FINANCIAL INDEPENDENCE (5)

FINANCIAL INDEPENDENCE

BAH HUMBUG

MAKE MONEY FROM HOME

This posting is not investment advice in any way shape or form, its simply Humbug’s personal opinions. You should not take it as advice, please do your own research.

Since the start of the GREAT BRITISH TRADE OFF I’ve been known as Humbug. Possibly because I own a famous old sweetshop but more likely because I’m such a happy little soul.

So, best I live up to my nickname and write a weekly BAH HUMBUG posting.

Some weeks it’ll be no more Mr Nice Guy and really will be BAH HUMBUG. I’ll  rant about something that’s totally pissing me off and right now there’s plenty of things that are.  Other times it’ll be calm, reflective and thought provoking.

This first one is hopefully just that and looks at how to MAKE MONEY FROM HOME.

If you think about it for a minute or two, there are 101 ways to do this, some better than others.

The ones that don’t ring my bell range from renting out the spare room on AirB&B.                                                                                                                                                                                                                                                                                    Although I know a lady who does this with the granny annex on the side of her house. She now makes more money doing that in a week than she earned in a month working 160 hours cooking in a cafe.                                                                                                                                                                                                            So maybe that’s not such a bad one. Although I’m very fussy about who uses my loo if you know what I mean.                                                                                                                                                                                                                                      What else can I think of? Taking in washing perhaps or running an unlicensed massage parlour maybe. Neither of them strikes me as one of my better money making schemes.

Actually, going off at a tangent for a moment on the subject of iffy ways to make money from home.  I used to know a guy called ‘pound note Pete’, so called because no one had ever seen him spend more than a pound on anything, ever.

In addition to running the electricity for his flat from the lighting circuit of the shop downstairs, without their knowledge obviously,  Pete ran an illegal drinking club from his front room.

Given that most of the booze he sold had, how can I put this, dubious providence, as you can imagine the profit margin was brilliant.

Helped even more because he used to water down the spirits and as he was on benefits, the council paid his rent as well.

None of the above (and unless things perk up greatly in the next few years, I’ll be writing that on the next ballot paper I’m given to vote with) none of the above spark any great desire in me to do likewise. But each to their own.

If I’ve inspired you to emulate ‘pound note’ and open an all night drinking den in your front room, what can I say other than ER GOOD LUCK. Lets hope you don’t get your legs shot off.                                                                                                                                                                                                                                            Whilst its a true story, its no way to behave and is all a bit sordid. None of what he did was either clever or decent behaviour, but it was his way of MAKING MONEY FROM HOME.

In my time I’ve had both good and bad times and understand crystal clear how difficult it is to make money if you haven’t got any. For many people the only way is to bend the rules and duck and dive.

It’s a widely held belief that many fortunes that are now viewed as totally legitimate, were built on dodgy dealings at the start. Many famous and old money fortunes at that.

If your starting out and want to get on, do well for yourself and create a decent level of FINANCIAL INDEPENDENCE, I think there are three brilliant ways to MAKE MONEY FROM HOME.                                                                                                                                                                                                                                  The drawback to each of them is that they need money to start with. The first one the least and it could well be the route to the other two.

1 START A PART TIME BUSINESS OR SIDE HUSTLE.

Starting a part time business or side hustle on your ‘kitchen table’ is a great way to keep the costs down and ensure that whatever you do has the best possible chance of success. If its structured correctly it also takes much of the risks of starting a new business away.

This is how I started out (story for another day perhaps) and it enabled me to pay the mortgage on the tiny terraced house I’d bought that no way could I afford.

Working for yourself part-time on a side hustle is a great way of testing concepts out with minimal risk
If you can find a profitable niche it could well be the route to helping you get on (or up) the housing ladder and begin to provide you with investment capital.

                                                                                                                                      2 BUY A HOUSE.

Given that we all have to live somewhere. If individual circumstances permit, buying is usually better than renting. Not least because paying a mortgage is often cheaper than renting and once the mortgage is paid off the asset really comes into its own.

There are a lot of caveats to buying in 2018  as prices in the big towns and cities in the South East, particularly London are crazy right now.

It seems to me that the value in the UK  presently is up north, this is where you get a lot more bang for your buck.                                                                                                                                                                                                                                    Also given the angry mood in the country,  my guess is that frightened politicians will at long last wake up to the fact that they need to invest in the North East and the North West and create prosperity right across the country and not just be London-centric.

Going forward I think its likely that the best house price growth in the next decade and beyond will be in the most prosperous northern cities. Leeds, Manchester, Liverpool, York and Newcastle.

Certainly if I was young again and just starting out, if I couldn’t afford to live in London I’d look first to the commuter belt and if I couldn’t afford there either, I’d bite the bullet and re-locate up North.

Prices in London and the South East look very toppy to my eyes right now.

However over the last 50 years prices have always been very chunky in London and Greater London relative not just to incomes but also to the often overlooked factor of mortgage interest rates.

A friend of mine bought a terraced house in Buxton Road, Stratford in London’s East End for £5000 in 1973. I looked up its value today on Zoopla, its now priced at just under £600,000.

At first glance that looks like the steal of all time and re-enforces the view that the ‘baby boomers’ (those born shortly after the second world war) were lucky beyond belief and had it easy compared to today’s young.

Hum, its not quite that simple, true that poxy little two up two down Victorian terraced house has been a superb investment particularly once the mortgage was paid off. But in the early years his wages were £25 a week and the mortgage interest rate was 12%.

Do the maths. Sure prices were a fraction of what they are today but so were wages. Yes there is an imbalance between the ratio of them now as against then, but mortgage interest rates back in the day were four times higher, so affordability was almost as difficult then as it is now.

Its always been one hell of a struggle to buy a house in the early years of ownership. The value comes through the longer you keep it

For example, lets take this house in Buxton Road. It was a struggle to buy it in the early years, but the mortgage would have been paid off long ago. The current value is £600,000 and the rental value is £21,600 a year.

So in effect the return on capital at its current value is 3.6% (tax free) and the return on the initial purchase price is over 400%.

None of us knows what will happen to prices in the next 50 years, but if history is any guide they’ll continue to rise, at least in line with inflation.                                                                                                                                                                I also think because so much money has been lent and secured on property  the ruling so called elite (who I despise), dare not let there be a property price meltdown because it would almost certainly cause the financial crisis of all time.

So for the above reasons, my view is that even at today’s valuations, owning a house bought at the right price in the right place is a great way to
MAKE MONEY FROM HOME.

 

3 INVESTING OR TRADING THE MARKETS.

BIG BANG (the deregulation of the City of London) coupled with the growth of the low cost on-line stockbrokers has transformed access to the markets for people like Fagin and I.

We, exactly like you, can sit at a computer at home, or indeed almost anywhere in the world and control our trades and investments.

I THINK WHAT WE DO IS THE ULTIMATE WAY TO MAKE MONEY FROM HOME.

Sure it takes capital to start with and this takes us back to the problem of how do you make money when you haven’t got any?

This takes us back to starting a part-time business as a side hustle. When I started out I was brimming over with energy and enthusiasm.

It was a shame that I wasn’t brimming over with wisdom as well, you would not believe the mistakes I made and the money I wasted.

But over time the money flowed in, I learnt the hard way to spend less than I earnt and to save and invest the difference.

EASY WAS IT?  NO IT BLOODY WASN’T.

But after a dodgy start when I acted like a fool, throwing money away on BIRDS, BOATS and FAST CARS I was determined to do it and create real FINANCIAL INDEPENDENCE for myself. If anyone really really wants to, they can and they stand a good chance of pulling it off.

FINANCIAL INDEPENDENCE is a different number for different people. I no longer throw money away, but I don’t do frugal either. So whilst I’m almost there I still need another couple of noughts on the end.

What I’ve found is that after a while there comes a point at which the capital begins to reach critical mass and the money begins to compound up nicely. The old gag is that the first million is the hardest.

Fagin and I set the GREAT BRITISH TRADE OFF portfolio’s up with £100k quite deliberately. On the one hand its a large enough sum of money to make the results interesting, on the other its a sum that someone who earns a decent salary could save and put away over a few years if they are motivated enough.

In other words once you’ve accumulated it, £100k is a sensible sum to use to build FINANCIAL INDEPENDENCE over say twenty to twenty five years.

The key is to make the market pay you above average returns. If like Lord Lee of Trafford (John Lee…………………..the guy widely credited with being the first ISA millionaire) you can take 20% out of the market a year you’ll turn that £100k into over three million pounds in less than twenty years.

Can Fagin and I do likewise? Who knows but certainly he’s made a great start to the GREAT BRITISH TRADE OFF.

In year one he used his capital to earn £34,200  or 34% which he’s added to his pot for this year. I by way of contrast had a crap year and lost money, but in the last ten weeks I’ve made it all back.

I think that for someone who has saved a half decent amount of capital, has good risk management in place and knows what they’re doing, investing in or trading the markets is a brilliant way to Financial Independence and to

MAKE MONEY FROM HOME

 

 

 

Friday June 15 2018

HUMBUG’S WEEK

I’ve had a brilliant week, I’ve been away sailing my boat on the Norfolk Broads for a few days. Some parts of the Broads are touristy and utter crap but there are plenty of hidden gems once you know where to look. Pulling up in an old sailing boat somewhere like this to spend the night is just heaven really. Especially if there’s a good pub nearby.

I got back last night having not thought about my investments for even ten seconds whilst I was away. Logged on and thought wow I must go away more.

Yesterday evening my Great British Trade Off portfolio was actually in credit. Yeah I couldn’t believe it either when I saw £100,239.00. But as I so often say, what goes up can come down and today £700 bled away.

Shame from an emotional point of view, but from an investing point of view believe it or not I don’t just want things to keep going up. The danger always is that if the market gets a bottle of spirits ahead of itself, the inevitable correction is not going to be fun.

Fagin with his Rolls Royce trade beats me this week  by a few hundred pounds, but I’m not too unhappy with the £289 increase in my portfolio’s value.

Fagin and I approach the business of seeking financial independence from different angles, but one of the things we are in total agreement on, is if we want to generate wealth (and believe me, we really do) then the best way to do it is to get above average returns out of the Stock Market.

My return this week is .3% which if you plot it for a year is a market beating result.

Twelve of my fifteen funds are up this week, my star performer being the Legg Mason IF Japan Equity Fund up 3.36% on the week. This is closely followed by the Baillie Gifford American Fund up 2.81%.

CHART OF THE LEGG MASON IF JAPAN EQUITY FUND

I’m currently just over 10% up on this fund, with just over £11k invested in it.

In percentage terms the Baillie Gifford American Fund is twice as profitable for me, being 20.3% up since I bought in. But my position at £6k is only half the size which is a shame. My view is that it would be stupid to chase the price and buy in no matter what, as sooner or later there will be a correction. I’ll buy more after the correction once momentum has re-started.

CHART OF THE BAILLIE GIFFORD AMERICAN FUND

 The signal I’d look for to make a top up would be the price coming down through the green line (a two week moving average) and then rebounding back up.

However whilst there’s much for me to be happy about,  its not all singing and dancing on the table with my portfolio. As you may remember I’ve been wittering on about the Neptune Emerging Markets Fund for a couple of weeks. It’s now got on my nerves.

Last week it looked as though it was going to claw its way out of danger, but sadly that hasn’t happened and its broken down through my stop loss.

CHART OF THE NEPTUNE EMERGING MARKETS FUND

For what its worth I think the price is likely to bounce off the low 160’s, but I don’t bet on what I think, I bet on what I see.

And what I see is a fund that’s broken down through my stop (the red line, a six week moving average) so it has to go.

As we sit this evening I’m a couple of hundred down on the deal, so not the end of the world even if I suffer a bit of slippage before my selling order goes through early next week.

This pending sale will take me down to about 83% invested, which is probably no bad thing as everywhere I look prices seem very toppy.

So for the coming week nothing to buy and just this one sale.

I have to say that I so much enjoy pitting my wits against some of the cleverest brains (and machines) in the world, which is what you do when you ‘play’ the markets. The quest to seek Financial Independence will continue next week

 

Friday June 15 2018

FAGIN’S WEEK

Fagin’s had a steady but still nicely profitable week. He opened a long position in Rolls Royce (RR.) on the 11th of May at £8.43p, sat watching it meander around for five weeks and closed out yesterday at £8.69p for a profit of £667 or 3.17%.

GRAPH OF ROLLS ROYCE GROUP PLC

The green arrows mark the action.

 

 

Friday June 8 2018

HUMBUG’S SMOKING

 

Last Friday in my weekly and monthly review of the Great British Trade off I said that May (the month not Teresa) had gone too well. I asked the question, ‘As an investor seeking financial independence how can you have too good a month?’

The answer obviously is when the results are way over trend and a correction is not only overdue but extremely likely in normal circumstances.

Well what can I say? This week has been an absolute stonker for me, and I’m beginning to wonder if we are operating in abnormal rather than normal circumstances. My funds are spread around all over the world and 13 of the 15 I currently hold are up this week.

Now here’s a thought I’ve not seen or read anywhere else.

I’M WONDERING OUT LOUD, ARE WE NOW HAVING A WORLD WIDE TRUMP BUMP?

In the US the TRUMP BUMP (where US shares are at or around all time highs because of the President’s policies) is widely reported and very real. It’s irrelevant whether you like or loathe the guy, the fact is if you give business’s tax breaks share prices will rise. Simples. Is the same thing now happening over much of the world for a different reason?

As we all know the markets are forward looking, so tomorrow’s news is in today’s prices.

Have the markets begun to price in Trump pulling off a deal and bringing North Korea into the so called civilised world? You know what? I think they might have done.

I wrote a few weeks ago that I thought if he did strike a good deal the markets would run up strongly over the summer. Is this what’s now happening?

AM I RIGHT DO YOU THINK? OR HAVE I GONE RAVING MAD?

Let me know what you think via our Twitter feed. Humbug&Fagin@:BritishTradeOff. Also on the subject of Twitter a shout out and big thank you to the 500 new followers we’ve gained in the last few weeks. We’ll try hard to make the stuff we tweet interesting, informative and relevant.

Oh well, but for whatever reason my funds are doing well.Really well. To be honest, as a momentum investor it doesn’t actually bother me why prices are going up, all I need to do is spot that they are and place my bets. My best performer is the Gam Star China Equity Fund up 3.1% this week.

GRAPH OF GAM STAR CHINA EQUITY FUND

The green circle shows where my system picked up on the rising momentum and when I placed my buying instructions. The other two China funds I bought at the same time are also doing extremely well. As are the Tech Funds and the US.

Last week I was fretting about the Neptune Emerging Markets Fund and reporting how close to the relegation zone it was. In the last couple of days of last week it dragged itself away from the wire and this week although its the fourth worst performer in my portfolio its still up. Almost 1% at.94% and is beginning to look a little safer. My £8k investment is all of £68 in profit. Wow.

GRAPH OF THE NEPTUNE EMERGING MARKETS FUND

I bang on about what goes up can come down and it sure can. But for now things are brilliant. In my drive to reach a financial independence with lots of noughts on the end things are looking good. My Great British Trade Off portfolio is up £1371, that’s 1.4% on the week and up £6645 that’s 7% since the start of our new competition year on April the 5th 2018.

Nothing to sell this week and nothing to buy either.

 

 

Tuesday June 5 2018

FAGIN GETS A PRESENT

This posting is not investment advice in any way shape or form, it is simply a record of our trades and investments. Please do not copy anything we do or have done, always make your own decisions and do your own research.

Is it Fagin’s birthday? Answer, no it just feels like it. As you may remember he snatched a quick profit of £472 out of Bodycote PLC (BOY) a few weeks ago.

But what is even better, is that the share went XD in the short time he was holding it and he received the dividend of £556.50p .yesterday.

A good start to his week, because lets face it, it’s always nice getting presents.