The Loveliest Coast In The World

Tuesday, 28th October 2014

Roger Moore’s house is beautiful. It’s a white painted villa set in the cliffs near Amalfi, with a stunning setting and amazing views across the Mediterranean Sea.

It pales besides Gina Lollobrigida’s pink painted home, however. And that in turn looks small next to Sophia Loren’s lovely villa atop a crag, framed by the glorious Amalfi mountain coastal backdrop. And looking down on them all from on high is Gore Vidal’s white mansion, all 70 million euros worth of it according to our skipper.

The Amalfi coast is generally reckoned to be the most gorgeous in the world, and we’ve come out by bus and boat to see for ourselves. We’re strongly inclined to agree.

Gina, we love your house!

Gina, we love your house!

We’ve driven across from Sorrento, following the coast road to Positano, Amalfi and Ravello. At Amalfi our guide has arranged a boat excursion to view the coast as it should be viewed, from the sea. And what a fabulous view it is.

It’s the complexity of the scene that is its key. The multi-textured cliffs are full of interest, changing constantly as layer builds upon layer. Interwoven into the cliffs are houses, villas, churches and other buildings forming a riot of colour. Added to them are the vineyards, rosemary gardens, inlets, caves, crags and beaches that have been threaded into the picture like silks in an intricate embroidery.

I’m reminded of the coast of Southern Ireland that I visited last year. That was glorious for its emptiness, its remoteness. Here the contrast is clear. The beauty of the Amalfi coast is in its vibrant humanity, its ancient relationship with the peoples of the area, and its modern-day connection with the beauty and confidence that is Italy.

I could write a lot more about it, and many others have done so. But there are some places that you just have to experience to understand. Here is one of them.

Sharpen your passport now.

 

 

 

The Biggest Bang in Europe

Monday 27th October 2014

Steam is rising in gentle plumes from the rock face. It’s evidence of the heat that’s present several kilometres below, gradually building in intensity. We’re standing on top of the release valve of a gigantic pressure cooker, and one day it’s going to blow. When it does, the results will be spectacular and lethal. This is Vesuvius, Europe’s biggest active volcano.

It last went off in 1944, but notable as that eruption was, it was a mere fizzle compared with the most famous bang in the year 79. Apparently on that occasion 1.5 million tons of rocks, earth and ash spewed out every second for days, reaching over 20 miles high before it started falling to earth. There was enough material to cover the whole surrounding area to a depth of many metres, including the complete town of Pompeii which would remain buried for another one and a half millennia.

It’s probably appropriate that we’re here a week before Guy Fawkes night, because that must have been the firework display to end all firework displays. And we’re standing right on its top lip, looking down at the blue touch paper.

We’ve come up the lower slopes by 4×4 bus, feeling as though we’re in an Indiana Jones adventure as we bounce and lurch from pothole to pothole along the rough mountain track as we climb the peak, often inches from a sudden rapid descent as we peer down to the valley below. Our last few minutes are on foot, kicking through the grey ash that this mountain seems to be made of. We reach the summit to find the inevitable wooden shack selling volcanic gifts, postcards and Coke before we meet our guide who explains in heavily-accented English the main features of the volcano.

There are two adjacent peaks that are part of the mountain, he explains, Vesuvio (as the Italians know it) and Monte Somme sit alongside each other. Volcanologists now believe that instead of forming two separate channels with Vesuvio being the source of the AD 79 eruption, they are instead both what’s left of a much bigger, single peak that was massively reduced in size by the scale of the explosion. Considering the amount of material that was launched skyward it’s a theory that’s easy to believe.

What strikes me as we gaze down into the huge caldera is the perpendicular nature of the rock face. It’s clear that this is the visible end of a huge pipe, and I get a sense of the massive pressure behind the eruption as it forced upwards and outwards from its start point many, many miles below.

Caldera posing

Caldera posing

The views from the top are magnificent, with the panorama of the Bay of Napoli stretching away to the west, and the Monti Lattari – the Milk Mountains – to the south-east. It’s a lovely sunny day and our guide points out Pompeii, 8 kilometres away. Despite being impressed by its scale when we visited a couple of days ago, it looks insignificant now, swallowed into the heavily built up landscape.

Adding to the beauty of the vista is the heavily wooded National Park land adorning Vesuvio’s slopes. This, we learn, is a deliberate ploy to limit the number of people within the volcano’s immediate vicinity, part of the evacuation master plan in case the numerous sensors and monitors strategically placed around the caldera start to give their warning signals.

Sorrento coast from Vesuvius

Sorrento coast from Vesuvius

On the return journey we stop for lunch at a winery located on the lower slopes, in the mountain’s shadow. They proudly tell us the history of their wine, a family business since it began in the1940’s. They’ve obviously grown up living with the threat of possible annihilation and don’t seem concerned by it. This is their home, just as it’s home for another million+ people within the bay area. Judging by the density of development just a mile or two away, when the next big bang finally comes – as it inevitably will – that evacuation plan is going to have to be pretty slick.

Let’s hope it doesn’t have to be tested in our lifetimes.

 

 

The Empty Streets of Pompeii

Saturday, 25th October 2014

It’s a man, stretched out on the ground. His hands are to his mouth, fighting for breath. He’s been in this pose for nearly 2,000 years, since the day in 79AD when the sky fell in.

The sight leaves us with mixed feelings. We’re fascinated by the antiquity, and by the drama of the story of life suddenly cut short for thousands of people as a result of this most famous of natural disasters, but at the same time we feel like interlopers, voyeurs on the moment when a whole town was obliterated in minutes. Pompeii is a grand mausoleum, a monument to its residents who died that day. It’s a huge site and amazingly preserved, but it’s sterile and curiously silent, with grey walls and fragments of Roman tiles where there were once people, smells and noise.

Pompeii street

Pompeii street

Our experience of Pompeii stands in contrast to our journey to find it. We weave through the vibrant streets of Sorrento, dodging people, cars and the ubiquitous scooters thronging the roads like noisy insects. We negotiate the hordes to buy our tickets and catch the train, arriving early to a half empty carriage that gradually fills with young people as the departure time nears. We guess they are just out of school – it’s early afternoon – and like most young teenagers they are boisterous. The volume rises as the babble grows.

We set off towards Naples past busy apartment blocks, washing lines full to overflowing. One false move with a clothes peg means certain loss of lingerie as it plummets to earth several floors below. The impression is of life being lived, in all it’s daily grime and glory.

The train speeds us on its way, making numerous stops at which teenagers leave and enter, along with men in suits, men in overalls, women with designer bags and designer children, and old people with walking sticks, all off to who knows where. By the time we reach Pompeii it’s standing room only. It reminds me of London Underground, especially when we go through the numerous tunnels that line the route.

The entrance to Pompeii is a short walk from the ‘Stazione’, and the approach road is lined with alfresco restaurants. “Come in to our garden,” pleads the swarthy sentry outside one of them, “bring your…. money!” He grins widely and we accept, admiring his honesty. The garden is indeed pleasant, with a lovely herb garden at the rear making for a delightful feature on this pleasant late October afternoon.

So the contrast once we enter the impressive walled city is stark. We’ve been told that Pompeii is huge, but we didn’t begin to appreciate it’s scale until we experienced it for ourselves. The streets go on for what seems like miles, the buildings are overwhelming in their number as well as their state of preservation, and there are high points including the amazing amphitheatre and the two-millennia-old frescoes. We’re glad we came.

Pompeii amphitheatre

Pompeii amphitheatre

But comparing notes afterwards, we both had a real sense of being intruders, as though we shouldn’t really be disturbing these ancient stones. We realise that we needed to visit to understand it, and reading about it later we appreciate the huge wealth of knowledge that this place has revealed about daily life in an important Roman town at the time of Christ. But neither of us feels especially drawn to return.

In the evening we find a family restaurant in a side street of Sorrento where the host again pulls us in with his enthusiasm. As we enjoy our meal whilst he entertains his guests with his version of ‘My Way’ accompanied by his friend on the guitar, we reflect that life is for the living. And perhaps Pompeii should be left to the historians.

My first visit to Italy – again!

Friday, 24th October 2014

I get the distinct feeling that I’ve been here before.

The flat landscape densely populated by cultivated trees with a periodic patch of tightly spaced vines filling in the gaps. The brick, gold, russet and amber coloured farmhouses dotted amongst the orchards. The sense of every spare centimetre of land having been put to productive use. And the long, arrow-straight road cutting directly through the middle.

Except that last time I experienced these things the trees were almonds, not olives. The cars were big Dodge and Ford trucks, not Fiat 500s and Opel Corsas. And the signs were mostly in Spanish, not Italian.

The similarity, though, is striking and it doesn’t abate as we climb into the hills. Even the huge bank of wind turbines stretching across the hills were present in California.

We’ve landed at Bari airport on the eastern side of Italy, flying in over the Adriatic. We should have been heading for Naples, but they’re on strike and Thomas Cook has taken the decision to divert. Neither our fellow passengers nor the ground staff seem to have heard of Bari, much less know where it is.

But we’ve arrived and filtered through the airport. We get the impression that an international arrival here is a big event, but perhaps that’s unfair. They’ve clearly seen planes before. Perhaps it’s tourists that are new.

All credit to Thomas Cook, the whole thing runs seamlessly. We are welcomed out of the airport and guided to our coach by the helpful and bubbly Andrea. “I’ve never been to Bari before,” she chirpily informs us as we set off, “and don’t make me come again!”

The main difference between here and California Central Valley is that here it’s heavily overcast and a bit chilly. “It’s beauuuuutiful in Sorrento,” Andrea informs us as the rain starts to batter the coach windscreen, clearly not appreciating her excursion.

Together with a comfort break at a motorway service area (much the same wherever you go) it’s about four hours in the coach to add to the three spent in the air. But for me I find this opportunity to witness the different landscape in the east, and the journey over the hills to the Amalfi coast as very much part of the experience. Thank you, Neapolitan strikers.

The foothills rising up from the plain are again reminiscent of our drive across California a couple of years ago, as the rich farmland turns into rolling hills and green slopes. But as we carve deeper into the country, the landscape changes. The patchwork of colours, the intensity of the land, and especially the frequency and design of the buildings start to take on a distinct feel, looking much more like the Italy I might have expected. Villages cluster atop some of the hills like barnacles in a very unAmerican way, houses jostling for space as they cling on to avoid dropping off the tops into the valleys below.

We reach Avellino and the hills have turned to mountains, meaning less cultivation as the trees become a tangle of dark green foliage instead of neat rows of olives, and the buildings cluster the sides and base of the slopes as they abandon the peaks. We stop for a break, and soon after setting off again I’m struck by the unusual shape of one mountain, curious ridges running down its sides as though it has been concertina folded. As I’m pondering how it acquired this design, Andrea picks up her mike to fill me in. We are passing Mount Vesuvio, most famous of Europe’s volcanoes. That explains it, then.

The Bay of Naples

The Bay of Naples

We skirt Naples, a jumbled riot of concrete spreading across the Bay area. Again every spare metre of land is occupied, this time by a block of homes, all appearing to have a line of washing hanging outside. The buildings aren’t in great condition, in fact the vast majority could do with a repaint and some repair work. Andrea tells us that Al Capone’s parents came from here, and despite the beauty of the bay as it conjoins with the sea and the mountains it’s clear that this is a land of contrasts for the people who live here.

We head towards Sorrento and our coach enters a series of tunnels. We emerge from the last one into a land that’s different again. This is the scenic Amalfi coast that poets and princes have visited for centuries to find their inspiration, and it’s why we’re here too. The view across the bay is outstanding, the sky is blue and the road is tortuous as it grips the coastline. Sorrento awaits. Our holiday has begun!

 

My Dad Rides A Motorcycle

In May 2014 my dad and I journeyed to Germany together by motorcycle. Here’s the story of our trip.

I’ve always been into motorcycles. At 15 I used to devour all the bike magazines, and although my dad didn’t have a bike himself he certainly didn’t discourage me. He would recount how he and my mum had journeyed to Italy on honeymoon on his 600cc Panther, the long-stroke single seemingly firing every lamppost.

Decades on, motorcycling has given my dad a new lease on life. Five years ago he signed up for ‘Enduro India’, a 2000 km ride across that country on locally built Enfield India bikes almost identical to the 1950’s British Royal Enfield singles on which they were based. To prepare for the trip he bought an Enfield to use at home, and was back on a bike after a gap of 50 years, apart from occasional short trips on my brother’s Yamaha trail bike. The trip gained him a whole new directory of friends with a common passion and a shared experience, and they obviously took inspiration from his presence and energy, bearing in mind that he was 20-40 years older than most of them (he was born in 1928, you work it out).

Five India trips later, including one to traverse the world’s highest road across the Himalayas, you could say he is a seasoned biker. His exploits make me feel like a rank novice, trailing in his wake.

We took a family trip together to Ireland last September, my dad, brother and I, having a great time biking around the Ring of Kerry. And now here I am with him, sharing a hotel bed in a room overlooking the Mosel river near Bernkastel-Kues in Germany.

We take our time on the road, cruising at around 55-70 mph. At 60 my KTM feels relaxed and barely off tickover, and Dad’s 750 Moto Guzzi is similarly unstretched. Our sedate pace is reflected in our frugal fuel usage, with over 200 miles before my low fuel warning light appears – thrashing around Leicestershire it’s been down to 135 miles on a tankful before now.

Not everyone is so slow. Heading towards Dover a brace of Harley Davidson’s come thumping past, their pilots adorned with the cut-off denims long associated with the marque and proudly displaying their ‘Hells Angels Holland’ tribal moniker. They must think that, with our high-vis fluorescent yellow bibs, we’re a couple of wimps. Little do they know!

The deep, resonating rumble of a pair of Harleys in flight contrasts with the screaming banshee that startles us near Mons in Belgium. Too fast to identify, the rider has his right leg extended in the form of greeting used to signify the universal camaraderie of two wheelers on this side of the channel as he weaves through the four-wheeled detritus at 100 mph plus.

In Germany, it’s the BMW saloons that come past like demons. A glance in the mirror shows a clear road for miles behind, but seconds later the bike is rocked sideways by the pressure wave from a car that must be doing 120 mph or more. He’s soon out of sight and clearly not enjoying the view.

Which is a shame, as there’s lots to enjoy, especially here in Rhineland. We’ve arrived at the Weisser Bar, or White Bear, Hotel which is owned by Dad’s former employer, his main engineering factory a few metres further along the riverside. They have a long-standing and mutually appreciative relationship, and Rolf proves to be a warm and gracious host. Last night he was christening a newly-installed barbecue cooking device, and we joined him and a group of his workers to enjoy roasted wild boar in the hotel restaurant. Thick slices of distinctively flavoured meat with a never-ending flow of delicious local wine make for a memorable meal, and the language barrier only adds to the fun. We eventually depart to our room to savour a beautifully calm, peaceful night from the balcony, the Mosel shimmering like glass in the moonlight.

Today we’re heading back to Lille via Luxembourg. We’ve opted to go cross-country, although it’s hard to avoid motorways altogether on this vast continent without slowing journey times to an unacceptable crawl. We begin, though, with the serpentine road alongside the Mosel to Trier.

The Mosel from our hotel room

Like most German roads, this one is smooth as silk and a pleasure to traverse. It is also accompanied by superb views as the Mosel wends back to it’s source, and this morning’s crystal blue sky brings out the magnificent colours in vivid style. This is wine country, and we pass countless vendors offering their sweet, lemony white nectar that is the speciality here. We’ve already ordered ours from Ulrike the previous day, a long time acquaintance of my father’s who had plied us with samples before taking us down to her cellar to show us the 1000-litre barrels that have harboured her family’s endeavours over 250 years of wine production. Mosel wine favours sunny years as they bring out the sugar in the wine, helping to enhance the sweet acidity that is it’s hallmark. Best years, she tells us, were 1976 and, before that, 1959. She is keeping some bottles from that year to celebrate her 60th birthday in a few years time. She’s obviously of a good vintage, I tell her. The wine will be delivered soon. If you’d like to sample her multi-award winning varieties just type Dr Leimbrock into your search engine and you’ll find her.

The intimacy of the Mosel road turns into the impersonality of the main highway to Luxembourg, and then on towards Liege and Namur. We turn off at Neufchatel on to the N40, cutting the corner off the route but substituting a steady and relaxed 110 kph for a 90 kph trundle through the countryside, slowing to 50 kph or less through the many small towns and villages.

Arrow straight for the most part, we ride a section that swings through bend after constant-radius bend, under the trees, past rivers and streams, up slow rises and down again, for what seems like forever. This is motorcycling nirvana, and if you’ve never experienced it I pity you.

Eventually the N40 gives way to the autoroute around Valenciennes, then on to the madness of Lille in the evening rush. We enter the city with a clear idea of the way to our hotel, having studied the internet map and made copious notes. All are to no avail as we immediately get lost with only a vague idea of our direction. Fortunately signs point to each of the many hotels and we eventually find ourselves perched on the roadside outside the Best Western, our pre-booked choice for tonight. Only when we check our trusty smartphone map do we realise that there are 3 Best Western’s in Lille and this is the wrong one. Fortunately the correct one is only a few streets away and we find it soon, although finding their private car park (“eet’s really very simple” says the very helpful Maureen on reception) sees us revolving around the Grand Place several times.

It’s a modern, funky hotel and we enjoy a great meal at a frenetic street restaurant before retiring to an early-ish bed. It’s been a hugely enjoyable motorcycling day, easy yet demanding. Riding a motorcycle at any kind of speed along unknown roads requires a form of complete concentration that is tiring yet therapeutic, and although sleep comes easily it is accompanied by a flow of images recalled from the day’s activity. I thoroughly recommend it.

Tomorrow is an early start to catch the ferry, still an hour and a half away, and a long ride home on reportedly the busiest motorway day of the year. But that, as they say, is a story for another day.

A Lesson In Entrepreneurship

I hadn’t heard of Graham Mulholland or his company, epm:technology, before last Thursday. If I had passed him in the street I doubt I would have given him a second glance. A quiet, unassuming figure, slight of build and modest in dress, Graham doesn’t come across as a person of great power.

Until you start to listen to his story. Because Graham is one of the finest examples I’ve ever come across of a true entrepreneur.

I was at Simon Bozeat’s Midlands Leadership Experience Money Debate listening to a group of successful local business people talking about how they did it and what they’ve learned. Gold dust to someone like me.

I’m always interested in the characteristics of successful business people, and how they got to where they are. There are some common features that are evident across this group, and Graham exhibited many of them. Features such as;

Vision. Graham told how he had realised that his business needed to grow, and that meant a new building. He described his vision of a factory purpose built for his business, a shining example of a modern icon for the high-tech field he operates in, with room to grow in line with his plans. The resulting construction (so new it doesn’t yet appear on Google) is clearly a product of Graham’s imagination and vision and he’s obviously very proud of it.

epm technology building

Single-mindedness. Graham negotiated government funding for the building project, tapping into an allocation of money available to businesses in the Derby area. When the auditors charged with approving the grant checked Graham’s books, they questioned why he was writing off a sizeable value of machinery to purchase new equipment at the same time as moving to the new premises. Graham pointed out that the project was designed to future-proof the business and relying on ageing plant, despite it still having life left in it, wasn’t part of the plan.

The auditors prevaricated. Graham dug in. If he couldn’t build the project as he’d envisaged it, he told them, let’s call the whole thing off.

I believed he would have done, too. They obviously believed him as well, because he got the money, got the new machinery, and created the platform for his business that he’d set out to achieve.

Problem-solving. As an engineer at the leading edge of technology, Graham is obviously used to solving problems. But what was so impressive about his approach was that he doesn’t just solve problems – he blows them apart. Like a true entrepreneur, his mind set is to view problems as a challenge to be solved, and if you can’t go round it, or over it, or under it, then just go straight through it. Very inspiring.

Courage. Graham described the process of acquiring other businesses along the road, and how he was doing deals with companies at a time when his own business wasn’t in the best of financial shape. Yet he knew that the acquisition was the right thing to do, and he made it happen.

Self-reliance. Whilst Graham clearly understands how to build a great team of people, he also realised that in making the decisions he needed to make he wasn’t going to get support from some key players, especially the banks. His willingness to look for other options meant that, instead of being in hock to them he was a few steps ahead, meaning he could dictate terms when it mattered.

There were other qualities I could highlight, but you get the picture. The point is, if you want to get things done then find someone like Graham in your life or your business who will show you that you don’t have to take no for an answer, and that if your vision is clear enough you really can change the world.

Thanks Graham, and the other speakers at the event, for sharing your story. I for one appreciated it.

If you’re interested in meeting people like Graham, the Midlands Leadership Experience is a great way to do it. You can register for more information on their website.

 

Borrowing to Invest

Often the ideas in a blog post spring out of a conversation with a client or colleague, and this one is no different. So James, this one is for you.

Debt is expensive, and your lender needs to make a return on their money so they aren’t going to give you interest on cash you deposit with them of more than they’re taking off you in loan interest or they’ll soon be broke.

So why borrow at all?

Reason one is to enable you to buy something now and pay later. Your house is the obvious example.

The second reason is to invest. If you can make a return on the borrowed cash of more than the cost of the loan, you’re in profit.

The problem is that generating a return of more than your loan interest rate can only usually be done by accepting more risk. The scale of this risk will determine your willingness to borrow.

If the money is going in to your own business you might think the risk is worth taking. If you can borrow £x and turn it into £10x or £100x that sounds like good business.

You could put the money into shares or similar investments. The returns should be better, but there’s no guarantee, and the value of your borrowed investment can fluctuate wildly.

If you’re using mainstream investments borrowing to invest might still be an attractive strategy. The return on a well-managed mixed portfolio (shares, bonds, etc) has averaged several percent a year more than the average mortgage rate for decades, so profits should be forthcoming.

By far the most popular form of borrowing to invest is to purchase investment property. Whilst the returns aren’t spectacular, the income you’ll receive from renting out your house or building is reasonably predictable. You’ll be able to work out the return for yourself.

Investing in property has some other important features. Firstly, it’s easier to get someone to lend you the money in the first place. Lenders are happy to take property as security for your loan, and if you can’t keep up the repayments they could grab it back and sell it to get their money back.

Secondly, interest payments on property investments can usually be set against the rent for tax, reducing the true cost of borrowing significantly, especially if you pay tax at the higher rate.

The third reason is one of psychology. People view property investments as long term so they tend to worry less about swings in the price of houses or buildings. They will ride through economic downturns and tough times to get the benefit of long term growth.

There are very few lenders, on the other hand, who would accept your share and bond portfolio as security, so you’re restricted to either borrowing lesser amounts in the form of a personal loan, or using a property that you own as the security the bank will require. I’m not sure there’s a lot of sense in this rule, but that’s how it is.

Your share portfolio will probably require tougher nerves, too. The sheer visibility of share prices is a big reason why many people don’t stay the course. They are much more likely to cash in when times are bad instead of riding through the ups and downs to get the returns that come through over time.

So is it worth it? Let’s put some numbers on the table to show what’s possible.

Let’s say you borrow £100,000, in the form of a mortgage on your existing property, at a loan interest rate of 5% a year. Here are the figures:

At start 5years 10 years 15 years 20 years 25 years
Amount borrowed £100,000 £100,000 £100,000 £100,000 £100,000 £100,000
Total loan plus interest cost at 5% £100,000 £125,000 £150,000 £175,000 £200,000 £225,000
Total loan interest cost at 5% with 40% tax relief £100,000 £115,000 £130,000 £145,000 £160,000 £175,000
Amount invested at 3% compound growth £100,000 £115,927 £134,392 £155,797 £180,611 £209,378
Amount invested at 5% compound growth £100,000 £127,628 £162,889 £207,893 £265,330 £338,635
Amount invested at 7% compound growth £100,000 £140,255 £196,715 £275,903 £386,968 £542,743
Amount invested at 9% compound growth £100,000 £153,862 £236,736 £364,248 £560,441 £862,308

Or, to show it another way:

Chart

Interestingly, even where the loan interest and the return achieved are similar (as shown by the 5% less tax relief and 3% growth lines) the investment return still outstrips the loan interest cost over time. This is because of the compounding effect of the investment, whereby interest is earned on interest.

What this says is that if you could get a return of, say 7% a year whilst paying interest of 5%, over 25 years you would have made a profit of £317,743 in total, and if you could get a 9% return you’d be ahead by £637,308.

Of course it also shows that if your return is only 3% a year you’d be £15,622 worse off in total, although you would still have £109,378 left over if you paid off the outstanding loan at that point, because you’ve paid the loan interest along the way.

So should you follow this plan to get rich? As always, the answer is – it depends. There are a few questions you’ll need to ask yourself before you start. Here are some of them;

  1. Are you able to borrow the money in the first place? If the amount you want to raise is substantial you’ll probably need something to offer as security and you’ll need to show how you propose to make the repayments.
  2. Can you afford the repayments? Do you know how much they will be and how to calculate them?
  3. What will happen to your plan if the loan interest rate changes? Could you afford the extra commitment if the loan cost doubled, say? There was a period in the 1990’s when interest rates reached 15%. If that happened again, how would you cope? (everyone taking out a mortgage should consider this question, by the way).
  4. Do you know what the likely return on your investment will be?
  5. Do you understand how secure your invested capital will be? What’s the risk of losing some or all of it? Do you really understand what you’re getting into?
  6. Are you prepared for the inevitable swings in market prices and investment values? For example, an investment in shares would have returned around 9% a year over the last 20 years or so, but there were some years when values were down to almost half their previous level. Do you have the stomach for that kind of ride?
  7. Will you need to borrow for any other reason? If you’ve used up all of your credit line you’re going to have to sell something or do some tough negotiating to free up cash in the future.
  8. Are there restrictions or time penalties involved in either loan or investment terms? If your lender decides they want you to repay the loan immediately and you’ve put the cash into something that won’t pay out for five years you have what we call ‘a problem’.
  9. Is it worth it? Does the extra money you’ll make justify going through all of this work?
  10. Do you have the necessary skills to get the required returns for yourself? Or if you are giving the money to someone else to invest for you, have you carried out thorough (and I mean thorough) due diligence on them? Even the most plausible of people and finest of institutions can go pop or get their sums badly wrong, witness Lehman Brothers, RBS, Equitable Life, Tesco, etc., etc., etc.,…….). If in doubt pay for really good professional advice.
  11. If you’re dealing with an adviser; Do you understand the difference between sound advice and a sales story? Be especially careful of advisers who try to educate you. Here’s a quote from the Dalbar Report (dalbar.com); “Investor education….. has been used as the vehicle to transfer responsibility from the expert to the unwitting neophyte. By providing education, the investor is expected to make prudent decisions that relieve the expert of any responsibility. This use of education as a litigation defence may be effective in arbitration, in the courts and with regulators but it does nothing to protect the investor from making bad decisions.” I couldn’t have said it better myself.
  12. What does your partner or spouse make of your plan? Trust only goes so far. Full communication is better.
  13. What is there about your plan that is so obvious that you’ve overlooked it?

Having tried to scare you with what could go wrong, don’t forget that you don’t get to win the trophy by sitting in the changing room twiddling your thumbs. If you’ve answered these questions carefully you should be prepared and be able to avoid the worst mistakes. Having decided, stick with your plan! Persistence is one of the keys to successful investing.

Good luck!