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Perseverance: The Secret Sauce to Building Personal Wealth

One of the most important components of billionaire intelligence is perseverance.  The ability to keep going and stick to it – especially when times are tough – is a cornerstone to many of the greatest accomplishment achieved by the self-made Super Rich (net worth of $500 million or more).

  • Failure is not optional – it’s given. Therefore, perseverance is essential to building wealth.
  • Perseverance stems largely from having self-efficacy – the ability to say “I can” in specific situations, and believe it.
  • Perseverance can be learned and strengthened over time through resources like mastermind groups, red teaming exercises, and working with consultants and peers.

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Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Make Your Brain Faster, Smarter and Sharper – in Just Two Weeks

With a few changes to your lifestyle, the performance of your brain can be greatly improved – even making it faster.

“I’m not getting older, I’m getting better!” It’s a saying that you might see on a T-shirt or coffee mug, probably at the birthday party of a man or woman of a certain age.
Well guess what? You can make that hackneyed slogan a reality by taking steps to get your brain working at its full potential even as you age—allowing you to enjoy sustained energy, productivity and clarity, and get more done in less time.

  • The right diet can help provide your body with ketones- molecules that are great for fueling mitochondria.
  • Even small amounts of artificial LED light can change your brain’s timing circuits and energy production.
  • At the end of every shower you take, turn the water to the coldest setting for 30 seconds.

Click the image below to read the full article:

Brain Faster

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Costs Really Do Matter

“Performance comes, performance goes. Fees never falter.”

Warren Buffett, investment legend, Chairman, Berkshire Hathaway (2018 Letter to Shareholders)

Costs, time and compounding are an insidious mix

It is a shame that human beings are so poorly wired to be good investors.  We have many deep-seated biases and behaviours that, whilst once useful to survive in the wild, do us a great disservice when investing. One area of weakness is our poor grasp of the exponential impact of compounding that can work both for and against us.

Imagine three different portfolios that deliver returns of 1%, 3% and 5% per year after inflation, but before other costs, over a period of 30 years: £100,000 invested in each would result in a growth of purchasing power to around £135,000, £240,000 and £430,000 respectively.  Seemingly small differences in the compound rates of return (geometric returns), turn into large differences, in terms of financial outcomes. That’s one of the great positives of a disciplined and patient approach to investing – small returns turn into big numbers, given time.

On the other side of the coin, costs – when compounded over time – eat away at these market returns to a far greater degree than many investors ever imagine.  Let’s compare two managers who deliver 3% gross (before fees) above inflation, where Manager A has costs of 0.25% and Manager B has costs of 1.00%. We plot the purchasing power impact of these different fee strategies on outcomes, across time, in the chart below.  As you can see, costs matter a great deal; an investor in Manager B’s fund is over £40,000 worse off than an investor with Manager A’s fund over 30 years. Put another way, you end up one third more wealthy selecting Manager A over Manager B.

Figure 1: Compounding is a powerful concept (1)

costs

(1) Compounding: Starting amount X ((1+rate of return)^number of years), where ^ is ‘to the power of’.

 

As Jack Bogle would say: ‘In investing, you get what you don’t pay for’. A pound of costs saved is more valuable than a pound of performance gained because you reliably get its benefits every year.

Risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

 

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

 

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

The Two Types of Professional Networks You Need to Become Super Rich

There are two types of professional networks that you need in order to support your business and gain an abundance of wealth. Expansive networks and nodal networks are vital to becoming super rich.

  • Top entrepreneurs use expansive networks of many people and nodal networks with just a few contacts to generate tremendous wealth.
  • Nodal networks are tougher to build – they require deep relationships with exactly the right people – but they offer a tremendous return on investment of your time and energy.
  • Leveraging the connections of your own network members can work like rocket fuel – rapidly accelerating your success.

This article explains exactly what these networks consist of and how they could benefit you.

Click the image below to read the full article:

Professional Networks

 

 

 

 

 

 

 

 

 

 

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Brexit and Your Portfolio

Whichever way one voted, it is hard not to be dismayed by the shambles that is Brexit, concocted by all sides. In the event that any deal agreed gets voted down in Parliament, or there is no deal, there is a material chance that the government could fall. One or both of these events would come with great uncertainty.

We set out three key investment risks relating to Brexit and how sensible portfolio structures can mitigate them.

Risk 1: Greater volatility in the UK and possibly other equity markets

In the event of a poorly received deal or no deal, it is certainly possible that the UK equity market could suffer a market fall as it tries to come to terms with what this means for the UK economy and the impact on the wider global economy.  A collapse of the Conservative government and a Labour victory would add further uncertainty.

Risk 2: A fall in Sterling against other currencies

In 2016, after the referendum, Sterling fell against the major currencies including the US dollar and the Euro.  There is certainly a risk that Sterling could fall further in the event of a poor/no deal.

Risk 3: A rise in UK bond yields (and thus a fall in bond prices)

The economic impact of a poor/no deal and/or a high-spending socialist government could put pressure on the cost of borrowing, with investors in bonds issued by the UK Government (and UK corporations) demanding higher yields on these bonds in compensation for the greater perceived risks. Bond yield rises mean bond price falls, which will take time to recoup through the higher yields.

Mitigant 1: Global diversification of equity exposure

Although it is the World’s sixth largest economy (depending on how you measure it), the UK produces only 3% to 4% of global GDP, and its equity market is around 6% of global market capitalisation.  Well-structured portfolios hold diversified exposure to many markets and companies.  Changing your mix between bonds and equities would be ill-advised.  Timing when to get in and out of markets is notoriously difficult. Provided you do not need the money today, you should hold your nerve and stick with your strategy.

Mitigant 2: Owning non-Sterling currencies in the growth assets

In the event that Sterling is hit hard, it is worth remembering that the overseas equities that you own come with the currency exposure linked to those assets.  Remember too that a fall in Sterling has a positive effect on non-UK assets that are unhedged.  The bond element of your portfolio should generally be hedged to avoid mixing the higher volatility of currency movements with the lower volatility of shorter-dated bonds.

Mitigant 3: Owning short-dated, high quality and globally diversified bonds

Any bonds you own should be predominantly high quality to act as a strong defensive position against falls in equity markets.  Avoiding over-exposure to lower quality (e.g. high yield, sub-investment grade) bonds makes sense as they tend to act more like equities at times of economic and equity market crisis.

Some thoughts to leave you with

Even if you cannot avoid watching, hearing or reading the news, it is important to keep things in perspective.  The UK is a strong economy with a strong democracy.  It will survive Brexit, whatever the short-term consequences that we will have to bear, and so will your portfolio.  Keeping faith with both global capitalism and the structure of your portfolio and holding your nerve, accompanied by periodic rebalancing is key.  Lean on your adviser if you need support.

‘This too shall pass’ as the investment legend Jack Bogle likes to say.

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Educating Your Inheritors

The heads of many of the wealthiest families are concerned about their heirs’ ability to smartly deal with the money and business assets they will one day inherit. This is especially true among the first-generation wealthy. And their fears are warranted: full 70% of wealthy families lose their wealth by the second generation, and a stunning 90% by the third, according to the Williams Group wealth consultancy.

  • The people who inherit your assets need to know how to manage that wealth intelligently.
  • Wealthy heirs’ top priority is to identify and work with top financial talent to guide them.
  • They also want to know what their wealth can accomplish.

Click the image below to find out more about educating your inheritors about wealth planning and managing financial assets.

Educating Inheritors

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

The Entrepreneur’s Brain

Entrepreneurs have the equivalent of a Ferrari engine for a brain. That’s why we are major winners in the business world. But that Ferrari engine of ours usually comes with bicycle brakes – and a Ferrari engine with bicycle brakes can be very hard to control, and to slow down.

  • To thrive, entrepreneurs must learn to overrule their destructive tendencies while taking advantage of their considerable constructive gifts.
  • Learn systems that can help you slow down, inhibit, pause, ask for help, take advice, make a plan, get organised and think a project through.
  • Spend as much time as possible at the intersection of three spheres: what you love to do, what you have a special skill at doing, and what advances the project or what someone will pay you to do.

Click the image below to read the article

Entrepreneur's Brain

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

Retirement Income: It All Used To Be So Easy

You are a long time retired!

Thirty years ago, securing an income in retirement was relatively simple; collect years of service in the company’s pension plan and retire on a defined percentage of your final salary.  Today, for most, the risk and financial burden of securing a retirement income has shifted from companies and governments to individuals.  Turning investment assets into a stable income that will support a retiree’s expenditure throughout the unknown length of their retirement is a complex problem.  There are no easy solutions, as markets do not deliver consistent returns and the sequence in which these returns are experienced matter.

The sequence in which returns occur matters when taking an income

Let’s look at the impact of the sequence of returns in two scenarios.

  1. A £1,000 lump sum pot that has no additions or withdrawals.
  2. A £1,000 pot from which a withdrawal of £100 is made each year.

We will use the following 10-year hypothetical series of annual returns (Table 1), which delivers an annualised return of 4%, whether experienced ‘forward’ or in ‘reverse’.

Table 1: 10 years of hypothetical annual returns – forward and reversed sequences

Retirement income - scenario 1

Scenario 1 – A £1,000 lump sum pot that has no additions or withdrawals
It makes no difference, in the end, because 1 X 2 X 3 (‘Forward’) is the same as 3 X 2 X 1 (‘Reverse’), as the table below demonstrates.

Table 2: Scenario 1 – A £1,000 lump sum pot that has no additions or withdrawals

Retirement income - scenario 2

As soon as money flows into or out of the pot, the sequence in which returns are experienced has a material impact on outcomes, as we can see below.

Table 3: Scenario 2 – A £1,000 pot from which £100 is withdrawn each subsequent year

As soon as money flows into or out of the pot, the sequence in which returns are experienced has a material impact on outcomes, as we can see below.

Retirement income - scenario 3

This scenario equates to taking an income in retirement.  Even though the return sequences both deliver the same outcome on a portfolio with no cashflows, in a withdrawal scenario, weak returns and withdrawals in the early years (‘Reverse’) deplete the portfolio substantially, and when the better returns come in later years, these returns are applied to a far smaller portfolio balance.  The result, in this case, is an impecunious retirement for those experiencing the ‘Reverse’ sequence. Whilst, withdrawing £100 (or 10% of the starting balance) is unrealistically high, the point is made.  The sequence of returns matters, and upfront and ongoing planning is essential.

The value of retirement advice

It is evident that many people in, or approaching, retirement need to take advice from a well-qualified and experienced financial planner.  Choices to transfer from a final salary scheme, buy an annuity or set up a withdrawal strategy are highly complex.  Tax and regulation make an already complex issue, even more challenging.   Modelling an individual’s circumstances and evaluating and understanding his or her requirement for income certainty is key.  At that point, building a suitable portfolio and withdrawal strategy – perhaps encompassing some pre-identified strategies for dealing with poor market outcomes – is the next critical step.  This is not a set and forget process.   An insightful discussion on the progress of the withdrawal strategy is needed on an annual basis.  Recognising and understanding the possible challenges ahead – and dealing with them before they become problematical is central to success.  In most cases these events won’t arise.  But if they do, that is when a good adviser will earn his or her weight in gold.

Other notes and risk warnings

This article contains the opinions of the authors but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services. Donald Wealth Management strongly suggests that no investor should act on any of these ideas without first seeking financial advice.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated. The value of an investment is not guaranteed and on encashment you may not get back the full amount invested. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.

 

Stem Cells: The Key to Active Longevity and Quality of Life as You Age

Dr. Dan Carlin, co-author of The World of Concierge Medicine, talks here about stem cells and how they might just be the key to a long and active life.

“You’ve probably heard about how stem cells have the potential to cure all sorts of conditions, but what many people don’t know is that they can harness the power of stem cells for themselves right now.

The story of one of my patients shows how stem cells can help with one of the most common problems of aging, osteoarthritis.  With stem cell therapy, she was able to avoid a knee replacement and get back to pain-free activity fast.

Her journey began with seeing several orthopedic surgeons about her osteoarthritis. Her first two treatment options were typical: inject artificial joint fluid into the knee to temporarily reduce pain, or undergo a total knee replacement and commit to three months of physical therapy. She felt that there had to be a better option and reached out to us. We worked with a stem-cell expert and orthopedist in Europe to create a treatment plan that included injecting the knee with her own stem cells after undergoing an extensive surgical clean-out of the damaged cartilage and old scar tissue. She went to Europe for treatment and was soon back to walking and golfing with her friends.

My patient didn’t realize it, but the stem cells actually had a far greater effect on her longevity than just letting her play tennis and exercise. Being pain-free meant more physical and social activity, both of which have proven anti-aging benefits.

With a good physician on your side, anyone can access the amazing power of stem cells. To learn more, check out my book The World of Concierge Medicine, which shows you how to find a great physician and has more examples of cutting-edge longevity treatments.”

If you would like a copy of Dr. Dan’s book, The World of Concierge Medicine, please get in touch and I’ll happily provide you with a PDF version.

Pack Up Your Troubles

‘Pack up your troubles in your old kit bag
and smile, smile, smile…’

Modern life provides us – some would say swamps us – with so much news, information and punditry, which focuses on the here-and-now, that it is easy to be overwhelmed with the feeling of doom and gloom.  The list of things to concern us is long and worrisome; Donald Trump leading the free world, a nuclear-armed North Korea; an increasingly fractious Brexit process and looming cliff-edge, to name a few.

The natural extension of this is to worry about what the impact of all this uncertainty will have on your portfolio and in turn, on your future wealth and expenditure goals.  The first mistake is to believe that the world is falling apart around our ears.  It most certainly is not.  The second mistake is to think that the portfolio needs to be repositioned to mitigate these events. There are six key reasons why portfolio tinkering is unlikely to be a sensible course of action.

Reason 1: today’s ‘unprecedented’ turmoil is no different to how it’s always been

Today’s worries dominate our thinking; but can you remember what you were worrying about a year ago, or two years ago? Probably not.  It has ever been thus.  Take a look at the chart below. The overwhelming take-away is to acknowledge the relentless upward trajectory of purchasing power for those patient enough, and disciplined enough, to stay the course.

Figure 1: The relentless growth of purchasing power, despite World events

Purchasing power growth despite global uncertainty

Source: Albion Strategic Consulting[1]

Reason 2: bad news sells – so don’t ignore the underreported good news

We are all aware that bad news sells.  For example, the Office for Budget Responsibility (OBR) delivered a ‘gloomy’ forecast for growth of ‘only’ 1.4% for 2018.  Yet, the UK economy is still growing; remember too that this slow down comes after a period of growth that has outstripped much of the developed world – particularly the rest of the EU – for the past few years.  It is not all bad news.

Reason 3: the danger of conflation of ‘what ifs’

The human mind likes stories and in themselves these stories may lead to what appear to be rational outcomes on which some action, or another, could or should be taken.  What we often fail to realise is that the seemingly logical outcome is highly unlikely; we have failed to multiply the probabilities of each sequential outcome together.  Think hard about the stories you read and hear.

Reason 4: the futility of futurology

Futurology is the financial markets’ version of astrology.  There is a huge industry out there from the IMF and the UK’s Office for Budget Responsibility (OBR) to investment banks, academics and BBC reporters all peddling their own view of the future.  These futurologists have one thing in common; they are nearly always wrong in their predictions, and are rarely held to account for their poor forecasts. Take forecasts with a pinch of salt.

Reason 5: the framing of data

As we all know, data is used to score points in support of the data-user’s viewpoint. Be aware that simple statements of fact can be both very influential and misleading.

Reason 6: the news is already in market prices

It is normal to be worried about the potential impact of what is going on in the world and how this will affect markets.  The reality is that you are not alone; in fact, all active investors have some view on how Trump, Brexit, Merkel’s problems in Germany, or the Federal Reserve in the US – to name a few – will impact bond and equity prices.  These global, diversified view-points are already reflected in the equilibrium price of securities, agreed freely between buyers and sellers.

Your portfolio is already structured to manage uncertainty

Today’s concerns such as Brexit, Sterling’s weakness, potential tax rises in the event of a Labour government, and Donald Trump in general, are endlessly recycled through the 24/7 media soundbite process, alarming some who are invested in the markets.  Well-structured investment portfolios seek to ensure that any market conditions can be weathered in the future, whatever drives these storms.  Your highly diversified portfolio, balancing global equity assets with high-quality shorter-dated bonds, is well positioned to do so.  Try not to worry.  Start by watching the news less.

If you are feeling concerned, please feel free to get in touch to talk further.

[1]     Global balanced portfolio: 36% MSCI World Index (net div.), 26% Dimensional Global Targeted Value Index, 40% Citi World Government Bond Index 1-5 Years (hedged to GBP) – no costs deducted, for illustrative purposes only. Data source: Morningstar Direct © All rights reserved, Dimensional Fund Advisers.

Other notes and risk warnings

 This article is distributed for information purposes and should not be considered investment advice or an offer of any security for sale. This article contains the opinions of the author but not necessarily Donald Wealth Management (the Firm) and does not represent a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but is not guaranteed. It is not a promotion of Donald Wealth Management’s services.

The past is not indicative of future results and no representation is made that the stated results will be replicated. Errors and omissions excepted.

Donald Wealth Management is a trading style of Donald Asset Management Limited which is authorised and regulated by the Financial Conduct Authority in the United Kingdom (FRN: 223784). Donald Asset Management Limited is registered in England and Wales under Company No. 4675082. The registered office address of the Firm is: Stable End, 12 Heather Court Gardens, Four Oaks, West Midlands, B74 2ST.