Monevator is a personal blog about money: making, saving, growing, and sometimes even spending it.
Please read the full disclaimer.
It’s mainly written by myself (The Investor) and my co-blogger (The Accumulator) for people like us. We also get a little help from our friends.
We all have our different approaches to investing, so don’t be surprised to read something on a Tuesday that’s at odds with what you read on a Thursday.
Monevator aims to inspire, not tell you exactly what to do in your life.
Nothing here is meant as or should be taken as specific advice: do your own research in all things. We can’t be held liable for your actions.
I’m not flogging a financial product or luring you into some cult pyramid scheme where you have to spend your Saturday nights posting coupons to all the Ts in the phone book. I simply enjoy writing about money and investment, and I hope others enjoy reading my musings. The site makes money only through advertising and through ‘affiliate’ commission if you click on a link to a shop or service and subsequently buy something.
If you do need an independent financial advisor, try Unbiased, a matching directory of over 26,000 vetted and regulated professionals. We are not qualified to give individual financial advice.
If you plan on getting rich(er), stick around. But to repeat please read the disclaimer first.
The (exciting and action-packed!) long explanation
Want to make money? I do. Want more money to save, more to invest, more to give away or spend or leave to your grandkids? Do you want to be free? I do.
Or do you want to be in debt? Do you insist on having something right now, even though you can’t afford it? Do you want to judge yourself according to what the bloke next door is driving?
I believe every time we make a choice about earning money, saving it, investing it or spending it, we’re choosing which path we want to follow.
Most people will do anything to avoid thinking about money. Pensions are a dirty word, smelling of institutional boiled cabbages. Jobs are suffered and endured. The word ‘investment’ seems at times inseparable from its partner in crime, ’scam’.
But whether you think about it or not, the fact is money rules our lives. Money is not the most important thing in life – far from it – but it’s second only to oxygen in terms of our daily needs.
Yet this needn’t be a bad thing. Think of it like the sun, which grows your food, can give you an attractive and healthy tan, and which almost makes the Costa Del Sol a pretty place, but which if treated carelessly will turn you lobster red or even transform you into interstellar radition, depending on whether you’re a dozey holidaymaker or a stray asteroid.
See, you need to know about money whether you plan on being the next Richard Branson, or the next carefree bum on the beach. At a minimum, you need to stay out of debt (except when buying a house), have enough money to pay for your everyday needs, avoiding buying useless crap you won’t want in six months (or six hours), and put sufficient aside to invest for a rainy day.
Aim to Get Rich Slowly
More ambitious? If you can read these words without talking aloud — and maybe even then — you likely have it within your means to become financially free. By this I mean free to work or not work, to modestly travel the world or stay at home, start a business or retire on your savings. Not extravagantly, but much better than if you spend the next 20 years throwing cash at beer, gadgets and brand new cars.
I like a drink, and I love my iPod. But all in moderation!
This isn’t a Get Quick Rich hangout. If anything, it’s a Get Rich Slow backwater. The truth is, most of us won’t get rich quick. Over 99.99% of us won’t buy a winning lottery ticket, or have the next cash-strapped Bill Gates ask us for £1,000 for a 50 per cent share of his new company, or invent the alternative to oil, or buy shares with the skills of legendary investor Warren Buffet.
But so what? You never know, you might be in that 0.01% if you give it a go, and in the meantime you might as well Get Rich Slowly.
The wonders of compound interest
The good thing about Getting Rich Slowly is it’s open to everyone. You need desire, dedication, and the abilty to realise that you can only spend £1 once. But those are things in short supply these days.
Buy a bottle of water with your £1 and it’s gone forever. Invest it at 10% per year for 30 years, and you’ll have £17.45, which, if we’re going to see much more of you around here, you don’t need me telling you is more than 17 times as much as £1.
On the other hand, 30 years is a long way off, and you have to think about inflation (that £17 is more likely to be worth about £8 in today’s money). So it’s all about balance. You only live once, and you don’t want to live like a monk (although some of them laid down pretty fancy wine cellars in their day). But you might find you don’t need quite so many toys/cars/mistresses any more, once you’ve got a new plan. After all, the best things in life are free, and even money can’t buy you love.
Who wants to be a millionaire?
What’s feasible? Let’s say you’re in your early 30s and resident in the UK, and you can afford to save £7,000. (Sounds impossible? You’re giving up too soon. Nothing will change if you carry on like you’ve carried on. What if you got a new job? Flogged your car and rode a bike? Sold old records on eBay in your spare time? Married money?)
What if you set aside £7,000 every year for 30 years, investing for an average return of 9% a year?
You’d have… £1,132,900
You’d retire a millionaire. (Check the sums with our compound interest calculator!)
I’m ignore inflation here, but equally I’m not assuming you increase savings as time goes by, which you should do. On balance, I think retiring a millionaire is a credible goal for anyone under 35 reading this article.
Want to get richer earlier, or starting later? Then you’ll need to make more money, save more, invest more riskily, or do all three. I’ll look at various scenarios in the months ahead.
Monevator is about Getting Rich — A Bit — Slowly
- Earn (a bit) more
- Save (a bit) more, and invest it
- Spend (a lot) more (eventually!)
Or you could get started by reading some favourite Monevator articles.