August 2012 | FISH | Financial Independence Seeking Happiness

Risk Versus Reward

Contender 0 Black Swan, Compound Interest, Critical Thinking, Dividends, Finance, financial independence, Inflation, Investing, Risk 19:56

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Is THE.CONTENDER risking a knockout blow? 
 
 
THE.CONTENDER thought he would write a post on perceived Risk versus Reward when investing. THE.CONTENDER compared the THE.CONTENDER strategy against a couple of very successful savvy bloggers. THE.CONTENDER 's investment plan can be summarised in one simple statement "save as much as possible, in stocks that have a high risk \ reward profile early in life then choose lower risk stocks later". That was the easy part. The next part was devising a strategy to max out the strategy for early financial freedom. The THE.CONTENDER approach is covered in more detail in "<a href="http://getintheringwithme.blogspot.co.uk/2012/07/round-5-156s-investment-challenges.html" target="_blank">Investment Challenges</a>". Here are links to a few articles from the bloggers THE.CONTENDER was talking about earlier: 
 
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 <a href="http://jlcollinsnh.wordpress.com/" target="_blank">jlcollinsnh</a> </div>
<ol>
<li><a href="http://jlcollinsnh.wordpress.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/" target="_blank">Stocks part vi portfolio ideas to build and keep your wealth</a> </li>
<li><a href="http://jlcollinsnh.wordpress.com/2012/05/12/stocks-part-vi-portfolio-ideas-to-build-and-keep-your-wealth/" target="_blank">How I failed my daughter and a simple path to wealth</a></li>
</ol>
<a href="http://www.mrmoneymustache.com/" target="_blank">Mr Money Mustache</a> 
 
<ol>
<li><a href="http://www.mrmoneymustache.com/2011/05/18/how-to-make-money-in-the-stock-market/" target="_blank">How to make money in the stock market</a> </li>
<li><a href="http://www.mrmoneymustache.com/2011/06/07/where-should-i-invest-my-short-term-stash/" target="_blank">Where should I invest my short term stash?</a> </li>
<li><a href="http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/" target="_blank">A Brief History of the ‘Stash: How we Saved from Zero to Retirement in Nine Year</a></li>
</ol>
(Other early financial freedom bloggers: <a href="http://gooddaytolive.wordpress.com/" target="_blank">A Good Day to Live</a>, <a href="http://www.bravenewlife.com/" target="_blank">Brave New Life</a> and <a href="http://earlyretirementextreme.com/" target="_blank">Early Retirement Extreme</a>) 
 
<a href="http://getintheringwithme.blogspot.co.uk/p/muff-tools-and-check-lists.html" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;" target="_blank"><img alt="" border="0" height="161" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2_tJJBfdEcjYj8hSe6G74uOkYPZdhtdvUjHlD66iDSU-DDkHu3ga_HfgHks_i1d_8T14tBYvTCra_s6KmbaqeiUZkh0TVDkWPeTO1BasqeCXSrNbM009OsiGvcohCmAN1cKCIvm1mpU_e/s200/Muff+Tool+Kit+v6.jpg" title="PLANNING TOOLS AND CHECKLISTS" width="200"></a>First, both of these guys have made it, are financially free and are still able to save and invest each month. Both guys built significant savings through very hard work and dedication in their employment and investing decisions. Hats off to both of them. This blog highly recommends working through their sites for insights on finance and life. 
 
Next, let's start a comparison of the different strategies:

Risk Versus Reward

Is THE.CONTENDER risking a knockout blow? THE.CONTENDER thought he would write a post on perceived Risk versus Reward when investing...

PLAN DO CHECK ACT Life Objectives

Contender 0 Early Retirement, Life, Planning, Toolkit 19:52

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THE.FUTURE: "CONTENDER you are wasting your life your time has come to relinquish your crown and come with me!"   
THE.CONTENDER : "I am only 27 I can change my ways! "   
THE.FUTURE: you have one year to change your destructive ways. I will return at the stroke of midnight on New Years Eve! 
 
What did THE.CONTENDER want out of life? Where to start? First THE.CONTENDER needed understand what he was good at what did he enjoy. Secondly what was THE.CONTENDER going to do about it! 
 
This post is going to look at   
1. How THE.CONTENDER started to plan for THE FUTURE   
2. How the THE.CONTENDER tribe use the PLAN DO CHECK ACT life planning process on a monthly basis using a spreadsheet, whiteboard and a calendar. 
 
THE.CONTENDER self analysis - what needed to change for the better 
 
In looking for a place in society and work THE.CONTENDER had to find something he was good at. THE.CONTENDER was never going to excel at music so no there was no point learning the saxophone because it is COOL to be plain bad? Would this be a good use of my time? THE.CONTENDER must work on skills and areas he is good at or that help achieve early retirement and independence. 
 
Firstly  general traits; 1) THE.CONTENDER likes making things but dislikes finishing them to perfection (another reason not to be a musician:) 2) THE.CONTENDER 's personality is unique and what makes me but can be too abrupt and willing to take the lead. So there are areas of opportunity and other areas that need some work on. 
 
Core skills - why THE.CONTENDER is an Engineer 
 
THE.CONTENDER is a thirty five year old and found himself as an engineer by trade. As a result he likes to be practical and put things into action (a key part of this blog). Is he?: 
<ol>
<ol>
<li>creative</li>
<li>problem solver</li>
<li>analytical</li>
<li>have an end result in the real world</li>
<li>enjoy what I do</li>
</ol>
</ol>
THE.CONTENDER has always been a numbers guy and interested in sciences. THE.CONTENDER is not going to be the following though.... 
<ol>
<li>Going to be a famous writer or sports star (really only a very small % of society excel in these areas)</li>
<li>Pander to people's every needs and be the best shoulder for someone to cry on. THE.CONTENDER is a direct person who wants results. THE.CONTENDER wants to get things done which can come across as forceful and sometimes insensitive.</li>
<li>Complete things (THE.CONTENDER is a firm believer in the 80:20 rule 80% of results from 20% of the effort). Perfection produces diminishing returns and you only have a finite time on this planet (saxophone player is definitely out for me) . This is to the annoyance of Mrs C who believes in 120% all the time. She is coming around to my thinking now that we have 2 kids. A rounded approach to bringing them up instead of trying for the perceived best of everything such as enrollment of the 3 year old in every extra activity we come across. And no we are not going to make them learn the saxophone.</li>
</ol>
THE.CONTENDER must to carefully consider the use of his skills in the future planning. Can these skills be used on this blog effectively but can THE.CONTENDER make the blog readable can he overcome some of his weaknesses?  
 
Improving interpersonal and skills 
 
Lots of training has been taken to improve interpersonal skills. Here are some of the key areas that needed refinement: 
<ol>
<li>Listening to others and trying to understand their point of view (Professional training and <a href="http://www.amazon.co.uk/NLP-Workbook-practical-achieving-results/dp/0007100035/ref=sr_1_6?s=books&ie=UTF8&qid=1345560271&sr=1-6" target="_blank">NLP Workbook</a> and <a href="http://www.amazon.co.uk/Listening-Self-Teaching-Guide-Wiley-Guides/dp/0471015873/ref=sr_1_7?s=books&ie=UTF8&qid=1345560369&sr=1-7" target="_blank">Listening - a self Teaching Guide</a> books)</li>
<li>Simply my presentations (<a href="http://www.communispond.com/" target="_blank">Communispond professional training - click here for their site and blog)</a>)</li>
<li>Thinking about how other people would use any solutions that I have developed so that they buy into rather than reject them.</li>
</ol>
THE.CONTENDER was and is missing other skills. THE.CONTENDER needed a way to track and improve these skills and make sure he had life goals and objectives. 
 
Creating a life plan using PLAN DO CHECK ACT 
 
Using a planning and reviewing technique - PLAN DO CHECK ACT THE.CONTENDER got to work on a life plan (for more information on planning in business a very good book is:  <a href="http://www.amazon.co.uk/Project-Workout-Ultimate-Programme-Management/dp/0273723898/ref=sr_1_1?s=books&ie=UTF8&qid=1345560741&sr=1-1" target="_blank">Project Workout</a>): 
 
1. Plan 
       Listed my strengths and weaknesses 
       Chose the areas I want to work on 
       Listed my desires and dreams in life 
2. Do 
        Created goals and objectives 
        Made sure goals are SMART Specific that can be measured it is achievable, realistic and timed 
3. Check 
       Checked the objective are aligned to needs and plans for happiness 
4. Act 
       Cleaned up the goals and objectives 
       Created actions for each goal and track progress 
 
This keeps on changing due to our circumstances. Becoming a dad 
threw a curve ball at me - it is the most astounding of all of the "new" 
challenges I had to consider. Lets have a look at each of the 4 parts of the planning process:

PLAN DO CHECK ACT Life Objectives

THE.FUTURE : "CONTENDER you are wasting your life your time has come to relinquish your crown and come with me!" THE.CONTENDE...

CALP! Where to Live in Early Retirement?

Contender 0 Early Retirement, frugality, Happiness, Life, Planning 20:46

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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLtmQA2I2C612gK5F9lKW7uTQ6ojp-1jBXWR6rRYuxETEcAZ_jmri6HxRDwbj5efJ0Jozg1qb3H6utZlRPi5vxgddLeVV23qh_s_OXpITLr9k9lxoOIITfMoLc3hIZlGykTpN-w4Yx9LCf/s1600/BrightSideOfLife.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="209" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLtmQA2I2C612gK5F9lKW7uTQ6ojp-1jBXWR6rRYuxETEcAZ_jmri6HxRDwbj5efJ0Jozg1qb3H6utZlRPi5vxgddLeVV23qh_s_OXpITLr9k9lxoOIITfMoLc3hIZlGykTpN-w4Yx9LCf/s320/BrightSideOfLife.jpg" width="320"></a>Our tribe has a financial freedom plan in the CPH (Contender Plan for Happiness). It is one thing to be financially free but what are we going to do with it? We have developed our own CALP (Contender Awesome Life Plan). So our CPH consists of the CFFP (<a href="http://getintheringwithme.blogspot.com/p/muff-tools-and-check-lists.html" target="_blank">Contender Financial Freedom Planner</a>) and CALP :) 
 
This post is how we have chosen (with a scorecard posted below) where we want to live considering education for the kids, community, food, climate etc. Read on to find out why the French Countryside (but not too far from the amenities of a city) are right for us at this point in time. 
 
Our goals early in life were like any other young couple, have fun travel and socialise. We were discussing some longer term plans but we too busy in the NOW having FUN. We were testing the water you could say. Would we like to get married have kids etc. Work was fulfilling but what were our long term aims and how are we going to get there? 
 
<iframe allowfullscreen="allowfullscreen" frameborder="0" height="266" mozallowfullscreen="mozallowfullscreen" src="https://www.youtube.com/embed/A3oIiH7BLmg?feature=player_embedded" webkitallowfullscreen="webkitallowfullscreen" width="320"></iframe>At the time 7 years ago we were in no position to make more radical decisions about our careers but after 4 years of saving we started to see options. With the arrival of our first child my wife had a year off on maternity leave. During this time the advantages for our child were clear. My wife had time to recover and enjoy quality time with our daughter. 
 
Management books had made way for baby books and as a Dad I had started reading up on work life balance. We needed a blueprint for the next few years. Was career a key driver for us or something different? We decided we needed some balance like anything in life. We needed a new definition for what is a career and what is achievement in life.

CALP! Where to Live in Early Retirement?

Our tribe has a financial freedom plan in the CPH ( C ontender P lan for H appiness). It is one thing to be financially free but what ar...

Early Retirement with a Mortgage?

Contender 2 Early Retirement, Investing, Mortgage, Renting, Toolkit 00:01

<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGW1ourjU12rLl-4E1WbRT5aCEFfsNtzt-DKDD9bxJqPo4d721fInQuPYBN9AfixFQp_pFVukAGygJNPnj4puiWrE51-YeSBWVLPUQsihys4XOpfVNqMZrhnkfFoPOGi6_YwCtnkNn1Q6s/s1600/House.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="212" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjGW1ourjU12rLl-4E1WbRT5aCEFfsNtzt-DKDD9bxJqPo4d721fInQuPYBN9AfixFQp_pFVukAGygJNPnj4puiWrE51-YeSBWVLPUQsihys4XOpfVNqMZrhnkfFoPOGi6_YwCtnkNn1Q6s/s320/House.jpg" width="320"></a>How do you get to Early Retirement as quickly as possible and buy a property outright? Here in the UK we have an in-built fascination with owning your own 
property. Continental Europeans, on the other hand, tend to either stay at home 
for an extended period of time or rent. THE.CONTENDER has been interested in this 
debate for some time and the impact it would have on our financial 
freedom plans. In order to illustrate the differences I have posted an 
Open Office spreadsheet with some hypothetical scenarios. You can open the <a href="http://getintheringwithme.blogspot.com/p/muff-tools-and-check-lists.html" target="_blank">spreadsheet</a> in the financial section of the toolkit and have a play with the parameters. It contains: 
<ol>
<li>An example of when getting a mortgage is beneficial</li>
<li>An example when renting could be a good choice</li>
<li>An example of early retirement </li>
</ol>
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<a href="http://getintheringwithme.blogspot.co.uk/p/muff-tools-and-check-lists.html" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;" target="_blank"><img alt="" border="0" height="161" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj2_tJJBfdEcjYj8hSe6G74uOkYPZdhtdvUjHlD66iDSU-DDkHu3ga_HfgHks_i1d_8T14tBYvTCra_s6KmbaqeiUZkh0TVDkWPeTO1BasqeCXSrNbM009OsiGvcohCmAN1cKCIvm1mpU_e/s200/Muff+Tool+Kit+v6.jpg" title="PLANNING TOOLS AND CHECKLISTS" width="200"></a></div>
You can play with the parameters for savings, property cost, rental rates, mortgage, income and inflation expectations for your unique circumstances.

Early Retirement with a Mortgage?

How do you get to Early Retirement as quickly as possible and buy a property outright? Here in the UK we have an in-built fascination with o...

Investment Challenges

Contender 0 Dividends, DRIP, Ethical, Inflation, Risk, Saving 15:02

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One Black Eye Too Many?</h2>
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Today I would like to discuss some CIT (Contender Investment Themes) and challenges faced today. Investing at the time of writing is a mine field. We are in one of the most volatile financial periods in recent years. An economic crisis is ongoing in the western world while concerns about sustainable growth in emerging markets are frequent in the financial press. 
 
<h3>
Managing Inflation</h3>
 
Inflation is most often described as prices are going up because materials and labor etc are getting more expensive.... Really as I see it this is a fallacy - money is actually loosing its purchasing power as there is more of it. 
 
Like everything in life we have supply and demand balances. The more abundant something is the less it is worth to the consumer. The same is true of the current version of "money" we have in the world. We are creating vast amounts of money - mainly electronically. The more there is, the value of each unit decreases over time. In the UK I have seen the cost of a loaf of bread increase by 2.5 times over 20 years but if anything we have more global grain supply now. 
 
Inflation is a real concern in the MIT list. It affects our investment choices, pension allocation and impacts our ability to build and protect our savings. Inflation is like a stealth tax - legal theft. 
 
It is of utmost importance to plan for a significant rate of inflation and make sure you have assets that compensate for any increase in prices \ decrease in the value of the fiat currency in the future. Examples of investments that could grow at the same rate if not faster than inflation: 
 
1. Companies with strong brands, advanced distribution and manufacturing networks \ economies of scale can raise prices in line or above inflation (such as consumer goods companies) 
2. Energy and raw material producers 
3. Stable currencies and precious metals (scarcity value) 
4. Agriculture (we are not creating any more land on the planet) 
 
A note on CASH and GOVERNMENT BONDS. Cash and bonds are deemed safe investments. Bonds will pay some interest and you can buy inflation protected products. In MIT I consider these investments \ savings as dry powder for opportunities when there is "blood on the canvass": 
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"I am not so much concerned with the return on capital as I am with the return of capital." - Will Rodgers </blockquote>
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Investment Challenges

One Black Eye Too Many? Today I would like to discuss some CIT ( C ontender I nvestment T hemes) and challenges faced today. Invest...

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

Risk Versus Reward

PLAN DO CHECK ACT Life Objectives

CALP! Where to Live in Early Retirement?

Early Retirement with a Mortgage?

Investment Challenges

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