The best of the week’s money reads.
I was sad to see Steve Jobs finally throw in the towel this week on his ability to run Apple, the company he first founded and later saved.
Over the past few years, Jobs has led one of the greatest companies the world will ever see, produced peerless products (I haven’t bought a non-Apple computer since the Amiga!), fought cancer, and seemed to be having a whale of a time throughout.
There’s many lessons from Jobs’ life that I wish could inspire my day-to-day living as much as they do when I first encounter them.
But perhaps his most universally inspiring message was the simple one he gave to a class of US graduates:
“When I was 17, I read a quote that went something like: “If you live each day as if it was your last, someday you’ll most certainly be right.” It made an impression on me, and since then, for the past 33 years, I have looked in the mirror every morning and asked myself: “If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.”
Steve Jobs is 56 and his net worth is at least $8 billion, but that hasn’t saved him from the random mutation of his cells. He is an artist who happens to have the technical foresight of Thomas Edison and the business acumen of Henry Ford. Or maybe he’s Bill Gates with an eye for colour.
He’s also a charismatic leader that can rally his people around him despite being difficult to work with, or even obnoxious.
Most importantly, Jobs can say “no, that’s not good enough” and demand a prototype is improved. Such an obsession on quality is incredibly rare. It is the difference between Apple and its rivals, and the difference between capitalist flair and bureaucracy (aka Nokia).
The blog Abnormal Returns has posted a huge list of Steve Jobs links if you want more. The tone of most of the coverage is a bit creepy. It’s as if he’s already dead and beatified, which must be unnerving even for Jobs.
It might also be intimidating for his successor, Tim Cook. Still, to take his mind off it the new CEO has been given one million Apple shares, worth £235 million at today’s price.
It’s a fortune, but if he is truly Steve Jobs’ heir then that’s irrelevant. Jobs hasn’t sold a single share in Apple since he returned in 1997.
From the blogs
- Save aggressively, invest conservatively – The Finance Buff
- How to learn a foreign language without spending – Get Rich Slowly
- Safe withdrawal rates and life expectancy – Oblivious Investor
- What if the stock market was a bond? – Crossing Wall Street
- Index fund pollution… – Rick Ferri
- …some ETF firms even planning own indices! – Abnormal Returns
- Shoot first and ask later? – Investing Caffeine
- Get rich with non-financial investments – Simple Living in Suffolk
- Monthly review – Value Hunter UK
- The construction industry is only sleeping – UK Value Investor
- Dread risk: Investing outside the goldfish bowl – The Psy-Fi Blog
- Market volatility and the ‘rebalancing frown’ – Vanguard
- 7 things I learned from the first blogger – James Altucher
Deal of the week: You get £50 credit back
Mainstream media money
- The American economy’s prospects – The Economist
- When smart people are bad employees [from March] – Forbes
- Can Grantham profit from ecological mayhem? – The New York Times
- Are 7% real returns attainable? – The Motley Fool
- Pensions: The big problem is we’re living too long – FT
- Gold run not over yet – Merryn/FT
- Do your homework on BTL for students – FT
- Victoria Stapleton, founder of Brora: My first million – FT
- Consumers save £51 billion a year with voucher codes – Telegraph
- Dutch pensions: 50% higher returns than ours – Telegraph
- Invest in cash flow rich dividend payers through the noise – Independent
- New ways to get on the housing ladder – Independent
- Home exchange – cut the cost of your holiday – The Guardian
- Fund manager-speak translated – The Guardian
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Some great reading in there, Mr Monevator. B-)
Thanks for checking in — hope you’re set for crazy/lazy bank holiday weekend to suit. 😉
Good food for thought here – thanks for all the work you do with this terrific blog.
My favourite Jobs quote:
‘Remembering you are going to die is the best way I know of avoiding the trap of thinking you have something to lose’.
Hi TI,
1. I was waiting to see whether you’d include that excellent article by Patrick Collinson in ‘The Guardian’. You did: it’s the last one in the list above.
2. It’s not only funny. It also serves as an excellent summary of the reasons why we should invest using a passive approach.
3. The irony is: Collinson doesn’t actually say this is the logical conclusion of his piece. I suppose that section of the ‘The Guardian’ does depend on advertising from a certain sector…
Alex
I had an Amiga 500, what a machine – but even that wasn’t a patch on the BBC Model B I had before that – halcyon days…
@ Alex – yeah it’s a very funny article.
I enjoy reading the hargreaves lansdown manager comments in their Investment times magazine.
A couple of examples:
From a Japan fund: “Although the recent disaster will result in tremendous cost to the Japanese economy, it should also unite it’s people and allow Prime Minister Naoto Kan to implement more constructive reforms” – I’m as much in the dark as you are. Lovely day though.
From a European fund: “We believe that holding companies with leadership positions, above average growth and low levels of debt is appropriate to this stage of the economic cycle” – is there ever a stage in the economic cycle to hold companies with declining market share, below average growth and high levels of debt.
From a ‘Star’ Income Fund Manager: “We should outperfrom strongly when defensive stocks are revalued. ‘Dependability is underpriced in the market, in our opinion”. – I’m a star fund manager but my fund has vastly underperformed in the last few years. So I’m going to start speaking in the plural to deflect the heat.
Hours of fun. 😉
TMG
Hi TMG,
1. Totally agree with you about those fund manager comments Hargreaves Lansdown (HL) seems to believe are useful.
2. Actually, that’s not fair. They are useful – to HL, clearly. Their clients (or anyone else), however…
3. What really annoys me is that a serious UK national newspaper, ‘The Independent’, gives HL a column every Saturday to cut-and-paste that guff from their favourite fund managers. Funny how said managers always use an active approach…
4. If it wasn’t bad enough that HL uses its column to push certain active funds, the whole exercise is just an advert for HL itself. Weekly.
5. It’s ridiculous.
6. Er…That’s it.
Alex
Ha ha Alex – I’m with you. I must confess I have most of my fund accounts with HL as I do think they offer an exemplary service.
I am inclined to treat the fund peddling as an amusing and enjoyable bonus. That said, they can be very persuasive and I do wonder how many people have taken their musings as fact.
TMG
Hello, long time reader, first time poster here.
I’m a young investor who has been reading Monevator (amongst other research) for a year or two now, and now I’ve begun earning I finally bought my first shares on Friday, in part based on your 9 August 2011 post, ‘Good Shares to Buy Now’. For the record, I invested approximately £1000 in Tesco using Hargreaves Lansdown’s ISA.
I have a question which may have a very simple and obvious answer, but I would appreciate some advice. On my investment, I paid £11.95 as a fee and £4.95 in stamp duty. This makes my cost around 1.7%. I understand I can invest in funds and trackers with HL for cheaper than this, but in terms of individual shares is this a fairly high cost? I’m considering experimenting with pound cost averaging , but at the moment would only have around £500 available to invest each month. Investing less than £1000 each month would make my fees 2-3 per cent – 3.4% on £500/month – which is obviously undesirable. My question is, does pound cost averaging on individual shares only work if you have larger sums to invest each month, say £1000+ ? At the moment, I’m starting to think I should invest every other month to keep my fees around 1.7%. As a follow-up question, is it possible to economically invest only a few hundred pounds at a time? There are a few shares that I wouldn’t mind taking a chance on, but I would be reluctant to put more than a few hundred quid in them.
Thanks for your time, and any advice!
for shares or etfs that attract a trading fee then HL isn’t the cheapest. look up iii and read all about it in the passive investing section, slow and steady portfolio. you can trade monthly for £1.50. or, like you say, pay quarterly or annually to reduce your trading costs as a % of the amount invested
I use HL for funds that don’t suffer from trading fees.
@TheLegend – congrats on taking the plunge.
All good advice from Ben above.
One thing for you to think about – I assume you don’t have other investments and Tesco is your first one. Do you really want to be adding more?
TMG
@Ben – Thanks for your response. I’ll check out iii and set up another S&S ISA with a different provider next year! I’ll keep my HL ISA for cheap trackers and funds, and buy individual shares elsewhere. Still got a lot to learn…
@TMG – Really want to be adding more what? Tesco shares? I think my post was ambiguous – I meant I want to invest in other companies. Are you saying I shouldn’t be adding more Tesco shares until I’ve diversified? I agree – I fully intend to build a diverse portfolio – but I wouldn’t mind snapping up some more Tesco shares or another high-yielder while they are relatively cheap. Thanks
@TheLegend
Why are you using HL for individual shares? That platform is targeted toward funds….
Halifax and iii offer sharebuilder (iii call this regular investments) which charge you £1.50 + stamp duty per batched trade. Monevator used sharebuilder to build his HYP which seems pretty much like your aims…
@ermine. Hi, I’m a big fan of your blog as well!
I checked out a few places and they all seemed to be charging approx. £8-12 per trade for individual shares. I wasn’t aware of iii (or I think I heard of it and then forgot about it!) but will definitely investigate. I’m a bit annoyed I can’t open another ISA until 2012, I want to buy more stuff right now! Ermine, can I ask what you use? From the sounds of it, keeping my HL ISA for funds and getting a Halifax or iii ISA for shares sounds sensible.
Am I right in thinking batched trades are where you agree in advance what to invest in, and then at the end of the month you have to buy regardless of the price? I’m not sure I’d be comfortable with that yet. Can anybody recommend a good, low-cost ISA platform for buying individual shares in the ‘normal’ way?
Thanks for the advice folks, I really appreciate it.
@ermine – Forgot to say that I will be re-reading http://monevator.com/2011/05/12/buying-high-yield-portfolio/ again tomorrow. You’re right, it does sound like what I’m looking for – at least for the HYP part of my investments. I’ve been doing a lot of reading over at ERE as well, and am now saving nearly 50% of net income every month, so I’m hoping to have more money to invest soon.
@TheLegend I use iii, though I believe halifax may have the edge as it is possible that you can batch sell, with iii the £1.50 price only applies to purchase orders.
It’s not as bad as you think. You set a batch trade ahead of time, and they will execute it on a day at least three days up to a week ahead of the placing date, you can see the day in the trade screen.
If you don’t like where the SP is going you can cancel any time up to 5pm on the workday before the trade is due to go ahead. For all your trouble you pay £1.50 for the trade, plus stamp duty of course. You can also set that up a a monthly repeating event.
I’ve used this to build up a stake over time. The Halifax variant suited Monevator’s HYP because he had a total of £5k across 20 shares, which is £30 dealing costs with sharebuilder but would have been £200 at a tenner a pop, a trading premium 0.6% of as opposed to 4%.
I’ve bought usually at £2-3k a go, so with an ISA I have to tolerate temporary asset allocation lumpiness. I’m happy with the batched purchase as it is sort of more deliberate and gives you some time to mull things over. Though in the recent crash I’ve just gone for it and taken the £10 hit. I’m not a passive sort of guy 😉
One of the things you have to make sure in an ISA is they don’t charge you any recurring fee on contents or annually. Some make the per-trade cost lower but tap you with a annual fee. If you’re a portfolio churner that may be worth it, but otherwise why carry passengers…
Great info for TheLegend guys, you’ve done us proud.
Re: Halifax, I’m not sure you can do batch sells? I’m away from my Mac at the moment and can’t check.
Re allocation, it’s true that buying one company and building up is far riskier than more diversified approaches, even when it’s a defensive blue chip like Tesco. On the other hand, I’m not a dogmatic passive guy and quite understand the various motivations for stock picking, even as I’d remind you most do less well going down this route.
There’s something to be said for learning your lessons early. You’ve mentioned funds, which I hope are passive funds. Perhaps split your contributions 50/50 between your hyp and a low cost index fund for a few years? This will hugely reduce risk and you’ll learn a lot, too.
@Monevator/Ermine
There seems to be some confusion over my allocation/diversification. I do plan to buy a bit more Tesco, but over the next few months I also plan to buy into other companies/sectors so that Tesco is drastically reduced as a percentage of my holding. i.e. at the moment, it is £1000/100%, but in six months’ time it may be £2000/20% of my holdings.
Yes, I’ve been listening to you all for a while now and my funds would be passive. Not sure what yet, but there’s no way I’m paying a hefty ‘management’ fee every year! A HYP / low cost index fund sounds wise.
I’ve looked into the Halifax Sharebuilder service and, rather annoyingly, it’s outside an ISA. I’ve spoken to one of their advisors and, whilst you can have a sharebuilder-type service within the ISA for £1.50/trade, you have to pay a 0.05% monthly admin charge (capped at £8.33/month). I need to be within an ISA, but these charges would quickly wipe any benefit of using the low-cost trade service (I’m aware that I’m paying 0.5% annually with HL as well, so that’s no good either). I’ll check iii out soon – Once I’ve found a low-trade-cost, low-annual-fee ISA for individual shares, I’ll be set!
Thanks for all the advice – I’ll stop clogging these comments up now!
Curious, because I understood iii used Halifax. Anyway, the good news is I have an III ISA and I’ve used the equivalent of sharebuilder (called regular investments, even if you only do it once!) and never paid iii any fees other than dealing charges, which is £1.50 a go for ‘regular investments’.
If you’re a passive fund sort of guy, iii also let you hold funds like CPUKI (Halifax’s all-share UK offering) and LGAAAK without an initial charge, and costs just the TER.
If you don’t tell Monevator 🙂 I was tempted to buy Neil Woodford’s Invesco Perp High Income fund but iii isn’t a great platform for that as they hit you with a 1% upfront charge so I blanked that. HL probably wouldn’t do that. I buy £100 of the passive funds every month in my ISA to track how I am doing relative to a passive approach.
@Ermine — Yes, Halifax offers a white label service to other companies, true. Presumably its partners are allowed to tweak the exact offering to suit. It’s the back end that’s the hard bit, not the pricing. (Perhaps I should investigate setting up a Monevator dealing service? Ha ha, low cost of course).
Re Woodford, I’d keep an eye on the Edinburgh investment trust he runs. 😉 Lower cost and discount potential though not for a while. All his funds hold roughly the same suite of companies.
Aah Mr Neil Woodford. In time to come, I think NW getting pillioried in the press ‘fund too big’, ‘lost his touch’ will be a sure sign of an imminent stockmarket crash.
TMG
Probably has already happened in the past 2 years or so, up until recently. His blue chip dividend payers are hardly the stuff of dashing for trash! 😉