Why you should concentrate on getting rich slowly
PUBLISHED: 14:55 29 August 2017 | UPDATED: 15:02 29 August 2017
Attending auctions can become almost compulsive behaviour for some people, particularly when property is up for sale, though for most of us, spending time in an auction room is usually a fascinating experience, especially if you arrive before proceedings get under way and grab the opportunity to browse through tables and boxes of interesting paraphernalia.
Of course, much of what sellers believe is a valuable decorative piece, work of art, or ancient musical instrument lovingly handed down by old auntie Mabel while she was still living in her fairy-tale cottage in the Cotswolds, turn out to have been mass-produced by a factory in Stoke during the 1960s, often to the vendors’ deep dismay.
Conversely, far too many buyers get caught up in the auction room’s peculiarly competitive atmosphere, convince themselves that they’ve suddenly become experts on eighteenth century Japanese Imari porcelain and bid accordingly.
This happened to me at an auction a few years ago when two small decorative vases caught my eye. Couldn’t tell you why this happened because I’d never before been interested in vases (and haven’t been since), but they were bright, attractive and reasonably priced, although what persuaded me to bid were the colourful Chinese inscriptions on the bottom of each piece, markings which only enhanced their appeal.
I tried to convince myself that they were probably the insignia of a Shanghai factory which produced millions of them, but perhaps, just perhaps, they were the rare signature of an obscure Asian genius whose vase work was sought-after by museum curators across Europe. Such thinking can prove costly. None the less, at worst I believed they would be a perfect gift for my wife; she’d be thrilled with them (mistake number two) and happily parted with £40 plus the auctioneer’s commission. Today, they’re somewhere in the loft, gathering dust.
It’s surprisingly how quickly we can be hoodwinked by the prospect of easy money and I suspect that we may witness a spike in auction attendances over the coming months following a report that a pair of ‘egg cups’ valued at £50 were auctioned for £10,500.
The seller, said to be pleased with the modest initial valuation, had been using the 7cm tall stemmed Cloisonné cups, manufactured in eighteenth century China, for the occasional boiled egg. It was only when they reached the auction room in Stamford that serious collectors were alerted. One auction goer described the bidding as “fast and furious” as the ‘egg cups’ went under the hammer for £10,500.
Real life tends not to be like this because the unexpected injection of handsome cash sums into our bank account rarely occurs, no matter how desperately we may want it. Folks who chase ‘easy money’ by playing the Lottery, for instance, are effectively throwing their hard-earned away; you have more chance of being decapitated by a Frisbee than winning the Lottery jackpot.
Instead, I’m afraid, you should concentrate on getting rich slowly, as every one of the world’s greatest investors would confirm.
Boring eh? Well, such a conclusion is certainly not as exciting as unearthing a masterpiece behind the rusting tools in your grandad’s shed and selling it at a high-falutin’ London auction house as dozens of international buyers participate in a bidding frenzy. Ultimately, however, building your own nest egg is remarkably satisfying ( I initially wrote ‘significantly more’ but replaced those words with ‘remarkably’ as I see no reason to fib) and reasonably straight forward.
For instance, investing £100 a month in a stocks and shares ISA where combined annual dividend and growth returns averaged 5% would, assuming all dividends were reinvested, build to £10,258.93 after just seven years.
Based upon their current valuations, this wouldn’t quite buy a pair of 300-year-old Cloisonné cups, but saving just £23.08 a week would certainly provide a decent lump sum. Furthermore, keeping your contributions inside an ISA would ensure that all returns were tax-free, a benefit denied auction room vendors.
THE WEEK IN NUMBERS
Number of men from the Ludlow Brewing Company who dressed as female nurses to raise money for the Shropshire Community Health NHS Trust. The £2,500 raised by the bra-wearing chaps was turned down as the trust said their drag-related efforts were ‘demeaning’.
Amount earned by Mark Wahlberg, 46, last year, making him Hollywood’s highest-earning movie star. The top 14 on Hollywood’s pay list were men. Emma Stone, of La La Land fame, was the highest-paid female, earning $26 million.
Percentage of people who prefer eating from a round plate in restaurants according to a YouGov poll. The least favourites receptacle was a shoe (who thought that would be a good idea?), Wooden boards, slates, shovels and mini-umbrellas should be ditched say most people.
Amount a pair of rare Chinese cups fetched at auction after being valued at just £50. The seller, who for years used the 300-year-old relics as egg cups, said she was ‘absolutely thrilled’ with the sale price.
Payments of self-assessed income tax made to the Treasury last month, the highest July figure since records began.
Forecast demand across China for ‘alternative fuel’ vehicles by 2025.
Proportion of total hospital admissions deemed to be ‘baby boomers’ (aged 55-74) admitted for ‘risky’, alcohol-related problems in 2015-16, up from 36% a decade earlier. The percentage of those aged under 35 admitted for the same problems fell from 29% to 9%.
Peter Sharkey read economics at the University of Bristol. He worked as an accountant on three continents and has been a company director and investor for more than 30 years, building and selling three different companies.