Why to become an individual investor:

 

Money does not make you happy but it sure makes misery easier to live with.

Joke apart, there can be many reasons why you want to invest. Good ones and bad ones.

If you want to strike it rich quickly, stop reading. This website is not for you. Start a chain of strip clubs or another similar activity.

 

If you intend to buy a house or a new car in a couple of years and you quickly want to increase your savings, in order to be able to afford yourself a mansion instead of a council house or a Ferrari instead of a Dacia, also stop reading. The information, I intend to give you, is not for the short term.

 

If you earned some savings or you inherited some money that you would like to conserve in a way that it is not reduced by inflation and gives you instead some decent returns, please continue reading.

 

If after a lifetime of working, you would like to enjoy your retirement and you would want to supplement you meagre pension (if any) with some extra revenues, please continue reading.

 

Deciding what are your goals whilst investing is the first and maybe most important decision to take.

Everybody should reflect on what they expect from life and draw up an according financial plan. Preferably, on paper, so you can read and reflect on it at regular intervals.

Drawing up such a plan is essential. There is a specific page on this further on the website.

 

If the conclusion is that your current projection of future financial resources could do with some changes please continue to read.

 

The first and best investment to make is in yourself. The world of lifelong employment is over and not returning. Believing that your pension will provide you with sufficient resources to enable you to live the retirement you expect is a pipe dream. Whatever some politicians may want you to believe, our world is changing quickly and you will not escape from having to live with your own personal responsibilities. So lifelong learning, improving your abilities and skills is the first and best way to invest your money.

The most appropriate and reliable way to increase your standard of living is by increasing your professional income.

 

When making any financial plans the most essential thing to bear in mind is the destructive force of inflation.

Following figures of the U.S. department of Labor in the years between 1974 and the end of the century purchasing power of 1$ shrank to about 27 cents. This means that if you inherited or saved some money and counted on the returns of a savings account to provide you with some extra cash, after retirement, three quarters of your capital might be eroded by inflation by the time you retire.

 

Simply buying some bonds or storing your savings on a “risk-free” savings account and collecting the yearly interests is not going to prevent your capital from melting away, like snow on a early spring day. Returns on most government bonds in Europe are close to zero, if not negative, and most saving accounts currently in Belgium, but not much different in other countries, give you a generous 0.60% interest rate.

So imagine you would like to offer yourself a yearly winter holiday in Tenerife, that would set you back around 2000 EURO. The capital to be invested on a savings account, in order to return you a yearly interest of the required amount, would be 333.000 euro.

 In addition, your capital will diminish each year by the rate of the inflation. Very soon, you will no longer be able to afford your holiday in Tenerife but after a couple of years, it will be a weekend with Ryanair to Benidorm before ending up at a trailer park in Bredene on the Flemish coast.

 

So the easy solution of bonds or a savings account is not an option. This obliges you to explore other paths in order to get you some extra revenue.

An often chosen solution in Flanders was to invest in some real estate like houses or apartments to rent out. The reasoning behind this solution was that you receive a monthly revenue by means of a rent and the principal only increases in value over time and can eventually be passed on to next generations.

If this is the option you prefer, stop reading. We cannot help you with this one. It is an option we never favor for the following reasons:

• We prefer an investment where we are not confronted with unhappy tenants, where we do not have to contract builders to do necessary repair works, where we do not have to run to lawyers in order to start legal procedures to recover money for damages or unpaid rent. We want our investments to be a source of extra cash, to pay for our travelling, not a source of worries and sleepless nights.
• We want to be able to spread my investments over different countries and even continents if we wish to. Europe has been lagging economically as compared to the US and Asia for decades. If you buy real estate to generate a revenue, it is most probably going to be, for practical reasons, close to your place of living. So geographical diversification is going to be very hard.
• The assumption that houses and apartments only increase in value over time is not an absolute certainty. Yes, it has been the case for most of Flanders but not in other countries. Great Britain and The Netherlands have known in the past serious reductions in the sales prices of private real estate. Changes in fiscal treatment of revenue from renting out real estate can also have a big influence on prices.
• Investing in real estate is difficult to build up gradually. You need a considerable amount to invest in your first house or apartment.

 

So if you are still with us at this point it means you would like to invest some of your funds in other ways than laid out above.

 

You may all be familiar with the success stories of famous investors like Warren Buffett and you probably all have received (spam) messages about how you can make fortunes in the financial markets if only you would pay for a subscription that then will give you access to golden tips to strike it rich.

 

Well, we hate to disappoint you, but the magic formula to strike it rich on the stock markets is a pipe dream. No guarantees are offered whilst investing on the financial markets.

During the 15 year period from the late 1960’s until end of the 1970’s the US stock market, corrected for inflation, lost about 80% of its value.

So why then would we then invest in the stock market?

Well, be it in the US or in Europe, on a long term, shares outperform other asset classes. In the US the real (after inflation) average annual return, in local currency, between 1900 and 2019, of shares was around 6.5%. Bonds only returned 2% in the same period. For Europe, same period, shares returned around 4.3% and bonds 1.3%.

The historic return for bonds looks even optimistic in the current environment of financial repression, where central banks basically have guaranteed governments they can borrow money at no costs for any duration they want.

 

When investing in the stock market you can again choose for several options.

 

The first one is to believe that you can do better things with your time than following up what is happening in the world on an economical, political and financial level and blindly trust your banker or an investment advisor who will look after your intrests in the best possible way. After all, they are the specialists, no?

Yes indeed, there is no shortage of professionals that will be all too happy to manage your funds on your behalf. Only, they will look in first instance after their own interests, not yours. Their principal goal is keeping you as a customer in order for them to keep their job. In order to do that most advisors will sell you about the same investments as their competitors in order for you not to make comparisons that would make them look bad.  And of course the yearly costs of the bank will be deducted from your investment, whatever the return. Thus what you can expect is a return, more or less in line with indexes, minus the management fees, of course.

But even that return is not a given fact you can count on. As you will see further some portfolio management formula’s underperformed the market by a long stretch.

 

Also, funds or formula’s that gave a nice return in some periods can under-perform in other. Example the Patrimoine fund of Carmignac which was widely popular in Belgium. This also in various products offered by banks. It held up well in the crisis of 2008-2009 but underperformed in the decade thereafter. They only picked up during the corona crisis. 

 

But the main reason, for us, not to trust blindly a bank or portfolio manager, is that we do not like the feeling of not being in command of what happens with our savings. By relying on a paid manager, the risk is that you no longer are going to follow what is happening in the financial world. It will make it harder for you to evaluate, in the information meetings your manager will invite you to at regular intervals, whether the decisions he took are in accordance with your own expectations and whether your manager is putting your interests first and not his or the ones of the bank.

 

So the alternative is for you to start working and to become AN INDIVIDUAL INVESTOR.

 

This is what this website hopes to help you with.

 

Disclaimer: I would like to remind you that the data contained in this mail/table is not necessarily real-time nor accurate. All information comes from various websites and other sources, so figures may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for investment purposes. Therefore I do not bear any responsibility for any losses you might incur as a result of using this data.

I will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts or opinions contained within this mail/table. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.