Trying to be calm

“A man cannot directly choose his circumstances, but he can choose his thoughts and so indirectly, yet surely, shape his circumstances.” (‘As A Man Thinketh’ – James Allen)

The talk at work is all about the coronavirus and I have to say, I am concerned to say the least. Not about myself, I am concerned about my family.

I have been telling them to wash their hands and put their anti-bacterial gel throughout the day for the last few weeks. Although Mrs Duffy hasn’t taken it seriously (up until now), she has been encouraging our two girls to clean their hands and take their vitamin C tablets.

The cases of the coronavirus are escalating all the time and it seems a matter of time before the situation worsens in the UK. All non-essential travel to China, Hong Kong, Japan, South Korea, Singapore, Italy and Iran must be delayed until further notice.

I am hoping and preying that the situation can be controlled but I am not optimistic and feel we all have to prepare for the worst. Prepare for the worst, hope for the best.

We all have to clean our hands and try and do our utmost to help prevent this virus from spreading further.

This has had a negative effect on my anxiety levels and also on my Lifestrategy 80/20 Vanguard fund. From being having a 6.4% return on my investments just last week, it has swung to a -5.25% return today.

Although I am worried about the virus and the evolving situation regarding the outbreak of it, I am not worried about my investment.

The main point is that money becomes insignificant when people’s health is at stake. My thoughts and prayers are with everyone who has suffered because of this horrible virus.

Another point is that I am well aware of the ups and downs associated with the stock market. I am a long-term investor (well I am now I am aware of how to invest) and am going to follow the stock market for years to come.

There will be ups and downs when following the stock market but looking at over 100 years of data, the markets will revert to the mean and the average return will be between 7 and 8%.

Hopefully the clever scientists and health care professionals around the world can perform miracles so we can say a big fuck you to this horrendous virus!!!

I am very calm about my investment and am trying to be calm about the coronavirus.

Compare EVERY Market

Being an Electrician, I should be aware of how an energy meter works and the charges involved. If not the gas and electricity, surely the electricity meter at the very least.

Fuck me I even know the odd spark, who knows how to tamper with the meter to avoid paying their bill for a month or two.

Not me, as I prefer to bury my head in the sand and just pay the bills as they come in. Then pay the arrears as I go into debit, as I haven’t being paying enough month to month. A pattern I have fell into since moving in with Mrs Duffy almost 14 years ago.

This was ok until recently when I decided to get a fucking grip. Over the last few months I have been reading about money and trying to sort my finances out. Despite this, I have still put the energy bills to the back of my mind – old habits are very hard to shift!

My bill has gone from £100pcm to £140pcm and I have built up arrears of £600. NOT FUCKING GOOD ENOUGH. I didn’t even monitor the readings, as until last month, I had never taken a meter reading.

Just a few weeks ago, I made a baby step into sorting this out and made a note of my meter readings and put them into the energy provider, via my online account.

This month, I put the meter readings in again. Not only that, I went on ‘Compare the Market’ to see if I could save money.

I had a little look and realised I could save £430 per year by switching energy provider. I switched straight away and was quite happy with myself. Fuck me, the unit rate for Gas is now 2.259p per KWH compared with 3.599p per KWH on my old deal.

Yet another financial mistake and yet another lesson learned. That £430 saving will almost wipe out my arrears (£600) and I am going to switch every year.

Compare everything when it comes to money

I was notified by VW this week that my gorgeous (slightly dented) shit loads of miles to the gallon Passat, was due its service and MOT.

My service plan was finished so I was expecting a £200 service bill and £50 MOT – no real dramas.

When I made the call to book in with the main dealer, they informed me that it was a major service and would be over £400 – fuck that!

I never use the main dealer for services for my A-B car (Passat) and only had done the last few times as I was given a service plan when I bought it.

After politely telling the crafty little salesman to forget about the service, I rang a mechanic who I know in the local village. He said £130 in the garage or I can do it over the weekend at mine for £110.

So getting it done for £110 has saved me nearly £300.

This might sound a little bit tedious but it’s worth it! Look at the energy savings I could have made over the years. I could have saved thousands by spending 10 minutes each year on a comparison website.

I need to improve on every front when it comes to money and I will continue to do so.

Although I keep thinking my house is in order, I come across something else. Like my overdraft charges that caught me out for nearly a year, losing the details for my kids savings accounts, years of being really shit with money (negative equity in houses, no pension, single share disasters) and realising I could have saved thousands of pounds on my energy bills.

Over the next few weeks I intend to go over every little detail and try and get my financial house in order. It is amazing that 20 minutes of effort has saved me £700.

Long-term investors

Over the last few days, I have realized that I have made another financial mistake. The two savings accounts I set up for my two girls when they were born have vanished into thin air.

We decided to put £20 a month away for each of our girls. We had no idea what interest rate they would get and now I have no idea what company we used. Looking through my bank statement’s there are no direct debits for £20 so putting 2 and 2 together, I am thinking that the investments no longer exist.

This clueless approach to money is very typical of me (hopefully in the past) and it is something I am working on moving away from.

The two savings accounts were set-up with the intention of helping the girls out when they come to buying their first car or if they decide to go to University.

Although we will try and help them as much as we can, I have changed my approach when it comes to investing. Instead of saving and giving them a couple of thousand pounds on their 18th or 21st birthdays, I want to encourage them to become long-term investors.

My obsession with money (sorting my shit out) started just over 12 months ago. It took me about 4 months to understand the fundamentals of investing and make a decision on where to invest my money. I now have a stocks and shares ISA and a stocks and shares SIPP. They are both held in a Vanguard fund that mirrors the stock market in various markets and various locations around the world.

My two little priorities have no stocks and shares fund. Shame on me, they don’t even have a shitty little savings account with a shitty little interest rate.

Maybe it’s because I have been focused on sorting my finances out, or that our budget is quite tight, or even that it has slipped my mind for the last 8 months. But not investing for my two girls is not good enough.

With our mortgage quite high, having to have 2 cars, my ISA and SIPP, overpaying one of my rentals and a few other bills make our budget very tight. But again, I refuse to use this as an excuse.

They will both get £100 a month into a fund that I choose for them. At 11 and 8, they are too young to choose themselves. Turning them into long-term investors is going to be gradual. I will be trying to educate them over the next few years as I continue to learn myself.

The fund I have chosen for them is a Vanguard fund that tracks the stock market. Basically it will be made up of a large number of companies, and they will have a small slice of each company.

Very similar to my ISA stocks and shares fund, they will be investing in a ‘Life strategy 100 fund’. My fund is made up of 80% shares and 20% bonds (Life strategy 80/20 fund). The all share fund is riskier than my fund but they do have a higher risk tolerance as they are much younger and hopefully, will be investing for the long-term.

If my eldest decides to cash in at 21, her end capital will be £16,579. That is after 10 years of investing £100 pcm and assuming an interest rate of 7% (this figure is based on historical figures). At the same age, my youngest would have an end capital of £24,168 at 21. This is after 13 years of investing £100 pcm and assuming an interest rate of 7%.

The challenge is turning them into long-term investors so they can really benefit from compound interest and be practically retired in their early 40s.

If my two little investors fully understand money before becoming adults, it will make a massive difference to their financial security and hopefully financial freedom.

You always want more for your children and what I want is for them to have choice. Not to be in a means to an end job or be under financial pressure. This is the first step in encouraging them to be long-term investors that have the freedom to choose what they want to do in life.

I should have invested years ago…

Now I am all over finance like a rash, it tends to come up in conversation. Travelling home from working abroad I got talking with my engineer and he has been a contractor for years.

Reading between the lines, said contractor had earned a fortune over the years. By the sounds of it, he had earned good money and had a fucking good time spending it.

This is a common trap for us contractors. I started to earn good money in my late twenties and almost immediately my spending matched my earnings. The little pattern for me continued until about 18 months ago – I was sick as fuck and knew I had to sort my shit out.

This particular contractor seems good as gold. He has looked after his wife and two boys. He spent a year doing a house up for his son to move into. His other son lives in his flat rent-free (his retirement pot).

He is trying to tell his wife that the rent-free flat is costing them £8,000 a year but she isn’t listening and I get the impression his two sons will continue to be helped along.

I’ve got to say,“fuck that!” In reality, I will probably end up helping my two daughters in the same way further down the line. I can just see my better half paying our daughter’s rent and whatever else. Two daughter’s that are helped along will no doubt cost more than two sons getting helped along.

Anyway, we get onto pensions and the fact that my new mate hasn’t got one. “I should have invested years ago but I haven’t got a pension.”

That is the reason he is still chasing money abroad in his early 60s. Again, “fuck that!” This time though, I can honestly say, “fuck that” as I have started to plan ahead.

He keeps telling me, “You need to invest as it will soon come round you know!!!” I know what he is saying as the older I get, the faster the years get. Every Christmas I come out with the same shit, “Where has the year gone, they get faster every year.”

I don’t tell him that I have started to invest 6 months earlier and am confident I am on the right path with regards to my pension pot. I just let him have his say and take his valuable advice.

“I could have easily saved £1000 a month and I wouldn’t have missed it you know.” I could put the figures into a compound interest calculator and tell him what he would have saved over 30 years but that would be a c***s trick and id like to think I’m not a c***.

Just for the sake of this blog I will put the figures into my geeky compound interest calculator for illustration.

After investing £1000 a month, for 30 years (interest rate of 7% – based on over 100 years of the stock market) he could have ended up with a retirement pot of £1,133,529. What is really impressive is that £773,529 of this pot is made up of interest earned (via compound interest).

If he earned around 5% interest on his pot (1.1 million) he could take £55,000 a year out and he wouldn’t have to touch his pot. With this money coming in, he wouldn’t have to chase money.

The morale of the story is to invest money as early as possible. If you are a contractor with no pension pot, no one is going to come along and help you out. The only person that will help you out (in most cases) is you.

At the moment, my strategy is to put £800, in my stocks and shares ISA and £200 in my stocks and shares SIPP (Self-invested personal pension). The big aim is to get my FI (Financial Independence) as early as possible.

Although I have only been investing for the last 6 months, I feel confident I know where to put my money. I would invest what you can and learn about money. Most people I talk to haven’t heard about compound interest and it is knowledge that can really help when you are looking to invest long-term.

Spend less than your disposable income and invest the rest.