Friday, 31 July 2015

How did i start to buy shares?

At some moment in time after i read an endless stream of books about buying shares and playing some virtual money ( losing most of them), i decided to buy some. What i learn? First i learn that when you want to invest on long term, day trading is not good. The fees will just eat away all your profit, doesn't matter how good are you. Then i learn that is always easier to buy them yourself without hiring some clever bloke from the bank to advice you, and nowadays you can use an online platform without any trust issues. Then i learn that is better to buy mutual funds instead of individual shares. Then i found that you can buy aiming for a good dividend, in this case you do not care too much about the price fluctuation of the share as long as you get your money every year. Or you can buy aiming for an increase of the price of the share, in this case is irrelevant if the company is paying dividends or not. Then i found that mutual funds can have different fees, and a diference of only 2% in the fee level can eat away as much as 20% of your profit over the years. Luckily for us, we have now tracker funds, with shares that sell only for a minimal fee. And between the best of them i consider the ones from Vanguard, Blackrock and Unicorn.
What is the next step? Define your savings amount. Save automatically very month. Choose 3-4 equity trackers and 1-2 bonds mutual funds. Save as your life depends of it ( funny thing, this last words are not a joke at all ). Few years later you will thank me.

P.S. At the moment shares, bonds and mutual funds are only around 60% of my porfolio, as you read and learn more you will find many other sources of income. But this is a story for another day. Good luck and strong will!

Thursday, 30 July 2015

How i learn about shares?

I was talking today at work about shares with some of my colleagues. They wanted to know how i do what i do. One was not interested. "I did it once and i lost money" was his excuse. He is investing in a motorcycle collection. I ask him what are his other additional 8 income sources (Disclosure: I believe that everyone of us need to have at least 10 income sources, if not more, in order to be fully covered against any natural disaster, economic crash or anything like this. So, motorcycles and monthly wages, he needed another 8. In my opinion only).The interested ones were even worst. The put an equal sign between FOREX, currency, shares, oil, gold and other crazy things, and are thinking at day-trading as trading shares. I told them the short version. How i studied the market for 18 months, reading and learning about everything from 1880 until nowadays. How i trained myself on virtual money and i mostly lost. How i was trading individual shares with a decent return (beginner luck!), how is start to buy mutual funds (income for my early retirement funds, accumulated for my pension funds).And how i became comfortable enough after just 6 months of trading, in the end i think i will buy mostly Vanguard or Blackrock 100 UK equity tracker funds (80%) and few others (small cap and foreign ones for the remaining 20% ). In the end they understood, but even if they liked the idea of financial independence, they were thinking that 5% of their money saved for this goal is too much.

What can i do? Nothing. At least i feel like i did my duty as i will finish my job in that place tomorrow. From Monday i start another job, one that will get me even closer to my early retirement. Hopefully.

Financial independence for people working in Central London

I just heard about some rumors like commuting from Madrid is cheaper than living in London. Is that true? Let's see. As Homes&Property of Evening Standard is saying, an average one bedroom flat in Camden costs 1893 a month to rent, council tax is 111,40 and a zone 1-2 travel card is 123,30, resulting the basic cost of living in London 2128 pounds. A fully furnished air-conditioned apartment (Yes, we got sunny days in Spain) in the heart of Madrid is 532 per month, with no council tax to pay. Booking the flight with budget airlines like Ryanair will cost you on average 900 per month. That is 1725 pounds a month including train travel. 403 pounds less every month, or 4836 extra money in one year. And we are talking about Madrid. Good football, nice food, good exchange rate pound/euro, 6 months of proper summer and Latin women. What would you want more?

P.S. IF you want to move i can tell you this:
Best websites to find a home are Idealista and Fotocasa.
Best budget airlines are Easyjet and Ryanair.

And in just 5 years you will save 38.688 pounds on average 4% return. In 10 years is no less than 74.958. Living in Spain. Working in London. Any thoughts?

(Of course it will be much easier to move to a small city like Bedford,one hour to Central London by train. Where you will pay 500 for rent for a 2 bedroom flat, 55 of council tax and 367 for train (4404 for an yearly train pass) on a monthly basis, making your expenses 922 pounds. This way we will have a whooping 1206 saving per month or 14472 per year. For 5 years is 115.776 pounds (on average 4% return), for 10 years is an incredible 463.104 pounds, more than enough for your early retirement, financial independence, FIRE or whatever is your strategy called. Sometimes is just as easier as that. And 4% return means that you will learn to live with 18524 pounds per year, or 1543 per month. We can go even further. Imagine that your partner is doing the same thing as you. 3086 per month. Add 10 years from now and you can be the one of the few living the dream.)

***Don't forget to buy me a drink when you get there. Ha ha!

Wednesday, 29 July 2015

Where to start ?

My journey started after i read John Brooks - Business adventures, a history of the market and shares from 1880 until 1960. I read there about Benjamin Graham and next book on my list was The Intelligent Investor. This is how i found that Benjamin Graham was Warren Buffet mentor and that his teachings are still very actual. I realized that i can do this. I was very excited, and after i just learned the basics of the trade i did my first trading account. I found that i was not the only one who was thinking like this and a whole internet open before my eyes. Buy shares for dividends, buy shares for long term, for short term, mutual funds, taxes and other one thousands new words make their way in my vocabulary. I did some minor mistakes at the beginning, but thanks to hours of study and some help i start my investing adventure. It was first day of January 2015 when i find about financial independence and i decided that i want that to happen to me. It was a long way to where i am now, and is amazing how much i changed in just 6 months. From 300 pounds in debt in December 2014, i had an eventful, but fulfilling journey. It is 1st of July, i have now funds in private pensions (2201 pounds) and different investments (2735 pounds), meaning that i managed to save 4936 pounds working on almost minimum wage, at least 40-50 hours each week. But the difference now is that i know my goal, and the fact that each day at work will take me closer to it. Being an optimist, i think that it will take me 5 to 7 years to get there. But if i can do it, anyone can. I want to be the living proof.
And i will stop now, because i still need to go to work tomorrow. For now.

You're welcome to join me in this ultimate challenge, and teach me how to improve my plan, or learn new tips and tricks on how to live your life as if money was not a problem.

Let's go!