Before we start, I just want to add that this is not financial advice. This is information only.
One of my goals for 2022 is to start a YouTube channel. So, at the beginning of Feb, Personal Finances and Investing with Duffmoney will start on YouTube. This channel will help absolute beginners with their personal finances and then with their investing.
The first 20 odd videos will be loosely based on my 1st book all about my colourful relationship with money and how I’ve managed to turn things around. This will be split into 4 sections and there will be 5 videos in each section. The fourth (and final) section is all about investing with skill. See below for a little summary of the invest with skill videos:
Invest with skill
- ROI and essential calculations
- Property investing solid foundations
- Tracking the markets with index investing
- Crypto asset fundamentals and an excellent hedge against inflation
- Diversification to increase likelihood of FI
Todays post is a brief summary of these 5 videos
Return on Investment
Over the last few years, I have been aiming for an ROI of 10% from the rental properties I have purchased. In case you’re not sure, ROI is return on investment.
Is this ROI of 10% high enough? Up until recently, I would have said yes. And then I would have compared it to the interest earned in a high st. bank to back-up my thinking. This was me not really taking inflation into account.
This is me sort of understanding inflation but not really. The penny is finally starting to drop, and I am becoming more aware of the carnage inflation can cause. And this is without even thinking of what hyperinflation can do to a country’s economy. Have a little look into Argentina and hyperinflation – frightening!
The video goes on to talk about ROI further using a property example. Learning how to do your sums and learning what your target ROI is very important from my experience.
My investing strategy is long-term buy and hold with property, index investing and crypto assets. The next 3 videos are going to cover my strategy and this video I will be starting with property investing.
Personally, single let is my preference. This is what I’ve been doing for the last nineteen years, and what I will continue to do over the next few years while I still have a full-time job.
There are different strategies. Different strategies like HMOs and serviced accommodation can certainly bring more cash flow. But I have been single let only to date..
In my opinion, single let is a good place to start before you get carried away with multiple strategies. It is a good idea (again in my opinion) to get good at single lets then tackle some of the other more challenging strategies. If that’s what you fancy doing to increase cashflow … because HMOs and other strategies do bring in more cashflow … all I’m saying is when you 1st start think delayed gratification and solid foundations.
This video gives some info on single let properties and goes through the buying process. Buying property is an excellent way of investing towards financial independence..
Tracking the stock markets with index investing
Tracking the markets is basically mirroring entire market’s and this is usually done with an index fund. This gives you diversification (spreading the risk) as your index fund often holds hundreds of shares or bonds (a small slice of several companies if you like). It means you are less exposed if one of the holdings performs poorly.
If you get into single shares and put all your hard earned money into one share or one company’s stock should I say… you are at risk if it goes wrong and this has happened to me in 2010 when I invested into single shares without any research and lost all of my hard earned savings ..this isn’t the case with index investing as you have less risk – you have a small slice of several companies and this gives you diversification. And in my opinion this diversification is important for beginners looking to invest in the stock market.
As well as diversification another big one is costs. This is something I learned after listening to a lot of Tony Robbins videos back in 2018. Basically be aware of fund managers who charge up to 2% per annum and sometimes even more. If you manage to get returns of 7% and they charge 2% your returns are reduced to 5%. JUST SOMETHING TO BE AWARE OF. Even if your fund returns 1% you still get charged 2% so you are down -1%.
This video goes into the benefits of index investing – this is currently my favourite way to invest. This is because it is passive and it suits me as an emotional investor. I only check on my index fund once or twice a year – not like when I was checking my single shares every 5 mins back in the day. Just to be transparent, this is something I’ve struggled with recently with crypto
Hedge against inflation with crypto
In my opinion, it is important that everyone in the UK and everywhere else in the world, fully understands inflation. I might be wrong but I get the impression that inflation is background noise to many people. Trust me, it wont be background noise to people in Argentina or Venezuela or even Turkey. Or anywhere else that is suffering or has suffered because of hyper inflation.
Up until recently I had a naïve view that in the UK we would always be ok and I had trust in our government and banking system. With more understanding of the effects of Quantitative easing, that trust has disappeared.
Quantitative easing means the UK and US are printing money for fun. And lots of it. Fair enough if it leads to inflation levels of like 5% ish. Still pretty painful for us in the UK and other parts of the world but we would probably be ok. But what if that inflation rises to double figures and we are talking 10 or even 15%.
That means we would all need wage rises of 10 or 15% to be in line with inflation. This isn’t happening as far as I’m aware. The hyper inflation that is happening in Argentina, turkey and other countries could happen to the UK in my opinion. This is frightening. This is the type of inflation where normal families cant afford their weekly food shopping
Could crypto be a legitimate hedge against inflation? In my opinion crypto assets are an option and are a hedge against inflation.
This video gives some valuable info on crypto and why I think it’s a hedge against inflation.
Diversification your way towards financial independence
Personal finance and investing is important and if you put the effort in, it will help you get some early financial independence. At the very least it will help you to be comfortable later in life.
With some discipline you will get to a point where you can spend less than you earn.. then you can invest the difference. If you get to this point you have got A GRIP OF YOUR personal finances. Then it is about getting financially literate and investing with skill.
Part of investing with skill is diversification. I got told about it back in 2012 by my accountant at the time. I had no idea what he was talking about and this was down to a lack of financial literacy.
Diversification is about having different types of investments. My strategy is long term buy and hold with property, index investing and crypto assets. This means that I am diversified. I am less at risk if property markets fall in value as the stock market or crypto market might be in a bull market meaning they are going up in value. In theory diversifying your investments reduces your risks and this is what the experts recommend.
I am no expert but I have read over 150 books over the last 3 years….. books by Warren Buffet, Benjamin Graham, Tony Robbins, Rober Kiyoaski and many more who I consider to be experts in terms of investing. This has helped me to become an investor and I can now invest with skill after becoming financially literate over the last few years.
In this video I go into diversification and I talk about exactly how I plan on getting financial independence over the next few years..
This is a post to go over the 5 videos that will cover investing with skill on my new YouTube channel. This type of post has just been until the YouTube channel starts in the next few weeks. If you like the sound of my new YouTube channel, look out for it in early February.
This is my last post on my upcoming YouTube channel. Going forward, I will be back to documenting my journey towards financial independence.
By the way, if you want some more info on personal finance and investing, you can always read my 1st book. Or if you are on a limited budget, I have no issues sending you a FREE COPY.