Richie’s Guide to Free Money
“Free Money”, isn’t that a grand idea. Well, read on and I’ll tell you how to get some.
Free Money has been a saying in our family for many years. Years ago when the kids were young and growing (spoiler alert: I’m of a different generation to most The Bank Engine’s followers) we wanted to undertake some major house renovations. This involved adding two bedrooms and an activity room and cost what seemed a princely sum.
Years later when discussing finances with now adult children, twenty-something daughter suggested we were able to afford this as it didn’t require “real money” but instead was paid for by “Free Money”. What did she mean by this? Well this was money that didn’t come from regular salary or wages, but was investment earnings that had been steadily compounding for years previously.
At an earlier juncture I had been made redundant with a minor pay-out of accumulated holiday pay and compensation. While this may sound fortunate, those who have been have been through a similar experience I’m sure will echo my feelings of anxiety and concerns that comes with this. With a potential period of unknown duration with no income and a family with small children we reduced expenses where possible and I beavered away looking for a new job. I was able to secure a new role – certainly not my dream job but I would work to improve that later and was able to retain a portion of the redundancy payout. Now here’s the key: this money I invested and added to in a low cost on-line share portfolio. If he’s not already done so I’m sure Thomas can point you in the direction of many of these. This investment has returned an average of 12% per annum and the compounded earnings are the basis of the Free Money.
What else could I have done with this…go on an overseas holiday? I tell you with four children in tow this burns through cash at an unbelievable rate! Or I could have invested in a bank account but I’d have only got somewhere from 2-4% per year. So why Shares? Upfront costs are low (online trades cost as little as £10 each), you can start with very modest amounts, you can easily add to the investment and maintenance costs are low. Sure there is a potential for more volatility but over the long term this has been demonstrated to provide higher returns
So the way to Free Money is to create a small investment account – don’t worry you can start small, put off a holiday or two, or forgo the take-away coffee on the way to work and importantly remain patient while the magic of compound interest works.
My Free Money account continues to provide for family occasions. Adult children know how to find the best restaurants and most exotic cocktails and they remain thrilled that this is paid for with Free Money.