Good morning, friends! ☀️
I am writing this right after my 12k run in Regents and Hyde Park this morning! Now that hockey season is over; I can start running further distances without ruining my body by adding three hockey sessions a week!
Anyway, this week I wanted to discuss a massive taboo subject for British people: money!
Last week, I was discussing investing with a couple of colleagues. Naturally, everyone has different opinions about how to "best" invest their money, and it boils down to personal preference and what allows you to sleep best at night!
With this in mind, I wanted to explain how I invest my monthly money from my salary and the reasons behind my current process.
💡 Needless to say, I am a data scientist and not a financial advisor, and nothing in this article is financial advice or recommendations.
Now that we have the disclaimer out of the way, let's get into it!
I have always been reasonably interested in the stock market; I even read Benjamin Graham's book Intelligent Investor (affiliate) when I was 16! For those unaware, Intelligent Investor is seen as the holy grail of how to approach investing, particularly value investing.
Value investing uses fundamental analysis to find inherently undervalued stocks. This analysis looks at a company's assets, liabilities, and the general outlook of the market.
My journey with value investing began with an attempt at picking individual stocks. However, I soon realized that the extensive analysis required to beat the market was beyond my capacity. 'Beating the market' encompasses various aspects, but it generally implies that your investments are outperforming a global index like the S&P 500 or the FTSE 100.
As a result, I now have a much simpler approach. I invest most of my savings into an S&P 500 ETF within a stock and shares ISA and try to maximize my contributions every tax year. Obviously, there is a risk it will go down, but over the long term, 10+ years, the S&P trends upwards.
An interesting story is that in 2008, Warren Buffet bet with a few hedge fund managers that the S&P 500 would beat a hand-picked portfolio by these funds over ten years. In 2018, Buffet ultimately won and showed that simple index investing may be better than these tailored funds with management fees.
The next thing I do is put my money into an emergency fund/basic savings account. I simply use premium bonds for this, mainly for ease of use and the tax wrapper. I probably have three months' worth of living expenses, but I would like to increase it to six months this year. I could open a cash ISA, but I'd instead use all my allowance on stock and shares ISA investing in the S&P 500.
Finally, because of FOMO, I dabbled some of my money into Crypto, mainly Bitcoin and Ethereum, but that's not all. I am also a proud owner of ~144 Dogecoins!
I see "investing" in Crypto as pure gambling from my side. I don't put much money into it to the point where I depend on it. Although Bitcoin reached an all-time high a couple of days ago, I didn't even realize it! It just shows how much attention I pay to it.
So, to summarise:
Most of my money is in the S&P 500 within a stock and shares ISA
Some of my money is in an emergency fund through premium bonds
Tiny bit of my money is in Crypto, mainly Bitcoin and Ethereum
This works for me, and I am happy with it. I am probably on the more "risky" side, but it doesn’t keep me up at night.
I am always curious to hear how other people invest their money so that I can discover potential new assets to explore, so feel free to reach out!
Weekly Favourites ❤️
🎬 Book — Prisoners of Geography by Tim Marshall. I am re-reading this as it is genuinely one of the best books I have ever read. It explains almost everything you need to know today about the world from a geopolitical perspective.
📩 Newsletter — K's DataLadder. One of my friends from the data community has recently started her substack newsletter, which is fantastic. Khouloud is a data scientist at Spotify and shares her insight working at a top-tier tech company every week.
🎬 YouTube — Darren Lee. I recently discovered this podcast, and it's really good. If you like business-based podcasts, I recommend you check it out!
(PS: Some links are affiliate links that I get a kickback from with no extra cost to you 😎)
My Latest Content 🎬
You can reach me on:
LinkedIn, X (Twitter), or Instagram.
YouTube Channel and Medium Blog to learn technical data science and machine learning concepts!
💡 If you are interested in sponsoring this newsletter see here.
Really cool post Egor! It’s comforting to see other people do the same as me. Something I find quite difficult to assess is usually how much to put in an ETF. A friend of mine recently explained that it’s better to put the amount you can go without for 10-20-30 years, and it helped me a lot. Also worth noting that depending on where you live, there can be tax exemptions from investing in ETFs, which is really cool!