to aid in that open-borders pursuit. Around about now his expertise on social pension rulesets was starting to get established pretty seriously.
Brexit happened as covid rolled through the world. Your financial frolicker did not need to be asked twice to take out an insurance policy on the USA and its disdain for effort and talent, compared to a cheesy elevator ride-length pitch ported at you by a sociopath. Plus ca change, ... twice. Your financial frolicker toddled off to germany and enrolled for temporary residence there, establishing his european settlement rights.
The moral of the story is that wherever life leads you, do not leave your social pension cards behind at the airport. ... and collect a few passports along with experience in a few global bases of operation, spread across the developed and developing world. Your children will thank you later, after you have taught them the financial frolick.
Up next, we are going to discover the true difference between a collection of assets and a portfolio constructed of those same assets. It is time to dance one of the mainstays of the financial frolic, and dig into the costs, benefits, special features, and correlations among social pensions.