💰 A Simple Strategy To Save EVERYONE A Minimum Of £250,000 Inside!

A lot is said about how the educational system is broken and that the things we are taught in school have no use in our later lives. The life skills we truly need are never taught, but we don’t usually find that out until it is too late.

While I agree with the argument, it has never really been something I have had to worry about until now.

My elder daughter has spent her 17 years in the private education system, and I’m fortunate she has grown into an intelligent, focused young lady with a clear path for what she wants to do next. But there are a lot of other skills and information I wanted to train her in as part of a more rounded education.

As a young kid, Harlie had no interest in this, and her mum (who, by the way, I have a fantastic relationship with, so I’m not moaning at her here!) didn’t really support me in pushing it, so I just let it slide.

But now that I am on round 2 with baby Nele, I have the chance to do things differently, and I am so excited about building the curriculum she needs to be a top performer and smash the game of business and life. (Even if she doesn’t want a career in business, the skills are totally transferable for success.)

Financial advice, money management, and investment skills are not only not taught in schools but are still considered taboo subjects to even discuss in later life.

Anytime this is the case, it leads to people operating with either no information or misinformation.

When you don’t have the knowledge yourself, you usually blindly follow the advice of ‘professionals’. And nowhere is this more prevalent than with financial advisors. The financially uneducated of the population (i.e., the vast majority) hand their money over to an advisor who, in 90% of cases, can’t manage their own money and generate wealth for themselves, never mind for their clients.

But because these advisors have professional qualifications and the clients never learn the necessary skills to make informed decisions, they are given the opportunity to erode their clients financial returns with exorbitant fees, all while providing a return that could be achieved by almost anyone choosing their financial products by throwing darts at the wall!

So money management, basic economics, financial products, and investment strategies are definitely something that will feature in Nele’s curriculum from an early age.

If you think it is unnecessary so early in life, then I want to show you the true cost of this lack of knowledge, and how badly it compounds over time. The true cost of your inability to manage your own money and select suitable investment strategies.

When you work with a financial advisor, they will typically charge you a percentage of the overall assets you have under management with them. This is usually 1% per annum. (But very often dressed up in a way to make it sound cheaper, like 0.25% per quarter.)

Now, that may not sound much; it may even sound fair, but let me show you how that charge extrapolates over time.

To be clear here, I am not dissing ALL financial advisors. I know a lot of highly competent advisors that I work with both for myself and to generate investment funds for my products from their clients. But these guys are the exception, like in most professions. (By the way, if you want an introduction to a fantastic advisor, then reply to this email, and I will happily put you in touch with one of my great contacts.)

But the reason they are different from the vast majority is because they actually add value. They truly help their clients minimise their taxes and maximise their returns at a level well in excess of what they could do for themselves. And they are worth their fees all day long.

But to pay a fee for your assets under management for average or substandard advice for selecting products you could select yourself is financial suicide.

Back to the numbers... For this calculation, I have made certain assumptions:

• You are 35 years old.

• You are starting with an investment pot of £50,000.

• You add to your pot £10,000 a year for 30 years. (That takes you to retirement age.)

I haven’t assumed any increases in your investments as you age and earn more, but as you will see, the more you invest, the more expensive this lack of education is.

So here is the math:

If you achieved a 7% return (which is a very low bar to set) for the 30 years without paying any fees to an advisor, your retirement pot would be £1,325,221.

But if you were to be paying a financial advisor ‘just’ 1% a year, then your retirement pot would diminish to £1,077,756!

That 1% fee has cost you £247,464! Almost a quarter of a million without you even noticing it! Do you think that would make a nice addition to your retirement pot?

That calculation wasn’t based on the financial circumstances of a multi-millionaire. That is very much ‘Joe Public’, and look at what it has cost them.

The more you invest, the more scary these numbers look. Even if you started with nothing and just contributed £10k a year for the next 30 years, you would still lose £154k in fees!

So what lessons or quick takeaways can I give you here?

1. The power of compounding is often talked about in the context of how much it amplifies your returns over time. But compounding can work FOR you or it can work AGAINST you. Compounding the 'small' fee year after year adds up to an enormous number. It may be small, almost unnoticeable in year 1. But by the time you get to year 30 in the above example, you have given away the value of a house in fees!

2. When you pay for a professional, they need to bring expert advice and perspective to the table that you otherwise wouldn’t know or couldn’t implement yourself. The average return from the stock market over time is about 10% per annum. So if you simply invested your money in a stock market tracker fund that has minimal management fees, you could generate yourself a 10% per-year return over time by knowing and doing absolutely nothing. So if you are going to pay for advice, then it needs to generate you a return substantially above that.

3. Incentives only work if they are aligned. Anyone who is paid just to turn up is never going to perform as well as someone whose income is riding on the success of their performance for their paymaster.

4. Learning doesn’t need to be complicated or time-consuming. I have taught you quite simply in this 5-minute email that knowing how to just track the stock market while paying as little fees as possible will generate you life-changing returns. Can you imagine how different your financial situation would be if you had learned this knowledge at 8, 10, 12, or 15 years old? The earlier you can start to implement this stuff, the more powerful the results.

I have genuinely been excited writing this, as it makes me think about all the learnings and skills I can pass on to Nele that I never knew until I was 25, 36, or even 42. She could turn into a cuter version of Elon Musk!

So what did you think of this? Are you in shock at the power of compounding on a number as small as 1%? Do you wish you knew this years ago?

I hope you enjoy this week’s newsletter. As always, I love to get your feedback on ways to improve. And if you want to talk about investment opportunities that can provide you returns of even greater than 10%, then reply to this email!

This week, it’s from me! Knowledge is the cornerstone for success and growth; it's an investment that consistently brings the best returns. Just as a smart financial investment gains interest over time, spending time and effort on learning and continuous education has a ripple effect, benefiting both personally and professionally. It's not a one-time benefit but a continual asset that helps every aspect of life.

The more you invest in learning, the greater the rewards. It opens doors to new possibilities, enhances decision-making, and helps you thrive in our ever-changing world. It serves as the ultimate tool for progress and self-improvement, whether in your job or personal life, creating numerous opportunities for you. Remember my column from a couple of weeks ago where I spoke about getting paid like a boss? Well, showing determination, learning various skills and platforms, and reading—these will all stand you in good stead.

What's the link between reading and wealth? Let me break it down for you...

Let's connect this stat with the business world and the road to success. It's crucial to see how vital constant learning and self-improvement are. Reading isn't just about turning pages; it's a door to new ideas, perspectives, and knowledge. In business, it's like keeping your tools sharp before getting to work. When you commit time to reading every day, you're feeding your mind, picking up insights, and staying updated on the latest trends and strategies.

I know it, but it’s now backed by a real statistics! Learning is the key to success. To sum up, making reading a daily habit shows a dedication to always improving and learning. And this dedication can pave the way to achieving success.

It's the weekend – time to unwind and switch off. But hey, if you're eyeing the big wins, why not make the most of the next couple of days? Today's fuel can fire up your motivation to think beyond your 9-5!

Do you have a skill or a side hustle that you've been pondering over how to monetise? I've got all you need to know and actionable steps to take. Listen in, turn your talents or side gigs into profitable ventures... Are you ready to make it happen?

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Ta.