The magazine of the Elite Investor Club Wealth Watch Watch July 2016 £5.95 where sold The magazine...
Transcript of The magazine of the Elite Investor Club Wealth Watch Watch July 2016 £5.95 where sold The magazine...
Wealth Watch
July 2016£5.95 where sold
The magazine of the Elite Investor Club
Graham rowan’s
P10 SingaPore sets sail!
P7 the Worst Market tiMer
in HiStory?
t h e i n a u g u r a l e l i t e i n v e S t o r awa r d S !
P2 Full report FroM Star-Studded oxford St
+
P14 andrew Craig on nonsense or
neuroscience
e l i t e i n v e s t o r c l u b t H e g l o b a l S o P H i S t i C a t e d i n v e S t o r n e t w o r k
2
From The ediTorw
hat a
historic
month
for the club!
our first ever
awards ceremony
was a sell-out and
went really well.
You could sense
the goodwill among all the members,
even those who didn’t walk away with
one of our Elite stars or our silver
Britannias. and I was so pleased for
Kathryn minchew that she won the
member of the Year award after all
her hard work on her book and her
business. we’ve dedicated three
pages of coverage to the main event
starting on page 4 and the back page
shows the six investors who were also
recognised on the night. Graham’s
whistle-stop trip to singapore was
also a great success, thanks mainly to
the efforts of his new partner in the
region, mette Johansson. see page
10 for more. andrew Craig is going all
woo-woo on us this month with his
piece on neuro science, while marcus
De maria focuses on the investment
rights and wrongs of ‘steve’.
By personalising the experience the
points really get driven home. we
have the final instalment of Graham’s
seven steps report on page 11, while
our a-Z of investing moves on to
Bonds on page 12. so pour a coffee
or something stronger and settle
down for half an hour of information
and entertainment..
Daphne Rowan
Editor
The GovernmenT is here To help…
3
than providing better schools or filling
in cavernous potholes? my second is a
philosophical one. Do we really want a
society where the state goes to these
lengths to police our everyday lives?
Is it acceptable for a council to bend
the law by effectively hiding these
cameras and giving no clear indication
of what constitutes an offence? To
me it’s in the same category as local
authorities using anti-terror laws
to fine people for over-filling their
wheelie-bins. It’s just another twist
of the ratchet. a tiny step towards
all of us becoming stepford wives,
doing exactly what the Big state
dictates. and don’t think it ends here.
In singapore they’re now installing
satellite-based systems that can issue
instantaneous fines if you park where
the state says you’re not supposed to.
how long before we have sub-
cutaneous chips installed that prevent
us from thinking such renegade
thoughts as I’ve expressed here?
wait. what’s that camera behind me?
There’s a hand coming out from it.
aaargh…
Icouldn’t believe my luck.
as I drove down the a316 heading
for horsham to record my next
batch of Elite Investor TV videos, I
slowed down to 40 mph just after
the saracens rugby ground. wait a
minute. where’s the big yellow box
waiting to flash like paparazzi at the
Cannes Film Festival if I dare to cross
the hatched lines at some dare-devil
speed like 43 mph?
Gone. so was the next one on the
approach to the whitton roundabout.
happy days! at last richmond
council has seen sense and given
up on its deliberate criminalisation
of the motorist as a stealth council
tax. The camera near whitton was
reversible, so one week it would
point towards the m3 and the next
it would try to catch people coming
towards richmond. It was an endless
source of amusement to me to see
the Pavlovian reaction of 90% of my
fellow motorists. They would see the
dotted lines on the road and jam the
brakes on, even though the camera
was clearly pointing in the opposite
direction. my laughter was cut short
by a darker thought. If they were so
lacking in peripheral vision and road
awareness that they couldn’t work out
the direction of the camera, what did
that say about the rest of their driving?
Talk about your life in their hands…
Proof of my worst fears came in
the weeks following my euphoric
discovery. almost every driver still
slowed down in the same three
places, even when the cameras were
long gone. The nanny state had
programmed them to perfection.
But she clearly wasn’t satisfied with
this level of obedience. Drunk with
success, she plotted her next move.
only 100% obedience will suffice.
Enter the Brave new world of the
average speed camera. The clearly
marked 50 yard measurement zone
is gone. replaced by a tiny L shaped
mark at regular intervals. The big
yellow boxes are gone. replaced by
a series of tiny cameras mounted so
high that they are out of the driver’s
eye-line. The law says they have to be
painted yellow so that drivers are aware
of them. Yes, these smaller-than-a
shoe-box devices are the correct
colour. But only Clark Kent could see
them in normal driving conditions.
weeks after the network of cameras
was installed, a small temporary sign
appeared saying ‘average speed
Check’. Then another appeared further
down the road saying ‘average speed
Enforcement’. no explanation is
offered about how this is calculated.
The stretch covered by these
concealed devices stretches from the
dual carriageway at the end of the m3
right into richmond town centre. Lots
of roundabouts. Lots of traffic lights.
Lots of side roads to turn off onto. so
where am I being measured from and
to? Is it the entire journey end-to-end?
Is it between any two cameras? how
do you factor in all the time spent
stationary along the way?
I can hear the cries now in acacia
avenue, Chipping sodbury. ‘If you
obey the speed limit you’ve got
nothing to worry about’. I understand
your point. But here are my two
arguments in response. There’s a lot
that’s great about living in Britain.
and there’s a lot that needs fixing.
so our political leaders constantly
face decisions on difficult choices.
Too many things to do. not enough
cash to do them all. my first question
is a practical one about priorities -
how does the very significant cost of
installing this system get to the top of
the queue? Is it really more important
Rowan’s Rant
BiG BroTher Comes To riChmond
Goodbye old friend? you can’t
spot the new ones…
4
Partner of the Year Avantis WealthThere’s no partner that we work
more closely with than rod Thomas
and his hove based team. some
of the investments we’ve brought
ElitE invEstoR awaRds
move over oscars.
step aside BaFTas. You’ve
been usurped by the most
important awards ceremony of
all – The Elites.
oK, it wasn’t hollywood. nor even
Park Lane. But the packed house in
oxford street witnessed the historic
first night of something big. an
evening dedicated to honouring Elite
Investor Club members and those
who serve them. I hope my words
and the images captured by amanda
Lucas give you some flavour of what
it was like to be there on the night.
make sure to save the Day as soon as
you hear about the 2017 Elite awards.
The night began with a
champagne reception as a Thank
You to all the members who joined
us on what we billed as our first
Investor appreciation Event. In the
Night of the StarS at the iNaugural
Then it was time for the Main Event. The Five Big Winners, starting with:
and can take it over if any interest
payments are missed. and third, if
we can’t recover our capital directly
from the company’s loan book
there is an insurance policy in place
that ensures we recover 95% of our
original capital investment.
end we went much further than
we originally intended by creating
the five categories of awards and
commissioning bespoke Elite star
trophies for each winner. They were
laid out at the front of the main room
and made an impressive site as the
more than 65 members present
began to wonder who had won what.
as the canapes were washed
down with more bubbly we
eventually persuaded people to
take their seats so the ceremonies
could begin. Before we came to
the announcement of the winners
I wanted to recognise some recent
serial investors and referrers. For this
we’d been looking for the ideal gift
and settled on a silver Britannia coin
mounted in a presentation wooden
box, as you can see on Page 16.
The idea of an investment rather
than consumable food or drink really
seemed to resonate with the winners
whose photos you can see on the
back page :
• Cilla and nigel steed
• Elizabeth Benjamin
• Gerry melville
• anne and michael Foster
• sunil nathwani
• Leonora Dawson-Bowling
to you recently, such as the Isa
consumer finance bond and the
special needs care bond, have come
from the avantis portfolio.
and there’s a lot more to come as
we launch an exciting new range of
pension products over the summer –
if ‘exciting pension’ isn’t
an oxymoron. watch this space…
Investment of the Year Consumer Finance BondThis was a tough call – everything we
put in the portfolio deserves a prize!
But there can only be one winner,
and there are three things that stand
out about this bond. First, it can go
in your Isa so the 9.85% accumulates
tax free.
second, the bond issuer has full
visibility of the underlying business
“An evening dedicated to honouring Elite Investor Club members and those who serve them”
peter stokes accepts the
investment of the year award for
the consumer finance isa bond
avantis founder rod thomas
was on hand to receive the
partner of the year award.
5
friends, family and work colleagues.
I know that lots of you do it, but I
don’t think we’ve been very good at
encouraging it or recognising it. so it
was great to be able to change that
with this new award. The problem
was, who to give it to? we debated
this one the longest before settling
on Kumon maths franchisee and
serial property investor Dipak shah.
The southgate-based business
owner has been a serial investor
himself in care homes, burial
plots and romanian property
development. But he’s also brought
numerous friends and family
members into the club who have
themselves gone on to become
serial investors.
Then finally, it was time for the
main award of the evening, the Elite
Investor Club member of the Year.
again, it was a tough choice. But
the panel decided that it would take
the broadest possible view of how
someone had used their membership
most effectively to progress towards
our goal of financial independence. on
that basis there was a clear decision:
Night of the StarS at the iNaugural
Speaker of the Year Dominic Frisbymoney week’s Dominic Frisby is
one of the most multi-talented guys
you are likely to meet. one of the
country’s leading voice-over artistes,
precious metals expert, author of my
favourite book Life after The state
and stand-up comic at the Edinburgh
Festival. and no mean speaker as
anyone who’s been present at the
events he’s guested at will know.
If I’d seen it in advance I’d have
given him a separate award for the
suit he wore on the night:
Then it was time for the two
most important awards of the
night, the ones that went to our
own star members.
Referrer Of The Year Dipak Shahas I said on the night, we don’t
have a multi-million pound marketing
budget like the artemis Profit
hunter or nutmeg that you see all
over the tube and the newspapers.
we rely heavily on word-of-mouth
referrals from people who like what
they’ve discovered and pass it on to
dominic frisby was a popular
winner of speaker of the year
and dressed up for the occasion…
dipak shah won the hotly-
contested award for best
referrer of 2016
eliTe invesTor AwArds
6
Strategy Is King Terry Fieldafter we’d topped up our glasses
and polished off the few remaining
canapes, it was a struggle to herd
people back into the main room
for the second half. But boy was it
worth it. Depending on the mood
he’s in, Terry Field will either refer to
himself as a management consultant
or a financial concierge. I prefer the
latter moniker, as my impression of
management consultants is people
who charge you a fortune to borrow
your watch and tell you the time.
(I speak as a former member of this
species, mea culpa, mea culpa.)
what Terry and his team do is help
you create a plan and then bring in
all the relevant experts to turn it into
the only kind of plan that matters
– an implemented one. so whether
you need a will, a trust structure,
to incorporate your buy-to-lets or
make some great investments, he
knows just the right organisation to
ElitE invEstoR awaRds
Elite Investor Club Member of the Year Kathryn Minchewshe features in my new report, 7
steps to Financial Freedom the
‘Professionals’ Don’t want You
To Know. she’s appeared on TV’s
master Chef. she’s just published an
excellent first book using her new
moniker The Pyromaniac Chef.
and she’s qualified as a
sophisticated investor so she’s
ready to take advantage of our
portfolio as soon as she can
extract some cash from her rapidly
growing business.
Kathryn’s online Pr stories have
enjoyed over a million hits and she’s
established her own Foodie network.
her acceptance speech could
have been taken from the 7 steps
report, so much had she taken the
information to heart in prioritising
her own journey. The warm round
of applause at the end of her talk
suggested that we’d made the
right choice.
introduce you to. he’s a perfect fit
with the Elite Investor Eco-system
that I described on the night, mainly
under the wealth Protection heading.
Terry’s ice breaker is to ask four
key questions from which he’s yet
to receive 100% answers from any
client, regardless of their wealth or
apparent sophistication. Do you have
a will? are your death benefits in
trust? Do you have a Lasting Power
of attorney registered in case you
go gaga? and can you name your
pension fund manager and talk
sensibly for ten minutes on what his
investment strategy is and how it’s
been going in recent years? when
you realise that over 80% of Brits
don’t have a valid will and almost
nobody has a Power of attorney you
can see why Terry always has work
to do. I’ll be telling you more about
how he can help in future issues
as we expand the range of experts
available to help you create more
wealth anD protect it from greedy
chancellors who have come to see
people like us as a soft target.
The fight back begins here!
kathryn minchew’s acceptance
speech was like a precis of
Graham’s 7 steps report
can you answer terry field’s
four questions
7
had bought his shares. he couldn’t
believe it. how unlucky could one
man be? scared to get out at the
wrong time (his confidence was at
an all-time low), steve decided not
to sell and kept his money invested.
he was like a deer in the headlights,
unable to react and get out. so he
stayed in, as he had done before.
after this event, steve’s attitude
towards the stock market changed.
he couldn’t see how people were
able to make money and he certainly
didn’t feel right about putting his
future savings back into stocks.
Years passed until mid-1990s when
there was an insanely rampant Bull
market. stocks were almost doubling
every few months. Everybody was
talking about it. By the end of 1999
it seemed impossible not to make
money so steve took a deep breath
and invested the entire £68,000 of
savings he had amassed since the
last time he invested. surely it had to
work this time?!
would you believe it? This time
his purchase at the end of December
1999 was just before a 50%+
downturn that lasted until 2002.
was that he only had the courage to
put his money to work in the market
after a huge run up i.e. after he could
see that the market had been going
up for a while. only then would he
dare get in, which he did. at the end
of 1972, he put his entire savings of
£6,000 into an s&P 500 index fund.
To his dismay, within a short
period, the market dropped nearly
50% in 1973-74. steve had put his
entire savings in at the peak of the
market right before a crash. steve
stood by and watched his savings
get cut in half. he didn’t know what
to do and was paralyzed with fear.
steve didn’t want to sell because
he would lose too much money.
Investing at the top was a bad
decision – he didn’t want to make
another bad decision and sell at the
bottom. so he decided to wait. In
fact, this was one of steve’s traits
– you could say it was his saving
grace. once he was in the market,
he never sold his fund shares.
now as you can imagine, steve
felt insecure about his decision to
make money in stocks. was this
really for him? so steve didn’t feel
comfortable about investing again
until august of 1987 after another
huge bull market. he was so insecure
about his own abilities that he had
waited 15 years before deciding to
go back into the market. In that
time, he had saved £46,000 which
he wanted to put to work. hopefully
this time it wouldn’t be like last
time. The market had been going up
strongly. again he put it in an s&P
500 index fund.
You will not believe it when I tell
you that he invested at the market
peak just before Black monday of
1987. The stock market crashed 30%
literally overnight right after steve
I recently read an article by a chap
called Ben Carlson, which I found
fascinating. not only because of this
man and his story, but the learnings
that come from his unhappy timing of
the market. I have adapted the story
for the purposes of this article.
It was about a man, called steve,
who just wasn’t very good at timing
the market. actually that’s an
understatement. You need to see
this to believe it. It’s almost as if this
man literally had the oPPosITE of
the midas touch – he just invested
right at the top of every market,
terrible timing. steve was literally
the worst stock market timer in
history. what I am about to reveal is
a sequence of dreadful timing of his
stock purchases.
steve started a job in 1970 aged
22. he was a diligent saver, a trait
he inherited from one or both of
his parents, which is quite young
compared to most people, so he
must have been quite switched on at
the time. most importantly steve had
a plan (so he thought).
his plan was to save £2,000 a
year during the 1970s and bump that
amount up by £2,000 every 10 years
until he could retire at age 65 by the
end of 2013. what does this look
like? £4,000 a year, every year in the
80s, £6,000 a year in the 90s then
£8,000 a year until he retired. he
started out by saving the £2,000 a
year in his bank account until he had
£6,000 in his bank account by the
end of 1972 i.e. after 3 years.
he had heard that good money
was to be made in the american
stock market. he didn’t know much
about it, so he decided he would
keep things simple. he would invest
for the long term. steve’s problem
The sTory oF sTeve, The worsT sToCk mArkeT Timer in hisTory!
“Steve decided not to sell and kept his money invested. He was like a deer in the headlights, unable to react and get out. So he stayed in, as he had done before”
MaRcus dE MaRia
8
That’s right – steve had invested his
life savings into the tech bubble and
it burst on him literally overnight.
Talk about the worst market timing
in the history of humanity. Vowing
never to invest again, steve decided
to save as hard as he could every
year. he was badly scarred by these
events. whenever anyone talked to
him about stocks he would almost
have a panic attach.
That’s why it is so surprising to
hear that steve decided to make
one more big purchase with his
savings before he retired. The final
investment was made in october
of 2007 when he invested £64,000
which he had been saving since
2000. The stock market had been
rising since 2003 and by 2007 he felt
that it was safe to go back in. It was
as if this man would never learn from
his mistakes. well, you have probably
guessed it – steve rounded out his
string of horrific market timing calls
by buying right before another 50%+
crash from the credit blow-up.
after the financial crisis he
decided to only continue to save and
he never went back into the market
again. so instead of investing his
money, he kept it in the bank with
MaRcus dE MaRia
“Remember that when you lose 50% of your investments, you need 100% growth to just break even. Most people don’t realise that”
almost zero return, amassing another
£40,000 in cash. steve retired in
2013 according to his plan.
But what about his investments?
what happened to them? Go on,
take a guess.
remember that when you lose
50% of your investments, you
need 100% growth to just break
even. most people don’t realise
that. Losing money is noT a good
thing to do and steve had done
this several times. he really was the
world’s worst market timer, with
his only stock market purchases
being made at the market peaks just
before extreme losses.
Do you want to know what
happened to his savings, that he had
spent a lifetime working for? Let me
tell you. remember that steve never
sold his shares. not even once.
he didn’t sell after the bear
market of 1973-74 or the Black
monday in 1987 or the technology
bust in 2000 or the financial crisis
of 2007-09. he never sold a single
share, his one saving grace.
Even though he only ever bought
at the worst time ever, at the very
top of the market, steve still ended
up a millionaire with £1.1 million. how
could that be you might ask?
First of all steve was a diligent
saver and planned out his savings
in advance. he continuously saved
every year and increased the amount
he saved every ten years, according
to his plan.
“Do you want to know what happened to his savings, that he had spent a lifetime working for?”
9
To get these and other
strategies, including my
famous Buffalo strategy, you
can download my book, The
Lunchtime Trader, now, where
you can find all the long term
stock investing strategies you
need. Just go to http://www.
investment-mastery.com/wwbook
second, he allowed his
investments to compound through
the decades by never selling out of
the market over his 40+ years of
investing. Thirdly, if he ever received
any dividends, he would re-invest
them. Finally, he had a very simple
and low cost investment plan — one
index fund with minimal costs.
obviously, this story was for
illustrative purposes and I wouldn’t
recommend a portfolio consisting
of 100% in stocks of a single market
like the s&P 500 unless you have an
extremely high risk tolerance. and
if you did want to do what steve
did it makes more sense to have
a balanced portfolio in different
global markets with a sound
rebalancing policy.
So what can you learn from this story?
when I discussed it with my team, they came up with the following:
• make sure investing in the long term is part of your
financial strategy.
• saving your money so that you have money to invest is the basis
of wealth. Too many people spend their money and don’t put
anything away for a rainy day.
• actually taking action and investing is essential. Too many people
save but don’t invest.
• Time is the great friend of compound growth. The earlier you start
the better.
• Keep adding to the pot – the more you have the more you will make.
• Don’t be perfect – just take action and you will wake up one day
a very happy person.
What did YOU learn?
Please note: If he would have used
well known long term investing
strategies, like our PCA and
especially VCA, Steve would have
been up by over £2 million.
10
singapoRE sEts sail
The first weekend in June saw
the first 2016 meetings of
Elite Investor Club’s singapore
branch. Friday evening and saturday
lunch time found Graham presenting
to groups of current and prospective
members on the topic of wealth
Creation Through Passive Income.
The venue was breath-taking. we
were kindly loaned the head office
facilities of Unity Group, the people
I’m working with to bring small but
profitable private companies to
the stock market as part of a series
of group flotations. If you thought
London was full of iconic buildings,
singapore more than holds its own.
we were in the sail, an obvious name
given the svelte, curving shape of
the 69 story edifice. and we got the
full effect from the floor to ceiling
windows in the board room on the
64th floor. we could see right across
to the daddy of all singapore icons,
marina Bay sands. That’s the three
towers with a boat on top that you
can see in the background.
By the time I finished my talk and
answered the last question from
a very switched-on audience, the
laser light show had started in the
bay. I know when I’m beat. I couldn’t
compete with showbiz on that level.
so I grabbed another glass of wine
and watched the show.
I always get a real buzz from
being in singapore, partly because
of the climate and architecture
but mainly because of the people.
almost everyone you meet is
driven, ambitious and out to make
a difference. Just like the Elite
Investor Club members I meet at
our UK events. (Except that I think
such people form a much smaller
percentage of the population in Britain
than they do in singapore). most are
sinGApore seTs sAil
expats who are at the top of their
game. They’re relocated from all parts
of the world to follow the money and
the opportunities. In the room on
Friday we had a Canadian who’s a
senior exec in a famous PC and server
manufacturer. a swiss professor who
leads his field in cancer research.
a couple from the Philippines who
export 50 tons of bananas to China
each month. a sri Lankan who exports
tea to health shops in Liverpool. a
semi-retired wealth manager who
went to school in Ponteland in my
old stomping ground in north East
England. I could go on.
on saturday guests included an
austrian lady who’s lived in singapore
for six years and in hong Kong
for a decade before that. she’s a
firm believer in the value investing
principles espoused by Ben Graham
and our own Tim Price. and she
made an interesting point about the
recent austrian elections in which the
far right candidate mr hofer came
within spitting distance of winning.
“oK we risked being accused of
being neo-nazis, but you have to
understand the level of dissatisfaction
after decades of centrist coalition
government. nothing seems to
change for the better. The middle
class keep getting worse off and it’s
uncomfortable to be seen as more
successful than other people”.
her views were confirmed by
German engineer roland, just
starting a three-year secondment in
singapore: “It’s the same in Germany.
we have a funny attitude towards
success. It’s almost as if it’s oK to
be ‘normal’ like everyone else but
if you stand out as achieving more
than average you’re not made to feel
good about it”. This reinforces two
key points I see as I travel the world
on Elite Investor Club business. The
alienation of the wealth creators
through the politics of envy and the
increasing dissatisfaction with the
existing political ‘elites’. hence the
Donald Trump phenomenon. and,
arguably, the election of Jeremy
Corbyn to the Labour leadership.
You’re in the right place guys.
and there’ll be a regular singapore
column in wealth watch from now
on thanks to my new partner in the
region, mette Johansson. so watch
out for it landing on your doormat
each month and welcome to the
only global network of sophisticated
and high net worth investors where
you can be comfortable with your
own success and learn from others
who may be even further on the
journey to financial freedom. my
thanks to mette and her team for
organising two great events and
I look forward to my next visit to
singapore in october.
11
7 stEps
Following last month’s article I
hope you’ve taken steps to sort
out your asset allocation. This
month we’re going to cover one of the
biggest asset classes of all and one of
the most misunderstood – bonds!
Don’t be fooled by the official
sounding language. a bond is quite
simply a loan. It’s usually either a
loan to a government or a loan to a
company. Companies need money to
expand their operations, develop and
launch new products or acquire other
companies. Governments need money
because politicians are incapable
of living within their means, spend
money they don’t have to meet their
promises to their cronies and hope
that there are enough suckers in the
bond markets to buy their loans at
pathetically low rates of interest. so
far, sadly, they’ve been proved right.
The global bond market is
enormous and is dominated by
america, where short term loans of
less than a year are called Treasury
bills or T bills. Those that mature in
one to ten years are T notes and the
really long term ones that can go up
to thirty years are called Treasury
Bonds. In the UK these government
bonds are known as gilts, presumably
because the government is guilty
about how little interest they pay.
what you’re buying as an investor
is a guaranteed future stream of
income, called the coupon, and the
return of your capital or principle at
the end of the term of the bond which
can be anything from a few months
to several decades. Unlike shares, you
don’t own a piece of the company or
the government, you just become a
source of funds for them. Bonds can
trade at more than their face value, a
premium, or below it, at a discount.
Like any asset, bonds are worth
The A-Z oF invesTinG B is For Bonds
whatever someone else is prepared
to pay for them. They will take into
account the interest rate or yield and
their view of inflation or deflation
in the years ahead in arriving at the
price they think those specific bonds
are worth in today’s money.
This where it can get confusing. If you
invested £10,000 in a bond paying 1%
interest for the next ten years, that’s
£100 a year for ten years.
what if interest rates on the next
batch of bonds were to pay 2%
interest? That means I can come
along with my £10,000 and buy
£200 a year income. The most I’d
be prepared to pay for your bond is
£5,000, because I now want a yield
of 2% on my capital.
so, when interest rates go up, bond
prices come down. Conversely, when
all sorts of institutions like pension
funds are told by their regulators to
switch from ‘risky’ stocks and shares
to ‘safe’ bonds, we see so much
money chasing safe bonds that the
prices go sky high and the yields
become zero or even negative! Even
some of the basket case countries of
southern Europe are able to sell their
bonds at interest rates that in no way
reflect the risk of a potential default.
so we now have this situation
where bond prices are at a forty
year high based on record low
interest rates. we all have to play
a guessing game about when the
Bank of England in the UK or, more
importantly, the Federal reserve in
america, decides to raise interest
rates. Because the likely result of an
interest rate rise will be a crash in
bond prices. any such crash will be
exacerbated by the lack of liquidity in
the market, but that’s a concept we’ll
look at another time.
In the world of loans to companies,
corporate bonds, we’ve seen a
similarly disturbing trend. Bond
prices have risen significantly even
for companies with poor credit
ratings whose bonds are given the
rather unflattering name, junk bonds.
Very small companies have been
successfully offering mini bonds, while
at the micro company level you could
even regard crowd-lending as a form
of corporate bond. In all cases you
have to balance the interest rate being
offered with the likelihood of the
company being around and able to
repay your capital at the end of
the bond period.
If you’re new to investing, the only
way you should hold bonds is within
broadly diversified funds within the
kind of asset allocation we discussed
in the previous episode. If you’re an
experienced investor, now might be
the time to research strategies for
shorting some of the major bond
markets, either through spread betting
or through leveraged ETFs that give
you the chance to place a Put option
on the bond markets.
The bond market is too big to
ignore, but at this moment in history
I urge you to approach with care!
12
thE a-Z of invEsting
Finally we come to the most
important part. and the
one that’s most frequently
forgotten. I’m sure you’ve heard the
axiom, ‘what gets measured gets
managed’? It’s exactly the same
when it comes to wealth creation.
I know how busy your life is. only
a busy person would be interested in
a report like this. Chances are, you’re
different to most people. serious
about success. ambitious for the
future. maybe a bit disappointed by
where you are today.
I’m a great believer that we
tend to over-estimate what we can
achieve in one year and massively
under estimate what we can achieve
in five years. That’s another way of
saying that real success tends to
come to those who persist.
> Put the strategies in this report
into action today.
> Follow them for a year and you’ll
see some real progress.
sTep 7 meAsure monThly
> Follow them for five years and
you’ll experience transformation.
what will keep you going
through all the daily ups and
downs for year after year? Clear,
unambiguous evidence that you are
making progress. and for that, you
need to measure.
You could do it daily, weekly,
monthly, quarterly or yearly.
Even doing so on an annual basis
will put you ahead of 95% of the
population. I suggest monthly.
It’s long enough to see some
difference in the numbers. short
enough to take some corrective
action if you’re falling behind.
once you’re into a routine,
it should take no more than an hour
a month. There are two things you
are going to measure:
• a snapshot of your net worth
at this moment in time
• an estimate of your passive
income for the 12 months from today
It’s just an Excel spreadsheet. on the
left you list all your assets including
property, savings, businesses
(use 3 x net profit as a rough but
consistent valuation metric), stocks
and shares, Isas, pension funds
and the like. on the right you list
your liabilities such as mortgages,
loans, leases, credit card debt and
so on. subtract the liabilities from
the assets and hopefully you have a
positive number!
“We tend to over-estimate what we can achieve in one year and massively under estimate what we can achieve in five years”
what level of net worth will
suit you?
measure monthly and you will!
13
reneGAde roAd To riChestake control
Get educated
Get connected
acquire assets
build businesses
tame the taxman
Measure Monthly
obviously the goal is for your
net worth to be a higher (positive)
number each time you measure it.
It won’t always happen, especially if
you’ve had funds in the stock market
in recent months. But, when you
set your sub-conscious mind the
target of seeing a higher figure each
month, you’ll be amazed how hard it
works at achieving that goal for you.
on a separate tab of the
spreadsheet create your Passive
Income Planner. across the top,
set out a rolling calendar from the
month you start. Down the side, list
the assets you own that throw off
passive income. rental properties,
whether residential or commercial
such as the care home suites we
offer. Dividends on shares. Interest
on savings accounts. returns on
bonds and loan notes as they fall
due. regular income from customers
through membership subscriptions
and the like. when you first start, this
spreadsheet may be blank. Imagine
how you’ll feel as you start to see
tens, then hundreds, then thousands
of pounds of passive income falling
due in the year ahead.
That’s the start of financial
independence. money coming in for
which you do no new work. It quietly
builds up to the point where you
realise you have choices. maybe I
only need to work three or four days
a week now? maybe I can take that
three month world tour?
From time to time you’ll have
a ‘liquidity event’ – the sale of a
business or property. an inheritance.
a maturing endowment policy.
Each of these is a trigger point for
reviewing your portfolio and seeing
what you can do to increase your
passive income. If you remember
nothing else from this report,
please remember this:
PASSIVE INCOME
=
FINANCIAL INDEPENDENCE
Focus your energy on increasing
your passive income as the fastest
route to financial independence.
The investments you’ll see in
the Elite Investor Club portfolio
are almost exclusively geared to
increasing passive income. here are
just a few websites live at the time of
writing where you can look for ideas:
this is what passive income
looks like
www.careinvestment.co.uk care home
suites offering 10% per annum for 10
years with a £52,650 investment.
www.eliteplots.com burial plots
offering a 40% uplift in 2 years.
www.healthcarebond.co.uk a loan
note funding a new care centre
offering an 18% return in 18 months*
www.guaranteedbonds.co.uk a
range of bonds and loan notes
offering 8-12% per annum returns
over periods from 1 year to 5 years *
www.elitefrance.co.uk managed
apartments in the French alps and
the Cote D’azur offering personal
use, guaranteed rental income and
someone else to do all the work.
* These investments are only open
to sophisticated and high net
worth investors – please speak to a
member of the Elite Investor Club
team to see if you qualify.
14
thE cRaig coluMn
have you
ever
had that
experience where
you finally decide
on the make and
model of car
you intend to
buy and suddenly, as if by magic you
see those particular cars absolutely
everywhere? You’ve never really
noticed them before but now they
are everywhere you look.
obviously, there’s still the same
statistical incidence of whatever the
car is, but it really is uncanny the
extent to which you now notice them
on every street corner as opposed to
how essentially invisible they were to
you previously.
The reason this happens was
discussed in a recent episode of the
irreverent and enjoyable radio 4
programme, the Infinite Monkey Cage
– What is reality? The basic point here,
now well established by scientists in the
space, is that our day-to-day experience
of existence is the tiny fraction of reality
that our brain constructs on our behalf
to make sense of everything. There are
literally millions of potential data points
available to your senses at any given
moment in time and, even with the
awesome computational power of our
grey matter, our brain is programmed
to heavily edit and triage these data
points to avoid our conscious selves
experiencing madness-inducing
overwhelm.
what many of us fail to realise is
that you can hugely help this largely
unconscious process by what you do
with your conscious focus. That is to
say that you can help your brain in
its never-ending editing and triaging
of what is going on around you by
simply making the effort to do so. The
result is that you can exert a significant
influence on what you experience as
“reality”, odd though that sounds.
our brains are designed to keep
us alive and, as a result, not very well
designed for the modern era. They
are especially attuned to the negative,
because this is what maximised our
chance of survival historically. our
brains have a tendency to focus on
dwindling resources and threats from
other human beings or animals, or the
environment generally. In the modern
era, where we are seldom actually at
risk, you have to make a concerted
effort to counteract this innate
imbalance. Doing so can variously
be described as ‘being present’ or
‘mindfulness’. Taken to the next level,
it is the idea that underpins what is
(un)fashionably called ‘the law of
attraction’ – an idea which has sold
literally millions of self-help books and
is generally rather unpalatable and
silly-sounding (for us cynical Brits).
But this isn’t about ‘energy
vibration’ or the ‘secrets of the
ancients’ or any other such hocus
pocus. It is actually about simple
neuroscience. You quite literally “get
what you focus on” because that is
how our brain works.
“How on earth is all this relevant to
my finances, Andy – you’re right off-piste
today, are you not?” …I hear you ask.
The answer is that this subject is actually
incredibly relevant to your financial
success and, more generally, success
in pretty much every other area of life.
Every day you have the chance to choose
to focus on that subset of reality that is
most helpful to your health, happiness
and wealth. as abraham Lincoln said:
“Folks are usually about as happy as
they make their minds up to be…” The
problem is that most of us don’t do this.
most of us allow what Buddhists call the
“scampering monkey” of our brain to
dash around all over the place absorbing
vast amounts of entirely unhelpful noise.
This is particularly problematic in an era
of 24/7 news blaring at you everywhere
you go and your ever present smart
phone with its social media feeds and
constant email traffic.
I wrote back in January that
99.99% of the things that will happen
across the whole world today will not
be violent murders, terrorist bombs
or someone contracting the latest
tropical disease but 99.99% of our
headlines will be about those things
because our media is stuck in that old
paradigm of our old brains.
In terms of finance specifically,
many people suffer from essentially
the same problem: those who’ve
taken no time to study it or really
understand it, think that the stock
market is horribly risky. This is perhaps
unsurprising given that the media
goes bananas every time there is
a ‘massive crash’ and that is most
people’s ‘reality’ when it comes to
investment. The 99% of the time
that a sensible, diversified portfolio
will gradually, sensibly and entirely
effectively build your wealth doesn’t
make front page news, isn’t what most
people consciously put in their brain
and isn’t most people’s “reality” as a
result – which is one of the reasons so
many people fail with investment.
The antidote to this unfortunate
reality is to be consciously selective
about where you put your focus and
to think carefully about where your
beliefs come from and how well they
serve you.
If you truly get what you focus on,
then it pays to focus on the exciting
possibilities that result from becoming
truly financially literate and on top of
your investment portfolio…
you GeT whAT you FoCus on – nonsense or neurosCienCe?
15
we are a global network of
over 2,000 sophisticated
and high net worth
investors, with bases in London,
Tel aviv, singapore and Beijing
and members in more than fifteen
countries across five continents.
Our Philosophy and Valuesour primary aim is to help you take
personal control of your financial
future so that you can achieve
financial independence and therefore
live life on your own terms. we
do that through a combination of
financial education, wealth coaching
and access to extraordinary
investments that you won’t find on
the high street.
our values include taking personal
ownership, giving information
whAT is eliTe invesTor CluB?
noT advice, covering the FULL
investment universe, a commitment
to life-long financial learning,
honesty and transparency and a
healthy scepticism. we call ourselves
Elite because we represent the
tiny portion of society that takes a
serious interest in its financial future
but we are not elitist as we have
members on every stage of the
journey to financial independence.
It’s a serious subject but we’re
allowed to have fun as you’ll see if
you come to our live events…
what is ElitE invEstoR club
“Our aim is to help you take personal control of your financial future”
An Eco System for Wealth Creation and Wealth Protectionwe want to provide you with all
the elements necessary to build
wealth and every legal means of
keeping it out of the hands of
greedy politicians! This includes
helping our UK members to qualify
as sophisticated Investors by
being members for six months and
investing in at least two unlisted
equities through a platform
like Crowdcube.
If you haven’t already joined
Elite Investor Club,
associate membership is free at
www.eliteinvestorclub.com
learn what the 1% know as part
of elite investor club
16
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thE Month in pictuREs
cilla and niGel steed (niGel
wishes he’d come now…)
reCoGnisinG memBers AT The eliTe invesTor AwArdsas well as the five Elite stars
awarded to winners in each
category, we also said a long
overdue Thank You to some of our
regular investors at the June event.
recipients of a silver Britannia in a
wooden presentation case were:
leonora dawson-bowlinG looks
pleased with her silver britannia
sunil nathwani was himself referred
by referrer of the year dipak shah
anne and michael foster
were both present for
their award
investor and
referrer Gerry
melville
last month’s cover Girl
elizabeth benjamin