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What's Eating Away at Inheritance Money · Merryn Talks Money

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  Speaker 1: Bloomberg Audio Studios, Podcasts, radio News, Hey.
• 0:09
  Speaker 2: Maren Talks Money listeners.
• 0:10
  Speaker 1: Last week we had our subscriber event at the Bloomberg
• 0:13
  Speaker 1: offices in London. It was wonderful to see so many
• 0:15
  Speaker 1: listeners and so many readers there and thank you so
• 0:18
  Speaker 1: much to those of you who did come to those
• 0:20
  Speaker 1: of you who couldn't.
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  Speaker 2: Good news.
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  Speaker 1: We spoke to Sebastian Lion of Troy Asset Management and
• 0:24
  Speaker 1: that conversation is in the feed already. But we also
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  Speaker 1: did a Maren Talks Your Money segment live and we
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  Speaker 1: welcomed back veteran financial advisor Paula Steele. So here is
• 0:34
  Speaker 1: that conversation. Now we're going on to the Marin Talks
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  Speaker 1: Your Money section of the show, and those of you who.
• 0:51
  Speaker 2: Listen to us will know what push you'll listen to us.
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  Speaker 1: But this is the weekly series where we talk more
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  Speaker 1: personal finance stuff. We talk about how to make the
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  Speaker 1: most of your money. So with me today you all
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  Speaker 1: know as John Steppeck Senior, a border and author of
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  Speaker 1: the Do You Want to Stay Yourself?
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  Speaker 3: John? What I need to sell Newslayer up?
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  Speaker 2: Thank you John. Also, we have Paula Steel. He will
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  Speaker 2: have heard on the podcast as well as well.
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  Speaker 1: I'm an introducer directorate at John Lamhill Oldridge and very
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  Speaker 1: very experienced. Now what we want to talk about today,
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  Speaker 1: Thank you Paul for coming on again. What we want
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  Speaker 1: to talk about today is the Great Wealth Transfer, which
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  Speaker 1: I'm hoping to be a beneficiary of at some point
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  Speaker 1: and I'm sure many of the rest of you are
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  Speaker 1: hoping to be a beneficiary of as well. And I
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  Speaker 1: spent some time looking today to see exactly how much
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  Speaker 1: money we can all expect, and it really does depend
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  Speaker 1: where you look at. Could be four and a half
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  Speaker 1: trillion over the next twenty years, could be five, could
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  Speaker 1: be seven pounds in the UK, so proper money. And
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  Speaker 1: in the US we're up into the hundreds of trillions,
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  Speaker 1: and we who knows. I found numbers ranging from eighty
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  Speaker 1: trillion to one hundred and twenty four trillion, So however
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  Speaker 1: you cut it, we're talking about a lot of money
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  Speaker 1: trickling down from the baby boomers to the next generation.
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  Speaker 2: So what we want to talk.
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  Speaker 1: About is how that money should get transferred. How do
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  Speaker 1: you do it efficiently, how do you do it with
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  Speaker 1: the least possible tax implications, and how do you do
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  Speaker 1: it without destroying the lives of your children by giving
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  Speaker 1: them too much too soon not something that happened to me. So, Pauler,
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  Speaker 1: let's say that you are a baby boomer with quite
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  Speaker 1: a lot of money and a house and a couple
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  Speaker 1: of kids. Where do you even start with thinking about
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  Speaker 1: how you transfer it?
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  Speaker 4: You think about how much money you need to keep, yes,
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  Speaker 4: before you start to give it away. And I think
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  Speaker 4: that although the baby boomers we're going to live longer
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  Speaker 4: and we're going to be very expensive, the last ten
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  Speaker 4: years of our lives are going to be very, very
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  Speaker 4: expensive in terms of care, and you can't afford to
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  Speaker 4: give it away. You need to keep it in terms
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  Speaker 4: of that. And I say, you know a lot of
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  Speaker 4: people do it lot of cash for modeling to show
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  Speaker 4: that you can afford to give it away. My experience
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  Speaker 4: is that most of the clients are not prepared to
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  Speaker 4: give away that much because and I think that one
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  Speaker 4: of the big issues is going to be the change
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  Speaker 4: in the pensions legislation. Yes, because when the pensions were
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  Speaker 4: inheritance tax free, they were your third line of defense.
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  Speaker 4: You always knew that the pension fund was there. It
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  Speaker 4: was inheritance tax free, so it could go to the kids.
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  Speaker 4: But if you needed it for care, it was there.
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  Speaker 4: It was that third line of defense because that that
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  Speaker 4: care issue for the baby boomer is the big elephant
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  Speaker 4: in the room.
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  Speaker 1: Do you think that maybe the numbers are just wrong
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  Speaker 1: because when we talk about four trillion, five billion, and
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  Speaker 1: six seven trillion, whoever coalates those numbers is not taking
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  Speaker 1: into account the fact that a lot of people are
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  Speaker 1: going to spend four or five years any care home
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  Speaker 1: it's going to cost one hundred and twenty grand a year.
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  Speaker 4: And the rest, oh okay, in a care home. Maybe
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  Speaker 4: if you have care at home, probably more right. If
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  Speaker 4: you need twenty four our care, that's three that's three
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  Speaker 4: shifts of staff. You're looking at probably twice that, okay.
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  Speaker 1: So a lot of people who are thinking that they
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  Speaker 1: have money to hand down and people who are thinking
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  Speaker 1: they have money to inherit may well not.
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  Speaker 4: I think you may well find. You know, it comes
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  Speaker 4: into the assisted dying, which is in Canada where people
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  Speaker 4: are being pushed and whatever ones you want a sister dying,
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  Speaker 4: And I personally think I would rather go if I
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  Speaker 4: was sort of half dead anyway, But nevertheless, but.
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  Speaker 2: You wouldn't want your kids to make sure you.
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  Speaker 4: Went okay, you know, but I think that I think
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  Speaker 4: that the first thing for anybody to think about is
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  Speaker 4: you're going to have enough money for care. I was
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  Speaker 4: talking somdly fun Enough the other day, and they were saying,
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  Speaker 4: it's a great place that we don't have a product
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  Speaker 4: that enables us to spend our pension, but gives us
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  Speaker 4: an income if we are if we survive to a
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  Speaker 4: sage ninety, because that's really what the pension was there for.
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  Speaker 4: It was giving you that longevity support so effectively.
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  Speaker 2: A delayed annuity of sometimes yeah, it.
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  Speaker 4: Used to call a contingent annuity doesn't exist in the
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  Speaker 4: market anymore. Sadly, it would be an interesting thing.
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  Speaker 1: Interesting that feels like the kind of product that might
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  Speaker 1: be coming back in the same way as the innuity
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  Speaker 1: market might be coming back.
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  Speaker 4: I think the innuity market is back, is it? But
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  Speaker 4: it's back in terms of an investment proposition, it's a
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  Speaker 4: different way of buying a fixed interest investment, getting a
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  Speaker 4: much better return. You're getting a fixed return and you're
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  Speaker 4: playing the longevity. For the client or for the advisors,
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  Speaker 4: they're playing the longevity the longevity game. I remember a
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  Speaker 4: client doing a next to release on his parents who
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  Speaker 4: were very elderly, and him saying, I'm doing an extry release.
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  Speaker 4: I'm going to buy an annuity because that handles my
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  Speaker 4: longevity risk on my parents' wealth, So which I thought
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  Speaker 4: was quite tough, actually.
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  Speaker 3: Has that is the annunity.
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  Speaker 5: If I've partly been helped by Patons and Helen's tax coming,
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  Speaker 5: then is that something that's in people's mains.
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  Speaker 4: I think people are given that the pension fund is
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  Speaker 4: now going to be you know, I've had people saying
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  Speaker 4: before it was tax free and now it's going to
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  Speaker 4: pay tax at sixty seven percent. It was never tax free.
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  Speaker 4: It was tax free from an inheritance tax perspective. But
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  Speaker 4: this to get to sixty seven percent, you've got a
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  Speaker 4: forty percent and then a forty five percent tax rate
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  Speaker 4: to get it out. The forty five percent tax rate
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  Speaker 4: to get it out if you died post seventy five
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  Speaker 4: was always there, but it.
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  Speaker 1: Provided options but to your heirs right and they can
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  Speaker 1: take it. They could withdraw from it when they had
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  Speaker 1: a lower encarment or lots of ways to make it
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  Speaker 1: a low tax event a lower.
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  Speaker 4: Well, no, because once you died, the pension fund had
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  Speaker 4: to go to somebody at that point. So you couldn't
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  Speaker 4: say your dad dies and you couldn't say, well, I'll
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  Speaker 4: have it. Actually no, I think I wanted to go
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  Speaker 4: down to the grandchildren. You had to make a decision
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  Speaker 4: at that point. It wasn't it was, but it stayed.
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  Speaker 2: In the wrapper.
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  Speaker 1: It's good with that for it at will. So you
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  Speaker 1: could choose to withdraw from it. You can show income
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  Speaker 1: period in your life.
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  Speaker 2: You could.
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  Speaker 4: Yeah, you could choose to withdraw it a lower and
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  Speaker 4: you can still choose to withdraw it as a lower thing,
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  Speaker 4: so you won't be paying sixty seven percent. I have
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  Speaker 4: seen more angry people about this, you know adell story.
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  Speaker 4: I've got a client and she's I don't know how
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  Speaker 4: they are. She's coming up to eighty and she's incandescent.
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  Speaker 4: She has one hundred and twenty five thousand pounds in
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  Speaker 4: her pension fund, and that is her money for her grandchildren.
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  Speaker 4: The fact there worth twenty five million isn't neither here
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  Speaker 4: all that.
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  Speaker 2: Should spend it on herself. Definitely, but nonetheless.
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  Speaker 1: So if you know that you're going to be paying
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  Speaker 1: that amount of tax, your family's going to be paying
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  Speaker 1: that amount of tax, you may as well buy annuity
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  Speaker 1: and have the security of that income flow upfront.
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  Speaker 4: Yeah, I think, and I think people will start to
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  Speaker 4: spend their pension funds down. Which if they are going
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  Speaker 4: to do that, there are two things in terms of efficiency.
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  Speaker 4: First of all, if you're joining income out of a
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  Speaker 4: pension fund, it is income if it is surplus income.
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  Speaker 4: And I've got clients who are joining and out paying
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  Speaker 4: the tax forty five percent tax, better than sixty seven
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  Speaker 4: percent tax, but it then gives them income which they
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  Speaker 4: can then give away. And because it is now a
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  Speaker 4: surplace income, it's clearly surplus income because they didn't have
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  Speaker 4: it before and they were living perfectly comfortably, they can
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  Speaker 4: give it away and it's immediately inheritance tax free.
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  Speaker 2: So you'll split it. You're stripping it over say.
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  Speaker 4: Three or five years, and I think it certainly we're
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  Speaker 4: seeing clients that are doing that kind of thing. But
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  Speaker 4: you need to do that. You need to have enough
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  Speaker 4: other assets. You're having to rethink your assets so that
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  Speaker 4: you are then thinking about, Okay, what I'm going to
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  Speaker 4: do is I'm going to spend this pot of money,
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  Speaker 4: but that will then mean that I've got this pot here.
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  Speaker 2: Yeah, So it's a general reshaping of the way you
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  Speaker 2: do it. It's reshaping. So let's go back to.
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  Speaker 1: Our our couple worried about their care bills and they've
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  Speaker 1: decided how much they need to keep, and that they've
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  Speaker 1: got a pot that they want to give away. Obviously,
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  Speaker 1: the best way to do that is just to give
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  Speaker 1: it away and not die for seven years.
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  Speaker 4: You'll buy an insurance policy to cover it.
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  Speaker 2: Can you buy insure?
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  Speaker 1: You buy an insurance quality to cover that, an expensive one,
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  Speaker 1: presumably depending on your edge depends how old.
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  Speaker 4: You asked about six percent of your eighty, about one
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  Speaker 4: percent of your seventy, and you pay that over seven years.
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  Speaker 4: So it's one percent over seven years. If you're seventy,
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  Speaker 4: I think that's cheap. Yeah, that does sound quite cheap.
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  Speaker 4: It's quite expensive if you're eighty. Yes, more more problematical
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  Speaker 4: is that you've got to pass a medical.
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  Speaker 1: Oh and okay, so there's only one percent if you're
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  Speaker 1: very healthy.
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  Speaker 4: You have healthy The insurance companies didn't put the price
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  Speaker 4: of life insurance up post COVID. What they did was
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  Speaker 4: they increased the bar. So where before we would have
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  Speaker 4: got standard rates for somebody, now they'll load the premium
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  Speaker 4: by fifty percent, so they've changed the pricing without looking
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  Speaker 4: as though they've changed the pricing.
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  Speaker 2: Good marketing.
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  Speaker 1: Okay, definitely, Okay, So give it away by an insurance policy.
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  Speaker 4: Give it away and give buy an insurance policy.
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  Speaker 2: What about bringing it in a trust.
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  Speaker 4: If you're going to put it in a trust, if
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  Speaker 4: it is agricultural land or business assets. Business assets are
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  Speaker 4: trading businesses which are unquoted, So there's a which is
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  Speaker 4: not property assets. If you constitute yourself as a builder,
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  Speaker 4: that is a trade. If you are holding assets for rent,
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  Speaker 4: then it is not a trading asset. I always say
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  Speaker 4: that's the easiest way to remember, because everybody knows what
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  Speaker 4: the builder is, and they know what holding an asset
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  Speaker 4: is for rent. So if it's a building, if it's
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  Speaker 4: a trading asset, and you give it away into a
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  Speaker 4: trust before the fifth of April, I haven't got long hair,
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  Speaker 4: have I got wrong, then you will not pay You
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  Speaker 4: will be able to transfer it without any tax.
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  Speaker 2: Okay.
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  Speaker 1: The neurals after the after what's only allows to that
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  Speaker 1: million pounds?
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  Speaker 4: They know that's only on death. You will be paying
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  Speaker 4: a ten percent entry charge on those assets. You've got
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  Speaker 4: three hundred and twenty five thousands of allowance which you
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  Speaker 4: can reuse every seven years. But apart from that, you
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  Speaker 4: will pay the ten percent as a lifetime entry charge,
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  Speaker 4: and you don't. The allowance is only on death. It's
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  Speaker 4: not a lifetime. It's all that's worth the bother de friends,
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  Speaker 4: how much you care about what the tax? I think
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  Speaker 4: you have some clients.
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  Speaker 2: Men didn't say.
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  Speaker 4: I largely spend my life doing life insurance and we
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  Speaker 4: look after a very large number of very large estates.
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  Speaker 4: And for them, inheritance tax and the transitioning of the
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  Speaker 4: wealth to the next generation is a key driver for them.
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  Speaker 4: And they know who's going to inherit it from the
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  Speaker 4: time that probably something is born, and they spend a
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  Speaker 4: great deal of time and they buy insurance to cover it,
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  Speaker 4: and they are making huge gifts of transfer of assets
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  Speaker 4: now and they care very much. I have other clients
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  Speaker 4: who maybe have made the wealth and they care very
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  Speaker 4: much about income tax and capital against tax, and they
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  Speaker 4: don't care about inheritance tax because from their perspective, what
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  Speaker 4: the children. They started with nothing, and they don't tend
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  Speaker 4: to then care of their children. They get sixty percent
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  Speaker 4: feet they'll be well off. That changes when they get
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  Speaker 4: grandchildren when staggeringly well, they're not prepared to earn their
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  Speaker 4: own children by giving them loads of money. They're delighted
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  Speaker 4: to the grandchildren and children. I've had lots of clients
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  Speaker 4: who you know, you've talked to for years and said, well,
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  Speaker 4: you ought to be thinking about giving it away.
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  Speaker 1: No.
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  Speaker 4: No, And particularly if it's business assets, there's much more
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  Speaker 4: of a problem because the giving away of the business
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  Speaker 4: assets is about succession in the business and transfer, and
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  Speaker 4: that's all about do you trust the children to do
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  Speaker 4: the transfer? Is that going to be appropriate? Are they
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  Speaker 4: appropriate for running the business? Are they interested in running
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  Speaker 4: the business, all those other things. So you may or
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  Speaker 4: may not want to give the asset away if it's
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  Speaker 4: a business asset and you don't want to earn them,
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  Speaker 4: and they must get on with their lives. And then
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  Speaker 4: these grandchildren arrive and boo if.
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  Speaker 2: They go, hof they go, it's all different.
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  Speaker 1: And if that's skipping a generation a good way to go.
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  Speaker 1: I mean that surely caused some friction between parents and
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  Speaker 1: their next generation if the money skips a generation.
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  Speaker 4: I haven't really seen that because I think if it's
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  Speaker 4: going down a generation, that the generations are being skipped
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  Speaker 4: tend to be involved. I think I think, as with
• 14:41
  Speaker 4: all of these things, it's all about communication, because.
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  Speaker 1: I suspect, as we were talking about this earlier, that
• 14:46
  Speaker 1: there's there's a there's a this missing generation when it
• 14:50
  Speaker 1: comes to pensions, which is people born born sort of
• 14:53
  Speaker 1: late sixties to late eighties or middle eighties, people who
• 14:56
  Speaker 1: missed out on having a defined benefit pension and then
• 15:00
  Speaker 1: had no pension provision at all until the introduction of
• 15:03
  Speaker 1: water enrollment and so have pretty much no pench and
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  Speaker 1: provision at all and will generally be relying on inheritance
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  Speaker 1: to get through their last twenty years and pay for
• 15:10
  Speaker 1: that care. So it would makes sense if the boomers
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  Speaker 1: left their money to that generation.
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  Speaker 4: They might all want might not realize that the boomers
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  Speaker 4: need the money. Well, no, no, because money has a
• 15:27
  Speaker 4: you have a reference point. My father who's dead would
• 15:32
  Speaker 4: be one hundred almost now. But when he started working,
• 15:36
  Speaker 4: he earned fifty pounds a year working in Lloyds in London,
• 15:42
  Speaker 4: and then you know, his first pay rise went to
• 15:46
  Speaker 4: two hundred and fifty pounds a year.
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  Speaker 2: But it's very difficult, is.
• 15:49
  Speaker 4: You spend two pounds fifty buying a cuff of coffee
• 15:51
  Speaker 4: on the way to work for him to understand that
• 15:56
  Speaker 4: he moved his reference point up. But I think that's
• 15:59
  Speaker 4: that's in terms of the transfer of wealth. I think
• 16:02
  Speaker 4: that that reference point that the children, you know, the
• 16:05
  Speaker 4: children have got fifty thousand a year or so, they're
• 16:08
  Speaker 4: fine because in their reference point, there's a point at
• 16:13
  Speaker 4: which people stick yeahering.
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  Speaker 1: There's probably an educational need on both sides, right, And
• 16:20
  Speaker 1: one of the things that you mentioned the inheritance is
• 16:24
  Speaker 1: systems of bigger states and families that have been rich
• 16:27
  Speaker 1: for generations have a system for passing wealth down and
• 16:30
  Speaker 1: an education system as well for the recipients.
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  Speaker 2: But most people don't.
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  Speaker 1: You know, it's relatively new, this idea that a lot
• 16:36
  Speaker 1: of people will have money to pass down and a
• 16:38
  Speaker 1: lot of people will inherit and there's an education gap
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  Speaker 1: possibly on both sides.
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  Speaker 4: Yes, I think so, And I think that it was
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  Speaker 4: never talked about it So within the biggest states, it's
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  Speaker 4: talked about as a commercial thing. It's part of the
• 16:57
  Speaker 4: commercial planning for the estate. They're very long term investment,
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  Speaker 4: and it's very long term planning and people are involved
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  Speaker 4: in it, and they also are quite good if they
• 17:09
  Speaker 4: have a generation who aren't, who aren't maybe very commercial,
• 17:13
  Speaker 4: they're quite good at finding a way around that, so
• 17:16
  Speaker 4: that then they just get an income and they're not
• 17:18
  Speaker 4: going to impact on the estate, not impact on the business.
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  Speaker 4: But it's a commercial, it's a commercial thing. They have
• 17:28
  Speaker 4: a whole ramp of advisors who talk about it, and
• 17:30
  Speaker 4: you just join that conversation which has gone on for years.
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  Speaker 4: I think what's much more difficult is if you've suddenly
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  Speaker 4: got what's really quite a lot of wealth and you
• 17:39
  Speaker 4: don't have that sort of range of advisors and you
• 17:42
  Speaker 4: don't have that forum, which is we discuss, you know,
• 17:47
  Speaker 4: how we're investing for the long term. We discuss it,
• 17:50
  Speaker 4: and we do it at the annual at the annual
• 17:53
  Speaker 4: meeting at least. And there's almost always a trust so
• 17:56
  Speaker 4: there are always external people. They're called the trustee, and
• 18:02
  Speaker 4: they're probably outside the family.
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  Speaker 1: So how do you educate a new generation of inherited
• 18:09
  Speaker 1: the fabulous opportunity for the wealth management community, right.
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  Speaker 4: I think they're trying. I think the wealth management community
• 18:16
  Speaker 4: is trying, but I think they're trying more to get
• 18:19
  Speaker 4: to the much younger ones. Certainly, the wealth management industry
• 18:26
  Speaker 4: is going to lose. As things stand, they keep about
• 18:32
  Speaker 4: twenty five percent of the wealth when people die and.
• 18:37
  Speaker 1: Their population, so they get the cash. They go around
• 18:42
  Speaker 1: with the wealth manager and they say, will you be
• 18:43
  Speaker 1: looking after that gorgeously for forty years, but now I'll
• 18:45
  Speaker 1: have it.
• 18:46
  Speaker 2: Yep.
• 18:46
  Speaker 4: Because they pay off the mortgage, they hand the money
• 18:49
  Speaker 4: on to the next generation. They get the children on too,
• 18:52
  Speaker 4: they pay off their student loans. They get the grandchildren
• 18:56
  Speaker 4: onto because they don't need it, and if they do
• 19:00
  Speaker 4: need it, they've got their own managers.
• 19:04
  Speaker 2: Or swoop it up. That seemed to me, I was
• 19:05
  Speaker 2: going to ask you. That seems to me to.
• 19:07
  Speaker 1: Be one of the best possible ways to pass down
• 19:09
  Speaker 1: some inheritance is to pay for all your grandchildren to
• 19:13
  Speaker 1: go to university and pay all their living expenses so
• 19:15
  Speaker 1: they don't leave with one of these awful that John
• 19:17
  Speaker 1: conducting is about all the time.
• 19:19
  Speaker 4: It's not tax deductible for an inheritance tax. If you
• 19:22
  Speaker 4: pay your children's education, that is not considered a gift
• 19:26
  Speaker 4: for the inheritance tax. If you pay your grandchildren's education,
• 19:31
  Speaker 4: that is a gift, So it goes on the clock.
• 19:34
  Speaker 2: Even if they're a surplus income. That's the way to
• 19:36
  Speaker 2: do it.
• 19:36
  Speaker 4: Well, if it's if you can create the surplus income yet.
• 19:39
  Speaker 2: Then you can do it.
• 19:40
  Speaker 4: You used to give people who used to give grandchildren
• 19:43
  Speaker 4: quite a bit of money under deed of government and
• 19:46
  Speaker 4: then which was a way to make it very tax efficient,
• 19:50
  Speaker 4: but that was then shut down.
• 19:53
  Speaker 2: Nothing left is that everything's been shut down.
• 19:56
  Speaker 4: You buy insurance just to pay the tax, so paid
• 20:01
  Speaker 4: the premium every year rather than paying forty percent of
• 20:05
  Speaker 4: the bullet. You do think about putting some of it
• 20:07
  Speaker 4: into trust. You can fund an insurance policy by drawing
• 20:13
  Speaker 4: money as the pension fund. That's very efficient, and then
• 20:16
  Speaker 4: you give it away.
• 20:18
  Speaker 1: Okay. Ask a final question, do you think it's a
• 20:20
  Speaker 1: good tax, inheritance tax?
• 20:23
  Speaker 4: I think that's from where you are on the political spectrum.
• 20:28
  Speaker 4: If you believe in the redistribution of wealth, then I
• 20:32
  Speaker 4: think it probably redistributes wealth. If you think that people
• 20:38
  Speaker 4: have worked terribly hard and paid an awful of tax
• 20:42
  Speaker 4: to have accumulate his money.
• 20:44
  Speaker 2: That's what makes Peel very.
• 20:45
  Speaker 1: Cross Chavan who'd like to see inheritance tax abolished for
• 20:53
  Speaker 1: those who aren't here, I say that's about forty percent. Yeah, yeah,
• 20:58
  Speaker 1: I'm surprised that the young are putting up their hands.
• 21:00
  Speaker 2: You did inherit more. You know, if it was it
• 21:03
  Speaker 2: was abolished, not less, it'll be good. I have to
• 21:08
  Speaker 2: leave it there.
• 21:08
  Speaker 1: Although I didn't ask John, John, should it be abolished?
• 21:11
  Speaker 2: Bad?
• 21:12
  Speaker 5: I think in the moment, yes, yes, it's too it's
• 21:15
  Speaker 5: too long. And don't think what is too many people
• 21:17
  Speaker 5: at the low end, you know the thresholders. Yeah, there
• 21:21
  Speaker 5: are too many people panic in the wrong about it.
• 21:27
  Speaker 2: You shouldn't exactly.
• 21:28
  Speaker 4: There are an awful lot of people and they will
• 21:30
  Speaker 4: spend quite a lot of it. That that's when people
• 21:34
  Speaker 4: really get into a panic is when you look at
• 21:36
  Speaker 4: the care costs.
• 21:38
  Speaker 1: Yeah, let's not talk about care anymore. And I'm going
• 21:40
  Speaker 1: to add one of these sessions on and up. Let's
• 21:43
  Speaker 1: just end it with you can all go out and
• 21:45
  Speaker 1: buy insurance.
• 21:46
  Speaker 2: You don't have inheritance tax.
• 21:47
  Speaker 1: But well, brilliant and Paula, thank you so much, Thank.
• 21:51
  Speaker 2: You so much. The last bit.
• 22:04
  Speaker 1: So this is the question answered session. John's going to
• 22:06
  Speaker 1: stay here because I know you always have questions for him.
• 22:08
  Speaker 1: And we've got Moreena coming up to join us. She
• 22:10
  Speaker 1: is on our Markets Live team. And I think you've
• 22:13
  Speaker 1: probably all had been when I was speaking before, because
• 22:15
  Speaker 1: she's been on You've been quite a few of the
• 22:16
  Speaker 1: Friday round ups, haven't you. Yes, yeah, excellent, so all
• 22:20
  Speaker 1: things markets, and you've given us some really brilliant contributions.
• 22:22
  Speaker 1: So let's just start with a question just view about
• 22:27
  Speaker 1: I mean markets, we've talked about a bit of Sebastian,
• 22:29
  Speaker 1: but what I think we're really interested in is interest
• 22:31
  Speaker 1: rates where we might expect them to go next. We've
• 22:34
  Speaker 1: got quite a lot of questions about mortgages and that
• 22:36
  Speaker 1: kind of thing, So let's start. Their expectations have changed
• 22:39
  Speaker 1: quite a lot over the last few weeks, haven't they.
• 22:41
  Speaker 6: Yes, they have, particularly from the end of last month
• 22:45
  Speaker 6: into March. Of course, with the conflict escalating in the
• 22:49
  Speaker 6: Middle East, we had seen markets expecting more too full
• 22:55
  Speaker 6: quarter point cuts from Bank of England this year, with
• 22:59
  Speaker 6: quite a strong chance of that happening this week. Since
• 23:03
  Speaker 6: the invasion, that has quite dramatically reversed. At one point
• 23:08
  Speaker 6: we really had a full cut priced in, sorry Paul,
• 23:12
  Speaker 6: hike priced in for the year and that's pared back
• 23:15
  Speaker 6: a little bit, but market startles still looking quite hawkish
• 23:20
  Speaker 6: at the moment. We've got about fifty percent chance of
• 23:22
  Speaker 6: a hike priced in so it's really quite a dramatic change,
• 23:28
  Speaker 6: although I think some people maybe feel that that's a
• 23:30
  Speaker 6: little extreme. You know, Whether the Bank of England actually
• 23:35
  Speaker 6: feel that what's happening justifies a hike at this point
• 23:40
  Speaker 6: is certainly something that will be looking very closely to
• 23:44
  Speaker 6: them and what they say on Thursday. They may be
• 23:47
  Speaker 6: looking to temper some of those those fears. They had
• 23:52
  Speaker 6: for a very long time been expressing their desire to
• 23:56
  Speaker 6: cut rates and the question was really just about the pace.
• 24:00
  Speaker 6: So whether their approach is completely changed, I think what
• 24:05
  Speaker 6: we'll have to see. But it's quite early days to
• 24:08
  Speaker 6: be pricing, you know, that far ahead. But I think
• 24:12
  Speaker 6: we're looking for things to stay on hold for quite
• 24:14
  Speaker 6: some time.
• 24:15
  Speaker 1: And as Sebastian answers, there's quite a lot of room here
• 24:16
  Speaker 1: for policy mistake in both directions.
• 24:19
  Speaker 3: Yeah, John, I mean yeah.
• 24:21
  Speaker 5: I think the fact that the problem is oil and
• 24:25
  Speaker 5: the oil price rise is it's both inflationary in terms
• 24:28
  Speaker 5: of it drives up the consumer price index, but it's
• 24:30
  Speaker 5: also very disinflationary because it's staple's money from people's pockets,
• 24:35
  Speaker 5: so or rather not disinflationary so much as recessionary. So
• 24:39
  Speaker 5: the longer it goes on for the more likely we
• 24:41
  Speaker 5: get some kind of stag inflation. But equally the problem
• 24:43
  Speaker 5: is the Bank of England's only get one target, and
• 24:45
  Speaker 5: it's CPI at two percent, and they haven't had it
• 24:48
  Speaker 5: for six years now, and so.
• 24:50
  Speaker 2: They changed that target, isn't it well?
• 24:52
  Speaker 5: I mean, I think they would look quite late to
• 24:54
  Speaker 5: I mean, some people think that it's a daft idea,
• 24:58
  Speaker 5: and to a great extent I kind of agree with that,
• 25:00
  Speaker 5: except that you need some kind of target, and the
• 25:03
  Speaker 5: problem is if you change it, then they'll just make
• 25:05
  Speaker 5: life easier for themselves. So I can see almost that,
• 25:09
  Speaker 5: I can see a policy mistake, and I do think
• 25:12
  Speaker 5: it would be a mistakes put up interest rates. I
• 25:14
  Speaker 5: can see it almost happening as a result embarrassment and
• 25:18
  Speaker 5: a sort of commitment to this idea that doesn't inflation
• 25:21
  Speaker 5: expectations channel the you know, because inflation is too high,
• 25:25
  Speaker 5: we keep thinking it's going to keep being high, even
• 25:27
  Speaker 5: though I don't actually I kin I struggle with I
• 25:30
  Speaker 5: don't think that's how people actually generally think about inflation.
• 25:34
  Speaker 5: It's a long story short, Yeah, it's not ideal. I
• 25:38
  Speaker 5: think the bank will probably hold this week because they'll
• 25:40
  Speaker 5: want to you know, keep their options open.
• 25:43
  Speaker 1: Yeah, a difficult people. We have one question ken in
• 25:45
  Speaker 1: earlier about buying houses. Is this a good time to
• 25:49
  Speaker 1: buy a house?
• 25:53
  Speaker 6: I think that's an incredibly difficult, a very difficult question
• 25:57
  Speaker 6: to answer or anything. What we would always say on
• 25:59
  Speaker 6: the blog and John I would just talking about this
• 26:00
  Speaker 6: earlier and ultimately you know it's the right time, when
• 26:04
  Speaker 6: it's actually the right time for you to do it,
• 26:06
  Speaker 6: because it's not it's not a speculative asset for most people,
• 26:09
  Speaker 6: it's actually somewhere you live, and there's a lot of
• 26:12
  Speaker 6: other considerations that come into account. But in terms of
• 26:15
  Speaker 6: the actual mortgage rates, I mean the way in which
• 26:18
  Speaker 6: mortgage is the price. We have been seeing that rising
• 26:22
  Speaker 6: and we have also seen lenders actually increasing their rates,
• 26:26
  Speaker 6: but not a huge amount. Some have actually reported to
• 26:30
  Speaker 6: us that they've been encouraging people who are coming up
• 26:33
  Speaker 6: to refinance to perhaps do it now and not in
• 26:36
  Speaker 6: six months time. So it is seen as actually a
• 26:39
  Speaker 6: good time in the context of the uncertainty ahead. But
• 26:43
  Speaker 6: at the same time, I think, as we were discussing earlier,
• 26:48
  Speaker 6: we're seeing some of those expectations for the Bank of England,
• 26:51
  Speaker 6: you know, calming down a little bit, and you know
• 26:53
  Speaker 6: you wouldn't want to jump the gone on a major
• 26:56
  Speaker 6: decision I think purely based on a couple of weeks
• 26:59
  Speaker 6: of very fraud uncertainty.
• 27:02
  Speaker 1: Because John, here's one fear. I think you probably agree
• 27:04
  Speaker 1: with all that on houses. But here's here's something you
• 27:06
  Speaker 1: write about all the time, which is UK equities. Right
• 27:10
  Speaker 1: with the UK stuck between weak growth and physical constraints,
• 27:13
  Speaker 1: do you think markets are still giving too much benefit
• 27:15
  Speaker 1: of the doubt to UK assets.
• 27:18
  Speaker 2: It's interesting when looking at.
• 27:20
  Speaker 1: It, the fifty one hundred is one of the very
• 27:22
  Speaker 1: few developed markets that's still up on the year, considerably
• 27:25
  Speaker 1: on the air.
• 27:26
  Speaker 5: I mean the first one hundred to think makes sense
• 27:29
  Speaker 5: to be less vulnerable, I mean still down since the
• 27:33
  Speaker 5: war kicked off, despite the factskoot oil and.
• 27:35
  Speaker 3: Resources not that is.
• 27:36
  Speaker 5: But the firstly one hundred I think, you know is
• 27:40
  Speaker 5: if you're going to be in equities, that's not the
• 27:42
  Speaker 5: worst place to be. The two fifty and the kind
• 27:46
  Speaker 5: of UK mid caps and smaller caps. I know that
• 27:48
  Speaker 5: we've can have been broadly bullish in the UK assets
• 27:52
  Speaker 5: and think that they've been possibly hip with the ugly
• 27:55
  Speaker 5: stick too much. At the same time, there is you know,
• 27:59
  Speaker 5: they have come some way. We do have this problem
• 28:05
  Speaker 5: that you know, we are quite vulnerable. I absolutely don't
• 28:09
  Speaker 5: want to catastrophize, but you know, the kind of Geltz
• 28:13
  Speaker 5: market is quite sensitive to changes. We still in force
• 28:17
  Speaker 5: that are kind of stricken by political uncertainty. People had
• 28:22
  Speaker 5: hoped and I must have been it was kind of
• 28:23
  Speaker 5: one of those. Certainly, well they give the new government
• 28:25
  Speaker 5: the benefit of the doubt, kind of hope that that
• 28:27
  Speaker 5: was going to go away.
• 28:28
  Speaker 3: Clearly it hasn't.
• 28:29
  Speaker 5: In May obviously, obviously Kirs Stammer's position has flipped off
• 28:34
  Speaker 5: the front pages because we've got other things taken over.
• 28:37
  Speaker 5: But come to May local elections, I think it's pretty
• 28:40
  Speaker 5: clear that you know, there's going to be a pretty
• 28:43
  Speaker 5: nasty outcome for the incumbents and that will again raise
• 28:48
  Speaker 5: questions or whether have we got the right guy leading
• 28:50
  Speaker 5: the party just now? Is it worth the risky of
• 28:53
  Speaker 5: changing it? So I guess I can see there's a
• 28:56
  Speaker 5: lot of pain points coming up for the UK that
• 28:59
  Speaker 5: I hope where I'm going to be an issue.
• 29:03
  Speaker 3: There are there are so.
• 29:04
  Speaker 1: Many questions on on UK credibility coming in.
• 29:07
  Speaker 5: Absolutely, I mean the same thing, you know, companies have companies,
• 29:11
  Speaker 5: and companies just have to put up this stuff. You know,
• 29:14
  Speaker 5: we've been through plenty of kind of traumatic times before,
• 29:18
  Speaker 5: and the companies themselves are not hugely expensive relative to
• 29:21
  Speaker 5: their own history. One issue with the two fifty, I
• 29:24
  Speaker 5: guess is a lot of things like hostpeild doesn't know
• 29:26
  Speaker 5: at that are quite cyclical. I don't I'm not ready
• 29:30
  Speaker 5: to give up point UK equities yet, but maybe agent closerly.
• 29:35
  Speaker 2: Aging closer to not being so bullish.
• 29:37
  Speaker 1: Yeah, And we did have probably all listened to the
• 29:39
  Speaker 1: Edward Chancellor podcast earlier this week and one of the
• 29:43
  Speaker 1: things that he said was if you're looking for a
• 29:46
  Speaker 1: place to invest, maybe didn't choose the place was incredibly
• 29:49
  Speaker 1: high electricity costs and there's no chance that they might
• 29:51
  Speaker 1: be coming down because it's just a bad signal. And
• 29:54
  Speaker 1: that did that did make us go, yeah, maybe we
• 29:56
  Speaker 1: should be slightly slightly less positive. Are there any questions
• 29:59
  Speaker 1: in the because we've got mics. I've got loads of
• 30:01
  Speaker 1: questions here, but I'd much prefer to take them from
• 30:04
  Speaker 1: from the room if you have them. Really, okay, one
• 30:09
  Speaker 1: of the bag here, thank you, There is a mic
• 30:12
  Speaker 1: coming to you.
• 30:15
  Speaker 7: I how do you view the strategy of treating a
• 30:18
  Speaker 7: guaranteed pension from like a workplace pension as a proxy
• 30:23
  Speaker 7: for a fixed income allocation, thereby justifying one hundred equity strategy.
• 30:29
  Speaker 2: In a portfolio very young to have a dB pension, so.
• 30:33
  Speaker 7: Like a workplace pension. So using that as like if
• 30:35
  Speaker 7: you had a ninety ten portfolio, your workplace pension or
• 30:39
  Speaker 7: your is your bond.
• 30:42
  Speaker 5: So it's not a dB pension. It's not a guaranteed no,
• 30:45
  Speaker 5: not guarante topic sex pension. Yet I guess that that's
• 30:48
  Speaker 5: really just a question about your your asset allocation. I mean,
• 30:53
  Speaker 5: if you're told me yourself and that thing been to
• 30:56
  Speaker 5: you not given personal financial ad face, we can't do that.
• 31:00
  Speaker 5: But through all I thumb is the younger you are,
• 31:03
  Speaker 5: the more risk you can take. So you know, I
• 31:06
  Speaker 5: mean even my age is like thefty ish fifty ish,
• 31:09
  Speaker 5: so coy I would, you know, And I'm kind of
• 31:14
  Speaker 5: mostly inequities because I'm thinking it's going to at least
• 31:17
  Speaker 5: twenty or years before retire, so I may as well
• 31:19
  Speaker 5: take the maximum ament risk that kind of you know,
• 31:22
  Speaker 5: it's so I can get the maximum growth.
• 31:25
  Speaker 1: But nonetheless, a workplace pension if there's not a guaranteed
• 31:28
  Speaker 1: income is also equity. There's not a replacement for it's
• 31:32
  Speaker 1: the same thing.
• 31:32
  Speaker 3: It's just the same thing.
• 31:34
  Speaker 1: It's sole equity exposure in the main, unless it's lifestyled
• 31:37
  Speaker 1: into bonds as you age. Yeah.
• 31:40
  Speaker 7: I was treating it as a form of like lifetime capital.
• 31:45
  Speaker 7: So it's kind of guaranteed as long as you're still
• 31:48
  Speaker 7: in a career. So that would act as your safety net.
• 31:52
  Speaker 7: So then that allows someone young like me to be
• 31:55
  Speaker 7: fully risk onde.
• 31:57
  Speaker 1: I suppose what you mean is that you would have
• 31:58
  Speaker 1: a higher risk equity portfolio out with your webs.
• 32:02
  Speaker 2: Yeah, yeah, that makes some sense.
• 32:04
  Speaker 3: That sounds theological, I think.
• 32:07
  Speaker 1: But but just to be clear, it's still an equity portfolio.
• 32:10
  Speaker 2: Yeah, likely lower risk equity portfolio.
• 32:13
  Speaker 1: Still don't have a bond style balancer, and you'll be
• 32:16
  Speaker 1: needing some gold.
• 32:19
  Speaker 2: Thank you for that question.
• 32:21
  Speaker 1: Listen, there's quite a few questions on does the does
• 32:23
  Speaker 1: the UK need a crisis? Will the government change they
• 32:29
  Speaker 1: do we need Do you think that that maybe you
• 32:32
  Speaker 1: can have a go at this point? Do you think
• 32:34
  Speaker 1: the UK needs a crisis something similar to the UK's
• 32:36
  Speaker 1: IMF bailad in the late seventies for policymakers to confront
• 32:39
  Speaker 1: the underlying issues with the economy, energy policy, taxes, et cetera.
• 32:43
  Speaker 1: In other words, do things need to get worse before
• 32:46
  Speaker 1: they get better? And there are a couple of others
• 32:48
  Speaker 1: along the same zone, the same thing about the bond
• 32:52
  Speaker 1: market and the extent which we might destroy it by
• 32:54
  Speaker 1: cutting yels, et cetera. And we have had this conversation
• 32:57
  Speaker 1: that things eventually they'll get so that they have.
• 33:00
  Speaker 3: To get better.
• 33:02
  Speaker 6: I mean, things haven't been good for quite a long time.
• 33:06
  Speaker 6: I think if you look at the longer dated guilt yields,
• 33:09
  Speaker 6: you know, we saw them hitting sort of nineteen ninety
• 33:13
  Speaker 6: eight levels earlier in the year, and that suggests that
• 33:18
  Speaker 6: we haven't really recovered actually from what we saw in
• 33:21
  Speaker 6: twenty twenty two with the mini budget. Actually, things have
• 33:25
  Speaker 6: been getting a bit better this year until this recent
• 33:30
  Speaker 6: sort of turmoil, which is a global one. But actually
• 33:33
  Speaker 6: their longer data to guilds haven't been too badly affected
• 33:36
  Speaker 6: in contact, so I wouldn't say that we've sort of
• 33:41
  Speaker 6: reached a point where things have got much better. Whether
• 33:46
  Speaker 6: they could get worse, I mean, I think they always could,
• 33:49
  Speaker 6: and I don't know what the answer is to that,
• 33:51
  Speaker 6: except that I think to Joins point, there is a
• 33:53
  Speaker 6: lot of uncertainty. We've seen quite a lot of political
• 33:57
  Speaker 6: risk priced in, and so I suppose is something that
• 34:00
  Speaker 6: would add to that and stabilize it further.
• 34:04
  Speaker 2: Do we need it, John? Do we need a crisis
• 34:07
  Speaker 2: if we muddle alone?
• 34:10
  Speaker 1: It seels to me like the bit where we can
• 34:12
  Speaker 1: just keep muddling is nearly over.
• 34:14
  Speaker 3: No, I think so.
• 34:15
  Speaker 5: And I actually think where we make it a crisis
• 34:18
  Speaker 5: is in energy provision or infrastructure, because we've already seen
• 34:23
  Speaker 5: things like I'm from live near Tunby's Wells and thankfully
• 34:28
  Speaker 5: didn't get caught up, but like you know, the water
• 34:30
  Speaker 5: system was out in like a major town. It's just
• 34:32
  Speaker 5: probably something you kind of live there or thereabouts for
• 34:35
  Speaker 5: you know, the best part of like six weeks. And
• 34:37
  Speaker 5: that was nothing to do with it was nothing to
• 34:39
  Speaker 5: be cyber attacks, it was nothing to do we you know,
• 34:42
  Speaker 5: warfare or anything like that. It was it was just
• 34:44
  Speaker 5: degraded kind of facilities, back management, whatever it was. And
• 34:49
  Speaker 5: you know, we've got the highest industrial electricity prices kind
• 34:52
  Speaker 5: of pretty much in the world, and you got it
• 34:54
  Speaker 5: turn around and think, well, what happens if we keep
• 34:57
  Speaker 5: on going down the pathway that leads away from me
• 35:00
  Speaker 5: security and towards kind of like energy speculation, you know,
• 35:04
  Speaker 5: kind of maybe overloading their grid with kind.
• 35:06
  Speaker 3: Of renewable assets before it's ready.
• 35:08
  Speaker 5: Not saying that's a bad thing, but you know, we
• 35:10
  Speaker 5: got to kind of take you know, baby steps towards
• 35:13
  Speaker 5: this stuff, and then maybe we start seeing things like
• 35:16
  Speaker 5: you know, extensive blackouts or the sort of thing that
• 35:19
  Speaker 5: gets people properly worried and makes us make some hard.
• 35:25
  Speaker 3: Decisions about where we need to focus.
• 35:28
  Speaker 5: I think something like that actually probably more than a
• 35:30
  Speaker 5: guilts market crisis is actually more likely where there it
• 35:33
  Speaker 5: really is a sense that things have fallen apart.
• 35:37
  Speaker 1: Okay, christ is then yeah, proper pace question right here
• 35:41
  Speaker 1: in the front.
• 35:44
  Speaker 2: I'm trying to answer some quickly.
• 35:45
  Speaker 1: Do you think we will see a massive exodus from
• 35:47
  Speaker 1: the UK of the high ending individuals in light of
• 35:49
  Speaker 1: the punitive labor government tax policies.
• 35:51
  Speaker 2: I think we already have, but we might see that.
• 35:53
  Speaker 1: Decline because there's nowhere to go now, is there coming.
• 35:57
  Speaker 2: Back on going?
• 35:58
  Speaker 3: Yeah, it's Ryan Swin.
• 36:00
  Speaker 8: I'm a mortgage advisor, so I wanted to bring it
• 36:02
  Speaker 8: back to the housing market if possible it seems to
• 36:05
  Speaker 8: me that there's a huge scope on Thursday for surprises
• 36:08
  Speaker 8: from the Bank coming not because of necessarily a policy move,
• 36:11
  Speaker 8: but because of what they say. If it appears there's
• 36:14
  Speaker 8: consensus that because of the energy crisis now they're inclined
• 36:17
  Speaker 8: to raise rates that could push bond yelds up much
• 36:20
  Speaker 8: higher than we've gone so far. But they might also
• 36:22
  Speaker 8: say they're still inclined to raise races, which you could
• 36:24
  Speaker 8: push yields down. So I just want to know what
• 36:26
  Speaker 8: your take is, what do you expect them to say,
• 36:28
  Speaker 8: and you know, what are the risks for the housing
• 36:31
  Speaker 8: market the rest of the year as you see it.
• 36:35
  Speaker 6: I mean from my perspective, you know, I can look
• 36:38
  Speaker 6: at what the market are saying, and they have seemed
• 36:41
  Speaker 6: quite actually uncertain. So whilst I said that they'd moved
• 36:45
  Speaker 6: towards pricing in a hike, you know, they've moved back again,
• 36:47
  Speaker 6: and we've also seen that fluctuate in both directions just
• 36:50
  Speaker 6: in the last few trading sessions. So I would say
• 36:53
  Speaker 6: there's a huge amount of uncertainty. The only real indications
• 36:57
  Speaker 6: we've heard from the bank last week we had Alan
• 37:00
  Speaker 6: Taylor speaking and he said that if the oil price
• 37:05
  Speaker 6: spike sort of stayed where it was for just a
• 37:09
  Speaker 6: few weeks. Then by the time we get to the
• 37:10
  Speaker 6: end of the year, it wouldn't necessarily make any difference
• 37:13
  Speaker 6: to overall CPI, But of course we're already moving on
• 37:16
  Speaker 6: and things maybe look like they're going to be a
• 37:18
  Speaker 6: bit more protracted. So I think there's going to be
• 37:21
  Speaker 6: a huge amount of uncertainty, and the bank do tend
• 37:23
  Speaker 6: to be quite cautious in that. I don't think they're
• 37:26
  Speaker 6: going to be looking to say anything that's going to
• 37:29
  Speaker 6: trigger extreme market reactions. I think how they vote will
• 37:34
  Speaker 6: be very important. You know, we're expecting it to be
• 37:37
  Speaker 6: a hold, but whether anybody feels like it's worth sort
• 37:41
  Speaker 6: of stepping out of that consensus view will be interesting.
• 37:45
  Speaker 6: And now we get the commentary published as well, and
• 37:48
  Speaker 6: of course their guidance, you know, changing and wording to
• 37:51
  Speaker 6: the guidance and just really anything and their inflation you know,
• 37:54
  Speaker 6: predictions as well. For the rest of the year, I
• 37:56
  Speaker 6: think really going to be incredibly closely watched. But I
• 38:00
  Speaker 6: probably had to say that we'll see now big surprises
• 38:03
  Speaker 6: because I think they'll probably want to try and give
• 38:07
  Speaker 6: a massive stability housing market.
• 38:10
  Speaker 5: John, Yeah, I mean, I think I agree with you
• 38:12
  Speaker 5: more when I don't think they're going to want to
• 38:13
  Speaker 5: rattle the horses that this meeting. I think the April
• 38:16
  Speaker 5: one will be the scarier one because if you're still
• 38:19
  Speaker 5: going on by that point, they're going to actually have
• 38:21
  Speaker 5: to commit in some sort of direction. As far as
• 38:24
  Speaker 5: the housing market goes, I mean it really boys down again.
• 38:27
  Speaker 5: If you're buying a house for yourself, then there are
• 38:30
  Speaker 5: so many other factors that mark more it is a
• 38:32
  Speaker 5: buyer's market.
• 38:33
  Speaker 3: Well, I think that's one thing I would say.
• 38:34
  Speaker 5: You know, and this, if anything, makes it more of
• 38:37
  Speaker 5: a buyer's market, because you know, you can turn around
• 38:40
  Speaker 5: people and say.
• 38:40
  Speaker 3: Well, you know there's a barrow and you know he's
• 38:42
  Speaker 3: not going to get many other buyers.
• 38:44
  Speaker 5: So I sort of feel that from that point of view,
• 38:47
  Speaker 5: if you are a buyer, you're probably in a decent
• 38:49
  Speaker 5: position as long as you've got all the usual stuff,
• 38:51
  Speaker 5: you know, get your mortgage lined up, make sure you
• 38:53
  Speaker 5: get enough money, that kind of thing. And also if
• 38:57
  Speaker 5: you're buying in London, which I think is where the
• 38:59
  Speaker 5: question came from. The I mean, the London housing market
• 39:03
  Speaker 5: is basically flat for about a decade now, and probably
• 39:06
  Speaker 5: a nice of the town in real terms. So I mean,
• 39:10
  Speaker 5: what can it go the world? You know, of course
• 39:12
  Speaker 5: I can go through it. But at the same time,
• 39:14
  Speaker 5: you know, you're not buying when it's at the peak,
• 39:18
  Speaker 5: if you're worried about that kind of thing.
• 39:20
  Speaker 1: But the market across the board, I mean, it is
• 39:21
  Speaker 1: just interesting, isn't it. And we're talking disapascination about the
• 39:24
  Speaker 1: turn in yields and interest rates starting to go up
• 39:26
  Speaker 1: and interest rate normalizing, and now we're moving into an
• 39:29
  Speaker 1: environment we can easily expect rates to stick around the
• 39:32
  Speaker 1: three thousand year historical normal four.
• 39:34
  Speaker 2: To five percent.
• 39:35
  Speaker 1: And only just now is it really beginning to turn
• 39:38
  Speaker 1: up in all the asset classes that you would have
• 39:39
  Speaker 1: expected it to turn up in a few years back, So.
• 39:42
  Speaker 2: Housing being one of them.
• 39:43
  Speaker 1: You know, house prices were ridiculously high on the basis
• 39:46
  Speaker 1: of a very, very free and easy capital.
• 39:50
  Speaker 2: We don't have those things anymore. You begin to see
• 39:52
  Speaker 2: the housing.
• 39:52
  Speaker 1: Market crack, You start to see the private actuity market crack,
• 39:54
  Speaker 1: you start to see private credit crack. All these things
• 39:57
  Speaker 1: are a function of this regime change in in yields,
• 40:00
  Speaker 1: and I find it so interesting that it's taken so long.
• 40:04
  Speaker 1: You know, we started talking about all these things, well
• 40:06
  Speaker 1: this will crack, and that'll crag, and this will crag
• 40:08
  Speaker 1: three four years ago. But it's just it's much slower
• 40:11
  Speaker 1: than you think. But of course it's slower than you
• 40:13
  Speaker 1: think in the asset classes that are not particularly liquid
• 40:17
  Speaker 1: and not particularly transparent and housing, well, obviously it's not
• 40:21
  Speaker 1: the same kind of asset price class as private credit
• 40:24
  Speaker 1: and private equity. It has the same dynamics when it
• 40:26
  Speaker 1: comes to liquidity and transparency. That was an attempt to
• 40:30
  Speaker 1: answer another five questions in a while.
• 40:33
  Speaker 2: Because there are quite a few abouts. Did you have
• 40:35
  Speaker 2: private credits, did you have private equity?
• 40:37
  Speaker 1: How should you hold infrastructure inside your portfolio? And the
• 40:40
  Speaker 1: answer I would say from all of us is with
• 40:42
  Speaker 1: extreme care, Sebastian nodding, with extreme care. You know, we
• 40:47
  Speaker 1: feel very strongly, John and I will I do anyway
• 40:49
  Speaker 1: that if you're going to hold pretty much any asset,
• 40:53
  Speaker 1: you should hold it in the most transparent way way possible,
• 40:56
  Speaker 1: Which is why we are those great fans of the
• 40:58
  Speaker 1: listed markets over the private mind. Because you want to
• 41:00
  Speaker 1: be able to trade something, you want to be able
• 41:02
  Speaker 1: to understand it, you want to be able to talk
• 41:04
  Speaker 1: to the directors all these things, and you can do
• 41:06
  Speaker 1: that and listed markets in a very different way. And
• 41:08
  Speaker 1: of course listed markets react much more quickly, so that
• 41:11
  Speaker 1: that covers pretty much all of those anything else. From
• 41:14
  Speaker 1: the floor, there were a couple at the back there.
• 41:16
  Speaker 9: I think, thank you, Hi Field job, thank you for this,
• 41:21
  Speaker 9: and just wanted to ask, if you assume a new
• 41:25
  Speaker 9: investor no equity exposure to begin with, very young, and
• 41:30
  Speaker 9: they were looking at having a split of UK and
• 41:34
  Speaker 9: American ETF, how would you think about framing the question
• 41:39
  Speaker 9: of do you hedge the US ETF back into pound
• 41:46
  Speaker 9: sterling or do you just leave it in American dollars
• 41:50
  Speaker 9: to roll up in that US side of the investments.
• 41:54
  Speaker 1: I think you're going to make your life far too
• 41:56
  Speaker 1: complicated by even thinking about that. When you invest in
• 41:59
  Speaker 1: a country, you take the car do risk at the
• 42:00
  Speaker 1: same time there they come as a package. So I
• 42:04
  Speaker 1: would never begin to start trying to, particularly in a
• 42:07
  Speaker 1: small young portfolio, to start trying to hedge that away.
• 42:10
  Speaker 1: But maybe the others have a different view.
• 42:13
  Speaker 3: I don't at all.
• 42:14
  Speaker 8: No.
• 42:14
  Speaker 5: I think the four X exposures is one of those
• 42:16
  Speaker 5: things that goes into the buffet too hard bucket and
• 42:20
  Speaker 5: if you are, by and part and also part of
• 42:22
  Speaker 5: the benefit of investment overseas is you do get that diversity.
• 42:27
  Speaker 5: So you know, you get the dollar as well as
• 42:29
  Speaker 5: the pound exposure, and you know often the dollar or
• 42:33
  Speaker 5: so often in recent years, you know, having dollar exposures
• 42:36
  Speaker 5: been a good thing for stelling investor. At some point
• 42:39
  Speaker 5: it probably wouldn't be the best thing, but it's not
• 42:41
  Speaker 5: something they worry about on top of all the other
• 42:43
  Speaker 5: things that go into choosing that in the first place.
• 42:46
  Speaker 1: We have run out of time, but I'm still going
• 42:48
  Speaker 1: to take another question to see because I don't think we've.
• 42:50
  Speaker 2: Done quite enough on the back here. Thank you.
• 42:54
  Speaker 1: There is a question, by the way, and here about
• 42:57
  Speaker 1: do you have any thoughts on the upcoming SpaceX ipo
• 42:59
  Speaker 1: and we'll this lead to Tesla merging with SpaceX down
• 43:02
  Speaker 1: the road. Now, I'm not going to answer that one
• 43:05
  Speaker 1: because Cassy Word has answered it for us, and you
• 43:09
  Speaker 1: can listen to my podcast with her on Monday and
• 43:12
  Speaker 1: you can hear the answer to that.
• 43:13
  Speaker 2: I'm not going to tell you, so you will listen
• 43:15
  Speaker 2: to the podcast.
• 43:16
  Speaker 10: Question So, prior to the events in the Middle East,
• 43:19
  Speaker 10: obviously one of the dominant conversations in the in the
• 43:21
  Speaker 10: markets was around cracks and private credit and elevated valuations
• 43:25
  Speaker 10: in sort of AI boom equities, And in one of
• 43:28
  Speaker 10: your recent podcasts there was sort of a conversation about
• 43:30
  Speaker 10: a potential catastrophic event pulling the rug under those valuations
• 43:34
  Speaker 10: in AI equities and you know, potential inflationary impact and downstream.
• 43:38
  Speaker 10: Do you see a prolonged situation of conflict in the
• 43:42
  Speaker 10: Middle East as one of those potential scenarios causing a
• 43:45
  Speaker 10: crash in those you know, and an adjustment in those equities.
• 43:49
  Speaker 2: Yeah, I mean, it easily could be.
• 43:50
  Speaker 1: And that's the thing with any any kind of any
• 43:52
  Speaker 1: kind of bubble level of valuation. You don't know, you
• 43:55
  Speaker 1: never know what it's going to be, but it's going
• 43:57
  Speaker 1: to be something, So yes, that could be it. But again,
• 44:00
  Speaker 1: I got to listen to Kathy because we talk about
• 44:02
  Speaker 1: that quite a lot in the podcast with her about what.
• 44:04
  Speaker 2: It might be. But of course she doesn't believe it
• 44:06
  Speaker 2: will be anything.
• 44:06
  Speaker 1: She believes that all those stocks will grow into their
• 44:09
  Speaker 1: evaluations over the next few years and this this won't happen,
• 44:11
  Speaker 1: but that that very rarely happens.
• 44:13
  Speaker 2: That's very rarely. The answer to over priced stocks. The
• 44:15
  Speaker 2: answer is is usually that they fall.
• 44:18
  Speaker 1: Anything to add to that, John or Mollana No.
• 44:22
  Speaker 5: I think, yeah, yeah, the one thing I see the
• 44:26
  Speaker 5: private schedit thing, and this is something I'm curious about
• 44:28
  Speaker 5: him when the audience is an expert on this and
• 44:30
  Speaker 5: do police come up with the chatters after? But I
• 44:33
  Speaker 5: still don't quite see because some people have mentioned that
• 44:35
  Speaker 5: would have been kind of like two thousand and eight,
• 44:37
  Speaker 5: two and seven, and that always kind of, you know,
• 44:40
  Speaker 5: raises a lot on bells because obviously two thousand and
• 44:41
  Speaker 5: eight was pretty charastrophic. But I don't quite see yet
• 44:44
  Speaker 5: how we get from sure a lot of these things
• 44:47
  Speaker 5: could go bad, or how do we get from that
• 44:50
  Speaker 5: to infect in the entire financial system. I believe there
• 44:53
  Speaker 5: is a sort of like insurance and go there. Even then,
• 44:56
  Speaker 5: I'm still struggling to see exactly how that goes to,
• 44:59
  Speaker 5: you know, not being able to get cash out your ATM,
• 45:01
  Speaker 5: you know, one Friday kind of morning. Yeah, I was
• 45:04
  Speaker 5: just if anyone thinks they wanted that one, then please come.
• 45:08
  Speaker 2: Up to me.
• 45:08
  Speaker 1: Okay, I'm going to allow one more question, but please,
• 45:11
  Speaker 1: can it be something to which we can answer in
• 45:13
  Speaker 1: an upbeat manner, because I want to finish this on
• 45:16
  Speaker 1: an up. We finished every session on a low. You
• 45:17
  Speaker 1: look like a happy person.
• 45:19
  Speaker 2: Go for it.
• 45:23
  Speaker 8: Change What one policy change could a UK government do
• 45:27
  Speaker 8: that would turbo charge our economy?
• 45:30
  Speaker 2: You can't sol on that zero that's on net zero.
• 45:36
  Speaker 6: If you're talking about the housing market, i'mus like, get
• 45:38
  Speaker 6: her of stamp duty?
• 45:40
  Speaker 2: Great one.
• 45:40
  Speaker 5: I can't believe you both took my man options next
• 45:43
  Speaker 5: zero stamp duty?
• 45:45
  Speaker 3: Yeah?
• 45:46
  Speaker 5: No, God, that is a really good one, don't. That's
• 45:49
  Speaker 5: a kill off for these marginal tax rates. That's the
• 45:51
  Speaker 5: other irritating one. So like when somebody turns over a
• 45:55
  Speaker 5: hundred ground, they immediately jump up to a.
• 45:57
  Speaker 3: Six percent tax rate.
• 46:00
  Speaker 5: And also and that the other said as well, because
• 46:02
  Speaker 5: whenever your own benefits, if you get a job, or
• 46:04
  Speaker 5: you get a job going over a certain nobody else,
• 46:06
  Speaker 5: you get a similarly in seeing marginal tax right and
• 46:09
  Speaker 5: whether you know and know that, people say, oh you're
• 46:11
  Speaker 5: still getting for what ep, you're still getting there, You're
• 46:13
  Speaker 5: still get a bit more money.
• 46:14
  Speaker 3: It's not.
• 46:15
  Speaker 5: It definitely holds people back and spoken to people that
• 46:17
  Speaker 5: can have both ends the spectrum who are put off
• 46:20
  Speaker 5: extras by those marginal tax so get rid of them.
• 46:23
  Speaker 5: I think it would be really helpful.
• 46:25
  Speaker 1: Okay, so counselor a lot of taxes, sort out the
• 46:27
  Speaker 1: tax system.
• 46:28
  Speaker 2: Get rid of that zero, make life cheaper.
• 46:30
  Speaker 1: Okay, that's thank you for that question that I think
• 46:33
  Speaker 1: those answers were quite positive. None of these things are
• 46:37
  Speaker 1: going to happen, of course, but you know there you go, right,
• 46:40
  Speaker 1: So do you listen to the podcast. Do read John's
• 46:44
  Speaker 1: newsletter Money to Build award winning. Do read my newsletter
• 46:47
  Speaker 1: out on Saturdays. Do read the Markets Today Blog Mona
• 46:52
  Speaker 1: and enjoy them all. I hope, and thank you so
• 46:54
  Speaker 1: much for coming this evening. You've been a really good
• 46:56
  Speaker 1: audience and we will be hanging around to answer more questions,
• 46:58
  Speaker 1: and so will our other panel.
• 47:00
  Speaker 2: So thank you all.
• 47:06
  Speaker 1: Thanks for listening to this week's Marin Talk to Your Money.
• 47:08
  Speaker 1: If you like our show, rate review and subscribe wherever
• 47:11
  Speaker 1: you listen to podcasts. Also be sure to follow me
• 47:14
  Speaker 1: in John on ex or Twitter at marinas w and
• 47:16
  Speaker 1: John Underscore Steppek. This episode was produced by Someasadi and Moses,
• 47:20
  Speaker 1: and questions and comments on this show and all those
• 47:22
  Speaker 1: shows are always welcome. Our show email is Merrin Money
• 47:25
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• 47:29
  Speaker 1: special thanks of course to Paula Steele.