A money journalist’s personal finance revolution: Part 2
Having started my investment account a week ago, I’m pleased to report I’ve made 12p. It might not seem a lot, but it is better than losing 12p. 12p in a week could be £6.24 a year, and on balance that doesn’t seem too bad for a £100 investment.
Admittedly, there was a hairy moment mid-week when the market started to drop precipitously and I found myself down 62p. Apparently the situation in Greece gets markets a little twitchy from time to time. But some new temporary fix to this impossible situation appears to have been found until the next time.
Of course, watching the progress of an investment day-in, day-out is completely the wrong approach. Investing in the stock market is a long term game. And by long term, that means five or ten years. The smartest minds at investment companies across the globe devote their working weeks to making predictions on economies and markets, and many of them get it wrong much of the time. What chance would I have in deciding whether markets are about to rise or fall? It’s really best to just leave it well alone and hope that it works out. Therefore I report on the progress of my investment purely in the interests of research.
That said, I am buoyed by my early success and put another £100 into the same fund (the Marlborough Multi-Cap Income fund). I am assured by many experts that ‘drip-feeding’ money into the market in this way reduces the market risk through the phenomenon of ‘pound-cost averaging’. By buying at a series of different prices, there is less risk of buying at the top of the market.
With the investment side apparently under control – until the US raises interest rates, or another Greek crisis looms – I remind myself that I also need to keep my spending in check. This is tricky, it’s a holiday month where all spending discipline usually goes out of the window. I’m not a sucker for the souvenir shops, but the local food and wine always seems to drain my pockets.
I’m not going to try and avoid this phenomenon – holidays are holidays – but decide that this year I will get my foreign exchange costs under control. Heading to France at a time when the Euro is sitting at 1.4 to the pound gives me a natural advantage, but that can be washed away pretty quickly in charges.
I get myself an EasyJet Euro Currency card. These pre-pay cards offer a decent exchange rate with no transaction fees. They can be used like a credit card to pay in shops or take money out. You need to load them up ahead of time. On my last two week holiday in Continental Europe, I racked up around £50 in transaction charges, having just used UK credit and debit cards. I should say that I didn’t do exhaustive research and the Easyjet card may not be the most competitive one on offer, but it seems to get relatively decent ratings and was easy to apply for.
This seemed like another small victory in the battle to improve my finances. I also find that I’m rather enjoying the warm and fuzzy feeling that comes from not paying out huge amounts in bank charges. With that in mind, I head to the duty free shop.
Click here for Part 1 of this series.