Stocks and Shares: To invest or not to Invest? That is the question.
Background
In November 2019 I took early retirement. I must say this right upfront: I would not be in this position without the help and support of my intelligent, sensible, beautiful, kind and lovely wife, who over the years played a large part in making it possible.
I was 55 to the day when I left work. Now, I know some of you may be thinking this is far too young to retire. Others maybe sitting in their comfortable sea-view villas in Tenerife, or beach homes in Malibu, thinking I did it a decade too late. It is very much a case each to their own I suppose. It depends on if you still like what you do, your finances, your health, other interests and a thousand other factors. Take my father as an example. He worked until he was 72 , and still had 21 years to enjoy his retirement, before he said his goodbye to this mortal life. He carried on because he enjoyed work and could so still his job well, it was a simple as that.
Planning and Sacrifice
Don’t get me wrong here. I enjoyed work too and had various degrees of success, but over the years it had taken a toll on me, plus I had other interests I wanted to pursue. I am also lucky to be one of the last generation to benefit from a good final-salary pension. (Don’t forget I paid a lot into it too, with a much higher than average percentage contribution) I did plan well ahead and was fortunate to have zero debt by my early 40's, having paid off the mortgage on our house early and all my credit card bills. I say fortunate, but this came at a ‘cost’ of course. I didn’t win the lottery or receive a large inheritance or get any other sudden injection of a large cash sum. No, instead I made it possible by making some sacrifices back in my late 20’s and 30’s. Bargain bucket holidays and running cheap decade old cars; not to mention a distinct lack of any designer clothes in my wardrobe. Little things add up too. An example being grabbing a morning cappuccino on the way to work every day of the working week. This will set you back at least £ 15 ( price data) which over year equates to £700 or more. Over a life time at work you could easily spend £25,000+ buying your morning pick me up! Needless to say I didn’t do that.
Now then, I accept running old cars and not buying a morning coffee are hardly ‘sacrifices’. I am acutely aware for some on the lowest incomes a holiday is a luxury they cannot afford at all; bargain bucket or not. A car is just out if the question, designer clothing a fantasy. However, with greatest respect to those in that position, I am specifically just comparing myself to my contemporaries at the time.
I did live a frugal life for quite a while, but I also managed to save a little here and there an this added up over the years. With this money I’d saved not buying coffee, a morning paper and a lunchtime sandwich, I finally bought my first ever new car in 2017. This meant no vehicle leasing bill for me to worry about either.
On retirement I cashed in a small slice of my pension, the idea was to use this to help fund our travels, as well as do a few of the more expensive projects around the house and garden. However, the terrible global Covid-19 virus spread to the UK within a few months of me leaving work. The ensuing global pandemic saw off our travel plans, as well as many of the big jobs too, due to a combination of lack of materials and anyone to do it. Not forgetting the fear, harm and death it went on to bring to millions of poor souls.
Investment Superpower
With nothing to spend it on, my lump sum was now burning a hole in the trousers that is my current account, I started to wonder what to do with it. Then one day I casually announced to my wife I was going to start investing in the stock market. It was if overnight I had been gifted some magical investment superpower. After all, I said with complete modesty, I’m pretty smart, how hard can it be? She smiled at me initially, as she thought I was joking. However, when she realised I wasn’t she said something to me that is quite unprintable, but it was along the lines of …
“You’ll lose all your money!”
I was naturally a little upset with her lack of confidence in me, however, after a day or two I had a rethink. The travel plans were there, just on hold and the cost of these would be no doubt higher by now. At some point in time the contractors would begin and finish their work resulting in me having to pay them with actual money. I didn’t want to gamble away these things I was looking forward too, just because I had a fantasy moment that I could somehow be a successful investor overnight.
The realisation that I actually didn’t know much about investing in stocks irritated me a bit. I did some research and, to my delight, soon found out that you can learn about and in fact ‘play’ at investing in stock by using the London Stock Exchange Virtual Portfolio from the comfort of your laptop. I opened an account and immediately invested a cool £500K.
The virtual portfolio is easy to use by the way and you soon learn the terminology /jargon needed and some other important stuff to get going. Before you know it you’ll have the confidence to choose some stocks to invest in and then watch how they all fair over time.
I surmise some who read this may be having a chuckle right about now. Half a million, that’s just a silly amount to choose for a working class bloke, this guy is a fool, a dreamer or both. Conversely others may be thinking… is that all? A pitiful £500k, I spent twice that on my last NFT artwork piece.
All I will say is this. Don’t judge. This a large part of my hard earned net worth and anyway there is always someone with more money* (to invest or otherwise) than you. Even you, yes you, the one reading this with a billion pound/ dollar net worth. Don’t forget that the elderly lady who lives in that mansion over the road has £10 billion and I know of a 25 year old ‘kid’ in Dubai with £15 billion… and so on it goes… till you get to *Elon, *Jeff or *Bill, I guess. Which one depends on the time of year, who has said something silly on social media this week, or who has given more to charity this cycle etc. (*statement does not always apply to these individuals)
Luck or Skill
Well, it has been seven months since I entered the world of play investing and well, what do you know, I am £97K richer! Okay, it’s pretend richer, but my make believe investing superpower has been vindicated after all. Hoorah! For those of your curious to know, I invested in tech, car makers and some green energy companies).
It just goes to show that even with a little basic knowledge and research the average early retiree can conduct sound investment decisions and make money. Or perhaps I was just very lucky and this gain is simply a fluke. In truth it is probably a bit of both and that is my personal issue with investing. It certainly takes a lot of skill and research, having a diverse portfolio, as well as detailed knowledge of the sectors you are investing in to do well in the long term. However, you do also have to rely on a decent slice of good fortune along the investment highway too. Factor in market sentiment, as well as what is flavour of the month or fad of the decade, an unexpected scientific breakthrough and so on, it is really a form of gambling. This is the case in the NFT and Crypto world too from what I can see. After all will Bitcoin, Etherium and other crypto currencies be around in the future. Probably will, but what will they be worth then. Will a Bored Yacht Club Ape really still be selling for millions in five or ten years? It may be of course and I hope they are. None of this is possible to predict with any certainty, and from what I can see, when all is said and done, a lot of investors spend much of their time grinding their teeth with their fingers firmly crossed.
So, do I regret not putting the actual cash in — no actually I don’t. Sure, I would be now be almost be able to buy myself that shiny new Porsche in the photo above or the princely sum of about 3 Bitcoins.
Equally though, if it had gone the other way, I could be being forced to sell all my worldly belongings and spend years living in a caravan in farmers field off the A1 till I recovered. No, I worked too long and hard for forty years to let it all go in a financial car crash, just because of some bad publicity, product recall or a thousand other bad luck events that can happen. I’ll put my money into property for the long term, and while of course this is not 100% safe, at least its future value is not determined by an irresponsible tweet either; well I certainly hope not anyway.
Good luck to all those of you who are investors.
S
