Lifestyle Creep 🛍
Quote Of The Week 🖋
I’m not a parent yet, and most of you reading this may not be as well so it may be hard for us to relate directly to this Bruce Lee quote. However, the meaning behind it should definitely resonate with all of us.
The shiniest things we buy for our children will not bring them as much benefit as the knowledge we teach them on how to navigate life’s many struggles.
Help develop their mindset so that they don’t make the same mistakes that you did.
Market Overview 📉
Some interesting facts about the two main US Market indicees:
The S&P 500 has posted its seventh consecutive weekly decline, its worst week on week performance in over 21 years.
The Nasdaq 100 has now dropped more from its all time high than its drop during the covid induced market panic of March 2020.
The market has been bleeding all year with the constant declines over the last few weeks showing no end in sight. History dictates that bottoms (the level at which the market begins its bounce back up) are usually found at maximum pain, and with market sentiment being the worst in decades, we may be close to it.
Compared to the stock market, cryptocurrencies performed relatively well. Bitcoin and Ethereum both seem to be challenging and (currently) holding close to their round number resistances at $30,000 and $2,000 respectively.
What does all this mean for your portfolio? I often got asked over the last few years “when’s the best time to invest?”. The best time to invest was ten years ago, the second best time is today.
No one has a crystal ball to know which directions the markets will go in the short term but a consistent action plan to invest* weekly / monthly is often the best route to building a strong portfolio over the long term.
*Start investing from as little as £10 at eToro, one of the easiest to use investment platforms.
Lifestyle Creep 🛍
The easiest thing to do with money is to spend it. This becomes even easier as we earn more. This phenomenon is ingrained within all of us and is called “lifestyle creep”.
It’s easy enough to reward ourselves with an extra shopping trip or frequent UberEats orders on a temporary basis. These lifestyle creepers can be scaled back if necessary.
The changes that are harder to unwind are larger commitments on the back of a promotion or starting a better paid job. That bigger house and fancier car may feel well deserved, but chasing the finer things in life is more likely to put us in greater difficulty if our financial circumstances suddenly change.
It’s no surprise that over 61% of all Americans and even 42% of those earning over $100k are living paycheck to paycheck. The desire to keep up with our neigbours, friends and colleagues is not financially healthy, yet to some extent, we all do it.
How can we manage lifestyle creep?
Track Spending: Track every single £ you spend. This will highlight how much money you are spending on wants compared to needs.
Build a Budget: Your monthly earnings could be £3,000 or £1,500, build a budget around that figure and stick to it. If you allocate £100 a month to eating out, it doesn’t matter if you hit that total on the 10th or the 21st, be disciplined and cook your meals for the rest of the month.
Avoid Social Media Comparisons: Stop comparing your lives with that of your peers. Our financial situations are a result of a unique set of circumstances that differ widely person to person. You don’t need to buy a hot tub for the garden just because your neighbours have now got one.
Think Long Term: If you get a pay rise, invest / save more of the difference than you spend. By focusing on your long term goals, you are gifting financial security to your future self sooner rather than later.
Remember, wealth is money not yet spent.
Investing 101 🍏
I’ve been sharing key investment terms, background on cryptocurrencies and some of my largest investments in the newsletter.
APPLE’S REVENUE BREAKDOWN
Apple is one of the biggest companies in the world with revenues of over $365bn in 2021. Whilst it is known for a wide rang of devices and services, the above breakdown of its revenue highlights the importance of iPhones sales to the company, which total over $191bn (52.5% of overall revenues).
The success of the Apple brand is evident with the sales of its other products such as the iPad, Macbooks and Wearables collectively contributing over $100bn in revenues.
Like the rest of the market, Apple’s stock has taken a beating, down more than 24% this year and currently trading at $137 per share. With the company looking to enter the electric vehicle and VR spaces over the next few years, this pullback could be an opportunity to invest* in Apple for the long term.
*Disclaimer: This is not investment advice and is purely for educational purposes. I am sharing investment ideas. Please do your own research before making investing decisions.
What I’m Listening To 🎙
Ray Dalio is a billionaire American author, investor and the founder of one of the largest hedge funds in the world, Bridgewater Associates. He sat down with podcaster Lex Fridmen to discuss Money, Power, and the Collapse of Empires.
The podcast is a great listen for those interested in the role money has played in the rise and fall of empires over centuries.
Watch the episode on Youtube or listen to it on Apple Podcasts or Google Podcasts.
Did You Know? 🏡
Warren Buffett is one of the most successful investors of all time. He is the only member of the $100bn+ club who’s wealth has been achieved purely by investing in companies rather than building them.
Despite having a net worth of $112bn, he still lives in the same house he purchased in 1958 for $31,500! The house has 5 bedrooms and 2.5 bathrooms and is currently worth around $650,000 today (less than 0.00001% of his net worth).
A thought to ponder next time you get tempted to change your car after a couple of years.
Question For You 💭
What lifestyle change can you easily reverse to put yourself financially ahead?
Thank You 😊
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