Wednesday, 14 September 2011

Property, Portfolios, Microholdings and Fine Wines.

Prot€cting ¥our Fruga£ Investment$

It's a bit of a 'non-day' here, today. No new work arrived in my email in-box, no interesting post dropped through the letterbox and, so far, there have been no visitors. The coalman did deliver a half tonne of coal early this morning, mind you, and it was the brief chat with him that prompted this post.

The topic of discussion was property and assetts, mainly about what happens to them when an elderly person ends up moving out of their home and into residential care. With a family member in this situation right now, I understand the trauma and upheaval it causes. I'm failing in my attempts to convince family members that their life's work of striving for a lovely home with savings in the bank is pointless unless they plan for the entire future.

Frugaldom is about frugal living, finding the most cost-effectve ways of creating own little microholding of self-sustainability, working from home to earn what we need to cover the costs of living, while investing anything left over into our future, whatever that might be.

Buying the property outright was our only option - no bank would offer a mortgage to the likes of us, we are self-employed and debt free with no fixed, regular income... banks and building societies hate that! It seems that the more debt you take on, the more it becomes available to you, which is great, IF you can service those debts regardless of the outcome of any unforeseen changes. Anyhow, debt free is how I intend to stay, even if it means renovations take many years. Whatever way we look at it, if it all went pear-shaped, we do have a (currently leaking) roof over our heads and a big enough garden to grow food, rear poultry and generally keep us busy. Home can be anything you make it as long as you feel secure. In my book, that means no unreliable landlords.
One of today's 'junk' emails arrived announcing that, "The fine wine market has outperformed oil, gold and international equities for the past two years." It went on to invite me, the "Dear Investor", to register my details and claim my free copy of their 'Wine Investment Guide'. I didn't, of course, because I have absolutely no intentions of 'investing' in fermented sugar and fruit pulp that I can't drink. Let's face it, a bottle of store's own 'Lambrusco' is about as close to a fine wine as we get these days. Even then, it's only if someone brings a bottle as a gift! The frugal version of longterm investment in fine wine is looking after your rhubarb patch, bulk buying sugar when it's on offer and, if you're really 'up market', tending your grape vines in your makeshift lean-to greenhouse.

I should add that if anyone receives the above email, look at the date of the Bloomerg statistics they are using to 'sell' us their brilliant idea... April 2010! I'd check for more recent trends before pursuing anything any further, or else simply hit 'delete'.

Bricks and mortar, now that's a sound investment! Nothing beats owning your own house! It can drain you of every penny while trying to keep it wind and watertight, leak money from every corner while trying to heat it during winter and swallow up every bit of your savings in one fell swoop if you buy it for cash. On the other hand, it can equally do all of these things, but cost you three or four times as much if you choose to spread the payments over the duration of a mortgage, accompanied by whatever other insurances they deem necessary.

Why do I think bricks and mortar investments are far superior to any other longterm investments?

In my humble and frugal opinion, it's more a case of valuing a home and the land upon which it sits. Land should be the longterm investment, for whatever reason you can imagine. Think about it... society can offer us everything we need. We can make our own wines, sew our own clothes, build our own homes, manufacture practically anything, grow our own food, rear our own livestock, create any manner of fantastic, technological device, heal the sick, offer financial support to the needy... but we cannot make more space on this planet!

No amount of wheeling and dealing, investing, trading, developing, exploring, researching or data analysis will ever create land. Let the sheiks build their paradise islands, let the 'high heid yins' spend vast fortunes in making fortunes that need fortunes spent on them to avoid paying fortunes in taxes, let the designer-clad city folks pamper and spoil themselves, let the rich property tycoons and landowners lord it over their tenants, but never let it be said that life is their way or no way. We have a choice - to be indebted or not. Frugaldom means freedom.

So, frugal readers and those of you who are just being nosey while having nothing better to do, be prepared. Think long and hard about your portfolios, holdings and longterm investments. They're worth nothing if there's no room at the inn.

7 comments:

  1. A brilliant post. I agree with every word.

    Sue xx

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  2. Me too - we don't have a penny to chink between us, but we own our house and hectare, every square centimetre!

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  3. We describe ourselves as asset rich but cash poor! everything is paid for and we don't need much. Have learned that it's not what you earn but how wisely you spend what you have!
    Just 'done' our house top to bottom on a very tight budget and far from being a bind it's actually quite liberating (and fun) trying to find 'alternatives' when we need something!
    Garden next!

    http://tightwadgazette.blogspot.com/

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  4. Thanks for responses and support. I'v always felt that achieving the security of owning the roof over your head is far greater than any ability to juggle debts and be seen to have spending power.

    There have been many maor hiccups during my journey here but all have proved worth it in the longrun - even taking divorce into consideration.

    The 'alternatives' to living within our consumer-driven society are great, even if some folks do look at us as if we're daft. LOL

    Best of luck to all who pursue this lifestyle. Giving up employment in favour of self-employment was, for me, an obvious choice. The meagre income is still enough to do most of the thigs I want to do, albeit slightly slower.

    I love frugal living. I also love your blog, Mrs Tightwad. :)

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  5. Well I honoured you like it! You've made my day!

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  6. Just read this post (just found this blog in fact) and can relate to the paragraph about old people being taken in to residential care.
    After buying my mothers house (ex council) for her over a 20 year mortgage, she needed to be in such a home, and lived there for 4 years until she died there.
    The house I paid for, to have somewhere to live, had to be sold to pay for her care, despite the fact that this meant I became homeless.
    So much for the advice to save for your future.
    Speaking from experience, just make sure that your property is in the name of the person you want to have it after your day, or at least in joint names.

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  7. Hi Cumbrian, thanks for dropping by and posting your words of wisdom.

    We (two individuals, not a married couple) opted to pool our savings and buy the property 50/50, with either of us leaving our share of the house to the other. That's all fine for now, but it still poses the problem of what would happen if I suddenly died while my son is still living here, as this is also his home.

    With 'Will Aid' month being November, I'll be tripping off down to the lawyers to have a will drawn up and ask for advice before doing this.

    As far as inheritance is concerned, at this current moment in time, it isn't looking like there will be anything of significance other than the house, but even that's not guaranteed.

    My preference would be to spend any extra cash on my family while I'm alive and well enough to grumble about how they spend it. But I won't be doing any of that before this house is renovated.

    From the other perspective, I would never rely on inheritance from my own parents or relatives. If those who can afford it cannot see fit to spend it while they are alive, what right have we to spend it when they are dead? But there again, the Government has legislation in place to help prevent that happening (more so in later years), too.

    At the end of the day, care needs to be provided for the elderly. We either prepare for that by longterm investment or else prepare for it in living within extended family units.

    Scottish law is also different from English law, but I'm not too sure how different, especially when it comes to residential care of the elderly. This house we bought was sold to raise nursing home fees, so I have seen both sides of the coin over the past six months.

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