How do I save each month - I have nothing left at month end?

There are many people that have started to question the main stream narrative and the “great resignation” is clearly a function of this. At some point the topic of savings / investments for the future will come along and the obvious next question is : How do I save/invest when I have nothing left at the end of the month?

Don’t worry, I often hear this question, and I hear it more than you think. Without going into all the detail in this blog, there is a book or audio book that I would highly recommend that you read or listen to. This will put you on a path to financial freedom and answer the question above.

In its simplest form:

“Pay yourself first”

For more on this, I’d highly recommend The Richest Man In Babylon By George - S. Clason (AudioBook)

DISCLAIMER

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

Financial Goals - How do we set them? (3/3)

image by Chiara Bonetto

With the what and why done, the next step is the how do we set financial goals.

If you haven’t read part 1 & 2 of this blog series, see links below:

• Financial Goals - What are they? (1/3) and

• Financial Goals - Why set them? (2/3).

Okay, so how exactly do we set financial goals, these 6 handy steps will help:

Prioritise

Figure out what your priorities are and write them down. PS paper works best and do it away from your phone and PC. I like to start with the long term goals first (think 10-15 years), I then look to break these down into 2-5 year goals. After that these 2-5 year goals are broken down to <2 year goals.

Once you have this list of short term goals, define at least 3 task to complete for each goal (<2 years) and make sure you complete 1 task for each within one month.

Categorise

Categorise your goals into short, mid and long-term goals. Also consider using a high, medium or low priority or 1/2/3, with 1 being the most important. Just remember to keep it simple.

S.M.A.R.T

Apply a SMART goal strategy. In other words, ensure they are specific, measurable, agreed, realistic, and time bound - see part 1 of this blog series for more on SMART (here if you missed it).

Budget

Create a realistic budget. Understanding what’s coming in and what’s going out, then work it to address your goals. Use your budget to plug leaks in your personal finances.

Automate

This is a key step to achieving your goals, make sure that you allocated to your goals automatically. Directed payments into a separate account/s (such as saving or investment account) or (debt or mortgage payments) via standing order or direct debits to address the first priorities in your list of goals.

Monitor

Review your progress regularly to ensure you are hitting your milestones and benchmarks. If you don’t hit your targets, take some time to re-evaluate what went wrong and how to improve.

In summary, defining your goals drives you to take action so your chances of achieving them increases. Once you’ve charted your course to achieve them, you set yourself in motion toward a successful outcome.

For the observant out there, you will have noticed the subtle change in blog image from the first part to the last part in this blog series. This is how I like to think of goals. When you start, you only know so much about the journey (i.e. what you see and know to be true will change). The further you go, the more you learn and the closer you get to your ultimate goal (in the 2nd image you will have to navigate around the boat ahead, you did not know this when you started - image 1). In addition to this, if you need to get to a certain destination, just starting will get you there much sooner (over planning and over thinking keeps you from starting). Once you are out at sea, you can correct course. Do you really want to be the one that never leaves the harbour? Just like in the 3rd image - once out at sea, the destination will become clearer and you will see all the obstacles … Just START!

This blog series is dedicated to “das fibonator” 

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

Financial Goals - Why set them? (2/3)

image by Chiara Bonetto

We hope you enjoyed our first blog on financial goals, if you missed it, here is a link to Financial Goals - What are they? (1/3)

“A dream without a plan is just a wish”

With the what ticked off, let’s dive into the why. Being successful with money, having financial stability and security for your family is extremely difficult to achieve if you do not set financial goals. Deciding how you are going to arrange your finances to achieve the life you want for your family and yourself, requires you to align your actions with your goals and financial objectives.

Here are 5 key reasons to set financial goals and how they’ll help you achieve the success you’ve planned:

Gives you direction

Defining financial goals helps you define what you are trying to achieve and what success looks like. Your unique goals allow you to set course for the end goal, allowing you to make key changes to your and your families circumstances along the way.

Gives you a plan of action

After you have defined your goals and have direction, it’s a lot easier to create a realistic plan to achieve them.

So for example, you have a long term goal of paying down your mortgage in 10 years. Start by breaking this down into smaller targets along the way. You could set a yearly target of paying down an additional 10% per year. This can also be broken down further into a monthly target. These smaller goals and milestones will help guide your financial decisions. So if it’s increasing your family income or cutting back on unnecessary expenses, these goals and milestones help you determine the methods that would best support your efforts in reaching them.

Gives you focus

Simply having goals helps you to keep your mind on the prize. Many don’t set goals because they fear failure, but failure is a necessary step to success and offers important lessons. Overcoming difficulties on your journey provides the focus and motivation to keep moving forward and keeps you on track.

Allows you to track progress

With a clear destination defined, it’s much simpler to keep track of all the milestones you should be achieving along the way. Being able to show this progress also gives you motivation to keep moving ahead. In addition to this, highlighting where you have missed targets will give the opportunity to make changes, reprioritise or devise an alternate plan or strategy.

Provides accountability and increases chances of success

Accountability leads to responsibility, it’s up to you to achieve them. Owning your financial goals will in the long term contribute to them being achieved. Make sure you record your goals and regularly revisit them, it also helps to keep them prioritised. Ask someone in your family to checkin with you regularly to discuss your defined goals - this will drive accountability even more. 

The long and short of it is this, setting financial goals provides the clarity needed to build the kind of life you want for you and your family. If you don’t define the outcomes you want, your journey towards financial freedom (if that’s your ultimate goal) will be significantly more difficult. 

The goal of this blog was to cover off the why of financial goals. Look out over the next few weeks for the final blog in this 3 part blog series where we cover the how to set financial goals. 

This blog series is dedicated to “das fibonator” 

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

Financial Goals - What are they? (1/3)

image by chiara bonetto

Christmas is just around the corner, before you know it, we will be in the new year!

At the beginning of the each year, most people are asked by their employers to work on their personal goals and objectives to ensure that they are aligned with the corporate goals and objectives.

Just like corporations, you should ensure that you to have set your own goals and objectives. I will focus on financial goals, but you should also regularly look to create and review family, health, career and other personal goals. 

Paying off debt, starting a dollar cost average (DCA) savings plan (see DCA blog here) or even just putting something aside for that special holiday, a few infinity fiat currency units today (dollar, pounds, euros) can add up to a lot of scarce money (gold, silver, bitcoin) down the road. 

If you do not know where you are headed, where do you start walking towards?

So to ensure you end up where you want to be - you will need to set specific financial goals.

What are financial goals?

They are the specific goals and objectives created by you when it comes to your personal finance. They are therefore unique to your personal and family situation, with defined targets for you and your family to achieve over the short, medium or long term.

Examples of financial goals include:

• Saving $30k for a new car within 2 years

• Having 6-month of emergency funding within 18 months

• Earning an additional £1000 per month for a year

• Paying off your mortgage 10 years early

• Become financially free within the next 5 years

One thing you will notice is that the above financial goals are all SMART goals. The SMART acronym stands for:

• Specific - This means that objectives must be clear, for example it must state that an individual needs to make more money, reduce waste, reduce environmental impact, increase sales etc.

• Measurable - an individual must be able to measure whether they have met an objective. ie needs to specify an amount. For example, an individual may want a £10,000 increase or a 25% decrease.

• Agreed - its important that all family members are aware of and agree with the family financial goals, this will give objectives a much better chance of succeeding.

• Realistic - Objectives must be realistic. For example, earning and extra $10000 a month to start with on a basic of $1000 a month salary isn’t realistic, maybe starting with an extra $200 is more realistic, and you can build up to the $10000.

• Time-bound - Objectives must have a time limit, for example 6 months or 1 year.

The goal of this blog was to introduce a few examples of what financial goals look like and secondly to introduce the SMART framework for defining goals. Look out over the next few weeks when we cover part 2, why financials goals are so important to set and finally part 3 - how best to set financial goals. 

This blog is dedicated to “das fibonator” 

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

The Bitcoin lottery or hedge (Part 2)

image by Elena Mozhvilo

This is a follow on article, I’d highly recommend that you first read - How do the top 1% stay in the top 1%?

In that article, to summarise, we cover:

• highlevel Credit Suisse global wealth report numbers

• pyramid of 4 global wealth categories

• how the top top category, 1.1% of the population controls 45.8% of the global wealth and top 2 combined - 12.2% of the population controls a staggering 84.9% of all the global wealth

• how the top 1% stay in the top 1% - they hedge for all outcomes

• how many oz of gold are required to remain in the top 1% should we go back to a gold like or sound money standard when our fiat systems fail (why - because they always do fail in the end)

If you missed it - the magic number is 14oz of gold (per adult) to stay in the top 1%.

This got me thinking about Bitcoin, which is often compared to gold as a store of value type asset and I’m sure you will see from previous blogs, post and tweets - both are equally important as a hedge against:

• money printing (or what ever you want to call it - same outcome)

• inflation targeting (policies designed to destroy your wealth over a short period of time)

• negative yielding bonds (more theft and logically it’s nonsensical - no sane person would ever lend money to others and pay them interest too).

So the question I’m going to try and answer here is how many bitcoin (BTC) would you need to stay in (or join) the top 1%?

Obviously the assumption is that neither fiat money or a gold standard survive and we move to a pure bitcoin standard where all the world’s wealth is backed by BTC.

This article is not about getting the exact mix of fiat, gold and bitcoin - its more about what the 100% BTC hedge would look like. At some point in the future, I will do a part 3 to this series with some calculations based on different probabilities i.e. 50/50 mix of gold and BTC or a 33% mix of Fiat, Gold and BTC.

When it comes to gold this is a moving target as more gold is mined each year, however the amounts we are talking about would not be material and when performing the same calculations for BTC, there are important points to factor in:

• not all 21 million coins are available at present (i.e. not all have been mined)

• and some are lost forever (approx 3.7 million) - more of this here if you are interested

So with this in mind we have done the calculations based on 17.3m Bitcoin in total. If you take all the adults in the world (5.23 billion), that comes to only 0.0033 BTC available per adult. If you divide the total world’s wealth ($418 trillion) by 17.3m BTC - that a staggering $24.16million per coin.

To either stay or join the top 1% you will need to own 0.0414 Bitcoin (per adult)

At todays price (~$33.4k) thats about $1383 (1164 Euro or £995) worth of BTC per adult to hedge yourself against FIAT. Put differently, you could see it as a lottery ticket to join the world’s elite. The question for you is if you think its worth taking the hedge or ticket for 0.0414 BTC - I know what I’d do.

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

How do the top 1% stay in the top 1%?

image by Geoff Brooks

I recently came across a very good video on YouTube put together by “belangp” titled “How Much Gold do you Need to Protect Your Wealth?”. I have included a link to the video below this article if you are interested.

The video basically explains how the world’s wealth is distributed among the world’s population. The analysis is based on the Credit Suisse global wealth report numbers published in June 2021. Global wealth is split into a pyramid of 4 categories:

• Greater $1m

• Between $100k and $1m

• Between $10k and $100k

• Less $10k

What is amazing is how much wealth is in the top category (45.8% - $191 trillion) and how few people there are in that category (1.1% of population or about 56m adults).

The top 2 categories combined, 12.2% of the global adult population (639m of 5.24b) control a staggering 84.9% of all the global wealth.

Here is a view of the pyramid:

So back to the title of our blog - How do the top 1% stay in the top 1%? The answer is -

“They manage risk better and they cover their bases. In other words they hedge themselves for different outcomes”

The second part of the video explains how the wealthiest people in the world calculate how much gold they would need to stay in the top 1% should fiat currency fail.

I’ll let you watch the video on your own, but based on the total global gold (approx 6 billion oz) it would require ~14oz to stay in the top 1%. At today’s prices (~1800/oz) that’s about $25200 which will be revalued to $1million should we go back to a gold like or sound money standard. The secret is, the top 1% have taken this hedge for themselves and their partners to ensure that should things change, they are perfectly positioned.

DISCLAIMER:

This publication is general in nature and is not intended to constitute any professional advice or an offer or solicitation to buy or sell any financial or investment products. You should seek separate professional advice before taking any action in relation to the matters dealt with in this publication. Please also note our disclosure here

How Much Gold do you Need to Protect Your Wealth?