| 1.5 HRM
52. Personal Investments | | |
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| 1.5.51 Personal Investments: | | 1. To ask - what investments should I make and should I dabble in stocks and shares. | | WHY? | | 2. To gamble on the stock market with trivial amounts of money is a harmless hobby. | | 3. To dabble with stocks is like dabbling with fruit machines, the more you dabble the more it costs in time and money - its called an adiction. | | 4. To understand that poor people dabble in shares and get taxed while rich people own the company with optional taxes. | | WHAT? | | 5. To write down a strategic plan for personal investments - what are they for - what valuation is needed. | | HOW? | | 6. To expect UK inflation to be in the range of 3% to 5% so any investment must have a return greater than 5% just to stay up with inflation. | | 7. To expect UK unearned tax to be in the order of 20% and capital gains tax to be in the order of 35% so investments must exceed this return to pay the taxes. |
| 1. Stocks and Shares: | | 1. To gamble that by funding a UK company, that company will earn a profit to pay a dividend greater than annual inflation. | | 2. To gamble that by funding a USA company, that company share price will increase faster than the USD-GBP currency rate decreases. | | 3. To pay a broker a fixed rate commission for that broker to invest in a group of shares that may increase by more than the commission rate (2%) plus annual inflation (3%). | | 4. To play a gambling game where one thousand pounds is invested to win ten pounds in a good year and to loose ten pounds in a bad year - what a game to earn one percent! | | 5. To invest in a bank like RBS that lost 90% of its stock price in 2008 - banks are at risk. | | 6. To invest in a growing technology company like SKY that can rise 30% one year and loose 30% the following year - technology is unstable. |
| 2. Commodoties: | | 1. To buy some commodity at todays spot price plus commission fees and hope to sell at a higher price in the future. | | 2. To buy gold at todays price and sell at a future price and pay 20% unearned income tax on any capital gains made. | | 3. To accept that commodities is a very specialist market where some inside knowledge of the future must be understood - most people cannot forecast the future and so they loose in the longer term. |
| 3. Day Trader: | | 1. To become a day trader buying and selling stocks on the London market - to gamble on buying stocks this morning and selling then this afternoon with a slight profit (or loss). | | 2. To hedge by selling stocks today at a high price that you do not own and buying them in the next month as the value of the stocks reduce - monthly settlement. | | 3. To work five hours a day to gamble and win some days and loose other days. To understand that those that gamble with many millions of other peoples money are on a fixed percentage commission without any risk - if they were so good, why do they charge a fixed percent commission? |
| 4. Currency: | | 1. To gamble on exchange rates that change every minute - to buy when a currency is low and to sell when a currency is high, To pay tax on the trivial profits made when not buying a million pounds at a time. Governments limit currency movements, so the gamble is against national banks. | | 2. To invest in crypto currencies such as Bit-Coin - one hundred pound invested in 2010 is worth 75 million pounds in 2018 because crypto currencies are not controlled by Governments and a fixed number of bit-coins can ever exist. Many thousands of crypto currencies exist - bit-coin is just an example. A small crypto currency investment of 250 pounds for the long term (at least 10 years) is a mandatory part of every persons portfolio - ignore monthly and annual fluctuations and gamble on long term tax free capital growth. | | 3. To understand that currency trading is a full time gamble because any international event will cause currencies in all parts of the world to change - very rapid trading is mandated to mitigate risk. |
| 5. Property: | | 1. To invest in the stable long term property market - the shortage of properties will mean that the price increases over time. | | 2. To buy part of a commercial mortgage for a company with annual returns that may exceed 8% per year - but money is locked up for at least 3 years and the company may go bankrupt. | | 3. To buy more and more property because a stable 5% return on investment can be earned with all risks insured - it is not a gamble, it is a long term wealth and asset strategy. |
| 6. Own Company: | | 1. To acknowledge that rich people own their own company and poor people do not - rule-1 is to buy your own company for fifteen pounds. | | 2. To arrange a private pension scheme for all employees of your own company and arrange that your company will pay all the pension contributions with zero tax liabilities - an effective 20% increase in amounts. Rule-2 is to invest in your own private pension scheme that you control, but your company pays all the installments tax free. | | 3. To set up an online company bank account and understand that your company is a different person to yourself - you cannot spend your companies money and your company cannot spend your money - total isolation. | | 4. To subcontract your company to do work for you and be paid a management fee. To charge your company expenses that exceed revenue so net profit is zero - taxes are only paid on profits. To have an objective of never making a profit because expenses include all kinds of expensive trips and allowances. |
| 7. Own Pension Pot: | | 1. To understand that eventually your private company pension scheme will own real assets that you have the right to invest in anything you wish your pension scheme to invest in - earning a profit on such investments may be desirable, but its is OK to make poor decisions because its not your money and you choose what benefits those investments may bring you. | | 2. To remember that your pension pot has been saved from money that has not been taxed and that only 25% of that money can be extracted without paying any tax whatsoever - no stocks and shares will provide 25% of your income tax free. Normal tax is paid on the remainder, but only when that money is transferred from your private pension scheme to your personal bank account. |
| 8. Conclude: | | 1. To ignore the words that will include fake news and analysed in depth what people do - truth is in actions. To have role models as people who have role models and follow their actions. | | 2. To conclude that investing in stocks and shares is a full time job for people who can rapidly react to international events that cause stock markets to fluctuate - even the full time stock brokers loose money when gambling and prefer to charge a fixed commission rate to gamble with other peoples money. | | 3. To conclude that currency and day trading are very time demanding where people dare not take a holiday because they must be able to rapidly sell their portfolio in the event of a major change to the market. To note that profits rarely exceed the trading charges plus inflation. | | 4. To accept that property is a solid long term investment that does not need access to day trading markets - property investments can be fully insured to guarantee a stable return on investment and a capital gain. | | 5. To conclude that rich people run their own company and every person has the right to run their own company as well as doing other things at the same time. | | 6. To gamble means taking a long term investment in a number of crypto currencies such as bitcoin and its derivatives - the easy gamble to become financially free in ten years. Expect governments and banks to make it very difficult for working class people to become financially free - expect taxation and capital gains taxes to evolve to reduce the yield - expect to have to use UK overseas tax haven accounts like the Isle of Man or Bermuda. Diversify into many competing crypto-currencies. |
| 9. Action: | | 1. To buy your own company from companies House for fifteen pounds - rule-1. To contract your company to do various things for you for a retainer fee of say one hundred pounds per month. | | 2. To arrange a private company pension scheme with the Prudential (or others) - rule-2. To approve your company to pay say one hundred pounds per month into your pension pot - tax free. | | 3. To expand your company to do little management service jobs for others - accounts. To extract any such income as expense allowances so profits remain zero. To run your own payroll system and to grow your company to run the same payroll for lots of tiny companies. To invest extra income in extra pension payments to your private pension scheme. | | 4. To look around and choose what (property) to invest your pension pot in. To expect between 5% and 8% annual return on investment in property with virtually no risk - far higher than gambling on the stock market. | | 5. To get your Last Will and Testament signed by two independent witnesses - without any legal fees. To review and replace your Will each year - no codacils or changes - replace it. To eventually simplify and reduce your Will to a minimum legal paragraph. |
| 10. Rich and Poor: | | 1. To make a strategic decision to be rich or poor - most people choose to be poor because they will not make a strategic decision to the rich. | | 2. To accept that poor people are employed by rich people to make rich people richer. | | 3. Redundancy: To accept that when hard working people are not making rich people richer then they will become redundant - redundancy is only imposed to poor working people. | | 4. Retirement: To accept that when stagnent people are to be replaced by dynamic people it is called retirement as a type of redundancy. |
| 11. Retirement Pension: | | 1. NEVER confuse a Pension with Retirement. | | 2. To understand that a pension is a private pot of money that can be called upon as and when needed - a pension is not a regular annuity wage that is taxed. | | 3. To accept retirement as when a perosn is unable to dress, unable to cook, unable to keep clean, unable to use steps, unable to say what day it is and unable to work - retirement is when people are unable to work. | | 4. To have pity for the poor people who look forward to retirement, to be worth nothing, to be a liability on the community - they really must hate their job. | | 5. To note that only poor people retire, rich people work forever because they enjoy their job and pretend they do not do it for the money. |
| 12. Tax: | | 1. To understand that a "personal investment" begins by creating an environment where taxes are optional - a person can choose the level of taxes they wish to contribute. | | 2. To note that capital gains taxes can be taxed as high as 35%, so the act of making a personal investment is to arrange things to avoid and minimise such taxes. | | 3. To note the unearned income tax can be as high as 45 %, so the act of making a person investment is to arrang ethings to avoide and minimise such taxes. | | 4. To expect inflation to rise and rise to conspire to reduce the effective value of any investment. A=P times (1 + R/N) to the power N times T. A=Inflation. P=Principal amount. R=inflation rate. N=number of periods. T=Time | | 72. To understand that the annual inflation percentage divided into 72 sets the number of years to half the value of money. 72 / 4% inflation = 18 years to half the buying power of the investment. For every generation prices are doubled to keep poor people poor. | | 6. To accept that any investment thay pays less than inflation every year is loosing money, even where the capital amount is protected. |
| 13. Global Warming: | | 1. To embrace the environment as the single most critical factor that will impact future generations - extreme weather (hot cold storm) events, air pollution (nitrites), water pollution (plastic particles). | | 2. To direct investments to mitigate the dramatic impacts of global warming such as energy generation, air conditioning, air filtration, water recycling, reduced mobility (private motoring) and to keep out of the polluted air that is creating respiratory diseases. | | 3. To invest in personal health and wellbeing as others die from the effect of outside living and public health services are reduced. To invest in personal security protection as public services are reduced. To invest in personal energy and water facilities as public services cannot be trusted. |
| Document Control: | | 1. Document Title: Personal Investments. | | 2. Reference: 161552. | | 3. Keywords: ITIL, Personal Investments. | | 4. Description: Personal Investments. | | 5. Privacy: Public education service as a benefit to humanity. | | 6. Issued: 11 Dec 2018. | | 7. Edition: 1.2. |
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