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My 3 Pillars of Smart Property and Investment Strategy
Balancing Consumption, Wealth Building, and Future Security
Iain Shirlaw
March 07, 2025
In partnership with
Welcome to Financial Fluency - a newsletter designed to boost your understanding of financial terms and provide you with investment ideas for long-term financial success.
In today’s newsletter:
A Look at the Markets: February 2025 Performance
My 3 Pillars of Smart Property and Investment Strategy
Quote of the Day: Jack Welch
Word of the Day: Financial (and collocations)
Whenever you are ready, here is how I can help you
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A Look at the Markets: February 2025 Performance
Vanguard FTSE All-Word ETF (Accumulating)
Vanguard FTSE All-World ETF (Accumulating) - justETF.com
After January’s 4.25% increase the Vanguard FTSE All-World ETF posted a small pullback of 1.06% in February. This is largely due to uncertainty in the markets with President Trump reintroducing tariffs this week.
Vanguard EUR Corporate Bond ETF (Accumulating)
Vanguard EUR Corporate Bond ETF (Accumulating) - justETF.com
The Vanguard EUR Corporate bond ETF posted a 0.58% increase in February.
iShares Core S&P 500 UCITS ETF USD (Accumulating)
iShares Core S&P 500 UCITS ETF USD (Accumulating) - justETF.com
I like to compare the FTSE all-word index that I prefer (personal choice) with an S&P 500 index. While both indexes are in drawdown in February, the S&P 500 index fall is more significant at 1.8%. This will not be the case every month.
Bitcoin Monthly Performance
Bitcoin monthly performance - Coinglass
Finally, Bitcoin was down 17.39% in February. If you examine the figures in the table, you will see that such drawdowns are not unusual.
Bitcoin bulls will be waiting to see how long it takes for Bitcoin to return to all-time highs.
Bitcoin bears will be waiting to see how far the price falls.
My 3 Pillars of Smart Property and Investment Strategy
Balancing Consumption, Wealth Building, and Future Security
Over the last 2 newsletters, I have introduced the idea that your primary residence is consumption.
This does not mean that you have to give up on the idea of owning property. Eating out is also consumption but I still do it. However, just like choosing a restaurant, I choose my property based on what I can comfortably afford. If you are starting your investment journey, perhaps this can help you with asset allocation.
Here are the reasons that this view has shaped my investing approach.
Long-Term Strategy
Property ownership requires a strategic financial perspective.
I understand that owning a property costs you money every year (say 5% of the value). This does not mean that I am willing to give up on property ownership, but rather that I want to build a secure future for me and my family. I know that having a property will ensure I won't have to pay off a mortgage or rent in my retirement, while also leaving money for other investments to build a retirement portfolio.
I believe this approach gives me the best of both worlds.
Global Investment Opportunities and Diversification
Diversification is the key to a robust investment strategy.
Unless you live in a prime property area like Manhattan or Dubai, you are probably better investing in other assets as well as property. As long as I understand that property is not the best investment in my area, I should also make sure that it is not my only investment. I have therefore spread my investments across multiple asset classes including an All World ETF, Corporate Bond ETF, Individual Shares, and Cryptocurrencies.
I have a barbell approach to investing that we will examine next week.
Passive Income
Passive income represents financial independence.
My ultimate aim is to have a passive income that completely replaces my income from working. Undoubtedly, this approach requires some sacrifices, as I am sacrificing spending today for future spending. However, I am aiming for a comfortable retirement that potentially allows me to create an investment portfolio to pass on to my children.
Financial freedom is a deliberate, strategic journey.
Conclusion
What do you think of this strategy?
Do you view a primary property as consumption? Is this strategy something that would appeal to you? I am eager to hear your perspectives on balancing property ownership and investment goals.
Your financial path is uniquely yours to design.
Quote of the Day: Jack Welch
This quote from Jack Welch encapsulates the ideas presented in this newsletter.
Jack Welch, the esteemed CEO of General Electric (GE) who served from 1981 to 2001, is widely regarded as the driving force behind GE’s remarkable transformation into one of the most valuable companies globally.
The ideas presented in this newsletter align with the concept of seizing control over your own destiny by diversifying your investment portfolio rather than allocating too much of your net worth to personal property.
Word of the Day: Financial
Financial - adjective - relating to money, income, or the management of monetary resources
Business Context: In business and personal settings, financial matters encompass everything related to money management, investments, and monetary planning. Understanding financial concepts is fundamental to achieving economic stability and growth.
The company's financial performance exceeded market expectations last quarter.
Word Family:
Noun: finance
Adverb: financially
Verb: to finance
The startup was financially stable within its first year of operation.
The bank agreed to finance the expansion project at favourable terms.
Key Financial Collocations:
Financial Planning
The process of setting monetary goals and developing strategies to achieve them over time.
"Effective financial planning involves analyzing current resources, identifying future needs, and creating actionable steps to bridge the gap between them."
Financial Literacy
The knowledge and skills needed to make informed and effective decisions with financial resources. This is the main aim of these newsletters and why I chose the name Financial Fluency.
"Companies that invest in financial literacy programs for employees often see improvements in workplace productivity and reduced financial stress."
Financial Independence
The state of having sufficient personal wealth to live without having to work actively for necessities.
"Many professionals are adjusting their careers to prioritise financial independence rather than pursuing traditional corporate advancement."
Financial Freedom
A step beyond financial independence, representing the ability to make life choices without being constrained by financial concerns.
"After years of disciplined saving and investing, she achieved financial freedom and now divides her time between consulting work and philanthropic projects."
Financial Security
The state of having a stable income or resources to maintain a standard of living now and in the future.
"The recent economic volatility has prompted many households to focus on building financial security through emergency funds and diversified investments."
Financial Stability
A condition where an individual, organisation, or financial system can withstand economic shocks and fulfil financial obligations.
"The company maintained financial stability throughout the market downturn by keeping adequate cash reserves and managing debt levels carefully."
Financial Statements
Formal records that document an organisation's or individual's financial activities and position.
"Investors carefully analyse financial statements including the balance sheet, income statement, and cash flow statement to assess a company's health before making investment decisions."
Financial Problems
Difficulties related to money management, debt, insufficient funds, or cash flow issues.
"The startup faced financial problems when its operating expenses consistently exceeded revenue, forcing the management team to restructure their business model."
Financial Difficulties
Challenging financial situations that create stress and require strategic solutions to overcome.
"Many small businesses experienced financial difficulties during the economic downturn, leading them to explore alternative funding sources and operational efficiencies."
Can you think of any more collocations with financial…..?
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Disclaimer:
This newsletter is for informational and educational purposes only and should not be construed as financial advice. The information contained herein is generic and does not take into account your individual financial circumstances. You should always consult with a qualified financial professional before making any investment or financial decisions.
Additionally, the authors and/or publishers of this newsletter may hold investments in securities or other financial instruments mentioned herein. These are included for illustrative purposes only and should not be taken as a recommendation to buy or sell such securities or financial instruments.