This is the week you have all been waiting for. The "sexy" week where we talk all about investing. Alan managed to stay fully clothed in the zoom call. We hope it lived up to the hype!
Disclaimer
We are NOT financial advisers. The content of this course, the articles on Alan's blog and these resources are NOT financial advise. This is our opinion and we are just sharing what we are doing. DO YOUR OWN HOMEWORK
That being said, onto the Week 6 recap!
Week 6 recap
Learning about investing is like learning a whole new language. There are going to be terms and phrases you don't understand. Stay calm, look up what it means, ask us!
Disclaimer
We are NOT financial advisers. The content of this course, the articles on Alan's blog and these resources are NOT financial advise. This is our opinion and we are just sharing what we are doing. DO YOUR OWN HOMEWORK
That being said, onto the Week 6 recap!
Week 6 recap
Learning about investing is like learning a whole new language. There are going to be terms and phrases you don't understand. Stay calm, look up what it means, ask us!
What are assets?
We've been jabbering on about buying your freedom for weeks now. We've been telling you to buy assets not liabilities. But what does that actually mean? What are assets? What are stocks and shares? How do you even buy them?
Well Alan wrote a blog post all about this
Vanguard Index Funds
Our strategy is to buy Vanguard index funds. They're easy to buy, it's a simple strategy and the fees are very low. We'd rather be living our lives than spending all day every day thinking about our money and managing our investments.
In it for the long term
For our strategy to work you have to be in this for the long term. This is not a short term get rich quick scheme. This is slow and steady wins the race. Buy and hold and NEVER sell. Never kill the golden goose! You have to be prepared psychologically for WHEN the stock market crashes. We suggest this meditation from the OG of Financial Independence JL Collins.
Impact of fees
We met back up with Early Ellie and Late Larry who we met in week 4 when we talked about the power of compounding. The moral of the story is to invest as early as you can. We revisited Ellie this week to see the impact on her investments of choosing between an actively managed fund and an index fund. Fees MASSIVELY eat into your returns. Of course Early Ellie and Late Larry are still doing better than Never Bothered Ned who never bothered investing and has a big fat ZERO.
We've been jabbering on about buying your freedom for weeks now. We've been telling you to buy assets not liabilities. But what does that actually mean? What are assets? What are stocks and shares? How do you even buy them?
Well Alan wrote a blog post all about this
Vanguard Index Funds
Our strategy is to buy Vanguard index funds. They're easy to buy, it's a simple strategy and the fees are very low. We'd rather be living our lives than spending all day every day thinking about our money and managing our investments.
In it for the long term
For our strategy to work you have to be in this for the long term. This is not a short term get rich quick scheme. This is slow and steady wins the race. Buy and hold and NEVER sell. Never kill the golden goose! You have to be prepared psychologically for WHEN the stock market crashes. We suggest this meditation from the OG of Financial Independence JL Collins.
Impact of fees
We met back up with Early Ellie and Late Larry who we met in week 4 when we talked about the power of compounding. The moral of the story is to invest as early as you can. We revisited Ellie this week to see the impact on her investments of choosing between an actively managed fund and an index fund. Fees MASSIVELY eat into your returns. Of course Early Ellie and Late Larry are still doing better than Never Bothered Ned who never bothered investing and has a big fat ZERO.
Coming up next week
You might be thinking...
"This is all very well Donegans but I'm now sat at my laptop ready to invest, how do I actually do it? What are the different accounts I can get? What are the different fees you have to pay and how can you minimise these?"
Well this week we covered some of the theory of investing. In week 7 we're going to talk about how to implement this and answer these questions! And we'll also cover some FIRE (Financial Independence Retire Early) principles that we've been alluding to and teasing you about for weeks now....
You might be thinking...
"This is all very well Donegans but I'm now sat at my laptop ready to invest, how do I actually do it? What are the different accounts I can get? What are the different fees you have to pay and how can you minimise these?"
Well this week we covered some of the theory of investing. In week 7 we're going to talk about how to implement this and answer these questions! And we'll also cover some FIRE (Financial Independence Retire Early) principles that we've been alluding to and teasing you about for weeks now....
Week 6 homework
To get the most out of this course you must do the homework (plus homework is fun! Or that's what Katie tells me....)
So here is the homework for week 6...
1. Watch JL Collins' Google talk about investing. It's a one hour talk. Instead of watching an episode or two of your favourite Netflix show watch this instead. You will be much wealthier in the long run!
2. And/or read JL Collins' book The Simple Path to Wealth. All of JL's investment advice is free on his blog. For a more condensed and easier to read version you can buy the book (link to UK version or US version).
To get the most out of this course you must do the homework (plus homework is fun! Or that's what Katie tells me....)
So here is the homework for week 6...
1. Watch JL Collins' Google talk about investing. It's a one hour talk. Instead of watching an episode or two of your favourite Netflix show watch this instead. You will be much wealthier in the long run!
2. And/or read JL Collins' book The Simple Path to Wealth. All of JL's investment advice is free on his blog. For a more condensed and easier to read version you can buy the book (link to UK version or US version).
3. For existing investments (in the UK these might be Stocks and shares ISAs, pensions with your employer, Self Invested Personal Pensions (SIPPs)) find out
- What funds they are invested in
- How much the fees are
Optional homework:
4. IF AND ONLY IF you are ready to invest (you have an emergency fund, no expensive debt and you have 3-6 months of living expenses in cash) and are eager to get going you can also do the following. Hang fire if you're not sure how to do this because we're going to cover it in detail next week.
- Open a Vanguard account
- Decide which Vanguard fund to buy
- Set up a regular monthly investment
Ask for help
Remember to reach out in the Facebook group with any questions you have or if you get stuck. Don't let confusion be an excuse for not progressing with this stuff. We are here to support you!
Alan and Katie