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I also answer questions asked by people on Quora - they contain some useful money insights and many of my comments below first appeared on this platform.

Mark Underdown

Financial Planning Consultant, Small Acorn Money

How old do you have to be to start your retirement fund?

As early as possible; yesterday would have been better.

In the UK you are able to start a pension from birth. Your parents or grandparents can contribute up to £2,880 pa and you will receive basic rate tax relief, making the full contribution £3,600 gross pa.

These funds are also able to grow largely tax free.

It is perhaps one of the best financial choices you can make for your children.

Hope that helps.

This question and answer originally appeared at Quora.

How can I make 50k in a year?

Question: I’m a sophomore in college, therefore I have no degree yet. How can I make 50k in a year while still being a full time student? I’m specifically interested in making passive income.

The passive income you are looking to build is actually very active income – It should more accurately be described as creating smart income (income you work hard and intelligently for by building helpful and useful products and services etc. and marketing them properly).

That being said if you build up a web based business you can genuinely ‘earn money while you sleep’, but it’s only because you have put the work in either previously, or while you were awake.

Two great resources for all things related to building small businesses are The Smart Passive Income Blog and EOFire Business Podcasts – Daily podcast interviews with today’s most successful Entrepreneurs.

These will take up a great deal of your time and it may well be better for you to concentrate on your degree (spend the extra time available to get the best possible degree, write extra research reports and send them to people in your proposed field, network in your proposed career; basically try and get a jump start on everyone else going to Uni).

That is most likely to provide an immediate benefit to you in your early years after leaving Uni.

I hope that helps and good luck.

This question and answer originally appeared at Quora.

I’m 30 and have virtually nothing saved for retirement. Will I be working until I’m dead?

Well to be blunt, it largely depends on when you will die.

If you live until you are say 100 (which is quite feasible), then you will most likely be physically and/or mentally unable to work.

You really must start saving some money on a regular basis, learn about investing and perhaps try and create a side business to provide extra income.

If you don’t take action today to provide for your future prosperity, you may find that you have to rely on your children. Make sure you don’t outlive your money.

You should have 30+ years to go, so make some sensible financial choice today, but don’t worry about it too much – a lot will change in your life between now and retirement.

You may also feel like only having $7,000 is bad, but it’s a great start, so many in this world are in debt, and so many more earn so little they will struggle to save that in a lifetime.

You have a good base to start from; but it’s always best to save as much as you can as soon as possible as compound interest is more powerful the longer it is able to work.

You will also most likely feel like you are making no real progress for 10 years or so, but this is normal. a Graph of compounding returns looks as follows:

This is a chart showing the growth of £10,000 if you achieve a 7% pa compounded investment return. This should illustrate how compounding of returns has a greater impact the more money you accumulate.

It also shows that when you are halfway there, you will feel like you are still a long way away from your goals.

Save as much as you can now, learn about investment risk, invest wisely in a diversified manner, minimise taxes, maximise tax breaks and make sure you don’t pay too much in fees.

I’ve added some links in the answers to some of my earlier articles that you should find helpful for building your general understanding (although my content is UK specific, not the US). The most important thing is your own behaviour and how much you can save.

I hope this helps you and good luck.

This question and answer originally appeared at Quora.

My mother, age 63 is receiving a $100K life insurance payout. She has no income and little saved for retirement. What should she do with the $100K?

Firstly, I’m sorry to hear about your family’s loss.

In these times the most sensible thing to do is to take your time.

Don’t make what could be irreversible financial decisions if you aren’t in a clear financial mindset.

Put the money into a few bank accounts on a temporary basis and patiently think about what to do with the money.

I usually favour each person learning about how to invest (as professional advice fees can soon add up), however in this situation, given the amount of money and your mother’s age – you may be best served seeking professional advice in the US.

I’ve heard a few things mentioned from other posts, but the short answer is that no investment or solution is going to be perfect. Each will have it’s unique advantages and disadvantages which you should take the time to fully understand and then decide what fits in with your mother’s own personal needs.

A life annuity, whereby you hand over the cash in return for a insurance company promised lifetime income, has it’s merits. However they have been affected by low interest/bond rates and I feel that generally, your mother will probably be a few years too young (at age 63). The rates will tend to get better with age. You should however use this as a benchmark to aid comparison with other options.

In general, investing into a diversified income producing portfolio (dividend paying shares, commercial property, corporate and government bonds) should provide a reasonable long-term income level, however with the size of the funds you may not be able to financially afford fluctuations in income levels, or the financial stress in market downturns may well be too high (causing paper losses to become very real ones).

It may well be that the best thing to do is find a variety of ‘good’ interest paying bank deposits (I say ‘good’ interest in relative terms – we all know they are pitiful) and adjust expenditure downwards for a few years until a better option becomes available.

I would advocate caution, patience and due diligence at every stage of the process before deciding where to invest this money for your mother.

A reputable financial planner would be happy to discuss these options with both you and your mother present at a meeting. With the size of the fund, some may not be able to help you, but perhaps do a local search and try and speak to a few different financial planners to get an idea.

I have a guide about what to look for in a financial adviser. Whilst it is UK focused, it is a general guide, so you should find it useful.

Here are a few websites which may help you (but please note that I am not a US based financial planner, so unfortunately I cannot vouch for anybody).


Fee-Only Financial Advisors Home

Find a CFP Pro

I hope this helps you and I wish you and your mother all the best.

This question and answer originally appeared at Quora.

I made $5M from selling my startup, what’s the best way to invest this money?

Firstly well done!

I’ve written a little about how suddenly receiving a large sum of money can be a little bit of a shock or overwhelming. You will no doubt suddenly feel like you have all these extra things to think about that perhaps didn’t apply before. The article is called ‘Surprise! You’re Rich. Now What?’. I hope you find it helpful.

I would firstly say that you should take your time. There is no need to rush your financial decisions.

You should then take some time to have a realistic appraisal of your life. Now that you have this wealth, what do you want to do with it? How do you wish to use this money for your life?

As a successful entrepreneur, your first question to ask is whether you wish to continue investing this money in yourself and your own business ventures.

Without knowing more about you, your situation and your views, I can only put myself in your shoes and suggest that I would do the following.

Firstly, I would split up this capital.

I would perhaps use a third for lifestyle and family related assets – this would be a healthy cash reserve (few years expenses), help out family and buy a home etc.

I would then set aside a third to fund future business ventures. The money doesn’t have to burn a hole in your pocket (you don’t have to go into the next business idea you have), but you will probably find in a few months/years time, you will probably have other business start up ideas you wish to pursue. This is how you will continue to create and build wealth.

The final third, I would invest into a diversified portfolio and in a cautious manner. As other funds are set aside for more risky personal business investment, I would simply aim to maintain your wealth.

(I would say 1/3 into each category, but this will change depending on your own personal situation. Perhaps it could be only 10% to future businesses, 30% to lifestyle and family, and 60% to investments. You should take the time to consider what is right for you.)

Maintaining wealth sounds like it’s easy and not a very ambitious goal, but this isn’t true. Truly maintaining your wealth against the impact of inflation, fraud, excessive fees, high taxes, theft, speculative mania, panic, confidence tricks, bankruptcies (I could go on), is no mean feat.

I would suggest there are a few factors to maintaining your wealth:

  1. Effective diversification – across businesses, assets, geographic locations and political environments.
  2. Tax minimisation – don’t go into any complicated tax avoidance type schemes – as they are often later deemed to be evasion – but legitimately and reasonably ensure you don’t pay too much tax.
  3. Fees – Make sure you don’t pay too much money in investment and professional related fees. This means you should take the time to learn about financial matters – but do take the right professional assistance when you feel it is appropriate. Whilst professional advice is costly, it’s far preferable to amateur advice!
  4. Prudence. At all times, try and be prudent about how you calculate your wealth. This will help you to remain prudent. It’s quite easy to be misled into assuming you are richer than you are – with the result being you consume your capital. There is a general rule of thumb that you can take 4% from your investments and use it as income for many years (your own rate is dependant on many factors). Having $5million sounds a lot different to having $200,000 pa, but they are essentially the same thing.

Bob Parker has provided some good investment specific views, so there is not much need to repeat it – I would only add the following.

Investment risk is about volatility and probability.

Successfully building up and selling a start up business is very high risk – the likelihood of you actually being successful is quite remote and therefore you have actually built your own wealth in a very risky way (i.e. if you kept trying this you would statistically fail more often than succeed).

However you have probably not really been exposed to volatility in these endeavours. Volatility is the measure of how the daily traded prices of a company or other asset change. I’m sure you didn’t receive a daily value of your own company; but instead were solely focused on building the fundamentals within your business on a daily basis.

When you become an investor however, these assets are usually very liquid (you can buy and sell them every day if you wish – not advised!). You will see the value of your portfolio at all times. This can make you feel like a genius when your portfolio increases significantly, or pig sick when it declines in value. Imagine how you would feel if you received a sale price for the business you were building each and every day?

When dealing with volatility you can do a few things:

  1. Avoid it. I wouldn’t recommend this because the trade-off is that you basically receive no real return on your money.
  2. Manage your personal timescales. I would refer back to my earlier points made about your personal goals and make sure you set aside the right amounts of money for other purposes. Don’t put yourself in a financial position whereby you need access to funds when markets are experiencing a downturn.
  3. Manage your behaviour. Take some time to find out about what type of investments you would be comfortable with owning. Try and make sure you keep an eye on your portfolio, but don’t look at it too often, or don’t become a data addict (I’ve written about this previously in an article called ‘No Monkey Business’. It is very hard to do this in our modern information age).

Ultimately, you will experience volatility and uncertainty in managing your wealth. As you have created considerable wealth, you should focus on keeping it and therefore prudence and caution would be wise.

I hope this helps you.

This answer first appeared here.

I’m 30 yrs old. Have no debt & a house paid outright. I have $100k to invest for 30yrs/retirement. How should I do it?

I would firstly say that there is no need to rush.

Take a year to learn about investing to ensure that you understand the decisions you make and the investments that you will select.

If you don’t wish to go through the process of learning and understanding, then you will need to find a suitable professional in the USA who can help you (i’m assuming you are US based).

My take on this is that over 30 years the fees on professional advice can be quite high (as i’ve outlined in an article called ‘don’t be a fish’. You can therefore become more prosperous with a DIY approach (with the huge caveat that you must be willing to learn).

To get you started I would suggest the following are steps to consider:

  1. Consider your personal goals – Before you start investing you should think about where you want to be in the future, consider shorter term goals to aim for, do you need these funds for other purposes etc. Where do you want to be in 5/10/30 years time – it helps to try and visualise these and then match your financial choices to your personal goals.
  2. Diversification – learn how to diversify your investments across a range of shares (which can be achieved very cheaply and simply via index funds – see Vanguard), plus across a range of asset classes – shares, bonds and property for example.
  3. Dollar cost averaging – Just because you have $100,000 to invest, it doesn’t mean you must invest $100,000 today. You could take your time to invest and gradually allocate your funds to financial markets – be patient and cautious, you don’t have to always achieve the market return to achieve your own personal goals.
  4. Over a 30-year period of time, you are generally more able to accept volatility (fluctuations in market prices) than someone with a shorter time horizon. This would indicate that shares should generally form a very high part of your portfolio. You have to be careful and make sure you don’t panic when there are downturns (which will be classed as crashes in the media). If you can accept and embrace volatility you could end up with higher returns, that can make a huge difference to your wealth in the future. For example, $100,000 with a compound annual return of 5% pa over 30 years becomes $432,000. But if you achieved 7% pa over 30 years it becomes $761,000. Quite a difference! However you need to think about how you will react if you see a portfolio worth say $300,000 one day and then 6 months later you see it worth only $150,000 . . . I expect like many, you would feel rather sick, but the truly successful investors firstly don’t panic and sell, but also use spare cash to invest more on these occasions. You will never know what type of investor you are until you experience it – so take some time to get an idea of your own risk profile and behaviour.
  5. Tax – pay as little as possible without going into schemes that are more likely to result in enforcement than tax saving.
  6. Keep saving – How much you save is far more important than the level of investment return you will receive. Make sure you select a tax efficient, low charging, and personally appropriate portfolio; but remember to keep spending less than you earn and saving up – You may find you can shed years off your intended retirement/financial freedom goal of age 60 – perhaps even becoming financially free at age 50.

Finally, focus on making sure you make sensible financial and investment choices, but don’t become too worried about money. You are already vastly wealthier than most of the people in the world and should take comfort from that fact. I have seen people who have net worth of $1 million plus and still don’t feel like they have enough money or financial security (which I find a little sad, although entirely understandable in our complicated and ever changing world).

Good luck

This answer first appeared here.

What is a good piece of random advice?
God grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.
Reinhold Niebuhr

Read more at: Reinhold Niebuhr Quotes at

This answer first appeared here.

What does invest every month mean?

Invest every month has two main benefits:

  1. It uses the PAY YOURSELF FIRST principle. If you commit to putting money aside every month before you get a chance to see it (and spend it) you are less likely to miss this money and will get used to saving it each month.
  2. DOLLAR COST AVERAGING – Rather than trying to time the market, you continuously put aside the same amount of money each month. Joe Homan has already provided a good answer for this and you could also take a look at this explanation on Investopedia.

How much you set aside to invest each month is dependant on your cash flow and personal goals, however as a general rule I would say that you should put aside 10% as a minimum for future financial survival, 30% if you want to be financially comfortable and 50% if you want to have financial freedom at a younger age.

This answer first appeared here.

What is a good way for me (I’m almost 18) to start investing?

This question and answer originally appeared at Quora.

I’ll also be starting college in the fall and helping my parents pay for tuition. They will be willing to pay for most of it, which means I will have some extra money to put towards investing, but only a couple hundred dollars. I just want to learn about investing now while I’m young.

Personally, you should make good use of the University or local library and spend this time reading and learning about investing.

There are many ways to invest and speculate; the right way for you is dependant on your own goals and personality traits.

If you want to use the money to gain practical experience of setting up accounts and buying shares for example, then you could use this as a learning experience.

From a financial perspective however, you would be better off keeping the money aside in the bank (you’ll probably need it soon – even if you don’t expect to).

Additionally there is likely to be ways to use this money to improve on your own education – additional books, courses to accompany your degree, which will provide a better payoff than investing in shares.

This answer first appeared here.

What should I invest $50k in?

To answer that question you need to think about what it is you wish to achieve, what your timescales are, what other needs are there for this money, what your personal views are, how you will respond to market fluctuations (your risk profile).

You need to think about these things and clearly set your goals and parameters before deciding where to invest.

In general, I would suggest you think about a diversified portfolio made up of dividend paying shares, corporate bonds and commercial property. The allocations would be based on your goals, views and objectives.

You should ensure you understand what you own, try not to overcomplicate things and make sure you don’t pay too much in fees.

This answer first appeared here.

I have $400. What can I invest in?

This question and answer originally appeared at Quora.

Don’t waste your time investing in anything other than your own education with that size of fund.

For example, you could use it to buy a number of books in your field that will enhance your earning capacity – and then save the extra earnings and invest that continuously every month.

If this is all the money you have in the world you need to keep it in the bank – just in case, and then save up some more money.

This answer first appeared here.

I read a lot of books on investing and don’t seem to be learning anything. Should I quit?

This question and answer originally appeared at Quora.

You may be reading too much variety or the wrong types of books?

Most of your investment success will come down to your own behaviour rather than the techniques of investing.

How much you save will be far more life changing than how many investment terms and techniques you understand.

Don’t fret – much of the investment world is filled with noise that will be irrelevant to your own needs and personal goals.

You should think about what you are looking to achieve in your life and how your finances will help that end, before you even pick up another investment or finance related book.

You also may need to just take some more time with the books – reread them etc.

Good luck.

This answer first appeared here.

How much money does a 40-year-old person with a wife and 2 kids need to retire safely in Singapore?

This question and answer originally appeared at Quora.

Wife is not working and both kids are around 10 years old. The lifestyle is simple. Just eat to live for the adults and enough for children’s education. No luxury needed. Fully paid property.

Assume the 40-year-old Singaporean has been burnt out by a stressful job and needs to rest indefinitely before his health breaks down.

You’ve already received a lot of answers about the financial side of things, but ultimately the number is unique to each person – calculate how much you personally spend each month, add on 10–20% and then very roughly you can divide the number by 4% (so if you need income of $40,000, you need capital of $1,000,000).

This is very approximate and the amount required is dependent on investment returns, taxes, inflation, fees etc.

In terms of lifestyle, Singapore is one of the costliest places in SE Asia (although safe and clean etc.). As a retiree you could reduce your expenses by spending at least part of the year in other regions (I find both Penang and KL in Malaysia pleasant and interesting) or you could go to places like Thailand and Bali.

You very well may be feeling like doing absolutely nothing – but I expect in a year or so you will be bored of full retirement and will probably end up doing some form of work anyway (whether that is entirely different to your career, part-time, or a small business etc.).

A change is often better than a rest.

You will find the book Twenty Good Summers very helpful.

I hope that helps and good luck.

This answer first appeared here.

My fiancé is inheriting 5.2 million dollars. What should we do to ensure that we never have to “work” again?

This question and answer originally appeared at Quora.

We are stressed to the absolute max, and overwhelmed beyond comprehension. What do we do to secure an 10k–12k++++ monthly net income and fix our horrible Credit While still getting a house, dream cars, and helping out our families? Business ideas? Franchises? We’re lost at 22 and 24 years old. HELP!

(I’m making the assumption that this is US dollars when discussing your wealth.)

Firstly you should try and relax.

Having the perceived problem of too much money is far better than the very REAL PROBLEM of too little.

I understand the vast amount of options, informations and decisions you will face can be overwhelming – but they will only be so if you try and make all the decisions at once and don’t take your time.

Just be patient and let the wealth you have received sink in – get a little used to it before making your decisions.

Forget about your horrible credit rating – you should never have to borrow money ever again. Make sure you clear any outstanding debts as soon as possible, but make sure you look at all the details and don’t incur early repayment penalties etc.

Before thinking about all the lifestyle assets and purchases you would like, you should consider properly arranging investment and business assets.

At the age of 22/24 you should still think about a business/career/projects etc. You can choose these purely based on enjoyment and interest and use your capital to top up your income to your needed expenditure level.

Before you go putting lots of your capital into your dream property and cars – I would suggest you rent them for a year. After that year you can decide whether they still remain your dream choices – I would be surprised if the allure doesn’t wear off a little.

You should think about investing at least half of your wealth into a sensibly constructed and patient investment portfolio. You have enough wealth; there is no need for you to chase more and risk losing your shirt. All you need to do is maintain your wealth against inflation, taxes, poor investments, overconsumption etc. (that is actually no mean feat).

At all times remember to diversify (across companies, across asset classes, across investment managers and tax structures, across institutions, across banks, across countries, across professional assistance).

If you do this with $2.5million, you can reasonably expect to withdraw $100,000 pa (using the rule of thumb of 4%). You have to be careful here as investment yields are generally quite low at the present time and you will have a very long life. I also haven’t mentioned taxes which will be largely dependant on where you intend to reside and how you structure your affairs.

When deciding how to help your family, be very careful about how you help them. Make sure it is constructive help and consider regular gifting rather than lump sums – perhaps set aside some capital into trust and use the returns from investing to help your family meet study costs, or start businesses etc.

Take some time to learn about personal finance, your behaviour and investing. Education is what will protect you from making too many errors with your money.

Take you time to find the right professionals who will sit on your side of the table and genuinely help you. You should interview a number of people before making any decisions about this.

Finally, whilst other professionals can provide input in many ways, it is ultimately your own money and therefore it’s important for you to remain in the driving seat and truly understand the decisions you need to make.

I wish you luck and I hope you have found these comments helpful.

This answer first appeared here.

Why does credit card agreement come in multiple pages, with really small fonts?

This question and answer originally appeared at Quora.

If this stuff was written in a way people could understand I expect the amount of people taking out credit cards would decline by 99%.

I’ve written about this elsewhere – I really think we should be restricting credit cards and enforcing honest marketing and T&Cs – but I won’t be holding my breath!

This answer first appeared here.

How can I adjust from being an extravagant spender to a frugal spender?

This question and answer originally appeared at Quora.

I would say try to avoid advertising and marketing as much as possible – say no to cookies, try to read things on the web ad-free, try to avoid television and glossy magazines etc.

You should also analyse what areas you are spending extravagantly on – is it clothes? Eating out? Drinking or other habit etc.?

You should go through the painful process of noting down your last years expenditure on different items – this will take some time and will no doubt be frustrating but it will be valuable.

Once you have this information look at how much you spend per year on items than per day/month – the numbers are far larger and thus more likely to jolt you into avoiding these types of purchases – we don’t necessarily miss £200 per month – but we would sure miss £2,400 a year (although it’s exactly the same thing).

I would also suggest seeing how much value you have received for your purchases – is it clothes you never wear, meals out you can barely remember etc.

I have written a few blog posts you may find helpful:

I would also second all of Betsy’s helpful comments, so I won’t add any more to the answers.

I hope that helps

This answer first appeared here.

If I had $300 to invest every month, can I make it $300,000 by the end of 4 years? What are my options? How do I educate myself about my options?

This question and answer originally appeared at Quora.

You’re looking to receive a 200% compound annual return.

You can’t realistically expect to earn this from an investment – you would be more likely to lose your money than turn it into $300,000.

From an investment perspective, you need to significantly adjust your expectations -they are unrealistic.

If you are committed to turning that money into very large amounts of capital, then you can’t be an investor but you need to become a business owner/operator.

That’s very different to investing. I would suggest reading as many small business books as possible – Perhaps you can start with the E-Myth?

I hope that helps

This answer first appeared here.

What is the single most important thing/ability/skill that can help you get rich?


There are many different skills to learn and many different ways to become rich – but the most important is genuine ambition.

This question and answer originally appeared at Quora.

What’s the best 6–18 month investment at the this time for 15k?

This question and answer originally appeared at Quora.

With such a short time frame you shouldn’t be looking to invest, but rather to simply find the best deposit rate available.

If these funds aren’t needed for a longer period of time, then you can consider investing but your mindset needs to be significantly longer term (10+ years).

This answer first appeared here.

What is the difference between socialism and capitalism?

Socialism is where the government owns capital goods – the means of production. They would also tend to try and control our consumption via regulations and taxes.

The extreme end of Socialism is Communism is where the government owns everything – production and how much you can consume and when etc.

Capitalism is often misunderstood.

The Capitalism that we have experienced in the world is quite fascist – consumer and capital goods are privately owned, but are tightly controlled by government via regulation and policy.

Pure Capitalism of the free market kind has never truly existed. It would be an unrestricted free market where individuals can privately own the means of both production and consumption. In this world I expect there would be minimal property taxes and no other taxes, no real regulations, very little government (if any), no central bank and I doubt anyone would willingly accept any form of fractional reserve banking etc. I’d quite like to see this world – but I won’t be holding my breath.

Most of the world presently has varying combinations of Socialism and Capitalism (of the fascist kind).

I have Doug Casey to thank for explaining these points so simply and clearly.

I hope that helps.

If I want to become wealthy as a 20 year old, should I invest in real estate or start a business?

Create and build up a business.

Property has been good for many in the past few decades largely due to increasing levels of debt, easy monetary policy and a little speculation (it has gone up in many places, simply because it has previously gone up).

I would say this is true of UK, Canada, Australia, New Zealand and the USA – there are probably other countries.

You should focus on creating and building real wealth – once you have built wealth then you can invest into property/real estate along with other assets such as shares in the attempt to maintain the wealth you have created and built.

If you build a good business you will not only help yourself, but will help others because no one will buy your products or service unless you provide something better than what is already out there.

This is how we improve on our prosperity – chasing real estate returns isn’t really helping anyone – and I very much doubt that at the present time it will help you become wealthy.

I hope that helps.

What’s your favourite way of saving money?

Living out of a travel holdall (can’t be dealing with backpacks although they work as well).

It’s a very physical barrier to buying stuff you want but don’t really need. I’ve lost count of the number of times it’s stopped me buying extra clothing or gadgets – if it doesn’t fit I can’t have it.

It also allows me to freely move around to interesting and exciting places and live cheaply, so pretty enjoyable way to save money.

This answer first appeared here.

What important things does a 20-year-old need to know about money and finance?
  1. Spend less than you earn – considerably less if you want to have financial freedom.
  2. Have a clearly defined and ambitious plan for your future and work backwards from there.
  3. To learn about investing, I feel the best place to start would be to read the intelligent investor by benjamin graham. It’s quite old now but the wisdom is still very relevant. You should also read Warren Buffet’s annual reports over at
  4. Investing in yourself will provide the greatest possible return – both financially and in life.
  5. At all times, remember it is your money and life so your decisions should always be individual ones – don’t be swayed too easily by other people’s views and opinions – take the time to come to your own informed conclusions about what path to take.

I noticed that you have a lot to go on from other answers to this post, so I won’t add any more.

I hope that helps.

This answer first appeared here and you could probably take all of these comments and make it into a personal finance book. I wouldn’t agree with everything said, but a great place to start if you want to find out more about managing your personal finances.

What financial planning should I do right now as a 20 year old that will help me live comfortably by my late 20s?

Hello Mika, I would second Ted’s comments and ideas but with two additions/alterations based on your goal to be financially comfortable in less than 10 years:

  1. You have to spend considerably less than you earn (realistically you have save 50% of your income), and you will have to invest the difference (in yourself, in your own business and in other businesses via shares – so you should learn about these subjects).
  2. You have to strive to earn more money. You will struggle to be financially comfortable by your late twenties if you only earn average income – it will be easier to save half your income if you earn more. That is easier said than done – but you need to set ambitious goals (it helps to visualise them) and you will need the focus of working towards them every day – but remember the importance of using Sunday to rest.
  3. Keep track of your progress. You will find it helpful to note down where you are today (income, assets, debts, skills etc.) and then you can look back at how you have progressed each year.

Finally I would say that whilst it is sensible to focus on becoming financially comfortable and wealthier, remember to remain content with what you have and the efforts you make (celebrate the small successes along the way), and also remember that you are already more financially comfortable than the vast majority of people on the planet.

Give due attention to your finances, but don’t let that stray into worrying too much about money at the expense of living a fulfilled life.

I hope that helps.

As a 70yr old living, with state pension (UK), no home, 150K (GBP) savings – what is best way to invest the money to live off for the next 20 years?

Firstly you should base your decision on how much income you need each month and work backwards from that point.

At 70 years of age there are some factors to consider that wouldn’t be relevant if you were younger.

You should ensure you have someone to keep an eye on your finances that you can trust. You should at the very least share your thought process and decisions with a close family member if possible and set up a lasting power of attorney in case your health declines. This can impact on your wealth because once you start making investment decisions, reviewing them is essential and you may not realise that you are building up problems or making mistakes.

If you don’t have a family member you should consider discussing your finances with an independent financial adviser and one who is experienced in later life advice. This organisation will be a good start: Society of Later Life Advisers.

To be able to provide better answers you would need to know more about your views and financial position, but as a general idea you should think about investing it into a widely diversified portfolio of income producing assets (dividend paying shares, property and bonds).

You would also want this to be on autopilot as much as possible so should think about different funds, investment trusts and ETFs.

Finally you need all the return and income you can get so make sure you don’t pay too much in fees.

Some people would suggest an annuity in your position and that should be considered. An annuity provides an income for life in return for your capital – the downside to this is that the rates are low (affected by government bond yields) and you have to give up your capital.

As you will be so dependent on using this £150k to support your life you should take professional advice.

You are welcome to contact me directly and I can help put you in touch with a financial adviser after finding out a little more about what you need (I also have a free guide explaining what to consider when looking for an adviser).

Hope that helps.

Which country is ideal for your retirement plan?

I would pick based on the following factors:

  1. Climate – in older age joints tend to ache in colder weather, so not surprisingly people favour warmer climates.
  2. Good healthcare – You would want healthcare that is to a high standard and accessible.
  3. Safe – Not exactly going to be in a position to defend your home and will become more vulnerable, so you want a country with low levels of crime.
  4. Community – You would want a support network – or perhaps even retirment homes and villages nearby etc. – this is for social reasons as well as more practical ones.
  5. Family proximity – Many wouldn’t wish to be too far away from their family.
  6. Low cost – many people will be spending their capital as well as their income, and most don’t have enough savings to fund a full retirement in expensive countries.

Your country of choice will depend a lot on where you are from, but from people in the UK, France/Spain/Italy etc., are all favoured places because they incorporate some or all of the above factors.

It depends on what stage of retirement you are at as well – early years are more mobile and leisurely, later years you need more support and healthcare etc.

Also, you don’t have to just pick one country – maybe have a base and then spend part of each year in a different location (that’s what I will do anyway). I would also favour going wherever my money stretches the furthest (at least for half the year) – so if I retired today I would spend a lot of time in south east asia – you can live in a hotel and eat out everyday for the cost of living in some boring part of the UK. Seems like a far more interesting, enjoyable and comfortable way to spend retirement.

Hope that helps

What is the best bank or broker to invest at United Kingdom?

These guys provide a great comparison:…

Who you choose is down to personal preference and features that you need or would like.

The cheapest isn’t necessarily the best.

What are the investment options for young graduates in the first 2-3 years after graduation?

I’d firstly second the answer Solanki provided to you.

That would be a good first step – clarify your goals an what you wish to achieve and when etc., what are your milestones, how long you can put money aside for.

For long-term money – anything over 10 years you should invest into the stockmarket in a diversified range of companies. I feel you should take the time to just learn about investing before doing any active investing (you won’t get the answers from just one book – read many over a course of a year or so). In the meantime invest into a all market tracker – I’d suggest something like the FTSE All World Index (and you may well come to the conclusion to invest with a passive approach at all times).

Once you have built up some knowledge you will begin to understand what investment style suits your personality, what risks you would be comfortable taking etc.

Then once you begin to invest you may adapt your approach as real life experience is different from books – believe me when I say you will think you’re a genius when your stock purchase rises 30% in 6 months or so, and pig sick when it goes down 6 months or so. Try to ignore this – it’s the value in decades to come that counts.

What is the best way to swap my money in a UK bank to US dollars?

I would take a look at international money transfer | currency exchange | HiFX

I find them to have good rates and low fees compared to many others.

Don’t do it directly with your bank – they tend to be the most expensive.

What is the best way to invest 500K, for a 53 year old, with no job qualification?

When you mention you have no job qualification I am making the assumption you don’t have a job, or at least are struggling in employment.

We are all likely to live a lot longer than previous generations, which means we will likely need to work longer. It wouldn’t be unreasonable (health permitting) to expect and plan to work until you are 65–70.

This means that you will have perhaps 15 more years of employment (or self employment) remaining.

With machines and other low cost regions taking many ‘unskilled’ roles, your best bet would be to use some of this money to invest in yourself and learn a new vocation. Think carefully about how you wish to spend your time, how much money any new skill would provide, can you still do it if physical health declines etc., how much it costs to train and how long it will take etc.

Good places to learn new skills would be:

Take your time to find the right courses and speak to potential employers to find out if they will hire you with these skills and get their views on your skill learning options.

Next up would be to set aside a healthy amount in cash as a reserve fund. This should be 6–12 months expenses, but can be more if you feel more comfortable with it. I rather rudely call this f**k you money, but despite the crassness, the lessons are extremely valid.

After this you should think about whether you have any business ideas you wish to turn into reality. Setting aside some money to pursue any dreams or ideas is worthwhile, even if it financially doesn’t work out.

Better to be broke having attempted your big life goals, than to die with money but filled with regret.

Now onto investing.

You should be thinking about investing to provide you with a return. By return I mean income, or yield. You shouldn’t invest trying to sell what you own for a higher price (a complicated game of pass the parcel), but rather think about buying some investments that you would be comfortable holding for a very long time and simply reinvest the returns they provide, or use the income to support yourself if you need to.

In today’s world, the yields available from many assets have been suppressed by government and central bank manipulation so you really must diversify and you must accept there is likely to be some rather uncomfortable downward fluctuations (the media will call these crashes).

You should think about building a portfolio that has an allocation to shares, property and bonds.

I would propose looking at established companies that pay regular dividends – you could save some time and find investment funds that focus on dividend paying shares.

Take some time to learn about investing before parting with any of your money.

Education will help ensure your parting is temporary and not permanent.

Hope that helps.

How exactly did the Rothschilds get so rich?

I have read a number of books by Niall Ferguson and they are always well researched, well written and very interesting. The Ascent of Money is excellent.

I haven’t read his book on the House of Rothschilds but I expect it would be a great place to find your answers to this question, as no doubt the reasons are varied.

I fear if you try to find this answer on the internet you will just end up wasting your time with lots of conspiracy theories etc. so the book would be your best bet.

What do I do with 10k a month from my new business?

The first priority with your cash flow is to ensure you have money set aside, both within the business and separately:

  1. In the business, think about likely needs for investing in your business over the next year or so. It’s far better to build your business from your own earnings as you will retain control and have less (or no) debt.
  2. Make sure you have 6 months expenses in cash for both personal and business needs. Maybe up to 12 months. You can have more if it makes you feel more comfortable – essentially the bigger wedge between something going wrong and having to get into debt the better.

After you have taken care of the cash reserves the next best thing to do is to invest in yourself; Is there any skills you can learn for either economic or lifestyle gains? This type of investment provides a far superior returns on your life quality, to anything a stockmarket investment could ever provide.

The question also appears to mention investing in your business, so you should focus on growing your business (this creates your wealth), but begin to set some aside outside of your business into different assets (this helps protect and gradually maintain the wealth you have created).

After all of the above I would base my view on the fact you appear relatively young (so can invest for 20–30 years before needing the money).

Where exactly you should invest depends a lot on your location as tax is very important (i.e. you need to minimise how much you pay in tax to leave more money in your investments). Each country will have different tax wrappers, structures and rules.

In terms of investing, I favour established dividend paying companies because the fact they consistently pay dividends proves that the company generates real profits (hard cash). The dividends also help offset the fluctuation in the share price as you just keep reinvesting the dividends that you receive to buy more stock.

If you don’t want to get too involved with learning about investing you should look at something like a FTSE All World Index. This will ensure you allocate to stocks all over the globe in some form (it would therefore be pretty impossible to go broke).

Before investing however you should think about two things:

  1. Do you want to spend the time to learn about investing and managing your own finances? This will save you lots of fees and ensure you can make the right decisions for yourself. I would suggest starting with The Intelligent Investor, by Benjamin Graham. It’s old but the wisdom is still very relevant. You should then pair this with a more modern book or blog reading to learn the terminology etc.
  2. If you don’t want to learn, you should take advice from a professional and independent financial adviser who can help you to invest.

A lot of your investment success or failure will be down to your behaviour and emotions – how committed you are to saving, how you react to financial market fluctuation etc., so take your time and don’t just jump all in before you have a level of understanding of what’s involved.

If you are based in the UK I have created a free guide to finding the right kind of financial adviser.

How do student credit cards work? Are they safe to use?

Avoid credit card at all costs – if that means getting extra work, spending less, late nights etc. on top of study you will be grateful in the long run.

How can you bury money (cash) without it deteriorating?

Convert it to Gold.

What are some of the risky ways and safe ways to double $100,000 in a year?

There is no safe way to double your money in one year.

Risky ways would be speculative stock purchases, but you have just as much chance of losing $100,000 as you have of making another $100,000.

If you have $100,000 better off trying to keep it and gradually grow it.

If you must chase such high returns either create a business, or do serious amounts of research on smaller company stocks (although that still may not help you).

Rather than trying to get rich quick, why not try and get rich more slowly? You can comfortably double your money every 10 years and significantly reduce the likelihood of losing your starting capital.

Is it the right time to buy house in london?

I would personally stay clear of UK housing market – it is very highly priced and dependent upon a huge amount of debt in the system.

Properties have gone up considerably for many years now, but don’t assume it will continue forever.

The government has also finally introduced some measures attempting to stem demand and I don’t expect that will be the last of them.

If you are buying in London as an investment – you should seriously consider looking elsewhere. If you are looking to purchase as a home then it blurs the decision (as a home is also consumption – own comfort, styling etc.), so you should really only buy based on whether you can comfortably afford to do so and if you intend to live there for at least 10 years.

Ultimately I wouldn’t suggest buying property in London is a great move.

What investment options in the UK boast compound interest or money compounding opportunities?

In terms of shares, you should focus on those that pay a good dividend, with a long history – it’s far easier as an everyday person to invest in funds, ETF or Investment Trusts that does the filtering for you, rather than do it all yourself.

Even if you invest into a market tracker fund, rather than specifically favouring dividend paying companies, you will still get some dividends to compound.

Bonds and residential property in the UK presently pay little to no yield (there may be exceptions), so you’re really just speculating on capital appreciation – which is VERY different to compounding income.

A little out of the box would be peer to peer lending. You directly lend money to a range of borrowers and receive the interest (less some management fees) – i’d be cautious about these as they are relatively new (so many in this space haven’t seen default cycle performance as yet). Banks run into trouble making these kinds of loans even with fractional reserve banking and the back up of central banks.

It is however worth considering as an option if you are seeking to compound interest.

Does vast economic wealth guarantee a great quality of life?

It certainly helps!

If by quality of life you mean a variety of foods and flavours, improved diet, safe and comfortable homes and cars, everyday conveniences, improved health and healthcare when needed, more time and freedom etc., then quality of life would be vastly better being wealthy than poor.

However it doesn’t necessarily mean less money worries (although it should), it won’t ensure you fall in love and have a healthy and rewarding relationship, avoid depression and other issues, never get ill or injured – in short it won’t change your mind or your choices.

Wealth won’t make you truly fulfilled – but at least it will ensure your belly is full!

If you were independently wealthy what city/country would you choose as a home base?

Entirely depends on the lifestyle you would like – big city or village, middle of nowhere, exotic or multi season, sun most of the time etc.

With wealth and independence comes the freedom to go pretty much anywhere.

Also, you do not need to keep your wealth where you wish to keep your home.

It’s entirely reasonable to keep your assets and investments in sound countries, with strong private property rights, low taxes etc., but live somewhere a little more exotic or exciting (but where you would be entirely mad to put your money).

How do I achieve financial freedom
  1. Avoid debt like the plague.
  2. Spend less than you earn.
  3. Invest the difference in your own skills to earn more money.
  4. Save the extra money you earn.
  5. Invest that in either your own business ideas or other businesses (preferably a diverse range of dividend paying companies)
  6. Reinvest the earnings that these businesses generate.
  7. Repeat until you can afford to live off the income these investments and businesses provide – or at least supplement it with your other income, from say, part-time enjoyable work.
  8. Enjoy Freedom.
Does the money I pay for a stock go to that company in whole?

A stockmarket has two purposes.

The first and primary purpose of the stockmarket is to raise money for companies. This is done when a company first lists on the stockmarket – an initial public offering.

If you buy at this time (something I really DO NOT recommend at all) then the money goes directly to the companies to fuel their business plans.

The other purpose of the stockmarket is to have a market for people to sell their stocks once they own them. This is known as the secondary market.

It’s useful for companies as if there wasn’t a healthy secondary market no one would buy in the primary market (when the company needs the capital at IPO) as it would be harder to sell the shares on.

People buying stocks directly on the stock market will be buying from other investors who already own the stock and are looking to sell.

There are also instances where a company already listed on the stock market wants to raise extra money. This is done via rights issues. In this circumstance your money will go directly to the company.

Would you want to be rich, if it would make someone else poor?

No, but there are so many people who don’t become rich by exploiting others.

They become rich by helping and improving the lives of huge numbers of people.

It’s very important to distinguish between earned wealth and unearned wealth.

I do want to be wealthy and prosperous however, which I also think is different to being rich.

As a digital nomad, how can I hedge my savings (in UK£) against currency fluctuations? Is there a simple way to do this?

As an everyday person it is difficult as you are no doubt likely to use the £ in multiple different currencies.

If you spend a lot of time in one country (that has a relatively stable currency) you could put half your money there and keep half in the UK (that’s what I do). That way it doesn’t hurt so much when one currency drops etc.

It’s sometimes difficult to open an account without physically being in the country though.

As a nomad, just make sure you travel to countries with a weaker currency and you will be okay – even with the gradual sterling decline and the extra sudden drop – it will still go a long way in most parts of the world.

Still, knowing that your savings and contracts are now worth less isn’t much fun!

No matter what you do there will always be fluctuation.

I should also mention that you can also open up an account that owns gold/silver, rather than fiat currencies. The value of it will fluctuate, but is probably a good diversifier against declining currencies (not just the pound). GoldMoney Inc even has a card that you can use to make transactions with. In my view it’s worth having for some of your savings.

How do we distinguish between a monopoly and a market leader?

A monopoly would have a natural barrier to entry.

The most extreme being a road toll bridge – who is going to build another bridge and consumers have to use it, leaving them with no choice.

A market leader is someone who through innovation, good service and standards, achieving scale etc. has become a leader in their field above the competition and now it is very difficult to compete with them – examples would be Amazon or Google.

Market leaders are still prone to competition but it may take a long time to get them off their perch in the number one spot. A monopoly will essentially always be a monopoly.

There are also effective monopolies that are created by government favouritism, but that would be a rather long rant.

That’s my view anyway.

How do I budget/save money when thinking about a mortgage?

I read recently that budgets don’t work – a little like how diets don’t work.

In general budgeting may be helpful from a short-term perspective, but better to try and make a regular saving habit a lifestyle change.

If it’s for a one off purchase like a home, then you have to realistically try and save 50% of your income for a year or so.

Don’t get too hung up on where to save it, deposit rates etc. On small sums of money the interest rate isn’t very significant – it is how much you save that counts.

So be brutal with your expenses for a period of time and maybe try and earn a little more.

What is a good way to come up with a personal finance plan?
  1. Think about where you want your life to be (and look like) in 5, 10 and 20 years time – Visualise your goals as much as possible – and be realistically ambitious.
  2. Figure out where your finances are at now – i.e. cash flow (money in vs. money out), what you own and what you owe.
  3. Figure out where you can optimise your money – are you paying high interest on loans, could you get higher interest rates etc.
  4. Then figure out how to get from where you are now to completing your goals. This may be figuring out how much you need to save each month etc.
  5. Put the plan into action and commit to it.
  6. Review it frequently.

Hope that helps. My comprehensive financial planning service will help you take control of your wealth.

Is having a savings account worth it?

We all pretty much have to have a checking or current account nowadays, but a separate savings account is not always necessary – it depends on your behaviour. Some points are relevant:

  1. Savings account(s) can be good for setting aside different pots of money for different purposes.
  2. Savings accounts tend to offer marginally higher rate of interest (although it’s all rather tiny at the moment).
  3. If you need the discipline of having your money in a savings account, rather than psychologically more accessible in your current/checking account.
  4. If you have larger sums of money, you shouldn’t keep them all in one bank – have a couple of accounts.
  5. Very long-term (20+ years), savings just about keep pace with inflation (that’s only if you get best interest rates and minimise taxes etc.), so likely to lose via inflation and huge opportunity cost of a saving account vs. investment.
  6. Sometimes cash is king – don’t invest too much money. Lots of cash puts a nice wedge between you and financial poverty. Cash can be deployed at favourable times.
What are the best ways to start investing in the UK at 22?

At 22, the best thing you can do is invest in yourself. It doesn’t have to be formal education, but could be softer skills, learning to build up a side income, maybe saving some cash to try out a business venture idea you have. A good starting point is to think about what skills need improving and employability in your current role. There is no other investment that will provide such lifelong gains (and financial return).

That’s including the stock market.

If you want to start investing a regular income each and every month, you should perhaps invest into a FTSE All Share tracker that is low cost and simply ignore the news and diligently put your money away each and every month. However you should think about the risks and do some research before jumping in.

You should then learn more about investing over the next few years so as your funds grow in size, you can learn how to build an investment portfolio that is personally suitable for you.

If you rely on regulated financial advice in the UK it can be quite costly and with a little effort and patience you can get an idea how to do it on your own – and then perhaps ask the professionals when you have a larger pot.

How do you know when you can afford a car?

Firstly, if you are asking that question you can’t afford a new one.

There are two things to consider.

  1. Do you have money to pay for it or reliable cash flow to service a loan? Whilst you may be able to afford to buy it, it still doesn’t mean you should.
  2. What else could you do with the money and how useful would that money be in the future if you had more of it?

A good compromise would be to find a car you like and how much it would cost; and then half the price and try and find something you will like in that price bracket.

A shiny piece of metal is nice, but it’s not life changing. Making bad financial choices is however.

Hope that helps.

I’ve written previously about car purchases in Forget the Fiat. Own a Ferrari.

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