There are millions of investment options in the world, and they seem to be multiplying.
Looking back on 30+ years of studying and working in finance, I see a clear difference – an investment is either sexy or boring.
Or, from my perspective, there are investments that work and those that are sexy.
Sexy is a lot of fun, they are glamourous, featured on glossy magazines and all over social media. They are the talk of dinner parties, an opportunity to brag.
The catch is they rarely, if ever, work in the context of a financial plan. And when you find out they do not work, it will be too late.
The one, and only, investment objective you have (assuming a life of retirement poverty does not appeal) is to have a lifetime of uninterrupted and growing income once you stop earning.
As such, running out of money and permanent capital loss are simply not options – any investment whose value might fall to £0 cannot be countenanced.
All sexy investments can become worthless – worth nothing – a complete and permanent loss.
So, we unashamedly and steadfastly stick to the boring – investments that work.
They rarely make the headlines or become anything to brag about – they simply get the job done and are good for our emotional and financial health.
In 30+ years I have been enchanted by various sexy options, for example:
- Individual shares – various recovery stocks that did not;
- “Zeros” – the clue really was in the name, but I couldn’t see it!!
and, best of all,
- “Death bonds” – “everyone dies eventually, and you can profit from it”. After 15 years it is down 25% and inaccessible. The same money in a global equity tracker would have trebled in that time – my £50,000 could be £150,000, not the £37,500 it is – that’s real money, really lost.
And now the brashest, most dazzling, sexiest investment to date is here. It is radical, arresting and irresistible. That’s right, it’s crypto!!
And, as far as I can tell, the whole “investment” argument is: “Buy crypto! It’s the future!”.
The problem is so are many other things, they are either not on our radars or not yet invented. What you see is not all there will be.
But so what? If you have money you do not need to see again, go for it. But, if you have money you need to rely on once you stop working, I would pause for thought.
To help you get the lifetime, uninterrupted and growing income you want once you stop work, I am going to stick with the boring. Today that is four index tracking funds and a dollop of cash.
And my sole focus is how can I make it more boring than that….