Last week A friend of mine asked me for investment advice in these turbulent times, this is not one of my core subjects, but I put some thought into it and this is what came out…
Most regular people who are able to invest do so to have a degree of freedom at some point in the future, either for themselves or for their children. It used to be that investing in financial instruments (pensions, shares, funds) was a reasonably reliable and at least moderately ethical way to achieve that freedom.
This is no longer the case. Banks and other investment institutions, with a few exceptions, are no longer the reliable or ethical choice.
So what do we do?
Below is my guide to reliable and ethical investment in the 21st century. Please note that my main qualifications for making these suggestions is that I am neither and economist, an analyst or a banker, pursue these strategies on your own responsibility
1 – Avoid spending taxed income: Invest in renewable energy, specifically combined Solar PV and Water Heating or PV/T - you might even be able to set it up as a company so that the costs can be offset agains the income. The costs have come down at the same time as energy prices have gone up. If you have net metering in your country it means that when you generate more than you consume the meter runs backwards. If you have a feed in tariff in your country it means you get paid a premium for the electricity you generate. Remember that by not spending the money you are not having to earn it.
3 – Invest in yourself: Freedom is really about being able to live the lifestyle of your choice as much as possible. If you are not already doing that – what are you going to do about it? What holds most of us back is that there is something missing: confidence, money, time, clarity of purpose, skills or some combination. Identify what is missing for you and figure out how to find it there are plenty of options available these days -friends, books, coaching, courses and other events like Light My Fire. Just make the time, space and commitment to have the conversations that matter – rather than the ones that don’t.
3 – If you have done all of the above and you still have some money left to invest – invest in things that create value: Of course it could be argued that PV or paying off the mortgage does not add value, but I think they fall into a special category of investing in our own freedom and creativity. Speculation is dead investment and from a global responsibility point of view, should be avoided. Being your own VC through things like CrowdCube in the UK or Kickstarter in the US is a good option. Or just investing in businesses you believe in directly, particularly your own children’s businesses.
A potentially more reliable form of investment income is through peer to peer lending, this emerging sector looks likely to take a chunk of the market from conventional banks. Peer to peer lending enables savers to lend more or less directly to borrowers, with some built in safe guards, meaning that savers don’t need to suffer unduly from Bank of England interest rates.
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