After a much needed rest, I’m ready to hit 2018 with a clear and stress free head.
I hope that my recent break will be one of many this year; as I am planning to go to Spain and Portugal more often over the coming year to look at properties to buy.
If we don’t buy anything, then we will rent a place long term. It is actually a very cost effective way to holiday more without the commitment of owning. You can rent long term for around 400 euros a month and still be central enough to social life and even beaches.
Whilst buying property sounds or seems like a good investment on the face of things, it’s actually not that great when you analyse the returns. That’s why I think renting is not as bad as it’s made out to be; as long as you are also investing sensibly elsewhere.
How You can Invest in 2018
The returns on our recent house sale equated to just over 3.7% a year with a total return on investment of 39.42% over the 10 year duration.
The average yearly return on the S&P 500 over the last 10 years has been 7%
Add into that, trading the Dogs of the Dow each year, which has returned on average 9.5% over the last 10 years and you’re looking at a yearly return of around 17%
These ideas are simple, steady and strategically sound investments that anyone can follow and take part in.
You don’t need any special skills, publications or subscriptions to take care of your own wealth if you are looking for slow steady returns.
On top of those return, I make more with the selections I get with Vince Stanzione… His stock picking is absolutely amazing.
Think of Investing Long Term
What have you got planned for investments for the next 10 or 20 years?
You can invest in property like traditional UK homeowners do and get around 3% a year returns, or maybe you can act like a professional and have investments in both?
However you look at it, investing in the mentioned ideas above beat the returns of property investments hands down.
Let’s look at what an average deposit on a house [£35,000] looks like after compounding interest over the next 20 years compared to investing the same amount in the markets and receiving various other percentages of investment returns.
It’s clear and safe to say that there are better investments available than property nowadays.
Another Idea to Invest in 2018
Another strategy to consider is… If you invested as above long term and then had another smaller account to spread bet with short term , then you could just keep reinvesting your short term spread betting profits into a longer term account. You could actually buy shares and hold them. Schwab and HL are good places to buy and sell stocks.
Spread Betting Returns
So what kind of returns can you get? Let’s say you started spread betting trading with £2000 and made 25% returns each month from trading the price movements of shares and the Forex markets…
You could build your spread betting bank up to a figure where you could take out your personal living expenses every month and then also add an affordable £1000 each month to your long term share trading account. Now that’s a plan with sensible leverage.
It is quite possible to do this after a year or so with a good spread betting strategy.
So using our £2000 bank and returning on average 25% each month.
You then compound your profits for a year.
If you hit a modest 18-25% return, this gives you a bank of more than enough to generate an income to live on, enough to regularly add surplus to a longer term trading account and enough to also keep compounding your initial spread betting bank.
Doing this over 10 or 20 years may sound too long right now, but it isn’t at all. Think how quick the last 5 years have gone?
Growing Your Long Term Bank
Now I understand that not everyone has 35K lying around to invest in a long term trading account as in my example above… but most wealthy people didn’t start out with mountains of cash either.
However, building your wealth slowly and surely is the idea here.
Making around 17-25 % annually may not sound exciting enough to you, but you have just beaten most hedge fund managers annual returns. However…
…Start by growing what you can afford to invest
A small spread betting account making 8% each week [24% Monthly] can grow amazingly fast if you keep reinvesting your profits… and look at what can happen if you hit 10% a week.
So for example, if you were trading 8 positions over a month, with a realistic 50% strike rate [50% is actually conservative]and your losses were [obviously] kept smaller than your wins we can expect a positive outcome.
If you return a 2/1 basis, then you should be able to make 8% + a week returns on average.
Example: you risk 50 points to make 100 and only half of your trades were ever winners, you’d still have created a successful and profitable edge for yourself.
It doesn’t take long to accomplish these types of returns if you are realistic from the start and if you avoid falling into the trap of overnight success syndrome.
I will be covering more about all of this in my new spread betting course.
Compound Interest Calculator
Here is my Rachel Trader Compound Interest calculator Rachel-Trader-Compound-Interest.xlsx that you can download and keep. You can add your own values in and see what sort of returns you can get.
Remember, be realistic. You won’t make a guaranteed set percentage every week or month… in fact sometimes you might even lose 10 or 20%. Over time though, with a solid strategy and discipline you’ll come out on top.
Also… I have mentioned this book many times before… if you have never read The Richest Man in Babylon, do yourself a huge favour and order a copy. It is one of the best books you’ll ever read on how to create wealth.