From £1 per Day to £20,000 in Liquid - Part 5 of 8
By Stephen Sutherland, author of Liquid Millionaire.Posted in the Category of ISAS, Investing, Stock Market, Investment Fund, Wealth Building on 13th January, 2010.
Tags: isa, isa investing, liquid millionaire.
How Saving £1 per Day Can Help You Accumulate £20,000 in Liquid Capital
Can you afford to save £1 per day? If you answered yes, I have just the way for you to quickly accumulate your first £20,000 in liquid.
Some people who read my book Liquid Millionaire really loved it – but at the same time they came to the end of the book and were frustrated.
Here’s a couple examples of readers’ comments posted as reviews on Amazon:
“People like me with less than £10,000 will not be able to afford the £6,000 to gain access to the information which could make you richer.”
And…
“…I must say that the service offered looks interesting. I don’t know if I can afford it, not living in the UK.”
I think I know why people like this are frustrated. It’s probably because they don’t have the cash to give them the option of possibly becoming one of my premium clients.
In my four previous blogs, I started to share with you a simple 10 Step Strategy which could seriously help you save £20,000. In my previous blog I focused on Step 5 - Save at least 3% of your net income and Step 6 - Save 10% of your net income. Today I want to share with you how and when you can start investing the savings you have built up to help you reach your first £20,000 sooner.
Step 7 – Hit £2000 and when the S&P 500 is 20% off its high, start investing in a Stocks and Shares ISA using a tracker fund.
As soon as you hit £2000, you want to give yourself a huge pat on the back. Yes, you maybe only 10% of the way to your goal, but saving £2000 is a huge achievement – especially if you have not enjoyed saving in the past.
When you hit £2000, I suggest that you start watching the behaviour of the S&P 500 index.
The S&P 500 is the US equivalent of the FTSE 100.
And you can watch the S&P 500’s daily behavior by daily viewing of the website Yahoo Finance. http://finance.yahoo.com/
So what do you need to watch?
I want you to start to look at the chart of the S&P 500 so that at a certain price point, you are going to invest either your full £2000 or part of it – into a tracker fund using a Stocks and Shares ISA.
Let me explain.
First of all, you must keep focused on making sure that you stick to your new budgets after your expenses cut exercise. You also need to make sure that you are working on increasing your income and that you are continuing to pump money through a direct debit into a savings account.
While all this is going on, you want to be watching and waiting for the right time to pounce on the market.
And when I say pounce, I mean to get into the stock market at a good entry point.
Notice I say good entry point rather than safe.
You have to understand a couple of things here. First of all, timing the market is not easy. In other words, it doesn’t matter who you are or how good you are at reading the trend of the market, trying to get into the market right at its bottom is impossible. However, by understanding that your goal is not to get in at the very bottom, but instead to get in when the market is “low” – as long as you treat your investment as long-term, you’ll do fine.
I say “think long-term” because when you finally get invested into the market, your portfolio account value could fall before it eventually rises. This is simply the way the market works.
But when you know it’s a fact that the stock market will always eventually move into new high ground, and that the market over the last 100 years has been in an uptrend, it means as long as you are patient, your account is going to rise.
I say that it is going to rise with certainty because the stock markets have always recovered after downturns – however severe the downturns have been. And I can assure you that they will continue to do that in the future. The important thing is that you have faith. You have to believe that they will recover or you’ll panic, draw out your money and seriously regret your decision.
So when should you get in?
I’d suggest you wait until the S&P 500 is at least 20% off its recent high. This is because when the S&P 500 is 20% off its high it’s what is known as a bear market.
The challenge is that once you are at 20% off the recent high, it doesn’t mean that the index can’t go lower. However, getting in 20% off its high is in my eyes a fairly decent entry point for any long-term investor.
In Friday’s blog I’ll be going into detail about 2 different strategies you can follow for investing your initial £2000 - Lump Sum and Pound Cost Averaging.
Find Out More
In the mean time if you would like to find out more about how having £20,000 to invest could help make you a liquid millionaire please click here for a FREE sneak preview of my book, Liquid Millionaire.
Happy reading!
Your friend,
Stephen Sutherland
The UK’s Leading Authority in ISA Trend Investing and Author of Liquid Millionaire
Please Note: As always, let me remind you that I am not a financial adviser and therefore not authorised to give advice on what investments to buy or sell.
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