February 2024
WELCOME
Welcome to The Crazy Plan where our mission is to show that anyone can create unimaginable wealth.
Each month, we publish a blog providing readers with the financial education needed to set out on their own journey to a bright financial future. We do this by following two plans, our Monthly Plan saves £50 a month for 10 years and our Lumpsum Plan starts with a one-off £10,000. Our aim is to turn each plan into $1 billion in one or two generations.
At first, making $1 billion seems crazy but once you realise it’s a journey then things change. We’ll save our first £50 and from there our wealth will build to $1,000, then $5,000, then $10,000 and then $50,000. One day, if we’re patient, we’ll have $100,000 and then we’ll be looking at $1 million. From there it will be onwards to our $1 billion goal. This journey of small steps is how what seems impossible becomes possible.
You can dig-in to our posts however you like or if you are completely new to investing, you may want to start with “1.0 Liftoff!” and go through them in order which is how we build the education. We hope to provide you with the knowledge needed to set out on your own journey to a bright financial future if you choose. You can also visit the “About” page on our website to learn more about our plan.
All readers must read and agree to our Terms & Conditions, including the Disclaimer, which can be found on the T&C page of our website: https://thecrazyplan.com
ON WITH THE PLAN!
Time to $1billion: Monthly Plan 89yrs 4mths | Lumpsum Plan 80yrs 2mths
Last month we looked at the basics of a Fund and saw that funds are really very simple. They’re just a pool of money from lots of investors and a Fund Manager then goes off and invests the money. We invest in a fund by buying units and the price of the units is simply the value of all the investments in the Fund divided by the total number of units sold to all investors. We then set up The Crazy Fund, appointed ourselves as the Fund Manager and went off and made some investments.
This month we are going to take a break from investing and discuss what could be the three most important things that will lead to us making our family $1billion. Hard as it is to believe, picking what to invest in will probably be easier than what we’ll discuss this month: sacrifice; temptation and commitment.
SUCCESS
When we see successful people, whether it’s athletes, business people or anyone, we tend to think they were born talented and overlook the most important factor for their success, practice. There is a saying “Practice beats talent when talent doesn’t practice” and this is true in all areas of life. Take any group of successful people and the one thing they all have in common, without fail, is that they all put in 1,000’s of hours of practice. Whether it’s dedicating time to physical training in the case of athletes or to research and planning in the case of elite business people.
It’s no accident that these people are highly successful. Talent, if you have it, then takes you the last 1% to be the best in the world. Most people would agree that Roger Federer, Tiger Woods and Michael Jordan were all at the elite end of their chosen sports, being the greatest in the world. But how successful would they have been if they had not practiced very much? Would we ever have heard of them? No, and we would never have seen the talent they all possess.
It’s exactly the same in business where practice means reading about your chosen field and investing time in planning your future. What would have happened if Bill Gates, Elon Musk or Jeff Bezos had not dedicated untold hours to planning and building their businesses, would we have heard of them? No, and they would not be some of the richest people in the world.
This is also true in investing. Warren Buffett, who is worth over $120billion (yes that’s $120billion), didn’t spend an hour or two a week doing some research and get lucky. He spends hour upon hour researching and refining his investment philosophy. What’s interesting is that he actually says you don’t need to be super smart to be a great investor, lucky for us! This is what he said about IQ: “Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”
Every successful person has spent 1,000’s of hours practicing, learning their craft and dedicating themselves to being the best they can possibly be in their chosen field. They practice with utter commitment and determination and when they fall they pick themselves up, learn from what went wrong, and carry-on moving forward towards their dream.
SACRIFICE
So, to be successful at anything, it looks like we need to sacrifice our time. If you are reading this then you have already sacrificed some time to think about your financial future so you are off to a good start, but we are going to ask you a question. If you found last month’s post a little difficult, with all the Fund talk and the Investment report, did you wait until this month hoping we would give you the answers? Or did you go off and do some research on your own to find out more? If you found the post easy, did you go and research the investments that The Crazy Fund bought or find out about different unit types like Distribution and Accumulation Units?
You see, we are not going to be able to tell you how your family can make $1billion. We hope we can guide you to the areas that we think are important, but it’s up to you to sacrifice a couple of hours a week for your own research.
Let’s work out the hourly rate of those couple of hours a week: last month we estimated the Monthly Plan will take 89years and 5 months to make $1billion; that’s 4,666 weeks; at 2 hours a week that’s 9,332 hours; and so $1billion / 9,332 hours is $107,158 per hour. So, think of it this way, every time you do an hour of research your family are getting paid $107,158! If that doesn’t motivate you to sacrifice your time then we have no idea what will!
TEMPTATION
In our first post, “1.0 Liftoff!” we talked about the need to resist the temptation to spend the money we’ve saved. We said we need to think of the money we commit to this plan as family money and no longer ours. This is such an important point that we will repeat what we said: “if we go and blow our £50 per month or find that there isn’t £10,000 down the back of the sofa, then there will never be $100,000. If there is never $100,000, then guess what, there will never be $1million and if there is never $1million, there will never be $1billion.”
To help us resist this temptation, as well as reminding ourselves that this is family money, we should also give ourselves a carrot. In the future there will come a time when we can start to take an income from The Crazy Fund. Never mind £50 a month, imagine when we can take $1,000 a month from The Crazy Fund and then see that grow over the coming years to $10,000 a month and more. If Warren Buffett makes 10% this year he will make $12billion which is $1billion a month. Quite simply, we must follow in his footsteps and resist the temptation to spend.
COMMITMENT
Most people think there’s some magic formula they don’t know about or some talent they were not born with and that’s the reason they are not wealthy. But do you want to know what the secret is? It’s our attitude and commitment that will define whether we achieve our $1billion target, not whether we are born with some mystical investing talent. Yes we need a plan, yes we need to save £50 a month or get lucky down the back of the sofa, but it’s commitment that will make it happen, it really is that simple.
OUR SUCCESS
So, three of the most important contributors to our success have nothing to do with investing at all. They will be our commitment to our plan, our ability to sacrifice the time needed and whether or not we can resist the temptation to spend the money. We know this sounds too easy but in the world of investing, when we have just made or lost a huge amount of money, it will be these three qualities that allow us to succeed. We are going to commit to our plan, put in the time needed and resist the temptation to spend the money as we quite like the sound of our family chasing Mr Buffett’s tail.
THE INVESTMENT REPORT
For an explanation of The Investment Report and The Crazy Fund please see our post “1.1 The Deep End”
| Thu 29-Feb-24 | Monthly Plan | Lumpsum Plan |
| Cash last month £ | 50 | 0 |
| Cash Saved £ | 50 | 0 |
| Unit buys / sells £ | 0 | 0 |
| Total Cash £ | 100 | 0 |
| Units last month | 0 | 10,000 |
| Units bought / sold | 0 | 0 |
| Total Units owned | 0 | 10,000 |
| Unit Price £ | 1.0731 | 1.0731 |
| Fund Value £ | 0 | 10,731 |
| Total Wealth £ | 100 | 10,731 |
| FX Rate | 1.2663 | 1.2663 |
| Total Wealth $ | 127 | 13,589 |
| Estimated CAGR | 15.00% | 15.00% |
| Years to $1billion | 89yrs 4mths | 80yrs 2mths |
This month we saved another £50 into the Monthly Plan so we now have £100. At the moment, we’re not investing the money from the Monthly Plan, we’re just in saving mode. We will invest in the future but are going to wait until around 6 months when hopefully (if we resist the temptation to spend!) we will have £300 saved up.
The Lumpsum plan had another good month and is now up 7.31% in the two months since we started. Now, some people will look at this and say it just proves that the rich get richer and what chance does the average person have, it’s just not fair etc, etc.
We view this very differently. We are delighted that the Lumpsum Plan is doing well as it proves that this whole crazy plan might just work after all! The real success is the Monthly Plan as two months ago our financial future was bleak, in fact it was horrendous with no savings and no plan. In just two months we have achieved the goal we set ourselves of saving £50 a month and are turning our financial future around. This is a huge achievement and we are exactly on track to make $1billion for our family, maybe we are earning $107,158 per hour after all.
THE CRAZY FUND
We have swapped the axes over to make the chart easier to read, the unit price is now on the right-hand axis.
| Result | 31-Jan-24 | 29-Feb-24 | Move |
| Unit Price £ | 1.0156 | 1.0731 | 5.66% |
| FX Rate | 1.2696 | 1.2663 | (0.26%) |
| Unit Price $ | 1.2894 | 1.3589 | 5.39% |
Over the month, the value of the fund went up by 5.66% due to the value of our investments going up and because we received something called a dividend (see below). The £ / $ exchange rate went down which means our £ buy less $ this month which is not good. We need to measure our wealth in $ as our target is $1billion. Overall, the value of The Crazy Fund went up by 5.39% in $. As you can see from the chart, this is a very bumpy ride unlike a bank account, with big swings up and down. Buckle up for far bigger swings in the years to come and welcome to the volatile world of investing.
Below is a table of what the fund is invested in at 29/February:
| Ticker | % Fund | Price | CCY | Type | Description |
| LON:IEM | 7.64% | 388.00 | GBP | IT | Impax Environmental Markets PLC |
| LON:SMT | 8.71% | 801.20 | GBP | IT | Scottish Mortgage Investment Trust PLC |
| LON:XDEM | 10.69% | 4,699.00 | GBP | ETF | DB X-Trackers MSCI World Momentum Factor UCITS |
| LON:ATT | 10.46% | 343.50 | GBP | IT | Allianz Technology Trust PLC |
| LON:PCT | 8.74% | 2,890.00 | GBP | IT | Polar Capital Technology Trust PLC |
| LON:XDWT | 11.39% | 78.80 | USD | ETF | Xtrackers MSCI World Information Technology UCITS |
| LON:MTE | 8.63% | 136.80 | GBP | IT | Montanaro European Smaller Companies Trust PLC |
| LON:CSP1 | 10.55% | 42,253.00 | GBP | ETF | iShares Core S&P 500 UCITS (Acc) GBP Hedged |
| LON:EQQQ | 11.55% | 34,715.00 | GBP | ETF | Invesco NASDAQ 100 UCITS GBP Hedged |
| LON:JAM | 11.59% | 939.31 | GBP | IT | JP Morgan American Investment Trust PLC |
| Shares | 99.94% | ||||
| Cash | 0.06% |
We made no investments or divestments in the month. So, if we didn’t do anything where did this 0.06% cash suddenly come from? Well, one of our investments (LON:IEM) declared something called a dividend. When a company makes a profit there are several things it can do and one of them is called paying a dividend. Along with all the other people who have invested in IEM, we own the company and so the profits belong to us. Management have decided to pay us some of that profit and that’s what a dividend is. We’ll talk about dividends later in other posts but for now let’s keep it simple and just get used to the language.
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NEXT MONTH
We realise that our plan sounds totally ridiculous and unbelievable, come on, save £50 a month for 10 years or a lump sum of £10,000 and turn it into $1billion?! When we crunched the numbers we had to re-do them as we were in disbelief as well (and we did them a 3rd time and a 4th!) Next month we’re going to talk about seemingly ridiculous plans, including ours, and show you how things are hopefully going to unfold over the coming years and how perhaps our plan is not so crazy after all.
DISCLAIMER
Please note that by the time this blog is published, we may no longer own some or any of the investments discussed. Strategies and investments discussed might be totally unsuitable for you and we are not recommending them to you, they should only be considered as ideas for further research. You must read and agree to our Terms & Conditions, including the Disclaimer, which can be found on the T&C page of our website https://thecrazyplan.com
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