Following on from Freedom Friday and the Christmas Shopping Special yesterday today I have another book recommendation for you. The book is called: Happy Money: The New Science of Smarter Spending by Elizabeth Dunn and Michael Norton. It looks at Money and Happiness and how the way you spend it can have an impact on your happiness.
For example one of the finding was that you can get more happiness from spending money on others than on yourself - so perhaps all that Christmas shopping is not so bad after all? Any way if you are all spent out already or you don't want to buy another book then there was also a good piece and video interview about the research which you can read and watch, if that is of interest, at the link above.
I certainly buy into the concept in the book of - How “time affluence” is more important than a fat pay cheque. Decided not to clutter the post up with another you tube music video today as I couldn't decide between Happy Mondays, I Don't Like Mondays, and Happy Talk. But you can click the links if you want to hear them.
So on that bomb shell I'll leave it there for today - but don't forget to open your Advent Calendar window below for today's treat which might help you with you investing.
...is all about achieving financial independence and financial freedom. Now obviously it helps if you work hard and can get a well paid job which will give you the cash flow to put some capital aside to invest - if that's want you want to do. Failing that you might be lucky enough to inherit a small fortune, marry a wealthy partner or have the talent to make it in a lucrative industry like music, film or football perhaps?
Or you can just live for today, spend spend spend put it on the credit card and re-mortgage when your house had gone up in value. Now that's seems to be government policy these days to encourage the housing market and keep everyone buying and selling houses to each other borrowing and spending. I guess it keeps people tied in and paying taxes and having to work until they drop.
So with that in mind how about a book called Free Capital: How 12 Private Investors Made Millions in the Stock Market by Guy Thomas.
If you have been disciplined or lucky enough to do that then you need to decide when enough is enough for you and the lifestyle you want to lead. For this you could try Enough: Breaking Free from the World of Excess - By John Naish
Finally, enough already and now for something completely different as I'm for freedom actually! Plus don't forget today's Compound Income Calendar window which is open for one day only, special offer, if you have one hour to see how I escaped the rat race.
...about my purchase of IG Group in September this year which I mentioned in my other post today? If so good news as I am hoping to introduce a portfolio service in the New Year in which I will open up my portfolio and give updates on trades as they happen.
If that is something that might be of interest then head over to my Portfolio page for some background on how I do it and how I have done in the last few years. There you can also sign up to get yourself on the update list for when this service goes live and to receive details of any launch offers.
...is a book by John Lee which was published last year. As I finally got around to reading it recently and it is the weekend, I thought I would do a quick review for you.
The Author - if you are not familiar with him is a former MP and now a Lord as well as a long time investor who has also written regularly over 14 years in a column for the Financial Times. He also gained some notoriety when he disclosed in his column that his PEP/ISA's had grown to be worth over £1 million by 2003 from contributions of £126,200 since PEP's were first introduced in 1987. While he acknowledged that his status as a financial writer probably made it easier for him to arrange meetings with companies, he is also a big fan of going to Annual General Meetings to read the body language of the board etc.
The Content - is quite interesting but I have to say it is quite a slim volume at 141 pages and much of the content is reprints of his columns from the FT over the years with a few short update comments. I also found that some of the anecdotes therefore got repeated as a result.
He generally favours small cap stocks with strong balance sheets and tries to buy these on low valuation (sub 10x P/E backed up with a decent yield). He then also advocates patience and long term holdings to allow the magic of compounding to work and also to enjoy re-ratings if the company delivers and comes to the attention of a wider audience. He has also been keen on family owned / run businesses and property or asset backed companies too. His Twelve guiding principles can be summarised as follows:
1. Buy cheap stocks with yields and at a discount to assets if possible.
2. Ignore overall market levels and macro economics, focus on your stocks prospects.
3. Be prepared to hold a position for a minimum of five years.
4. Understand the businesses that you invest in.
5. Ignore minor price moves as value will out in the long term.
6. Seek established businesses with a record of profitability and paying dividends and avoid start ups, bio techs and Oil E&P stocks.
7. Look for recent positive statements from Chairman / CEO's.
8. Seek conservative, cash rich or lowly indebted companies.
9. Ensure directors have a decent stake and a clean reputation.
10. Look for stability in the board and advisers.
11. Face up to poor decisions - he has come to use a 20% stop loss after admitting some of his earlier mistakes.
12. Run your winners don't try to be too clever by trading out and hoping to get back in.
Summary & Conclusion:
I found it an entertaining read as his philosophy is quite similar to my own and I have also invested successfully in a number of the stocks he mentions or is this confirmation bias on my part? He makes the point that to be a successful investor, like other things in life, you need to be dedicated to it and passionate about it. If you are not then you should probably invest in trackers or pay for an actively managed fund or account.
It is all quite sensible advice although he does acknowledge that it is probably harder today to find the sort of opportunities he has availed himself of over the years. However, with today's increased ISA allowance, if you can afford to save that sort of money each year then you too could make a million slowly if you have the patience, the inclination and some luck too. if you want to get a copy you can see more details at Amazon by clicking the image above, although other book shops and sites are available. Or if you want to save some money to invest in an ISA then I would recommend getting it from you local library if you can. Or get it for free by signing up for a one month free trial of Amazon's - Kindle Unlimited.
I mentioned in my post earlier this week about the possible advantages of focussing on stocks which have shown a consistent track record of increasing their dividends. S&P also provide an index for this in the UK and other regions around the world. The UK version is also offered as an ETF under the ticker UKDV which has been available since 28th February 2012.
You can get a copy of a recent fact sheet by clicking the highlighted ticker above or see it on line if that is of interest to you? If you want to get a spreadsheet with a list of the 30 holdings making up the fund you can download that here because I like to be helpful.
One interesting things is that I see Tesco (whoops) is in the top ten with a 4% weight - guess after their dividend cut it will drop out on the next index re-balance. I also note that Glaxo is also in the top ten and as I mentioned recently I have some concerns about the sustainability of their dividend distributions in the longer term, so you probably need to do your own research on stocks in this list and make sure you are comfortable with them if you were thinking of investing, this is why I prefer to do it myself.
However, I think the concept behind this index / ETF overall is a good one and if you wanted to follow it blindly then this offers a relatively cheap 0.3% (total expense ratio - TER) way of doing it with a current yield of around 4%. It looks like it has outperformed the FTSE by around 12% in capital terms since inception and obviously a bit more in total return terms given the extra yield. However as you'll see in the chart below is has underperformed over the last year after a poor run since June this year, probably primarily on the back of weakness in Glaxo & Tesco more recently.