How do I become investment literate?
Discussion
Chaps, long post, but I would like some advice: really some pointers.
It has occurred to me that I am financially poorly educated. Let me tell you what I mean. I have a good education, and a good job. But I have little idea of investing, little appreciation of investment risk, and no idea how to make money work for me.
I find myself with the classic middle class problem – I earn well, as does Lady F, and together we can manage our liabilities (mortgage and things that incur expense) and pay for extra stuff. I also realise that I have been thinking of things wrongly – I thought that my house is an investment, and that my cars are assets. They are not – they are both liabilities (they incur expenses). I do have some assets (things that do/could bring income), but they are not working as well as they should.
Assets-wise I have cash, and I own a rental flat (also mortgaged). I have no real portfolio of investments – just shares in the company I work for, and a pension that I do not actively manage. I have the classic middle class problem – I am entirely dependent on my salary to live my life.
Have any of you changed this? Can it be changed? All I want at this stage is to educate myself – I don’t want to be sold ETFs or investments, or BTL opportunities. I just want to invest in educating myself: I’d like to know what I can read, what courses have worked for you, to learn about the larger investing world. I want to make a start on thinking differently – I am not just looking for the big score.
I have had real trouble finding any sort of advisor who says anything but “buy these ETFs and pay me x per cent”. I have met no-one know knows anything about using a company to shelter myself from tax (I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax). I have met no-one who can advise on Lady F’s FATCA dual tax problem (she’s American). Ultimately we are well-off enough to qualify for off-the-shelf advice but are not rich enough to be interesting to the more interesting wealth advisors (we have been told this up front).
This is not a complaint – we are happy and (currently) financially unstressed and very lucky when compared to many. But I want to start learning how to become financially independent, rather than just well-paid. I am 40 years old – I would like to spend the last half of my life as financially literate. I have been shocked by me and my friends – many of us work in well-paid city jobs. No one has anything other than those jobs, and associated pensions, as their game plan for later life. I have worked out that if I am going to learn, I am going to have to teach myself.
My in-laws built themselves a property portfolio of rental houses in the 1980s/1990s. That pond looks overfished/taxed these days and anyway, having more money in property than I already do looks to my untrained eye a little undiversified. I want to learn about what else is out there, and how to get involved.
I have a working knowledge of companies, P&L/Balance sheets and securities due to my job, so I am not completely virgin territory. What I do not have is any sort of idea how to make money work for me, rather than me work for money. Any educational suggestions welcome.
As a starter – what books should I buy and read?
It has occurred to me that I am financially poorly educated. Let me tell you what I mean. I have a good education, and a good job. But I have little idea of investing, little appreciation of investment risk, and no idea how to make money work for me.
I find myself with the classic middle class problem – I earn well, as does Lady F, and together we can manage our liabilities (mortgage and things that incur expense) and pay for extra stuff. I also realise that I have been thinking of things wrongly – I thought that my house is an investment, and that my cars are assets. They are not – they are both liabilities (they incur expenses). I do have some assets (things that do/could bring income), but they are not working as well as they should.
Assets-wise I have cash, and I own a rental flat (also mortgaged). I have no real portfolio of investments – just shares in the company I work for, and a pension that I do not actively manage. I have the classic middle class problem – I am entirely dependent on my salary to live my life.
Have any of you changed this? Can it be changed? All I want at this stage is to educate myself – I don’t want to be sold ETFs or investments, or BTL opportunities. I just want to invest in educating myself: I’d like to know what I can read, what courses have worked for you, to learn about the larger investing world. I want to make a start on thinking differently – I am not just looking for the big score.
I have had real trouble finding any sort of advisor who says anything but “buy these ETFs and pay me x per cent”. I have met no-one know knows anything about using a company to shelter myself from tax (I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax). I have met no-one who can advise on Lady F’s FATCA dual tax problem (she’s American). Ultimately we are well-off enough to qualify for off-the-shelf advice but are not rich enough to be interesting to the more interesting wealth advisors (we have been told this up front).
This is not a complaint – we are happy and (currently) financially unstressed and very lucky when compared to many. But I want to start learning how to become financially independent, rather than just well-paid. I am 40 years old – I would like to spend the last half of my life as financially literate. I have been shocked by me and my friends – many of us work in well-paid city jobs. No one has anything other than those jobs, and associated pensions, as their game plan for later life. I have worked out that if I am going to learn, I am going to have to teach myself.
My in-laws built themselves a property portfolio of rental houses in the 1980s/1990s. That pond looks overfished/taxed these days and anyway, having more money in property than I already do looks to my untrained eye a little undiversified. I want to learn about what else is out there, and how to get involved.
I have a working knowledge of companies, P&L/Balance sheets and securities due to my job, so I am not completely virgin territory. What I do not have is any sort of idea how to make money work for me, rather than me work for money. Any educational suggestions welcome.
As a starter – what books should I buy and read?
No - was it useful? I'm trawling google for best personal finance books, but I really wanted to start a thread for like-minded folk to be told stuff about financial education by people who have had some and found it useful.
Not really what are good investments, but how to start thinking about making money work. More basic than much of the stuff on this thread.
The sad result of this thread will probably mean me selling my Aston: but as it has been in storage for six months and never gets used, I'd rather use the £35-40k locked in it for something that could start bringing me some income. Rather than servicing costs.
Not really what are good investments, but how to start thinking about making money work. More basic than much of the stuff on this thread.
The sad result of this thread will probably mean me selling my Aston: but as it has been in storage for six months and never gets used, I'd rather use the £35-40k locked in it for something that could start bringing me some income. Rather than servicing costs.
Harry Flashman said:
I have had real trouble finding any sort of advisor who says anything but “buy these ETFs and pay me x per cent”. I have met no-one know knows anything about using a company to shelter myself from tax (I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax). I have met no-one who can advise on Lady F’s FATCA dual tax problem (she’s American). Ultimately we are well-off enough to qualify for off-the-shelf advice but are not rich enough to be interesting to the more interesting wealth advisors (we have been told this up front).
I'm genuinely surprised that you haven't managed to find a decent fee based planner that focuses more on achieving your objectives rather than selling you products. Not sure why you need to use a company to shelter yourself from tax.
There are thousands of people with similar issues to you (including dual tax issues) that are able to find tax efficient solutions - I don't see that your situation is in any way unique
Not sure what you mean by "interesting" wealth adviser.
Harry Flashman said:
The sad result of this thread will probably mean me selling my Aston: but as it has been in storage for six months and never gets used, I'd rather use the £35-40k locked in it for something that could start bringing me some income. Rather than servicing costs.
Ouch. Surely the Aston is now at the bottom of the deprecation curve?The Monevator website is full of good information about investing. Well worth a read. Navigate using the MENU button under the main heading:
http://monevator.com
http://monevator.com
You may find this thread on "The Escape Artist" helpful - I have
https://www.pistonheads.com/gassing/topic.asp?h=0&...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
BanzaiMan said:
Harry Flashman said:
The sad result of this thread will probably mean me selling my Aston: but as it has been in storage for six months and never gets used, I'd rather use the £35-40k locked in it for something that could start bringing me some income. Rather than servicing costs.
Ouch. Surely the Aston is now at the bottom of the deprecation curve?Certainly not advocating the book itself as its by and large patronising nonsense, but one thing Rich Man Poor Dad does instil is the notion bigger houses and pricier cars are more often a liability and not an asset, as Harry identifies already.
Personally I remain of the view that to learn about investments nothing beats experience and getting hands dirty. Tax wise then pension from gross salary are obviously primarily the most efficient tax method to invest for the future (assumption being from your comments you are PAYE). You will have maximum pot considerations at your earnings level but otherwise that would be the starting point. Similarly from net earnings then its daft to not use ISA allowance of £20k this year to then invest. I'll leave the book recommendations to others as I have read 20+ on the subject but cannot say many stand out in my mind more so than my own experience and I am just an amateur running a portfolio through Hargreaves Lansdown. Whilst not the cheapest their service is easy to use, the website very self-explanatory and they are receptive to queries. They make for a very customer happy experience IMO.
Subscribe to Investors Chronicle (online) and read some back dated articles from the Portfolio Clinic over the last three years. That will give some context to how other people manage their wealth building and how its perceived.
https://www.investorschronicle.co.uk
https://www.investorschronicle.co.uk
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hstewie said:
hstewie said: You may find this thread on "The Escape Artist" helpful - I have
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Interesting link. Very much like Mr Money Mustache on a cursory glance.https://www.pistonheads.com/gassing/topic.asp?h=0&...
Looked at the useful reading list on there too
https://theescapeartist.me/life-changing-books/
Some fairly weighty books in that list and i have read 50% of them at a guess. Found the Intelligent Investor a strong read. Fooled by randomness is a worthwhile read, if only because I enjoyed the book itself. Thinking Fast and Slow is another great read but I would say less investment based but still worthwhile in general.
NickCQ said:
Harry Flashman said:
I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax
Sorry for the digression, but if you and the wife are on £150k plus each, I think you lose the right to claim to be middle class! 
BanzaiMan said:
Great book (and it's interesting to see how many "next gen" financial planners are using his service), but Harry probably a broader range of knowledge than just investments.
I was going by the " How do I become investment literate?" - would it help to list all your "stuff" (avoiding the assets word there) on a spreadsheet, add a column for typical annual return (or cost), sort by that column, and consider things near the top as "good" and further down as bad? It would at least inform you of your situation better.If you're just after FIRE, then The Escape Artist site is a reasonable starting point, but to be honest it seems pretty obvious if you've spare capital or income
xeny said:
I was going by the " How do I become investment literate?" - would it help to list all your "stuff" (avoiding the assets word there) on a spreadsheet, add a column for typical annual return (or cost), sort by that column, and consider things near the top as "good" and further down as bad? It would at least inform you of your situation better.
If you're just after FIRE, then The Escape Artist site is a reasonable starting point, but to be honest it seems pretty obvious if you've spare capital or income
Speaking personally I think The Escape Artist site just made it clear do something rather than nothing.If you're just after FIRE, then The Escape Artist site is a reasonable starting point, but to be honest it seems pretty obvious if you've spare capital or income
Can't speak for the OP but the hardest part is understanding what investments are low/medium/high risk as different people have differing definitions.
BanzaiMan said:
NickCQ said:
Harry Flashman said:
I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax
Sorry for the digression, but if you and the wife are on £150k plus each, I think you lose the right to claim to be middle class! NickCQ said:
Harry Flashman said:
I am a highest rate PAYE earner, as is Lady F, so makes anything we earn subject to lots of tax
Sorry for the digression, but if you and the wife are on £150k plus each, I think you lose the right to claim to be middle class! All, thank you very much for contributions - some great leads.
As I said, I want to start by being better informed: at least them if I hire a professional, I'll be doing so on an informed basis.
In PH terms, the Vantage may be at the bottom of its depreciation curve but as schnozz said, it actively costs money. I can't see it increasing in value enough to offset the annual costs unless I literally pay to store it somewhere and leave if for 10 years. At which point I'd like to think I would have done better with the cash out of it!
I just need to know more. This thread is helping, as I hoped it would. Thanks again.
As I said, I want to start by being better informed: at least them if I hire a professional, I'll be doing so on an informed basis.
In PH terms, the Vantage may be at the bottom of its depreciation curve but as schnozz said, it actively costs money. I can't see it increasing in value enough to offset the annual costs unless I literally pay to store it somewhere and leave if for 10 years. At which point I'd like to think I would have done better with the cash out of it!
I just need to know more. This thread is helping, as I hoped it would. Thanks again.
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