My favourite definition of pot
Hands up if you thought this was going to be about investing in cannabis?
To be fair I looked into this earlier in the year, and could see massive potential in a small stake in some of the Canadian companies.
I just couldn’t convince my wife – who sees the effect drug addiction has on university students, even though there is a pretty big difference between the two.
Anyway, back to the subject line.
All smart investors have different pots of money which they use for different types of investment.
One may be a pot which needs to generate monthly or at least annual income.
Another could be for long-term armchair investing, with the intention to build this pot up through compounding.
Earlier this year I started a pot where the intention is to never withdraw the interest to use as income.
In this pot I put £40,000, and found an asset backed investment which had an expected maturity of 12 months.
Since then I’ve decided I need to set a target annual interest and long-term plan for this pot. I believe in developing plans, and sticking to them.
So I decided I want this pot to generate 20% per annum, and I won’t touch it until my daughter turns 21, at which point my son will have just turned 18.
If I achieve my aim the £40,000 will be worth £739,537 in January 2034.
This will give them a leg up at a time when they need it, hopefully to pursue something they really care about.
This type of return is almost impossible if I stick it in a bank account, it’s even pretty unlikely if I invest it in a FTSE index tracker.
Instead I will seek out security backed investments, or those that don’t care what happens in the economic and political worlds.
I already know a few of these and believe there will only be more and more opportunities in the future.
If you also want the skills and knowledge to seek out these types of alternative investments you will need to become a Guerrilla Investors subscriber.
All the best,
Stephen Wallis.
Photo by Harry Quan on Unsplash