Wealth Watch

July 2016£5.95 where sold

The magazine of the Elite Investor Club

Graham rowan’s

P10 SingaPore sets sail!

P7 the Worst Market tiMer

in HiStory?

t h e i n a u g u r a l e l i t e i n v e S t o r awa r d S !

P2 Full report FroM Star-Studded oxford St

+

P14 andrew Craig on nonsense or

neuroscience

e l i t e i n v e s t o r c l u b t H e g l o b a l S o P H i S t i C a t e d i n v e S t o r n e t w o r k

2

From The ediTorw

hat a

historic

month

for the club!

our first ever

awards ceremony

was a sell-out and

went really well.

You could sense

the goodwill among all the members,

even those who didn’t walk away with

one of our Elite stars or our silver

Britannias. and I was so pleased for

Kathryn minchew that she won the

member of the Year award after all

her hard work on her book and her

business. we’ve dedicated three

pages of coverage to the main event

starting on page 4 and the back page

shows the six investors who were also

recognised on the night. Graham’s

whistle-stop trip to singapore was

also a great success, thanks mainly to

the efforts of his new partner in the

region, mette Johansson. see page

10 for more. andrew Craig is going all

woo-woo on us this month with his

piece on neuro science, while marcus

De maria focuses on the investment

rights and wrongs of ‘steve’.

By personalising the experience the

points really get driven home. we

have the final instalment of Graham’s

seven steps report on page 11, while

our a-Z of investing moves on to

Bonds on page 12. so pour a coffee

or something stronger and settle

down for half an hour of information

and entertainment..

Daphne Rowan

Editor

The GovernmenT is here To help…

3

than providing better schools or filling

in cavernous potholes? my second is a

philosophical one. Do we really want a

society where the state goes to these

lengths to police our everyday lives?

Is it acceptable for a council to bend

the law by effectively hiding these

cameras and giving no clear indication

of what constitutes an offence? To

me it’s in the same category as local

authorities using anti-terror laws

to fine people for over-filling their

wheelie-bins. It’s just another twist

of the ratchet. a tiny step towards

all of us becoming stepford wives,

doing exactly what the Big state

dictates. and don’t think it ends here.

In singapore they’re now installing

satellite-based systems that can issue

instantaneous fines if you park where

the state says you’re not supposed to.

how long before we have sub-

cutaneous chips installed that prevent

us from thinking such renegade

thoughts as I’ve expressed here?

wait. what’s that camera behind me?

There’s a hand coming out from it.

aaargh…

Icouldn’t believe my luck.

as I drove down the a316 heading

for horsham to record my next

batch of Elite Investor TV videos, I

slowed down to 40 mph just after

the saracens rugby ground. wait a

minute. where’s the big yellow box

waiting to flash like paparazzi at the

Cannes Film Festival if I dare to cross

the hatched lines at some dare-devil

speed like 43 mph?

Gone. so was the next one on the

approach to the whitton roundabout.

happy days! at last richmond

council has seen sense and given

up on its deliberate criminalisation

of the motorist as a stealth council

tax. The camera near whitton was

reversible, so one week it would

point towards the m3 and the next

it would try to catch people coming

towards richmond. It was an endless

source of amusement to me to see

the Pavlovian reaction of 90% of my

fellow motorists. They would see the

dotted lines on the road and jam the

brakes on, even though the camera

was clearly pointing in the opposite

direction. my laughter was cut short

by a darker thought. If they were so

lacking in peripheral vision and road

awareness that they couldn’t work out

the direction of the camera, what did

that say about the rest of their driving?

Talk about your life in their hands…

Proof of my worst fears came in

the weeks following my euphoric

discovery. almost every driver still

slowed down in the same three

places, even when the cameras were

long gone. The nanny state had

programmed them to perfection.

But she clearly wasn’t satisfied with

this level of obedience. Drunk with

success, she plotted her next move.

only 100% obedience will suffice.

Enter the Brave new world of the

average speed camera. The clearly

marked 50 yard measurement zone

is gone. replaced by a tiny L shaped

mark at regular intervals. The big

yellow boxes are gone. replaced by

a series of tiny cameras mounted so

high that they are out of the driver’s

eye-line. The law says they have to be

painted yellow so that drivers are aware

of them. Yes, these smaller-than-a

shoe-box devices are the correct

colour. But only Clark Kent could see

them in normal driving conditions.

weeks after the network of cameras

was installed, a small temporary sign

appeared saying ‘average speed

Check’. Then another appeared further

down the road saying ‘average speed

Enforcement’. no explanation is

offered about how this is calculated.

The stretch covered by these

concealed devices stretches from the

dual carriageway at the end of the m3

right into richmond town centre. Lots

of roundabouts. Lots of traffic lights.

Lots of side roads to turn off onto. so

where am I being measured from and

to? Is it the entire journey end-to-end?

Is it between any two cameras? how

do you factor in all the time spent

stationary along the way?

I can hear the cries now in acacia

avenue, Chipping sodbury. ‘If you

obey the speed limit you’ve got

nothing to worry about’. I understand

your point. But here are my two

arguments in response. There’s a lot

that’s great about living in Britain.

and there’s a lot that needs fixing.

so our political leaders constantly

face decisions on difficult choices.

Too many things to do. not enough

cash to do them all. my first question

is a practical one about priorities -

how does the very significant cost of

installing this system get to the top of

the queue? Is it really more important

Rowan’s Rant

BiG BroTher Comes To riChmond

Goodbye old friend? you can’t

spot the new ones…

4

Partner of the Year Avantis WealthThere’s no partner that we work

more closely with than rod Thomas

and his hove based team. some

of the investments we’ve brought

ElitE invEstoR awaRds

move over oscars.

step aside BaFTas. You’ve

been usurped by the most

important awards ceremony of

all – The Elites.

oK, it wasn’t hollywood. nor even

Park Lane. But the packed house in

oxford street witnessed the historic

first night of something big. an

evening dedicated to honouring Elite

Investor Club members and those

who serve them. I hope my words

and the images captured by amanda

Lucas give you some flavour of what

it was like to be there on the night.

make sure to save the Day as soon as

you hear about the 2017 Elite awards.

The night began with a

champagne reception as a Thank

You to all the members who joined

us on what we billed as our first

Investor appreciation Event. In the

Night of the StarS at the iNaugural

Then it was time for the Main Event. The Five Big Winners, starting with:

and can take it over if any interest

payments are missed. and third, if

we can’t recover our capital directly

from the company’s loan book

there is an insurance policy in place

that ensures we recover 95% of our

original capital investment.

end we went much further than

we originally intended by creating

the five categories of awards and

commissioning bespoke Elite star

trophies for each winner. They were

laid out at the front of the main room

and made an impressive site as the

more than 65 members present

began to wonder who had won what.

as the canapes were washed

down with more bubbly we

eventually persuaded people to

take their seats so the ceremonies

could begin. Before we came to

the announcement of the winners

I wanted to recognise some recent

serial investors and referrers. For this

we’d been looking for the ideal gift

and settled on a silver Britannia coin

mounted in a presentation wooden

box, as you can see on Page 16.

The idea of an investment rather

than consumable food or drink really

seemed to resonate with the winners

whose photos you can see on the

back page :

• Cilla and nigel steed

• Elizabeth Benjamin

• Gerry melville

• anne and michael Foster

• sunil nathwani

• Leonora Dawson-Bowling

to you recently, such as the Isa

consumer finance bond and the

special needs care bond, have come

from the avantis portfolio.

and there’s a lot more to come as

we launch an exciting new range of

pension products over the summer –

if ‘exciting pension’ isn’t

an oxymoron. watch this space…

Investment of the Year Consumer Finance BondThis was a tough call – everything we

put in the portfolio deserves a prize!

But there can only be one winner,

and there are three things that stand

out about this bond. First, it can go

in your Isa so the 9.85% accumulates

tax free.

second, the bond issuer has full

visibility of the underlying business

“An evening dedicated to honouring Elite Investor Club members and those who serve them”

peter stokes accepts the

investment of the year award for

the consumer finance isa bond

avantis founder rod thomas

was on hand to receive the

partner of the year award.

5

friends, family and work colleagues.

I know that lots of you do it, but I

don’t think we’ve been very good at

encouraging it or recognising it. so it

was great to be able to change that

with this new award. The problem

was, who to give it to? we debated

this one the longest before settling

on Kumon maths franchisee and

serial property investor Dipak shah.

The southgate-based business

owner has been a serial investor

himself in care homes, burial

plots and romanian property

development. But he’s also brought

numerous friends and family

members into the club who have

themselves gone on to become

serial investors.

Then finally, it was time for the

main award of the evening, the Elite

Investor Club member of the Year.

again, it was a tough choice. But

the panel decided that it would take

the broadest possible view of how

someone had used their membership

most effectively to progress towards

our goal of financial independence. on

that basis there was a clear decision:

Night of the StarS at the iNaugural

Speaker of the Year Dominic Frisbymoney week’s Dominic Frisby is

one of the most multi-talented guys

you are likely to meet. one of the

country’s leading voice-over artistes,

precious metals expert, author of my

favourite book Life after The state

and stand-up comic at the Edinburgh

Festival. and no mean speaker as

anyone who’s been present at the

events he’s guested at will know.

If I’d seen it in advance I’d have

given him a separate award for the

suit he wore on the night:

Then it was time for the two

most important awards of the

night, the ones that went to our

own star members.

Referrer Of The Year Dipak Shahas I said on the night, we don’t

have a multi-million pound marketing

budget like the artemis Profit

hunter or nutmeg that you see all

over the tube and the newspapers.

we rely heavily on word-of-mouth

referrals from people who like what

they’ve discovered and pass it on to

dominic frisby was a popular

winner of speaker of the year

and dressed up for the occasion…

dipak shah won the hotly-

contested award for best

referrer of 2016

eliTe invesTor AwArds

6

Strategy Is King Terry Fieldafter we’d topped up our glasses

and polished off the few remaining

canapes, it was a struggle to herd

people back into the main room

for the second half. But boy was it

worth it. Depending on the mood

he’s in, Terry Field will either refer to

himself as a management consultant

or a financial concierge. I prefer the

latter moniker, as my impression of

management consultants is people

who charge you a fortune to borrow

your watch and tell you the time.

(I speak as a former member of this

species, mea culpa, mea culpa.)

what Terry and his team do is help

you create a plan and then bring in

all the relevant experts to turn it into

the only kind of plan that matters

– an implemented one. so whether

you need a will, a trust structure,

to incorporate your buy-to-lets or

make some great investments, he

knows just the right organisation to

ElitE invEstoR awaRds

Elite Investor Club Member of the Year Kathryn Minchewshe features in my new report, 7

steps to Financial Freedom the

‘Professionals’ Don’t want You

To Know. she’s appeared on TV’s

master Chef. she’s just published an

excellent first book using her new

moniker The Pyromaniac Chef.

and she’s qualified as a

sophisticated investor so she’s

ready to take advantage of our

portfolio as soon as she can

extract some cash from her rapidly

growing business.

Kathryn’s online Pr stories have

enjoyed over a million hits and she’s

established her own Foodie network.

her acceptance speech could

have been taken from the 7 steps

report, so much had she taken the

information to heart in prioritising

her own journey. The warm round

of applause at the end of her talk

suggested that we’d made the

right choice.

introduce you to. he’s a perfect fit

with the Elite Investor Eco-system

that I described on the night, mainly

under the wealth Protection heading.

Terry’s ice breaker is to ask four

key questions from which he’s yet

to receive 100% answers from any

client, regardless of their wealth or

apparent sophistication. Do you have

a will? are your death benefits in

trust? Do you have a Lasting Power

of attorney registered in case you

go gaga? and can you name your

pension fund manager and talk

sensibly for ten minutes on what his

investment strategy is and how it’s

been going in recent years? when

you realise that over 80% of Brits

don’t have a valid will and almost

nobody has a Power of attorney you

can see why Terry always has work

to do. I’ll be telling you more about

how he can help in future issues

as we expand the range of experts

available to help you create more

wealth anD protect it from greedy

chancellors who have come to see

people like us as a soft target.

The fight back begins here!

kathryn minchew’s acceptance

speech was like a precis of

Graham’s 7 steps report

can you answer terry field’s

four questions

7

had bought his shares. he couldn’t

believe it. how unlucky could one

man be? scared to get out at the

wrong time (his confidence was at

an all-time low), steve decided not

to sell and kept his money invested.

he was like a deer in the headlights,

unable to react and get out. so he

stayed in, as he had done before.

after this event, steve’s attitude

towards the stock market changed.

he couldn’t see how people were

able to make money and he certainly

didn’t feel right about putting his

future savings back into stocks.

Years passed until mid-1990s when

there was an insanely rampant Bull

market. stocks were almost doubling

every few months. Everybody was

talking about it. By the end of 1999

it seemed impossible not to make

money so steve took a deep breath

and invested the entire £68,000 of

savings he had amassed since the

last time he invested. surely it had to

work this time?!

would you believe it? This time

his purchase at the end of December

1999 was just before a 50%+

downturn that lasted until 2002.

was that he only had the courage to

put his money to work in the market

after a huge run up i.e. after he could

see that the market had been going

up for a while. only then would he

dare get in, which he did. at the end

of 1972, he put his entire savings of

£6,000 into an s&P 500 index fund.

To his dismay, within a short

period, the market dropped nearly

50% in 1973-74. steve had put his

entire savings in at the peak of the

market right before a crash. steve

stood by and watched his savings

get cut in half. he didn’t know what

to do and was paralyzed with fear.

steve didn’t want to sell because

he would lose too much money.

Investing at the top was a bad

decision – he didn’t want to make

another bad decision and sell at the

bottom. so he decided to wait. In

fact, this was one of steve’s traits

– you could say it was his saving

grace. once he was in the market,

he never sold his fund shares.

now as you can imagine, steve

felt insecure about his decision to

make money in stocks. was this

really for him? so steve didn’t feel

comfortable about investing again

until august of 1987 after another

huge bull market. he was so insecure

about his own abilities that he had

waited 15 years before deciding to

go back into the market. In that

time, he had saved £46,000 which

he wanted to put to work. hopefully

this time it wouldn’t be like last

time. The market had been going up

strongly. again he put it in an s&P

500 index fund.

You will not believe it when I tell

you that he invested at the market

peak just before Black monday of

1987. The stock market crashed 30%

literally overnight right after steve

I recently read an article by a chap

called Ben Carlson, which I found

fascinating. not only because of this

man and his story, but the learnings

that come from his unhappy timing of

the market. I have adapted the story

for the purposes of this article.

It was about a man, called steve,

who just wasn’t very good at timing

the market. actually that’s an

understatement. You need to see

this to believe it. It’s almost as if this

man literally had the oPPosITE of

the midas touch – he just invested

right at the top of every market,

terrible timing. steve was literally

the worst stock market timer in

history. what I am about to reveal is

a sequence of dreadful timing of his

stock purchases.

steve started a job in 1970 aged

22. he was a diligent saver, a trait

he inherited from one or both of

his parents, which is quite young

compared to most people, so he

must have been quite switched on at

the time. most importantly steve had

a plan (so he thought).

his plan was to save £2,000 a

year during the 1970s and bump that

amount up by £2,000 every 10 years

until he could retire at age 65 by the

end of 2013. what does this look

like? £4,000 a year, every year in the

80s, £6,000 a year in the 90s then

£8,000 a year until he retired. he

started out by saving the £2,000 a

year in his bank account until he had

£6,000 in his bank account by the

end of 1972 i.e. after 3 years.

he had heard that good money

was to be made in the american

stock market. he didn’t know much

about it, so he decided he would

keep things simple. he would invest

for the long term. steve’s problem

The sTory oF sTeve, The worsT sToCk mArkeT Timer in hisTory!

“Steve decided not to sell and kept his money invested. He was like a deer in the headlights, unable to react and get out. So he stayed in, as he had done before”

MaRcus dE MaRia

8

That’s right – steve had invested his

life savings into the tech bubble and

it burst on him literally overnight.

Talk about the worst market timing

in the history of humanity. Vowing

never to invest again, steve decided

to save as hard as he could every

year. he was badly scarred by these

events. whenever anyone talked to

him about stocks he would almost

have a panic attach.

That’s why it is so surprising to

hear that steve decided to make

one more big purchase with his

savings before he retired. The final

investment was made in october

of 2007 when he invested £64,000

which he had been saving since

2000. The stock market had been

rising since 2003 and by 2007 he felt

that it was safe to go back in. It was

as if this man would never learn from

his mistakes. well, you have probably

guessed it – steve rounded out his

string of horrific market timing calls

by buying right before another 50%+

crash from the credit blow-up.

after the financial crisis he

decided to only continue to save and

he never went back into the market

again. so instead of investing his

money, he kept it in the bank with

MaRcus dE MaRia

“Remember that when you lose 50% of your investments, you need 100% growth to just break even. Most people don’t realise that”

almost zero return, amassing another

£40,000 in cash. steve retired in

2013 according to his plan.

But what about his investments?

what happened to them? Go on,

take a guess.

remember that when you lose

50% of your investments, you

need 100% growth to just break

even. most people don’t realise

that. Losing money is noT a good

thing to do and steve had done

this several times. he really was the

world’s worst market timer, with

his only stock market purchases

being made at the market peaks just

before extreme losses.

Do you want to know what

happened to his savings, that he had

spent a lifetime working for? Let me

tell you. remember that steve never

sold his shares. not even once.

he didn’t sell after the bear

market of 1973-74 or the Black

monday in 1987 or the technology

bust in 2000 or the financial crisis

of 2007-09. he never sold a single

share, his one saving grace.

Even though he only ever bought

at the worst time ever, at the very

top of the market, steve still ended

up a millionaire with £1.1 million. how

could that be you might ask?

First of all steve was a diligent

saver and planned out his savings

in advance. he continuously saved

every year and increased the amount

he saved every ten years, according

to his plan.

“Do you want to know what happened to his savings, that he had spent a lifetime working for?”

9

To get these and other

strategies, including my

famous Buffalo strategy, you

can download my book, The

Lunchtime Trader, now, where

you can find all the long term

stock investing strategies you

need. Just go to http://www.

investment-mastery.com/wwbook

second, he allowed his

investments to compound through

the decades by never selling out of

the market over his 40+ years of

investing. Thirdly, if he ever received

any dividends, he would re-invest

them. Finally, he had a very simple

and low cost investment plan — one

index fund with minimal costs.

obviously, this story was for

illustrative purposes and I wouldn’t

recommend a portfolio consisting

of 100% in stocks of a single market

like the s&P 500 unless you have an

extremely high risk tolerance. and

if you did want to do what steve

did it makes more sense to have

a balanced portfolio in different

global markets with a sound

rebalancing policy.

So what can you learn from this story?

when I discussed it with my team, they came up with the following:

• make sure investing in the long term is part of your

financial strategy.

• saving your money so that you have money to invest is the basis

of wealth. Too many people spend their money and don’t put

anything away for a rainy day.

• actually taking action and investing is essential. Too many people

save but don’t invest.

• Time is the great friend of compound growth. The earlier you start

the better.

• Keep adding to the pot – the more you have the more you will make.

• Don’t be perfect – just take action and you will wake up one day

a very happy person.

What did YOU learn?

Please note: If he would have used

well known long term investing

strategies, like our PCA and

especially VCA, Steve would have

been up by over £2 million.

10

singapoRE sEts sail

The first weekend in June saw

the first 2016 meetings of

Elite Investor Club’s singapore

branch. Friday evening and saturday

lunch time found Graham presenting

to groups of current and prospective

members on the topic of wealth

Creation Through Passive Income.

The venue was breath-taking. we

were kindly loaned the head office

facilities of Unity Group, the people

I’m working with to bring small but

profitable private companies to

the stock market as part of a series

of group flotations. If you thought

London was full of iconic buildings,

singapore more than holds its own.

we were in the sail, an obvious name

given the svelte, curving shape of

the 69 story edifice. and we got the

full effect from the floor to ceiling

windows in the board room on the

64th floor. we could see right across

to the daddy of all singapore icons,

marina Bay sands. That’s the three

towers with a boat on top that you

can see in the background.

By the time I finished my talk and

answered the last question from

a very switched-on audience, the

laser light show had started in the

bay. I know when I’m beat. I couldn’t

compete with showbiz on that level.

so I grabbed another glass of wine

and watched the show.

I always get a real buzz from

being in singapore, partly because

of the climate and architecture

but mainly because of the people.

almost everyone you meet is

driven, ambitious and out to make

a difference. Just like the Elite

Investor Club members I meet at

our UK events. (Except that I think

such people form a much smaller

percentage of the population in Britain

than they do in singapore). most are

sinGApore seTs sAil

expats who are at the top of their

game. They’re relocated from all parts

of the world to follow the money and

the opportunities. In the room on

Friday we had a Canadian who’s a

senior exec in a famous PC and server

manufacturer. a swiss professor who

leads his field in cancer research.

a couple from the Philippines who

export 50 tons of bananas to China

each month. a sri Lankan who exports

tea to health shops in Liverpool. a

semi-retired wealth manager who

went to school in Ponteland in my

old stomping ground in north East

England. I could go on.

on saturday guests included an

austrian lady who’s lived in singapore

for six years and in hong Kong

for a decade before that. she’s a

firm believer in the value investing

principles espoused by Ben Graham

and our own Tim Price. and she

made an interesting point about the

recent austrian elections in which the

far right candidate mr hofer came

within spitting distance of winning.

“oK we risked being accused of

being neo-nazis, but you have to

understand the level of dissatisfaction

after decades of centrist coalition

government. nothing seems to

change for the better. The middle

class keep getting worse off and it’s

uncomfortable to be seen as more

successful than other people”.

her views were confirmed by

German engineer roland, just

starting a three-year secondment in

singapore: “It’s the same in Germany.

we have a funny attitude towards

success. It’s almost as if it’s oK to

be ‘normal’ like everyone else but

if you stand out as achieving more

than average you’re not made to feel

good about it”. This reinforces two

key points I see as I travel the world

on Elite Investor Club business. The

alienation of the wealth creators

through the politics of envy and the

increasing dissatisfaction with the

existing political ‘elites’. hence the

Donald Trump phenomenon. and,

arguably, the election of Jeremy

Corbyn to the Labour leadership.

You’re in the right place guys.

and there’ll be a regular singapore

column in wealth watch from now

on thanks to my new partner in the

region, mette Johansson. so watch

out for it landing on your doormat

each month and welcome to the

only global network of sophisticated

and high net worth investors where

you can be comfortable with your

own success and learn from others

who may be even further on the

journey to financial freedom. my

thanks to mette and her team for

organising two great events and

I look forward to my next visit to

singapore in october.

11

7 stEps

Following last month’s article I

hope you’ve taken steps to sort

out your asset allocation. This

month we’re going to cover one of the

biggest asset classes of all and one of

the most misunderstood – bonds!

Don’t be fooled by the official

sounding language. a bond is quite

simply a loan. It’s usually either a

loan to a government or a loan to a

company. Companies need money to

expand their operations, develop and

launch new products or acquire other

companies. Governments need money

because politicians are incapable

of living within their means, spend

money they don’t have to meet their

promises to their cronies and hope

that there are enough suckers in the

bond markets to buy their loans at

pathetically low rates of interest. so

far, sadly, they’ve been proved right.

The global bond market is

enormous and is dominated by

america, where short term loans of

less than a year are called Treasury

bills or T bills. Those that mature in

one to ten years are T notes and the

really long term ones that can go up

to thirty years are called Treasury

Bonds. In the UK these government

bonds are known as gilts, presumably

because the government is guilty

about how little interest they pay.

what you’re buying as an investor

is a guaranteed future stream of

income, called the coupon, and the

return of your capital or principle at

the end of the term of the bond which

can be anything from a few months

to several decades. Unlike shares, you

don’t own a piece of the company or

the government, you just become a

source of funds for them. Bonds can

trade at more than their face value, a

premium, or below it, at a discount.

Like any asset, bonds are worth

The A-Z oF invesTinG B is For Bonds

whatever someone else is prepared

to pay for them. They will take into

account the interest rate or yield and

their view of inflation or deflation

in the years ahead in arriving at the

price they think those specific bonds

are worth in today’s money.

This where it can get confusing. If you

invested £10,000 in a bond paying 1%

interest for the next ten years, that’s

£100 a year for ten years.

what if interest rates on the next

batch of bonds were to pay 2%

interest? That means I can come

along with my £10,000 and buy

£200 a year income. The most I’d

be prepared to pay for your bond is

£5,000, because I now want a yield

of 2% on my capital.

so, when interest rates go up, bond

prices come down. Conversely, when

all sorts of institutions like pension

funds are told by their regulators to

switch from ‘risky’ stocks and shares

to ‘safe’ bonds, we see so much

money chasing safe bonds that the

prices go sky high and the yields

become zero or even negative! Even

some of the basket case countries of

southern Europe are able to sell their

bonds at interest rates that in no way

reflect the risk of a potential default.

so we now have this situation

where bond prices are at a forty

year high based on record low

interest rates. we all have to play

a guessing game about when the

Bank of England in the UK or, more

importantly, the Federal reserve in

america, decides to raise interest

rates. Because the likely result of an

interest rate rise will be a crash in

bond prices. any such crash will be

exacerbated by the lack of liquidity in

the market, but that’s a concept we’ll

look at another time.

In the world of loans to companies,

corporate bonds, we’ve seen a

similarly disturbing trend. Bond

prices have risen significantly even

for companies with poor credit

ratings whose bonds are given the

rather unflattering name, junk bonds.

Very small companies have been

successfully offering mini bonds, while

at the micro company level you could

even regard crowd-lending as a form

of corporate bond. In all cases you

have to balance the interest rate being

offered with the likelihood of the

company being around and able to

repay your capital at the end of

the bond period.

If you’re new to investing, the only

way you should hold bonds is within

broadly diversified funds within the

kind of asset allocation we discussed

in the previous episode. If you’re an

experienced investor, now might be

the time to research strategies for

shorting some of the major bond

markets, either through spread betting

or through leveraged ETFs that give

you the chance to place a Put option

on the bond markets.

The bond market is too big to

ignore, but at this moment in history

I urge you to approach with care!

12

thE a-Z of invEsting

Finally we come to the most

important part. and the

one that’s most frequently

forgotten. I’m sure you’ve heard the

axiom, ‘what gets measured gets

managed’? It’s exactly the same

when it comes to wealth creation.

I know how busy your life is. only

a busy person would be interested in

a report like this. Chances are, you’re

different to most people. serious

about success. ambitious for the

future. maybe a bit disappointed by

where you are today.

I’m a great believer that we

tend to over-estimate what we can

achieve in one year and massively

under estimate what we can achieve

in five years. That’s another way of

saying that real success tends to

come to those who persist.

> Put the strategies in this report

into action today.

> Follow them for a year and you’ll

see some real progress.

sTep 7 meAsure monThly

> Follow them for five years and

you’ll experience transformation.

what will keep you going

through all the daily ups and

downs for year after year? Clear,

unambiguous evidence that you are

making progress. and for that, you

need to measure.

You could do it daily, weekly,

monthly, quarterly or yearly.

Even doing so on an annual basis

will put you ahead of 95% of the

population. I suggest monthly.

It’s long enough to see some

difference in the numbers. short

enough to take some corrective

action if you’re falling behind.

once you’re into a routine,

it should take no more than an hour

a month. There are two things you

are going to measure:

• a snapshot of your net worth

at this moment in time

• an estimate of your passive

income for the 12 months from today

It’s just an Excel spreadsheet. on the

left you list all your assets including

property, savings, businesses

(use 3 x net profit as a rough but

consistent valuation metric), stocks

and shares, Isas, pension funds

and the like. on the right you list

your liabilities such as mortgages,

loans, leases, credit card debt and

so on. subtract the liabilities from

the assets and hopefully you have a

positive number!

“We tend to over-estimate what we can achieve in one year and massively under estimate what we can achieve in five years”

what level of net worth will

suit you?

measure monthly and you will!

13

reneGAde roAd To riChestake control

Get educated

Get connected

acquire assets

build businesses

tame the taxman

Measure Monthly

obviously the goal is for your

net worth to be a higher (positive)

number each time you measure it.

It won’t always happen, especially if

you’ve had funds in the stock market

in recent months. But, when you

set your sub-conscious mind the

target of seeing a higher figure each

month, you’ll be amazed how hard it

works at achieving that goal for you.

on a separate tab of the

spreadsheet create your Passive

Income Planner. across the top,

set out a rolling calendar from the

month you start. Down the side, list

the assets you own that throw off

passive income. rental properties,

whether residential or commercial

such as the care home suites we

offer. Dividends on shares. Interest

on savings accounts. returns on

bonds and loan notes as they fall

due. regular income from customers

through membership subscriptions

and the like. when you first start, this

spreadsheet may be blank. Imagine

how you’ll feel as you start to see

tens, then hundreds, then thousands

of pounds of passive income falling

due in the year ahead.

That’s the start of financial

independence. money coming in for

which you do no new work. It quietly

builds up to the point where you

realise you have choices. maybe I

only need to work three or four days

a week now? maybe I can take that

three month world tour?

From time to time you’ll have

a ‘liquidity event’ – the sale of a

business or property. an inheritance.

a maturing endowment policy.

Each of these is a trigger point for

reviewing your portfolio and seeing

what you can do to increase your

passive income. If you remember

nothing else from this report,

please remember this:

PASSIVE INCOME

=

FINANCIAL INDEPENDENCE

Focus your energy on increasing

your passive income as the fastest

route to financial independence.

The investments you’ll see in

the Elite Investor Club portfolio

are almost exclusively geared to

increasing passive income. here are

just a few websites live at the time of

writing where you can look for ideas:

this is what passive income

looks like

www.careinvestment.co.uk care home

suites offering 10% per annum for 10

years with a £52,650 investment.

www.eliteplots.com burial plots

offering a 40% uplift in 2 years.

www.healthcarebond.co.uk a loan

note funding a new care centre

offering an 18% return in 18 months*

www.guaranteedbonds.co.uk a

range of bonds and loan notes

offering 8-12% per annum returns

over periods from 1 year to 5 years *

www.elitefrance.co.uk managed

apartments in the French alps and

the Cote D’azur offering personal

use, guaranteed rental income and

someone else to do all the work.

* These investments are only open

to sophisticated and high net

worth investors – please speak to a

member of the Elite Investor Club

team to see if you qualify.

14

thE cRaig coluMn

have you

ever

had that

experience where

you finally decide

on the make and

model of car

you intend to

buy and suddenly, as if by magic you

see those particular cars absolutely

everywhere? You’ve never really

noticed them before but now they

are everywhere you look.

obviously, there’s still the same

statistical incidence of whatever the

car is, but it really is uncanny the

extent to which you now notice them

on every street corner as opposed to

how essentially invisible they were to

you previously.

The reason this happens was

discussed in a recent episode of the

irreverent and enjoyable radio 4

programme, the Infinite Monkey Cage

– What is reality? The basic point here,

now well established by scientists in the

space, is that our day-to-day experience

of existence is the tiny fraction of reality

that our brain constructs on our behalf

to make sense of everything. There are

literally millions of potential data points

available to your senses at any given

moment in time and, even with the

awesome computational power of our

grey matter, our brain is programmed

to heavily edit and triage these data

points to avoid our conscious selves

experiencing madness-inducing

overwhelm.

what many of us fail to realise is

that you can hugely help this largely

unconscious process by what you do

with your conscious focus. That is to

say that you can help your brain in

its never-ending editing and triaging

of what is going on around you by

simply making the effort to do so. The

result is that you can exert a significant

influence on what you experience as

“reality”, odd though that sounds.

our brains are designed to keep

us alive and, as a result, not very well

designed for the modern era. They

are especially attuned to the negative,

because this is what maximised our

chance of survival historically. our

brains have a tendency to focus on

dwindling resources and threats from

other human beings or animals, or the

environment generally. In the modern

era, where we are seldom actually at

risk, you have to make a concerted

effort to counteract this innate

imbalance. Doing so can variously

be described as ‘being present’ or

‘mindfulness’. Taken to the next level,

it is the idea that underpins what is

(un)fashionably called ‘the law of

attraction’ – an idea which has sold

literally millions of self-help books and

is generally rather unpalatable and

silly-sounding (for us cynical Brits).

But this isn’t about ‘energy

vibration’ or the ‘secrets of the

ancients’ or any other such hocus

pocus. It is actually about simple

neuroscience. You quite literally “get

what you focus on” because that is

how our brain works.

“How on earth is all this relevant to

my finances, Andy – you’re right off-piste

today, are you not?” …I hear you ask.

The answer is that this subject is actually

incredibly relevant to your financial

success and, more generally, success

in pretty much every other area of life.

Every day you have the chance to choose

to focus on that subset of reality that is

most helpful to your health, happiness

and wealth. as abraham Lincoln said:

“Folks are usually about as happy as

they make their minds up to be…” The

problem is that most of us don’t do this.

most of us allow what Buddhists call the

“scampering monkey” of our brain to

dash around all over the place absorbing

vast amounts of entirely unhelpful noise.

This is particularly problematic in an era

of 24/7 news blaring at you everywhere

you go and your ever present smart

phone with its social media feeds and

constant email traffic.

I wrote back in January that

99.99% of the things that will happen

across the whole world today will not

be violent murders, terrorist bombs

or someone contracting the latest

tropical disease but 99.99% of our

headlines will be about those things

because our media is stuck in that old

paradigm of our old brains.

In terms of finance specifically,

many people suffer from essentially

the same problem: those who’ve

taken no time to study it or really

understand it, think that the stock

market is horribly risky. This is perhaps

unsurprising given that the media

goes bananas every time there is

a ‘massive crash’ and that is most

people’s ‘reality’ when it comes to

investment. The 99% of the time

that a sensible, diversified portfolio

will gradually, sensibly and entirely

effectively build your wealth doesn’t

make front page news, isn’t what most

people consciously put in their brain

and isn’t most people’s “reality” as a

result – which is one of the reasons so

many people fail with investment.

The antidote to this unfortunate

reality is to be consciously selective

about where you put your focus and

to think carefully about where your

beliefs come from and how well they

serve you.

If you truly get what you focus on,

then it pays to focus on the exciting

possibilities that result from becoming

truly financially literate and on top of

your investment portfolio…

you GeT whAT you FoCus on – nonsense or neurosCienCe?

15

we are a global network of

over 2,000 sophisticated

and high net worth

investors, with bases in London,

Tel aviv, singapore and Beijing

and members in more than fifteen

countries across five continents.

Our Philosophy and Valuesour primary aim is to help you take

personal control of your financial

future so that you can achieve

financial independence and therefore

live life on your own terms. we

do that through a combination of

financial education, wealth coaching

and access to extraordinary

investments that you won’t find on

the high street.

our values include taking personal

ownership, giving information

whAT is eliTe invesTor CluB?

noT advice, covering the FULL

investment universe, a commitment

to life-long financial learning,

honesty and transparency and a

healthy scepticism. we call ourselves

Elite because we represent the

tiny portion of society that takes a

serious interest in its financial future

but we are not elitist as we have

members on every stage of the

journey to financial independence.

It’s a serious subject but we’re

allowed to have fun as you’ll see if

you come to our live events…

what is ElitE invEstoR club

“Our aim is to help you take personal control of your financial future”

An Eco System for Wealth Creation and Wealth Protectionwe want to provide you with all

the elements necessary to build

wealth and every legal means of

keeping it out of the hands of

greedy politicians! This includes

helping our UK members to qualify

as sophisticated Investors by

being members for six months and

investing in at least two unlisted

equities through a platform

like Crowdcube.

If you haven’t already joined

Elite Investor Club,

associate membership is free at

www.eliteinvestorclub.com

learn what the 1% know as part

of elite investor club

16

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thE Month in pictuREs

cilla and niGel steed (niGel

wishes he’d come now…)

reCoGnisinG memBers AT The eliTe invesTor AwArdsas well as the five Elite stars

awarded to winners in each

category, we also said a long

overdue Thank You to some of our

regular investors at the June event.

recipients of a silver Britannia in a

wooden presentation case were:

leonora dawson-bowlinG looks

pleased with her silver britannia

sunil nathwani was himself referred

by referrer of the year dipak shah

anne and michael foster

were both present for

their award

investor and

referrer Gerry

melville

last month’s cover Girl

elizabeth benjamin