Thu, 02 Jan 2025 07:43 UTC
23.96% — that’s the number for Q4 2024 (plus September) — 23.96% growth. Not too shabby for one quarter, if I do say so myself.
In September 2024, I set out to see how I could increase my capital — on my own and by how much — instead of just leaving it sitting in an interest-bearing account (lazy investing). This is how I got there.
I’m not offering anyone investment advice. The laws of many lands dictate that I need a licence to do that…I don’t have that licence. What I do possess is control over my own money so here I spill the beans on how I gained 23.96% in one quarter.
Step 1: Invest and take risks
In my mind, the least risky option available for capital growth is to simply park money in a bank account and let it sit there gaining interest. Post 2007 in the UK, all savings accounts have guaranteed protection of deposits of up to £85,000 in the event of a bank going bust. This takes the risk right down to almost zero.
I want to live a little; I want to challenge myself. I want to see if I can beat the 5% annual return I could easily — and lazily — gain from doing nothing. After all, there is no gain without risk. So, let’s take some risks. What is the worst that could happen? I lose my investment? Therefore, how much am I prepared to lose? What is the loss limit I can bear and shrug off?
Once I made my peace with that, I got busy.
Step 2: What and how
I bought a few shares in some well-known US, UK and European companies and they performed well enough. I diversified by spreading my investments across sectors: tech, pharmaceuticals, cosmetics, retail and manufacturing. Not a bad quarter, all things considered. I made some losses and I made some profit. By the end of the year, I have closed some positions and continue to hold on to others which I believe still have more to give me.
For a little extra fun and excitement, I tried my hand at currency trading. Ha! This is not for sissies! I’ve lost chunks of cash but thankfully, made some meaningful gains as well. I successfully shorted the EUR and that was a good payday. But this game is for hard-nosed traders so I’ll get back into this in 2025 when I’ve toned up my muscles a tad bit more.
And of course, there was cryptocurrencies. BTC netted me a tidy 116.02% gain and a couple of other coins profited by 291.49%.
Thoughts?
What I did not like so much was the UK and French stamp duties when purchasing shares; it adds up to quite a lot in the end. I ended up divesting in all but two UK companies and two French companies and will think twice before buying in those venues in the future. I’m not a fan of paying additional taxes just because.
Germany, on the other hand, only charges stamp duty on purchases above €5,001. I am able to buy shares or part-shares in some US companies through their twin-listings on the Frankfurt Stock Exchange. The likes of Nvidia, Apple, Amazon and Microsoft are in my portfolio and all in EUR from Frankfurt Stock Exchange. Win-win for me.
Finally, good ol' US of A, the titan of all giants. I do hold some shares — those which I cannot purchase elsewhere. Of course, there is the matter of double-taxation, something easily worked around by registering for their W-8BEN tax program. And which other market has the Mag 7?
Lessons?
Governments like taxing us! If I didn’t know any better, I would think that they are all deliberately trying to keep us poor by making it expensive for us to grow our money. Oh wait! That’s probably what they are doing! Thankfully, through a little research, expensive trial and error as well as some smarts, there are legal ways to lower one’s taxable obligations. Up yours, tax man!
All in all, 23.96% gain in one quarter plus one month is tidy, by my measure. I proved to myself that with a little thought and determination, I can beat the returns offered by my local central bank. Yes, I must still pay tax on my gains but I’m totally fine with that, too.