Optimal Car insurance

Following on in the current theme of 'Frugality', with articles such as 'How an investment of £30 has saved me £1044' here follows an article on saving money when buying car insurance:

Introduction: What is all this Insurance?

This article conveys to the reader a personal problem that I have with car insurance companies. Many people do not think long enough when they are paying out for car insurance. Aside from the fact that many do not use comparison websites, the ones that do tend to find the cheapest fully comprehensive insurance and be done with it. If this sounds like you at all I implore the reader to take not of the following article. The reader should gain an insight into how to optimize their choice of car insurance. For one thing the reader should learn the value of closer analysis into financial matters, appreciating that there are always more options available than the obvious few.

There is no doubt on the matter car insurance is incredibly expensive. I believe that given the choice many people would not opt for car insurance. Unfortunately however, it is a legal requirement.

I have a slightly alternative way of looking at buying car insurance...and hopefully it's a more money efficient method. I make a few assumptions:

  1. When it comes to small bumps and scratches most people pay to fix their car themselves (and not allow insurance companies to get involved) as they reason that they will save more money in the long run by not losing their no claims bonus and not having their premiums put up.
  2. Once a car is purchased it loses on average half its value as you drive it off the forecourt
  3. I am assuming a UK car market and UK law but I assume that most economically developed nations have similar issues
  4. Insurance companies exist to make money by having people pay them more than they ever have to pay out (simple business set-up....or not!)

Types of Insurance

  1. Third Party: is a legal requirement ensuring compensation is paid when there is injury to another person or their property as a result of your driving. However, it doesn't cover costs incurred by you as the result of an accident (remember here that we have assumed that most people pay off most of the damages themselves, unless the costs are too great).
  2. Third part fire and theft: provides the same cover as above but also insures against the risk of your car being damaged by fire or being stolen.
  3. Comprehensive: provides the same cover as previous, however it covers you should your vehicle be damaged in an accident. Other additions may include: courtesy cars, insurance for excess and legal expenses, roadside recovery, and vehicle repairs

My situation

I shall now explain my current situation and how I hope to proceed. I hope that you will follow my logic and that it can be helpful to others out there:
After checking eBay and other comparison website, I was shocked to find that the current value of my car is about £1000 :-(
I decided to use a comparison website to see what the best deals for car insurance were for someone of my driving experience. I should note here that I am male and have been driving for about 5 years without any accident or claim.
I was shocked for a second time (need to stop checking these sites!) to find that to get fully comprehensive insurance it would cost me £1369.19 and that was the absolute cheapest provider. That's more than the current price of my car! If we didn't have to pay for insurance and my car was damaged, it would be cheaper for me to buy a new car of similar value (if not better quality) than to pay insurance and get the car fixed.
The cheapest third party only insurance was £1184.12.
The cheapest insurance that I could find for someone like me was £960.11 for third party fire and theft. Still a ridiculously high amount considering the worth of the car. Mathematically I think that there is only one optimal to the problem of which insurance to purchase.

Potentially Optimal Solution

The best solution that I can think of is that I buy the cheapest insurance possible regardless of whether or not this is the minimum required insurance.In this case I end up buying third party fire and theft. Observing assumption 1 it is clear that many of this 'extras' that fully comprehensive insurance would cover, many people purchase themselves out of fear of paying an excess or losing their no claims, so where was the benefit of paying the extra costs of fully comprehensive insurance.
For those that disagree with me (and you are entitled to in the comments box below) and argue that they would have claimed on their insurance for the small bumps and scratches I have a possible alternative for you. Why don't you put the excess money that you would have spent on the fully comprehensive insurance into a savings account. This can be your own personal "car kitty". In this case you would put £409.08 in it. This is the difference between the payment between fully comprehensive insurance and third party fire and theft.

Reasoning

Assumption 4 suggests that regardless of what you do the insurance company will find a way to make its money back. If you don't claim on your insurance you will have to pay out and the insurance company walks away with your coverage money without having to pay you a penny. If you do make a claim then you make lose your no claims bonus and have to pay an excess. Furthermore, the insurance company will probably put up the price of your insurance when you are up for renewal in an effort to reclaim their lost revenue. It's a rigged deck where the house never loses!
The solution I have presented to you makes sense. In any situation the insurance company wins, so why not mitigate your legally required losses by buying the minimum amount of insurance required. BUT we also take the sensible decision to build up a small pot of savings (the difference between the payment between fully comprehensive insurance and third party fire and theft) to help pay for any damages to your car, preventing us from claiming on insurance and bumping up your costs.

One important thing to note

Of course there is one key assumption in all this. That is that your car is not worth very much. Of course if you're driving a brand new expensive car the maths is a little different in which case purchasing fully comprehensive insurance may make sense as the insurance money you are paying is not worth more than the car itself (by the way, as an economist I am almost 100% certain that there is something wrong with a market whereby to insure an object of a value X you need to pay out X + Y!).
However, I hope that this article has made you realise that in buying insurance, it is not as simple as choosing fully comprehensive over third party. Instead it involves careful analysis to weigh up all the options.

Do any of you disagree with me? Please say so below and we'll debate it out. Let me know if you think I'm crazy!
Have any of you got any innovative methods for saving money?


Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all. 

How an investment of £30 has saved me £1044

Following my previous article on Frugality and what it is I felt it time to reveal where I save myself a substantial proportion of my income each year and I recommend all families to make this investment if they can:

One Hell of an Investment

I've got a brilliant investment idea. This is not a con. It works, for real! I made this investment one December seven years ago and it only cost me £30. Since that time, 87 months have gone by and this great investment has allowed me to amass an amount of savings worth about £1044. What is more is that this small investment keeps on giving. That is almost an annual return of about 500%!!!

Clauses:

  • I don't mean to be sexist but unfortunately this investment tends to benefit boys more than girls. However, mothers of boys and wives of husbands will also gain from this investment.
  • Whilst this investment doesn't actually generate extra money it allows you to save large amounts of money by reducing your outgoings in a particular area.
  • WARNING: This investment may not be suitable to all hair types!!??


The Haircut Haircut

For those of the readership that has not already worked it out: I'm talking about saving money on your haircuts. On average haircuts can cost anywhere between £8 to £20 depending on the style and quality. I used to pay £12 each time I went to the hairdressers, which was about once a month.

However, seven years ago I invested in a set of clippers. This was a great investment and I haven't looked back since. It allows me to have a haircut more often and it's really easy. Unfortunately you are slightly limited to a shorter haircut but that was never a problem for me and shouldn't be for many of you, especially if you invest in a set of clippers that have various adjustable guards for many lengths of hair.

Apart from a great haircut (and in my case he is excellent!) you can save yourself a lot of money. A set of descent clippers is about £30 but you can pay up to £50 for a really good set. This is a small price to pay considering you get your money back in saved haircut expenses in about 3-4 months. What's more is that if you have a family you could be saving many peoples' haircut costs each month.

So there you have it: the haircut haircut, saving money on your monthly haircutting costs.

Has anyone else got money saving ideas that save you vast amounts of money for little outlay? If so share in the comments box below.


Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Frugality

This post is to explain to the reader what I mean when I have used the term frugal. I think the reader may be surprised by some of my slightly alternative opinions on the matter:

Frugality and the key to success


I feel that in many of my recent posts I have referred to the idea that we can save money by being frugal. It has only recently occurred to me that I have not once stopped to explain the idea of frugality and have just assumed knowledge. In the classic phrase: "better late than never" and so now I shall try to convey my ideas on the subject.

Puzzle piece

I first referred to frugality in my Get Rich Plan, writing:
"Frugality - this does not mean living off beans on toast for the next 30 years and then living off "turtle-duck soup served with a golden spoon" for the rest of my life. Everything in moderation, including moderation! There's nothing wrong with enjoying yourself from time to time but keep a record of everything you're spending. Open a 'note' on your phone and every time you spend write it down under a self-made category that you will understand. For example, money spent on eating food or drink out, I categorise as 'restaurant'. Make sure you update an excel spreadsheet every so often with your monthly income and outgoings. Furthermore frugality requires seeking the best deals on comparison websites for all kinds of goods and services, considering second hand and even changing things like your bank (regularly) to get the best current accounts."
This was the first point in my get rich plan because the first thing to do to reach financial freedom is to reduce your spending. Frugality is a key piece in the puzzle that is the game of life if you want to be successful. As I wrote previously, this does not require you to live on very little, only that you don't over-indulge often. To put the idea as simply as possible, buy needs not wants.

Frugality: A not so simple definition

Wikipedia defines frugality as:
"the quality of being frugal, sparing, thrifty, prudent or economical in the use of consumable resources such as food, time or money, and avoiding waste, lavishness or extravagance" (Wikipedia, Frugality)
To this I would add two points:

  1. I believe that frugality also should be included in the consumption of services such as haircuts and insurance etc
  2. Frugality should not interfere with comfort. EVER. If you are uncomfortable in any way (physical or mental) and it is by consumption choices that you make, then you are not being frugal, you are being stupid (sorry). You have one life to live. Enjoy it. This does not mean that you should be unhappy for the first half of it and live in luxary for the second half. Much like how a diet should be frugality is a life decision, and should not be something to be switched on or off.


Frugal implementation

Living in a frugal way is quite easy. All you need to do is ask yourself three questions. The first two are:

  1. Do I need to pay this price?
  2. Do I need this now?
If the answer to either of these questions is no then you do not need to buy the good or service now. However you must also ask yourself a third question:
    
     3. Would it cost too much time to wait to buy the good or service at a later date or to shop around?


Saving two pence (or cents) on a can of beans will not make a massive difference so going on a 20 mile car journey to find the cheapest beans in the country would be madness. If the answer to this question is yes then you might as well buy the good or service now so long as it is NEEDED and not wanted. NB. Measure the cost of time in terms of what else you could be doing with your time, e.g. your wage per hour.


Fitting in the Plan

Frugality fits into the plan in a particular combination with other things:

  • Frugality + increasing salary = increase savings,
  • increasing savings + paying off debt = increase cashflow,
  • Increase cashflow + Investments = Financial Freedom
I'm interested to hear people's ideas about how to be frugal. I have many of my own that I intend to share of the next few posts  but please feel free to comment any of your own below.


Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

The Great Takeaway Pizza Con

This is a fun little article to demonstrate how knowledge of a bit of simple mathematics can save you hundreds over your life-time...and make you feel really smug in the process.

The Con

We're all being conned and the worst thing is that most of us don't even realise it. Of course, I'm talking about the great takeaway pizza con. Takeaway pizza companies have been conning us for decades and I want to put a stop to it.
The con is a simple one, based on simple business statistics. Basic psychology teaches us that people prefer a large pizza (12") and not finishing it, to ordering a small (9") pizza and still feeling hungry. Takeaway pizza companies feed off this knowledge and bump up the price of a large. Fair enough, on might say. This is simple supply and demand. However, there is a way to beat the system with knowledge of a little basic mathematics.

The Solution

All you need to know is one simple equation:
The area of a circle A=πr^2,   where r^2 = r * r ,   or r times r, where r is the radius of the circle.
If this seems a little complicated please don't worry, I will guide you with a friendly hand through this mirky mire of mathematics.
Pizza companies usually give you the diameter and price of each pizza size.
For our purposes a small pizza will have a diameter of 9 inches (9") and will cost £2. A large pizza will have a diameter of 12 inches (12") and will cost £5. As you can see the large pizza is more than the cost of two smaller pizzas, but is it worth paying more for the larger pizza? That is, do you get more bang for your buck, or I should say more pizza for your dollar!


The mathematics - don't panic

To work out the radius (r) of a pizza you observe the diameter and halve it. Whilst we know that π is a really long number that starts 3.141592654.....all we need to do is work out our answers in terms of π.

In the case of the small pizza: the area of the pizza = πr^2. Since the diameter of this pizza is 9" thus the radius is 4.5" (half of the diameter). This means that the area of the pizza = π(4.5)*(4.5).
Using my brilliant calculator like mind we can see that this is = 20.25π which cost you £2.
Thus if you bought two 9" pizzas you could get 40.5π worth of pizza for £4.

In the case of the large pizza: Since the diameter of this pizza is 12" thus the radius is 6" (half the diameter). This means that the area of the pizza = π(6)*(6)
The area of the pizza = 36π which cost you £5.

It doesn't take a genius now to see that if you had bought two small pizzas you would get more pizza for 20% off the cost of a large pizza.

Doesn't it make sense to always buy two smaller pizzas saving you a little cash and giving you more food!

The conclusions

This sort of thing doesn't just happen in pizzas, it happens in all sorts of goods in the supermarket as well. Buying in bulk is not always so beneficial. Always check the £ per kilogram if the have it (or equivalent metric and currency).

Hope you enjoyed this brief mathematical thought experiment and that it wasn't too tough for any of you. Please let me know what you thought of my findings in the comments section below.

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Investor Mistakes

The purpose of this article is to highlight to the reader potential mistakes that an investor may make. Avoiding these will help to ensure higher returns


Investor Mistakes


I recently wrote an article spelling out the attributes that make a good investor and so I felt that it was time to outline what it is that poor investors are doing wrong. The idea is that if we can avoid these fatal errors we should be able to generate higher returns from investments in the stock market. This article assumes that you invest using the Buffett-Grahamite investing technique of value investing. If you are already using value investing then making sure that you are not performing any of these investor mistakes should increase your annual returns.


  1. Not starting early enough:  To truly gain the benefits of the growth of a company you need to be investing for the long term over several decades. Naturally then the best time to start investing in the stock market is as soon as possible. Even better is helping your children understand aspects of the stock market now and helping them make investments for the long term from an early age as possible.
  2. Quick buy and sell: The quickest way to eat away at your profits is to buy and sell shares every week or two. Commissions and taxes will very quickly eat away any profits (if you've made any in this short time period). Once again I remind you to have a much longer time scale. Try not to check your shares every day. You are not a day trader. Without working in an investment bank you are not going to beat the day traders. The only way you will beat them is in the long term, over 5 to 10 years.
  3. High Commissions: Ideally you want to find a cheap broker who doesn't take to much profit away in commissions. I use a cheap on-line trading platform that charges me £5.75 per trade, regardless of size.
  4. Invest with debt: This is a terrible idea. Investing is a risky business as it is without funding it with debt. Don't do it! Simple.
  5. Over or under diversify: Having too many shares spreads your risk but gives you little room to make large profits. Having too few shares leaves your portfolio open to large swings if one or two shares have a bad spell. Buffett recommends that the casual investor should be looking to manage 8 to 12 shares. This is an amount that is manageable and gives you some form of diversification.
  6. Listening to people or emotions: This is the worst mistake that most investors make is to listen to the 'wisdom' of others in a bar or pub. Any tips should be treated as if a five year old told you. Ideally you don't want to follow trends but if you want to check the numbers on a particular share that you keep hearing about feel free to do so using value investing. Furthermore if you've calculated the numbers and everything checks out but the market appears to move against you don't allow your panicked emotions to dictate a trade (to sell for e.g.). If your numbers were correct, have faith and be patient and the market will eventually follow.
Are there any other big investing mistakes that people tend to make? Do you agree with the 6 points made above?

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Why I use a credit card

This is an article that should help to explain to it's reader the benefits of using a credit card over a debit card or just using ordinary cash:


Benefits of a credit card



Just some of the benefits of Credit cards
Assuming you are good with debt and can control your spending habits, the following are six reasons why you should use a credit card (paying it off in full each month):


  1. Cashback - Many credit cards offer cashback. This is free money!!! Why would you not want this? For example you use a credit card that offers 1% cashback on all expenditures. You use this card for one years purchases and end up spending £10,000 on the card. This entitles you to £100 cashback from the bank, for free.  Sometimes you will be asked to pay for a cashback credit card. Read this article to see if it's worth it.
  2. Rewards -  In addition to or instead of cashback a credit card can generate points that can be exchanged for airmiles, vouchers or other gifts. Free things!!!!! Sounds great!
  3. Section 75 Cover - Essentially this means that the credit card is equally liable for breaches of the contract between buyer and seller. This means you have free cover for undelivered goods, faulty or damaged items. You have the right to refunded if you claim within 6 years. Even if you only pay for the goods in part with credit card, you are covered for the full cost of the item. There will be an equivalent in the USA.
  4. Travel Insurance - Free travel insurance is available with some cards.
  5. Emergency credit cards or cash - If your card is lost, stolen or damaged then the credit card company replaces your cards or could potentially provide up to £1000 in cash within the hour.
  6. Quick loan - At one point in the early stages of his entrepreneurial career, the successful businessman Duncan Bannatyne had £30,000 worth of credit card debt. He needed this to help start one of his businesses and it was a quick way to gain access to a large amount of credit. The key is to pay it off in full each month. Furthermore, using credit rather than the money in your current account delays money coming out of your account allowing your savings to accrue an extra months worth of interest.
What are the reasons not to use a credit card? Throw them out and I'll try to convince you otherwise.

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Is it worth paying for a cashback credit card?


This is an article in response to Sun's article  on the new American Express cashback card. It should enlighten its readers on the pros and cons of paying for a cashback card. Hope you enjoy reading:

Preliminaries

Sun at thesunsfinancialdiary.com recently posted an article about American Express replacing their old Blue Card Cash card, which we will refer to as card A, with the new American Express Blue Card Preferred Card, which we will refer to as card B. Sun emphasised the benefits of the new card B over A. Whilst card A has 3% cashback on supermarkets, 2% cashback on gasstations, and 1% cashback everywhere else, however the new card B has 6% cashback on supermarkets, 2% cashback on gasstations, and 1% cashback everywhere else.
As you can see the only differential factor is that the supermarket cashback percentage has doubled with the new card. However, with this added incentive comes the extra cost of the card, and at an annual rate of $75 it isn't cheep.
Sun's article had me wondering how much extra you would need to spend to be able to make the new card B a worthwhile purchase.


Assumptions to be made

To simplify this experiment I need to make some assumptions:
First, We will focus on the supermarket purchases only (to make back the $75). This is because the other cashback incentives are equal for both cards and so if this difference did not exist one might as well choose the original card A.
Second, Sun mentions some referral bonuses of $75 each time you refer someone to the card who is accepted. Furthermore there is a potential sign on bonus of $150 cashback if you are able to spend over $1000 in your first three months. For simplicity we will ignore these incentives and come back to them at the end.


The mathematics - don't be too scared!

Simply to cover your costs (just looking at the one difference between the cards - supermarket expenditure) you would have to spend $1250 a year on supermarket purchases to receive $75 on card B. This amount of spending on card A would earn $37.5. Hence to make sure that card B is worth the purchase you would need to make sure that you spend more than double this amount. Spending $2500 a year in the supermarket would earn $150 cashback, $75 profit (after you've paid for the card). Whereas, with card A you would earn $75 anyway spending $2500.
So to make spending on card B worthwhile you would need to spend more than $2500 in the supermarket a year. I doubt whether many of us have food bills this large. In which case I would not recommend this sort of card for most people. The high cashback rate seems to be a tempting Syren, but with a deadly $75 bite,

Conclusions

I would recommend avoiding these sorts of cashback cards such as B unless you are entirely sure you can make your money back.Obviously the cashback opening incentives will help. This is something I removed in my original assumptions. Of course, if you can make sure that you are referring someone new to the card each year, card B is definitely the better choice to go for. Additionally, if you are able to NATURALLY spend $1000 in your first 3 months on all purchases and receive the extra $150 cashback then card B is definitely worth your while for at least a year.

What are your views on paying for cashback cards? Is it worth the costs?

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Setting Short Term Goals

Following my previous article on updating ones Get rich Plan I felt the need to outline my short term goals financially and for this blog. I realise that this post is a very personal one however I encourage all who read it to take action and take 5 minutes right now to update your own financial goals.

Setting Short Term Goals

I love setting goals. I'm like a better looking version of Santa: I'm forever making lists and checking them twice.
Goals are good for all of us. They make us focus our efforts and remind us of what's important in our lives ensuring that we don't forget the important things in our lives.
Setting yourself any old goals is useless task, just as I have clearly done in the picture (whilst I like eating very much, all but the last are not things to go on a short term list of goal!).

In bold writing below are my key points to keep in mind when writing ones personal goals.
A goal should be challenging enough to push yourself. Without a challenge you aren't motivated to achieve. This is because the sense of achievement is removed by the ease in which the task is completed.
However, a goal must be achievable. To write something like "I want to be able to breathe in space" is a waste of time. Make sure the goal will be something physically possible!
Furthermore, you need to give yourself a deadline for the goal. Otherwise you may just find yourself putting the tasks to reach your goals off. Which reminds me, never ever say, "I'll just do it tomorrow". The old irritating phrase IS true, "tomorrow never comes".
I think the best advise that I can give you is to write down your goals somewhere where you'll obviously see them. This means that you can't avoid your goals. Even better if you can see them every day. I keep a 'note' open on my smartphone. I am constantly updating my list ensuring that I keep on top of things.

Personal Goals
Alexa traffic ranking is a rough measure of a website's popularity, compared with all the others out there on the internet. The ranking system takes into account both the number of visitors and the number of pages viewed on each visit. The lower the ranking, the more popular the website.
"All communication is good communication"
This site began with an Alexa ranking of about 20 million. In less than two months the rank will soon pass below the 1 million mark. The ranking system works on an exponential scale which means that my progress will slow down naturally as I progress in reducing my score.
My aim is to reduce my traffic ranking below 200,000 (completing the Yakezie Challenge) by the beginning of July. This will e tough but I will be incredibly proud if this is achieved. It is at this point that I must once again thank my readership. Without you,, all this progress would not be possible, so many many thanks to you all. Please keep reading, enjoy, comment, criticize, share. All communication is good communication!!!

I want to continue to save, spend carefully, and invest wisely. Furthermore I wish to establish a strong financial setup in terms of credit cards, current and savings accounts, and how they all interlink. Personally, I feel that there isn't enough information out there about how to achieve this so I will be conveying my methods in future articles.

What are your short term goals?
Is there any other guideline(s) that you would add to my advice on setting goals?

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Multi-Millionaire Road Plan Review (1)

Blueprints:
This article states what I have achieved so far. I will aim to have a personal finance review every few months. This article has a lot of links to other articles I have written to demonstrate how the articles interlink to form my plan. Think of these sorts of articles as review and the blueprints to my Multi-Millionaire Road Plan:


Multi-Millionaire Road Quarterly Report:

So-far-so-good

Firstly, I wish to extend a big thank you to all my readers. In my next post I will be writing about my online progress. I could not keep writing without your readership, comments, tweets and following. I hope you will continue to do so.

Even though I am a student I have managed to save roughly 20% of my monthly income. This is around £74, not much but better than nothing. Sometimes I am able to save more through frugal living, careful buying and budgeting . This money is taken directly from my current account into a monthly saver earning a meagre 3.5%. At the end of my financial year (July for me - I have time to sort out my financial matters) I will transfer the total sum (which now sits at over £900) into a trader account to buy more undervalued stocks and shares when the time is right.

My current share portfolio is healthier than last stated. Barclays PLC in particular has seen a return so far of 40% and I hope to sell at a return of 60%.

If you take a look back at an article back in January, I gave my current financial breakdown. I now wish to update my current asset holdings:

  • £8,800 - Investors Portfolio Fund ICVC - Adventurous
  • £8,070 - FTSE100 Enhanced Kick-out Plan 26 on course to gain a 10.5% return
  • £1000  - Current Account
  • £900    - Monthly Savings Account
  • £100    - UK Premium Bonds
  • £100    - Building Society
  • £4,000 - Online Shares
  • Net Worth: £22,970
I have managed to grow my net worth by 10.7% in two and a bit months with investments, savings and a little income. I believe this to be quite an achievement considering I live off a monthly income of £370.


Originally I wrote a post on a Get Rich Plan and am currently in the middle of implementation. Whilst I have a long way to go, I am currently laying the foundations of this plan. I will now go through each section, briefly:

  1. Frugality - this is something I still need to work on. Sometimes I get a little lazy with my shopping and buy a ready meal, or don't shop at the cheaper stores/supermarkets
  2. Budgeting - all going according to plan.
  3. Saving - I am able to save 20% and above of my monthly income.
  4. Debt - Although I have a credit card (and use it), I have no debt
  5. Housing - I currently rent student accommodation. For more information on my ideas on Housing read my article: Renting Vs Buying
  6. Investing - on the whole this area of my personal share portfolio is going well. I have much to learn but am making a decent 12% return on my investments so far.
  7. Tax - I have topped up my tax free ISAs. Any shares purchased in the future will be in Investment ISA form
  8. Job - my job is all lined up next year with an above national average pay
  9. Time and Patience - time will tell ;P
  10. Self-belief - check. I will make it
As you can see, on the whole things are looking good. There is much work to be done but I have time on my side.

I would encourage all of you to do your own financial plan quarterly report. It helps you clarify what you have to do and where you are going.

To see June's Quarterly Review: Multi-millionaireroad Plan Review (2)

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Attributes of a good Investor

The purpose of this article is to try to convey the right attribute of a good investor. These attributes are based on previous successful investors.


Introducing the Investor

The link between a Great Investor and their attributes
I believe that a person needs several attributes to become a good investor. Without any one of these five main attributes, the chain is broken and a person will make more mistakes when taking investment decisions. Let me know what you think about these attributes. The five attributes are as follows:


  1. Basic Intelligence - Whilst the likes of great investors such as Graham and Buffett are considered highly intelligent people, both performing well beyond their classmates, it is a misconception to think that you have to be a mathematics genius to trade stocks to any decent level. A good investor needs to be able to perform basic mathematics calculations such as addition, subtraction, and taking percentages. Furthermore a person needs to be able to interpret a companies balance sheets. To see how these two skills work in conjunction with each other read this article.
  2. Hard-working - Becoming a good investor takes a lot of hard work. It can be boring to perform all the research and reading required to make a good investment. You may need to read through twenty plus financial reports before you've found a decent stock. To generate the investment capital also takes a lot of hard work by saving and budgeting.
  3. Patience - Warren Buffett once said that his ideal time horizon for holding a stock would be forever. Whilst we may not all have this sort of time on our hands (;P), too many investors try to make short term, quick profits. Unless you're trading in 'The City' you are very unlikely to make this sort of quick profit. The only way to beat 'The City' is to ignore their turbulent ways and invest for the long term (5 to 10 years).
  4. Calm - I believe that this is the hardest attribute to acquire. It is very easy to panic when a share price falls and sell at a loss or get too excited when a price goes up and sell too early or too late. You need to be unaffected by daily swings in share prices. It is advisable that you should be willing to see your investment halve before acting (unless of course your investment decision was totally wrong).
  5. Self-Belief - Following on from the previous attribute, you need to have self-belief in your investment decisions, particularly if there are falls in the price of shares held. Have faith in your investment process and don't act upon these short term changes. Particularly ignore tips and advice from friends who disagree with your investment decisions.

Do you think I have left out any attributes? Do you disagree with the attributes here? How many attributes do you fulfil?

Do you like what you've read? Tell your friends by sharing it with one of the buttons below. Please post this to Facebook or Tweet it to help your friends and family. Feel free to send me an email (mrmoneybanks<at>multimillionaireroad<dot>com), find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Disclaimer

Information on this site is not appropriate for the purposes of making a decision for carrying out a transaction or trade nor does it provide any form of advice (investment, tax or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.
Always seek advice of a competent financial advisor with any questions you may have regarding a financial matter