Is it the right time for investing?
We are approaching the point where all our negative wealth will have gone and then we will have a spare couple of thousand pounds a month to play with. It has taken quite a time and a lot of effort to get to this but it will, we hope, have been worthwhile! At least we don’t have any horrible shocks around the corner – just a mortgage to pay off one day but we know about that.
This is a nice place to be in, I guess, and for me the first time I have ever been in this position. For many people of course this is what they have been doing for some time. Some folk have always had a knack for managing their money but as our regular readers will know, we weren’t! We had to learn the hard way but what leaning this was/is! Now we look forward to a future of building serious wealth.
We have already been expanding our learning to include not only money management but also investing. For some time now we have believed that whilst saving is important and not that hard it is not the way to build serious wealth; the mastery of wealth building is to get your money work for you. In other words, in this game building up savings, or capital accumulation, is only the first step on the way to investing at different levels of risk and potential return.
In the near future we will be starting a new blog on investment to track our fun and games and share information, insight and experimentation. But for the moment, it is sufficient to say that we have been looking at some possible investments in eight different areas. These are:
- Base dividend income from stocks
- Preference shares with large fixed dividend
- Penny stocks, Contracts for Difference, foreign exchange, derivatives
- Commodities, metals etc
- Bonds – banks are not lending yet companies are crying out for funding
- Property investments various – always an interest of John’s
- Peer2peer lending – 6-7% ROI for small amounts, short time
- Businesses – building some and investing in others
If this looks fairly conventional, don’t be surprised! Innovation is overrated where building wealth is concerned and we don’t intend to re-invent the rules of making money, not yet anyway . But we are always open to interesting and profitable ideas!
As we posted recently, we have set out to amass some £2.5 million (about $4 million) over the next 5 years so that Maria doesn’t have to be employed if she doesn’t want to be and we can have the life we want; this doesn’t include champagne baths and certainly no black caviar – bathing in champagne is such a waste and black caviar is very overrated as food. The life we want includes travel and charitable giving and our calculations include care in the later stage of our lives.
The minimum base return on investment we are looking for is 10%. Much less than that and we may as well just pay our mortgage down. Much more and the product may carry more risk than we are prepared to take. However, we aim to have a portfolio that includes some high risk investments , hence the penny stock, CFDs and FX. ‘Balance’ is the word and this can be achieved but not foretold; furthermore the appropriate balance between lower risk and high risk investments will change at the different stages of the portfolio.
We are likely to be going into online trading in quite a big way – John has been doing some research and he quite likes the look of some platforms such as the E*trade online trading platform, even if it is Australian (we can’t resist this one; after all we are British ! Heck – the Aussies have enough raw materials on their big island to supply us for generations and it is a politically stable country to boot. Pity about the fires though.
Many would argue that this is not the time to invest – stock markets are volatile, investment funds perform erratically, property prices yo-yo, and business is having really hard time. We are swamped by news about the desperate financial situation in the Eurozone and the present doom and gloom of Britain’s economic situation. And it is true: the future is really unclear at the moment. But we believe that investing is a bit like having children – it never seems to be the right time so one just has to jump in and do it. Yes, investments will underperform and we fully expect to lose some of our stash, particularly at the early stages. What is important is to make more money from our investments than we lose. Or shall we say, to make enough so that out huge financial goal comes off!
“The only lasting satisfaction is that which is found when enough is enough. If everyone were contented, the world will be a peaceful place.” – Lao Tzu
Finally, we have to accept that the future is uncertain. Maybe Andromeda will collide with the Milky Way in about 4.5 billion years time, just about the same time that the sun will expand to consume Earth. But in the meantime, let’s have some fun, try to save the planet by consuming less and enjoy our time on it.