Your Money Questions Answered: Debt, Investing and Fund Fees

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[0:00] Sammie Ellard-King: Hello and welcome to the Money Gains podcast. We are back this week with a brand new series, people. Once a month, I’m going to be answering your most burning money questions and giving you the answers that you want to hear. We are wanting to help a million people with their finances in 2024. And this new series is called Your Questions Answered. Basically, you can get in touch with the show via invest at upthegains.co.uk on email or drop us a line on any of our social media channels with your most burning money questions. And we will answer them once a month in this show. It’s a brand new format, so we’re testing it out. So please do give us some feedback and let us know how we get on. If you’re listening on Spotify, make sure you hit that follow button. And if you’re listening on Apple Music, hit that follow button again too. And also share this with a friend. Help us reach that goal of a million people in 2024. We really appreciate it. But for now, let’s get started on the Money Gains Podcast.

[1:11] Sammie Ellard-King: Let’s make some bread. Hello, hello. It is me. I’m back with myself. Not interviewing anyone this week. It does feel a little bit weird. So the first question is actually an anonymous question. Um, so there’s no one behind it. Ooh. How can I clear two debt loans off quickly? They total £35,000. So how can I clear two debt loans off quickly? They total £35,000. So the first thing first is you need to be aware of the debt. Now that’s something that you go, oh, of course I’m aware of the debt. But actually, a lot of people sweep their debt under the rug, they push it aside. So that piece of self-awareness initially is super, super powerful. Just actually understanding where you’ve got to and the level of debt that you’re in is honestly the most important thing about getting yourself out of it. Then after that, you really do need to do a budget. A budget will basically break down your current income and costs. And you might say, Yeah, again, that’s obvious, but most people won’t do it and they won’t do it properly. They’ll kind of just note down a few little category costs here and there. Do a proper, proper budget from top to toe, and then basically make yourself a backwards plan. Now, I use the technique I was in debt myself. It’s over £24,000 in my mid-20s. I built it up on credit card debt, personal loans after leaving university, not including my student loans. So basically got to university, took a student overdraft out, then just spiraled in debt. It just got worse and worse and worse. Eventually, I was just paying the minimum amount, basically just covering the interest. And I had to have a word myself because it was a lifestyle that I was living. Now, what I did was a technique called the debt snowball technique. Now, this works in a couple of ways. So the main way is you list your debts from biggest to smallest and you attack the smallest one first and knock those off. I actually did it the other way around. Some people do do that. You can also do it by the amount of interest payments you can as well. Um, that’s what I would do there. So I would do the it with the two loans essentially. I would basically target one with as much as I possibly can, a much like full power on that loan. If you can as well look at consolidating, especially if you’ve got high interest payments. So that could be a balance transfer onto a credit card or taking out a loan for that amount, which brings your overall interest payments down. That could be helpful, especially if your loan, you’re going to be paying interest on that. So do look into that and see what kind of deal you can get yourself. Okay, thanks for that question. That was the first one. So number two is Geordie Saver. What are your financial goals for 2024? Well, my personal financial goals are this year, very different to um perhaps other people’s. So my goal is essentially to help a million people with their finances in 2024. That’s my financial goal because if I help a lot of people, then my business will grow and more doors will open and we’ll do more things. So that is my financial big goal. I want my business to do super well. Um, me and the missus want to get away as well. You want to try and get on to you know a couple of nice holidays if we can this year. So, you know, the business needs to perform to do that, and I need to help lots of people. So that’s my uh financial goal this year, slightly different. Um, but I will say about financial goals is they are important, but the most important thing is understanding your why. If you don’t have your why absolutely nailed down, then really goals are irrelevant for me. So why is more of a feeling? So a feeling that creates so my feeling is I want creativity, positivity, and time freedom. To do that, I need a business which provides me those things and also provides me the cash to be able to make my time free. So the feeling, the goals are essentially then monetary, which I can then stack up and they feed my why. So make sure you got your why nailed down. That’s really, really important. Okay, next question from Jasmine Marie Newton. Thank you for the question, Jasmine. Um, I want to get my foot in the door with investing, but I can’t afford it right now. Could I just invest £25 a month? Where and how? Great, great question, Jasmine. Honestly, what I would say is make sure first you don’t have any consumer debt. Make sure that you’ve done a budget, make sure you can afford it, make sure you’ve got your emergency fund sorted before you even think about getting into investing. That’s what a lot of people get wrong. They get they they’ve still got consumer debt that they’re paying off and they start investing their money, thinking that it might accelerate them getting out of debt. It doesn’t because your your proper management money management skills aren’t in place yet. So get yourself to net zero and then start building an emergency fund. Once you’ve got at least a couple of months of emergency fund, most people will say three to six. But for me, a couple of months is fine, and then just keep topping it up. So basically, let’s say, for example, £100 that you saved each month, you might put £10 into your own your uh emergency fund, £10 into your shorter term savings, and £80 into your investments. That’s just an example, by the way. But you’re still topping up your emergency fund, it’s still getting bigger. Um, but you’re investing because you’ve got that couple of months set aside. That’s what I would do. Um, in terms of where and how, honestly, there are so many different avenues, but there are essentially I would open a stocks and shares ISA to get yourself started. That shields you from capital gains tax, from your um from your profits, interest, and dividends. Now, what I would say there is you have a couple of options. There are DIY options where you can go out and do it yourself, i.e., pick the stocks, pick the funds that go within that, um, or a managed option uh where you perhaps there’s a robo advisor option essentially where you answer a bunch of questions and then you get fed a portfolio um based on your answers, or a more like expert managed, so a personally managed option as well, which is where you interact with a human and they create you a portfolio. So those are your options in terms of where and how. Um for me, simple index fund investing is a is a great way forward, but again, not financial advice, always do your own research before you um invest your money. My man Alex Wallace, I’ve known for a very long time actually, he uh asked me about how to invest your first a thousand pounds. Great question. Um, so what I would personally do, and I did a video about this, I actually broke down how I would invest £1,000 if someone gave it today and you know I had my emergency fund and I had my debt paid off. What would I do with it? Now, what I would personally do with it, this is my own personal strategy, and I talk about this openly on the podcast quite a bit, is I have an 8020 strategy. So 80% of my wealth goes into index funds. Index funds are essentially baskets of stocks which track a particular index. So they could be the S&P 500 or you’ve got the Vanguard Total Stock Market Index. You’re all familiar with the FTSE in the UK. That’s an index. So basically an index fund investment. So you would naturally do that through uh a fund or an ETF in this case. So that’s what I would do in terms of investing uh 80% of that wealth. Now I have a couple of different uh ways of that. So again, I also break my index funds down. So I have uh the Vanguard Total Stock Market Index, I also have the S&P 500, and then I also have the UK, and then I have a little bit of Asia as well. Um, the weighting of those changes are much more heavy on the total stock market and the S&P 500, and then it goes down into the UK and then Asia as well. So I do break down that 80% as well. Then the other 20% goes in for me. This is because I’m taking a little bit more risk with how I’m doing things. This is not financial advice. Everybody’s different, everybody has their own investment and their own risk, their own appetite for risk. If you’ve got a bit of appetite for risk, individual stock picking or things like cryptocurrency may become more part of your portfolios. But for me personally, um I have 20%, which goes into individual stocks. Also, within that 20% as well, I do own a little bit of cryptocurrency, but not a much at all. And I don’t trade or jump in and out. So for me, what I have, you know, about 0.5% of that entire wealth at the moment is in something called Bitcoin and Ethereum, which I’m sure you’ve all heard of. Other than that, I don’t get involved with cryptocurrency, which was also Michael Merkhart’s question: what role should cryptocurrencies play in an investment portfolio? In my personal opinion, um, I don’t think it should be playing a massive, massive role, but everybody’s different. Um, a lot of people will argue against that, and you’ll see people that solely invest in crypto. It’s because they’ve got a different appetite for risk and perhaps they have a lot more knowledge in the space than I ever do. Um, but personally, for me, I prefer the traditional long-term wealth building approach, which is index funds and in and a small portion of individual stocks. I do like picking individual stocks, and that’s because I have a lot of interest in financial tech, so financial payments and financial solutions. I like these types of companies and I’m I find it interesting learning about them. So for me, I’ve got a leg up because my I’ve got a lot of knowledge in that area. So I invest in a lot of companies within that space because I feel like that space is going to grow over the few years, whether or not that I’m right or wrong, we’ll we’ll see. But for me, that’s I what I’m doing. So um, yeah, to break that down, 8020 strategy is what I call it. So 80% index funds and 20% individual assets. So that’s how I would invest a thousand pounds if you gave it to me today and I was at starting from zero. Okay, Tom Hyam said, Why should someone pay particular note to the fund fee of an investment such as an index fund? And how can different ones impact your final pension over your lifetime? This is an absolutely brilliant question, Tom. Thank you very much for sending that in. I talk about this a lot and I’m really bang on about fees because the difference is absolutely wild. Even in just 0.1% higher fees over a period of time is an enormous amount. And what I’ve done is I’ve actually broken down two examples here just to show you what happens to your money. Um, so the first example here is £100. So let’s say we’ve got two investment providers, okay, and we’re investing into those investment providers, and one is 1% and one is 1.5% in fees. Now we put £100 into both of them every single month for 20 years. So one is 1.5% in fees, one is 1.5, uh one is 1% in fees. So over that 20 years, the fund value would be £42,736 based on an annual return rate of 7%. But the fees lost on so fund one fund one at 1%, then the fees lost with the 1.5%, so that 0.5% is 8,491 pounds, which is absolutely staggering, right? So that’s 8,491 pounds. So if I just put the £100 into each one, but one is 0.5% a lot more, then I’ve lost nearly £8,500 in fees during that time. So that’s why you need to pay attention to fees. Those little differences make massive, massive changes to your portfolio returns over time. So I’m gonna up the stakes here and change this to 200 pounds. I’m gonna do this as a live example. So fund uh provider one is gonna stay at 1%, and provider two, I’m gonna change to 1.7%. So again, the £200 now into both of these over that 20 years, I’m gonna keep the annual return rate at 7%. And I’m gonna calculate this. Now the fund would be worth around about, give or take, £83,968. But the fees, so 1% to 1.7%, is £18,885 lost in fees. It’s it is an absolutely wild difference. So that’s why you need to pay attention to the fees, they are super, super important. So make sure you try and find one, the provider that has so when I’m looking for providers, when it comes to pensions, stocks and shares, ISAs, you name it, um, I want low fees. Number one, low fees. Number two is access. So can I get access to the funds that I want? And again, are they are they low fees and can I get access to them? And do I have to pay to get into them? These are all things that you need to take take advantage of, you know, and be aware of. And and number three, can I use it? Is it easy? Do I like it? Um, can I get a mobile app? Can I access it? I don’t have to phone them up and ask how much my pet is in my pension. They say they’re gonna send me a letter three weeks later. That’s you know, you know, 1980s, you know, let’s face it. Okay, we don’t want that. So pay attention to fees, everybody pay attention to fees. It is super, super, super important. Okay, moving on. Johnny Lee, my man. Now, this was quite funny. So he said, How to earn £50,000 a year. I seem to be the only person who isn’t helper friend. Now, the context behind this question uh is quite funny. I had a video um absolutely blow up. Uh it’s done over 1.6 million views on TikTok and Instagram combined, and um it was 50k broken down. Um, so how to how to budget a 50k salary, essentially. So we broke it right down, and I used UK average costs for those categories because essentially that’s the only thing that was tangible that I could actually use. Um you know, and people lost their minds, people absolutely lost their minds when uh Johnny asked the question uh who is earning 50k, and I think there’s a conversation thread of like over 200 comments on that thread. Um what I will say is be nice to people online, okay? Because the comments section of this post and others now that my account is grown, and I’m super grateful. Thank you to everyone that’s followed along and um is continually sending messages and nice comments. I see you, thank you. You know, there is some seriously angry people out there, and look, I get it, man. Times are tough. You know, if you want to come online and and take it out on somebody else, I get it, but just remember there’s a human being behind that. You know, I had to uh actually go and do some training on how to deal with this because um I’d never seen it before, I’d never had it happen to me before, and then all of a sudden this video blew up and there was you know nearly a thousand comments and you know, good 150 to 200 of them are insane. The names that I’ve been called is just wild. So just remember that there’s someone at the end of it. You know, I luckily I’m pretty thick skinned, um, but my heart goes out to the creators who aren’t and that have to be subject to this kind of abuse because God knows what it would do to their to their self-esteem. Um, so yeah, why did I do the video on it? Because I’d already done 35k and 28k, so I went up the chain. Okay, so people don’t lose your minds. Life goes on, okay? All right, Ellie Brirton, we’ve got three questions left. Um, Ellie Bri Brirton said, Um, digital ways to make money, please. Love this question. Something which we’re gonna be doing. I I I know hopefully some of you have tuned in to the first uh side hustle deep dive breakdown that we did last week. I’m gonna be doing one of those a month as well, but that’s not gonna that’s gonna be extra, that’s not gonna be in place of the interviews. Um, so I’m gonna be breaking down deep dive. So, what I’m actually gonna do after the first one, I’m actually gonna do a little bit of a different format with that. And I’m basically gonna decide. So, I’m gonna deep dive in. What would I do if I was starting that side hustle today? So, how would I go about it and how would I make some money? Um, you know, I spent over 10 years in the marketing industry, so a lot of these side hustles are super relevant for me. So I can go out and how would I go out and make money? What was the be my way of doing it? And hopefully that inspires a lot of people to start as many side hustles as they possibly can, um, or just that one that really does it for you. So, Ellie, that’s what um I’m gonna say there. Definitely tune into those episodes. I can talk for years about digital ways to make money online. We have just released our course as well called A Couch to Five Grand. Now, A Couch to Five Grand is teaching you guys how to make money with digital products through organic social media. Now, we do that in a number of ways. We create content in a niche which you’re passionate about, um, and we create products around that and feed the audience by solving problems. Now, it sounds super, super top line, but actually when you get into it, it’s it’s it’s not as hard as you think. Um, if you can use a camera phone and you’re pretty proficient, you can post stuff on on social media, then I can teach you pretty much everything else. And that’s what we do in the course. We had our first community call last week for the people that um bought bought the extra community package on top to join in to get access to me. And we do monthly calls and I do masterminds in there as well, and there’s a chat function as well. It’s really cool. Um, so go and check that out. Couch to Five Grand. Um, it is available now. Just hop on over to our Instagram and hit the link in bio and check that out. But I’ll be doing much more deep dives into digital ways to make money, don’t you worry, Ellie. Thank you very much for your question. Um, Gordon Oak, why do 70 why don’t sorry, hang on, why do most people 70% in brackets, why do most people never invest their money? Why do most people 70% in brackets never invest their money? That’s a great question. Um, it’s quite open-ended. For me, the main reason is education. Um now, investing until very recently, let’s be honest, like a lot of us can remember dial up internet and MSN, right? Like, and if not, then you know, the Motorola, flip phones, etc. Like, we’ve not really had access to these types of investing platforms that we do today. These have only really sprung up in the last like decade, really. Let’s be honest. So, access and education has been a massive problem, and now that’s changing, and obviously the younger generation are way more tech-savvy and actually investing, and money conversations are happening a lot more. So, I do think that that will change over the years. I do think we’ve got a massively aging population, and they grew up where you had to phone up in a stockbroker and place an investment with the likes of like Merrill Lynch and all of these, you know, old school uh investment institutions. You know, if you didn’t have a bit of cash, you didn’t really know what you do. You used to keep your cash under your mattress. You know, that was what you did. You you stashed it and you saved. So I think that’s why a lot of people never invested their money. Um, but I do think those numbers are going to come down. Conversations like this, accounts like mine, and the other fantastic people within the industry, you like some Martin Lewis and you know, um Mr. Money Jar, big favourite of mine as well, Timi. If you haven’t checked him out, and also Gordon as well. Gordon is is very good. I will say that I did answer his question, but he has a very cool investing account as well. So do check out um Oak Investing. Um, Gordon is a lovely chap. Last one is Alex. Alex, what is your most recent money mistake? Now that’s a great question, man. If I’m being frankly honest with you, what I would say is what I did was um my business had just for the first ever month made probably about 80% of my income before. Um, but I just jumped and I just jumped off and I just went for it. Do I regret it now? No. But looking back, that’s probably my most recent money mistake. What I would have done is probably built a little bit more um data up in my business because actually what happened next month after I that you know, basically the first month after I left, my income went down in my business to way before, way lower than I expected, and then it bounced back up and then it went back down. Um so I didn’t really have a base average, and that was a bit of a mistake for me, but I was so keen to just go all out on Up The Gains uh that I just jumped in and went for it. So, what I would say to people is when you get to that point of your side hustle starts replacing your job income, give it three to six months. Um, or if you really can’t do that, give it at least a couple of months before you make the jump. And also, you know, make sure you’ve got a bit of a safety net. Luckily, I did. You know, I had some cash in the bank which I could I could use if I really wanted to. Um, but ideally didn’t want to do that, wanted to just run with the business and get the business working. Um, but thankfully we’re here today um and we’re still growing. So um thank you very much. I’d love to hear your feedback about this type of episode. Uh, it has just been me. Um, I’ve been considering trying to find a fun, cool host to come on and ask these questions and just be someone there to have a little bit of banter with. Um, but I really hope you found this useful. Um and yeah, I really enjoyed answering your questions. So if you do have any questions, you can email them in to invest at Up The Gains. I will leave that in the description below. Um, pop your questions in. Happy to answer them as much as I possibly can. If it gets too much um or leans too heavily into a certain topic, I will probably email you back and let you know. But yeah, any of your burning money questions, hit me up. It’s been a real pleasure. Thank you very much, and we will see you next week with an interview format. Take care, guys. Much love.