Beach money: investing and risk

I’m taking a break from the New Year Money guides to riff a little. This week has been filled with stories of stock market crashes, crypto circling the drain, and general doom. Quick reminder that when weeks like this seem long, do join me for mindful money hacks and positivity over on Instagram @brilliant_ladies_money. Now with added Barbies and reggae!

So I wanted to chat a bit about risk, opportunity and how growing into your power means making decisions you really believe in: feeling your way through the different options and trusting that you have your foundations on point, whilst still showing up with courage.

Either way, let’s make it to the beach. Photo by frank mckenna on Unsplash

If you spend enough time on social media it is easy to believe that we are all missing out on the ability to make easy millions through crypto, NFTs (IKR?), or indeed being eight years old and making videos of oursleves opening gifts. I don’t believe it’s all snake oil though. My parents, like many working class people, refused to have anything to do with investing or the stock market because of deep suspicion, and it harmed their finances in the end. On my mum’s side I think it was partly her left wing politics but for both of them it was definitely lack of trust that the system could benefit them in any way, as well as lack of confidence. I think I’m the only person in my family to have investments, and it still causes my mum to freak out.

I thought a lot of this was historical, but a study by Forbes shows that 65% of people aged 18-40 say that investing in the stock market is scary or intimidating. But this is the interesting thing about perceived risks: that age group is also the most likely to be familiar with cryptocurrencies; have holdings or expect to buy crypto in the future. There are a lot of brave investors out there as well who see engagement with Wall Street as part of the great Battle Between Good and Evil. Whilst it’s not totally clear who is on which side, the pandemic, climate change and heated global politics means it’s not hard to get the sense that the End of Days are on the way. This week was the anniversary of GameStop – the memestock phenomenon that saw average small investors drive up the price of GameStop shares by 1,700% through enouragement on reddit. If you are interested in hearing more about that, and about understanding the ethics of engaging with the stock market and how to impact it, I really recommend Paula Pant’s podcast on the topic.

Whatever you do, make sure you understand the risks. Photo by janilson furtado on Unsplash

After a few years of investing – and freaking out, and sometimes doing stupid things – here’s what I learnt:

Your portfolio should have different options depending on your risk tolerance based on what you want that money for and the consequences of losing it. There is room for both the tortoise and the hare here: room indeed even for the Pink Fairy Armadillo. The question is choosing the right vehicle for your money at any particular point. If you are socking money away for retirement you already know:

  • What your time horizon is, and probably that you have a long period to invest meaning that you can choose vehicles which take a longer time to generate a return, as well as needing to factor in inflation. The long horizon also makes it wise to look at tax implications since you will, hopefully, be making a bunch of money over a long period.
  • That you need to be sure there will be money by the time you retire, so your risk tolerance will likely change as you get closer to the date and you will have a chance to rebalance so it makes sense to find a mechanism which allows that.
  • The consequences of not investing wisely would have a massive impact on the later seasons of your life. If you lose your retirement fund, it increases the likelihood that you will have to work way, way past when you want to and are more at the mercy of health issues, not able to help out adult children and so on. Basically, it’s not where we want to end up, and for my generation who worked 15-20 years before pension auto-enrollment but will probably get to retirement after the State Pension has gone up in smoke, it is a very real destination.

Balancing the options therein should get the balance between comfort and discomfort.

  • Get the very basics right first. If you have a clear saving and investing strategy for the money you have coming in based on hierarchy you will create a foundational level of comfort which frees you to be courageous elsewhere. Allocate the money that needs to be there to pay your bills, keep your kids fed and a roof over your heads, and it removes a whole load of late-night anxiety. This money is not something you need to invest anywhere, at any time. Keep it accessible, and spend it – it’s what you made it for. Check out my post on working out your fixed outgoings, and go from there.
  • Prepare for emergencies. I am a total catastrophiser. I think working in the humanitarian sector for so long, coupled with a few unexpected life disasters and an overactive imagination means that the only answer I ever have to the question ‘what could possibly go wrong’ is ‘EVERY DAMN THING’! Whether you think they are coming or not, having rainy day money, or an emergency fund, means that you won’t be thrown off course by a broken down car, month without work, or whatever else. Keep it accessible but don’t spend it unless you have to – it’s there to protect you later on. As I say to my kids, boredom is not an emergency.
Beauty has foundations and grandeur. Work out what needs to be where to hit the right balance. Photo by Johannes Ludwig on Unsplash

After that, base decisions on what you are prepared to lose.

  • Optimism bias means that we are programmed to think about what we have to gain. Negative Nelly over here says – but what about what you might lose? There is a reason though why this is the right question to ask when thinking about investing. With the examples above of retirement, monthly costs and emergency funds, the answers are quite different. The risk balance for retirement is also cushioned by the longer time horizon, and by the fact that (hopefully) you can delay using that money by a few months or years if you need to ride out an occurance in the market.
  • Conversely working this out gives you a whole load of freedom for other pots of money. I have a few super high risk investments which have all been done with what I call beach money. This is money where if I lose it all it means I can’t take my kids to the beach for a holiday – not that we can’t pay our rent. It means I can be brave (or ill informed, let’s be fair) and it really doesn’t matter. I have about $10,000 of beach money investments across angel investments and crypto, and I only really think about it when I am getting antsy that I might be missing out on something.

Working out your priorities means you will create a framework in which you can have certainty and risk where you need to. Let me know how you balance this out, I love hearing from you!

No less than the stars

So I haven’t written for the last two weeks, which is bad because part of my commitment to this blog was about learning to – well, learning to commit I guess, which might not be my natural talent – but also about engaging with the practice of writing rather than focusing on outputs.

I have been super busy with work and was assuming that was why I hadn’t written, but being super busy with work is a) normal and b) an unacceptable excuse. I loathe competitive busy-ness and everything that comes with it – the toxic showboating; the tedium of having someone spend time that could have been better spent doing the damn thing telling me why they can’t; the letting people down and excusing it away.

Anyway: safe to say that it wasn’t work. I’m not sure at this point what kind of internal transformation is going on but I feel like a snow globe that has been shaken up, and I’ve been busy in anstonishment that my soul is dancing in the glittering starlight.

ALL the glitter: Photo by Luke Besley on Unsplash

I spend a lot of time thinking and writing about how to get through challenging times: the small habits, the next right step, the power of faith and of looking back at where you have come from to really understand how high the mountain was that you just climbed. I know – from my trust in God but also from the data – that brighter days are coming. But I cannot tell you how astonishing it is to find that brighter days are actually here, and I am not sure quite how to react.

Everything I profess to believe, though, tells me to be grateful for it but maybe not be surprised. And not to freak out when something feels too big or good to be true any more than I should freak out when the bad stuff feels overwhelming.

In the words of the DesiderataYou are a child of the universe no less than the trees and the stars; you have a right to be here’. I fully believe this but I would take it another step – you are no less because you are the stars. Science (actual science, not The Lizard Times) agrees, saying that ‘almost all the elements in the human body were made in a star and may have been through several supernovas‘.

Reach for the stars because you are the stars: Photo by Phil Botha on Unsplash

What does it mean (and indeed you might ask, why is this relevant to a blog on FIRE? Though if you are asking that I cannot imagine it’s for the first time…)?

You don’t know what is coming to transform you, nor what you will look like after you’ve been through the fire. And transformation comes in all kinds of guises: from lightening bolts to erosion: from a life-changing medical diagnosis to unexpectedly and outrageously falling for someone.* You can plan for things but you can’t control it all. Yes there is data, both yours and that which comes from research or the world, your friends, the internet or whatever, but it won’t all be applicable. And even if you can know how things will work out, you can’t know what your own metamorphasis will look like. You just have to trust in the process.

So what it means is: I am not afraid. I’m not afraid or ashamed of the bad days, and I’m not afraid of being transfigured by the bright lights either. I can know that God created me and I will go back to Him: the circle never deviates from being a circle, things just look different depending on where you are. All you have to do is turn your face to the stars and marvel. That’s where you came from. Imagine who you might become.

*All examples in this blog are completely random

The tail end

I’ve glibly borrowed the title for this post from the brilliant Wait But Why since I’ve been thinking a lot about how time passes. I spend a lot of energy thinking about what to fill that time with – how to make each moment a meaningful contribution of myself to the world.

In reality, I spend a lot more time making a meaningful contribution to emptying a packet of biscuits, or being Just A Little Bit Annoyed.

But this week a few things have aligned to make me remember that our time really is short. Not just short, but not guaranteed. I’ve lost a number of friends in my life and I am reminded that their time was cut short whilst I am frittering mine away.

Time to do…. what?. Photo by Aron Visuals on Unsplash

Paula Pant had a great episode recently with Oliver Burkeman who has written a book called Four Thousand Weeks. Burkeman, who is ostensibly writing abour time management, has recognised that a lot of works about optimising our time – whether that means living mindfully, or getting through your to-do list – don’t recognise the basic fact that time is limited.

My mum always says – you can have everything, but not at the same time. It’s similar to Paula Pant’s ‘you can have anything, but not everything’ mantra. Some things are a finite resource, and time is one of those. Energy is another one: so it’s the number of shits I have to give (as it were).

Burkeman’s point is exactly that. Our average life span is 4,000 weeks which suddenly seems like it just won’t be enough. And he has some great advice about how to live with that in mind, knowing that we will have to miss out on some things, and how not to get crushed by FOMO.

Even if you are immortalised on a building wall, your time is finite. Photo by Mark Neal on Unsplash

There is something about having children which also makes you notice the passing of time, sometimes wishing for certain phases to be over, sometimes desperately clutching on to others which seem to have passed all too soon. It reminds me of Jonathan Fanning‘s poem about parenting: about all the last times we have of doing things, and how oftern we don’t even know it’s signalling the end of something:

The thing is, you won’t even know it’s the last time
Until there are no more times. And even then, it will take you a while to realize.

So while you are living in these times, remember there are only so many of them and when they are gone, you will yearn for just one more day of them.
For one last time.

So – this week I have been trying to live from that place. I stopped work at lunch time and made a bowl of steaming, spicy noodles, sparkling with chillis. I texted a boy I like who made me laugh. I quit the French classes I have taken for five years with the aim of getting a quaification I don’t need for a job I don’t want. I swam in the sea and felt the air turning to autumn. I lay in bed with my kids and listened to the rain. I lived. And I loved it.

You really are. Live from there. Photo by Bethany Stephens on Unsplash

Miracle on 42nd (birthday) street

Ah, here we are – that time of year again. I always have mixed feelings about birthdays – gratitude for the sheer privelige of each passing year, with the nostalgic sense of time moving ahead in a very finite way. And these days I get wrinkles, saggy bits, and bad hangovers. But as my mother would say, the alternative is death, so yom huledet sameach!

Woo! Photo by Miltiadis Fragkidis on Unsplash

But this year, something feels different – like everything has changed. I feel centred for maybe the first ever time and it’s causing tiny miracles.

For me the idea of being centred is that my whole self is in alignment. It’s about thinking and acting from a place which is calibrated with who I am. It sounds really obvious, but the magic is the extent to which this reduces tension and stress, because I’m not constantly pushing against myself.

Let’s be clear, I can still absolutlely be a twat, get things wrong, get antsy. But for whatever reason, at the moment that no longer equates to spiralling down a sink hole of guilt or shame. It’s like my mental company has shifted so that my inner voice is full of friendly compassion and not the negative drama queens who played a loop of what I was doing wrong and why it made me unloveable. And when I fail I try ad own it and learn from it, then move on, rather than seeing it as another foundation stone in an exhausting life of failure.

I’m also not totally sure where this has all come from. I’ve written a lot about micro-habits and small steps, and living mindfully, so maybe it’s a combination of all those things. Recently I’ve also been asking myself some tough questions, and trying to act on the answers. Why are you going out for a drink with those people when you always come away from their company feeling bad? Why are you second-guessing something you really liked after someone else was negative? What audience are you playing to here – and what validation are you seeking?

A lot of these are also essential FIRE questions – what decisions are you making, and based on whose opinion? By doing that, what are you denying your essential self either now or in the future? Breaking habits can be really hard, both for you and those around you when you start changing. And it’s a life time practice rather than a destination so it’s not like everything is solved forever.

Right now when the world is burning, it feels like a miracle to have come home to myself. Happy birthday indeed!