Latest / Bassline by Cavendish Ware / Episode 9 - Advice for the Young

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Episode 9 - Advice for the Young · Bassline by Cavendish Ware

0:00
Speaker: On today's podcast, we're trying something a little different.
0:03
Speaker: Dave Wallace's daughter Tilly will be on the show talking with Jack Williams, a senior consultant at Cavendish, where we call this one Advice for the Young.
0:13
Speaker: Here on Baseline.
0:18
Tilly: From the studios of NMD Plus comes Baseline.
0:30
Speaker 3: Baseline brought to you by Cabinet Wealth, a UK-based particular wealth management fund that provides truth to both advice.
0:40
Speaker 3: Cabinet wealth alive.
0:47
Jack: Do you want to just tell me a rough overview of your position?
0:50
Jack: I suppose probably the best place to start, and then what is on your horizon, what you're sort of working towards, and we can just go from there?
0:56
Tilly: Okay, so basically, like currently I have like a little business.
1:01
Tilly: I've currently now set up another business with of some other people.
1:06
Tilly: So I've got two technically the director of two businesses now.
1:11
Tilly: And I'm at a point where I want to obviously save money for I'm looking this weekend actually into like financing a car, and I want to save money to move out.
1:24
Tilly: And I'm not making, you know, a large amount of money, but enough where I want to put some money in my savings and I want to know what to do with my money.
1:32
Tilly: So that's currently where I'm at.
1:34
Tilly: And then in terms of on the horizon, sort of touched on it, I'm trying to like expand two businesses, grow two businesses, and I'm also wanting to aim towards basically just the end goal, is which I think most people are buying a house and moving out and whatnot.
1:50
Tilly: So that's like sort of the end goal.
1:52
Tilly: That's a really condensed version of that.
1:55
Tilly: So I'm not sure if that's enough details for you.
1:58
Jack: But that's a good starting place.
1:59
Jack: So tell me more about the businesses.
2:00
Jack: What are the businesses and how's it work?
2:02
Tilly: So I've got my own little business, and that's just me.
2:05
Tilly: I'm running other businesses' social media accounts.
2:10
Speaker 4: Okay.
2:10
Tilly: And then my second business that I've now set up, I've set that up with two other guys.
2:15
Tilly: And we do just content creation, social media management as a whole.
2:20
Tilly: So whereas mine's a bit more like running the accounts and whatnot with them, we're doing like everything to do with content creation, social media management, everything.
2:30
Tilly: They're both basically very similar businesses, just ones with your own thing and one day.
2:34
Tilly: Exactly.
2:36
Tilly: Exactly.
2:37
Jack: Got you.
2:37
Jack: Okay, fine.
2:38
Jack: So that's all very interesting.
2:39
Jack: Really, then it sounds like you're spinning a couple of plates, you're trying to grow businesses, but build your wealth behind the scenes, working towards building your financial picture behind the scenes, basically.
2:50
Speaker 4: Yeah.
2:50
Speaker 4: Yeah.
2:51
Jack: So with building up savings, building up wealth, you know, from surplus income or whatever it may be.
2:58
Speaker 5: Yeah.
2:58
Jack: There's got to be a context behind everything you're doing.
3:00
Jack: Because ultimately, why save if you've got no reason to save?
3:04
Jack: So you're clearly your reason to save is right, well, short term, I want to buy a place.
3:08
Jack: So you want to get on the property ladder, whatever that may be, house flat, whatever it may be.
3:12
Jack: So the best thing to do is really get an understanding of time scales for these things because ultimately, if you turn around and say, look, surplus income, which I can save, fantastic.
3:20
Jack: That can be high, low, whatever it may be.
3:22
Speaker 5: Yeah.
3:23
Jack: The timescales linked to that.
3:24
Jack: Say, well, I want to move out within two years.
3:26
Jack: Well, that's great, brilliant.
3:27
Jack: Okay.
3:28
Jack: So what do you need to save in the next two years to get your deposit and fees, etc.
3:32
Jack: Yeah, yeah.
3:32
Jack: Hopefully, stamp duty won't be a thing by the time you're buying, but who knows?
3:35
Tilly: God, yeah, don't even get me started on stamp duty.
3:39
Jack: Well, me and my wife bought this place three years ago, and the stamp duty was 15,000 pounds.
3:45
Jack: And it was just like, oh my God, you know, and you think, Christ, I just want to move house.
3:50
Jack: I don't want to, you know, mortgage a bloody stamp duty.
3:53
Tilly: People always forget about, isn't it, when they do something.
3:56
Jack: Well, this is it.
3:56
Jack: This is it.
3:57
Jack: You know, I sort of knew it was on the horizon, but yeah, I didn't really know about the stamp duty coming.
4:01
Jack: We were like, oh my goodness me.
4:03
Jack: But you just got to do it.
4:04
Jack: So hopefully that won't be much of a problem for you in a few years, but we'll see what happens with that.
4:07
Jack: Um, you've got these things to think about.
4:10
Jack: But if you're thinking, well, look, what's the time scales linked to this sort of goal that you're working towards?
4:14
Jack: Yeah.
4:15
Jack: I think that's a bit cringy, but that this is the goals in the short term.
4:19
Jack: So what are your plans for buying?
4:21
Jack: Have you earmarked a date or a time scale, or you just what have got it open in your mind?
4:27
Tilly: It's very open in my mind because ideally, what I will be doing in the next six months, I'm hoping to just like rent a place with my boyfriend, hopefully, in like the next six months or so.
4:38
Tilly: So obviously, you know, I want to then eventually hopefully buy a house with him, but you know, that not putting pressure on that.
4:45
Tilly: But um, it wouldn't be for a few years because it's quite a big commitment as well, buying someone like that.
4:51
Tilly: So, I mean, realistically, what I need now is it's all good and well me saving, but the money that I'm saving, it's just being wasted, sat in my bank account with like the shittest like exactly.
5:06
Tilly: So, I think ideally, you know, I'd be happy to buy a house in like early 30s if it came down.
5:13
Tilly: You do know what I mean?
5:14
Tilly: Like, I'm not putting pressure on myself in that sense.
5:16
Tilly: I just want to have the money I'm saving.
5:20
Tilly: I want to see it grow.
5:22
Speaker 4: Yeah, yeah.
5:23
Tilly: So that when I'm like, right, I'm ready to commit to buying a house, I can be like, right, I've got the money there and I can feel relaxed.
5:29
Tilly: And I know that that money that I'm investing or whatever, I know that that money is slowly but surely it's growing rather than just being wasted and almost losing value in my bank account, if you see what I'm saying.
5:40
Jack: Totally understand.
5:41
Jack: There's sort of two key things, I think, really.
5:43
Jack: So timescale one is a big thing because if you're looking to effectively buy or if you're effectively looking to use a lump of savings, what format is be it cash or investments, yeah, you're looking to use that within two to three years to buy a house or deploy on some business or whatever, really that money shouldn't be invested.
6:02
Jack: And the reason for that is because two to three years is not really long enough.
6:07
Speaker 5: Yeah.
6:07
Jack: If there is a market shock event or a hugely volatile period, the end of that two to three years, yeah, yeah, yeah.
6:13
Jack: Let's say you invested 100,000 and it grew each year, and then just before you needed it, it COVID event, something like that happens, and all of a sudden you're down to 75,000.
6:23
Jack: You're like, oh yeah, I needed that 100,000 at least.
6:26
Jack: And then the growth was decream, you know?
6:28
Jack: Yeah, yeah.
6:28
Jack: So if you're looking at two to three years, actually, really, investing is probably not a good place to be.
6:32
Jack: Cash savings is the right thing to do, but obviously doing something productive with that cash saving.
6:38
Jack: So, you know, is it in the best rate it can be?
6:40
Jack: And is it in the best tax wrapper?
6:42
Jack: So the word tax wrapper effectively means is it in ISIS or instant access or that sort of thing.
6:46
Jack: So if your time scales are, I'm not putting time scales, you know, not putting words in your mouth, but if you said two years, two to three years is when you and your boyfriend are looking to buy, investing the money is not the right way to go.
6:57
Speaker 5: Yeah.
6:58
Jack: Because the last thing I would want to happen is for you to lose some of that just when you need it.
7:01
Speaker 5: Yeah.
7:01
Jack: If you're looking at cash, so well, cash ices are the place to start.
7:05
Jack: So because cash ices are they grow tax-free, fantastic vehicles to run alongside things like pensions and stuff throughout your life.
7:13
Speaker 5: Yeah.
7:14
Jack: But they're great vehicles to have.
7:15
Jack: But there's one downside to them, which means you can only contribute 20,000 a year into an ISA.
7:19
Jack: So you can only have one per person.
7:21
Jack: So you and your boyfriend can have one each, and you can effectively put in 40k a year into those ICEs in total.
7:26
Speaker 5: Yeah.
7:27
Jack: So that's a good place to start with your surplus income straight into ICEs.
7:31
Jack: Beyond that, you're just looking at instant access savings and that sort of thing.
7:35
Jack: And the interest is absolutely pony, but it's getting better because obviously rates are going up.
7:42
Jack: So for savers, actually, you know, it's going in the right direction.
7:45
Jack: But obviously, when you then look to get a mortgage and borrow, hopefully interest rates would come down a bit because interest rates are going in the wrong direction for borrowers.
7:52
Jack: So that might not be necessarily the good news because obviously you know that your cash isn't really going to grow that much and inflation will eat it a bit, but it's just the sensible thing to do.
8:01
Speaker 5: Yeah.
8:02
Jack: It's really not worth investing, even if it is in something that is considered to be lower risk, it's just not worth doing, especially for something like buying a property.
8:11
Jack: It's such a big sort of financial milestone that you just balls it up by you know investments going a bit hay.
8:17
Jack: So that's what I would say for that.
8:18
Jack: But what I actually say is the key thing, so the second point really actually is understanding what do you need to tuck away, what do you need to have to sort of get you to the line to buy this property.
8:30
Jack: So to understand that, really, you've got to have a good understanding of what is the price of the property we're looking at, what's our price point, what property actually do we want, how much is your budget, you know, that sort of thing.
8:39
Jack: So for that, you've got to take into account income, you've got to think, well, yeah, exactly how much deposit do we want to put down, all those sorts of things.
8:45
Jack: And once you've got a handle on that, it doesn't have to be exact.
8:48
Jack: Once you've got a good feeling for what you're looking to buy and how much you need to then contribute, because obviously 10% is a minimum.
8:55
Jack: Well, it is at the moment, who knows what it'll be in a couple of years, but 10% is minimum.
8:58
Jack: So, you know, you might say, well, actually, let's try and put 20% down or 25% or 30% to get that lower loan to value, so your interest rates are less.
9:06
Jack: So you want to be thinking about those sorts of things, and then also further cash tucking aside for your stamp duty, your fees, your moving costs, all of these.
9:14
Tilly: It's so expensive.
9:15
Jack: But I'm sure um I'm sure Dave will help without doubt.
9:18
Jack: He's on mute and I can't see him, so he's probably either furiously shaking his head or nodding.
9:22
Jack: I don't know.
9:23
Speaker 4: Oh, here we go.
9:24
Jack: Oh, thank you.
9:26
Jack: So these are things to think about.
9:28
Jack: What it would be worth doing, and it's probably a conversation to have over a glass of wine with your boyfriend, is thinking, well, look, what does the property you want to buy look like?
9:36
Jack: So you've got a handle, a rough handle on time scales.
9:38
Jack: We're thinking maybe two to three years, maybe.
9:40
Jack: So that's great.
9:41
Jack: So we know really that our money needs to go down more of the cash savings routes into things like ISIS and so on.
9:46
Jack: So that's great.
9:47
Jack: But actually, how much do we need to save?
9:50
Jack: How much really do we need to be putting away each month and break it down to a monthly figure?
9:54
Jack: Because if you can do that, you can see it's steps, it's achievable.
9:57
Jack: You can stay on target.
9:58
Jack: If you're doing things annually, I work with clients on who are at who are retired, at the point of retirement, working towards retirement, you know, similar stages to life as me and you, whatever it may be.
10:09
Jack: And actually always break things down to a monthly figure.
10:12
Jack: It keeps the mind focused on what you're working towards, and you can see steps, you're working towards it.
10:16
Jack: If you do things annually, it just becomes a bit woolly, you know?
10:19
Speaker 4: Yeah.
10:19
Jack: So think of what do we need to put away each month, what do we need to get there, how much do we think our fees might be?
10:24
Jack: How much do we need to put down as a deposit?
10:26
Jack: All of that sort of stuff.
10:27
Jack: How much can we actually afford to borrow?
10:29
Jack: But obviously, that will be based on your salaries now.
10:32
Jack: In two, three years' time, your salaries will hopefully be bigger.
10:36
Speaker 4: So just touch wood, just getting a handle on these things.
10:41
Jack: So I think a really good place to start, and it sounds silly, but a good place to start is yeah, like I said, have a chat with your boyfriend, figure out what do we want to buy and how much do we, you know, what do we think our budget is.
10:52
Jack: Do one of those online mortgage calculators.
10:54
Jack: I did one when we looked to buy this place a few years ago.
10:56
Jack: I think it was a HSPC or a Santander one.
10:59
Jack: Yeah, they're pretty good, to be fair.
11:00
Jack: They're pretty good.
11:01
Jack: And that'll give you a handle on sort of, yeah, what can our income actually get from a mortgage point of view?
11:05
Jack: And yeah, mortgages are a bit bonkers at the minute.
11:08
Jack: You've probably seen all the stuff in the news about thousand mortgage products taken off the market yesterday or something like that.
11:13
Jack: Have a look at what you think you might be able to borrow, and then yeah, get a good handle on what you actually want to save in these next couple of years, and then break that down.
11:21
Jack: What do we need to do each month?
11:23
Jack: Yeah, that is the real key planning behind your obvious milestone in buying the place.
11:28
Jack: That's the key plan is actually figuring out what do we need to save each month based on time scales.
11:33
Jack: It's fairly simple.
11:34
Jack: Cash ICEs, that sort of stuff.
11:36
Tilly: Just put it into ICEs.
11:38
Jack: Absolutely.
11:38
Jack: So who do you bank with your bank account with?
11:41
Tilly: HSBC.
11:42
Jack: Okay, so if you want to keep things simple and easy and have it all in one place, all on one app, you can speak to HSBC and ask them what their cash ICEs are.
11:49
Jack: So instant access, you want instant access because you want to be able to save into it monthly.
11:52
Jack: Yeah.
11:52
Speaker 4: Okay.
11:53
Jack: Why are there instant access cash ICE rates?
11:55
Jack: But if you're pretty happy with online stuff, then go on things like money supermarket or whatever, and you'll get a chart of all the best instant access cash ICEs currently.
12:03
Speaker 5: Oh, perfect.
12:04
Jack: A few of them up there at the minute from when I looked a month ago, but banks and bills sites at Marcus is doing pretty well.
12:09
Jack: Marcus is like an offshoot of I think it was Goldman Sachs or one of those sorts of things.
12:12
Jack: They might even be in the butt they had a pretty good internet access.
12:15
Jack: So have a look on there and it'll tell you the best one.
12:17
Jack: And if you're happy, you can just open them up online and just each month transfer money from your bank accounts.
12:21
Tilly: Okay.
12:22
Tilly: I know there's so many different variables and whatnot, but as a general rule of thumb, like how much percentage of my income monthly do you think I should be aiming to put into savings?
12:34
Tilly: I know obviously it's different because I've got a goal of buying a house, so I might be wanting to put a little bit more in, but like just as a general rule of thumb, if you see what I mean.
12:41
Tilly: Like, is there a percentage you sort of recommend putting into an ice or into a savings?
12:47
Jack: So there is a never-ending number of different ways you can do it.
12:50
Jack: A good place to start, and this is totally down to what you can actually afford because ultimately you've got to live, you know.
12:55
Jack: There's an element of that, but there's, you know, I've heard people say save half, spend half.
13:01
Jack: I've heard people say save a third for long term, save a third for short term, and spend a third.
13:05
Jack: Again, it's what can you afford?
13:07
Jack: So what is surplus?
13:08
Jack: So, you know, so at the minute you're not renting, but you're gonna look to rent, yeah.
13:12
Tilly: I'm gonna look to rent, yeah, yeah, yeah.
13:13
Jack: So so at the minute you're at home, so you've hopefully got probably almost the best surplus income you've ever had because you've got no living expenses where it comes to like paying for a place to live, right?
13:23
Tilly: Yeah, I'm living with Dave at the moment.
13:24
Jack: So hopefully he's not charging you too high a rent.
13:26
Tilly: It's very reasonable.
13:28
Jack: I hope so.
13:28
Jack: If you've got a good amount of surplus income because a lot of your income isn't being spent on things like rental mortgages, then actually now's the best time to save as much as you can.
13:35
Jack: When you start renting, obviously your expenditure is going to go up a little bit.
13:39
Jack: So you'll probably find that surplus income might shrink and therefore you can save a bit less.
13:44
Speaker 5: Yeah.
13:44
Jack: But a good thing to do, and actually, I can send you this document, is actually break down your expenditure.
13:50
Jack: So, what are you spending your money on?
13:51
Jack: And this isn't an exercise to turn around and look at what you're spending and sort of like beat yourself up here.
13:55
Jack: Why am I spending this much money on coffee every morning or whatever?
13:58
Jack: Yeah, it's to basically get you know a good feel for what am I spending my money on?
14:03
Jack: Where is it going?
14:04
Jack: What should it be going on, and what do I have left?
14:06
Jack: And therefore, what I've got left, what can I do with this?
14:09
Jack: Is this money that is the short-term saving for the house or something else?
14:13
Jack: So an exercise of reviewing your expense should be worthwhile to sort of get a good feel for what you can save because ultimately, yeah, I could tell you much say, Well, you want to save 25% of your income, but yeah, it's so relative to your situation.
14:25
Tilly: Oh, yeah, of course, of course.
14:26
Jack: It's completely dependent on what you've got left.
14:28
Jack: So, as a percentage of your income, what do you have left each month?
14:33
Jack: Do you have like 20, 30, 40%, less than that, more than that?
14:36
Jack: Do you even know?
14:37
Jack: I mean, you don't have to know.
14:39
Tilly: I've basically been trying to mess around with it a bit after all my like bills and whatnot, like going out each month.
14:45
Tilly: I'll try and sort of say, right, you've got £100 a week to spend.
14:50
Tilly: And then I'll put that £100 at the start of a week into a revolute account.
14:55
Tilly: So it's completely separate.
14:56
Tilly: And then whatever I have left over after that, because I'll have a bit left over, then I'll put into my savings.
15:02
Tilly: And I've been trying to sort of do it that way around.
15:04
Tilly: So I actually don't know like percentage-wise, how much that is.
15:08
Jack: So it actually sounds like you're quite efficient with it, to be fair.
15:11
Jack: What you've done there actually reminds me of someone who I used to work with.
15:14
Jack: They used to budget in a similar way, where actually they receive their income at the end of the month.
15:19
Jack: And then what they would do is they say, right, I'll budget for X amount of pounds a week, and they'd actually draw that out in cash and have that, which is a bit old school now.
15:27
Jack: I mean, whoever has cash, I don't know.
15:29
Jack: Say, right, I'm living off that cash for this week, and that might be 100, 200, whatever it is.
15:33
Jack: Yeah.
15:33
Jack: Then everything left is going on.
15:36
Jack: You sort of have to pay mobile phone, car insurance, whatever.
15:39
Jack: Yeah, yeah.
15:40
Jack: But then everything on top of that is your surplus, is your savings.
15:43
Jack: So what you're actually doing already is really quite good.
15:46
Jack: Definitely going the right direction.
15:47
Jack: Something that a lot of people do, which would never hurt, is they just have everyone I talk to has their own budget spreadsheet.
15:53
Jack: So, you know, they've put together any sort of cash flow where they're looking at what's coming in, what's going out, what can I save, and where does that money need to go?
16:00
Jack: That might be something worth having a look at.
16:02
Jack: But actually, what you're doing is very sensible.
16:04
Jack: It's really the right track.
16:06
Jack: It's figuring out a sort of system.
16:07
Jack: So what comes in and where does it go and how do you spend it?
16:10
Jack: But then making sure that the amounts are right.
16:12
Jack: So it's reviewing every time do I actually, you know, am I spending enough or have I not got enough?
16:18
Speaker 5: Yeah.
16:18
Jack: Basically, just keeping an ongoing tab on that.
16:20
Jack: But yeah, what you're doing there is absolutely sensible, right thing to do.
16:24
Speaker 5: Okay.
16:24
Jack: How's your boyfriend doing it?
16:26
Jack: Is he doing a similar sort of thing?
16:27
Tilly: Is he as focused on it as you or we talk about money, but not like that.
16:32
Tilly: But he's also set because he's an osteopath, but he's like self-employed.
16:36
Tilly: So I don't really know how he does it, but he's very good with his money.
16:39
Tilly: Actually, weirdly, my dad actually had a sort of similar chat with him about money for a thing that he was doing.
16:45
Tilly: He wasn't just being like a psycho dad asking him about how good he is.
16:49
Jack: You weren't just like at the front door with a baseball bat saying, right?
16:51
Jack: What you think of the money?
16:53
Tilly: He wasn't, it sounds weird, but it was for work.
16:55
Tilly: But I think my dad actually weirdly knows a bit more about what he's like than I do.
17:00
Speaker 1: No, no, no.
17:01
Speaker 1: He's seeing me, okay.
17:03
Speaker 1: Yeah, yeah, we can see you.
17:04
Speaker 1: No, he's very sensible.
17:06
Speaker 1: He is basically putting money into a Barclays Sabres account.
17:11
Speaker 1: So yeah, he's on the pulse in terms of doing this.
17:14
Speaker 1: Jack, one of the questions I guess is is it worth Tilly and him having a conversation about uh you know, actually together, then he was to buy a house together, then sort of starting to plan that now.
17:28
Jack: Yeah, totally.
17:28
Jack: I completely agree.
17:29
Jack: I think obviously you've got a real good hand on what you're doing, Tilly, which is great.
17:33
Jack: What's your boyfriend's name?
17:34
Tilly: Sorry, Nathan.
17:36
Jack: Nathan, so I'm sure Nathan's doing similar stuff by the sounds, which is great.
17:39
Jack: Yeah, but obviously you're buying this house together, so uh it sounds silly, but I would say totally now you both want these changes which are right.
17:45
Jack: This is how much we can obviously he's self-employed, so his income's gonna be a bit more fluctuation.
17:49
Jack: Well, actually, to be fair, so are you.
17:51
Jack: Yeah, income's gonna fluctuate.
17:53
Jack: So that is what it is.
17:54
Jack: But I think you totally need to be sitting down together and saying, how structured can we make our savings plan?
17:59
Jack: So you're doing this.
18:00
Jack: I'm doing this, so the total amount equates to what we need.
18:03
Jack: Yeah, but then when obviously when you actually have the place and you're thinking, right, well, we've got mortgages, we've got home insurances, we've got gas and electric, water, sewage, all that sort of stuff coming out, and it goes out, believe me.
18:14
Jack: Um they don't give you any charity these places.
18:18
Jack: So if you're in that position, that's when you say, right, look, well, we want to be setting up a joint bank account for all our bills.
18:24
Jack: We might want to have a joint bank account for all of our joint spending, and then you might have your sole bank accounts for your salaries and all the other stuff you don't want the other person to know about.
18:32
Jack: So now is a perfect time to start having conversations with Nathan and start thinking, what do we need to set up and get running?
18:39
Jack: You don't need to have joint savings accounts for the house, but actually, again, having a joint savings, obviously have individual license to start with, but if you want to have joint savings to help again focus the mind a bit more because ultimately you can see what you can see, you can't see his stuff unless he tells you, and vice versa.
18:55
Jack: So having joint stuff can also help.
18:57
Jack: You say, right, our goal is 50k.
19:00
Jack: Yeah, you've got joint stuff, you can see yourself working towards it.
19:03
Jack: And it sounds silly, but a lot of this is finance, but a lot of this is psychological.
19:06
Jack: If you can see yourself getting towards it, spurs you on to maybe save a bit more.
19:10
Jack: Or yeah, I think back to when me and Robert bought our first place a few years ago.
19:14
Jack: We were, you know, we sacrificed a lot to buy and save our deposit and stuff.
19:18
Speaker 5: Yeah, yeah.
19:19
Jack: Actually, that because we had that figure in mind what we needed and we knew what it was, and everything was in joint names, it spurred us on to get it's totally worth you know having that conversation with Nathan now and sitting down and thinking, right, what can we pull it?
19:32
Jack: Can we pull everything together?
19:33
Jack: Yeah, make it a bit more streamlined and easy, but it will just help you get over the line.
19:38
Speaker 5: Yeah, cool.
19:39
Jack: And if you want to jump on a call with me, you and Nathan and chat, then by all means, let's do that.
19:43
Tilly: Well, thank you.
19:44
Tilly: Just one last question.
19:45
Tilly: So, just in terms of like buying, because I was wanting to buy just some stocks or like funds or whatnot.
19:54
Tilly: Yeah, just not much because I want to just try and dip my toe into everything.
19:59
Tilly: Yeah, don't worry.
20:00
Tilly: Do you think it's not worth me doing that?
20:03
Tilly: I'm not looking at it as a massive investment, to be honest, because realistically, it's not like I'll be that be putting like thousands of pounds into it.
20:12
Jack: It's never not worth investing, right?
20:15
Jack: Yeah, what you've got to do is make sure that you're portioning the right money to the right places.
20:19
Jack: And again, it all comes down to that context of well, if I did do this, why am I doing it in the first place?
20:24
Jack: So for you, it sounds like this sort of investment part from what you're saying is almost a bit of a, Dave, you may have heard Adrian say it at some point, a bit of a play-doh pot, it's what we call it.
20:33
Jack: So it's basically a bit of not fun, but a bit of a side thing that you're just doing for the sake of, well, can I make a bit more?
20:39
Jack: You know, yeah.
20:40
Jack: Just sort of fun, but not really, if you know what I mean.
20:42
Jack: Play play-doh, you know, not but your side money.
20:46
Jack: So absolutely, you know, again, it comes down to the thing where if you and Nathan feel you're well on track and you've got a good plan and it's very achievable, and you still have got this bit spare, you never want to spend that spare money on beer or whatever, then yeah, totally.
20:58
Jack: Do I want to buy a few shares in a company or like, or do I want to just invest in a few, you know, well-known funds or whatever?
21:05
Jack: You know, definitely.
21:06
Jack: It's all part, I mean, it sounds silly, but it's all part of uh your sort of your financial experience and education.
21:11
Jack: So your investment history, right?
21:12
Jack: So thinking about proper investing, have you got any experience?
21:15
Jack: So, what's your first experience in investing?
21:18
Tilly: Zero.
21:19
Jack: Zero.
21:19
Jack: Okay.
21:20
Jack: Having a bit of money on the side and just playing around with these things is not a bad idea.
21:24
Jack: You know, you can open up these online dealing accounts or online, you know, wrappers and just have a little play around with, but totally only put money in it that you're prepared to lose.
21:34
Speaker 3: To lose, yeah.
21:34
Jack: Not that you're gonna lose it, but just be hope for the best, prepare for the worst, sort of thing.
21:39
Jack: Which it sounds like, as a financial advisor, tell people that when it comes to investing, is a terribly unprofessional thing to say.
21:44
Jack: But on the side, if you're just doing a bit and you're controlling it yourself and you're just dabbling, yeah, don't invest any money that you're not prepared to lose.
21:51
Jack: Yeah.
21:52
Speaker 5: Yeah.
21:52
Jack: But it might be that you're just doing a 50 quid a month or 100 quid a month and you're just, you know, doing that, and it's totally on the side of what you're doing.
21:58
Jack: And actually, when you come to buy, You think, funnily enough, this is done okay.
22:02
Jack: This could be our furniture set or whatever, or you might just keep rolling on and on.
22:06
Jack: But that could be a personal introduction.
22:08
Jack: The other thing you need to consider as well for investing, it's never too early to start thinking about it is pensions.
22:13
Jack: For me and you, pensions are way off into the future, right?
22:16
Jack: So we can't even access them until 57 at the earliest.
22:19
Jack: It'll probably be later than that by the time we get there.
22:22
Speaker 4: Yeah.
22:22
Jack: But your pensions are invested, okay?
22:24
Jack: So you've got two businesses, right?
22:26
Jack: So if you're employed like me, you'd have a company pension, and you and your company would pay into it.
22:31
Jack: It would be invested.
22:32
Jack: And if you're at a company for years, or if you're at a few companies for years, over the years that builds up and up and up.
22:37
Jack: And then when you get to the point where you're going to walk away from work, that's what you live on, or part of what you live on, right?
22:42
Jack: So the earlier you start doing that, and the earlier it's invested, and the earlier it grows, and you contribute to it, you get free tax relief from the government and your employer contributes towards it, the less pressure you have down the line.
22:54
Jack: So when you're 50 and you're thinking, right, I want to sell my businesses, I want to walk away, I want to be financially independent, all that sort of stuff.
23:02
Jack: You've done all the hard yards already.
23:04
Jack: You and Nathan have got your pensions, you've got ICEs as well, you've got your property because you bought young, it's fantastic.
23:08
Jack: That's what you want to do.
23:09
Jack: So you don't want to leave pension planning until down the road.
23:13
Jack: Now, yeah, for you, and Nathan, obviously, that's a bit tricky because you are your employer, right?
23:18
Jack: So you need to start thinking, well, how much can my company afford to start tucking away in pensions for me each year?
23:28
Jack: So that's something to start mulling over.
23:31
Jack: No huge immediate pressure.
23:33
Jack: And let's say if you did wait until you bought property and then you got on it, that's fine.
23:37
Jack: You don't need to start doing it today, but it's something you need to consider as well because you've got your short-term objectives, but you need to think longer term as well.
23:43
Jack: And pensions are a very good way of doing that.
23:46
Jack: There's so many good tax reliefs and advantages to doing so, and also it can be your big key investment for your later life that you need to think.
23:54
Jack: Okay.
23:55
unknown: Yeah.
23:55
Tilly: Well, I think I have a pension set up.
23:57
Tilly: I think my dad set me up one, didn't you?
24:01
Speaker 1: She's got a Scottish widow's pension which has been set up.
24:04
Tilly: And you're right, it's something that I haven't really put as a high priority, but I guess it's something that I should be thinking about doing.
24:11
Jack: Definitely.
24:11
Jack: It sounds should be saying it shouldn't be a high priority, you know, when you're in sort of this generation.
24:16
Jack: But if you just make it on the agenda, yeah, and actually down the line, you're gonna be so comfortable in your pension planning, you're gonna have none of this pressure that we see so many sort of 50-year-olds have where they think, I'm 50 and I haven't done any pension funding.
24:30
Jack: Yeah, yeah.
24:30
Jack: And I and I want to sack it in in 10 years, I've got to pull my finger out and really get going.
24:36
Jack: So you can avoid all of those issues.
24:39
Jack: And especially when you're a business owner, your working life is different to an employee person, if that makes sense.
24:43
Jack: You've got a bit more flexibility and freedom.
24:45
Jack: So the more you've got behind you, the actual more options you've got when it comes to walking away, selling businesses, exit strategies, and whatever it may be, going in a new passion project, you've got that security behind you.
24:58
Jack: So it's one of those things to have on the agenda, but don't stress just yet.
25:01
Jack: But certainly you've got the vehicle you don't set up already.
25:04
Jack: So that's fantastic.
25:05
Jack: So you might just need to, at the end of each year, if your business has got a bit of spare cash, speak to your accountants, speak to your business partners.
25:12
Jack: What's left?
25:13
Jack: Well, you've got the decision do we pay ourselves a bit of a bonus?
25:15
Jack: Do we get a bit of a pay rise, or should we just tuck a bit away into your pension that you've already got, just do an employee pension contribution?
25:22
Jack: And if you do that, you're going to save on things like national insurance, corporation tax, all those sorts of things.
25:26
Jack: So who's your accountant?
25:28
Tilly: Mel?
25:29
Jack: Speak to Mel, yeah, when you do your accounts and say, look, I had a chat with a financial advisor.
25:34
Jack: He said just bring pensions onto the agenda.
25:37
Speaker 5: Okay.
25:37
Jack: Just see what your capacity is for pension funding there.
25:40
Jack: There might be nothing at the minute because you're in this growing phase, but if there is a bit you can do, then fantastic.
25:46
Jack: Your clearly your key objective for the short term is buying this property.
25:50
Jack: So make that your sort of top of your list.
25:52
Speaker 1: Okay, cool.
25:53
Speaker 1: Brilliant.
25:54
Speaker 1: Brilliant.
25:55
Speaker 1: If she's looking at a car, PCP versus HP.
25:59
Speaker 1: Oh, yeah, yeah, yeah.
25:59
Speaker 1: That's which is better to go for?
26:02
Speaker 1: Ah, good question.
26:03
Jack: To be fair, I've done PCP forever and I've never had a problem with it.
26:10
Jack: I've always found it pretty reasonable.
26:13
Speaker 4: Yeah.
26:14
Jack: I don't feel really, I love cars, but I don't feel like I really know the space that well, if I'm honest with you.
26:20
Jack: What I can say from my experience, PCP has worked absolutely fine.
26:23
Speaker 5: Okay.
26:24
Jack: But again, I've had my car for years now and it's on PCP, and rates were different, rates changing, that might change things.
26:31
Jack: So what I would say is if you find a car you like and you've got both options, by all means, give me a call, we can talk through it.
26:36
Jack: You've got the details in front of you, I can give you my opinion, but it's hard for me to say at the minute.
26:41
Jack: I don't feel like I really know it well enough.
26:42
Jack: Sorry.
26:43
Jack: No, I've had PCP contracts and never had a problem.
26:46
Jack: No.
26:47
Tilly: I'm so bad with cars.
26:48
Tilly: I don't know the first thing about cars.
26:50
Tilly: Like I don't really care as well, which is probably quite a good thing.
26:53
Tilly: Like, I'm not like a car snob, like I don't really care what I get or anything.
26:57
Jack: I mean that's good.
26:57
Jack: You just needed to get it from A to B.
26:59
Tilly: Exactly, exactly.
27:01
Jack: Again, behind everything, there is a financial planning point that I might be able to pass on a bit of wisdom.
27:06
Jack: So, like it's budget, right?
27:08
Jack: So if you go PCP route, so many people have gone for a nice, flashy car, yeah, they've tied themselves in for five, six hundred pounds a month, which is a lot of money a month for a car.
27:19
Jack: That is a lot for something really nice and all that, you know.
27:22
Jack: They've probably got a nice car, but you know, a crack house that they live in, makes no sense to me.
27:25
Jack: But there you go.
27:26
Speaker 4: No, no, no.
27:27
Jack: And they get to the point where they then come to them and their PCP or they want to get out early and their vehicle's value has fallen down and their PCP is so high, and they're paying to get out of their arrangement.
27:37
Jack: They have to pay huge amounts to get out of their arrangement.
27:39
Jack: If you go on a PCP on a car that's what you would consider well within budget, affordable, will hold its value, you know, second hand, all that sort of stuff, definitely go down that route.
27:49
Jack: Which sounds like, you know, if you're not necessarily massively into cars, then why would you go for a big fashy car anyway?
27:54
Tilly: Exactly.
27:55
Tilly: I really don't have any desire to have a nice car.
27:58
Jack: I don't really care.
27:59
Jack: Again, focus on budget, what are you prepared to spend each month and just find something that you think is good value.
28:03
Jack: That's as simple as it gets for cars.
28:05
Tilly: Okay.
28:05
Jack: Anything Italian generally is quite fast, but usually well, I'll have a look into PCP then.
28:12
Jack: Just go to the dealerships you like, find the models you like, and just ask them to present you with their different packages.
28:17
Jack: If you want to talk it through, give me a give me a buzz.
28:19
Tilly: Perfect, thank you so much.
28:22
Speaker 3: Thanks for tuning in to Baseline, a monthly podcast series dedicated to topics that matter in wealth management.
28:28
Speaker 3: Be sure to check out our podcast archive and sound cloud.
28:32
Speaker 3: And until next time, have a marvelous week.
28:36
Tilly: You have been listening to Baseline from Cavendishware, an NMD Plus production.