Looking after oneself.

I like to take a daily walk. Along the cliffs. Except when it is raining. Then I stay in. But if it is not raining I will generally take a walk along the cliffs once a day, even if it is very windy, or very foggy, or even both! Yes, we can get both at the same time!
I am fortunate in living within walking distance of some of the spectacular coastal scenery in the UK. Which is one of the reasons I moved here from Leeds in the West Riding of Yorkshire. In July and August there are a lot of holiday makers. Of course, one mustn’t complain because they do bring money into the county where wages are low and employment scarce – unless you are a Bulgarian prepared to work long hours in the back breaking task of picking flowers at very low wages. And then, this work is by it’s very nature seasonal.
At this time of the year however the number of holiday makers is low. There still are some however. Especially in this unseasonal good weather.
When the holiday makers are not around, I do something on my walks that I do not do in high summer: Talk to myself. Not all the time. But every so often. Occasionally, this can lead to embarrassing situations. I can be walking along and say something out loud – to myself – and having said it, discover some tourist sitting behind a rock.
Today, if I had not already thought to myself: “There comes a point when a person just stops and says to themselves; “It’s about time I concentrate on looking after my own interests!” I would probably have said this this afternoon when I’ll be on the coast path.
This brings us to the above image. As stated yesterday, images are important. They get a point across using no words. As they say, a picture paints a thousand words….. Which is why I pay great attention to the selection of the image that appears at the top of every article.
Today’s image shows four of the five companies in which I have shares (stocks – for our US readers). The fifth is an investment trust categorised as a “UK equity income growth stock”. People invest in investment trusts to spread the risk. The theory is straightforward: If you have limited funds (< £1 million) it makes good sense to purchase shares in an investment trust rather than some of the companies the investment trust invests in. This is because the investment trust is in effect a pooled investment and allows an individual investor a spread of risk unavailable to them (for all practical purposes). The particular investment trust in which I have shares/stocks has a market capitalisation around £375 million and assets worth somewhat more. The dividend yield is around 4.6% - which of course varies constantly due to fluctuations in the share/stock price. “Spreading risk” is one of the fundamentals of ANY competent investment advisor. The phrase which is trotted out in the English speaking world is; “don't put all your eggs in one basket”. If I had a £ (or even $) every time an investment adviser said this in one year, I would be a very very rich man! However the origin of the phrase is not that well known – and was in fact an allegory relating the very opposite course of action to that which it currently advocates! The author of the phrase was that great American steel magnate Andrew Carnegie. Mr Carnegie used the phrase to describe is actions following the US Civil War. Mr Carnegie by then had made a fortune in oil stocks but took the momentous – not for himself but for the USA – of selling all his oil stocks and concentrating all his resources and energies (which were considerable) into his steel investments. The success he enjoyed was eventually translated into the United States Steel Corporation. It was this success that transformed his personal wealth and also the USA. Mr Carnegie described it thus: “I put all my eggs in one basket. Then I watched the basket.” In 2014 when I paid in the cheque issued by my solicitor for the sale of what had been my family home, I knew what I was going to do: After the cheque had cleared, invest precisely half (not less) into equities to increase the income I already had. This of course restricted my choice insofar as finding a suitable place to live! Fortunately I found one. Having a large (for me, but not for such as Sir Philip Green) sum of money, I had to make some decisions. Some had already been made. Selling a house is widely regarded as one of the most stressful events in a person's life. I was most fortunate for I was able to deal with the stress alone and did not have the additional stress of a wife and children! One of the things I discovered is something my late mother told me on more than one occasion: “You can't choose your family, but you can choose your friends.” During this time I found my neighbours were very helpful. People are always eager and willing to give advice. As always however the quality and sagaciousness of the advice varies. Some advice I took. Other advice I did not. One piece of advice I ignored completely – even as the person giving it spoke it – was this: “Put your money in bricks and mortar. As well as buying a place to live, buy a small place and put it out to let. That will get you some money in.” Now, this advice can be good advice. If you are advising Sir Philip Green, it indeed good advice for Sir Philip has the resources to purchase many small modest residential properties (that are most suited to letting) and proceed to put tenants in them. If you have a large number of properties you can afford to employ a person to manage them and also negotiate contracts with tradesmen to maintain them. Furthermore, if you have many tenants you will always have an income coming in for there is always a natural turnover of tenants with them leaving and then some time before a new tenant for a particular property is found. If however you have the resources to buy only one small modest residential property then you have problems. Curiously enough, these problems are borne by four of my co-owners of the flats I live in. There are eight flats in our complex. In two buildings with four flats in each building. Of the eight owners, four have let the property out and four (including Moi) are owner occupiers. From time to time tenants change and the owner suffers a loss of income which since none of them have anything approaching Sir Philip's wealth, this is a problem for them. Therefore I had a decision to make: What to do with the money. I went to my stockbroker (https://www.redmayne.co.uk/) and purchased shares/stocks in the above companies. Now the safe thing to do would have been to put ALL the money into the investment trust to add to the shares I already owned. Furthermore, the shares (in the investment trust) are held in the form of an in house investment scheme which enables shares to be bought at a special low price of a fixed £10 plus VAT plus Stamp Duty. I did not do this. Instead I pursued a more risky strategy. In modern stock market jargon this is known as “increasing one’s risk appetite”.
The reason why can be summed up in one word: yield. I required more income than the investment trust would pay. Since making the original investments, I have moved shares around and have taken advantage of two rights issues (something I could not have done were I resident in the USA – which are illegal and which were a No Deal Brexit to take place and the UK forced into a Free Trade Deal with the USA on Trump’s terms would become illegal here as well). This has resulted in a great increase in my income since January 2014.
Thus it is I am concentrating on my investments now.
Herewith the reason why: http://eureferendum.com/blogview.aspx?blogno=87159
PS: Following Madame’s announcement in the Commons this lunchtime, another article will follow later.