by The Investor
on February 17, 2008
After five months of tough talk, roundabout action and general chicken-sans-headery, the Government has ‘decided’ to nationalise Northern Rock. (Yes, in the same way that I ‘decided’ to start losing my hair).
The authorities responsible for dealing with the Northern Rock’s collapse have been making poor precedent-setting decisions since day one of this pantomime. None are so significant as nationalisation, however.
As Robert Peston says on his BBC blog, nationalisation is supposed to be the preserve of the doomed industrial dinosaur industries of yesteryear, not our go-go financial services. It’d be scarcely more shocking if Wall Street’s bankers stopped illicitly smoking Cuban cigars and started getting behind Fidel Castro’s ideas on redistribution. Harry Enfield’s Loadsamoney of the 1980s is morphing into 2008’s Tonnesadebt before our very eyes.
Unsettling consequences for UK tax-payers of Northern Rock’s nationalisation:
- We’ve each got between £2,000 and £3,500* of exposure to Northern Rock’s mortgage book (depending on who you believe and how the final count is tallied)
- We’ve also got about £100 billion in assets (the same loans will keep churning out cash, provided mortgages don’t default)
- We’ve thus now all got a vested interest in the housing market not collapsing
Yes, even bears on UK housing like myself have now become mortgage lenders at the peak of the UK’s biggest ever housing bubble. Some days you wish you hadn’t gotten out of bed.
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by The Investor
on February 16, 2008
The actor from Lock, Stock (and Press Gang, for a certain generation) has given The Telegraph a cautionary tale on the reckless spending and debt-mania that saw him go bankrupt at 31:
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by The Investor
on February 15, 2008
Most of us get into investing because we want freedom, whether it be freedom from the office, from traffic jams or from the drudgery of a mortgage. We want to be free from having to work for a living.
Why then are money-motivated books called things like The Millionaire Next Door
or Secrets of the Millionaire Mind? A million isn’t what it used to be, but it’s still more than most people require for financial freedom.
What many of us are really looking for is a replacement for our salary. The number on your pay check is therefore the number you need to beat.
If your salary arrived in your bank account no matter what you did, wouldn’t you be free? You could quit work the next day, if you wanted – or you could get a more enjoyable or meaningful job, work for charity, or do a dozen other more fulfilling things instead.
This post explains why and how I focus my investing on growing my annual passive income stream to replace my income, rather than concentrating on my net worth.
Note: If you’re an American or European investor, please do keep reading. The principles of good money management are international! 🙂 Just mentally swap the £s for your currency and scale up or down as appropriate.
Why target income instead of capital?
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by The Investor
on February 13, 2008
New government statistics reveal home ownership in the UK is the lowest it’s been for a decade. In London there are an incredible 110,000 fewer home owners than in 2001 (not that surprising if you’ve seen London prices recently). Blame buy-to-let.
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