Investing in an Ideology

I have taken the plunge.

Over the last six months, I have been shoring money away to invest in something big. That sum has increased due to an unexpected windfall. I have all the investments that one is advised to make – the tax-free ISA, the pension contribution, the Friendly Society fund, the National Savings & Investments Bonds and stock market positions. So, the challenge was finding something growth driven that would make my money work its hardest. I considered the options:

Gold
Not wanting to blindly follow Mr Buffett's dislike of the shiny stuff, I wanted to do some research of my own.

Pros

• Since 2005, gold has outperformed every asset class 4 times.
  
• Most central banks hold gold. There must be some reason for this right?

Cons

• Gold is considered the safe bet whenever there is uncertainty in the world of investing. As a result, prices have soared recently.
  
• Gold is linked to the value of the dollar.

The Verdict
Gold requires too much monitoring and studying – from spread betting / futures / options / mutual funds / ETFs. It also doesn’t seem to be a growth-vehicle for the long-term. So, in my portfolio, gold doesn’t seem to afford me any utility. In short, gold is something to invest in – but not right now.


Property
I’ve always seen myself as an investor in property – I just never figured it would be through the stock market. With property ETFs offering good prices, I am tempted to buy low.

Pros

• Commercial property is a dependable investment vehicle. Average returns are 6%.
  
• It is often backed by a bank loan and business assets / collateral of some kind.
  
• Global securities funds are an excellent way to escape "old-fashioned" property investment

Cons

• It is a boring investment vehicle. It is nearly as boring as my NS&I bonds.
  
• It is geared towards low-risk portfolios, usually where protecting the initial investment is very important.

The Verdict
It won’t be commercial property that I invest my money in. Again, it’s not for me at this time.


So, I have decided to do something risky and exciting with my money, I am investing in Africa through ETFs. For now, I intend to split my money between:

South(ern) Africa: Tourism
Nigeria: Banking and Oil & Gas
West Africa: Infrastructure and mid cap
North Africa (focus on Egypt): Growth large cap

I know the climate is risky - corruption, unstable government, reliance on the developed world and a penchant for import are things I have considered. I feel like if things will change, it will do so because we believed in our continent.

And, where there is money to be made, well that's just a bonus really :)

Financial Overview 2009: Expenditure

The Surprises
Wow. I knew I spent a lot of money on transport (for someone who lives less than half an hour from work), but I didn’t realise it claimed approx. 23% of my yearly expenditure.
I thought my mobile phone bills would be less. I don’t speak much on the thing so why is it claiming around 10% of my annual expenditure? I shall be making some adjustments to my price plan very soon.


The Expected
Electricity, water, landline, internet, TV and food bills didn’t surprise me. What can I say? I like to eat and I like to be warm in my flat. The others are fixed prices spread over the year.
Entertaining and miscellaneous expenses could be reined in, but given there was a lot of fun had and some curveballs thrown in 2009, not a bad result.


Against Last Year

Even though I earned less in 2008, overall I seem to have spent more – quite a bit more actually. I blame it on the cost of living alone, acquiring household appliances and excessive commuting to London. In 2009, I monitored my expenditure a lot better. I noted down most purchases and updated my spread sheets regularly.

Thank goodness for birthday money in 2009. I am ashamed to say I spent most of it – partly on birthday-related things (party dress, party shoes, party etc.) and partly towards funding my trip to the USA. My Entertaining and Miscellaneous figures would be much higher if not for the offset.

Financial Overview 2009: Savings

After a slow, yet steady start to the year, I did okay in the end. Towards the end of the year, I paid off my overdraft, I moved into a cheaper flat and I made a commitment to go to London less and reduce those petrol bills.


I am glad to see my attitude to saving shows great improvement over the last three years. I'll let you in on something - I like having money in the bank! I mean I really like it. There is a feeling of power when I see something that costs £££ and I know I have more than enough money to buy it if I choose to. That is not to say I buy it, but knowing I could if I needed to / wanted to is a heady feeling.

I think I can save more in 2010 and I am working on identifying areas in which spending can be reduced. I put my unforeseen inheritance into stocks in the African continent – I believe in investing in oneself. I'll tell you more about that over the next week. The wisdom of my convictions will become evident soon enough.

2009: A Year In Review

As stated earlier, I am no longer doing monthly net worth reviews on the blog. This is because I want to notice real changes and trends – and that requires leaving more of a gap between assessments. So, that being said, I shall be comparing quarterly. It seems fitting that the first quarterly comparison will be in the New Year – this isn't because I'm too lazy to do one in December. It's just that, well what’s the point of a quarterly analysis when I can give you full and frank disclosure as to what went on in my finances for 2009?

Big Stuff
I inherited some money in September. I didn't speak about it when I got the money. To be honest, I didn't know how I felt about the situation. I got approximately £5,000 from a distant relative whom I didn't even know liked me. They were being tax efficient and decided to give everyone some money now. I was touched, but it was weird at the same time. I probably see them for about 20 minutes once every year. The "Thank you" phone call was awkward to say the least. I had to phone my mom to get his phone number and ask his wife's name. Sadly, I misheard my mother and called her the wrong thing. Aw, it was cringe-inducing I tell ya, but back to the finances. This generous donation made my net worth goal of £20,000 very attainable. So, I increased it to £30,000 by the end of 2010.

I have cleared my overdraft *pause for celebratory dance*. This last born child does not owe anybody any money. Operation Debt Free is over! Mission accomplished (can you tell I'm giddy about this?) I am still trying to figure out what to do with my newfound £100-odd every month. It's a shame no shoes are calling me.


Expected Stuff
I did not have to employ evasive manoeuvres at any stage of the savings plan. I managed to put away the minimums I said I would and that is largely thanks to direct debits. My car lost 20% of its value, my total assets doubled.


Housekeeping Savings
My regular saver matured, the money was paid to me and I set up a new regular saver for 2010/2011. I funnelled part of the money into my Cash ISA and part into my Stocks and Shares ISA. I also topped up my National Savings & Investments Bonds to a nice round number.

The rest of my money went towards living expenses and taxes. Living alone ensures my money is tied up in all kinds of bills - some of which I would love to do without but can't. For example, I'd like to ditch my BT phoneline, but I want broadband and I my area isn't equipped for cable. I wouldn't mind ditching my Sky TV, but I would pay more for a tvless entertainment package. My annual review shows I am running up my mobile bills and I go to London too much - surprise surprise.

Overall, it was a good year and I weathered setbacks quite well. Now that playtime (debt-elimination) is over, I can get down to the serious business of increasing my net worth.

Season's Greetings

Like most of you, on holidays I immerse myself in things family-focused so I don’t blog much and I take more than just the holiday off from work.

This year is no different – I’m not posting anything substantial, apart from my sincere wishes that everyone has a season that is meaningful to them.

I make none of the usual references because I acknowledge it may not be snowing where you are, you may "celebrate" differently, you may not be Christian and it may not be a holiday.)

Operation Enjoy Yourself

I like shoes. Lots and lots and lots of shoes. This like of footwear, together with my other likes (bags and holidays), often gets me into financial trouble.

Like most young people, I practice instant gratification. If there is a legal shortcut that can be taken, I will take it. As a result, I used to know all my credit card information by heart – no running to the bag for the physical card with me. That just gives you time to change your mind about the purchase or be beaten to it by that other eager person. Credit cards and I have had our issues over the years. Thankfully, we have a relationship build on understanding and are working on establishing more trust – i.e. they trust me to pay my bills on time and I trust them not to phone me looking for money.

Though I still like and enjoy the above-mentioned, I practice restraint nowadays. I identify what I am missing in my collection – this meant purchases of patent heels in the last six months, I check the sales at my favourite shops and sites, and I only purchase what I adore. If I merely like it, I pass. I also pay out of funds I have – no overdraft and no cards. So, in order to ensure I can still get these things that give me pleasure, I have set up Operation Enjoy Yourself (OEY). I intend to save £750 over the course of the year and then treat myself to something really nice – guilt-free.

I Talk Like This Cos I Can Back It Up

I’ve been waiting a very long time to write this post. As at today, my final payment towards my overdraft cleared. I am now debt-free. Debt f.r.e.e.! Whew. So, the car is paid for, the home is paid for, Operation Safety Net (OSN) is funded, holidays are not a problem and my shares are on the up-and-up.

Now, I can comfortably put my mouth where my money is. You'll notice my goal bars have been updated. I'm aiming to save more. Operation Invest Away (OIA) continues into Phase Two and is joined by two new missions; Operation Enjoy Yourself (OEY) and Operation Birthday (OB).

OEY [aka holiday / treat money]
This will go towards (part of) a holiday (flights and hotels) and/or a gadget/bag within the year. I'm aiming to put away £750 within one year.

OB
I'm starting this to help me plan ahead. The two most important men in my life (my father and my older brother) are approaching milestone ages within three years of each other. I know that I'm the baby of the family but I want to give them both out-of-this-world indulgent gifts. They, along with my mother, have been my rock throughout everything. They've loved me unconditionally, stopped me from getting ahead of myself and given me advice through it all.

I love being able to put my money where my mouth is. I can't wait to start saving the money that used to go towards the overdraft. Watch me break through some ceilings next year!

Christmas Is Cancelled This Year

That's what one of the partners said to me today. I was wondering what he meant. Thankfully, I didn't have to wonder for long. He went on to explain that his family were not going on their usual Christmas vacation for the first time in fifteen years. They were also not decorating the roof or the driveway of their home. Most importantly, they were only buying one gift per person - a combined effort from all other family members. He talked about what a change this would be and what a shame it was to cancel Christmas. A lot of people agreed and it seems most are scaling back in some way.

Then he came over and asked me what I was doing differently celebrate this year. My answer was nothing. I am having the standard Christmas - counting my blessings and spending time with family. You see, my family and I don't celebrate Christmas in the popular way. My mother always said "Christmas is Jesus' birthday, not yours" and that's how I view it.

Sure, we have Christmas dinner but even that isn't conventional. We aren't big fans of turkey (too dry we think), we never have cranberry sauce and we just don't like Christmas pudding. We go to church in the morning, cook in the afternoon and open our doors to anyone who comes by in the evening. Judging from the looks of sympathy and everyone's behaviour, Christmas has been cancelled for a long time in my household.

The Cost of Being Debt-Free

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I don't mean the cost of using a debt consolidation agency. I mean all the things you had to give up / forgo and all the lifestyle adjustments it took to get you there.

In my quest to become debt-free, I made a few lifestyle adjustments. I said no to a lot of social events / trips that would've been fun, but wouldn't have helped me pay off the overdraft. I packed my lunch to work 70% of the time, I moved out of my swish digs to somewhere cheaper, I didn't take on more debt, I shopped less and lived below my means.

Though I made those adjustments, I didn't do too much / more than I could handle.

For example, I didn't move into an ultra-cheap dump (though I thought about it). I spend a lot of time at home, so I wanted to be in a flat that was secure, reasonably priced, but spacious and airy.

I continued to go back to London often. For me, this is necessary to preserve my sanity - it keeps me in touch with friends and family and gives me somewhere to refocus and count my blessings. Also, I went on vacation as usual. I did it in a much more cost-efficient way - travelled in the off-peak season, stayed with friends and family, travelled cheap etc.

I guess what one chooses to live without is different for each person. Personally, I haven't found the cost of being debt-free to be exorbitant, because I have a balanced compromise. If anything, the cost of being in debt – late fees, overdrawn charges, expired interest rate offers etc. are what appear too high.


Sometimes I do wonder though, how much more I could put away if I changed a few things. Today, I'm wondering whether the cost of being debt-free was worth it to you, now you stand on the other side of the fence (so to speak). Are there things you would have done differently?


Speak on it.

Advice to a Young Teenager

One of my older cousins decided to impart some words of wisdom when I was 14 years old. He was a junior at university, back home for summer vacation. I was visiting his family, up watching late night television. He walked through the door after a night out, made himself a sandwich and sat with me for a bit. I wasn't sure what he was talking about (and it is highly probable he was under the influence of liquor at the time) but his words stayed with me and gave me valuable insight into the psyche of a man.

No man is looking to start a relationship in the club

Disclaimer
**This LastBornChild has never tried to start a relationship with someone from a club. NEVER. Truth be told, I stay with people I know at clubs - I go for the music and the drink, I supply my own friends.**

Now, back to the post. What I took away was, if a man doesn't tell you / show you he cares, then he probably doesn't. Men don't start caring in a club and men consider club-like environments as off-the-record. Recently, I read a short essay and from Ekene Agabu stumbled upon an articulate quote that reinforces the point my inebriated (well-meaning and loveable as always) cousin made to me all those years ago.

"As a man, I must call myself to higher standards. Before I touch you, I must respect you like my mother, protect you like my sister and look out for your best interest like my baby"

To me, the message in both is very similar, though the delivery couldn't be more different apart. The underlying theme is being able and willing to respect. My cousin's blunt method got his message across to me in a very effective way. Thinking about that one-sided conversation still makes me laugh.

Star Wars Facebook Status Updates

On the first day of the last month of the year, I would like to confess that I adore sci-fi. So, when I came across Facebook status updates from various Star Wars characters, I was laughing for a minute.

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Hahaha gotta love C3PO!