The Tools I Use To Invest

I thought it would be useful for readers to understand how I manage my own money, from a practical point of view. All too often one does not know what tools to use to manage one's own money as there are so many to look at, and so many that can confuse.

I outline below some of the low cost tools I use to help me invest and trade. However, it is well worth spending a little bit of money so you have these key tools to make smart and quick decisions. I use these tools regularly and now are integrated into my lifestyle of growing my own wealth.

In no particular order, these are some of the tools you will require:

On line Broker

I use on line broker TD Waterhouse to buy and sell my shares. www.tdwaterhouse.co.uk. They are a pretty large broker (known as a a Ameritrade in the US) and have access to most well known markets including the US. They normally charge £12.50 per trade (buying or selling) irrespective of the size of trade, whether it is £1000 in value or £100000! However, if you trade regularly the charge does fall to £9.95 per trade.

I don't use them for any advice, they are my execution broker online. In addition, i subscribe to their live pricing feed for the London Stock Exchange which costs me around £50 a quarter. If however, you do a lot of trades you can even get this free of charge. Is it worth having live prices? Absolutely, as sometimes on a trade you may get in and out within minutes after taking your profit! There are some other good companies out there too, such as e-trade, self trade etc.

However, for the US markets (which open at 2.30pm UK time at the moment), you do not need to subscribe to live pricing as this is free on sites such as www.google.com/finance (see below), but bear in mind if you want more detailed information about US market trading activity then it maybe best to subscribe accordingly to a site. However, a site like Options Express (see below) will provide usually enough information free.

Although i use TD Waterhouse for most of my trades including US trades, i also have a separate US broker known as Options Express. I have not used them much but they seem pretty good too.


Technology

I have a separate netbook which is just used to getting my live pricing on. I find having a separate PC, with this live data, much easier to us. I have a Dell netbook which costs me around £20 a month (for 2 years) from Vodafone which includes a good 3G allowance too ( you can get them even cheaper now). This can connect to a wi-fi connection too, where i can log on and get my live pricing if necessary.

I have an Iphone too, which has prices of shares that come directly via bloomberg. Pretty good too, but there is a 15 min delay in UK pricing.

Key Websites

Most of my research comes from the web. I use the following free websites:

1. www.google.com/finance - for US and International company information
2. www.google.co.uk/finance - for UK company information and news
3. www.yahoo.com/finance - for US and International company information

The above 3 websites are free and excellent. They act as an aggregator of information which then you can read as you wish. In addition, each stock you maybe following usually has a discussion board....which usually are pretty interesting to read. However beware, some postings are dubious at the best of times!

In particular I use the google sites for charting. They have a great free facility to be able to see the charts of the shares but also allow you to see key technical analysis too.

I also use:

1. www.iii.co.uk - for more information about UK companies and associated discussion boards
2. www.bloomberg.com - for breaking and up to date financial news
3. www.ft.com - for UK and international news

So what next?

Ok you have the account, the technology and know where to find information about companies, then you need to start choosing stocks and shares to invest in!

Most people never get to this stage as they feel that it is too difficult or they think it is easier to get their financial advisor to manage their finances. But my experience has shown that if you can get the above set up for yourself, then you can actively start trading and investing for you! If I can do it, so can you! And i would strongly suggest you take control of your own investment strategy. A good individual investor can usually beat the Professional Fund Manager!

How To Beat The Market!

The last six months have been a great six months for both active and passive investors. I had every intention of blogging about my investment strategies and sharing my thoughts with all. However, rather than blog, i decided, i would just get on with making some brilliant returns, and they have been brilliant. Therefore no time for blogging. Sorry.

I am sort of the person that believes rather than talk a good story, the best way to show to others is actually do it. Whether it is dental practices or trading shares, i would only expect others to do what i say if i have actually done it myself. Far too often, i hear and read of people doing what experts tell them, yet the expert has never actually done what they are suggesting. My brief time as a Management Consultant at PricewaterhouseCoopers and an analyst in the City taught me how to be a master of consultancy and analysis, however, i have only become a strong investor in business and shares by doing it myself (and of course by making plenty of mistakes!).

In this edition of our newsletter, you can read my piece about "How to beat the market! - Passive vs Active vs DIY Investing". In particular I highlight the benefits of DIY investing (assuming you know what you are doing) as opposed to investing in managed of tracker funds. I genuinely believe and feel that most individuals can manage their own funds and grow their own weatlh smartly, as opposed to using funds that charge and take away a lot of the returns. If you like what i say in this piece, and want to know more then i would suggest you then join us on our "Master your Wealth" day on the 30th October 2009. If you want to take control of your own financial well being, and not leave it to so-called experts, this day will be the impetus for you to do it! This will be a very small group, for more details and to book click here.

Passive vs Active vs DIY Investing

I personally don’t understand why people invest in ‘tracker’ funds. Why pay someone just to replicate the performance of the index?

A friend I was talking to the other day was singing the praises of this kind of ‘passive’ investing. He made the point that you may as well go passive since few active fund managers can beat the index over a sustained period. And that’s fair enough.

But to me it misses an even more important point. You don’t need to settle for market-tracking returns. It’s perfectly possible for individual investors like you and me to beat both passive and active funds by picking suitable stocks.

Let me show you what I mean...

There’s little doubt that index, or passive funds are a much better bet than actively managed funds. John Bogle, who founded the well-regarded Vanguard Group of index tracking funds in the US, has done a detailed comparison. The arguments in favour of index funds over actively managed funds are convincing.

Most actively managed funds don't beat the market in the long run

For example, he followed all 355 equity funds existing in 1970 over the period from 1970 to 2005. Of these, 223 did not survive to 2005. Only 24 of the remaining 132 beat the market by at least 1% per year. Just nine of those 24 beat the market by at least 2% per year and two beat it by 3% or more.

Choosing one of the few outperforming funds also proved to be difficult. Bogle looked at the 20 top performing funds in each year from 1995 to 2005. He found that the average rank of these top 20 funds in each following year was 619! In other words, if you bought one of the best funds one year, it often ended up being among the worst funds the following year.

One of the reasons the funds did so badly is their high costs, which are compounded over the years. Another reason is that funds advertise most heavily when the markets are reaching a peak. That means most investors invest more when shares are expensive rather than cheap.

Finally, large funds find it hard to invest in the stocks that are most likely to show the best share price growth. This is one area where smart individual investors have a serious advantage over fund managers. Here’s why. Let’s assume that a fund manager has 50 stocks in a £1bn fund. That is £20m per company on average. Now the manager will probably not want to own too large a percentage of any one company’s shares. This means that for a £20m holding that's worth, say, 3% of a company, he is limited to stocks with market caps over £660m. This figure will be even higher for a larger fund.

This means the fund must concentrate mainly on larger companies – the FTSE 100 if it is a UK fund. Indeed, many so-called active funds are just ‘closet’ trackers but with charges much higher than those of any tracker.

Every investor looking to beat the market consistently should avoid these funds - they can be dangerous.

The Best Way to Consistently Beat the Market

So we can see that index trackers are a smarter play than actively managed funds. However, there’s no need for you to settle for simply tracking the market. Because you have several advantages over the average fund manager that should enable you to beat the market. These advantages include the freedom to pick stocks from any sector and any market, right down to the smallest micro-cap. And you do not charge yourself any initial or annual fund charges.

You also have an advantage over the index fund because you can decide how much you invest in any single company. The index fund has to invest in proportion to the company’s market cap.

But of course, these advantages only give you better performance if you pick stocks wisely. There are a few simple rules to follow that will help in this. Of course, a company’s valuation needs to be reasonable to start with. But there are other important things to consider.

The first rule is to select companies with financial strength – look at the balance sheet and cash carefully. Secondly, make sure the company is growing profitably and has a leading market position in its niche. And thirdly, make sure that it is doing well in overseas markets as well as the UK – there is much more risk if a company is limited to the UK market.

But perhaps most importantly, the company also needs to have a sustainable edge in its market. This usually means it re-invests in its own future. Put another way, it is sufficiently profitable to be able to invest a sizeable chunk of its revenues in new products and services coming out of research and development. This kind of re-investment can have a dramatic positive impact on the share price down the line.

If you want to know more and learn about some of the keys to successful investment plus my investment allocation strategy come along on the 30th October. For more details and to book click here. I will share with you in detail how big my returns have been in the last 6 months, plus all the strategies i employ to grow my own wealth as a DIY investor.

Happy Investing and Reading!

Arun Mehra FCA �

How to add £100k to your top line

My latest Samera Newsletter....i hope you enjoy it. Click here to read it!

Has the market peaked?

Has the market peaked?

As an active personal investor in the stock market, this recent unprecedented rally is looking rather top heavy in my humble opinion. The markets have taken some good profits reported by most of the banks and used this as an impetus for rising. In addition, certain key data regarding unemployment in the US was more positive than expected. However, as a keen observer, markets always over-react to news - in a good and bad way.

My feeling it is doing this now too, and that the market is due some sort of correction soon. When? I have no crystal ball, but fundamentally the US and UK commercial and residential property market plus their economies are still weak, no matter how much money is pumped into the economy the fundamentals are still weak.

Unemployment is rising, banks are still hesitant to lend to small businesses, public spending is high...so fundamentally still many problems do exist. This rapid growth in the markets will no doubt come down with a bang very soon, in my humble opinion.

However, you can still make money in a downturn too - you just need to short the stocks or indices!

Happy investing and trading

Setting Up In Practice in a Recession

Setting Up In Practice in a Recession

Over the last few weeks i have been visiting many high streets across the country, and as you have probably noticed already, many of the units in many shopping centres are now empty. This recession has forced the closure of many well established names including our beloved Woolies. In many thriving centres, Lidl, Aldi Iceland, and Wilkinson's are opening up, changing the face of UK High Street. In fact, since the demise of Woolies, 7 out of 10 of its stores still remain empty, with such discount retailers taking Woolies old prime sites.

The UK High Street is undergoing a revolution, as consumers search for better value, much of the time online. Most well known department stores, once the preserve of higher prices, all price match on the Internet now. They have to, else the customer will go somewhere cheaper.

However, this shift in profile of the high street, in my opinion, will mean a change in how UK High Street will look in the next 5-10 years. I believe increasingly local councils will change their planning needs, as many shop units remain empty. This presents an opportunity for any budding dentist, as i personally feel over the next few years it will be easier to get change of use from shop status to dental practice status. The future of the UK High Street will include many more service oriented businesses, whilst the shopper shifts their spending on commodities onto the Internet. The high street will be dominated by large company brands and service oriented businesses, such as opticians, dentists and even doctors. Customers will come to the high street for big brands and their services.

As i mentioned, this represents an opportunity for those entrepreneurial service providers. Although rents will be higher in such prime locations (compared to off high street locations), such locations usually justify the prices charged. Being in the centre of the action, where the potential for greater footfall is usually so much higher is usually worth the extra spend. I have seen this in many of our clients who sit in such high street locations.

Location, location, location is ultimately the best marketing investment.

So what should you do now?

Well, as i have said many a time, opportunities don't hang around. Whilst times are tough (especially for commercial landlords) it is a good time to try and get a bargain and set up your own practice. Will it be easy to do? No, but rarely are the great things in life easy.

So if you are one of those dentists wanting to make that move but still feel scared about doing it, good, that is exactly how you should feel. Setting up a practice is not easy, and it is definitely for everyone, however the potential returns can be great, personally and financially.

If you take no risk, the rewards will be minimal, but if you take some risk (managed properly) the potential upside is big. So if you have some savings, lets £50k, you could put it in a savings account and after 5 years, with current interest rates have around £56k. Alternatively, if you use these savings, use your skills of dentistry, raise some finance and combine that with some business and entrepreneurial flair, that £50k could be worth much nearer £500k after 5 years (assuming you set up a 2 surgery practice)! That's not a bad return in anyone's book.

Of course, it isn't so simple, else every dentist and his nurse would be doing this. But if you want to get on board, and take that massive step to setting up your own practice, then you need to come along our "Setting Up In Practice" event on Friday 18th September in London. This is the only event of its type we are holding this year, so don' t miss it.

In this one day event, we will cover all the aspects of setting up a successful practice, Private AND NHS, but we will also be highlighting what you should be looking for when buying a practice cheaply.

So If you really want to open up your own dream practice or buy the right type of practice for you, and build long term asset wealth, this seminar is for you!

During this 1-day seminar you will gain a plethora of theoretical and practical advice from two experts who have set up a multitude of private dental squats across the UK. Moreover, you will learn first hand the real deal in how to set up a successful practice in a short period of time. To book your space, please click here.

Please note the pricing for this event doubles every month, so book early to avoid paying the higher price as we are doing this event only once in 2009!

Book in July - £100+VAT
Book in August - £200+VAT
Book in September - £400+VAT


Book by 31st July 2009 to get your seat for £100+VAT.

We will be only doing this event once in 2009, so make sure you book today, as i can assure you this will not happen again until 2010. If you want to set up your dream practice AND grow your wealth whilst being a dentist, then this event is for you.

Have a fun week ahead!

Arun

P.S Spaces are strictly limited, so if you want to book, make sure you book here today. �

To Laugh...

is to risk being a fool
to weep is to risk appearing sentimental
to reach out for another is to risk involvement
to expose feelings is to risk rejection
to place your dreams before the crowd is to risk ridicule
to love is to risk not being loved in return
to go forward in the face of overwhelming odds is to risk failure
but risks must be taken because the greatest hazard in life is to risk nothing
the person who risks nothing, does nothing, has nothing, is nothing
he may avoid suffering and sorrow, but he cannot learn, feel, change, grow or love
chained by his certitudes, he is a slave
only a person who takes risks is free

One Book That Changed My Life Forever

One Book That Changed My Life Forever

I was reminded by Mahen the other day about a book we both read around 5 years ago. The book in question, was called "Rich Dad, Poor Dad" by Robert Kiyosaki.

This book changed my life forever.

Picture this, back in 2002, i had just quit my highly paid big six figure salary job, and was feeling pretty good about myself. However, i had no plan as to what i was going to go and do. I had been married to a dentist (Smita) for around 6 months, and could quickly see she did not want a layabout of a husband sitting around at home most days (besides, being a very driven person, sitting at home was not what i wanted to do, i had quit the City to do my own thing!).

Well after 6 months of travelling and charity fund raising, i was recommended to have a read of "Rich Dad, Poor Dad". Being the cynical guy that i am, i thought initially, what do i need to learn from a book? At 28, in my last 2 years in the City, i had made more money than many people had in a lifetime. Anyway, curiosity got the better of me, and so i decided to have a good read of it. I did not regret that decision.
So what did i learn from the book?

Well the book traces the author's life from the age of 9, comparing the financial teaching that he received from his own, highly academically intelligent, real dad ( a doctor), and that of his friend's, financially intelligent, dad. Having experienced first hand the teaching and upbringing resulting from both of the dads, he is able to reflect on how they differ and how these differences had a profound effect on financial wealth.

The book for me highlighted, that working flat out, earning a high income was not the answer to growing wealth. Up until 28, that had been my strategy. Increase my income and i would become super wealthy. However, with such high income, come hig taxes, so seeing 40% of my income go each year was not much fun.

However, the book taught me (yes a qualified Chartered accountant, successful City Boy) the answer lay in creating and buying assets (cheaply) which then provided cashflow. By creating or buying assets cheap, my asset base would grow in value and my net worth would grow considerably. This meant for me in 2002, that Samera was started on a shoestring, no loans, just some innovative ideas and hard work in the early days from a core team. Whilst The Neem Tree required a certain level of financing, but with the right business strategy to move it forward. Our aim was to grow these businesses into valuable assets in their own right. Income was not our focus (only enough to cover our monthly needs), asset wealth creation was .

Almost 7 years on, i can safely say this strategy has worked 100% for us. Our liabilities, are low, cashflow is healthy, but most importantly our asset wealth is very strong. This provides us with a firm foundation to take on the next phase of our expansion strategy (you didn't think we would sit still?).

Focusing on asset wealth creation as opposed to income generation, has saved us considerable amounts in tax, and enabled us to build net asset rich businesses. This was the book that started it off to me, so if you have not ,read it, and if you have read it already, read it again, this is one of the best books in the market for taking charge of your own financial future.
So what about dentists?

Well like myself at 28, i see many dentists who have fallen into the same trap as i had up until 28. They have big liabilities, their income is high, their taxes are high, and so ultimately their cashflow is usually poor, and after all the sums (after taking into account all the large loans they have, especially if they have bought a practice in the last couple of years), their net asset position is not great even when working 60 hours plus per week.

Well as some of you may have come to know, i have never followed the well trodden path, i always invest when everyone is fearful (like now) and do things a bit differently. If you want to become asset rich, firstly read "Rich Dad, Poor Dad". If you enjoy reading this book, then secondly book yourself on our "Setting Up and Buying a Dental Practice in a Recession" event on Friday 18th September 2009, at our offices in London. You can read much more about this here.

Please note the price doubles every month until the event. Book in July for £100+VAT, book in August for £200+VAT, and book in September for £400+VAT .

We will be only doing this event once in 2009, so make sure you book today, as i can assure you this will not happen again until 2010. If you want to grow your net asset worth by being a dentist, then this event is for you. �