by The Investor
on January 14, 2009
Important: What follows is not a recommendation to buy or sell RIT Capital Partners. I’m just a private investor, storing and sharing notes. Read my disclaimer.
Name: RIT Capital Partners Ticker: RCP
Listed in: London (FTSE 250)
Business: Investment vehicles
More info: Digital Look / Google Finance
Official site: RIT Capital Partners
Some say it’s harder to keep hold of serious money than to acquire it. They tend to be very rich. The rest of us would dearly love to find out!
For preserving great wealth over the long-term, it’s hard to beat the Rothschilds. This banking dynasty started making money in the 18th Century:
- Nathan Mayer Rothschild helped finance the British Napoleonic War effort, sending bullion to the Duke of Wellington at the front
- The Rothchilds backed the industrial revolution in Europe, financed railways worldwide, and put together funding for huge projects like the Suez canal
- The family business continues today, with various wings operating investment and finance firms including: N M Rothschild & Sons, Concordia BV, LCF Rothschild Group, Atticus Capital LP and RIT Capital Partners
Do what the rich do
You can’t argue with a 200-year history of making money. I don’t understand why someone would back the ‘black box’ investing of a newbie billionaire like Bernie Madoff, the alleged Ponzi fraudster, who apparently discovered the secret of making steady 15% returns but wouldn’t tell anyone else.
When today’s fly-by-night financiers are long gone you can be sure the Rothschilds will still be in the game. While Rothschild conspiracy theories abound as a result of their success, I say good luck to them.
In fact, if you could only choose between reading Monevator or a blog written by Jacob Rothschild (aka the 4th Baron Rothschild) I’d recommend reading Rothschild. Forget Rich Dad, Poor Dad – his blog would be more like Gazillionaire Dad.
I can’t point you to Jacob Rothschild’s blog, but I can tell you how I invest some of my money right alongside his own.
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by The Investor
on January 10, 2009
In normal times, corporate bonds are the also-rans of the asset class world. They’re sometimes sexed-up, such as in the 1980s when Wall Street raiders used junk bonds to fuel company takeovers. But usually they’re too boring to interest private investors.
Boring can be profitable, but only if the underlying risk/return case is good. In my personal view, that’s rarely true of corporate bonds. (Many financial advisors and writers think different).
Corporate bonds:
- Offer none of the income growth of equities
- Are still exposed to the risk of company failure
- Don’t adequately diversify the risk of holding equities
- Aren’t anything like as secure as government bonds (governments can print money to pay their debts)
- Yield only 0.5-1.5% more than government bonds (in normal times!)
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by The Investor
on January 9, 2009
An asset is an item of economic value that can be converted into cash.
Assets likely to be held by private investors include: cash in bank deposits, securities (such as shares issued by private companies, and government or corporate bonds), property, insurance policies, foreign currencies, cars, art and antiques.
Company assets include plants and machinery, and intellectual property.
Different assets have different characteristics. Variables include:
- Liquidity – how easily can the asset be converted into cash?
- Rate of return – does holding the asset generate a cash income? Gold bars don’t give you an annual income. Shares in a large-cap diversified mining company typically do.
- Potential for capital appreciation – stocks and property tend to rise in value over time. Cash does not.
- Volatility – how does the asset’s value fluctuate over a given time period?
An investor’s requirements regarding these different characteristics will determine which assets are most attractive to him or her.
See more financial terms in the Monevator glossary.
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by The Investor
on January 7, 2009
Back in March 2008, I asked if rising interest rates at Zopa, the British peer-to-peer lender, were an opportunity for cash-rich savers or an accident waiting to happen:
In the A*, 24-month market, I seem to be in the zone with an interest rate of 10.5%, which Zopa estimates will give me 9.5% after bad debt.
That 9.5% is almost 50% more interest than on the best savings accounts available from banks at the moment.
I’m gob-smacked.
My post generated a few comments around the web. Even Zopa joined the discussion on the Zopa blog:
Johnnie Moore pointed us towards Monevator and a recent post about Zopa, and we thought it contained some food for thought. […]
Our default rate remains at less than 0.1% and we’ve seen no evidence of increasing bad debt. With our state-of-the-art credit and affordability checks, we’re confident that our credit process will continue to perform well.
So, sit back, relax and have a really nice relaxing biscuit and tea filled weekend!
Zopa was right. Nearly 10 months on I’m yet to see any bad debt. I’ve had a few late-payers but so far Zopa’s credit control has proved impressive and they’ve all coughed up.
Reminder: Zopa is a peer-to-peer lending platform. Rather than saving money in a bank, you effectively become a bank yourself, spreading your money between other Zopa members who are borrowers and who pay you interest. Think eBay for savings.
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