“hello and welcome to financial education
information my name is warren shoe and
today
knowing your number
[Music]
this episode has been sponsored by idelo
the price comparison website
okay so how much is enough
how much is enough for you how much do
you need
to be financially independent to be
fairly secure
or should we use the word retire i kind
of moved away from the actual language
the the language of retirement because
it
implies old age and implies
doing something which isn’t sort of
exciting
but um really what we’re talking about
is the period where you no longer
have to work for money you have the
choice to work for money i think that’s
a real important distinction because so
many people
particularly my clients continue to work
because it gives them more than money
and i think we’ve spoken about this
quite a lot in the podcast over the time
but um none of us are getting any
younger and precious time
is slipping away for all of us and we
have a period of um
retirement that could last say 40 years
so if you retired
if you became a financial independent at
60 you then have a period until age 100.
and we have clients who are on target to
have a retirement of potentially 50
years
so they’ll retire at 50. and that’s
because they’ve made a conscious
decision to do that
they’ve said okay this is my goals these
are what this is what’s important to me
you know whatever your day is how much
is enough what’s your number
um we all have this wealth window we
refer to as a wealth window so we have
this period of time
um that you have to save up and invest
enough money for your uh independence
your retirement
and as time goes on this wealth window
is getting smaller and smaller
so let’s say for example we have 10
years to go our wealth window would be
120
paychecks okay so i refer to it as
paydays or paychecks because it’s more
real brings it more into sort of urgency
so 10 years seems a long time but when
we say 120
paydays or 120 contributions into your
pension
you know they’re slightly different it
brings it to it more reality and that’s
what’s really important i think
that we have this sort of understanding
that you know time is slipping away we
have to make a decision
to move this forward you have to save
today
to secure your tomorrow you know if you
want your future to be brighter than
your past
you have to do something today to make
it so it just won’t happen by accident
and whether you’re saving 10 pounds a
month or whether you’re saving 10
000 pounds a month you know it’s
relative to you as an individual
and your outcome the output will be
commensurate to the input
so if you can only afford 10 pounds a
month that means you’re living on a
means that’s fairly modest right now
and therefore you won’t expect a lavish
lifestyle in retirement but if you can
afford 10 000 pounds a month now
it’s because you can afford that and
you’ve got that kind of lifestyle and
therefore
you would expect that kind of retirement
income um at retirement that income
every time as well
we refer to in the money plan is about
the first working hour working day so
pay yourself first so
12 and a half percent of your income
your take-home pay is a generalization
we suggest that you keep that retain it
for yourself as a minimum
um i’ve then kind of gone on and
elaborated on i really trying to drag
you up to sort of 20
of your income because i think that’s
more realistic level
but it’s making sure that you transfer
today’s money
to your future and make sure you build
up enough money to last you that
potentially
40 years you want to make sure you’ve
got enough money in the pot when you
pass away
so that you’re not worried about it in
later life and we have this wealth
window this period of time
while you’re earning money to do
something about it
and time and your ability to save
regularly or to your greatest assets and
securing your independence
you’re having time on your side and
putting money aside so
when i talk in schools or when i have
sometimes my clients refer their
children to me to talk
i say to one thing you’ve got that your
parents don’t have and
all your peers your sorry your um adult
teachers and stuff don’t have
is time and when you’re investing time
is your best friend
the sooner you can start investing the
better um
but most people don’t get excited about
investing most people don’t get excited
about investing
um long term anyway they want to see
quick results they
they want to put money aside and they
want to see the result on it straight
away
and it doesn’t work like that with
investing you know investing is an
exponential exponential growth machine
so if you plant a tree if you plant some
seeds for an oak tree
you’ll put them in the ground you’ll
water them you’ll nurture them you look
after them they’ll start germinating
they’ll start growing
but you don’t have a solid oak tree
after a few months or even a few years
it takes decades and investing is the
same thing
you start putting your money away each
month it’ll start growing you’ve got to
nurture it you’re going to make sure
it’s the same asset allocation you want
it to be
you’ve got to keep an eye on it you’ve
got to keep making sure the tax benefits
are being
looked after you’ve got to keep topping
it up keep adding to it keep adding to
it
but you’re not going to see a great deal
of growth over a period of a couple of
years
and that’s because it takes time to
really see the growth you’re getting a
10 return and you put 100 pounds away
you’re getting 10 pounds growth on that
but it’s the year after
you get 10 return on the 110 pound to
get 11 pounds growth
and then year on year this is what
happens and this is called compound
growth
it’s the 800 world i think i did a whole
podcast show
on it previously so search in the back
episodes for that so few people achieve
financial independence because
they don’t have the patience often it’s
not the only reason i appreciate
but often they have the patience to
allow the money to work for them
and allow money to work for me the
reason people say the rich get richer
is because they have more money to
compound
over time but that doesn’t mean that you
can’t start
you can start and you must start now and
there’s
never a right time i promise you whether
you’re earning twice as much money as
you are today
you will have other demands on your
income
i’ve seen it i’ve personally experienced
it and i’ve seen it with clients over
the last 26 years this year
as being a financial plan it doesn’t
matter how much you earn
most people live to their means
and they never find enough money to
invest it’s a
mental decision process you have to
decide
that you will take 10
12 20 of your income and transfer it
for your future self and money planners
understand this they understand
in the book i talk about regular savings
quite a lot and the
the need to put money away every single
month
regularly and then increase it
and then increase it so i increase mine
every january and
um we’re human my wife nikki and i are
in a relationship we’re we’re human
beings we’re not perfect on each other
i have a strategy that i must follow and
every january i want to increase it and
she’s like we can’t we can’t afford it
we have all these other expenses this
year
i said we’ll find a way we’ll find a way
we’ve found a way to everything else
we’ll find a way we have to do it
knowing how much you need
for financial independence for your
retirement is a tricky one in the book i
share the rule of 300
and the rule of 300 is a very simplistic
finger in the air sort of figure to say
that if you want a thousand pounds a
month
at retirement you need a pot of about
300 times that or 300
000 pounds to do it so you know you can
kind of work out the math it’s quite
simple so a thousand dollars a month the
retirement
three hundred thousand pounds if you
want two hundred thousand pounds by the
retirement you need about six hundred
thousand pounds so
300 times that and it’s a very good rule
of thumb to guide you
um but it doesn’t it’s not perfect
because what it doesn’t do is it doesn’t
take to account that in the
earlier years of your retirement the
earlier years you’re more likely to have
heavier spend
you’re likely to spend more money and
erode your capital more
and then there’ll be a dip period so
when you’re older
um in your 80s typically you’re like
less likely to long-haul travel
so you’re less likely to have high
expenditure but there is good news um
there is now a new website
it’s called truth about money dot code
uk
so t-r-u-t-h-a-b-o-u-t
m-o-n-e-y dot code uk i’ll put in the
show notes
so truth about money it’s an absolute
free site and it’s modeled on a bit of
software that we actually use
in lexington wealth our financial
planning practice and i have been a
supporter of now
for 20 plus years i think
i kind of lose track my son’s 16 this
year and it’s way before then so at
least 20 years i think
need to say it’s a fantastic bit of
software it’s amazing
and the truth about money is kind of a
slimmed down version a bit easier for
you to use it’s online and it’s
completely free and you can key in your
details
and it will create a cash flow for you
and it’s going to show one or two things
based on the assumptions that you’ve
entered either you’ve got too much money
which means fantastic you can maybe
retire finish work early
or help other people or do other things
okay you know maybe you can take that
extra holiday with your children you can
take them to disneyland have those
experiences
if it shows you’ve got enough money or
it’s gonna show you’re gonna run out of
money
and wouldn’t it be nice to know that
you’re gonna run out of money now while
you’re still within your wealth window
and you still got a period of time to
earn money than being
68 thinking i wish i put more money away
i wish i did
um so it’s great it’s it was subscribed
to me once one of my clients said
you don’t want it’s like going up in a
helicopter going out into the future and
seeing what my life looks like
financially
and then coming back down and coming
back today and saying right okay this is
what i’m going to do about it
so yeah go check it out it’s a good it’s
a good site it’s free and it’s called
truth about money dot co dot uk
okay so whether you’ve got 360
paydays or 36 paydays to your retirement
having a plan and deciding
that you need to grow this amount of
money
is essential and i think previous
episodes we’ve kind of touched on
how to grow the money and what to do and
um
there’s some there’s a lot more um
articles coming out on warranty.com now
about
putting a portfolio together and
financial planning and how it will work
so
you know go across to the site make sure
you sign up on that and um
please message me with any questions you
got because i think
for me going through the hierarchy of
the program
it’s essential you know the five steps
what’s your outcome so
step one we’ve got to know what we’re
doing and why we’re doing it what we
want to achieve
so if i go back to the guy you’re saying
to you wants to retire 50
that was his outcome his outcome was to
put his kids through school save enough
money so they go through school
pay his mortgage off completely debt
free he knew his number
we calculated it that was his target
that’s what he was working towards
so there was his things we have some
personal we set our goals in in order of
peak
so um personal economic adventure and
contribution we’ve got personal goals
um so what he wants to do is fitness
economics so what financials
he wants to do um adventure so it’s
temporary holidays that kind of thing
so what’s he going to do where’s he
going to go and then contribution so
how’s he going to give back because
for me it’s all about paying it forward
i think we live in a society where we’re
incredibly incredibly grateful
um for having a roof over our head
having
food on our table we don’t have to go
and catch uh have a medical system that
looks after us and
and generally speaking we should be
incredibly grateful it’s a safe
country um certainly in the main where
we live so
giving back to those people who are less
fortunate of us um
definitely is an importance for me i
think it’s you know we’re all connected
so
um you know it’s important to keep an
eye out for other people so that’s how
we set the goals peak goals um so know
what your outcome is then we get people
to be financially well organized talking
about a bank account system and um
i’m reading a book at the moment by an
australian financial planner and it is
incredible the similarities between his
process and mine
i might do a show on that one day um
just highlight that
um to get yourself actually organized
you know where your money is and you
control of it so you
free up this at least 12 and a half
preferably 20 of your income
to put away for your future and then you
go down to do your foundations make sure
your
insurances are in place and you’ve got
your wills and your power of attorneys
all sorted
and then you get your debt paid
obviously you’re unsecured debt free and
then we go
attack your investing five things this
week
i’ve taken it around retirement um
forget the word retirement i don’t like
the word retirement financial
independence sounds a little bit forgive
me
american i’m actually half american i
have no uh offense there whatsoever
because incredibly upbeat people in the
main
but he’s trying to find a balance
between two but you know
financial independence is probably a
nicer way of saying it rather in
retirement
um so five things about retirement or
financial independence um your state
pension agents like to be 66
that’s rising to 67. there’s talk or
legislation going through they want to
take it to 68 it’s slightly dry 68
so between 66 and 68 whatever your state
retirement is you can go online and find
out
but that doesn’t need to be your age of
financial independence or your
retirement age okay
that’s just when the state pay you you
can retire whenever you can afford to so
make sure you know what your number is
um workplace pensions are by far the
easiest and best place for you to invest
okay they’re set up generally speaking
they’re low charged
all the administration take take care
for you if you’re an employee
you most likely can get your employer to
deduct the contribution out of your
salary before it even gets into your pay
back it
therefore it’s a lot easier for you
because you just look at the net amount
of money you receive
if you are self-employed um and you
don’t have a pension
you really need to get yourself one um
go across to lexo dot co
uk you can set yourself a pension up
there or go to anyone else you want i
don’t really you know i don’t remind
lexi’s my site but i don’t mind where
you go but
get yourself a pension it’s so important
you start saving for retirement and
don’t put it off
and starting something is much better
than not starting it so start it with a
modest amount if you can’t afford a lot
of money
and start putting something away and
then change it just agree to keep
increasing it a girl born in 1951
was expected to live to 82 a boy
77 okay so a girl was expected to live
to 82
and a boy 77 now in 2018 this has
increased to 92
for a girl and 90 for a boy so
long these are average ages okay so
longevity is increasing
these are average ages remember that’s
the average
you don’t need to be that much better to
be more than average okay just a little
bit better
so if you look after your health if you
listen to podcasts and things
the probability is you’re going to be a
little bit better than average
because you’re mentally stimulated
you’re doing stuff you’re in tune with
your body
so you know you’re then thinking okay
well maybe
95 100 isn’t unreasonable my dad’s 95
got his vaccine this week yay um and
doing great
you know my mom’s 80. she’s got vaccines
doing great so
you know maybe there is a opportunity to
live until you’re a hundred
wouldn’t it be nice to make sure you’ve
got enough money to do that in comfort
doesn’t say in style but i think about
ages want comfort
um if you’re thinking about downsizing
your home so before think about
downsizing your home for part of your
retirement
really think about doing this earlier
rather than later because what you don’t
want to do is downsize and move to an
area
too old so you’re not able to make
friends okay so do it while you’re still
young fit and active
um so you can make friends have a good
time
and number five if your employer hasn’t
already
automatically enrolled you in your
workplace pension because you work less
hours
or you um earn less or you were young
it’s not less
actually sorry i should have said that
is if you earn less or if you um
if you’re younger than 22 you can still
join
okay they don’t have to contribute but
they do have to let you join so you just
go to hr departments i’d like to join
i’d like to start putting this money
away
and the reason i would do that as
opposed to setting your own scheme up
is they’ve done all the research they’ve
done all the research it’s all set up
for you
you know all the other members run it
it’s likely to be pretty good
um so it’s done okay so that’s enough on
your number know your number get to know
your number
go across to the truth about money dot
co dk site and check it out okay so
less uh more news this week public
sector net
public sector net borrowing so this is
the amount of money the government have
to borrow just to balance the book so
it’s almost like your overdraft
to make sure every single month that
they got enough money to pay
um in 20 december 2020 was estimated to
be 34.1
billion okay so they had to borrow 34
billion to balance the books this is all
because the corona crisis um government
support package and stuff
that’s 2.1 billion above the
expectations it’s the highest december
on
record overall now the government debt
is sitting around about 2.1317
billion so that’s 2 trillion 131
million that’s just a billion 700
million it’s crazy isn’t it 2.1 trillion
that’s 18 higher than a year ago and
it’s about
99.4 of gdp which is the government
sorry the country’s income
so that’s the highest rate since 1961
62.
the only thing i would say to you is
interest rates are much lower now so
it’s a lot
more manageable it’s not ideal but it is
more manageable
second bit of news out is halifax
published it’s researched in the first
time buy a home
market first time buyers were down about
13 year on year broadly in line with the
11
reduction in bar purchases over the
residential market um
halifax reckon first time buyers account
for around 50
of property purchases and that’s down
about one since 2019
so they’re still out there they’re still
buying it’s doing well
a couple of questions in from listeners
and readers and things this week so i
have a niggle in the back of my head
give it a scratch
that if i leave a certain percentage of
my estate to a charity it reduces the
tax liability on my estate
is this correct if so what is a
percentage please
okay so if you leave any money to a
registered charity or political party
it’s completely exempt from inheritance
there’s no seven year rule so on your
death you just leave it
it just reduces your estate um if you
leave
10 or more of your taxable estate that’s
the amount after the
um 325 or 650 tax free allowance if
you’re a married couple
then your tax rate on your death goes
from 40 of your estate
down to 36 okay so 10 or more
reduces the tax rate from 40 to 36 and
that’s your question
i noticed that the pension death
benefits uh
form that i have i can leave some all of
my pension
uh on death to a charity is this wise
um okay so your pension is outside of
your state and you can leave it to
individuals so normally it’s a spouse
and children
or you can leave it to a charity or any
anything actually any company or
um university anything like that um
it’s not ideal leaving it to a charity
now don’t let me explain why because
that’s outside of your estate
that’s not going to be taxed but your
rest of your estate your house your isis
your bank account your car
anything else what’s in your state is
going to be liable to inherit tax over
the 325 000 or 650 if you inherit your
partners
and you’ve also got your residential
already banned um so
if you think you’ve got an inheritance
liability you’re better off leaving
money from your estate
to a charity because that would reduce
the estate taxes and then leaving the
money in the pension
to someone um else or somebody else or
something else because they won’t pay
tax on that money
but um if you’re going to leave it all
to a charity anyway it doesn’t make any
difference
leave it all to a charity but if you are
going to leave money to an individual
often the pension’s a better place
because that will be tax-free
okay last section of the show is the
smarter
spender so the smart suspender is um
sponsored by idelo
we use it because um
i’m not one of those financial planners
that wants you to stop spending money i
think
life is for living life is your journey
both
now and over the years ahead and we
generally look to age 100
and john if you just put your whole life
on hold for your financial independence
your retirement years
it’s going to be pretty boring you know
got to be honest you’re going to be
pretty boring so you’ve got to be
have a balance i think buying things
give you gives you enjoyment it also
gives you opportunities it allows you to
do things
but it’s when you spend money that you
can’t afford
on credit cards you don’t pay them off
straight away or borrow money and stuff
they really get yourself in trouble so
you know what i say is spending money
isn’t bad
spending other people’s money is and
idealo is a fantastic resource that i’ve
used and my family use and we’ve used
for years
to search the internet and get the best
price on the items that you want to buy
so let’s say for example you want to buy
yourself um i do not i
bought myself some aftershave the other
day so i bought myself some shave went
on to a dilo typed in the afternoon that
i wanted everything else
and it went off and it found the article
and it found it cheaper i then went to
that website
um and bought it i used top cashback and
they paid me a cashback
enjoy they also did they gave me a
voucher now i didn’t know they did this
so um top cash will give me a voucher so
idelo is a fantastic first place to go
okay because you don’t worry about the
cash back in the voucher because they’re
add-ons they’re great things but let’s
get the cheapest price
okay the best price um and go and find
it and i deal with the legwork
so yeah i like it for that and then make
sure you use the cashback sites and
stuff
um also there’s little plugins on my
browser so well maybe we’ll cover that
another time
um so they cover the show they tell us
what’s dipped in price this week so they
come up with a number of different items
things that hit
my uh radar were play houses 15 cheaper
if you look out the window today it is
absolutely tipping it down
um you would not want to go on a
playhouse today hard drives
are 14 cheaper i’m always looking for
more hard drives and
ski helmets are 18 cheaper now think
ahead you know the ski resorts will open
ski season shut this year but they will
open
is it worth buying one for next year
they’re 18
cheaper that’s a big saving big saving
um
also this time a year is good to be
thinking about smart watches so
the average price for smart average
price for smart watch in february
is 210 pounds if you wait until
september your smart
watch would be about five percent more
so these things don’t fluctuate a lot in
price but they’re fairly big ticket
items
so if you can save five percent on an
item which is expensive that’s a lot of
pound
savings so that does make a lot of sense
and this week they
reckon that uk consumers will be buying
vitamins
um they say that uh probiotics are a big
seller
and also vitamin d now i gotta say
i take a probiotic every day um have
done for
uh a long time um i think it’s important
to look after your gut health as well as
your mental health
so um i you know i’m not medically
trained in at all
i have no reference on this all but you
know i completely agree with that
um and vitamin d as well i’ve been
taking vitamin d now for
10 years i think um i take a lot of
vitamin d
and it’s because it’s proven to um
increase longevity so there’s lots of
health
benefits of vitamin d and i think in
this country we don’t get enough sun
where the vitamin d comes from so um
yeah it’s definitely worth
uh making sure you get professional
advice
on your supplementation have a look into
some great people out there
but um yeah making sure that you’re
topped up on vitamin d and this weather
is probably not a bad thing
so that’s the end of the show
thank you so much for listening i have
appreciated it
um if you have any questions please send
them in make use of me
and um the resources that we’ve got and
until next time
stay safe and look after yourself thank
you if you haven’t yet subscribed to my
channel please do so there’s a great
number of back issues to go through and
remember
what makes us different on your
financial journey is the support with
access to downloads and templates on
warranty.com
the youtube videos and podcasts as well
as access to me
a multi-award winning certified
financial planner and certified
international coach
so please do engage and let’s get your
finances sorted together
thank you to idealo for supporting this
show and for you for listening
the money planner is edited and produced
by the amazingly talented vince wakeman
at avando systems
[Music]
you
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