Should I invest in gold?

I like gold

At times of economic and uncertainty the gold rush seems to commence. All of a sudden everyone seems to be talking about gold:

Should you buy gold? Sell your gold? Buy your gold? Bullish on gold. Buy mining Companies. Buy gold ETFs. Buy gold bullion. 

Whenever there is a crisis gold always seems to be on the up.

So why all the fuss over gold?

Traditionally, gold is seen as a safe haven for wealth during times of economic crisis. Money has to flow somewhere and gold is seen as an asset that holds it's value over time. If you were to ask why it is that gold is seen as a safe haven it would be hard for anyone to fully explain why. It may be partly because gold is seen as a tangible object that has had value to the global population for millennia. 

Furthermore, traditionally most global currencies are backed in part by real reserves of gold held by the national bank. With the advent of gold exchange traded funds (ETF), the ability to track the gold market is easier than ever. 

Gold prices are thought to be independent of the economic situation (or at least not positively correlated). The reason being that gold doesn't have an intrinsic value based on normal valuation metrics. It doesn't have an income so it's value cannot be simply calculated as the sum discounted cash flows. Future cash flows and the discount rates normally used in valuation techniques vary based on economic conditions. Gold doesn't produce an income so isn't directly affected by the economy, hence what makes it attractive in times of economic uncertainty.

Lack on income

Unlike shares that produce a dividend income and investment property that produces a rental income, the lack of income from gold may be a problem. A good investment is when the current price of the asset is less than the discounted future income produced. Consider that when assessing the value of a business to buy you value based on what it will earn you in the foreseeable future. With gold this is not possible so what is its value. 

Gold's value is really due to raw supply and demand. It's price is whatever some other schmuk is willing to buy it off you for. This is what leads me to consider that it is risky. If you trade gold I'm sure there are times when you will make money. However, it relies on there being someone else who thinks someone else things it could be worth more than it currently is...and so on and so forth. Who is to say that you're not the person at the end of the line of trades who thinks that someone else will pay more, when in reality there is no one?

Portfolio approach

Personally, I would steer clear of gold, even in times of economic uncertainty. There are no fundamentals that can be assessed by an individual as with any other asset type.

If you insist on investing in gold then I suggest you use a small percentage of your capital to do so - no more than ten percent. However, I'd ask you to consider what are your fundamental value based reasons for doing so? How do you know that gold is over or under valued?

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Advice For Setting Up Your First Office Space

Starting out as an entrepreneur

The following post has been contributed and provides an overview for setting up your first office. Please note that the following post may contain affiliate links:

From Flickr

Business startup

Running a business, especially when you’re in the early stages, is one of the hardest things anyone can do. There are so many different factors to keep on top of that it’s a wonder so many start-ups are still springing up! One of the important thing you’ll need to take care of is your office environment. This will have a direct impact on the efficiency of your whole business, so read on for some handy advice.

From Wikimedia

First of all, encourage flexibility in the way your employees work. These days, many employees don’t even have to come into the office to work. Cloud storage and other tech has made it easier than ever to manage remote workers. You might feel a little more secure having everyone where you can see them. However, you can get the most out of a lot of your staff by giving them a little more freedom with the way they get things done. On the days when people have to come into the office, be sensitive to the way they like to work. For example, you might want to look into some office pods for employees who do better in partial isolation. Letting your staff tailor their working conditions a little more can lead to an immediate upswing in productivity.

Creating a distinct workspace

From Pexels
Be sure to create several distinct areas for the different kinds of work you’re going to be doing at your business. If you keep the entire space open-plan and throw in a few cubicles, you’re going to be pretty limited in what you can use your office for. You need to have a distinct area for meetings, a few smaller rooms for collaboration between departments, as well as a kitchen area. Don’t forget toilets as well! While you could save money by keeping the design more minimal, this kind of separation is important. It will create a greater sense of order and structure in the office. Furthermore, having somewhere for employees to take breaks won’t go amiss.

Finally, do something about the noise. If there’s one complaint I hear about office spaces more than others then it’s the amount of noise. Constant background noise in the office can be a huge drain on your employee productivity and overall morale. Obviously you won’t be able to totally eradicate it. However, you can still take steps to isolate it as much as possible. The biggest culprit is going to be pieces of equipment in the office such as air conditioning units. If you have your own servers on the same floor running all the time, then these can also be a big distraction. If a lot of the sources are in one room or area, then consider getting soundproofing for it. Alternatively, you can browse the market for units with sound reducers. Whatever you do, do something to mitigate distracting noise in the office!

With these tips, you’ll be able to set up a comfortable and productive office. This will lead to happier employees, smoother collaboration, and a better business in all areas.

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5 Cliches About online trading You Should Avoid

Take care when trading online

The following post has been contributed and provides an overview of trading online. Please note that the following post may contain affiliate links:

The all new online trading system has changed the concept of stock investment and it is getting profitable for all the investors with each passing day. A large number of traders are excited to trade in stocks via electronic medium. The process is user-friendly and also offers a “Do it yourself” option to all its investors. A retail investor can anytime buy or sell stocks with the help of online trading system. This work can be done by a broker as well. A broker will enlist your name at his website and provide you with the login authority.

A successful trading technique

But a successful system is always corrupted with some myths or clichés. These clichés are considered as mistakes and can lead to a huge loss as well. It is always better to stay away from those stereotype ideas. IF you are not aware of the clichés of online trading, then this writing is going to help you big time.

There are basically five clichés of online trading which we are going to discuss here at this point in time. The clichés or myths are as follows…
  • A falling knife is always dangerous. Let this first fall into the ground and don’t ever try to catch it in between as it will only harm you. This phrase is perfect in describing shares and investments. A wise person will never buy a stock or share when it starts falling down. If you really want to excel in online trading, then you have to learn patience. A good trader believes in buying the rumour while selling on the facts. It is the best line a person can hear and can prove to be true as well. Buying shares on the first sniff of good rumours is always a sign of a savvy investor.
  • Staying in limits is very significant in the online trading system. That is the reason why a savvy trader always knows his or her restrictions. They know their nerves pretty well. They are well acquainted with their anger, excitements, and wishes. Online trading is all about applying strengths and weakness all together to make an investment successful. This is very much a customised way of thinking rather than following the usual footsteps. If you are a beginner at online trading, then make a plan using your own capabilities. Be a careful thinker to do justice with your investment. Running behind the others’ plan is just one of the clichés of virtual trading.
  • Fotolia_24488696_Subscription_L.jpgThe only bad side of online trading is its fraudulent activities. Every virtual sector is troubled by security problems and online trading is no difference at all. Therefore, precautions are better in this case. WE are often get allured by advertisements but there are thousands of fake advertisements in the field of online trading. They are just there to cheat you. If you ever see a hyped declaration or sudden growth of an association, then they are not worth of your trust.
  • There is no place for emotions in the trading field. Investment, shares, and stocks are more a professional term than personal. Generally, people start with purchasing small sizes of an organisation. This can be a home corporation or one that you might have a pal or a family member working for. This emotional decision can lead you to a huge loss of your money. You have to learn to go with your instincts. You have to do a lot of research before investing your money on something. If you are feeling that to be profitable, then go ahead with your decision. Stock markets are not at all affected by tips or tricks. There is no certain formula for success as well. It is a haphazard industry and one can never be sure of anything. Your intuition is the only master key of success here.
  • Software plays an important role in online trading. All the software is not perfect and there are thousands of factors to check. If a software is available without the live analysis facility, then it is better to not to use it. A demo account is a must for good quality trading software. Demo versions of CMC Markets are a great method to try out and develop your understanding of a variety of monetary investment marketplaces. If you wish to excel in the online trading system, then you have to purchase software which is based on the demo account and live market analysis.
There are two sides to every coin just like the online trading system has two faces. It is really important for today’s society, but is filled with too many clichés as well. All we need to do is to get rid of them as soon as possible to make this system more advantageous and risk-free.

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What will Brexit mean for my finances?

The implications of Brexit

It is four days after we found out that the UK has voted to leave the European Union. Many of us are a bit anxious as to what this could mean for our personal finances. We attempt to demystify this:

What does the Brexit all mean?

Whilst the UK will likely not leave the EU for at least another two years from October it is difficult to predict what will happen between now and then. At this stage we can only discuss the consequences of what we know is already happening.

Market panic 

On Friday 24th June, once the result was known stock markets took a tumble as large institutional investors and some retail investors sought to take their money out of a perceived risky stock market and transfer their money elsewhere to safer havens. This will likely have resulted in the value of your index tracker funds, individual stocks and pension funds to go down.

How does this affect you? If you need access to your money now, for example to put down a deposit on a property or want to retire you might find that you won't have as much or enough money. However, if you do not need access to the cash right now then you are better to do nothing. Leave the money where it is and over the long term (I mean decades) the short term decline in your wealth will be no more. Do not join the panic and remember Warren Buffet's famous advice: be fearful when others are greedy and greedy when others are fearful.

Property and cash 

The likely fall out from the markets will make people and investors uneasy. As a result demand for property will fall leading to likely decreases in prices. For those that already have a property, this isn't a problem unless you were planning on selling it any time soon. In which case my advice is to wait if you can afford to. Bear in mind that those looking to sell property are probably also looking at buying property that will also have had a price decrease. 

For those that aren't on the property ladder the fall in prices may result in the ability to actually afford properties. The only issue is that bank lending will likely become tighter and deposits may have shrunk if they had been held within share investments.

Cash and bonds are likely to be unaffected and are still covered up to £75,000 by the financial conduct authority.

Job and opportunities 

Given the uncertainty many Companies will go on hiring freezes for the time being. It isn't a good idea to start looking for a new job at this point. It is probably worth making sure you are as valuable as possible to your own firm. Look to learn as many new skills as possible and try (if possible) to develop additional income streams on the side just in case the worst should happen.


Prices are likely to go up given the uncertainty. If the UK leaves the single market and is unable to negotiate a free trade agreement then it is likely that tariffs will be put onto UK exports to the EU. Likewise the UK will put tariffs on EU imports. This will more than likely result in an increase in prices on the supermarket, at the pumps and in store. Remember that you are never committed to buying these goods. You could opt for local produce and not imports and you could opt to take alternative forms of transport.

Exchange rates 

Exchange rates has seen the GBP fall to a 30 year low. This makes buying imported goods ever more expensive and conversely makes our exports cheaper. Having exports appear cheaper to other countries can actually help UK businesses as it is likely that demand for their products will rise.

Going abroad will likely be more expensive for UK citizens as the GBP will buy less foreign currency than previously. Bear this in mind when going abroad, alternatively consider a holiday in the UK.

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Pension versus property

The best sort of investment

Invest in a pension or invest in property? This is the question that we will attempt to provide some form of an answer:

The article assumes that you have purchased your own home with a mortgage already. You are now deciding whether to put money into your pension or to hold it back in savings to eventually purchase even more of a property when you move.

Investment puzzle!

A investment puzzle: do you put money into a pension or hold the money back and invest more into property?

Of course the answer is that you should be trying to do both. You should be putting into a pension and saving up for the next property move. However this excercise is a purely mathematical one.

The problem is that the problem isn't so straightforward to solve. There are lots of moving variables. For example: you would need to assume a rate of growth for property prices, pension fund growth, rental incomes from property, fund charges on the pension and the respective tax situations. In order to answer the question I built a financial model with which I could test out different scenarios.

Pension assumptions

I assumed that I would be contributing £320 per month into my pension over five years. Note that in order to compare like with like I would be looking to move property in five years time and hence the money put into my pension over that period could have been used to invest further into a bigger home when we come to move.

Additional pension assumptions include that my employer will match those contributions each month. I set a retirement date for the pension to coincide with my 55th birthday. Hence any contributions to my pension pot over the first five years will then continue to grow based on the fund rate of growth over the following 24 years. 

I set the fund growth rate at a generous 5.9%, the same return that my current pension fund has achieved over the past 15 years. I set the annual management charge on the pension fund at 0.4% per annum.

In terms of taxes to consider, I assume that my marginal rate of tax is 40% hence I will make monthly tax savings today by putting into a pension. When I begin to drawdown the pension I assume that 25% is tax free and the rest is charged at my marginal tax rate of 40%.

Property assumptions

In contrast, in the property scenario I assumed that the £320 was set aside monthly for five years and contributed to the purchase of an even pricier next home. I assumed that the rate of price growth in the London housing market was 6% as it has been historically.

Furthermore, I assumed that there would be a 20 year period of earning a net 3% rent on the property. In addition, I liquidate the property on the retirement date (in order to compare like with like) and incur 20% capital gains taxes.

The results: property versus pension?

The results were not intuitive. Upon retirement date at the age of 55 the property scenario resulted in me having an additional £73,000 worth of property (and reinvested rent). Whereas the pension scenario resulted in £108,000 pension pot at the age of retirement and note that this was after liquidation having paid all taxes required. In addition, the pension scenario had resulted in over £7,000 tax deductions over the five years of contribution.

So, surprisingly the pension scenario was a better option for the assumptions that I input....very interesting.

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Why It's A Smarter Decision To Consider A Career In Accounting

Becoming an accountant

The following post has been contributed and provides an overview of alternative investment products. Please note that the following post may contain affiliate links:

If you’ve got a mind for numbers and problem solving, you shouldn’t have to wonder too hard about your career. In fact, there’s one lined up that is perfect for those skills, provided you’re ready to cultivate them. We’re talking about becoming an accountant. Becoming someone who has all his financial knowledge. Putting it together with those logical skills who can help others make better choices with their money. If you’re wondering why we’re so adamant that accounting might be the career path for you, keep reading. Hopefully we can help you realize some of the awesome benefits that could be waiting for you.

Lots of demand

The first thing that needs to be obviously mentioned is just how much demand there is for people who are well versed in accounting. Providing you have the knowledge and the qualifications like accounting degrees and certifications. Most business owners who grow to a certain point will eventually get out of their depth in terms of what they can handle, financially. It’s a vital point of keeping a business healthy, so they will outsource. Advertising those skills is often all you need.

Being able to spot your own opportunities

One of the non-career oriented pluses is what other kinds of benefits that knowledge can bring. Put your mathematical skills to good use with the experience of accounting and apply it to your own finances. Be able to recognize whether or not property investment is really such a good deal. Where you can spot potential deductions on your taxes. As well as all kinds of other financial benefits.

You can be your own boss

There’s a lot of potential to work directly within a company, being the financial mind they need. But there’s also a lot of potential to start up your own business. Accountants are in the cozy position of being in a seller’s market. Most of them are able to do well by having businesses come to them, not the other way around. If you be your own boss, it means you have all kinds of control over your work, too.

A stable job

With that demand for accountants also comes a certain stability. Not that you’re always going to be employed by the same people. There are some that you definitely won’t want to keep a working relationship with. But if you prove yourself helpful, you can find those clients who will want to keep you on for as long as they can. Every business owner learns that accountants are best kept as long-term advisors after all.

Diversity in progression

It’s not all down to offering consultation to business owners, however. The kind of knowledge you gain as an accountant can be put to use in a whole variety of different career paths worth looking at. Tax accountants can help just about anyone if you want a more diverse client base. If you enjoy investigating and righting wrongs, becoming an auditor could be the path for you. You won’t be limited just by learning all about accounting.

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 (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Do diagonal job moves grow income?

Moving jobs

Sometimes it's necessary to take that diagonal job move in order to move up the career ladder. But is it always a good thing?

What do you mean by diagonal job move?

I define a diagonal job move as one that results in the person moving to a different employer in a similar industry but at a higher level.

The obvious benefits of taking a job higher up but in another Company is the obvious prestige and status benefits and the likely increase in salary that comes with having more responsibility. 

A higher salary can always be tempting and there will be those people who will always chase down progressively higher incomes. But it isn't always about the money - at least not in the short term. What these job hopping people miss are three things: commitment, stability and education.


Rather than jumping from job to job there are befits to committing to one employer for the long run. Companies often provide long service awards such as bonuses, a holiday or additional pension contributions. Additionally and more regularly Companies offer their long standing employees additional holiday allowance, something that the individual who job hops cannot hope to obtain.


Committing as a loyalist to a Company can provide stability, not only to you but to your family as well. It's far more pleasant going to an office each day where you know people and perhaps even befriended a few. It must be harder socially for those employees who are regularly new to the work environment. By knowing your colleagues better you build rapport, meaning that you get along with them better. The end result being that you are happier at work and so come home happy - good for your family!!!


Finally, staying at one place long term mean that you can take the time to train and to learn. By understanding what the Company offers you can take a longer term approach to your learning and structure it to suit your own needs. 

Research has demonstrated that those who have more training, experience and are better qualified earn more in the long run regardless of the fact that they likely took a short term salary sacrifice to do the learning. 

Conclusions of job moves

There are times when a job move might be necessary - your current job has become stale and you don't see any prospects. However, if you're thinking of moving for the money (and the money along) then perhaps you should reconsider what the benefits of staying in your current job longer term might be.

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 (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

Crowdfunding platforms

Crowdfunding platforms and their usage are becoming increasingly more common, but are the actually a good investment idea?

What is crowdfunding?

Crowdfunding is a platform by which lenders and borrowers are linked together. Lenders tends to be people like you and me. Borrowers tend to be small businesses who for whatever reason are unable or don't wish to borrow money from a bank. The platform directly connects lenders with borrowers without the need for a bank. 

Generally borrowers are graded by the crowdfunding platform according to level of risk assessed within the business. Lenders can choose to target different levels of returns based on the level of risk associated with the borrower. Obviously the higher the risk then the higher the return.

Normally, the crowdfunding platform will charge a fee for using their platform. This commission is normally about 1 percentage point of the interest. For example, if the interest on your loan is 8% then the crowdfunding platform will take 1% leaving you with a net 7% remaining. Do not be confused into thinking that the 1% is charged on the total return! The actual commission is a lot bigger (in this case it's 1%/8% = 12.5%).

Benefits and drawbacks to crowdfunding

The result of crowdfunding tends to mean that the rate that the lenders (I.e savers like you and me) tend to earn are higher than those returns from putting your money in a bank. Conversely, your money is being lent directly to businesses. As such, business are able to borrow the money that they need for expansion/working capital/ investment. Given that some businesses could go bankrupt then it is possible to lose all of the money that you lent to the Company. As such, saving via crowdfunding is riskier than putting your money in a bank. I will point out however that crowdfunding platforms will attempt to get as much of your money back as possible following the business going into liquidation.

Reducing your risk

It is possible to reduce the level of your risk exposure on a crowdfunding platform by diversifying your portfolio.

Instead of lending out £1,000 to one lender at 8% you could spread your risk by lending £100 to ten different borrowers at an average of 8% each. It is less likely that all ten of the borrowers would go bust and as such you've reduced your risk. If you're going to get involved in crowdfunding then you should look to build a portfolio of micro loans rather than lend to one or two borrowers.

Portfolio analysis

If you're thinking of getting involved in crowdfunding and want to know whether you should or not think about it this way. Never invest in one thing. You should always try to build a portfolio of assets rather than just invest in property/stocks/bonds. Likewise with crowdfunding it is not unreasonable to have a portion of your savings tied into crowdfunding in order to obtain a bigger return. However, it should be another part of your portfolio of assets and not your main focus.

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 (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

7 Habits Of Successful Entrepreneurs

How to become an entrepreneur

The following post has been contributed and provides an overview of alternative investment products. Please note that the following post may contain affiliate links:

We often hear about people turning their passion into a business and making a significant profit. And it always leaves us wondering whether this is something we could do. The simple answer is yes. Of course. You can do anything you set your mind to. It’s useful to know that there are several common habits of successful entrepreneurs.

1. They Enlist The Help Of Experts

Harry Truman once said, “It is amazing what you can accomplish if you do not care who gets the credit.” Successful business people recognise this. They understand that in order to grow, they need to enlist the help of experts. For example, if your expertise lies in cooking, this is where your efforts should be focused. So when you open a restaurant, don’t be tempted to do all of the design work yourself. Instead, enlist the services of a company that specialises in fitting out restaurants and bars. They will create an environment around your food and ethos. This will drive more people through the doors.

Don’t be tempted to do everything yourself. Delegate, and don’t be afraid to employ people who know more than you.

2. They Work Hard

Successful people work hard. And not just that, they are willing to make sacrifices to achieve their goals. They understand that in the short term their business is their life. They accept this and focus on their end game.

3. They Are Prudent With Their Money

Making wise decisions regarding cash is essential if you run a business. When they’re starting out, successful people don’t get carried away. They weigh up all costs and the resulting return on investment. They also save. The first years of running a business are hard, so having something to fall back on is essential.

4. They Network

We live in a digital world, and it is tempting to hide behind our screens. After all, we can communicate via email, text, social media, etc. However, the importance of face-to-face communication cannot be discounted. You are the face of your business and it is important that people recognise that face. Networking isn’t just about selling. It’s about making connections. It may be that you don’t pick up any new leads during a networking event. But, you may pick up leads in the future, based on the relationships you built.

5. They Sleep

Although successful people work hard, they recognise that productivity has a limit. After working for so many hours productivity declines. Therefore, they make sure they get enough sleep each night. They can then start the next day feeling rested, refreshed, and ready to go.

6. They Keep On Going

Being successful in business isn’t about having a good idea. This is part of it, of course. But success comes through hard work and resilience. Anyone can have a great idea. But not many people are determined enough to take it to fruition.

7. They Are Not Afraid To Fail

It could be argued that failure is a big part of success. Few of us achieve success overnight. The reality is that it may take years. Successful entrepreneurs recognise this. When they fail, they take stock, adjust, and keep on going.

Success can be measured in lots of ways. It means different things to different people. There’s no recipe or template to be successful in business. However, there several habits we can adopt to get a little closer.

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 (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.

The 5 keys to why property investment will give you freedom

The building wealth overview from Clevercashflow

Alexander Teckkam is editor of helping others achieve financial freedom. Alex achieved financial freedom at the age of 27 years old.

“90% of all millionaires become so through owning real estate” - Andrew Carnegie

Property is a great investment if you are seeking freedom. What I mean by freedom is doing what you want, when you want with whom you want. If you are worried about losing your job or if you are worried about your family's long term security, a substantial property portfolio can help you ease these worries. Property investment done right  can give you a great source of passive income, money that comes into your bank account every month. This can supplement your income or can even allow you to retire early. There are 5 key reasons to why I think property investment can lead to a life of freedom:

Key 1 - Passive income

When a property is rented out it produces rental income. If the property is chosen correctly this will produce more money than all the costs leading to a positive cash flow. This will give you supplementary income which can contribute to your lifestyle or your savings pot.

Key 2 - Capital appreciation

Since the 1950’s UK property prices on average have doubled between every 4-14 year period averaging every 10 years. The simple reason is demand and supply. We are currently not building enough houses to satisfy our growing demand. Historical appreciation cannot predict future growth but when prices have been increasing for so long it is a struggle seeing that change even after the 2008 bust.

Key 3 - Inflation

The UK has averaged a 2.62% inflation rate since 1989. What this means is that goods have been getting more expensive over time. Why is that good for property? If your property has been bought with a mortgage, your mortgage borrowing in real terms will be reducing in size every year.

Key 4 - Adding Value

If a property is in a bad condition or in an auction it is possible to add value to the property or even buy it below market value (BMV). This is not the case with other forms of investing such as peer to peer lending or stocks and shares investing.

Key 5 - Return on Investment

Investing in property can give substantial returns on investment of 30% or more if investing correctly. This is much higher than other forms of investment. This can get you to financial freedom much faster with a smaller savings pot.
If you want to find out more about how property investment can lead you to freedom then join us at

Cash is king

Cash is crucial

If Cash is king the  maximising cash flow is the path to royalty. The following article explains the importance of cash flow:

Wealth is all about growing cash flow. If you delve into optimising personal finance you will find that time and time again cash flow is the most important thing to build wealth.


Obviously one of the key aspects to cash flow is your main source of income from your job. You should always be pushing to grow your income each and every year. This can be done via promotions, salary negotiations, bonuses, share options, or job moves (or all of the above!).

Saving and investing

Saving a portion of your income each and every month is extremely important. Think of it as "paying yourself". You should always want to pay yourself first and as such, put money aside in savings to grow your wealth. What remains is what you are allowed to spend that month.  In essence you are artificially reducing your cash available for disposable income and increasing your cash available for investing.


Minimising cash flow is crucial for long term savings growth. You can have an income of £10,000 per month but if you're spending £10,001 per month then you aren't building wealth. The first step is to track what you're sending, then look to where you can cope with less.


Property investment should be executed with the aim of maximising the net cash flow from the rental payments each month. Ignore any promises of capital growth from increases in house prices.

Stock market

Invest in Companies that pay a dividend. This allows you to reinvest those dividends as you see fit. You should also look at investing in stocks that produce net operating cash flow each year. Avoid investing in those Companies that cannot support their own normal every day operations.

Cash flow is the key to wealth building. Ignore it at your peril.

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Investment property for cash flow

Building wealth via investment property

Investment properties are an excellent way to build wealth. The problem is that it isn't always clear how to determine whether you're looking at a good investment or not:

How do you know if a property is a good investment?

Do the math! If the maths don't work out then you shouldn't be buying!

What are the investment numbers?

Well, for starters you can ignore capital grown. You shouldn't be investing in property in the hope that the price of your home will go up. This would be pure speculation! 

Instead in your calculations you should focus on whether or not the property will generate positive cash flow.

For the purposes of this exercise we will assume that you have enough money for the deposit, taxes and professional fees. We will also assume that you will be granted the mortgage for the property.

Getting into the detail of your investment

The first step is to determine what market rent can be earned from the property. To figure this out either you will need to check what other similar properties in the area are renting for, or else consult with a local estate agent/ expert to tell you what you could expect to make. Failing all of the above you could calculate that you would earn a conservative 4% return on the purchase price and spread this into monthly repayments (4% X purchase price / 12 = monthly rent charged).

Next, you need to calculate what the mortgage repayments would be on a buy to let mortgage over the property. There are two options here. You could use a price comparison website to get an idea of what your monthly repayments would be. Alternatively (or you could do this as well), you could ask a mortgage broker what rate they would be able to get you and then roughly what the total mortgage repayments would be. Make sure that you investigate all combinations of borrowing: borrowing over different terms, putting down different deposit amounts and changing the term of the fixed/variable mortgage period.

Finally you need to consider all other outgoings. For example, landlord insurance - what will the premiums be per month, letting agents fees - normally these are a percentage of the rent (estimate between 8%-10%), and also maintenance and repair costs - budget £100 per month but scale based on the size of the property (I was assuming a two bed flat).

Now you should take all those figures and calculate whether the property would produce positive cash flow each month: net cash flow = monthly rent - mortgage repayments - landlord insurance - letting fees - maintenance and repair. If net cash flow is positive then you potentially have an investment worth considering. But comes the important bit...

Sensitivity analysis of your investment

Sensitivity analysis is the most important part of this assessment and is often overlooked by would-be investors. Your calculations thusfar assume a steady state in the world of finances. You need to start to put your assumptions to stress tests to see how far you can push the assumptions and still be cash flow positive.

You should increase all the outgoings by 25% whilst keeping the rental income the same and assess whether you are still making a net cash profit. If not then you need to consider looking at another property in which to invest.

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 (, find me on twitter @millionairer0ad or comment. Whether good or bad, I want to hear from you all.


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