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We’re based in Ramsbottom, UK

Mark Sekree Posted:
225 days ago (February 13th 2017)

Investing- as simple as spuds

Investing can seem very complicated but an easy way to picture it is like so…

If you have a potato you can eat it in all sorts of tasty ways but once it’s gone, it’s gone.

If you take that potato and plant it carefully in the right soil and give it the right conditions and (importantly) time it will give you lots of potatoes to eat.

If you can resist their lure and take all those spuds and plant them out again and again you will soon have more potatoes than you know what to do with. You could be drowning in creamy mash and still have a patch of plants doing their thing.

Even if you know this you can only plant out those potatoes if you’re not starving hungry. If you’ve got some spare and can go without spuds for a while all this is possible. The more you have spare the more you can leave to grow.

Money is just the same. If you spend it, it’s gone. If you can leave some spare, tend it carefully and give it time it could grow to the point where you could have plenty to spend and plenty to still invest.

With both there is risk involved. If you eat your potato now at least you know where you stand. If you set it to grow it might just die and you’ll have nothing. This is why it’s important to ‘diversify’- plant several potatoes in different soil at different times knowing that some will do better than others but that they’re unlikely to all be wiped out. You also want to know that you’re not going to starve if your potatoes don’t grow well. Investment is the same, you want to spread your money over loads of types of investments all over the world if possible and think about what you could afford to lose.

Unfortunately where this analogy falls down is with the timescales. While I’m reliably informed (by Google) that you might hope to multiply your first potato in a matter of months an investment is likely to take decades to multiply. But decades pass surprisingly quickly and I’ve seen clients go from fairly modest levels of wealth twenty years ago to significant levels now, and one thing is certain- if you never plant anything you’ll never have anything grow.

Where the analogy definitely holds though is that it helps to know what you’re doing. We’re not all professional farmers or investors which is where EZ ISA comes in. EZ ISA has selected a team of world-class experts to give you the very best chance of growth without getting your hands dirty.

Mark Sekree Posted:
243 days ago (January 26th 2017)

I Hate Cash!

 

Academically I know there are reasons to hold it- total security (under £75k with each institution) and liquidity- but I just hate it. Here’s why:

Banks Make Lots of Money on Your Money, You Don’t

At the moment, for a simple example, you might deposit £100k with a bank. They might pay you 0.1% interest, maybe as much as 0.5%pa if you’re lucky. At the same time they don’t just use this money to lend out at, say, 2% interest and keep the 1.9% difference. They ‘multiply up’ the amount they can lend based on your deposit and make many times that. Barely any of this money goes to you- it goes to running vast corporations, paying massive bonuses and returns to shareholders.

They have a license to print money. At the same time they have brought the world to the brink of ruin, plunged public finances around the world into a mess and have merrily bounced back to making record profits.

I don’t want my money to be any part of that.

The Total Security is Provided by the Government/Taxpayer, Not the Bank

Depositing your money with banks is actually a bit risky. If the bank goes bust then you should lose your money. This should give the bank an incentive to be careful with your money so that they attract deposits. As things are they can be as risky as they like (as long as they get licensed) and still attract savers because of the Financial Services Compensation Scheme which guarantees deposits up to £75k. This just strikes me as a totally unfair subsidy to incredibly profitable institutions.

You Can Get Higher Rates

But it either involves locking your money away (so negating one of the reasons to hold cash in the first place) or complicated routines with current accounts. I keep considering the complicated routines (MoneySavingExpert is excellent for this info) but can’t bring myself to do it. I tot-up that it might be worth a few hundred pounds a year to do it but it’s hassle I don’t need and it would still be supporting the banks.

You Have No Chance of Keeping up with Inflation

At these rates you are losing money next to the rising cost of living each year. Guaranteed.

Fair enough, everything but cash will go up and down in value over time and you stand a chance of getting back less than you originally invest, but at least this gives you a shot at keeping up with inflation.

Cash ‘Burns a Hole in Your Pocket’

I’m not sure why but I, and most people, are far happier to spend cash savings than even totally liquid investments. Maybe it’s just the feeling that cash isn’t doing anything at all these days whereas investments have a purpose, but whatever the reason it does seem to be the case. If I want my savings to be there for the medium to long term I don’t want to be tempted out of them.

The EZ ISA Alternative

Here the money is invested directly into companies around the world- when they make profits (as they tend to) you are directly rewarded. Like cash the money is almost totally liquid (it takes about 10 days to withdraw) and costs nothing to invest or withdraw. While the Lower Risk (‘Conservative’) Fund has dropped in value occasionally (as you would expect from any legitimate investment) it has returned over 20% over the last five years, easily outpacing cash and inflation. The higher risk funds have performed significantly better.

It takes less time to set up than a new savings account and no time at all to run. While the investments will track up and down in value your money is secure as EZ ISA and all the organisations we use are fully FCA regulated.

Click here to set up an account online in minutes.

Mark Sekree Posted:
308 days ago (November 22nd 2016)

‘It Ain’t Cheap Being Poor’

ain't cheap being poor

This little nugget was bought to me in a good friend’s Geordie accent that I can still hear now. I had never heard it before but the simple truth of the matter struck me. I think we were talking about a bus fare or something similar but since then I’ve been pondering how it relates to general finances and this truth seems to me to be tragically amplified.

Where to start? Well, obviously loans are vastly more expensive for those without means. While interest rates are at record lows- banks can borrow at 0.25%pa and those buying expensive houses with large deposits can borrow millions at less than 2%pa this means nothing to those hard up. If they can get finance at all they are going to be paying much higher loan or mortgage interest, if they can’t then they could be stuck paying rent higher than even mortgage repayments. At worst of course you get the loathed Pay Day lenders charging hundreds of percent interest to those with no options. Seeing Pay Day employees on a marketing drive in London a couple of years back dressed as cuddly animals handing out balloons and goody bags to kids and ‘First Loan Free!’ fliers to parents turned my stomach.

Insurance? If you’re wealthy you can forget about needing life and long term sickness insurance in case the worst happens. That might save you thousands of pounds over your lifetime that you really need to spend if you don’t have lots of savings and don’t want to leave your family stranded in the event of misfortune.

And perhaps the biggest area, and most relevant to EZ ISA, is that you are excluded from investing. If you are always behind you will pay a vast amount in interest over your lifetime and without some luck or struggle it will be hard to get ahead. Even if you get a bit of money saved up it’s unwise to invest if you might need it in the short term. However, the more comfortable you get the more you have to invest and the more risk it’s reasonable to take. This means instead of getting next to no interest on your money you might take a fair bit of risk and stand the chance of doubling your money every 10 years (by getting 7%pa returns- not unreasonable). It doesn’t take too many 10 year cycles to get wealthy this way but unless you start from a comfortable position it will always be denied to you.

Those with savings and investments (the well off and informed) will always take money from those who borrow and buy (the hard up and the uninformed).

Unfortunately EZ ISA can’t help with most of this, but it does make it cheap and easy to get top quality investments once you’re in a position to do so.

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