Saturday, 30 July 2011

Why I Save and Why You Should Too - Even if you aren't saving for anything.

I was asked recently why I bothered to save and invest and why it was so important to me.

Some people are saving for a specific one-off expenses like a wedding or new car. Others are saving for ongoing expenses like school fees or university funds. Others are focussing on retirement or on buying a plush pad somewhere hot and exotic.

The reasons why people save are as diverse as a bag of pick 'n' mix. Reasons depend on priorities and life stage, amongst other things

My reasons are somewhat less obvious but I will try to explain them as best I can.

Friday, 29 July 2011

If the goal can't be changed, change the focus.

A few days ago, some friends invited me on a day trip to a huge lake in the Peak District.

My pals, rather strangely, enjoy activities like jogging and going to the gym. I've never understood it myself, but each to their own. I like to think my body is finely honed for short bursts of intensive activity but the truth is my pals are just fitter than me.

When I am asked the question, 'Shall we go for a walk?', I usually reply 'Why?' followed quickly by a politish, "No thanks."

I do not enjoy 'walking for pleasure'. Lots of people do it, I know, but it's not my thing. I don't mind walking when there is a purpose like a carboot sale or a treasure hunt or scrambling over rocks to find rockpools. But I can think of more enjoyable ways to raise my heartbeat than 'going for a walk'.

When I was invited, the plan, on arrival at the beauty spot, was:

Tuesday, 26 July 2011

7th Day Growing Pain - Prove I'm wrong. (Funds and Bundlers)

I invest monthly via a very large UK discount broker. I invest in a variety of unit trust and OEIC funds.

Some of the funds I invest in are specialist and some are not. The money goes out of our bank accounts on the 7th of every month and the new units appear in my account between one and four days later.

There is something I think I have noticed and it has been a source of bemusement for a while.

I'm looking to be proved WRONG on this because I sincerely hope I am.

Sunday, 24 July 2011

The Perfect Way to Queue Jump?

I like observing human behaviour. Occasionally, I will do little experiments just to test a prediction or see what happens.

These little experiments are in no way scientific because they are done 'on the hop' and not under laboratory conditions.

In this post, I would like to share an observation from this morning.

Saturday, 23 July 2011

Come and Ride the Bubblecoaster: Riders at the Back Will Get Wettest! (Part 1 of 2)

Stories of investment 'booms and busts' abound. Sometimes they're called 'bubbles' and the word 'bust' is changed to 'burst' because......... that's what bubbles do. I use the words 'bust' and 'burst' interchangably. 
The word 'mania' can used instead of 'bubble'. They mean the same thing: the price of an asset (or asset class) gathers such upward momentum that people trade the asset for increasingly ridiculous prices relative to the how the asset was previously valued. The price is chased upwards until it reaches a peak and then plunges like a lead balloon.

At the peak of big bubbles, although humans are unaware, spacecraft are rumoured to have been spotted in the sky as alien news reporters are dispatched from outerspace to report on the bizarre behaviour of those involved in the bubble. ;-)

In part one, I would like to take a closer look at the common features of bubbles and, in part 2, I will see how human behaviour contributes, and is affected, by them.

Friday, 22 July 2011

Sometimes It's Hard to Stand By Your Plan: Why I Choose to Live in a Smaller Home Than I Can Afford.

We own our small home. During winter, it's warm and cosy but come summer, its seems stuffy and cramped.

For the moment, we choose to stay put although we could afford a significantly bigger and better place.

Are we making the right decision? You decide.

Thursday, 21 July 2011

If Money Grew on Trees.......

we'd all ensure we got our 5-a-day!

Who Is the Best Person To Look After Your Money? I AM BEST

I like neat little tricks for helping me remember things. So I wanted to come up with something I could use to help me make decisions on my journey to achieving independence from my salary.

I considered the following questions:

  • Who has the best understanding of my attitudes, aspirations and situation?
  • Who cares most about the state of my finances?
  • Who has the most to gain or lose from the state of my finances?
  • Who will my finances be working for?

And finally, I considered this:

'Who is the best person to manage my financial affairs?'

My answer:


Wednesday, 20 July 2011

Is the stock market 'just gambling'?

I've often heard the phrase, 'playing the stock market is just gambling', or versions thereof.

Is it true that buying shares on the stockmarket has similar monetary risks to activities such as a night at the bingo, visiting a bookie, a casino or playing online poker?

Considering that many of us have money invested in the stockmarket through personal investments, windfall shares and other financial instruments, direct and indirect, it would be incredibly disingenius if playing gambling games and investing in the stockmarket were in the same risk class.

There is much information widely available on the internet that shows that the stockmarket offers a better rate of return than other asset classes, never mind gambling, especially over extended periods of time. I'm not going to rehash the statistics here because they vary according to time period taken and are the results of a simulated model. If you want the numbers/ graphs, Google is your friend.

Taking the 10 year view is, for most people - me included, a bit too far into the future to be meaningful. I am therefore going to talk in terms of my experience as a private but reasonably confident investor who believes that, over time, the stockmarket will offer me the best rate of return I can get.

In this post, I am going to explore the case of buying shares on the stockmarket rather than short term trading, dealing in derivatives or shorting stock. Also when I say gambling games, I mean where a company is involved rather than an evening of beer and poker in your mate's back room.

First, lets see how Wikipedia defines gambling:

Tuesday, 19 July 2011

I love reading investment books......... but am disappointed today.

My bookshelves heave with stockmarket investment books and related subjects such as psychology. My collection is jokingly referred to as 'investoporn'.

When I first started reading, every chapter I read contained a revelation. Nowadays, I tend to get a handful of nuggets from each book I read. I'm happy with that because each book provides lots of revision, some different angles and a few brand new nuggets.

I'm always looking for something new to read and recently came across a book called Warren Buffett Invests Like A Girl by LouAnn Lofton . Ms Lofton, a member of the Motley Fool Team, is lucky enough to have her book heavily promoted by The Motley Fool.

I think The Motley Fool is an excellent website and is usually a great source of financial and investment information.

However, I do have some reservations about this book.

Sunday, 17 July 2011

Apprentice - The 2011 Final.

The Lord's Prayer

Helen sure can crack a joke!
Should I pick her service - it's bespoke?
With a phone and yellow pages
Profits delayed for bloomin' ages.

Should I throw Jim a bone,
He who kissed the blarney stone?
Teaching money to the youth,
huddled in a computer booth.

AA - Apathethics Anonymous?

About eleven years ago, I signed on with the AA. I don't think I've had to call them out in the last 5 years but every May, as regular as clockwork, I get a letter telling me how much my new, increased premium is going to be. It was going to be £207 for this year.

Two hundred quid plus sounded a bit steep and breeching the £200 barrier seemed to jump start me into action.

I had a quick look on the AA website and also RAC and Green Flag.

The letter told me (twice) what a valued customer I was so I thought I'd see if that were true.

Since I'm much better at being assertive and masterful over the phone than in person, I decided to ring them up and see what was what.

After a few security questions and polite greetings, I gathered I was talking to an operative who I will call Mark, which isn't his real name but he was a very nice chap.

The trouble with compound interest - a theory

Many people who have a passing interest in finance are aware that compounding is great for growing your pile (or tailspinning you into debt) but why don't more people act on this startling phenomenon?

I have a theory - and it is only a theory but here goes.

The thing with compounding is that it takes an awfully long time before it starts to really do it's thing.

Just like its cousin, simple interest, it limps along for the first few years, before it starts to take steps, followed by strides and finally great big gorgeous leaps - leaving its simple cousin eating dust.

Quite simply, I think people get bored because the waiting is akin to watching paint dry.

Saturday, 16 July 2011

Did endowment mortgages deserve to die in disgrace?

This morning, I was looking through some documents and came across some papers relating to my mortgage.

I have an endowment backed mortgage which is an interest-only loan backed by an endowment policy. Buying an endowment mortgage turned out to be a big mistake, but at the time, I knew no better.

I know for a fact my endowment will not cover the mortgage when the mortgage becomes due in a few years time. Luckily, I have known this for a while and, years ago, switched a good chunk of the mortgage from interest-only to repayment. It won't matter if there is a shortfall.

A mortgage is a long term loan secured against your house.

There are essentially two ways of repaying your loan:

Friday, 15 July 2011

The funniest present ever: a seemingly insulting mug.

Although I have another few days left, the children broke up today. Amongst the presents I received, there was one rather unusual one.

In an unguarded moment, I once let slip a childhood story to a girl in my class. It was soon shared around the class. Too late for me - the cat was out of the bag.

One summer from my youth, the film BMX bandits came out. It starred a very young and frizzy haired Nicole Kidman. For those of you who aren't familiar with it, it's about some Australian kids who defeat some adult wrong-doers using not much more than their courage, wile and BMXs. In hindsight, it was a truly rubbish film. Absolute tut. But at the time, it captured the zeitgeist. There is one iconic scene where the main characters, whilst running away from some baddies, go down a water chute at a swimming pool WITH their BMX's. Truly the stuff of childhood dreams.

Investing is a picnic: the difference between shares and investment funds.

I like visualisations and analogies. You've probably gathered that from my other posts. So here is another one.

Imagine you are going on a gourmet picnic with your friends. You have agreed to limit your food budget to £5 each.

Come lunchtime, you have two options:

1) everyone brings and eats their own thing.

2) everyone sticks their £5 in the kitty. Someone who claims to be a culinary genius goes and shops for picnic food, shares out the goodies and plates it up. You get one plate.


Option 1 is similar to investing in individual shares.

  • You choose the items - you get to enjoy all the nutrious and delicious goodness if your item is particularly tasty.
  • You may have picked up a mouldy pork pie. In that case, you get to nibble on the un-mouldy bits, or, at worst, miss out.
  • The number of items you can buy with your £5 is limited - you have to buy the whole box of your favourite Super Nutty Choco-Crunch chocolate biscuits, even though you may only be able to eat three before nausea sets in.

Option 2 is more like investing in investment funds.


  • Convenience: you don't have to spend hours at the market.
  • Your culinary genius may produce a whizz bang gourmet delight.
  • You get a wide exposure to lots of different foods, some which you wouldn't have thought of for yourself.
  • It doesn't matter if your piece of pork pie is mouldy - there is plenty of other stuff on your plate.

  • Your culinary genius may turn out to be more greasy caff than posh nosh.
  • If you like a particular item on your plate, you can't get seconds - you get what you're given on your plate.
I know that this is not an exact analogy but I think it's a decent start.

Bon appetit!

Thursday, 14 July 2011 - a great story

The company, run by the publicity shy tycoon Mike Ashley, has hit its profit target of some £200 million.

The 2000 staff, whose average salary is £20k/ year, have been awarded shares worth some £40k each.

The company has got some very positive advertising on the news on TV.

Growing My Own's Investment Strategy

When people ask "What should I invest in?", it's akin to asking "How long is a piece of string?"

It depends on a multitude of things including age, disposable income, lifestyle, time scale, attitude to risk, knowledge, confidence. The list goes on.

With this in mind, I can only talk about myself. So lets consider me:

Join Me on Facebook

For those of you who like a bit of facebook time, it would be great if you join me on facebook.!/pages/Grow-My-Own-Money/131939456890147

I envision the facebook page being far more investment focussed than this page.

My lesson in risk evaluation from a nine-year old boy.

I teach primary school. This year, I have been lucky enough to have a maths set containing a few gifted and interested eight and nine year old mathematicians.

Every week, we do a timed times table activity. This involves filling in 121 answers to different times tables questions as quickly as possible. The idea is to build speed and accuracy. The children are hungry to better their scores, starving to beat each other and absolutely ravenous when it comes to the idea of beating me.

For the last few years, my score has remained static at around 2 minutes and 20 seconds. I don't think I can get much faster because, being a bit heavy handed, I can't write any faster.

A while ago, a boy asked if I would accept an open offer to give him a treat if he could beat me. I weighed up the odds and accepted, also saying that I would buy the whole class a treat if any one in the class could beat me. They all tried but he's the only one that has come close - even then,  I've always had a good 10 seconds on him.

Wednesday, 13 July 2011

Do you back the horse, the jockey or the racecourse?

When investing in a new investment, one of the first questions that I ask myself is the above question:
Am I backing the horse, the jockey or the racecourse?

If I choose to back the racecourse, I think of it as picking a sector (geographical, like China, or sector, like mining). I do this particularly when investing in tracker funds and ETFs.

If I choose the jockey, I'm backing the competencies of a fund manager (of an investment trust, unit trust or OEIC).

If I choose the horse, then I'm basically picking individual shares myself.

Which is best?

Tuesday, 12 July 2011

Why I valued my NVQ more than my degree.

In my opinion, far too many people go to university at the age of 18 these days. There are many good things about a university education, I'm just not sure 18 years old is the right age to make best use of the opportunities that university offers.

On the social side, I think that university makes a superb step between living at home and adult life. But the social side was a by-product of going away to university. It is also a hugely cost-intensive commitment today. (Unless you are being bankrolled by The Bank of Mum and Dad).

It's the academic side I'm not so convinced by - unless it is for a professional course that leads to a professional career.

Joshua Kennon - One of My Favourite Investment Authors

Joshua Kennon is one of a handful of investment authors that I really enjoy reading.

What I really like about his style is his ability to take quite complex principles and explain them very clearly and simply. When I read his stuff, I can almost hear him speaking although I have never actually spoken to him.

Another reason I like his writings is because he sometimes takes a commonly discussed issue and discusses it from a different angle.

Check out this article as an example of one of many:

Monday, 11 July 2011

Dot.Doom Fever - A historical story.

One long hot summer, when the internet was still in its infancy, an epidemic swept through Planet Wonga, where I once lived. This is the story of that time.

During the outbreak, previously rational people, myself included, caught a debilitating illness called Dot.Doom fever. Even though the fever was contagious, there were no physical symptoms and the fever could only be diagnosed by observing the symptoms of irrational behaviour and delusions that infected people displayed. Although not everyone caught the illness, every sector of society was affected: from doctors to cab drivers, hair dressers to solicitors, office workers to architects.

Prior to the epidemic, people used to go about their usual business of building houses in a slow and controlled manner: first the foundations, then the walls, followed by the roof and, finally, the additional luxuries like roof gardens and hot tubs.

One of the most pernicious effects of the Dot.Doom fever was that, in the early days, it made people feel like Masters of the Universe and every house they touched seemed to turn to gold. As you can guess, people started building more and more houses. Some of the afflicted even borrowed Wongatons, the currency of Planet Wonga, to build or buy more houses.

Sunday, 10 July 2011

The Widget Maker - A story.

Gerry made widgets. He loved making widgets and so did his team of widget makers. He loved widgets so much, he even called his business 'WidgetsRUs'. The only thing Gerry loved more than widgets, his wife and kids excluded, was cold hard cash.

Being a smart man, Gerry charged £X each per widget and then slapped a trailing charge of between 1% and 2% a year on each widget he sold, depending on the widget. (Gerry sold a whole range of different widgets - each type designed to do something slightly different).

The only thing that cast a cloud over Gerry's happy world was having to deal with the people who bought small amounts of his widgets. He didn't mind the people that placed massive orders so much, it was more the little buyers that used to ring him up for only 50 widgets at a time that annoyed him.

Indeed, he had once been known to yell down the phone at a startled little buyer, "What do you think this is? A 10p pick and mix store!"

If you pay your utility bill, pay yourself!

Every month most of us watch our wages slip out of our current accounts by direct debit and standing order. It's gone! Never to be seen again.

Would you ever NOT pay your utilities, mobile phone, insurance bills etc? No?

PAY YOURSELF too. Every month. Automate it.

A small start is better than not starting.

The Chessboard: A story

Once upon a time, in a far a way kingdom, lived a king who was very greedy and taxed his people until they were almost broke and starving. The king was not a totally bad bloke - just very greedy, foolish and far too removed from his people.

Early one morning, the king decided to go for a swim in the sea. Slipping out of the palace, the king headed to the beach leaving his guards and servants unaware of his whereabouts.

Saturday, 9 July 2011

What is an ISA? Who knew wrappers could be so much fun?

An ISA (Individual Savings Account) is a tax shelter - like the polytunnel
over your crops or the wrapper around your sweet, the box around your chocolates etc.

So a cash ISA means that you don't pay tax on your interest, like you would have to in a normal savings account. It's still cash in your ISA, its just that the cash is sheltered from any taxes that may be due.

You can have one if you reside in the UK for tax purposes (for most of us that means having a National Insurance number) and are over 16.

The Debt: A story

It was a grey and rainy day in a village deep in the
countryside. To the untrained eye, the village was sleepy. The word 'ghostly' would be a better description. A new motorway nearby had pretty much sent the village spiralling into obscurity.

The village was a shadow of it's glorious past and times were hard for everyone. People preferred to shop in the ''pile 'em high, sell 'em cheap' cathederals of consumerism located out of town. In these tough times, shoppers had chosen price and convenience over personal service.

Everybody was in debt and relying on credit to see them through. The few remaining small businesses in the town were hanging on by a thread.

On this particular day, a wealthy tourist was travelling through the village, on his way to somewhere else. Initially charmed by the first appearances of the quaint little village, he decided to spend the night in the village. Looking for somewhere to stay, he stopped at the local Bed & Breakfast and laid a £50 note on the desk, telling the B&B owner that he wanted to inspect the rooms upstairs before booking a room.

This is where we pick up the story.

Passive Income: The Holy Grail of Income

Imagine earning money while you DON'T work.

Assuming you are in paid employment, each day you go to work and engage in activities as directed by your employer. In effect you exchange your labour, knowledge and skills for a pay cheque. There is absolutely nothing wrong in doing this but it does mean that you have to be directly involved and physically present each day.

Yeah, you could do overtime (assuming you are in a job that pays overtime) or even take a second job but these still require you to be personally present and exchanging your labour for cash.

If you are in paid employment, you can't be elsewhere during your working hours. That means you can't be earning more money by working somewhere else or watching football or
chilling out or white water rafting or whatever else it is that
takes your fancy during work time.

So, is there another way?

Attitude: the difference between Americans and the British.

Google 'personal finance blogs' or 'investment blogs' and you will find hundreds of them. The majority are written by our friends over the pond.

I know we have money sites in the UK. But I am talking specifically about personal finance blogs.

Friday, 8 July 2011

Cut your coat one size smaller than your cloth....

In other words, try living just below your means.

I assume you are reading this blog because you have more than a passing interest in growing your own. (or you've stumbled on this page whilst waiting for your tea to brew).

Question is: are you prepared to delay gratification today for something much much bigger in the future?

Make the commitment and it all becomes much much easier because your mindset and priorities change. That, I guarantee you.

The ship: A story

If I knew where I'd heard it, I'd say but I can't remember. Anyway, here goes:

There was a ship owner who had a problem that was causing him much aggravation. He had a new ship due to launch but it wouldn't start. His engineers had tried to fix the problem but it was all in vain.

Thursday, 7 July 2011

News of the World Self Destructs Due to Phone Tapping Furore.

Can't say that I'm bothered whether the NOTW stays open or not.

However, now the printing presses are being ground to a shuddering halt, what really interests me is what motivated and compelled so many people to indulge in such an appalling activity in the first place.

Never a lender nor a borrower be....... is this good advice?

I would say it is good advice when talking about borrowing from your friends and family. I would even go so far as to say it changes the balance of the relationship, often for the worse.

But then there is comercially agreed debt and that's a different ball game altogether.....

Wednesday, 6 July 2011

Are we teaching our children to write wrongly?

I remember reading an article a while back about what makes a fiction author popular with readers.

This link is not the exact article I read but is similar. Check it out here.

Celebrate the first step.

It might only be a small one but it means you're taking in action in a particular direction, whatever that direction may be.......

Bon Voyage!

Tuesday, 5 July 2011

Why I think too much cash is not good for growing your own.

My mate has £10,000 in a safe. It's been there since 2004.

He told me about it a few days ago. I was pleased he'd managed to amass this amount but I was very surprised that he'd chosen to stick it in a safe.

Ways I can supplement my income.

Things I can do to supplement my income/ investment fund:

(1) Win the lottery - highly unlikely, moreso because I don't play it.
(2) An inheritance - moderately unlikely.
(3) Get another job - possible but not practical.
(4) Part time self employment - possible

So, it looks like self-employment of some sort is the way forward. But what to do?

Monday, 4 July 2011

Teachers are a resourceful lot.

I'm a primary teacher.

It seems to be a general trait that primary teachers can make something out of not very much.

Kids! You've got to admire their capacity for conniving.

Enter one rather upset mum to my classroom today. She wanted to know why her daughter, who I will call Shannon, had been separated from her friends for next year. According to mum, Shannon had been desperately upset all evening at been torn from her friends.

I thought it was odd because I knew I'd put Shannon and her bestest friend in the same class for next year. In fact my year group colleagues and I had spent quite a while ensuring every child would have at least one chum in their new class.

Is it a good idea to define yourself by one occupation alone?

It occured to me today that I define myself as being a teacher. That's nice, but dig a little deeper and its also a bit unhealthy.

Why? Because 'being a teacher' currently defines my income and although I hope it continues to be a major source of my income for years yet, I want to develop other revenue streams. Not necessarily huge ones.....a trickle will do for starters......

Sunday, 3 July 2011

What's the quickest way to make a small fortune?

Answer: start with a big one.

Boom! Boom! The old cliches are the best.

But for those of us that don't have a big fortune to start with, I intend this blog to be a source of information and ideas. That's the plan. But do plans ever go to exactly to plan? Not in my world and not in my classroom.

Why I'm Growing My Own.....

Let's be frank! It looks like whatever happens with the government and the unions over the next few months, we teachers are going to be left with a lesser pension than we signed on for.

So what to do? I'm aiming to get rich enough to not need my pension whilst still teaching.

How am I going to do it? I'm not totally sure yet but I'm up for the ride and ready for the journey.

Feel free to join me. :-)