#16 - Finance Fridays - 5 Pillars To Wealth, Stocks & Shares ISA, Digital Products on Etsy

*This is not financial advice, just me brainstorming about things related to money. Stocks are extremely volatile - value can go down as well as up. All investments and income streams may be subject to tax.

Contents:

• 💡 Idea of the Week - 7 Signs You’re Financial Okay

• 🥗Side Hustle of the Week - Digital Products on Etsy

• 🎒Useful Resource - Best explanation for Why US debt Is Out of Control

• 🎒Useful Resource - 5 Pillars To Wealth To Work Towards in your 20s

• 💹 Investing - Two Things to Watch Out for with Stocks & Shares ISAs

🎒 5 Pillars To Wealth To Work Towards in Your 20s

Inspired by: The 5 High Income Skills I Wish I Knew at 21

These were the 5 takeaways I took from this YouTube video on Financial Success.

Specific Knowledge

“If you can master a subject by simply reading and studying it then so can millions of others. And when millions of others can do the exact same thing, you will be easily replaced”.

Everyone wants to be rich, that’s a given but what value do you have to deserve vastly more wealth than most people? That’s why specific knowledge from years in an industry or honing a specific skill is important for acquiring wealth.

Have either Code and Media Leverage

“The greatest advantage of the internet is that all you need is to create something once and the impact of it can compound and scale over time with zero marginal costs to reproduce it again.”

Today, right now, you can create YouTube content that attracts monetizable views for years to come. You can create an iOS app that can earn revenue even once you’ve finished building it. Think of ways to stop trading your time for money (like your 9-5) instead lean towards finding “leverage” that increases in the long term.

Build Accountability

You need credibility to succeed that means taking accountability when things fail as well as succeed. That’s the power and tradeoff of the Personal Brand. You might cringe at the idea of putting yourself out there but you only need to look at the rise of influencers to understand why showing your true self can lead to greater business opportunities.

Take Action

Break things down into smaller chunks to create a feedback loop of

• Action - Builds momentum

• Quantity - Keep going

• Quality - Refine your work

• Motivation - Now you’re motivated to more action

Be Gritty

“Keep pushing forward even in the face of challenges and obstacles.”

There's only 2 real options - Improve your work or work on something else.

YouTube started as a dating site. Nintendo originally sold physical cards. Both do different things nowadays. The point is that you’re doing something right now and you’re flexible enough to change direction when needed.

These are pretty good pillars based on sound logic.

🥗Side Hustle of the Week 🚥 (Digital Products on Etsy)

Inspired by - I Tried Selling Digital Products for 90 Days

🔴 - Potential dealbreaker

🟡 - It depends

🟢 - Very Ideal

1. Hours per week 🟢 - Once you’ve built it once, you don’t have to build again

2. Skill required 🟡 - You need to be knowledgeable in your target niche but the tools required are easy to learn

3. Up front cost 🟢 - Like most things on the internet, it’s virtually free

4. Market saturation 🔴 - Etsy is very saturated with digital products copying each other

5. Timeline to reach success 🔴 - Because it’s so competitive, you need to find a way to break through the noise which will take time and practice

6. Income potential 🔴 - People don’t like spending money on non-physical items and there are always free alternatives for most digital products. It’s very unlikely you’ll be wealthy from digital products alone.

Digital products are popular for a reason, you build once and you generate genuine passive income. But it comes with a catch. They are almost too easy to copy by anyone globally, unlike physical items. And once bought, they are too easy to share/pirate so your spreadsheet a customer bought for £5 can be redistributed for free without your permission.

People still don't like investing heavily in digital products due to the psychological barrier of the lack of physical evidence. Due to their low maintenance, they do seem worthwhile but unless you are building full blown courses, don’t expect super high returns.

🧐 7 Questions To See If You’re Doing Financial Okay-ish

Read the online news or doom scroll for too long and you’ll think our financial future is beyond repair. Yes it’s quite bad but perspective is important in the grand scheme of things.

Here are 7 questions to ask yourself to see if you’re doing financially “okay”.

1. Do you have at least a 3 month emergency fund? That’s a good start but consider aiming for 6 months,  since we’re in for a ride in the next few years.

2. Is there money left over after you pay your bills? Then this is money you can invest, save or build from.

3. Do you know what your next career step is? Either way, plan more and go deeper. Being proactive instead of reactive will prepare you for the worst or lead you to your highest potential.

4. Are you regularly adding to a savings account/ISA? Keep going and automate your savings, adding the same amount every month. Always be saving for a rainy day.

5. Can you afford your hobbies? Delayed gratification is great but if you can’t enjoy your day-to-day (or weekend by weekend) then what’s the end goal here?

6. Can you afford to socialise with your friends? The poorest of kids can find ways to have fun so there’s actually not much stopping adults from adapting to each other’s financial circumstances. Whether it’s swapping nights out for dinner parties to going for runs together, your social life doesn’t have to be expensive. 

7. Health outcomes aside, can you afford to eat what you want? Sometimes I want a Chinese takeaway and the only thing stopping me is my metabolism. I see that as a privilege, since there are families who can’t afford to treat their kids to a cheeky takeaway every week. Sometimes appreciate the small things in life.

🎒Two Things to Watch Out for with Stocks & Shares ISAs

Inspired by: What They Don’t Tell You About Stocks & Shares ISAs

Two things from the video stood out for me:

• You will have to pay 0.5% Stamp Duty on any individual UK company stock (excluding foreign stocks) when buying (not selling). This also applies to inside an Stocks and Shares ISA

• In-specie transfers, which is when you move your shares from one platform another, have many limitations. For example, Moneybox does in-specie transfers but they are limited to non-US stocks. This means moving your shares between platforms in many cases is super expensive because you have to sell them, pay tax on your gains, and buy them again on the new platform.

Stay woke with your Stocks.

✍🏿Quote of the Week 

“It’s never been a better time to be exceptional, or a worst time to be average.”

― Scott Galloway

This makes me think about the long tail of the internet. Seth Godin, explains it very well:

The average YouTube video gets five new views every day.

Let’s parse that for a second.

5 billion YouTube plays a day, spread over about a billion videos means that while some videos live in the short head and get millions of views, there are a huge number of videos that get fewer than a single view each day.

At some point, the long tail is so long it ceases to exist.

So to achieve any measure of true success (particularly online), you need to be either:

• Incredibly unique

• Service an extremely small niche

• Outperform competitors by a significant margin

This looks hard but it feels simple to me. I simply need to choose my lane and commit to it. Personally, finding a small niche or being incredibly unique are tailor to my traits.