There are certain Life Leverage skills that give you maximum compounded benefits. You could call these Life Leverage hacks – extreme productivity for maximum time preservation. If you can turn much of your spending habits into investing habits, you will make 80/20 compounding work for you, save and make possibly hundreds of thousands or even millions, and have a valuable life skill most don’t have.
Think of every material item you buy as a liability-cash-drain, and apply an investor mentality and strategy to each purchase.

  • Step 1. Can I get by without it?
  • Step 2. Buy second-hand at the bottom of the depreciation curve
  • Step 3. Can I turn it into as asset?
  • Step 4. Can I sell or exchange it before it drops in value further?
  • Step 5. What’s the lowest cost method of finance?

You can use the above 5 steps for almost any material, non-perishable item such as cars, watches, handbags, jewellery, clothing, furniture, AV equipment, even holidays and travel.  

Here are the 5 steps:

Step 1. Can I get by without it?

Do you really need it? Is this a necessary or high-value to you purchase, or just a vanity or emotional purchase? Can you drop all spending that gives very short-term or no value, and then focus on spending on the things that give you the highest value? If in doubt, leave it out.
As a reformed spend-a-holic, something I’ve learned to do is to make a note of the model number or design of the item I’m about to buy in the moment, with a view to trying to find it online when I get home. Then I’ll think ‘do I really need it?’ ‘Have I ever bought anything like this before and not used it?’ ‘Will I still want or use this in 3 years?’ ‘Is this an 80/20 purchase?’ 
When I get home I will either find a better deal and save some money [via my researcher], or the emotion of buying the thing I thought I wanted but didn’t really need will have gone, and I save myself money by letting it go. 
Using these questions will literally save you thousands of pounds a year, which could compound to millions in your lifetime. 

Step 2. Buy second-hand at the bottom of the depreciation curve

I really love watches and listening to great quality music [though my taste in music is questionable]. It is of very high value to me to buy a new watch or new piece of audio equipment, bringing me much sustained joy. But these items are very expensive and if you’re not smart can really burn cash. 
As I sit here I’m listening to an experimental progressive rock band on my ProAc studio 140mk2s. Beautiful. Such detail, depth and separation. Anyway, the speakers were around £2,000 new. I bought them in at £900 second hand, and have just sold them on at £700 to make way for my new PMC Fact 8s. These speakers are £6,500 new and I have bought them a year old at £3,500. 
Now these might seem like a gratuitous waste of cash, but when you look at the numbers you see a different story. The speakers actually only cost me £200 in the year that I had them, and have given me endless joy and value. The actual cost of a pair of £2,000 speakers to me was 55pence a day. I spend £8 a day on Coffee.
Had I bought these new and owned them for a year, they would have cost me around £800 to £1,000 to own. Speakers actually sound better run in and not new, so it makes sense to let someone else lose £1,000 in a year, and you have cost of ownership of just 55pence a day. I’ve then saved almost 50% of the cost of the new-to-me speakers and will enjoy them at a whole new level.
Every 6 months I can check the residual price, and if they start to drop too much I can sell them and buy another pair that have dropped to a more even depreciation point. The same can be done for second-hand purchases of most goods on ebay or Gumtree.
I could have bought a pair of new speakers for ¼ of the price at £500, had them for one year, and then sold them on for £250. The speakers that cost ¼ and of much lower quality would have actually cost me £50 more to own in the year, so this would have been false economy. You really can have nicer items and more enjoyable experiences and at the same time preserve more cash or have less eroded through depreciation. 

Step 3. Can I turn it into as asset?

It goes to a further level of investment when you can buy something that could go up in value, like watches, jewellery, art or antiques. I’ve yet to find speakers that go up in value, but as I have a passion for both music and turning spending into investing, I shall continue to watch and learn. The most unique or desired of material items hold value or go up in value, like the Hermes handbag or original designer furniture.
If you buy an-all steel Rolex Daytona, even from new, it will appreciate in value over time. As do some other Rolex models, Patek Philippe’s and more recently some limited novelty Audemars Piguets.
You can likely get around £1,000 off for a second-hand Daytona, wear and enjoy a beautiful watch that gives other networking and perception benefits of how others view you, protect your cash from inflation erosion, and make around 7% gross growth. 
Here is a recently purchased second-hand ’79 Daytona [my birth year] for £25,000 with no paperwork.

A Daytona in ’79 would likely have been around £2,000. That is proven residual growth of 12,500%. If it had the paperwork it probably would have cost in excess of £30,000.
If historical standard Daytona’s have grown in value that much, it is likely, though not guaranteed, that yours will too. It is interesting if you compare the purchase of a Daytona to a standard Omega or Breitling. Assuming a standard model Omega or Breitling costs £3,000 and a Daytona £8,000. In 3 years the Omega or Breitling will be around £1,200 to £1,700, yet the Daytona will be £7,000 to £7,500.
The Daytona, though requiring more capital, has actually cost £300 to £1,300 less in 3 years. It compounds further the longer you own them. In 10 years the Breitling or Omega are likely to be worth £400 to £800, and the Daytona £9,000 to £10,000 or more. The difference being £3,200 to £4,600 in ownership ‘costs’.

Step 4. Can I sell or exchange it before it drops in value further?

Every 6 to 12 months check the residual values of most of your higher value material items. Use second-hand sales sites, part-ex companies and the Internet. Save all the purchase costs of these items in your mSecure private passwords and data folder, and check them.
You get double NeTime benefit doing this because: 
a. you continue to learn about investing and
b. you save or make money timing the purchase and sale of your items.
If I see a watch I thought would hold or appreciate in value start to ‘soften’ in value, I may sell it on. If I get more for part-exchange I may trade it up, or if there are currency fluctuations I may arbitrage selling in sterling having bought in dollars, or vice versa. If I feel my spending urge, emotion or addiction overwhelm me, I can research and buy a watch to enjoy wearing, and protect the capital or increase its value. That’s like being able to eat ice-cream and lose weight all at the same time! 

Step 5. What’s the lowest cost of ownership or finance?

You hear about people who buy everything on credit cards, yet hear others who only ever buy anything if they can afford it and have the money. Some get loans and some only spend savings.

So which is right?

It actually depends. 
You should look at total ownership costs, including cost of capital or cost of finance. Whatever you buy, or invest in, has an opportunity cost where the cash could produce an income elsewhere, or a cost of finance which is the full cost to take out, pay and pay back the loan.
There are often high admin and exit fees on loans that when you add to the interest, make the interest rate much higher than it first appeared.
A relevant example now would be a car. Certain car manufacturers offer great lease deals now because of low interest rates and high production volume. You can quite easily get a £20,000 to £30,000 car for not much more than £200 per month plus VAT. Or a £50,000 plus car for £350 to £500 per month plus VAT.
There may be a few payments upfront and there is a difference between lease, contract hire, business and personal, so always do your research [or outsource it]. There have been some even better deals too with certain end-of-line models or bad publicity like VW had with the emissions scandal.


Taking the £50,000 car example, depending on the model, if you were to buy new, in 2 years the car could quite easily be £30,000, a depreciation of £20,000. That’s £10,000 per year. Plus you’ll have a bit of maintenance, costs to sell it, and the cost of the capital held in the depreciating car. In reality, with everything added in, it could have cost you £15,000 a year.
With a similar model on a lease or contract hire, assuming 5 upfront monthly payments and £500 a month, the 2 year cost in total is £14,500. There’s no cost of capital, no depreciation cost to you, and no cost of sale [disposal]. That’s £7,250 a year, less than half the cost to buy the same car new.
If interest rates shot up and the lease became £1,000 a month, then you would think twice. Although at that price it would still be marginally cheaper to lease/contract hire.

  • If you bought the same £50,000 car 3 years old for £25,000, it would cost you less to own the car for 2 years. The depreciation will slow; it may only be another £7,500, which is £3,750 a year.
  • At 5% costs of capital, £25,000 would cost around £2,500 in 2 years, sale costs might be £2,000, but maintenance will be higher on an older car, say £2,500.

In this example the 3-year-old car will cost £14,500 over 2 years, or £7,250 a year. Interesting that it is the same total, overall cost to lease the new one. 
I could go into much more detail in actual purchasing cost, such as adding costs to insure, loans to purchase second-hand items, storage and security, but the point is clear – always look at the real, sometimes hidden, total cost of ownership and cost of finance of ownership of every item you buy or invest in.
If doing this is a passion of yours you have a great passion profession, vocation vacation merge. If it isn’t, outsource all the research and quotations…
In summary, turn spending into investing by buying products that appreciate in value and you’ll maximise financial leverage, minimise cash depreciation and still feed your spending addictions and emotions. You really can have fun and grow rich. You may even find time to learn a new skill that you always dreamed of, like flying or scuba diving, whilst moving towards your vision and merging passion and profession.