INVESTING FUNDAMENTALS
If you’re here it means you are my kind of person (impatient and hungry for knowledge)
So with no further ado scroll down for all five days of the email course.
If these concepts click you for you you’ll have a great understanding of why you need to invest and also one strategy for how to invest.
This five day email course has helped people with some amazing breakthroughs but I highly recommend you watch my free training The Effortless Investor.
One hour today could transform your financial trajectory forever. The training is ready when you are! Just click the sign up button below and choose to watch now or schedule it for a time that works for you.
QUICK LINKS AND NAVIGATION FOR THE FIVE DAY INVESTING FUNDAMENTALS:
Day One: Investing Essentials 💸
First things first, hello I am so happy I get to share this with you!
Let me just give you a quick intro to me before we get into it 💸
Who am I? I'm Hannah, an investing expert who helps people buy their time back through learning how to invest as ethically as possible.
Why listen to me? I'm a qualified financial advisor, ESG investor, property investor, developmental coach and yoga teacher.
I'm interested in money because it can make it possible for you to live the life you truly want to be living.
All my work and everything I'll share in the next five days is all financial education.
I'm sharing the all encompassing principles of wealth and investing for you to hopefully be able to apply yourself or you can find a financial advisor if you want tailored advice specific to your exact financial situation.
Why do you care so much about people learning to invest?
My investing journey and whole perspective on life changed when I lost my Dad when I was 22.
I had some money from him that he'd worked really hard for and it was really important to me to be smart with it.
That opened up the whole world of investing to me.
It was a world I had never really thought about or heard people like me talk about. I found it really difficult to find good resources to learn from and that meant it took me a long time to feel confident enough to actually get started.
Now I've got a successful investment strategy working for me which has allowed me to create location and time freedom for myself and I can't wait to share it with you too.
It's all evidence based and extensively researched by me and backed up by studies and statistics.
Let's get into it!
INFLATION IS COSTING YOU
Most people think investing is about picking winners.
That's incredibly difficult and the studies have shown that 96% of the time full time finance professionals can't do it.
So I really don't recommend that being your strategy.
I'm sure you have more interesting and important things to be doing than checking the stock market every day and worrying about your investments.
Luckily in the next week I'll be sharing an evidence based investing strategy that only needs your attention for a few hours each year.
The first thing to establish is why invest?
There are two reasons - one is the carrot, and one is the stick.
First up: inflation. The stick.
When I was younger I would often ask my Mum for 5p.
Why?
Because down the street at the off license I could buy a Freddo - my favourite chocolate treat for 5p.
Today a Freddo is 25p.
That's inflation at work.
I wish savings worked in the long term.
If they did, I wouldn't have bothered to learn to invest and put myself through the initial icky feeling of 'What if I lose money?'
But we live in an economic system with inflation.
The system is designed so that things get more expensive each year. The Bank of England's target is to make sure everything goes up by 2% each year.
Even if you're earning some interest on your savings in the last few years these interest rates have been lower than the inflation rate.
That means the purchasing power of your money is shrinking with time.
Even though the number in your bank account looks the same you can buy less with it each year.
Remember how much houses were in the 1970's?
Or how much a happy meal cost was when you were at school?
That's inflation at work.
YOUR CASH SAVINGS BECOME LESS POWERFUL OVER TIME
Imagine a fairy godmother gave you a million pounds when you were born.
You kept it carefully saved.
When you were born you could have bought a million pounds worth of stuff.
So fast forward you're now 30 years old and ready to spend the money.
Unfortunately now the million pounds only buys you the equivalent of what would have cost £378,673 in 1993.
Even though the million pounds is still sat there the value of those cash savings decresed by £621, 327
If you saved the million pounds until you were 50 it gets worse.
Now that million pounds will only buy you the equivalent of what would have cost you £59,236 in 1973.
Even though the million pounds is still sat there the value of those cash savings decreased by £940,764.
That's 94% less 🤯
Why is that happening?
Your savings are getting less powerful over time because:
The government are printing more money every year which makes the existing money less valuable.
Things get more expensive with time.
LET'S LEAVE IT THERE FOR TODAY...
TLDR: Your savings are worth less over time.
Keeping too much money in savings and not investing is costing you.
Tomorrow's email will be about the carrot aka why we would want to invest.
Be prepared for some cheerier news!
Speak then,
Hannah
INTERESTING READS FOR YOU...
Day Two
I have some good news about investing! Let's talk about compounding.
Compounding is the reward you get from investing.
It's the rocket fuel for your investments 🚀
Compounding is this weird thing to get your head around.
Because when you invest if you keep reinvesting the money those investments make then you get the benefit of exponential growth.
If you doubled a penny every day for 30 days how much do you think you'd have at the end of the month?
£5,368,709.
Bet you didn't think it would be that high?!
That's the power of compounding at play.
Unfortunately I don't have an investing strategy that can double your money every day.
But I do have an evidence based strategy one that has had an average growth of 7-11% each year over the past thirty years.
When you put that with the power of compounding you've got a pretty effective long term strategy.
EXAMPLE TIME
Let's use an example to show how compounding works.
If you saved £20,000 and kept it in a 0% savings account. It doesn't matter the time scale, you'll still always have £20,000 there.
Now let's imagine you invested that £20,000 instead.
You put your investment account on accumulation mode and let it grow and compound. Let's imagine it grows at 8% each year 💸
In 25 years, you'd have £146,804 in that investment account. In 50 years, it would be £1,077,564 🤯
Now, let's get back to compounding.
Because that's the reason this £20,000 grows so much.
And something interesting happens as time goes on...
From years 25 to 30 the investments grew by £71,911.
But from years 45 to 50 the investments grew by £354,292 🚀💸📈
Why?
Because the investments are compounding and growing exponentially.
Not linearly.
And that's what makes time a really important component of the investment puzzle
The power of time means investing smaller amounts as soon as possible is worth it because compounding over the years does a lot of the work for you.
So to summarise - the sooner you start investing the better because of our new best friend compound interest.
A WARREN BUFFET ENDORSED INVESTMENT STRATEGY
Amazon founder Jeff Bezos once asked Warren Buffett,“Your investment thesis is so simple, you're the second richest guy in the world, and it's so simple. Why doesn't everyone just copy you?”
To which Buffett replied, “Because nobody wants to get rich slow.”
The next piece of the puzzle will be me explaining more about this investment strategy and we'll do a deep dive into how much money people actually make with their investments 💸
Day Three: Investing Essentials 💸
In our last lesson I mentioned you could make 7-10% a year from your investments...let me explain where those numbers come from.
They come from three major financial indexes.
First of all... What is an index?
A financial index in this context refers to a group of companies and it tracks and measures their performance as a whole.
An index is weighted.
This means the biggest companies will hold the biggest share of the index and therefore have the greatest impact on the performance.
An index fund is an investment which mimics this performance of the group of companies which is often referred to as 'the market'.
Why does it matter?
Here are three major indexes and the returns they've made on average each year over the past thirty years: MSCI World Index - 8.1% S&P 500 - 10.8% FTSE 100 - 7.3% Source: Morningstar
Here's the thing though..
Investments don't go up in a neat and even 8% every single year.
The numbers fluctuate dramatically year to year 🎢
And being able to deal with those variations and keep your cool and stay invested is the price of admission for a long term investment strategy.
Hopefully things might be getting a little clearer.
And you might be thinking well if all I have to do is pick an index fund, put my money in it and keep it there to grow for a long time that sounds weirdly simple.
Then you'd be right! It really can be that simple.
You just need to understand enough to know that the benefits will most likely outweigh the risks.
Of course there's the nitty gritty of picking the right fund, and platform and thinking about tax amongst other mindset shifts but if you can get your head around the information in this document enough to want to take action then you'll be way ahead of the curve and entering the top tier of financially literate people in the UK.
A WARREN BUFFET ENDORSED INVESTMENT STRATEGY “By periodically investing in an index fund, the know-nothing investor can actually outperform most investment professionals.”— Warren Buffett, Berkshire Hathaway shareholder letter 1993
Day Four: Investing Essentials 💸
When I was learning to invest I thought index funds sounded like a great, low risk strategy to go with.
These funds bundle different companies together which lowers your risk if a few companies fail.
And copying the index meant that instead of trying to find a needle in a haystack you just buy the whole haystack.
Genius.
This book explains the strategy in more detail if you want to do a deep dive.
But there was a problem.
Investing in all the companies in a market meant I would be investing in companies that didn't align with my values.
And I wasn't willing to do that.
But I found a few different terms to search for when choosing investments that excluded companies that were engaging in potentially harmful behaviour.
Investment plans and funds use these terms in different ways so it's a good idea to do more research into the specific fund or investment you're looking at to understand the criteria they use.
These are the three terms you need to know:
ESG - This stands for environmental, social and governance.
An ESG fund works by negative screening so exclude company that rank poorly on these three elements.
They usually screen out companies in industries like tobacco, gambling, weapons and adult entertainment.
Socially Responsible Investing (SRI) - Usually includes some positive and negative screening for companies and might sometimes be called ethical investing.
Fossil Free - These aren't as widely available but it is possible to find fund that have fully divested from fossil fuel companies which is ideal if your climate conscious. I really hope these will become more widely available in the next few years!
I was worried that combining ESG with the index investing strategy wouldn't work but my investments have grown by more than 88% since I put money into them just over five years ago 💸
The past won't equal the future etcccc but it has got me convinced on the power of investing!
Day Five: You completed it ✅
You made it through!
Thanks for sticking around :) Let's recap:
Inflation is eating your savings and making them less valuable in the long term which forces our hand a little bit on the whole investing thing 💸
Compounding is this amazing thing that grows your investments exponentially. It makes investing in the long term over decades really bloody powerful so we know we want to be in it for the long haul 🚀
We saw that trying to pick the best companies is a losing game and that index investing is a way to invest in the every company in a particular market. That makes investing less risky as your eggs won't all be in one basket 🧺
In the last 30 years three of the major indexes grew on average by 7-10% each year. So we have an idea of the size of the prize! 📈
Unfortunately our investments won't grow in nice, steady, predictable amounts each year. The volatility is the price we pay for that long term growth 🎢
If we want to invest in a more conscious way we want to look our for ESG, SRI or fossil free investments 🌎
If you want to have a play around and see what might be possible through investing I like this investment calculator. I usually use an imagined 8% investment return rate but you could go a little lower if you prefer to be more cautious :)
I really hope this email series has given you some better knowledge about investing!
I've done my best to fit in the biggest concepts here but I go into waaay more detail in my course Money Vault
I want to give it a very quick shoutout because now you have the strategy it’s time to take the action required to get your money working for you 💪
Money Vault is the only investing system you need to turn your "I should really do something with my savings" into "Holy sh*t, my portfolio grew HOW much while I was sleeping?!"
In just maximum eight weeks, you'll have your investment account set up and working for you - even if you've never invested a penny before.
If you join you’ll get access to my cheatsheets, decision making frameworks, short jargon free videos and eight weeks of personalised email support from me so you can avoid overwhelm and expensive mistakes.
It's super fun and would love to have you if you need help with the next steps :)
WHAT NEXT... You'll now start receiving The Wealth Weekender which I send out most Sunday mornings.
It usually has my thought of the week, a question for you and one link I think might be useful on your wealth journey.
Email me back if you made it through and I'll send you something that might be helpful for you on your investing journey!
And email back with any questions - I'm here to help 💛
Speak soon,
Hannah