Frequently Asked Questions
I’ve answered the questions that crop up most frequently below. You can also take a look at these 3 short videos where I answer the top 10 FAQs from clients.
However, if you don’t see the answer you are looking for then please contact me. I will answer you directly, and if your question is of general appeal, I’ll add it to the list below.
Please remember though, I cannot give specific advice about your personal finances or potential investments.
As a general rule, I would suggest that you need to invest at least £10,000 to start to use the FIRE Revolution strategy, but it works best with larger accounts.
The reason is that one UK option covers 1,000 shares. So, at recent prices you would need £1,370 to sell an option on 1,000 Barclays shares, £1,650 to add in BT, £2,370 if you wanted mega-miner Glencore, £1,160 to include ITV, £2,060 for Royal Mail and a further £1,550 for Vodafone.
That’s a grand total of £10,160 to build a portfolio of six diversified shares.
So, to build a small diversified portfolio would require around £10k.
Now of course, you can also run the strategy using US shares and there are a number of benefits to this. One of which is that a US stock option only represents 100 shares. That can mean that there are many more opportunities to pick from stateside than here in the UK, especially if you have a smaller account.
And if you don’t have that much?
Don’t despair. The programme is not for you at this stage, but there is no reason that you cannot start to save your hard earned cash in income-producing assets — such as dividend shares — and use the power of compounding to build up your account. Then, when you have a decent nest egg, give me a shout.
I have spent a long time investigating the best brokers to use for this strategy and discuss the pros and cons of half a dozen or so that are suitable for selling UK or US options in the programme.
Yes, absolutely. If you have ever bought shares via an online platform then you are already halfway there. If not, as long as you are happy enough using your online banking or similar websites, have an interest in investing, are okay with numbers and are willing to put in some time to learn a new skill, then you will be fine.
And remember, as part of your programme we will have weekly group coaching sessions where you can ask for clarification on any aspect of the strategy.
You are never left unsupported as you make your way through the programme. I’m pretty much always available to answer your questions, however silly you make they are. Believe me, if you have a question, the chances are that I’ve heard it many times before and will be more than happy to guide you through it.
Dividends are taxed as income and everyone in the UK is entitled to a tax-free allowance of £2,000. After that, they are taxed at between 7.5% and 38.1% depending on your tax band.
Option premiums are taxed as a capital gain and subject to Capital Gains Tax (CGT). Therefore, you are entitled to the first £12,000 of that gain tax-free. That’s a pretty generous allowance and anything above that is taxed at 10% or 20% depending on your tax band.
You will need to declare your profits — and any losses — on your tax return or directly to HMRC.
I’ve included full details of the tax situation in the programme, but I don’t know your personal tax situation and you should consult an accountant if you are unsure of your position.
Unfortunately, you are not allowed to buy or sell options within an ISA. Don’t ask me why, it’s just the rules.
However, option premiums are usually subject to Capital Gains Tax (CGT) and you get a sizeable £12,000 annual tax-free allowance for CGT followed by a charge of 10% or 20% depending on your tax band. So, the tax liability is very reasonable even outside of an ISA.
And, you can run this strategy from within a Self-Invested Personal Pension (SIPP) which means that all your gains are tax-free.
There are a few requirements you’ll need to meet, for example, you need to have a minimum of £35k to invest and you may need to pass an online quiz. But, we give you all the details and a bunch of help on the programme. So, it is certainly possible.
Great question! There is nothing opaque, underhand or sneaky about this strategy. It is well known to fund managers, hedge funds and well-educated private investors. In fact, in the US, it is considered a straight-forward solution to the low-interest rate dilemma facing income investors the world over.
But for some reason, it has rather flown under the radar in the UK. I suspect there are several reasons for that.
Firstly, Independent Financial Advisors (IFAs) traditionally operated on a commission basis. Therefore, they were motivated to sell whichever product paid them the highest commission. And telling your clients about a strategy such as this, paid them no commission. So, your average mainstream investor never found out about it.
Secondly, investors in the UK are bombarded with the tax-free benefits of spread betting and this tends to drown out many of the other options available. As an aside, there is nothing specifically wrong with spread betting as such, but it still requires you to make a prediction about the future direction of a stock, currency, or commodity. And, in my humble opinion, unless you know something everyone else has missed, that’s just gambling.
And finally, options — especially in the UK — have something of an image problem. They are perceived as complicated and risky. As I explain fully in the programme, that is simply not the case when used the way I teach. In fact, the strategies I teach are simple to implement and actually less risky than simply buying the underlying shares.
All investments, apart from bank accounts — up to £85k — and government bonds issued by reputable countries, carry some level of risk. And as we saw in the financial crisis, even your bank account is not quite as safe as you maybe thought.
Risk and reward go hand in hand. The higher the potential reward, the higher the potential risk. If you ever find an investment that breaks that rule, you should bet the farm.
But, to answer the question with regard to this strategy: The risk is in the underlying shares, not in the options we sell.
The FIRE Revolution strategy focuses on the biggest most boring blue-chip companies you can imagine. Companies such as HSBC, GSK, Sainsburys, Severn Trent, BP and United Utilities. They are all stalwarts of our everyday lives and usually pay decent well-covered dividends.
Now, of course, their share price goes up and down over time, but do you really think any of them are going bust any time soon? No, neither do I.
And here is the clever bit. By selling options on these shares, you are bringing in immediate cash flow that can offset any unrealised drop in the price of the shares. Depending on how long you sell the options for, this can add up to quite a sizeable pot. So, the strategy actually reduces the risk of simply owning these shares outright.
But I will stress that there is still a risk. Even big blue-chip shares can get into trouble and sell off quite hard. Do you remember what happened to BP shares after the Deepwater Horizon disaster in 2010? If not, go and have a look at a stock chart for that period. Ouch.
But here’s the thing. Not to undermine the environmental impact or the loss of human life, but look at the BP share chart for the years that followed. What felt like a financial disaster for the shareholders at the time, looks like a bump in the road when viewed ten years later.
And the key point is that as income investors we are far more focused on the dividends and option premiums than regular ‘buy and hold’ investors. If we are still receiving income then we can easily ride out the short term volatility of share investments.
There is always risk in owning shares — or indeed any other asset — but as long as the company doesn’t actually go bust, the price usually recovers over time. The trick is to try and pick the right stocks in the first place and then not panic at every downturn.
Big-yielding blue chips are usually amongst the safest stocks you can buy and by selling options on them you are reducing the risk even further.
A fair question and I have several responses.
Firstly, I — like everyone else — only have a finite amount of capital that I can allocate to this investment strategy. So, my earnings are limited to a percentage of my capital, unless I chose to borrow more to invest. And leveraging can get an investor into a whole heap of trouble so I tend to avoid it.
Secondly, as any good businessman will tell you, generating additional income by selling my expertise and experience is a very sensible idea.
Thirdly, it makes no difference to the success of the strategy if more people get involved. We wont all be making the same investments at the same time, so there is no impact on me or anyone else. In fact, the more folks that start to invest this way the better. That would encourage more brokers to offer options and the liquidity would likely improve.
And finally, I actually really enjoy educating other people about investing and financial freedom. You should hear me down the pub, what a bore…
No, the FIRE Revolution programme is for education only. We are not authorised by the FCA to dispense specific investment advice.
But, the programme will teach you step-by-step exactly how to pick suitable stocks and implement the strategy. In fact, we discuss a number of different approaches starting from the very straightforward to the more complicated. And as you get more confident, you are likely to tailor the approach to your own specific needs.
As the old proverb goes:
“Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime”
Yes, you can, and I have successfully implemented the strategy many times in the US markets both for my private account and as a regulated subscriber service.
There are a number of advantages and disadvantages to this approach and I discuss it fully on the programme.
No, you don’t. Many people are happy to just sell covered calls and be done with it. Or — as I do — you can open your campaigns using cash-secured puts to get into shares at a lower price than they are currently trading for and really maximise the cash-flow. Then swap to covered calls to engineer an exit at a price that you are happy with.
It’s totally up to you, and there is no reason that you cannot start with the simplest approach and build it up from there. Indeed, a number of our clients take the core skills that we teach and apply them in slightly different guises on different types of shares.
That’s one of the strengths of the strategy. You can mould it to suit your own personal investing style and the prevailing market conditions.
Ah, the million-dollar question.
I’d love to be able to give you a definitive answer, but it’s just not possible I’m afraid. It depends on several factors, including your own tolerance for risk, the shares you choose and the wider stock market.
However, I can point you in the direction of the Model Portfolio that we have been running since the middle of 2018. This is based on real trades that I have made and so should give you a good indication of the returns that are possible. Although, I should point out that I tend to err on the cautious side side of things. So, it is certainly possible to achieve higher returns than this if you want to take a little more risk.
You can access the most up to date performance figures by accessing the portfolio under the FREE STUFF menu option at the top of the site.
Please be aware that this is in no way a guarantee of the yields or earnings an investor may make. It is purely for illustrative purposes.
Please click the programme link below.
I regularly post blogs with the intention of demonstrating the benefits of this style of income investing. I often include an example of a recent real-life investment that I have spotted, along with a breakdown of the yield and the possible outcomes. These are for educational purposes only, but it’s a great way to appreciate the power of the strategy.
And if anything else income-related takes my fancy, I’ll be sure to pen a few words of wisdom about that as well…
I believe that repeatedly seeing the sort of opportunities available with this style of trading should encourage even the most sceptical investor to give it a chance. And of course, I hope it encourages you to sign up to the programme.
Having purchased many courses and books in the past, I know how frustrating it can be when you get stuck. When you cannot quite understand a point, the author is trying to make.
So, an integral part of the programme are the weekly group coaching sessions. In these, we will go through the previous week’s lessons and discuss everything in detail. If it’s appropriate we’ll also jump onto a demo broker account and look at live opportunities. That’s a great way to really cement your knowledge.
And then once the 13-week programme is completed, you get a further three months access to our weekly Inner Circle sessions where we discuss anything and everything that any member of the group wants to cover.
Also, as part of the cost of your programme, you get unlimited free access to ask me any questions that you may have via email or Slack. I always try to get back to you asap — and I think my clients would agree, I’m usually pretty prompt. Just remember that I cannot give any specific advice about your personal finances or a particular trade.
In short, you’ll get all the support you need.
Ahhhh, the big one!
The programme is in three parts.
The first part is the 13-week group coaching course where you learn along with approximately half a dozen other clients using online videos and documents, but crucially meeting up once a week as a group via video conference to go through any issues and answer all your questions.
Then there is a further three months of Inner Circle support where we continue to meet up on a weekly basis to smooth through any issues you may have as you start to trade live. At this stage, I’ll also introduce some more advanced techniques and cover topics in greater depth if anybody requests this.
And, in addition to all that, you get access to HQ, our members only online forum where you can ask questions, share analysis and discuss trade ideas with your fellow graduates.
You also get full unlimited support from me every step of the way.
The cost for the full package is £2,950 (including VAT).
Welcome to the Revolution…
If you would like to discuss the programme, then I’d love to have a chat. Just hit the button below to schedule a 30-minute clarity call.