Two and a half year into our investment strategy I feel that it is going pretty slow. Judging by the daily stress about investment advice in newspapers and on the internet I am not the only one who wants to speed things up.
But in the back of my head I have my plan that is buy and hold for a long period of time, and that pretty much filters away all the advice in mainstream media. So what is there left to go on?
Here are some tips on how to maximize your investment power and improving your current financial situation.
1 Debts
Make sure that you have a
plan to pay off your debts. Not the most fun compared to spending money on investments. But as long as you have debt that you pay interest on, you are not increasing your own investment power, instead you are making someone else's investment power raise. That interest ends up as dividends to the shareholders of the bank that you owe. So, step 1 pay off your debt.
If you pay 100 per month on loans, that is 100 per month that you could spend on investments.
2 Decrease your expenditure
Another
relatively easy step to take. Stop that magazine subscription and put the cash to your investment account instead.
3 Pay yourself first AND increase the amount
I hope that you already
pay yourself the first thing when you receive your paycheck. What you may not do is to increase the amount over time.
There are some events that that could trigger an increase normally. For example when you get a raise. But even if you do not get a raise, just login to your bank and increase your automatic cash move from time to time. If you can live without the amount you move automatically today, maybe €10 more from time to time doesn't leave an impact. But do not rush it, the idea is to invest the excess, not the money you need to live your life..
4 Take an extra job
Really? you may ask. But yes, really. If your goal is to start living on your investment in the future then maybe sacrificing one evening per week/month for an extra buck could be OK. It's not like you actually need the money, but you want to get that little extra to boost your investment so why not?
My father did this, he used to clean supermarkets during evenings... I have done it as a bouncer at a pub. What extra job you get is up to you and your qualifications. And as you don't need it, you can quit whenever you get tired of it.. : ) Whatever extra money you did earn and add to your investment will continue to work for you for years to come. The longer money can grow the bigger effect they will make. So sacrificing a little time now may be reaped for a long time.
But note that you may have an clause about competing businesses in your contract.. Make sure you don't break it as you may end up with losing your main job instead of getting an extra. Always read your legal agreements when you sign.
5 Study
You can always spend your time on studying. Knowledge is power, and this might get you from average to cutting edge. Or at least to your next promotion.
I have always spent time home reading. Much is around subjects that I work with in my main job. But from angles that I may not have the opportunity to try out at work.
Invest your time in yourself by studying and making you more attractive on the job market. Check your local university for available evening classes or enroll at an online class. My employer gives us access to pluralsight, that is full of classes on subjects related to software development. Maybe your employer has similar programs in your field, ask your boss. And make sure your boss knows that you want to progress. This way I have been given the possibility to study during work hours. But I guess it depends on the employer that you have. Some invest in their employees, some do not.
A question that I ask when I interview candidates for my team is what do they have that makes them interesting. Home projects and study in their free time is something that I value high. That and cycling :)
6 Forget about it
Find something else to occupy your mind with. If you are investing part of your salary each month, you can forget about it for a couple of years. Trust in the
compounding effect.
If you continuously monitor the progress, you will not see the progress. Instead you will be tempted to meddle with the portfolio. If you instead let the investment work for you without any meddling the results will grow. This is the power of long-term investing.
Find a hobby, join a club. Meet people and live your life. Paying yourself first and investing in
index funds (the easiest strategy) will just solve the issue. The 'slow' feeling is just in your head!
7 start a blog!
or not. At some point I thought that this would be a good extra income source but in reality it's not. But it might work for you, it has worked for some people so just because my blogs aren't generating revenue.... yours might.A really sucky number seven but I'm out of ideas.. if you have any please leave them in the comments!
Sorry for the seventh tip, but for the rest the idea is to maximize the investment each month so that you can retire earlier. 10% of your income is a good start, 5% is a start but in the end you will want to grow that percentage over time so that you can fulfill your dream of retirement earlier. I read somewhere that 60% is the holy grail, seems quite far away but if you have the possibility to spend less and invest more. DO IT! The upside is that you learn to live on less.. meaning that you need less when you retire so that is also affecting how long it will take you to get there!
Hope this motivated/helped someone out there. : )
Until next time:
Work to Live, Don’t Live to Work
Disclaimer. I am in no way an expert on capital management or investing. On this blog I only wish to share my findings, ideas and comments on current events and fields that interest me. I hope that my thoughts can entertain you. I expect that everyone reading take their time and do their own research before acting on anything read on this blog. Investing is not for everyone. E&OE.
