Stoicism, p2p lending problems, commission-free trading etc!

A great sunset view from Wapping, London
A great sunset view from Wapping, London

I initially thought these “What I’ve read this month” posts will occur every month (duh!). But moving to a more quality over quantity kind of writing, I decided I’ll write a blog post every 2 weeks or so.

Therefore, this Reading section cannot happen so frequently, but once every 2-3 months and will include all my new findings. That’ll usually be evergreen articles I liked, resources such as books or online services and generally valuable content I’d really want to share! Without further ado, let’s begin ūüôā

Stoicism

I initially learned about it when I was at the school and as with any other philosophy subject I didn’t pay much attention to. The Financial Independence movement brought Stoicism to my attention once again. Finally, I listened to a Stoic Philosophy 101 podcast episode which convinced me to write about it.

Stoicism is an ancient Greek philosophy which says that you should only focus on things that sit inside your control. At the core, we don’t control what happens to us, we control how we respond to it.

This makes perfect sense to me when I think that people worry so much about the weather, traffic, etc today. The idea is that when you get mad about traffic, you should run through this process: Is worrying about traffic going to change it? How can I funnel my energy to use it productively instead?

Stoicism is not the absence of emotions, but the domestication of them. It’s like leading your emotions instead of being driven by them. Less stress, more happiness. Generally, I’m a calm person but want to take it a step further so I’ll definitely read a book on it. If you know one, please comment!

Another great podcast

50 things that made the modern economyI subscribed to another great podcast, hosted by the BBC World Service: 50 things that Made the Modern Economy. It explains how innovations such as the elevator, battery, public key cryptography (which Bitcoin is based on) have shaped our world. I learned a bit of history too. I didn’t know passports didn’t exist until very recently!

I’m also occasionally listening to random episodes from the following while commuting:
The Mad Fientist
 podcast [interviews with people who achieved financial independence]
The Tim Ferriss Show [self-improvement, fitness, creativity]
The Side Hustle Show [side income, part time jobs, entrepreneurship]
Smart passive income [business, entrepreneurship]
The Meb Faber show [stock investing, asset allocation]
Freakonomics [mythbusting, freakonomy!]

Peer-to-peer lending problems

You think the stock market is overvalued? So let’s invest in alternative investments instead. Everyone seems to think the same way (including myself) so a flood of investors and a shortage of borrowers started lowering the nice returns.

Although I don’t have more than 20% of my net worth in peer-to-peer lending I’m thinking whether this experiment is worth continuing. A few reasons:

Zopa plus rates
My Zopa plus rates have dropped from 6.5% to 5.4%

Guardian reported that credit card debt is rising¬†therefore unsecured lending will be the first to fall. Zopa (which I’ve recently reviewed) recently sent us an e-mail stating that due to rising debt expected returns will be lower at about 4.5% (previously 6.5%). They have also stopped accepting new investors due to the high supply.

Ratesetter has been hit with a ¬£80 million bad loans from its wholesale lending. They informed the public about it and offered a free sell out if someone wants out. Their provision fund will cover all losses and investors won’t lose any money.

I’ve stayed with Ratesetter because I believe that culture and honesty wins in the long term. Problems will always occur, it’s how you overcome them that matters. Ratesetter withdrew themselves from the Peer to peer Finance Association in an attempt to show they acknowledge their mistake of breaching the transparency rules. By the way, if you sign up using this link we both get a ¬£100 bonus.

Commission-free trading coming to the UK

You may have heard of Robinhood, the US app that allows people to buy and sell stocks for FREE. Yup, that’s right. The usual commission on the market is ¬£12.50 plus any foreign exchange fees which suck. As if that’s not enough, they charge a percentage fee on dividends too.

Anyhow, I had a chat with the folks from Freetrade.io a new app coming to the UK to disrupt this nonsense. They have not launched yet but you can sign up and wait. I had a couple of questions like… “Where’s the catch?”. Viktor from Freetrade was keen to answer and here’s a short summary:

Me: Is Freetrade available only for stocks or for mutual funds / ETFs as well?

Viktor: When Freetrade launches, users will be able to buy stocks and ETFs on US exchanges, too. That includes the popular Vanguard ETFs, and Freetrade will provide the cheapest option to buy them in the UK.

Will it include an ISA?

Yes. ISAs will be a premium offering. However, our basic account will be free, forever, without limitations like account size or the number of trades. That should work well for people getting into investing, as capital gains up to £11,300 are tax exempt currently.

How does Freetrade make money? (I actually mentioned Freetrade to someone and that was the first question he asked me).

Indeed, that’s the top question we get! We’ll offer premium features and services, similar to Amazon Prime or Robinhood Gold. We have a list of premium services e.g. ISAs and SIPPs that we’ll charge for.

Are there any fees after buying the stock?

No, none.

What happens to my stock holdings if Freetrade stops trading / bankrupts / ceases to exist?

In the future, upon being authorised and starting to operate as a stockbroker, all client cash and securities will be held in segregated accounts in accordance with FCA rules. That means that if Freetrade were to cease operations, client holdings would not be impacted, and any wind-up would be under FCA supervision.

So yeah, sounds good so far. I’m only allocating 5% of my net worth to individual stocks and see it more as play money but one could hold Vanguard ETFs in Freetrade to benefit from low-cost index funds.

The first version of the app is going to be a private beta, and they’ll invite users from their waitlist in small groups. They’ll prioritise access for users who referred the most of their friends to reward those people who helped build their community the most. I’ll probably test it out and report my findings back to the blog – here’s the sign-up link.

Couple of books

Million-dollar-blog

Whether you’re an existing blogger or just considering blogging the Million Dollar Blog book will help you dream big and think positive.

There are many success stories that prove blogging is a great way to get yourself out there. Publicity, earnings and a place to share your thoughts can all be achieved by blogging.

I’ve written about how to start a blog in 5 steps¬†and will certainly write again about the benefits!

Four pillars of investing

Despite its cheesy looks, the Four Pillars of Investing is a great all-time classic book on investing.

It describes how the fees can destruct your returns while you think they’re low and how the Wall St is built on them.

W. Bernstein discusses asset allocation depending on your goals, which is one of the most important things we should get right when investing. In other words, how much should I have in stocks and how much in bonds to achieve my goals?

The psychology of investing can often be the biggest obstacle we face as humans. This is why Bernstein tackles our behavioural mistakes as first class citizens and tries to set a framework for winning the long term game. It’s a great book that I’ll probably read again in a few years time.

Articles, happiness and financial morons

The new, nearly invisible class markers that separate the American elite from everyone else (qz.com) –¬†This very contradictory post shows how rich people have stopped buying consumer products in order to impress those around them and moved to spending money on education, yoga-like activities and organic-eating choices. Partly it’s because of the fact that, in our times, more and more people have access to the same high heels rich people used to wear. Definitely worth a read!

Forons  РThis guy, Financial Zombie is so funny. Financial Morons (Forons) is his new invention, referring to people who just mindlessly spend as much as they can. Some real-world stories in there, I enjoyed it!

Great News – There’s another recession coming¬†– MMM is right. The stock market is currently overvalued by any metric you can find. That means the next crash is coming. But it has always been like that. The million-dollar question is WHEN!

Since nobody knows, I will continue my dollar-cost averaging investing, stomach any short-term losses in case of a recession and care less about it. You should too!

The Aggregation of Marginal Gains – A 2015 post from the Escape Artist. Self-improvement, in the form of small wins. To add to that: “Long shots are small shots that keep shooting”.

22 Life Lessons I Learned from my Mentors that Every Person Should Know – Self-improvement again, 5-min read. My favourite quote:

I fail all the time, I just don’t give up

Which reminds me of another quote:

Rocky quote

Take care!

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