Minimax Investment - everything you need to know in one slideshow.
06 May 2022
An Andrew Hallam Presentation
Andrew Hallam's presentation at the UWCSEA Dover Campus on the 8th May 2013. Well worth a watch if you've never heard him speak.
05 May 2022
FTSE 100 v FTSE 250
Brits might want to have a look at a new ETF from Vanguard - VMID, which represents the FTSE 250, not just the FTSE 100. I plan to purchase this as part of my UK 'quota' alongside VUKE, probably alternating purchases. Rationale for this below, taken from Andrew's blog.
"The FTSE 100 does not represent the UK market - only 20% is exposed to what happens in the UK, with 80% of it affected by what happens abroad. This is evident in the fact that the index barely moved when the UK economy returned to growth this year or never moved around the days of the Scottish referendum - the potential break up of the UK and the index barely moved, yet the pound plummeted! What shook the market this year - Ukraine, Malaysian Airlines, ISIS and Ebola - all away from the UK.
There is one benefit of tracking the FTSE 100 and that is the yield, which is among the highest for any major index in the world - usually above 3% and currently yielding 3.6% pa.
Keep what money you have in the FTSE 100 and just start buying the midcap FTSE 250, which is more representative of the UK economy. Why?
1) It is more diversified
2) The top 10 companies only make up 11% of the index in terms of weighting.
3) The yield is historically just below 3% - currently now 2.8%.
4) Approximately 80% of the index has UK exposure, 20% abroad - almost the opposite to the FTSE 100.
5) We shouldn't go on past performance, but I will, since its creation in the mid 1980's, the FTSE 100 has only beaten the 250 for a total of 4 years! The rest of the time, the 250 has produced higher returns - including this year.
Author: John D
The FTSE 100 is a terrible index to track for a number of reasons.
1) It is not very diversified - the top 10 companies (mainly oil and banks) by weight make up 46% of the index.
2)The index is heavily concentrated in oil (just watch the news!), miners (facing a slow down in China etc), supermarkets (involved in a price war at the moment - a few months ago Tesco's shares plummeted, where Warren Buffet lost millions) and banks (nationalised and facing periods of debt restructuring etc).
Do not invest like this...
This is what doggy investors would have us believe is the only option outside of their oppressive clutches.
Or click here to get clear and watch it clean: https://www.yout-ube.com/watch?v=BcT0P87hGXI&t=3s
9 Frugal Habits of the World's Richest People
Some wealthy individuals live frugal lives, and have big bank accounts as a result.
I hate being asked what would I do if I won the lottery. I don't play the lottery, but If I did I wouldn't go and buy a flashy car, a huge home, and a bunch of toys. If you look at some of the wealthiest individuals, you find they eschew these luxuries in favor of living more frugal lives -- and they often have larger bank accounts to show for it. Here are 9 frugal habits of the world's richest people.
1. Buy a modest home.
Carlos Slim Helu, chairman and CEO of Telmex, has famously lived in the same six-bedroom house for more than 30 years.
2. Shop for sales.
You can follow rule No. 1 and still hang on to your favorite brands -- just don't go nuts on shopping sprees. Outlet stores will often stock name-brand attire at a fraction of the cost, and if you chose to dress sharp and conservatively, you'll never be rushing to keep up with seasonal styles.
3. Spend selectively.
Be smart about how and when you do spend your money. Resist going on huge shopping sprees or all-out spending trips. Instead, plan your spending wisely, and try to focus on things you need. This doesn't mean you shouldn't treat yourself or buy things you want -- just that you shouldn't be doing it on a daily basis.
4. Think twice about your coffee.
This might not seem too obvious, but if you were to buy a grande latte from Starbucks every day of the month, you'd be spending somewhere around $75 a month, just on your morning joe. Mayor Bloomberg is known for always ordering the smallest size coffee, and then only when he actually wants it. An even better option? Take that $75 and buy yourself a coffee maker and a few pounds of brew to make at home.
5. Fly economy.
If you're in an industry that requires you to travel, the cost attached to your flight tickets will rack up fast. It's better to build up points with a credit card and obtain that occasional free ticket than to go broke flying first class for every meeting you sit through this quarter. And if it works for Ingvar Kamprad of IKEA, then why not you?
6. Drive the same car for 10 years.
What do Jim C. Walton, Azim Premji, Steve Balmer, and Ingvar Kamprad all have in common? They all drive cars that cost them less than $20,000. Your car can easily be one of the most expensive things to maintain every year, just shy of $9,000 a year. Why pile that on to the additional cost of splurging on a new ride every 12-24 months?
7. Avoid debt.
It might be a hard one to follow, especially when you're launching a new business -- but when you're further down the line, paying back loans and working down credit cards can pile on enough stress to keep you from focusing on what's truly important.
8. Learn to be happy with less.
In America, we have a very materialist-driven society. By learning to value a "less is more" life style and not spend money every chance you get, you can wind up with more in your pocket -- and in your business. Sergey Brin said it well, with "I was raised being happy with not so much" -- his not so much has amounted to $22.8 billion.
9. Live below your means.
It can really all be broken down to this one simple rule -- you may net $100,000 a year, but that doesn't mean you should spend $100,000 a year. Don't go out to eat at expensive restaurants every night, don't buy a new wardrobe every season, don't pick out a new car every year, and don't go nuts redoing your home's interior design. The saying might be that you have to "spend money to make money," but once you've made money, you need to save it to keep it.
https://www.inc.com/rhett-power/10-frugal-habits-of-the-world-s-richest-people.html?cid=cp01002quartz
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BY RHETT POWER, HEAD COACH, POWER COACHING AND CONSULTING
Hope For A Stock Market Crash
Vanguard introduced its S&P 500 index nearly thirty-nine years ago.
It averaged a compounding return of about 11.1 percent.
That means if $100 were invested each month, starting at the fund’s 1976 inception, it would have grown to more than $716,000 by July 24, 2015. In other words, by investing a total of $46,600 between September 1976 and July 2015, investors would have close to three quarters of a million dollars.
Global stocks fell 2.8% yesterday. If you have a job, that's great news. If markets fall a lot further, that will be even better. Think about the stock market as a grocery store filled with non-perishable food items. Rejoice when they're on sale. Hang your head in disappointment when prices rise. On average, stocks rise 2 out of every 3 years. When you're employed, and you can add fresh money, hope for stocks to fall. My apologies to retirees. But as Warren Buffett once said when he related golf too investing, "Every putt makes someone happy."
Some via Andrew Hallam
https://assetbuilder.com/knowledge-center/articles/why-millions-of-americans-should-hope-for-a-stock-market-crash
04 May 2022
How to Retire Forever on a Fixed Chunk of Money
The following three sentences represent the entire universe of probability for you:
If you retire with $800,000 in investments, you will probably make it through your whole life without running out of money (a 5% withdrawal rate)
If you start with a $1 million nest egg (a 4% withdrawal rate), you will very likely never run out of money
If you start with a $1.33 million chunk (a 3% withdrawal rate), it is overwhelmingly certain that you’ll have a growing surplus for life.
Interested? Definitely read the rest:
https://www.mrmoneymustache.com/2018/11/29/how-to-retire-forever-on-a-fixed-chunk-of-money/
Bonds v Stocks: A timely reminder...
Over 30 year-year periods, portfolios with 100 percent stocks typically trounce portfolios with 60 percent stocks and 40 percent bonds.
That’s why smart investors maintain diversified portfolios. They don’t pay attention to bond market interest rates. They don’t pay attention to stock market movements. They ignore economic forecasts and goofy horoscopes.
You might have the courage to stomach big declines. If that’s the case, build an assertive or aggressive portfolio with a low bond allocation. Your Thor-like resolve will help you make a lot of money. But if you don’t see an Action Hero when you look into the mirror, be honest with yourself.
Andrew Hallam is a Digital Nomad.
https://en.swissquote.lu/international-investing/smart-investing/why-having-bonds-your-portfolio-can-help-boost-returns
You Need Boring but Stable Bonds...
Why you need boring but stable bonds in your portfolio, from a post by Andrew Hallam:
A real stock market plunge feels a lot like bungee jumping…in a third world country. But in some ways, it’s worse. On the way down, you have to wear a set of headphones. Endless experts are telling you that the bungee cord is going to break. Having bonds in your portfolio represent an extra bungee cord. The drop still terrifies. But it provides some comfort.
Last night, after my talk at Dubai College, Pele and I were enjoying an Indian restaurant dinner. We reflected on what went well and what I could improve. The restaurant didn’t serve humble pie. But she put a huge dose on my plate. I had mentioned, at the talk, that our portfolio represents 60% stocks, 40% bonds. Cavalierly, I claimed to select this particular bond allocation because, if I die first, Pele might want a portfolio with added stability.
She called me on my crap. The passing of time had warped my memory. When I was 20 years old (and very single) I followed textbook portfolio allocation. My percentage in bonds was similar to my age: 80% stocks, 20% bonds.
In the year 2000, when I was 30 years old, I had 70% stocks, 30% bonds. Having 30% in bonds helped me to emotionally weather the 3-year crash (2000-2003). It also allowed me beat index fund portfolios comprising 100% stocks from 2000-2019. Sometimes, bonds do more than help you sleep at night (see screenshot attached: portfolio 1 = 100% global stock index; portfolio 2 = 70% global stock index, 30% bond index)
In 2007, I had about 35% in bonds. As I mentioned during my talk, I wanted a market crash. When stocks fell hard, in 2008, the world was calling for financial Armageddon. It represented that 3rd world bungee jump. Like everyone else, I wore headphones that said, “This time it’s going to be different.” Once again, having bonds helped me stay the course when global stocks dropped 40%. Despite low bond yields, a portfolio with 60% global stocks and 40% bonds also edged a portfolio of 100% global stocks from 2008-2019.
As I mentioned in Millionaire Expat, no matter how old I get, I'll be sticking with 60% stocks, 40% bonds.
Stocks beat bonds over long time periods. But sometimes, balanced portfolios (like mine) do just fine.
Your tolerance for market volatility might be greater than mine. It might be less than mine. Everyone is different. I can’t recommend the perfect allocation for you. But here’s what I know:
If you choose a higher bond allocation, you might sleep better at night. If a higher bond allocation helps you stay the course, then do it. If it helps you stay on track when stocks crater again, that’s far more important.
And…I should listen to my wife….We have a portfolio with 40% in bonds because it matches my comfort level. I’m glad she calls me out. ☺
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