Archive | July, 2012

Are you part of the 8%

25 Jul

Several years ago a class of teenagers with dreams and aspirations for their futures were studied to see what they achieved during their lifetime.  Their backgrounds were basically the same.  They did not come from privileged backgrounds or have above average incomes or above average intelligence.  They were ordinary teenagers who went on to live their adult lives.

The results of the study are very interesting.  Of 100 pupils coming up to their 65th birthday – retirement age – the statistics are:

38 were dead

62 were still alive.  Of those 62 still alive

38 were financially broke

16 still needed to work just to survive

7 had retired and had a liveable income in their retirement years

1 was wealthy.

Only 8 achieved financial independence and only 1 was wealthy.  

The question I have to ask is why did only 8% of the population achieve financial independence and why did only 1% go on to achieve significant wealth?  The only thing the 8% appear to have in common is a willingness to learn and take action.

From my experience these are areas most people fail in and subsequently fail to achieve financial independence:

  • Lack of Knowledge
  • No Goal and No Plan
  • Buying liabilities rather than assets
  • Lack of confidence in their own abilities 

In future blogs we’ll look at each of the above reasons for failure in more detail but for today you can start your financial knowledge with my latest book Surviving 2012 available from Amazon books

So the question is: Are you going to follow the 92% who failed financially or are you going to become part of the 8% who achieve financial independence?

 

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How saving £2.73 a day can make you a millionaire

22 Jul

What would you do if I told you how saving £2.73 a day can make you a millionaire?  There are no gimmicks, no having to sell anything or start a business just save £2.73 a day and watch it grow.  Compounding Interest is one of the least used or understood principles of investing yet it is the most powerful tool available to the investor. 

Let’s look at an example of how compounding interest works.  In year one of saving £2.73 a day you have accumulated savings of £1000.  Interest earned on your investment is £140 so by the end of your first year of saving you now have a grand total of £1140 saved.  The total amount, including interest, is left in your savings and another £1000 added to it.  Interest earned for year 2 is £300. The process of leaving the interest in the savings account and adding another £1000 a year is continued.  By year 6 the interest you earn is £1195 and is more than the £1000 a year you are saving.  Your total savings by year 6 are £9732.  You have saved a total of £6000 and earned compounding interest of £3732.

Let’s look a what happens in 10 years time.  You continue to save £1000 a year.  Your annual interest is £2707 and your total savings are worth £22045.  You’ve saved £10,000 over 10 years and earned £12,045 in interest. You have now earned more in interest than you have saved.  By year 37 you will be earning interest of £138,921 per year and your total savings are worth £1,130,221.  You are now a millionaire and all because you made the decision to invest £2.73 a day.

When I show this example to audiences the immediate reactions I get is you can’t earn 14% interest and you haven’t allowed for tax.  So let me explain how I get more than 14% interest and don’t pay any tax on the interest I earn.  I use an ISA.  The government allows any UK resident to save up to a set amount every year (in 2012 the total is £11,680) in an ISA product tax free.  The interest you earn on your savings is also tax free.  To achieve a 14%+  return I use a shares and stocks self invested ISA and buy shares in high yield dividend companies, investment trusts, bonds and gilts.  There is no capital gains tax payable on any share price profit provided it was purchased within the ISA wrapper.

You can get further information on compounding interest and other investments in my latest book Surviving 2012 available online through Amazon books.

So now you know how saving £2.73 a day can make you a millionaire will you be the next millionaire?  

 

 

 

 

 

 

 

Welcome to Investment World

12 Jul

Investing is simple. 

Investment World will show you how easy it is to take your first steps to becoming financially independant.  It is not for sophisticated investors.  Investment World is aimed at the absolute beginner to investing who wants to improve their finances.

With regular posts you can learn the strategies that help everyday people create greater financial independence for themselves.  Anyone can improve their wealth and income just by following some basic steps. 

You can start investing with as little as £1 so there are no excuses for not starting.  The only skills you will need are a willingness to learn, patience and the desire to take action now.  This is not a get rich quick scheme.  If that is what you are looking for you will need to look elsewhere.  Here, you will find a path to financial independence that will take 10 years or 20 years or even longer to achieve.  You do not have to sell anything, you do not have to introduce more people or any other quirks you find on get rich quick websites.  Investing is about you and your money. 

As someone new to investing you will need to be willing to learn.  Starting with the basics and as your knowledge grows you can expand the type of investments you hold.  You will need patience while your investments grow and the magic of compounding kicks in.  There are no shortcuts to investing just simple steps taken every day.  Most of all, you will need to take action now.  Now because every day you delay you will need more and more patience while you wait for the magic of compounding to start.

Welcome to Investment World – let’s get your journey to financial independence underway.

 This website is based on the principles taught by Karen Newton in her book ‘Surviving 2012’ available through Amazon Books.