the richest man in atherstone

I'm between journal entries at the moment.

I've been busy researching money-making ideas and running trials with those that I thought were worthy of testing after due diligence. But until the trials are finished, unfortunately I have nothing to report.

So, I thought I'd fill the void with a run-down of my top three favourite books. Usually, when I've read a book I toss it aside and it either gathers dust in a cupboard or earns me a few quid from eBay. Occasionally, I'll come across a book that I think deserves a second read because I feel that I haven't grasped the points the author is trying to convey. Very rarely, I discover a tome that I can read time and time again without getting bored and learning something new each time. The books I present below fall into this latter category.

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In third place is Dale Carnegie's 'How to Win Friends & Influence People'. I think that maybe this book especially appeals to me because, I am not a particularly sociable person.

A few years ago, I was having a lot of difficulties maintaining cordial relationships with colleagues and acquaintances, in part because one of my core values is honesty - I very rarely lie about anything - and also because I didn't understand other people particularly well.

This book came to my rescue. I learned how to look at things from other people's point of view, how to handle different types of people, how to motivate and lead and how to communicate effectively. In short, my people skills improved one hundredfold and what's more I wasn't being untruthful and I didn't feel as though I were manipulating my fellow (wo)man.

Although the title does sound very shallow, the text is very deep and informative and has developed my personal skills and improved the way I feel about myself. It has had a significant and positive effect on my life.

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Taking second place is Napoleon Hill's 'Think & Grow Rich'. This book has taught me the true power and enormity of the human mind. If you want to learn how to get anything you want whether it be money, a new car or even a beach house in the Bahamas this book shows you how to achieve your desires.

Although it did take a few reads for me to open myself up to the ideas presented in the book, the text was inspiring enough to keep me entertained throughout. To fully appreciate the wisdom within does require both an open mind and a 'leap of faith' because the theory and methods do seem to be nothing less than magical but for a reason unknown to me, they do seem to work.

It is not a quick and easy guide to riches - I'm not a multi-millionaire yet! But since implementing Hill's ideas, I've achieved more than I could have possibly imagined.

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Unsurprisingly, taking the number one spot is George S. Clason's 'The Richest Man in Babylon' - the book that inspired me to start this journal. A series of short stories set in ancient Babylonia impart sound and practical advice for financial success.

I would say this is a must-read for anyone that wants to improve their financial situation. With ridiculously simple techniques such as saving 10% of your income and controlling your expenditures, Clason gives the common man the knowledge to become wealthy.

All the principals of the book are presented in story form providing an entertaining read which 'sticks' in the mind and makes it almost impossible to forget.

Since reading this book, my personal finances have improved dramatically with relatively little effort on my part. And, of course, if I hadn't discovered it, this blog wouldn't exist!

I reported earlier this year that I would be cashing in my £1000 investment in Premium Bonds and reinvesting it in the stock market.

The more astute of you have noticed that I bought shares in Lloyds TSB earlier this month but made no mention of financing the purchase with the money from the Premium Bonds.

The reason for this is simply cashflow. I had some cash kicking around in my current account that we were planning to use to buy furniture for our new house. I wanted the LLoyds shares at the beginning of the month but didn't want to wait until I'd cashed in the Premium Bonds so, knowing it wouldn't be needed for a few weeks, I used the furniture money to buy them.

I then cashed in the Premium Bonds (simply filled the form in and sent it off) and have received the money from them today. This is now my furniture money.

So, I just jiggled my money around a bit and everything is now straight...well nearly.

While I was filling in the Premium Bond withdrawal form, I decided to keep £100 worth of bonds. I thought I'd keep a ton in there just for fun. You never know - I could still win the million

So, a bit more money jiggling - moving £100 from one of my Savings Accounts to my Current Account - and I've got my furniture money back in full.

A couple of weeks ago, I opened three Nationwide Smart accounts for my kids as part of the goal I set myself at the beginning of the year to sort out my children's savings.

I am pleased to say this goal is now complete. I have opened a decent CTF (Child Trust Fund) for our baby and transferred all monies from my other two kid's poor National Savings accounts to their new Smart accounts.

The CTF I opened for our youngest was with Britannia Building Society. I opted for a non-stakeholder CTF for simplicity. My wife and I decided when we opened the first CTF for our daughter that we wouldn't make any additional contributions to it because our eldest hasn't got a CTF (the scheme wasn't in place when he was born) and it is possible that our two children with CTF's could end up with more money than him. We thought this was unfair.

Britannia Building Society's has a 5.9% interest rate, which is not the best but it isn't too far off the top. The fact that we have a local Britannia branch affected our decision somewhat. Opening an account was just a matter of phoning up for an application form, filling it in and sending it back to them with the CTF voucher. It took about 10 minutes in all.

I cashed in my other two's NS&I investment accounts by picking up withdrawal forms from the Post Office, filling them in and sending them back. A few days later, I received a couple of warrants in my name, which I paid into my current account. Then I wrote a couple of cheques for the same amount and paid them into the kids accounts at our local branch.

The one thing I do not like about kid's savings is that they are a lot less flexible than adult accounts. Deposits and withdrawals have to be made at a branch, which can be quite difficult for someone that works full time and has three kids to look after!

Anyway, my goal to sort out the kids money is now complete and I have ticked it off the list. The goals I have left for the second half of the year are based on making more money, so I'm looking forward to bumping up my income over the next 6 and a half months

I've been actively taking an interest in my finances for over two years now and it looks as though some of this "money awareness" has rubbed off on the missus.

My wonderful wife informed me at the weekend that she'd applied for something called a Sure Start Maternity Grant and her application had been accepted netting us £500 of free money from the government.

The SureStart Grant claims to be for low-income families that have had a baby to help with the initial cost of looking after the child. Now, I don't believe that we're a low-income family (we have a combined salary of a little over £30'000 a year) so we think that we were probably given the cash because it is our third kid - working family and child tax credits seem to have gone up by a lot more for our third child than it did for our second!

My wife was initially informed of the Sure Start Grant by one of the other 'mums' at the school before checking it out on the Directgov website. Eligibility was quite difficult to understand so she just printed off the form, filled it in and sent it off thinking the worst that can happen is they'll say 'no'.

Lo and behold, a week or so later we got a letter telling us that the application had been approved and yesterday she got £500 paid into her bank account.

Personally, I'd never heard of the Sure Start Grant before my wife mentioned it, so I suspect there's a lot of other people out there in Internet Land that haven't either. If you've just had a baby (or if you're expecting one) it might be worth checking out the Sure Start Grant to see if your eligible for the free money.

Needless to say, I'm very proud of the wife

This series of articles was inspired by a wealth-building strategy created by Stuart Goldsmith. It is called 'Double Your way to a Million' and you can sign up for your free copy on this webpage.

The weather's been nice today. After dinner this evening I took my daughter to play at the park for half an hour before giving her a game of Junior Scrabble on the picnic bench in the garden.

Mid-game, I noticed a glimmer in the grass beneath my feet and bent down to take a closer look. Staring up at me were two coins, well trodden into the earth and concealed by blades of grass. I picked them up and discovered that one was a pound coin and the other was a twenty pence piece - my highest denomination find to date.

The previous occupants of our new house seem to have left treasure everywhere for me to dig up

Step 12 in progress
Cumulative Cash: £11.33

My wife has been sick for the last couple of days (nothing serious), meaning I've had to take time off work to take care of the kids. This gave me the ideal opportunity to open savings accounts for them as targeted in my goals for 2007. Most children's accounts require a visit to the branch and because I work full time, I haven't had the time to do this.

As I searched for the best Savings Account, I began to notice that most children's accounts differ from adult accounts in that they cannot be operated online. Accounts need to opened in a branch and withdrawals require a visit to the bank as well. For this reason, I decided that I should open accounts provided by banks and building society's with branches in my local vicinity. I also decided that my choice should be based on good referral from people I trust after the bad experience I had at the Halifax.

The account I chose for them was the Nationwide Smart Account.

The Smart Account does not have the highest interest rate available, however it is far from the worst. At a competitive 5.70% gross, it provides the best interest rate that fulfil my two other criteria for my kids savings; we have a local branch and I got a recommendation from a good friend.

I called up the Nationwide in the morning after taking my two eldest kids to school and play-school. They informed me that they were full up with appointments but if I came down they might be able to fit me on. People without appointments are dealt with on a first-come, first-serve basis. I asked what I'd need to open the accounts and was told to bring the kids birth certificates and two forms of ID for myself. I'd also need to fill in application forms for them.

So I got the required documents and took a drive into town. Upon entering the branch and stating the reason for my visit, the representative told me there was one other person waiting without an appointment but couldn't give me a definite time I could be seen. I asked for the application and told her I'd fill them in while I waited. I sat down and proceeded to fill in the forms.

It took about 15 minutes to fill them in and after another 20 minutes or so, a representative was ready to see me. I explained to her that I only had about half an hour before I had to go and pick up my daughter from play-school and she was very understanding and said she'd whiz through the process as quick as she could.

My details were inputed into the computer, the documents checked and photocopied and the accounts opened in about 25 minutes. She said there was a little more to do but she could do that after I'd gone and she'd send the passbooks through the post.

Although I'd obviously have preferred to open the kids accounts online or over the telephone, I found the whole account-opening process relatively painless and Nationwide were very friendly, approachable and accommodating.

So another one of goals for the year is almost complete. Before I can sign this off fully, I need to withdraw the money from my children's existing (and poorly performing) NS&I Investment Accounts and transfer it to their new Smart Accounts. I also need to open a Child Trust Fund (CTF) for my youngest.

Well, I made my decision and subsequently I've bought 171 shares in Lloyds TSB at 576.3p each.

I felt that Lloyds offered the best investment because of the stability of the company (dividend has not fallen like United Utilities and the Chief Exec has not resigned like DSG International) plus, of course, it has the highest yield of the FTSE 100.

I also feel that by selling their registrars business, Lloyds TSB are focusing on the core financial services that they've laid out in their annual report and maybe some of the profits made from the sale could be be put in the shareholders pockets. I also think it is likely that Lloyds TSB shares will appreciate in value over the next few years.

Calculations
In total the shares cost me £985.47 (171 shares at £5.763 each).

Added to that are my broker's commission at £7 (per trade) and Stamp Duty at 0.05% of the purchase cost, which equated to £4.93. In all, the transaction cost £997.40 which, divided between the 171 shares, equals an actual cost of a fraction over £5.83 per share.

Assuming a dividend payment of 34.2p per share (as it has been for the previous 5 years), I should earn £58.48 gross per year from these shares. Dividend income is taxed at 10%, so that will actually be £52.63 net. That means a net yield of:

£52.63 / £997.40 x 100 = 5.28%

If I didn't take the commission and stamp duty into account, the net yield is:

£52.63 / £985.47 x 100 = 5.34%

Compared to a good savings account, the shares I have bought will have a better return. To earn 5.28% net from a savings account would require an interest rate of around 6.6% gross. Additionally, with savings, there is no chance that the capital will appreciate in value. By the same token, there is no risk that savings account funds will depreciate in value but I think investing in a large corporation like Lloyds TSB is a safe bet.

After one year, I would have earned around £47.88 had I put the £997.40 in my high interest IceSave savings account, compared to the £52.63 I will recieve from my Lloyds TSB shares in dividend yield. Over the long-term, reinvested dividends and capital growth should make the shares out-perform the savings account by a lot more.