Sunday, 14 March 2010


Goal 3 – To save enough to be able to retire

I finished reading The Naked Trader by Robbie Burns a week or so ago. I found it fascinating and very easy to read. It helps that I've wanted to trade shares since I was a teenager, inspired by Jeffrey Archer's Kane and Abel. The thought that one can make a lot of money by investing has since been very appealing.

I was fortunate enough to work for a Stockbrokers for a while and decided then to start investing for myself. It was a disaster...!

First rule of investing: you need a minimum amount otherwise any profit gets eaten up by dealing fees and tax. I had the princely sum of GBP 250 to play with...

Second rule of investing: Do Your Own Research. I wasn't a broker. I was developing reports and business applications but I was learning how the stock market works and picking up things and thought I could make some easy money. In 2007 I bought 3 high priced, high risk emerging market shares which had gone up consistently for the past year. This was at the height of the bull run. Over the next six months the shares dipped in value and kept dipping. I didn't sell, I thought they would recover, I hoped they would recover. They probably will recover but in March 2009 I sold having lost almost 50 percent of the value. I lost GBP 110 of my initial GBP 250 investment...

I've done rather better since then but have made many additional mistakes. I've sold too early and missed out of some huge share price rises, gotten scared at sudden falls in share price and sold when I didn't need to. Reading The Naked Trader has opened my eyes to the many actual failures I've made when trading and given me some direction for how I plan to trade in the future.

But, if I hadn't had all those failures, I would never have asked for advice, never been told about the book and possibly never read it. Even if I had, I doubt it would have had the same impact.

Failure is something that has been cropping up a lot for me recently. I stumbled across this commencement address by JK Rowling to Harvard University graduates. With all the irony she can muster, she espouses the fringe benefits of failure.

This week in the Open University course I'm studying, I read about the importance of failure to learning and experience. The argument was made that Western society has made failure an unacceptable situation but in doing so has robbed itself of the value gained from being able to fail and learn why.

I still don't have much money to invest with which makes any failure quite painful. Knowing that I can and have learnt from my failures helps, not at the time, but does give me confidence to keep trying. That and my apparent love of high risk, high reward situations!

I now have a retirement plan. It is basic and I'm sure I will be adding to it and modifying it over the next few years but it's a start.

The plan is to save a small amount each week, keep gradually increasing that amount and investing the savings with an aim of making a minimum of 20 percent return on the investment each year. I acknowledge it is incredibly ambitious but as I've already lost one pension to Robert Maxwell and seen other ways of investing getting most of the profits eaten up by fees and incompetence, surely I can do better?

year end invest total invested estimated return
2010 £400 £400 £80
2011 £520 £1,000 £200
2012 £572 £1,772 £354
2013 £624 £2,750 £550
2014 £676 £3,976 £795
2015 £728 £5,500 £1,100
2016 £780 £7,380 £1,476
2017 £832 £9,688 £1,938
2018 £884 £12,509 £2,502
2019 £936 £15,947 £3,189
2020 £988 £20,124 £4,025
2021 £1,040 £25,189 £5,038
2022 £1,092 £31,319 £6,264
2023 £1,144 £38,727 £7,745
2024 £1,196 £47,668 £9,534
2025 £1,248 £58,450 £11,690
2026 £1,300 £71,440 £14,288
2027 £1,352 £87,080 £17,416
2028 £1,404 £105,900 £21,180
2029 £1,456 £128,536 £25,707
2030 £1,508 £155,752 £31,150
2031 £1,560 £188,462 £37,692
2032 £1,612 £227,766 £45,553

My goal: to be getting a return of GBP 45K a year within 23 years. Assuming, inflation hasn't run too high, that might be enough to live on.

So, here's to failure... May all of us be willing to try, willing to fail, and able to use our failures to go on to better heights!


  1. Don't think I like the sound of this Mark.

    Investing in companies via the stock market is all very well, although preferably I would suggest, if you have some interest in what they're trying to do and you genuinely want them to succeed.

    What you're trying to do here though sounds more like "speculating", which is really just a posh word for "gambling" and is a big part of the reason why our economy is in such a mess right now - because too many people, and institutions, thought they could bet against the markets to make a fast buck instead of making a genuinely positive contribution to the world.

  2. Good point Dan. Personally I'd invest in property and get rental income. I hope to have a few before I retire. Its also helping people with accommodation who can't afford to buy. Is that a win-win situation?

  3. At the risk of upsetting everyone on here who's trying to make a bit of cash for themselves - yes, it does help people who can't afford to buy - but I think a big part of the reason why they can't afford to buy is because property prices have been inflated by landlords in the buy-to-let market...

  4. I'm not sure I'm completely happy with my last comment - I think there's some truth in it but perhaps it's more complicated than that? I guess if you are going to be a landlord then perhaps its just important to be a good one - i.e. look after your tenants and the property. Bad landlords don't care about the tenants or the property, they just care about how much money they can make, so the tenants suffer, the property suffers and ultimately the whole area suffers as a result.