FISH | Financial Independence Seeking Happiness: Finance

10 Reasons Why Financial Independence is Good for Society

Contender 0 #financialindependence, charity, Debt, downshifting, Early Retirement, Ethical, Finance, financial independence, Freedom, Habits 21:01

<table cellpadding="0" cellspacing="0" class="tr-caption-container" style="float: left; margin-right: 1em; text-align: left;"><tbody>
<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-3HNIdEQXagY/Uv_Ld6wX9YI/AAAAAAAADIg/954MUbjNB4Q/s1600/DSC_0006.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img alt="Are financially independet people good for society" border="0" height="320" src="http://1.bp.blogspot.com/-3HNIdEQXagY/Uv_Ld6wX9YI/AAAAAAAADIg/954MUbjNB4Q/s1600/DSC_0006.JPG" title="The road to financial Independence" width="212"></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">A Road to Freedom</td></tr>
</tbody></table>
Our little TRiBe is trying out the financially independent, idle life in France. Here are a couple of background posts: in <a href="http://getintheringwithme.blogspot.com/2013/08/happiness-in-france.html" target="_blank"> Happiness in France</a> : finally landed in France and plan for the next 4 years & in <a href="http://getintheringwithme.blogspot.com/2013/10/french-living-quelle-difference.html" target="_blank">French Living – Quelle Difference?</a> : this was a look at our expenditure in France compared to the UK. 
 
In this post here is a reflection on our current arrangement of living off investments and savings. We are now business owners instead of the wage slaves and 10 reasons why this is a GOOD thing. 
 
Wage Slave Exploitation 
 
We were wage slaves to big business. We were the ones being exploited.... 
 
THE.PaST: "Hold on there you were were doing it willingly and being paid for it right?" 
 
Willingly not so sure on that one and were we paid enough. Admittedly that is a matter of opinion. WILLING SLAVE BOOK? What can be said about it was that the companies that we worked for made large profits off our backs. Fine when you are the owner of the business receiving part of the profit (most likely through dividends) but what if the company is not listed and you are not a managing partner or the private equity firm. 
 
Sure wage slave is a harsh word it was not real slavery was it, chained to the desk and all that. Let's consider that further. We there are other ways of chaining on to his/her desk. Check out the book <a href="http://www.amazon.co.uk/gp/product/B005PROO5K/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=B005PROO5K&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">Willing Slaves: How the Overwork Culture is Ruling Our Lives</a> on this topic. 
 
We really had to do exactly as we were told, do what the boss wanted and make him/her look good. We had to follow the company line and bend over backwards when needed or else there is the door! OR We are not making enough profits so there is the door anyway. The sword of Damocles was there and you sure knew about it. 
 
We were brought up to believe work is good for us. Sure there is some truth in it (a little). It can provide an identity - what do you do (<strike>engineer</strike> loafer!). It gives you a purpose (damn alarm clock). You get to learn new stuff (invoice processing, making toilet holders) and meet new people in places you would normally not go (or want to go). 
 
In the West we dedicate a large part of our prime years to work. To make matters worse we start work really late after getting the pass to work - University Debt. All of those years that could have been spent actually doing something productive and being paid for it - gaining financial independence could be so much earlier. 
 
I digress - back to the point, we allow ourselves to be exploited as a wage slaves to a business and we have been brainwashed into thinking it should be this way until retirement age at 70.  Now let's flip this on its head and become the business owners.

10 Reasons Why Financial Independence is Good for Society

A Road to Freedom Our little TRiBe is trying out the financially independent, idle life in France. Here are a couple of background post...

The Digital Hypocrite

Contender 0 #financialindependence, Blog, Critical Thinking, Finance, financial independence, Happiness, stock screen 19:17

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<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-EJmGOml8iow/UveM3EHNzeI/AAAAAAAADHo/9oBcABxhdI0/s1600/Technology.jpg" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img alt="Financial Independence Through Technology" border="0" height="224" src="http://2.bp.blogspot.com/-EJmGOml8iow/UveM3EHNzeI/AAAAAAAADHo/9oBcABxhdI0/s1600/Technology.jpg" title="Useful Technology" width="320"></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Useful Technology?</td></tr>
</tbody></table>
I started out in life fascinated by new tech. I adored the BBC computer in school, learning a little bit of programming and playing the odd game such
 as Boffin, Manic Miner and Castle Quest. I was in awe with my Commodore
 64. Technology was new, changing fast, cutting edge and innocent. 
 
Roll
 on 2014 and the technological innocence has almost been lost. Devices 
used to be were stand alone and you really had to learn how to use them,
 write some code. Now everything is connected 24/7 you can access pretty
 much anything on the web including stuff that one should not have 
access to. 
 
We have social media - plaster loads
 of personal information about you across the WORLD. Better still give 
all of the important information about you FREE to advertisers to target
 your desires and weaknesses! 
 
Without the internet is was not as easy to read a freedom of 
speech article. Alternative views such as this blog would only be 
available in a magazine such as <a href="http://idler.co.uk/magazine/" target="_blank">The Idler</a>.
 First you would have had to find it and understand its content, ideally
 reading a copy to see if it was what you would like. Then subscribe to 
the magazine and wait each quarter or year for the latest edition.  
 
Desolation of the young 
 
Technology
 is changing the young in ways we still do not understand. Providing 
access to violent video games and sex at earlier and earlier ages 
through their tablets and smart phones is including their adolescence 
and destroying their innocence. Shooting a human being becomes more and 
more real on the screen leading some to act it out in real life. 
Internet porn is heaping extra pressure on them to perform (and perform 
what) when that special moment occurs. 
 
Does this really encourage respect for each other and the formation of strong families? 
 
Further
 attacks are taking place on their attention spans. Sit down and read a 
book - no let's watch the movie instead. Interface devices encourage 
'browsing' and consumption of goods and services. Snippets of 
entertainment news have replaces the investigative journalist and the 
need to think about the content and challenges in the world. Back to the
 bedroom from the fields - it is save there with def recon armored 
pursuit 10. 
 
 
In our eldest child's pre-school in London tablets 
computers were made available to the kids. Instead of learning to play 
together, develop 3D dexterity and interpersonal skills they are tap tap
 tapping at a flat screen that is 'educating' them to work quickly and 
jump from sugar rush app to app. It is easy to learn how to use a tablet
 and play computer games so why so young?

The Digital Hypocrite

Useful Technology? I started out in life fascinated by new tech. I adored the BBC computer in school, learning a little bit of programmi...

Financial Independence Options

Contender 1 Budget, downshifting, Early Retirement, Finance, financial freedom, financial independence, frugality, Planning, Saving 18:30

<a href="http://4.bp.blogspot.com/-BG85piBTkus/UuU-niALSnI/AAAAAAAADHY/88GfwH9Hgn0/s1600/TeddyFamily.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="283" src="http://4.bp.blogspot.com/-BG85piBTkus/UuU-niALSnI/AAAAAAAADHY/88GfwH9Hgn0/s1600/TeddyFamily.jpg" width="320"></a>Mr Teddy Bear: "Time to review our family finances and consider where are we going. Let's get the facts and run the cold hard numbers." 
 
Mummy Bear: "Oh daddy bear you are so cuddly when you talk tough" 
 
Baby Bear: "I want a games station, mobile computer, princess bike and trust fund...Now!" 
 
 
 
 This post is about a few hypothetical scenarios entered into the NEWLY UPDATED financial time line planner. 
 
The financial time line planner has received a little bit of tender and loving care in the last week. The following has been changed / added: 
<ul>
<li>Mortgage calculations</li>
<li>Debt repayments</li>
<li>Improved graphics</li>
<li>Financial scenarios</li>
</ul>
Here we are going to look at three different type of people and see how the timeline works for them: 
<ol>
<li>A fun loving/carpe diem 25-year old on a professional career who loves #selfies</li>
<li>A 35-year old looking to #downshift as fast a possible</li>
<li>A clued up 25-year old who is going for #ExtremeEarlyRetirement</li>
</ol>
Party on! CEO, Playboy, Sports car, Mansion, Hawaii 
 
Our
first example is the one THE.CoNTeNDeR started out in life believing would make him happy...
 This was soon dashed by the property boom in the UK effectively resigning him to having to rent for teh rest of his life. This caused a huge
 shift in THE.CoNTeNDeR's financial mindset. 
 
So here is a representation of an ambitious 
life and fun loving 25 year old looking to climb the corporate ladder. He is going to enjoy the high life and 
all the consumer goods on offer. The result shows 
the need for an ever increasing income to pay for the increasingly high 
life living costs. Although cash flow rich and materially wealthy on the outside he needs to keep the hamster wheel turning to avoid a nasty shock. 
 
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="http://2.bp.blogspot.com/-74UIXtw9txg/UuPiBkUZPtI/AAAAAAAADG4/U19n5TSyFBs/s1600/25yrPartyOn.JPG" style="margin-left: auto; margin-right: auto;"><img border="0" height="195" src="http://2.bp.blogspot.com/-74UIXtw9txg/UuPiBkUZPtI/AAAAAAAADG4/U19n5TSyFBs/s1600/25yrPartyOn.JPG" width="400"></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">CLICK ON PICTURE !</td></tr>
</tbody></table>

Financial Independence Options

Mr Teddy Bear : "Time to review our family finances and consider where are we going. Let's get the facts and run the cold hard num...

Maintaining Wealth II - We are all Investors Now

Contender 0 Black Swan, Critical Thinking, Dividends, Finance, Financial Armageddon, Gold, Inflation, Investing, Saving 16:03

<a href="http://3.bp.blogspot.com/-bG9sVWwZteo/UpsEz-bQlNI/AAAAAAAADDc/swNrFYBwmhY/s1600/InvestmentChoice.png" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="216" src="http://3.bp.blogspot.com/-bG9sVWwZteo/UpsEz-bQlNI/AAAAAAAADDc/swNrFYBwmhY/s320/InvestmentChoice.png" width="320"></a> 
TiMe: "Dring, Dring, TiMe to wake up sheeple" 
 
THE.FuTuRE: "Shussssh! They are sleep walking towards a cliff. We are providing wonderful <strike>distractions</strike> entertainment for them. Just look at all of their happy faces. Everything is great. There is no need to think just enjoy! Until I am ready to claim my pound of flesh MurrrGH HA HA HA" 
 
CoNTeNDeR: "Oi you evil B****** we the people will not stand for your bull****. We are waking up in our droves, turning off the entertainment and thinking about what you are up to. Financial freedom from your tyranny.  We are  lemmings no more and are turning away from the cliff - watch out below FuTuRE" 
 
In <a href="http://getintheringwithme.blogspot.com/2013/12/maintaining-wealth-i-bitcoins-and-real.html" target="_blank">Part 1</a> of this post we had a look at Paper Money, E-currency, Commodities, Real Estate and bonds. Today we are looking at Stocks, Land and investing in oneself as additional wealth preservation options worth considering. 
 
Stocks - Growing Profits? 
 
What
 value can you give to a company, let alone picking the winners in the 
stock market? This issue has flummoxed investors for years. 
 
Owning
 part of a company gives you an interest in that company's profits. 
Provided the profits keep rolling in due to a competitive advantage, the
 company should have some longevity. 
 
Perhaps looking 
for companies that have a distinct brand, product or advantage such as 
extremely difficult barrier to entry are the place to be. Those 
companies will grow in value along with their sales and / or return some
 of that profit back to shareholders through buybacks or dividends. 
 
Companies generate wealth - can you pick the right ones? THE.ConTeNDeR is trying see the <a href="http://getintheringwithme.blogspot.fr/2013/11/screener-for-value-and-dividend-stocks.html">Screener for Value and Dividend Stocks Here</a> 
 
For a seasoned professionals take on stocks for the long term, check out some articles by <a href="http://www.investmentu.com/2013/October/a-near-perfect-portfolio.html" target="_blank">Alex green from InvestmentU</a> and I am a fan of his book <a href="http://www.amazon.co.uk/gp/product/0470598204/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=0470598204&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">The Secret of Shelter Island: Money and What Matters</a> 
Warren Buffet even has a <a href="http://www.ivillage.com/warren-buffett-teaches-money-lessons-kids-cartoon/6-a-533797" target="_blank">cartoon series for kids on investing</a>. 
 
Tribe's opinion - Stocks allow the building of a diversified set of businesses. If stocks were not available it would probably be difficult to invest in diverse ideas such as graphene, new drugs and technology companies such as Google. Core holding. 
 
Arable Land 
 
An interesting investment class in THE.CoNTeNDeR's
 opinion. Precious renewable resources can be harvested from arable land
 year after year making it a very profitable investment class.  
 
Invest
 in woodland and you get free winter fuel and can sell the excess. 
Farmland can be planted for delicious fresh vegetables to be sold down 
the market. 
 
THE.ConTeNDeR likes the idea of some
 arable land next to his house. From a purely financial independence 
perspective 'free' heating, vegetables and eggs would reduce our living 
costs substantially. 
 
The <a href="http://www.transitionnetwork.org/" target="_blank">Transition network</a>
 are keen on this concept to help preserve the planet and combat 
resource depletion. They do a good bit on supporting communities as 
well. 
 
Tribe's opinion - We really think owing a bit of land even if it is used by someone else is a good idea and something we are looking at for THE.FuTuRe

Maintaining Wealth II - We are all Investors Now

TiMe : "Dring, Dring, TiMe to wake up sheeple" THE.FuTuRE : "Shussssh! They are sleep walking towards a cliff. We are pro...

Maintaining Wealth I - Bitcoins and Real Estate

Contender 2 Black Swan, Critical Thinking, Dividends, Finance, Financial Armageddon, Gold, Inflation, Investing, Saving 20:18

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THE.FuTuRE: "Contender you wuss, what is all this talk about income, growth and protection investments. I will take it all from you eventually. I have time on my side" 
 
TiMe: "Tick Tock, Tick Tock" 
 
CoNTeNDeR: "Precisely FuTuRe I have no idea what you are really up to. Heck I had a guess at the outlook for the year and how did that come out.....so I need a bit of diversification because of all of your conniving, plotting and outright corruption!" 
 
We are living in very interesting times especially with regards building and maintaining wealth. 
 
In this post we cover the TRiBe's options for investments in currency, commodities real estate and bonds with examples and opinions on some of the pro's and con's? 
<blockquote class="tr_bq">
 "You have much more opportunity 
to earn money than you do to 'not spend' money, and yet most people spend hours 
upon hours clipping coupons and perusing daily deal sites instead of 
brainstorming how to earn more money and solve 
people's problems." - Susan Fujii</blockquote>
In the second post we will be looking at other investment classes such as stocks and yourself followed by the TRiBe is current thinking. 
 
Paper Money Supply - Blind Faith? 
 
Since 1970 when Nixon took the world off the gold standard there has been no anchor to excessive money / currency creation. Governments have control over the supply of their currencies and they can determine the ultimate value of the currency in circulation depending on the amount in circulation. 
 
Previously if people wanted to save their labour and future buying power through the means of a currency, they could chose a checking account. It earned interest that was enough to offset any excessive increase in the currency supply. This is certainly not the case at the moment, interest rates are artificially low and people are being 'guided' to riskier investments for a return. 
 
One may ask but why is the currency supply increasing above the increase in productive capacity of the economy. Unfortunately this is easy to attribute to governments' fiscal irresponsibility. Excessive overspending is used to buy votes from the electorate. 
 
Alternatively if a country has strong institutions, low spending and fiscal responsibility - holding that countries currency is less of a concern. 
 
Fiat Money is covered by <a href="http://www.amazon.co.uk/gp/product/B005GSYZRA/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=B005GSYZRA&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">Currency Wars: The Making of the Next Global Crisis</a> by James Rickards, and <a href="http://www.amazon.co.uk/gp/product/0718192141/ref=as_li_qf_sp_asin_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=0718192141&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">Paper Promises: Money, Debt and the New World Order</a> by Phillip Coggan. There is also a good video to watch by Warren Buffet highlights how <a href="http://www.youtube.com/watch?v=5DvuyvuHmJI" target="_blank">countries get into trouble in the first place</a>. 
 
See the video series <a href="http://www.youtube.com/watch?v=DyV0OfU3-FU" target="_blank">Hidden Secrets of Money</a> by Mike Maloney 
 
Tribes opinion - it is so easy to transact in paper money and in the governments interest to keep them in place we will always keep some in our portfolio. 
 
Electronic Currencies - How Many? 
 
We now have alternative currencies such as Bitcoin and Litecoin hitting the news wires for their massive gain in relative value to reference currencies such as the US dollar. 
 
Firstly there are many people in favour to the inbuilt scarcity of the digital coins. Secondly they are not issued by any government and they are scattered globally that make them uniquely difficult to manipulate. 
 
One thing that is a red flag to THE.ConTENdER is what stops an unlimited amount of new versions of electronic currencies being created? 
 
Will the herd just jump from e-currency to e-currency chasing gains - see a list of them <a href="http://en.wikipedia.org/wiki/List_of_cryptocurrencies" target="_blank">here (10 listed)</a>? THE.CoNTeNDeR thinks this is highly likely until the number of e-currency options goes to infinity or faith in them is destroyed. Their value will go the same way as fiat currencies trending towards their intrinsic production value of close to zero. 
 
What may save them is if the herd all commit to ONE e-currency. 
 
One thing preventing this e-currency utopia is ... human nature. We are opportunistic and after an easy meal / fast buck. Our prehistoric past moulded us that way. When we were being chased by sabre toothed tigers whilst eeking out an existence coming across a free lunch in the form of a dead Mammoth. 
 
Will everyone commit to one e-currency? I would like to think it could happen but who can tame  human nature. Will we have to live in a dystopian future where we all take the happy pill to keep us controlled? 
 
Zero hedge recently <a href="http://www.zerohedge.com/news/2013-11-27/presenting-bitkillers-these-are-richest-holders-bitcoin" target="_blank">reported that 100 people hold 20% </a>of the bitcoin currency - a new type of Ponzi scheme in the making? Create a new e-currency holding a large percentage of the issue then cash in and move on as the perceived value burns. Who is left holding the proverbial handbag - the new entrants - good luck or what a good SUCKER!- THE.FuTuRe would be impressed! 
 
See this <a href="http://www.youtube.com/watch?v=T_hBhymFfm8" target="_blank">utube documentary on bitcoin</a> 
 
Tribes opinion - Speculative and almost impossible to value - mine some coins by all means* but only purchase if you have some spare gambling money :) 
 
* THE.CoNTeNDeR has had a go at mining. The setup is a pain, it is geeky, based on lots of technical know how. To mine alot of coins and to really exceed requires specialise mining rigs - a currency for the people - you must be joking! 
 
Next up commodities

Maintaining Wealth I - Bitcoins and Real Estate

THE.FuTuRE : "Contender you wuss, what is all this talk about income, growth and protection investments. I will take it all from you ...

Financial Independence and Happiness Books

Contender Black Swan, book, downshifting, Early Retirement, Education, Finance, financial independence, Freedom, Investing, Planning, Saving 13:01

SPEND.IT.NOW: "You say Read Read Read - I haven't got time to read! TLTM (too long too much?). I've been fed snippets all my life. The news in 10 minutes is all you need don't you know? That's what I want concise, short, to the point, none of this 300 page novel stuff. Crikey, even your blog posts are too long CoNTeNDeR. I've gotta do other stuff you know.  
 
<a href="http://4.bp.blogspot.com/-t8Jvc_oIscg/UpJAPlru4gI/AAAAAAAADC8/WHpH97fVVxk/s1600/Books.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="235" src="http://4.bp.blogspot.com/-t8Jvc_oIscg/UpJAPlru4gI/AAAAAAAADC8/WHpH97fVVxk/s400/Books.jpg" width="400"></a>Short is all I want! Let's start by sorting this blog out. 
 
Change it to "SMBH" Save Money, Be Happy" -  that's it nice, simple and quick to read! Genius!  
 
Delete everything on the blog and replace the front page with "SMBH". Job done. You will thank me CoNTeNDer you can pack up the website as you have done your bit and have all that spare time to fill with fun" 
 
CoNTeNDeR: "SMBH to you too!" 
 
Books are great, something to get lost in for a few hours, something to debate, something new to learn. A lot of what is discussed on this site has its starting point in a book or article. This post is all about the books we have relied upon for our financial independence and downshifting planning. 
 
Reading, Why Bother? 
 
Books, Books, and More Books, so many to read and so long. When will one ever the the time to read them all? 
<div style="text-align: center;">
<a href="http://en.wikipedia.org/wiki/List_of_countries_by_literacy_rate" target="_blank"> </a></div>
Aren't a lot of books just fiction such as graphic crime stories and romantic slush. Yes they may be great to retreat into a fantasy world unfortunately they will not help with gaining financial independence (although they may help on the happiness side). 
 
What we are really looking for are reference and how to books and essays. 
 
It is all too easy to say "Come on, I had my share of serious books at university" unfortunately the books in university were generally just on topic. Too specific and not everyday real world challenges. 
 
For example <a href="http://www.amazon.co.uk/gp/product/0141038225/ref=as_li_tf_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=0141038225&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">Antifragile</a> and <a href="http://www.amazon.co.uk/gp/product/0141034599/ref=as_li_tf_tl?ie=UTF8&camp=1634&creative=6738&creativeASIN=0141034599&linkCode=as2&tag=thecontfinain-21" id="static_txt_preview" target="_blank">The Black Swan: The Impact of the Highly Improbable</a> by Nassim Taleb are the opposite of  "Don't worry about challenges, society will look after you, go to the pub, watch a movie or go to the shops instead. It is more fun". Taleb highlights how fragile some of our support systems actually are how unforeseen events will always exist and what we as individuals can do about it. 
 
<div style="text-align: center;">
<a href="http://upload.wikimedia.org/wikipedia/commons/thumb/3/39/WorldMapLiteracy2011.png/400px-WorldMapLiteracy2011.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="185" src="http://upload.wikimedia.org/wikipedia/commons/thumb/3/39/WorldMapLiteracy2011.png/400px-WorldMapLiteracy2011.png" width="400"></a></div>
<div style="text-align: center;">
 <a href="http://en.wikipedia.org/wiki/List_of_countries_by_literacy_rate" target="_blank">List of countries by literacy rate source: Wikipedia</a></div>

Financial Independence and Happiness Books

SPEND.IT.NOW: "You say Read Read Read - I haven't got time to read! TLTM (too long too much?). I've been fed snippets all my li...

Dividend Surprise Part 2

Contender 0 Compound Interest, Dividends, DRIP, Early Retirement, Finance, financial freedom, financial independence 08:49

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</div>
 
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<tr><td style="text-align: center;"><a href="http://1.bp.blogspot.com/-9ABwzE9dk9k/UZC6VmBUgVI/AAAAAAAACpk/7mCDOPEk8Bo/s1600/ManagingRisk2.JPG" imageanchor="1" style="clear: left; margin-bottom: 1em; margin-left: auto; margin-right: auto;"><img border="0" height="320" src="http://1.bp.blogspot.com/-9ABwzE9dk9k/UZC6VmBUgVI/AAAAAAAACpk/7mCDOPEk8Bo/s320/ManagingRisk2.JPG" width="240"></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Risky business be careful!</td></tr>
</tbody></table>
After taking a parting blow to the head from CHEAP.SHOT his sparring buddy THE.CONTENDER was dazed and disorientated. Is the right thing to be doing, he asked himself? This fighting THE.FUTURE stuff is quite risky. Is he risking it all on black? 
 
CHEAP.SHOT: "CONTENDER! CONTENDER! are you alright? Sorry mate I thought we were still sparring. I did not hear PLAN.AHEAD calling us over" 
 
PLAN.AHEAD took THE.CONTENDER to one side: "Look what happened, you dropped your guard. You thought you were safe and in control. This is a risky business and you need to have your wits about you at ALL times" 
 
In part 1 of this post (found here) we had a look at the pros and cons of dividend investing. Here in Part 2 we are going to have a look at the risks of investing in dividend stocks, our strategy and tracking progress. 
 
Personal Financial Goals 
 
As we are well into our financial freedom plans we have been fortunate to accumulate enough savings and investments to be very close to our desired goal. This is to buy a "nice" property in France and enough passive income to cover living costs. Currently this nest-egg is 2/3 in cash and funds and 1/3 is in dividend stocks. Ultimately we need our investments setup in the following manner: 
<ul>
<li>45% in cash to buy a property outright </li>
<li>45% in dividend stocks. We are aware the nominal value will rise and fall with the market and company performance but the income that we need will hopefully grow over time. </li>
<li>10% in our protection portfolio for emergencies cash and cash alternatives such as precious metals.</li>
</ul>
So what do I think are the risks that lie ahead for this approach if we follow this route? 
<ul>
</ul>
Mitigating Currency Risk 
 
US
 shares carry a premium (more costly / lower yield) to them but the dollar is the reserve currency 
of the world. Likewise UK and Continental European stocks carry Pound 
Sterling and Euro risk (get the money printing presses ready, Mr Carney - New Bank of England Governor) 
 
We are going to be living in France and paying for everything in Euros so what do we think are our options to reduce currency risk? 
 
a)
 Ideally we want to have much more income than outgoings if possible. This is the 
ideal situation as we can continue to invest and grow our income and 
it will provide a buffer in hard times. Likelihood low - we want to spend as much as possible on a home. 
 
b) Investments will be made in countries with strong currency fundamentals and good 
trade agreements that avoid double or punitive taxation. Global low cost
 funds can help to mitigate currency risk instead of trying to work out 
the "best" country to invest in. In our case we cannot invest in funds in the short term due to higher French taxation. Our income will be paid in multiple currencies before being converted to Euros. 
 
c) PROTECTION - our cash will be spread across different currencies and cash equivalents. Primarily this will be covered by income from multiple countries in the form of dividends, pounds, euros and some precious metals fund. 
 
d) We will monitor all investments and country risk monthly and change the mix of the portfolio as required. Our monthly dividend tracker and risk evaluator is outlined below. 
 
There are several countries and currencies that are of interest to our little tribe Canada, China, Chile, Singapore and to a lesser extent Brazil, countries located in Eastern Europe and Australia. 
 
Canada and Chile are of interest for example as they both have growing populations, an abundance of natural
 resources, are business friendly and have a lot of undeveloped land for agriculture and natural resources. 
 
For more on risk management and the low cost fund approach to investing have a look at the videos on the <a href="http://www.bogleheads.org/wiki/Video:Bogleheads%C2%AE_investment_philosophy" target="_blank">Bogleheads wiki</a>. 
 
<div style="text-align: center;">
Please read on to have a look at the tribes own strategy and progress</div>

Dividend Surprise Part 2

Risky business be careful! After taking a parting blow to the head from CHEAP.SHOT his sparring buddy THE.CONTENDER was dazed and di...

Dividend Surprise Part 1

Contender 3 Compound Interest, Dividends, DRIP, Early Retirement, Finance, financial freedom, financial independence 12:46

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<a href="http://2.bp.blogspot.com/-c_ihto23ui8/UYNizFSopgI/AAAAAAAACoA/oJP40IJGj6A/s1600/Cash.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="210" src="http://2.bp.blogspot.com/-c_ihto23ui8/UYNizFSopgI/AAAAAAAACoA/oJP40IJGj6A/s320/Cash.jpg" width="320"></a></div>
THE FUTURE: "Jobs are being created, resources are abundant and technology is amazing - go out and enjoy yourself - I will look after you!"   
PLAN.AHEAD: "That is all good mate but I want options. I want freedom to do as I wish. If I spend all my money today I will have none for tomorrow" 
CONTENDER: "What about dividend investing, will this work?"  
PLAN.AHEAD: "Contender, the stock market is a casino mate! you have less chance in it than in the ring with THE.FUTURE!" 
Over the past 12 months a lot of work has been carried out to develop a strategy for a sustainable dividend income for our Tribe.  
 
Part 1 of this post is going to look at the pros and cons of dividends versus capital appreciation of stocks. Part 2 is going to look at risks of investing in dividend stocks, our strategy and tracking progress. 
 
The Tribes Dividend Journey 
 
We have been investing heavily for the past 7 years in three portfolios GROWTH, INCOME and PROTECTION (covered here). It is only in the last year we have been heavily interested in increasing the share of the INCOME portfolio. In particular we are buying individual company shares for their dividends. 
 
To get to the target we are gradually selling our tracker funds from the GROWTH 
(Primarily global, European and emerging markets) and adding capital 
from dividends and adding income from Mrs C's [delete] income into individual shares. The PROTECT portfolio is staying static. 
 
In the current climate of a historically high priced stock market (P/E ratios are at towards the top of their historical trading ranges) and what THE.CONTENDER considers a stagflation environment this poses several concerns about the timing of owning MORE shares. 
 
We currently live in a very different financial landscape with lots of printed money circling the globe. This is very supportive of stocks so there is no reason to believe the stock market will capitulate just yet. 
 
<ul>
<li>Our exercise is moving money out of one group of shares (funds) to another group (individual dividend stocks) </li>
<li>We are adding some extra earned income so we are in effect nearly neutral on purchases.</li>
<li>Our objective is all about GROWING INCOME over CAPITAL APPRECIATION. </li>
<li>We are comfortable in owning a large amount of stocks but... we want to be more DEFENSIVE with the choice of these shares. </li>
<li>We are buying shares in these sectors that we consider DEFENSIVE: utilities, energy and pharmaceutical.</li>
<li>We consider their goods and services as a "need" instead of "want". </li>
<li>We understand dividends can be variable such as energy companies that are beholden to the underlying price the the commodity they are selling.</li>
<li>We hold some fixed income assets (preference shares and cash accounts) </li>
</ul>
While it may seem a little Kamikaze to keep holding so much wealth in stocks at the moment we are buying them for their income, not overall value (appreciation is desired ;). 
 
Perhaps lots of cash is better? Unfortunately like anything in life it is all about risk aversion. Cash loses value to inflation but is safe. At our point in our lives we are do [which one?] not need to be overly safe. If a problem happens we will do what it takes to get back on track. 
 
We are aiming for 80% INCOME and 20% in GROWTH and PROTECTION after the purchase of a property in FRANCE and the semi early retirement situation we are looking for. 
 
Starting a portfolio 
<blockquote class="tr_bq">
"An investment in knowledge pays the best interest." - Benjamin Franklin   </blockquote>
We have read about dividend investing from several sites and blogs such as the <a href="http://dividendmonk.com/" target="_blank">dividend monk</a>, <a href="http://seekingalpha.com/" target="_blank">seekingalpha</a>, <a href="http://monevator.com/" target="_blank">monevator </a>and several early financial independence blogs such as <a href="http://www.bravenewlife.com/" target="_blank">brave new life</a>, <a href="http://retireby40.org/" target="_blank">retire by 40</a> and <a href="http://jlcollinsnh.wordpress.com/" target="_blank">jlcollinsnh</a>. 
 
We have a list of our our current holdings and the current dividend income they provide per month. We have added "what if" we bought x shares in each company to work out what the portfolio could look like to generate our desired final income (more detail will be provided in part 2 of the post). 
 
All of the stocks are researched  (Mr C spends lots of time on this) and evaluated. Decision of what to buy each month are made by having a look at share valuations and performance. We are currently concerned about buying some of the shares we have identified that have had large run ups at the start of the year (typically 10-20%). 
 
We are currently targeting the "laggards" - shares that are behind the market gains. Is this a good approach? Laggards are usually laggards for a reason? Well perhaps that is because their sector is out of favor and might be the next "performer". There is a "risk on" appetite in the market so some defensive sectors have been laggards / sold off in favor of stocks with perhaps more growth prospects. 
 
Please read on for: Are companies paying dividends the right choice? High paying dividend stock considerations. Dividend champion investing.

Dividend Surprise Part 1

THE FUTURE : "Jobs are being created, resources are abundant and technology is amazing - go out and enjoy yourself - I will look afte...

Welcome to FISH !
You have come here looking for answers. How to get out of debt? How to save and invest? How to retire early and how you want to live in retirement.

Well this is the right place for you as out tribe has been through all of these steps. We no longer work for a corporate employer and have saved enough to retire early. How we did this is shared here on this site for you.

Our little tribe found out these secrets to financial independence in our late 20’s. Since then we have taken early retirement, in our late 30's, in just 7 years. We now live in the South West of France with our two young children.

Along the way I decided to share everything I learnt. My articles and tips on aggressive saving and compound investing are there to help you meet your financial goals fast. I discuss ways to help you decide what you want by building a life plan. This helps to work out how to get where you want to be whilst avoiding the pitfalls along the way.

My expertise was built up working in blue chip corporate jobs, extensive reading and putting it into practice. I have condensed this knowledge into simple strategies to help you meet your goals and not those of the bank or the place you work.

There are free planning tools on this site that help you make a life plan. A plan for your future. The tools calculate how to reach your financial goals in a timeline that suits you. The tools help set out your life goals, make them happen and how to exceed them.

There are tips on how to simplifying your life to remove day to day headaches. These include ways to pay off debt fast buy eliminating wasteful spending habits. How to reduce your monthly bills through choices that actually improve your health and wellbeing. Identifying things you don’t need that sap your time and wallet.

There are little sustainability projects to reduce your dependence on shops and utilities whilst saving money to spend on things you want.

All of these little steps will show you how save 50%+ of your salary so you can meet your goal whatever it is. This huge saving rate can be compounded for very early retirement. I am sure you will find something here for you.

Darren Lee (A.K.A the Contender as in my blog)

FISH | Financial Independence Seeking Happiness