My Financial and Investment Strategy

The Financial and Investment Strategy

Acronyms

MNI :: Monthly Net Income

FC :: Fixed Costs

S&I :: Savings and Investments

FS :: Financial Strategy

IS :: Investment Strategy

STFS :: Short Term Financial Strategy

MTIS :: Medium Term Investment Strategy

Purpose

Both the Financial Strategy (FS) and Investment Strategy (IS) are a set of concrete guiding principles behind my fiscal and investment decisions that are designed to be aligned and promote the life I want to be live. 

The FS encompasses the broad financial picture with decisions encompassing revenue streams, costs, savings and investment allocations while the IS is a subcategory of the FS specific to investment decisions covering risk profile, investment philosophy, time horizons, capital allocation, etc. 

These strategies ought to set out where I currently am, where I want to be going, realistic actions as to how I intend to get there and any risks involved. These strategies ought to be simple, requiring minimal oversite and thinking. Changes to the FS and IS should be kept to an absolute mininum. 

Writing these strategies down ensures I am able to 1) articulate the reasons behind my decisions 2) hold myself accountable to a set of well thought out principles 3) reduce the times I have to make adjustements to portfolio. 

Historical Data

For decisions to be made, historical data needs to be avaibale to determine whether financial and investment decisions can be improved, over the course of 2025 I tracked this data. There are two primary metrics I used. 

The first is through a monthly cash flow statement where monthly, revenue, costs, savings and investments quantities are recorded providing a historical view on cost and savings and investment rates. This gives a view as to how much money is coming in on a monthly basis, how much money is going out to expenses, and how much money is being saved or invested. 

The second metric I use to analyse my financial situation is a balance sheet statement, on a quarterly basis, which tracks the value of each asset and total portfolio value (as well as subtracting any ongoing liabilities). Further analysis is performed in a Portfolio Review section to track the breakdown of investments across sectors, rates of return, risk, currency exposure and other typical investment metrics. 

STFS (update required by 2028)

The STFS consists of financial decisions and targets relating to the next one to three years. This is presented as a range of one to three years as any significant changes to the micro (personal) or macro (worldwide) economic environment may require a change of strategy. It is also unlikely that I am able to accurately forecast what my financial situation may be further than three years down the line. 


1.There are four primary ways of improving the financial situation: 

1.1. through wage income (selling labour --> receiving salary)

1.2. through investments (allocating savings and investments --> capital gains or dividends)

1.3. through business (selling a scalable product or service --> generating cash flows)

1.4. reducing expenditure (fixed or variable costs, discretionary or non-discretionary spending)



The important metrics to my financial strategy include: 

a. Monthly Net Income (MNI)

    how much I earn a month after taxes and before any expenses or savings and invesments

    relates to (1.1, 1.2, 1.3)

b. Fixed Costs (NC)  as % of MNI, fixed cost rate

    the proportion of my MNI that goes to predictable monthly expenses

    relates to (1.4)

c. Savings and Investment (S&I) as % of NI, S&I rate

    how much of my MNI that goes to savings and investments

    relates to (1.2)


Fixed Cost Rate

This year my FC rate averaged to 57%. However, excluding one outlier month, where my FC was 107%, my FC rate was 53%. In other words, on average 53% of my net income every month went to fixed costs, which are mostly same Month on Month, with variations mainly coming from fluctuations in gas prices and usage throughout the year: 

Fixed Costs (with average proportion breakdown of FC throughout the year)

    63% :: Rent, fixed

    06% ::  Utilities (gas, electricity, internet, phone), variable and fixed

    03% :: Transport

    10% :: Local Tax, fixed

    17% :: Health* (e.g. Gym, Medical), can be fixed or variable


*Health costs have been elevated due to one off medical procedures that had to be undertaken. Under normal conditions, it is expected for health costs to range between 5 and 10%. 

** Food costs are not included as that can have significant variations month over month, depending on how much I eat out, meal prep, etc. Food is also an expenditure which I do not want to quantify as good food is always worth it.


Having reflected on my Fixed Costs, I have determined that there are no areas which can be reduced without significantly compromising my quality of life, therefore, no immediate changes are being made to my fixed cost expenditures. Throughout 2025 the main shift included moving apartments closer to where I work, increasing the rent costs but eliminating transport costs. 

Looking forward, primary potential risks to changes in my Fixed Cost Rate comes from an increase in Rent costs, mitigation strategy is found in the section below. 


Savings and Investment Rate

This year the S&I rate was 6%, with an equal split to savings and investments. Next year I would like to increase the S&I target rate to 10% as I experienced an insufficient cash buffer for unexpected costs.  The target includes 5% of MNI going into cash savings, 3% into investments, and 2% into pension.


Monthly Net Income

Monthly Net Income refers to the income that is deposited in my bank account after taxes have been withheld, it is not my monthly free cash flow (FCF) which consists of the cash available once taxes, fixed costs and S&I have been subtracted. 

The change which may have the highest marginal improvement to the financial situation in the short term is increases to salary earnings. 

This year, my real salary earnings increased by ~8% (adjusted for inflation), however, it is not under my control to make direct changes to what my salary is as that is under the purview of company management. However, it is under my control to affect, what I see as, the main determinants of my salary, which is my Earning Potential (EP) or essentially, the value of my labour. As I see it, my earning potential is a function of two basic elements: 


EP = f(HC, P)

    Human Capital (HC): essentially my hard and soft skills, my knowledge and my skills. 

    Performance (P): attitude I bring to work and delivering consistent and high quality outputs. 


The details as to how I am focusing on increasing HC and P relates to my Development Strategy which falls outside the STFS. In essence, having recently started working, there is increasing marginal returns to the value of my labour in the short term due to the small amounts of existing HC and relatively large amounts of low hanging fruit that would increase HC. However, once I've picked all the low hanging fruit and diminishing marginal returns start to appear, I'll have to reassess the function of my EP. 


MTIS (update required by 2030)

Medium Term Investment Strategy pertains to investment philosophy, strategy, principles that will be followed over the next 3 to 5 years. This is presented as a range due to the uncertainty of structural changes to micro or macro economic environment requiring a reassessment of the MTIS.


Investment Rules

Rule #1. 

Never execute a buy or sell order without first waiting one month after making a trade decision (written down in an order log). 

Bad decisions often occur in moments of impulse, bad decisions are less likely to occur after prolonged meditated thought. 


Rule #2. 

No crypto, no meme stocks, no FOMO stocks.

 

Rule #3. 

No exposure to more than 5 to 8 individual assets, no exposure to more than 3 to 5 sectors. 


Definitions

Concentration: defined as the number of things and the difficulty of those to occur that need to go wrong to create a significant alteration in the value of an asset. For example, holding US dollars or a broad ETF (e.g. the SP500) I would consider low risk as that would require significant deteriorations in the credibility of the dollar or in the broad environment, evidently, while this doesn't mean there is no risk, it means that it is relatively less risky than holding other assets. Assets of medium concentration would be considered to have a medium number of things or difficulty of things to occur to create a significant alteration in the value of an asset (e.g exposure to sectors such as gold/silver, space, nuclear, etc). Assets of high concentration include exposure to individual stocks where they are affected by macro economic, sectoral and business specific conditions leading requiring a low number of things and low difficulty to create a significant alteration in the value of an asset. 


Different investments fall within different stages, these are the four different stages possible:
  • Sowing :: early stage investment, little to no traction from mainstream investors, buying low. 
  • Waiting :: capital deployed into asset, holding.  
  • Harvesting :: asset has appreciated in value, however gains only exist on paper, harvesting stage is to realise gains from investements, selling. 
  • PermaHolding :: capital deployed into long term assets, +20 years. 


Portfolio Holdings as of 21.12.2025


by Concentration

  • 54% :: Medium
  • 32% :: Low
  • 14% :: High

by Sector

  • 48% :: Gold and Silver
  • 17% :: Conglomerate
  • 16% :: Cash
  • 11% :: Space
  • 09% :: Nuclear
by Individual Asset
  • 25% :: Gold/Silver (commodity)
  • 23% :: GDX/J (gold miners ETF)
  • 17% :: Berkshire Hathaway 
  • 13% :: Other
  • 11% :: ASTS (ast spacemobile) 
  • 06% :: URA (uranium ETF) 
  • 03% :: Cash
  • 02% :: SMR (nuscale)
  • 01% :: CCJ (cameco)
by Stage, Sector, time horizon
  • Harvesting :: Gold and Silver, 2025 - 2030
  • Waiting :: Nuclear, 2030 - 2040
  • Sowing :: Space, +2030
  • PermaHolding :: Conglomerate, +2045

Portfolio Risk
  • Significant exposure to price movements in Gold and Silver (~50% of portfolio)
  • As my portfolio is priced in GBP, changes to USD:GBP exchange rate (~40% of portfolio)  


Investment Strategy

The broad philosophy is a simple part 1-1-1 allocation strategy. 33% into high concentration assets. 33% into medium concentration assets, and 33% into low concentration assets. As of now the current allocation is 14%, 54%, 32%, therefore actions will need to be taken to re allocate. 

The investment strategy I have come up with is taking a higher risk profile to my portfolio by deploying capital into sectors and individual companies that have a justified chance of generating higher than average risk adjusted rates of return compared to the broad market. These investments fall under the medium and high concentration categories. An exposure to a higher risk profile is justified due to a long time horizon and therefore an increased ability to recover from losses. 

Over time, if these investment produce alpha, excess returns will be realised and transferred to low concentration assets which are expected to track the performance of the broad equity market over the long term. The low concentration assets are buy and hold, these are long term assets and are not be touched. 


Actions

  • increase exposure of High (concentration) from 14 to ~33%
    • look into reinvesting into an existing stocks or one new stock
  • reduce exposure of Medium (concentration) from 54 to ~33%
    • reduce exposure of Gold and Silver (sector) from 48 to between 20 and 30% over the next five years
  • convert some of the assets in the low concentration category into higher yielding low concetration investments. 
  • produce a detailed investment review of current sectoral and individual stock holdings

Appendix: Learning Resources

  • The Tao of Warren Buffet (book): The wisdom of Warren Buffet as it relates to life in general, business and investing
  • Foundations of Finance by Aswath Damodaran (YouTube Playlist): for an introduction to the basic concepts of finance and investing - link
  • A Wealth of Common Sense (article) - 6 simple ways to improve investment performance
  • Use strategic thinking to create the life you want by HBR (article) - link




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