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Investment Alphabet

 inspired me to create an Investment Alphabet. You see, I’m a big believer in cooking from scratch and consuming lots of different and wholesome foods so nature can do the hard work. It struck me that this is really quite similar to my personal finance approach.

1. Develop an overall strategy from the ground up. Using advisers is like using recipes. They can provide ideas and help you implement them, but only you know if you want beef or fish for dinner!

2. Use lots of different products, but choose “wholesome” ones and time will do the hard work. Foods have nutritional value and health benefits; financial products have performance metrics and risk characteristics. Good stuff in = good stuff out!  Continue reading

A Made to Measure Savings Plan is a Balancing Act

Have you tried walking on stilts? It’s a balancing act through and through.

So is saving and living comfortably enough. Not easy to achieve, but once you get into the rhythm and learn to adjust your balance, it becomes doable. Very much like the made to measure approach to saving proposed in “Build a Savings Plan That Fits Your Real Life“, an article I tweeted last week and which has been re-tweeted a fair few times since.

Saving is like dieting. If the diet doesn’t suit your lifestyle and/or you are not willing to change your lifestyle to meet the diet’s requirements, you won’t stick to it. Set your savings goals too high and you’ll get discouraged when you can’t save that much; set them too low and you’re undercutting your future prospects. Either way, you won’t achieve your goal: be it weight or account size. So how do you do that?

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All that Glitters is not Gold

“Money, money, money! It’s a rich man’s world”, ABBA sings. But even the rich can’t avoid the fact that money is not all it seems.

Consider this: Is a £100 always worth a £100?

Face value is what it says on the tin. “Worth” is what you can buy with it, i.e. how full is that tin? Sounds obvious, but do you really appreciate what this means? Take this quiz to see.

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Go with the Crowd or Go Your Own Way?

Research says crowds are wise: watch this BBC video or read this book for more on this assertion. But, as another BBC article explains, the crowd is not always right. Witness the 2008 financial meltdown for proof that herd mentality can be dangerous. In fact, most people prefer to fail with the crowd rather than stand out with a different view. Being contrarian is hard work mentally but it can pay off if you take less risk or go for a smart bet.

New research is emerging into how social influence can alter the wisdom of the crowd by steering opinions in a particular direction. That’s where crowdfunding is at. Is it good or bad for you that crowd views and sentiment trend? Well, it depends. Are you an investor, a business looking for funds or a good Samaritan?

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