Are you ready to invest in Bitcoin?

I recently bought my first Bitcoin and Ethereum. Digital currencies – or crypto-currencies as they’re also known – had not really been on my radar previously, but having read up on them as part of a freelance project I was working on, I felt it was worth investing a small amount of my portfolio in them. I must admit to also feeling a curious and special pull to the crypto landscape and I could see why some people plunge money into this market without fully understanding it.

To anyone on the crest of investing in Bitcoin or Ethereum for the first time, make sure you understand the market and the technology as best you can before you commit. And to anyone yet to encounter this mystical modern world, I’ll do my best to give you a quick and honest overview of the technology and its potential as an investment asset.

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Bit-what?

Bitcoin is effectively a new way of paying for things online. It is still very early days so you can’t buy your online groceries using Bitcoin just yet, but one day, who knows? Plenty of places do now accept Bitcoin as payment – 10,000 outlets on takeaway.com, for example, careers and education site The Makers Academy, and even a handful of UK pubs, such as The White Lion in Norwich – and it’s steadily growing all the time.

Bitcoin uses blockchain technology. In very basic terms, think of blockchain as a bit like a google document, which can be shared and seen or edited by many people all at the same time, albeit on a massive scale. Using this approach, you don’t have the traditional one-to-one relationship when sending money to pay for something. This brings a lot of benefits and transactional features we’ve never experienced before, particularly around security, democracy and shared ownership.

Internet 3.0

Ethereum uses the same blockchain technology as Bitcoin but takes it to a whole other level. With Ethereum, it’s not just about currency, and paying for things online, you can build apps and software on the platform under the same philosophical approach. While Bitcoin could become a new mainstream online currency and payment method, Ethereum could create a whole new internet!

When you think of it in such grandiose terms, it’s easy to see why some brave souls are now rushing to invest in it. You could make a fortune if you can buy up Ethereum now and sell it on for a far higher price in years to come. After all, Bitcoin has already made some people very rich. Only 8 years ago you could buy Bitcoin for just a few cents – it’s now trading at around $1000. Ethereum has rocketed from around $10 to $50 in the first few months of 2017. It could reach the heights of Bitcoin and even surpass it over the next couple of years. Equally, it could all come crashing down – there has already been one major disruption to Ethereum development which has seen it split into two opposing factions.

A leap of faith

The real difficulty is that we have no precedents for a situation like this. When you look back in time it’s hard to find anything like it that has emerged as both a technology and an investment asset. It’s a great unknown. A giant leap of faith.

The potential for Ethereum is clearly enormous and personally I do believe it could very quickly revolutionise businesses and commerce in a way never seen before, but not without its many catastrophes en route. There are new money management innovations popping up all over the place – peer-to-peer lending, property crowdfunding, high-yield bonds that cut out the middle men, banking apps – the list goes on and on. That’s all very interesting, but blockchain is potentially the ultimate accelerator of all these. And also its death knell!

Share-Gen

Consider this… We all see Airbnb as a very modern business, a new and future way of arranging accommodation and a shining example of the sharing community where we market and share things we own to reduce the cost of ownership. There are many similar examples – car sharing (BlaBlaCar), renting out your parking space or garage (JustPark), loaning out a spare room as temporary storage (StoreMates). Collectively, I call it Share-Gen – the sharing generation.

But blockchain could actually overtake and kill off many of these innovative new businesses, before they’re barely up and running. They are, after all, just another middle-man, albeit one that facilitates a marketplace in a new way, making buying and selling quick, easy and accessible to everyone.

In an advanced Ethereum world, if I want to rent my car out when I’m not using it, I won’t, in theory, need a website or service provider to manage it all for me. I can log its availability myself. Someone in my local area looking to hire a car for a day can find it online, pay digitally for the booking and receive a unique crypto key that they use to unlock the car, which then activates its use for the period of time it has been booked for. They then return it and trigger another unique crypto key to unlock the insurance deposit on their booking. Ta-dah. The middle-man is reduced even further.

Love and war

Let’s get back to investing… As I say, it’s nigh on impossible to find historic parallels to this. But personally, it reminds me a little of the gold rush era. I can foresee millions of people getting over-excited and funnelling silly money into Bitcoin and Ethereum over the next 5-10 years, not to mention various other cryptos, some of which may not even have been imagined yet. There will be digital riots galore as greed takes hold and everyone fights for a piece of it. Some will bask in their new-found wealth, many more will get badly burnt by hoaxers, fake sites, corruption and theft. And eventually we’ll settle down into a more sedate responsible online existence were crypto is the new norm.

I believe investing in digital currencies is a great opportunity but it’s also very risky. It’s an exciting and sometimes scary future to behold. As an investment it will be a crazy, volatile marketplace – again, of the like we’ve never previously witnessed. My strategy will be to invest small portions of my portfolio, holding no more than 5% at any one time, and take a predominantly long-term view with a few short-term tactical trades when the markets experience huge swings.

One thing’s for sure. Digital currencies are not going to disappear any time soon. So even if you’re not interested in them as an investment opportunity, it’s worthwhile understanding how they work and how they can enhance and improve your lifestyle as they evolve.

Money Giraffe returns! My accelerated journey towards financial independence

I was horrified to realise it’s been an inexplicable 18 months since I last published a blog post. A lot has happened in that time on my journey towards financial independence (or early retirement, or call it what you will). So much so, I’m not quite sure where to start. But in short:

  • I re-focused and drafted an accelerated plan for financial independence (FI) numerous times over.
  • I decided to strive for a halfway house, a semi-FI. By that, I mean quit the full-on corporate job and move out of London so we could own a home outright in a cheaper area of the UK. Then find a way to bridge the wealth gap that remains to achieving full FI, hopefully working part-time from home on projects I can enjoy.
  • I endured an awful job for decent money while pursuing this plan in more detail and putting the building blocks in place to make it happen.
  • I eventually found us a lovely little house 250 miles north of London that fitted the plan really well.
  • We bought the house, I quit my job and we moved.

It sounds quite simple when laid out as five bullet points like that but it feels like it’s been anything but simple.

 

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A few weeks ago we packed up our belongings in Surrey to make the move up north. I travelled back down to see out the final days of my job in London from the discomfort of a cheap Croydon hotel. I did very little actual work but the company seemed pretty insistent I was there for the full duration. To the very last, the corporate blood-suckers of modern city living know no bounds. I finally made my permanent escape late on a Friday evening back to my wife and our two cats in our new home feeling giddy, exhausted and strangely on edge.

The new home has cost us £150k. It’s a very old, quirky 2-bed terraced cottage on a west Yorkshire hillside that’s brutally and beautifully exposed to the raw elements.We could just about buy it outright with the proceeds of our house sale down south after repaying the outstanding mortgage on that place. Having no mortgage is an unbelievable relief to me. There were so many mornings I’d trudge into work thinking there’s no other way to pay the £1600 per month mortgage-noose around my neck than do this – the 14-hour daily grind.

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I also have some money invested in stock portfolios. See My Investments page for a latest summary. It won’t be enough to keep us going. I calculate that as a bare minimum I’ll need to earn around £50k over the next 10 years. (At that point I can start drawing on my pension which, given average expected investment growth, should be just about enough to cover our expenses from then on).

The estimated £50k extra needed over the next 10 years is based on a pretty slim budget. If there are big unforeseens in that 10 year period, like health problems or house problems or lord knows what, that we want to spend big money fixing, then that sum rises accordingly. Let’s face it, there are always unknowns and unforeseens in life, so I’ve calculated that the £50k should become more like £100k. That’s an average of £10k a year gross (there should be no need to pay income tax on that amount if it’s earned in a fairly regular and consistent way).

How and when I earn that I’m not yet sure but I’m confident I could sustainably earn around £200 per month from matched betting and £100 from buying and selling niche items. That’s £3,600 a year, so £6,400 a year more needed.

I’ll keep in good contact with certain old work colleagues anyway and see if I can pick up occasional freelance work through that network. Being located up north in a cheaper part of the UK and having no bills to pay means I can be very competitive on freelance rates and fortunately the nature of my work means I can do most jobs remotely.

I also believe that with my new-found freedom and, most importantly, time, I’ll start channeling my energies into new endeavours, which are likely to present opportunities to earn money that I’d never previously considered properly.

Over the last 18 months I’ve  been constantly re-evaluating these numbers, seeing how soon we could make the move, how big a hole I’d risk leaving in our finances without having a job or another form of concrete income plan to securely plug the gap. But after all this frenzied meticulous recalibrating, I settled on the figurative £100k shortfall for no great reason whatsoever, other than it just felt like an amount I could live with and take a chance on.

Giving up a well-paid job and moving to a very different part of the country without a job to go to was a little scary. But giving up that same horrendous, life-sapping, spirit-crushing job was pretty euphoric. And the closer it felt to becoming a reality the more eager I was to ‘just do it’.

Now it’s happened, now that we’ve moved, it seems ridiculously easy and straightforward. I feel I could and maybe should have done it sooner, taking more risk. Having an even bigger shortfall in the finances would have been a minor sacrifice, given the liberty, release and freshness I’ve felt since the big move.

Yes, it’s going to take some adjusting. And I may struggle to find a source of income at times, especially if I’ve chosen to do no work for a year or so within that 10 year period. But hey, we don’t have kids so the risk and responsibility is far less than if we did. Plus, I believe in my resourcefulness to earn a crust in an interesting and experimental way, one that keeps me away from the mundanity of office life and commuting routes.

Most FI-seekers I’ve obsessively read about are a lot more cautious than this. They tend to save up way more than the projected sum they need for a safe margin on their passive investments, working years after that passive income outweighs the household expenditure to be absolutely sure they have enough in the tank. I really didn’t want to wait that long. I don’t want to spend another 5 years labouring to build up a super-safety net. I’d rather get out early with some risks on my shoulders. I craved even half an escape so desperately I guess.

I’m glad we’ve taken the plunge. For now it feels very very right. Everyone is different and I would stress to anyone going through a similar journey towards FI that it is exactly that – a journey, a very personal journey. Like all long life journeys, they evolve and have surprises, some good and some bad. You need to navigate them, refuel and take a different route if there’s a roadblock. Don’t get overly fixed on one plan, one route to FI or one solution for getting there. Stay open-minded and be flexible with your options. Above all, be brave. Or you might live to regret it.

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Hats off to the slackers! The false virtue of hard work‏

My dad worked damn hard his whole working life. He had to, to raise us as a family. He often had three jobs at a time to make ends meet and worked 7 days a week for months on end. As far back as I can remember he’d say things like “there’s no work in him” when talking about a colleague who was taking it easy on the job. And “I’ve never had a day off ill in my life” was his most-heralded badge of honour.

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It rubbed off on all of us – his values, his attitude to work and money, his fear of being laid off and penniless with no safety net in the bank with which to keep the family fed and watered.

I’ve always been very committed to the employers I’ve worked for, largely through that same fear of not having a future paycheque come through the proverbial door, to the point of exhaustion and near-breakdown on two occasions. My sister too. She’s worked tirelessly in a range of jobs, sacrificing her health many a time for the success of the company she worked for, and she continues to do so.

Time after time

In my current job, I see the same proud drive in some of my colleagues. They make a point of emailing late at night and early in the morning, showing they’re forever plugged into the corporate machine. They’ll say with fake indignation (and intended pride) they had to work all weekend on a report for the board or a new budget forecast for the MD.

It’s a false prophecy. The fake angel at play. I know most of the time there’s no need for them to work such hours, let alone do so without saying any of this to their boss, the one person who should be aware.

Then there are others who appear to be on easy-street. They roll up half an hour late, always leave on time, take a full hour for lunch, never work at home late into the night and have the carefree demeanour of a holidaygoer strolling along a deserted Caribbean beach.

I used to secretly sneer at these people. “No work in them” I’d say to my wife, echoing my dad’s often-used put-down from decades earlier. “Lazy sod. He can’t take the pace.”

Hats off

Not anymore. I admire these people. I’m fascinated to see how they’ve managed to cruise through on roughly the same career and salary trajectory, never getting stressed to the point of sickness or being cajoled into taking on more project work in a week than there are waking hours. They’re the smart ones!

And me? And my family?! What on earth have we been doing? We’ve been killing ourselves in the name of corporate gain. And for what? You don’t get more money at the end of it. In fact you get less. You end up reducing your hourly pay because your hours go up, for the same monetary reward. You end up saying “no” to nights out with friends and weekends away with your partner or family because you need to burn the midnight oil on a high-profile business pitch. You might get a nod of appreciation. But so what? Where’s the real value in a quick smile of thanks? Bugger that.

With my plans for financial independence now well and truly up and running, I’ve looked back and seen this work behaviour from a different perspective. I’ve been questioning this so-called ‘work ethic’ and the benefits it really delivers. And the answer is quite simply “none”.

 

 

5 ways to unleash your entrepreneurial spirit

We all tinker now and again with the notion that a genius invention or innovative new business idea is lurking deep in our brain, just waiting to be let loose. But is it really there, or are we simply playing with the dream of becoming the next Albert Einstein, Henry Ford, Walt Disney or Steve Jobs.

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There’s only one way to find out. Unlock the entrepreneur that lies within, in 5 easy steps.

1. Be wild, live free: See the world from every angle possible. Swim with the dolphins, live rough on the streets, volunteer for a charity, do bar work, get drunk, get high, jump out of a plane. Just not all at once. Strive to experience (almost) everything. There is always something new to be found and you need to give yourself the best chance of finding it.

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2. Change the world, not your bank balance: If you want to create the next big thing to become the next big thing then you’re doomed to fail. You’re missing the point. Start by thinking ‘how do I transform the lives of millions people?’ Strike on something that does that and you’ll get all the fame and reward you’d ever dreamed of, but don’t go for the fame and fortune first else you’ll be blind to the most bold ideas.

3. Emigrate: Putting yourself in the right environment, one that engenders creative thinking and champions boundary-pushing will help your mission no end. Some countries are simply better at producing entrepreneurs than others. The developed countries fare best. The US, UK, Canada and Australia fill the top four slots in the Global Entrepreneurship Index. Scandinavian countries figure high up the list too. Only two countries from the Asian world feature in the top 10 – Taiwan and Singapore. Economic growth giants Japan and China are threadbare when it comes to mercurial innovation and entrepreneurial genius.

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4. Make monumental mistakes: Think of it as progress. Make bold decisions and try everything – it’ll help you learn a lot quicker, it’ll shape your world-view and it’ll help break down the barriers of bias that are otherwise preventing you from seeing the light.

5. Don’t give up: The adage 1% inspiration, 99% perspiration was never more true than right here right now. Great entrepreneurs get kicked in the teeth time and again but they get up, roll with the punches and keep on fighting no matter what. Rejection is a minor hurdle to them. It will not dilute their determination. It is more likely to give them strength and a greater resolve to push on.

A finance fetish you’re not allowed to understand: Reporting on the Budget

Working in finance means you have to be obsessed with the Budget – and its little sister speech, the Autumn Statement. This year’s Budget, given that it was a platform for the government to deliver crucial pre-Election fodder and entice the voting public to swing Tory, upped the stakes even more.

osborne mania

So did the world stop still for those 64 minutes when the Chancellor announced the UK GDP projections, unleashed his strategy for reducing the national debt and unfurled his spending plans for the next 12 months like a royal banner? No. To most it is a non-event. But to anyone working in finance or media, it is everything. You see, we’re a weird bunch and we listen to no one when told…

A closed shop of fanatical fuddy-duddies

It’s a bizarre time of year. The most powerful industries on the planet – finance, media and politics – swarm in unison to soak up every word the Chancellor utters and lather maniacally at the government’s detailed future spending plans. Meanwhile, literally no one else cares.

The great British public, the people to whom it should matter the most, can’t be bothered. They’re not interested or engaged. They understand very little of the jargon and macroeconomic bamboozlings. They have far more pressing concerns in life, such as how their kids are doing at school, how they’re going to pay the bills, why they’re having relationship problems, or whether they can afford to get pissed on Saturday night and afford a kebab on the way home.

Fallacy rules

Working in finance marketing, I am sucked in to the whole charade. On Budget day, we all clamour round our desks early in the morning, forming an impromptu ‘war room’. We tweet pictures of ourselves in said war room. Then we scan the war room pictures of every other finance company on twitter. We’re all the same.

We compile summary notes of Budget predictions from all the tier 1 newspapers and media outlets. We gather quotes for later use and discuss the angles we will take as a brand in the financial services industry. If George says X, we will say this. If George says Y, we will say that.

Newsroom war room

We have it all covered. We’re so clever. We’ll be the fastest out of the blocks with our reaction. We’ll be first to produce a customer email that explains all of the key salient points from Osborne’s speech and highlights some of the possible ramifications for them. Except we don’t. And we’re not that clever.

A load of rubbish

Every finance company under the sun produces the same old guff and no one can convey it in a way that gains genuine cut-through and gives real meaning to the masses. Twitter is awash with re-tweets of the Chancellor’s big announcements and boring, safe corporate opinion on it all. ‘Osborne’ is trending, as are ‘GDP’, ‘lifetime allowance’ and ‘inheritance tax’. They’re trending because there are so many people from the same old industries chewing it up and spewing it all out again. The real world is nowhere to be seen. They’re in work, down the pub or in a queue at Asda.

Admittedly, some brands do a better job than others. A few pieces of marketing material are slick, swiftly produced and digestible. But the majority are achingly slow to emerge, covered in caveats and riddled with linguistic snakes.

But most importantly, they don’t relate to real people’s real lives. For all the Chancellor’s blabber about “hard-working British families” and “back to basics”, he – and we – fail to truly connect what’s in his head with what it means to the man and woman and child on the street. It doesn’t help them patch up a failing marriage or tell them they’ll be able to afford a kebab on a Saturday night or even if they’ll be able to pay this month’s gas bill.

The real Budget

Now the dust has settled we can calmly traverse the new paths the Budget has laid out before us. And in truth, there’s not a whole lot of difference. A few more quid in the pocket for the majority. Less for the super-rich. A smidge of help for late teens wanting to save for a house deposit. And a word of warning for anyone with massive pension pots.

That’s it. Job done. Move on. Nothing more to see here. See you at the polling stations in May. Or maybe not…