Andy Hart: Is the Stock Market Actually Risky? No Bullsh*t Money Advice

This transcript is auto-generated and lightly edited for readability, it may contain errors.

[00:00] Sammie: Andy, welcome. You called your book No Bullsh*t Money Advice, and I’d love to know what the biggest piece of bullsh*t in personal finance is right now.

[00:08] Andy: Great first question. There’s various BS in the world of personal finance. I think one of the biggest ones when it comes to investing is the age-old classic that the stock market is risky. You know, I say the biggest risk in the stock market is you not being in it. So that’s an initial one that we can start to explore. So yeah, that’s the first myth you need to overcome on your journey to becoming financial and investing literate. We are all born financial and investing illiterate, you know, the most famous investors in the world, the richest people in the world, the most successful people in the world, you and me, we have to go on a bit of a journey and unlearn a lot of stuff, then we need to learn a lot of stuff, and we need to take personal responsibility and become financially and investing literate. Money is a game that’s being played against you. You’re either playing it intentionally or unintentionally. Money is the fabric of society, and annoyingly, yeah, you do need to get your head around it. So that’s the first one.

[01:15] Sammie: When you say not risky, is it that it’s not risky? What do you mean as such? Because there’s obviously elements of risk when you’re investing, right?

[01:25] Andy: There’s elements of risk in everything we do. You’re gonna be dancing with risk whether you like it or not. So the question is what do you do with your money? Obviously, some people say, you know, I’ve got 10 million pounds, I’ve just sold a business, for example. I’ve got 100,000 pounds, pick a number. But I don’t want any risk with this money, so I’ve got to keep this in cash. As a professional advisor, we’d say, okay, I understand what you’re saying, but just so you know, if you keep this in cash for the long term, this portfolio will be one of the riskiest portfolios I’ve ever seen. So it’s about reframing risk. A lot of people are uninformed about risk.

[02:04] Sammie: Right.

[02:04] Andy: And as advisors, as money creators, people that are trying to educate more people to do good things around their money, you just need to become more informed about your risk. So yeah, cash is high risk long term, it gets eaten away by inflation, the slow, silent, tasteless financial killer of your money long term. And investing in the stock market, which is a productive asset class, investing in real companies that sell real things to real people. The only sane definition really of money should be purchasing power. And long term, your purchasing power should be outpacing inflation. That’s why the stock market is not risky. Another way of reframing it is people need to understand that, as I say, the stock market is a collection of real companies that we use every single day. These mics, this carpet, our computers, my clothes, all of it is the stock market. Every single payment you make, all of your monthly direct debits, all of your discretionary spending are pretty much going to end up with a stock market company. And then people say things like, well, I don’t understand the stock market. Saying you don’t understand the stock market is a bit like saying I don’t understand anything I buy, I don’t understand anything I spend my money on. So people are willing to pay and support stock market companies by buying their products, but then they don’t benefit from the growth of these companies long term. So again, that’s just a shift that people need to make in their mind, understanding the stock market is all around you. You go to bed in a stock market company, you get woken up by a stock market alarm clock, you brush your teeth with a stock market company, you drive a stock market company car, you fill it up at a stock market company petrol station, it’s just everywhere. You cannot get away from it. You probably get up a little bit earlier than me, don’t you? About half five.

[03:55] Sammie: How do you know?

[03:57] Andy: No. By the time you wake up nice and leisurely, about 7 a.m., by midday you’ve probably seriously interacted with about 500 stock market companies, probably more. So just having an appreciation of that, I think, is just part of your money journey.

[04:12] Sammie: We just break it down. It’s like you buy a jacket for X amount of price, it either goes up or down in value, and that’s essentially what a stock does. But essentially the stock’s got a working thing to make the jacket either more valuable or not, right? That’s like the basics of understanding it.

[04:27] Andy: Just understand that it’s all around you. Every single monthly payment you make and every single discretionary payment will generally end up with a stock market company. From the payment processor, from all the ingredients, from the actual premises you’re buying it from, the stock market is all around you and you can’t get away from it. But at the same time, you buy the products, you should be buying the companies, which is the next thing to talk about, investing. I suppose the good news in the UK is a lot of people, if you ask someone, have you ever invested in the stock market, whatever age they are, they often say no. It’s like, well, you’ve got a pension at work. They go, yeah, yeah, I’ve got a pension at work. It’s like, well, where the hell do you think that money’s going to go to? So there’s so many blind spots.

[05:14] Sammie: I’m surprised about how many people will still ask that to this day.

[05:16] Andy: What? The fact that, oh, is my pension invested in the stock market?

[05:20] Sammie: Yeah, yeah, well, I suppose they’re never told, so it’s just tough.

[05:24] Andy: Well, they are told, or they just don’t, it’s just money, boring, retirement planning, yeah. It’s all just pensions, they’re all just words that just turn people off. Yeah. But yeah, it is that switch and journey that everybody needs to go on. They need to think that the money game’s being played at them. I need to now be intentional and I need to roughly get my head around this. But it’s not easy. Like any good thing in life, it takes effort, it takes a bit of research, it takes a bit of taking action, behavioural change, mindset shifting, unlearning stories that you’ve been told for years when you were younger, good money stories, bad money stories. And people need to stop dragging bad money stories around with them. I’m good with money, I’m bad with money, I’ve never been good with money. It’s just stories in your head. Life is stories we tell ourselves. And money stories are so strong. Sorry.

[06:19] Sammie: I completely agree. You’ve set us up very nicely for what we’re going to talk about today.

[06:23] Andy: All right, let’s get into it.

[06:24] Sammie: I want to just talk about this book because the title’s bullsh*t, like I love it. It’s exactly right up my street. Love a bit of profanity anywhere I can get it. But you’ve been an advisor for 20 years now, so what made you write the book now?

[06:42] Andy: Yeah, so – we can swear on this podcast? Yeah, yeah, it’s called No Bullsh*t Money Advice. There’s too many soft books about personal finance that focus on the right ISA fund that you can buy to become financially successful, the right pension fund that you can buy to become financially successful. And I find them very off-putting. Mine is all about the individual and the person. You are the problem with your money, you are the solution with your money. It doesn’t pander to the individual at all. It talks to them like a grown-up. It’s got a money focus, obviously, but I’m not talking about all the different tax wrappers, the income tax rates, it’s information that you can’t get from Googling. And yeah, I’m a financial services lifer. I’m 44, been in the business since I was 24. Luckily I’m unemployable for life, so I had to go and work for myself, which is great. I’ve had business ups and downs, but now I’m sort of in an all right place. I’ve been creating quite a lot of content for many years. As we spoke about earlier, I had a podcast that I did 300 episodes of, a weekly show. You know, the great thing about a weekly show is it’s a weekly show. The freaking nightmare about a weekly show is it’s a weekly show. It’s a weekly show. It’s relentless. Feel you, mate. I’ll pass it over to you now, my friend. I was in the audio space.

[08:09] Sammie: You’re nearing 180 episodes in. Wow, you’re just a spring chicken.

[08:13] Andy: Yeah, no, I think it’s PTSD, like you get it. So I was okay at putting audio content together. I do a lot of talks with financial advisors, but writing a book was freaking hard. I suppose it just boils down to know thyself, and I’m not very good at writing books, so it took me a few attempts to try and crack it. The title was always a bit of a working title, but once a working title’s there for a while, you think, well, I haven’t come up with anything better, so let’s launch this. I then in the end had to get a publisher to hold me accountable and have milestones and deadlines. We did various iterations of it. I found it very challenging. But I’m tough. But yeah, it’s tough. I spoke to a famous author that we all know, and I said, how on earth have you written seven books? He said, seven. I said, how have you written seven books? I’ve written one and it’s like a freaking nightmare. He said, Andy, it’s just like children, once you’ve got the first one out of the way, they’re easy. And I thought, what, a second one’s coming. So I don’t know, maybe I should start writing the second one now. No Bullsh*t Money Advice, part two.

[09:18] Sammie: That’s what they say about raising money as well. Exactly the same. They’re like, oh, yes, yeah.

[09:22] Andy: You raise money, you speak to a hundred people, and you land it. Next time you’re gonna raise money, you sit with founders and they say, I could just text someone now and get three million quid. Exactly. It’s like, what? Oh, they just can’t wait to pour money at me now.

[09:35] Sammie: Yeah, it’s exactly like raising an idea, and you’re like, no one wants to chat to you, and they’re like, get out.

[09:39] Andy: Yeah, once you raise your first bit of cash, everyone thinks it’s contagion, social proof, it’s a wash with it. There’s a lot of money out there for investments, but not the first.

[09:52] Sammie: No, I’ve just gone through it. I’ll say it now, I’ve raised a puppy, that was pretty difficult. Oh, you mean like a puppy in life? This is not an analogy. Put that down to it being pretty nuts for the first three months. Raising money, hardest thing I’ve ever done, but a long, long shot. Oh, hold on. But we sort of touched on it there, and I think we touched on it a touch at the start, but I want to get a little bit into it because the behavioural side of money is massive, right? Sure. You said the book isn’t just about money. I watched the video that was explaining it, and I want to know what you mean by that, on the real core principle basis of what it means that it’s not about money, because it’s about money, surely.

[10:36] Andy: Yeah, the money business is definitely not about money. It’s people and it’s humans. We have a saying in our business called assets under management, and everyone talks about assets under management, how much money you’re looking after, or funds under management, which is important if you’re an investment house and that’s the main metric you get measured on. But as financial advisors, we still look after money, we still talk about AUM. But I don’t know how many years in it is, but I would probably say at least between five and ten years as a financial advisor, you have a massive lightbulb moment realisation that my God, this is not about money, this is not about the finances, it’s all about the people that own the money and own the finances. You’re never gonna get a shitty email from an ISA, you’re never gonna get a frantic phone call from a pension, you’re gonna get those interactions from the humans. Financial advisors then realise that looking after money and tax wrappers and income tax and all the other things about financial rules, that’s just boring plumbing in the background. Plumbing and admin. The real focus as a human advisor is looking after the human. Clients will want to do the wrong thing at the wrong time for the wrong reasons. Sometimes all three, sometimes two, sometimes one. So, as professional advisors, we realise, wow, we’re in the money business, but we’re really, really in the human nature business. Human nature is a failed investor, human nature constantly wants to do bad things to themselves, they want to self-sabotage. Human nature is not very good at planning for the future, human nature can’t envisage their future self. So all of our focus is on stopping clients doing the wrong thing and getting them to promote great financial behaviour. So for example, the focusing on the wrong thing is worrying about stock market volatility. Don’t worry about that, I’m not bothered about that, nor should you be. That might land or might not. And you should increase your investment contributions, changing your behaviour. So there’s various different financial levers and dials that people can pull. But yeah, it’s very much a human-first business. That, I mean, yes, it’s important to choose the right fund, because that’s then going to be the vehicle for you to create your wealth and then live off that money in the future. Yeah. But if you haven’t got the right wiring as a human first, then that’s a problem. Humans are born with all of their screws loose. The ones around money, finance, and behaviour are one of the last screws to be tightened. The last, really. Just as a thought experiment, humans are born with all of their screws loose. Yeah. We don’t know anything. We’ve got to then tighten all of our screws to become smart humans over time. And the ones around money, finance, behaviour, they’re the last screws to be tightened. Some people never tighten those screws because they’ve just not wanted to address that area. I think money’s becoming a lot more of a thing that people are taught. Investing’s everywhere at the moment. You know this very well, being in this space. Every second advert on the radio, every second advert on the tube is an investment platform.

[13:52] Sammie: That’s mad, isn’t it?

[13:53] Andy: Every single investment platform is now throwing a lot of marketing dollars at trying to get average punters to become investors. But going from a saver to an investor is the biggest shift you can make on your money journey. And a lot of people do it and they invest a small bit, it goes down a bit, they pull out, they’re gonna make all the mistakes. But hopefully a lot of people invest, see how it works, experience it, see the benefits of it, understand the long-term implications of it, and then we’re not an investing nation. I don’t know what the numbers are, but compared to America, I think we’re three times less of investors than America. I hope what Germany is as well. Oh, seriously? Okay, so we need to encourage an investing culture, and financial advisors, there’s hardly any of us, and there’s hardly any smart, good financial advisors. I’ve got to tread carefully here, they’re my people. I think there’s 25,000 financial advisors, probably 5,000 decent ones.

[14:52] Sammie: Yeah. And ageing as well. And ageing, yeah.

[14:55] Andy: So we’re not gonna be able to save as many families as we wish to. But there’s a wash of financial information now, which is great. When I came into the business 20 years ago, there weren’t podcasts, that wasn’t a thing. There were like a few books you could read from Americans. Americans, yeah. Whereas now, if you want to get your head around money, there’s loads of podcasts, there’s loads of YouTube content, there’s loads of decent books. So you can get your head around it, but it is a journey, everyone needs to go on it.

[15:23] Sammie: Yeah, and it’s not one pathway either, everyone’s is a little bit different.

[15:28] Andy: Everyone’s a little bit different, everyone’s got a different starting point, everyone’s got different money stories, everyone’s got a different end point, everyone has a different family dynamic, everyone has different goals, dreams, and aspirations. But fundamentally, they’re aligned.

[15:44] Sammie: I always say the 10% is the plumbing, like you mentioned there, and that’s actually quite easy to get into place. Yes. It’s the 90% that varies, the behavioural mindset, sticking to the plan, where you need to speak to X, Y, and Z customer way more than the other one over there, because they’re just completely different people.

[16:05] Andy: Yep.

[16:05] Sammie: And one needs way more handholding than the other, and talk through absolutely everything, accountability, X, Y, and Z, and the other one you can just leave to it and they’re happy to crack on, and they’ll phone you once a year and go, I’m thinking about this, and you go, ah, yeah, and that’s when you would get involved.

[16:19] Andy: Yeah, yeah. There’s all different stages people go through in transitions, and the temperament of the individual.

[16:26] Sammie: What do you do then? If they sit down with you, do you try and unpack the human first rather than going, how much do you earn, where do you sit on X, Y, and Z, more financial-based questions? How would you do that?

[17:24] Andy: We pick up loads of tacit information from clients. There is a joke, I can tell you how good that client’s gonna be just from their email address. Interesting. I’ve never probably publicly said that, but if someone emails me and it’s, or if I get an email from a potential client and it’s relatively bad language and grammar and it’s come from some free email provider or something like that, I know they’re not gonna be a good client. I could get it wrong, don’t get me wrong. If someone emails me a well-worded email and it’s come from a legitimate email location, this is just very basic. Our first interaction. I mean, I’m sure anyone in sales could say the exact same thing, whatever you’re selling or whatever business you’re in, they could tell you, blink knowledge, tacit knowledge, how well that interaction is probably gonna go. They can get it wrong, don’t get me wrong, and they say, actually, at first I thought they were gonna be this type of client, but actually they’re superb and wonderful. So yes, we pick up a lot very early on, very early interaction. Where does the referral come from? Who’s referred them? That again gives you a lot of information, if it’s come from a decent client. Is it some random thing off the internet? Is it a random interaction from your website? Then you have your first meeting, again you’re gonna pick up information there. Yeah, we’re constantly focused on the human. And when it comes to advising people about their family’s life savings, every client will have a suitcase of misconceptions, and our job as advisors is to unpack that suitcase. It might have many, many items in there, or it might just have a few. It depends on where they are in their journey of mastering their money. I think the typical age of someone in the UK that seeks financial advice is about 47.

[19:18] Sammie: Yeah.

[19:19] Andy: Because they’ve built up financial baggage over the years, and they’ve got to the point where they thought, I actually need help now. I was okay dealing with it before, and now I’ve got a more expensive question. So we help clients answer expensive questions, that’s what financial advisors do. Yeah, sale of a business or inheritance, big stuff. Am I doing the right thing for retirement? Is my family going to be okay if anything happens to me tomorrow? Am I doing the right things? What mistakes am I making? These are expensive questions. When it’s cheap questions, like, I’ve inherited 5,000 pounds, what should I do with it? Even go to Bali. Go, go, go, go enjoy it. Have a good time, send me a postcard. Not put it in index funds for the next 87 years.

[20:03] Sammie: Yeah, because it’s not really going to make a dent.

[20:05] Andy: Yeah, so we rock up when the client’s about 47, they’ve got quite a few. They’re a bit more mature, the kids are a little bit older, the mortgage is a bit paid down. That’s the sort of sweet spot for financial advisors. Whereas leading up to that, it’s a lot of DIY stuff, just get involved, embrace financial content, try a few things, make a few mistakes.

[20:30] Sammie: Some 47-year-olds are probably at that point, that’s the crazy thing, right? I get that a lot. What? I get people at 45, 50 going, I’ve done nothing.

[20:39] Andy: I’ve done nothing, and now I’m really always concerned about, am I in a good position compared to the others? And it’s like, it doesn’t matter, there’s nothing we can do about it. Yeah, yeah. Your situation is your situation. I don’t really care where you are or where you’ve come from, I mean it frames the future, but all I’m concerned about is where we’re heading. Because all we can change is where we’re heading, we can’t change where you are now and your journey to get where you are. And the person sitting in front of me, the 47-year-old, is not my real client. It’s the 77-year-old that they’ll become. I’m not really advising that 47-year-old, I am in person, but in my head I’m thinking, how am I going to get this person to the financial promised land, or whatever age they want? So it’s always sort of 30 years ahead. Are they going to be financially successful when they’re 77? That’s the key question. And yeah, we’ve got some headwinds and tailwinds in the money business. The tailwinds are people are living longer and longer and longer. And people are sometimes retiring earlier now as well, more intentionally. I sit down with some relatively financially successful 52-year-olds, and they’re financially independent, they’ve got more than enough money for the rest of their life, they genuinely want to retire. I think, you could be on this planet for 50 years, what are you gonna do with your life? The hundred-year life, it’s a book. So this, yeah, just living longer and longer is a huge challenge that a lot of people have got to address. Thirty years of that, you’re probably gonna be hobbling about as well with dodgy knees. Yeah, yeah. Do you have enough to do, basically? They’re the three retirement questions that all financial advisors ask a lot of clients approaching retirement. I took this from a guy in the States called Mitch Anthony, but basically the three questions are, have you had enough of work? That’s the first question. You sit down with people, say, have you had enough of work? Have you had enough of what you do? Have you had enough of your business? Some people answer that quickly, some people take 10 minutes, they go around in circles and they conclude, no, actually I quite like what I do. Or, actually, do you know what, yeah, it gets me down a bit, the travel and whatever. So, have you had enough of work? The next question is, do you have enough? Do you have enough financially? And a lot of people say, well, I don’t know, that’s why I’m sitting here, Andy. And you say, okay, we’ll get to that, we’ll work it out later on. So, do you have enough financially? And then the final question is, do you have enough to do? And that one normally hits people quite hard, certainly if they’re very close to retiring. Most people listening to this will be probably younger, I’m assuming. But they’re the three questions. So, have you had enough of work? Do you have enough financially? Do you have enough to do? And some people say yes, yes, yes. Some people say yes, no, yes, all different answers.

[23:33] Sammie: But you could probably tell as well, and they’re like probably going, yeah, but they don’t mean it.

[23:38] Andy: What do you mean, in terms of, have they got enough to do?

[23:42] Sammie: Because they go, yeah, no, I don’t, but in their head they don’t actually want to do a lot. I know one person in particular, my other half’s best friend, her dad’s just gone back, he lasted a month. He unretired. Unretirement is a movement in a month, yeah.

[23:57] Andy: I recommend, if you can, don’t fully retire. A couple of days a week, stay on. Yes, exactly. Keep the interest, keep the purpose. I work with a lot of business owners that fortunately run businesses that they can get rid of 60% of their clients and just have 40% of them and live a smaller business life, but at least they’ve got intention and purpose. Yeah, do you have enough to do is quite interesting. We also sit down with clients, we build financial plans using software and we can map everything out. And I’d say to you, yeah, you’ve sort of got enough, but if you work for a couple of extra years and I move the “working for a couple of extra years” event icon, and I go, if you work for a couple of extra years you’ll be okay, and if you don’t push back on that, you don’t want to retire. Some people go, whoa, whoa, whoa, don’t be moving that, don’t move that icon, I’m retiring next year. Whereas if you say, oh, you can work for an extra, I’ve just told you you’ve got another 24 months of pissing around with work, dealing with an awful boss, doing travel, and you’re okay with it, it basically means you’re not ready to retire. It’s a bit of a smell test if the client’s ready to retire or not.

[25:05] Sammie: Yeah, that’s so good. Because questions, essentially, and they are, and you’re like, ah, and you know exactly where to go from that point on. And your responsibility at that point, I found it so interesting. Do you have a financial advisor yourself?

[25:21] Andy: I don’t. I’m one of the ones that doesn’t have a financial advisor.

[25:26] Sammie: Alan does.

[25:27] Andy: Yeah, I work as a financial advisor for a lot of financial advisors. I don’t have my own financial advisor.

[25:33] Sammie: You use Alan’s.

[25:35] Andy: Can’t say. I think he’s said publicly, yeah. So I do work with him on some stuff, yes.

[25:40] Sammie: But I think that’s so interesting, because even the financial advisors need to be held accountable to their own thoughts and actions.

[25:47] Andy: Well, I think the reason a lot of financial advisors work with me as their financial advisor is because I’m known as the most competent guy at building financial plans, the nuts and bolts of building a financial plan. There’s a piece of software we use in the UK called Voyant, Voyant financial planning software, and I’m known as one of the number one users of it. So it’s just like an accountant being the best in the UK on Xero, and other accountants going to them and saying, I need a bit of a hand with this. So yeah, I’ve spent the last 16, 17 years just mastering Voyant financial planning software. So I train other advisors on it and all that sort of stuff. So yeah, I’ve got a good grasp of how to build. I’m one of the only advisors that will build live financial plans with clients. A lot of people talk about building financial plans and say they’re financial planners, but the definition of, are you a proper financial planner, is if a client couple typically came into your office tomorrow and said, build me a financial plan, and you sat there and you built them a financial plan. And the key word here is it was an enjoyable experience. It wasn’t like some remedial person trying to work some software they don’t know how to use, it’s like an enjoyable process, asking questions, and what about this then, have you guys thought about this? So it’s becoming more of a common thing, yeah, people being able to build live financial plans with people, but yeah.

[27:05] Sammie: Yeah, before Alan said that to me when we had him on the show, I didn’t know that that was a thing.

[27:10] Andy: That financial advisors have their own financial advisors, and it made sense, because I’d probably say only about 1% of financial advisors have their own financial advisors. Oh, really? It’s not that common. Yeah, because I suppose I think they’re referring to financial planners. There’s a lot of financial advisors that will have a financial planner and a financial coach, or a phone call to talk through decisions. It’s not ongoing looking after the money, doing all the boring nuts and bolts stuff that we do for all the other clients. It’s more of a sounding board from an intelligent professional that can push back on them. I think that’s a bit more. No, 100%.

[27:52] Sammie: And I get it, and I have my own, and I think it’s really important, even though I talk about this stuff all day long, I still make mistakes, right? And I think it’s important. But with this plan, you mentioned the plan there, and you wrote recently, I read the article, you said the hardest thing in investing is doing nothing. Sometimes it can, but yes. For someone listening who’s never invested before, that sounds insane. That does sound insane, yes.

[28:18] Andy: This is basically doing the wrong thing at the wrong time. Warren Buffett talks about it, everyone talks about it, it’s been an investment business staple for a while. The key is getting your investment portfolio, your investment fund set up correctly on day one. So all of the thinking, all of the smarts is done on day one, choosing the right place to invest and choosing the right investment fund. Then the behaviour is to contribute as much as you can, never sell, never do anything. But people can’t do that, they always want to react. Passive investing through funds, ETFs, etc. Absolutely, yeah. So I call it asset class investing. If you’re invested in an active fund that happens to be very close to an index fund that’s global equity investing, you’re there or thereabouts, don’t worry too much. I mean, yes, we all champion index funds and passive funds because they’re super cheap. In the UK now you can pretty much get a decent fund for about 0.12%. There are some lower ETFs, but it’s basically free. If me and you are arguing about 0.1% and 0.3%, it’s basically f***ing free. Yeah. So investment management is basically free. The fund platforms are also, but our clients argue, should I leave HL because they charge 0.35%, 0.2%? It’s like, don’t focus there, invest more, have a better asset allocation. The guns are focused in the wrong direction when we’re focusing on irrelevant basis points.

[29:49] Sammie: Yeah, you’ve got 200 quid in your account.

[29:51] Andy: Yeah, you’re contributing 200 pounds a month. I could give you, I could pay you 0.1% a year, and you’re still gonna end up financially broke. As in, not I charge you, I actually pay you more, just to be on my platform, which nobody would ever do, you’re still not gonna reach the financial promised land. Your contributions need to do the heavy lifting. This again is what, early on in Maven Adviser, it was massively focused on, early on your investment contributions need to do the heavy lifting. And you are buying units, you’re not buying prices. So you want to buy as many units as you can in your chosen fund, and you want to contribute as much as you can. Your contributions in the early years do the heavy lifting, the returns in the later years do the heavy lifting.

[30:36] Sammie: And when you say units, let’s say a unit is a hundred pounds, as one unit.

[30:41] Andy: Yes. So whatever investment fund you’re invested in, there’ll be a unit price and you will individually own units. Very few people talk about this. They just go onto their investment platform and they go, that fund, five grand. But other people go, that fund, 266 units. Focus on the unit number. You’re buying units, not prices. The prices will fluctuate. You’re buying units and you’re contributing as much as you can. It’s like stacking bricks. Stacking bricks. That’s exactly it. Stacking bricks. Well, slight play on words, but BBC, that’s what you need in life. You need businesses, bricks, and cash. Businesses is your own business or buying the stock market, bricks is the place you live. So you’re buying units and you’re contributing as much as you can. If you got a 50% investment return, which is mind-blowing, on a thousand pounds, your life’s not going to change. If you got a 50% return, again, I’m just picking numbers to hammer home the point, a 50% return on a million pounds, that’s substantial money. So you’re only really bothered about the investment returns once you’ve built up a sizeable amount of capital. So early on, it’s all about your investment contributions, and you should be investing a just-about-uncomfortable amount every single month. If you’re listening to this and your investment contributions to your pensions and ISAs feel comfortable, you’re being too kind to yourself, they should feel just about uncomfortable. So constantly keep nudging them up to a slightly uncomfortable level, it means you’re doing the right thing. You should also have a good grasp of your savings percentage, what percentage of your net income are you saving? If you earn a thousand pounds a month net and you’re saving 100 pounds a month, that’s a 10% net savings rate. You need to try and get this up as high as you can, as quick as you can. Again, these are all behaviours that you need to change and implement.

[32:42] Sammie: Yeah, and if you can start with 2% because that’s all you can afford, and you nudge it up, you start at 2 pounds.

[32:47] Andy: And if you’re in debt, again, this is counterintuitive, counter-cultural. If you’re in debt and you’ve been in debt a while, just start investing, invest your way out of the problem. If I told you, I know, Sammie, you’ve got to come back to me when you’re out of debt, and then we’ll start your pension and ISA, a lot of people say. Completely different, hence No Bullsh*t Money Advice. If you’re in debt and you’re regularly in debt and you can’t get out of debt, and I say to you, only come to me when you get out of debt, then you can start investing, I might never see you again. Just invest your way out of the problem. So set up those direct debits. I mean, in a perfect world, of course, pay your biggest debt off first, do the snowball effect. If that hasn’t worked, then you need to implement plan B, and plan B is invest your way out of this problem. So start your monthly contributions, get it to a certain point, understand how that works, start benefiting from the returns, and then you can maybe pay off your debts from that. I’m just saying you’ve got to attack the problem from a different angle if the current plain vanilla advice is not working. So you can invest your way out of debt, as I say, it’s only as a backup if you can’t do the normal traditional ways to clear debt. Nothing starts until debt stops, in the wealth creation game. And again, that is a big thing that people need to get out of. I mean, we briefly spoke about it early on, you said you were highly in debt in your 20s, and you went on the journey, now you’ve come out the other side. I think everyone’s in debt in their 20s, aren’t they? That’s how we lived. When the bank says your overdraft is 2,000 pounds, you’re not thinking, oh, I’ll start from zero, no, you’re actually at minus 2,000 then, and everything is off that bottom number. I lived on that minus number for like six years. When I got above zero, I was probably 23. It’s like, wow, I’m above zero for the first time. You have to be an expert, someone who’s made all the mistakes, so you have to make all these mistakes. Sometimes you can get away with it, and you can learn from other people’s mistakes, but generally you learn from your own mistakes. So you have to make all these mistakes on your wealth creation journey.

[34:51] Sammie: Yeah, it’s interesting because obviously it is vanilla advice, and people tend to go down that route first, do your snowball, the avalanche, or whatever works for you, all of those techniques, right?

[35:02] Andy: If that’s not worked, then invest your way out of it.

[35:05] Sammie: Ah, interesting. Okay, all right. But you talk about three flavours of risk. Three flavours of this risk, yes. Loss of capital, inflation, and volatility. Yep. Most people only think about the first one, really.

[35:17] Andy: Yeah, so this word risk, it’s a little bit like the word love. It means nothing out of context. I love my dog, I love the weekends, I love holidays, I love my iPhone. The word love on its own means nothing. And the word risk on its own means nothing. I want risk, I don’t want risk, that’s risky, that’s not risky, it needs a bit more context. So when it comes to investing, the risk that the uninformed investor and the uninformed commentator only knows is volatility, which is the unpredictability of the prices of the stock market. Volatility is a feature of the stock market and not a bug. And once you understand these key points, you start to become a smart investor. So flavour number one of risk is volatility. The most dangerous flavour of risk that people are aware of is permanent loss of capital. This is investing in a single company that goes to zero. Your hundred golden coins are now worth zero, that’s permanent loss of capital. You investing in something which is a fugazi, fugazi, doesn’t exist, they’re all out there, fools and their money easily parted. So that again is permanent loss of capital if you get defrauded, or various other ways to lose your money and lose the value of your money over time. And then the third flavour of risk is inflation. And inflation is slow, silent, tasteless, but very destructive long term. It’s the printing money machine where your money just loses value over time. We go back 30 years, how much was a beer, how much was a burger, compared to what it is now, is astronomical. So they’re the three flavours of it.

[37:08] Sammie: It was 10 pounds for a beer and burger, isn’t it? Sorry? Not long ago, it was 10 pounds for a beer and burger. When I was at uni, it was 2.99 pounds for a beer and burger. Well, yeah, that’s just what I mean. And then you go back to my uni, for me it was five quid.

[37:21] Andy: So it’s like that, and I think at one point it was 2.29 pounds for a beer and burger at Wetherspoons. But yeah, it’s probably still the same, you know.

[37:29] Sammie: Now you’re 18.50 pounds if you’re lucky.

[37:31] Andy: Yeah, so they’re the three risk flavours and factors that your money is vulnerable to. So permanent loss of capital wants to be avoided, inflation, you want to try and minimise its impact on your money long term, and volatility, which is the easy one to focus on, is the least destructive once you learn how to manage it. And a lot of this results in a fourth flavour of risk, which is low returns. Okay. And low returns come from asset misallocation. We all talk about asset allocation, it’s almost assuming that everyone’s got the perfect allocation to begin with, and they haven’t. So asset misallocation is more prevalent than asset allocation. Most people are in the wrong asset classes. The default funds that have pensions or alternative asset classes in them that have been created by some financial marketing company, it’s just not needed. Most portfolios are, the best investment portfolio is the one that you stick to. The best investment portfolio is the one that you stick to that has the highest allocation to global equities. If, because of your temperament, you can’t deal with the extreme volatility, which is not really extreme volatility, then you can sprinkle in some global bonds. I’m 100% global equities, I’m invested 100% of the time in 100% global equities. Same. I’m an insider. Do what the insiders do. We’re insiders. There’ll never ever be a bond fund in the Hart family portfolio ever. It’s on my will. If any of you put fixed income in my portfolio, I will come back and find you. Yeah, so I’m 100% invested 100% of the time in global equities.

[40:27] Sammie: Technically, if you wanted to get into that, you own bonds through those global equities in a way too, because some of those companies will have it on their balance sheets through their investment portfolios, right?

[40:37] Andy: Okay, minimally. It’s just like saying I own cash through global equities. I’m assuming six, eight percent of that company’s market cap might be cash. But it’s the productive asset class. And the smell test, back to the three flavours of risk and why global equities hammers all three of those, if I can expand on that. So the smell test of, is this the real asset class, is does it provide a rising income over time? And the only two asset classes that provide a rising income over time are businesses investing in the global stock market and physical property that provides a rising income through the rent. So the smell test of, is this a real asset class, a productive asset class, as Buffett calls it, is does it provide a rising income over time? The only two asset classes that do that are physical property and businesses investing in the stock market. The rising income is the key here. So the stock market provides a rising income through rising profits and rising dividends. Property provides a rising income through the rent being increased. Every other asset class is noise and distraction and financial trash to be avoided. So if you own a property because it’s your main house, then congratulations. If you want to invest in property, investment portfolios, and property is your thing, then good luck to you. But most people are realising the golden age of property ended 15 years ago, and it’s just getting worse and worse. There’s no good news stories when it comes to being a property owner. But if you love it and you’ve seen it work, then you stick to it. So most people, they’ll just have their one main house, they’ll be invested in global equities, which is businesses, and then they’ll have cash for lifestyle reasons. That’s as simple as you need it. BBC, bricks, your main house, businesses, global equities, and cash for cash flow. If you need to deal with the house or buy a new car. But apart from that, everything else should be invested. But the best investment portfolio is the one that you stick to that has the highest allocation to global equities. Some people are 100%, me and you are, we’re insiders. Some people need some bonds in that portfolio to dampen down the volatility during extreme times. But then, saying that, we had 2022 when the bonds did terribly. But you deserve that for being a fixed income investor.

[43:05] Sammie: So let me just play devil’s advocate here, because you said something which sounds very, very simple. Yep. And people don’t like simple, they like sexy, the cool things on the block. Like, what’s the next Amazon? And how do I get that? What do you do with those guys?

[43:22] Andy: Well, yeah, I mean, I’m all about elegance, simplicity, trying to find the essence of most things. A lot of people are into naive complexity. They sweat the small stuff and worry about various different things you mentioned. Five pound problems, do you mean, or cheap problems?

[43:43] Sammie: Yeah, the five pound problem, they spend an obsessive amount of four or five hours over finding the account with an extra, yeah, they’re penny wise pound foolish.

[43:52] Andy: Yeah, they’re focused on the wrong things. So what’s the specific question?

[43:57] Sammie: So you just said global equity, cash, bricks, right? Yeah, yeah, BBC, simple. Really simple, right? Which is exactly what we should be doing. Absolutely. Something in our heads makes us go, I know I can find the new Amazon, I need a bit more, I know I can get 12% instead of seven. Why do we do that? And how do you handle that with a client?

[44:19] Andy: Well, working with real, so you could read all of the finance books, personal finance books in the world, you could do all of the exams to become a financial advisor, you could put out lots of content, but when you come into contact with these things called humans as an advisor, everything changes, and you think, oh my lord, wow, what I’ve learned is completely different. Mike Tyson, everyone’s got a plan until they get punched in the face. Humans, we’re not wired for success, we’re not wired for wisdom. So it’s back to the suitcase of misconceptions. So when we take on a client, we work with them in the early stages, hear them out, meet them where they’re at, unpack this suitcase of misconceptions. But over time, my clients have been working with me two, three, four, five plus years, their financial house is tight and in order. And it pretty much is what I just explained to you. The predominant, the bulk of their family’s life savings are invested in global equities, and then they have cash on hand for lifestyle requirements. There might have been a few challenges along the way where they’re looking for the next exciting thing to happen, the next phase, the next fad. But with your family’s life savings, you want to focus on things which have always financially worked. We’re trying to avoid anything which is working now. And as financial advisors, there’s always new things that are working now, they always look brilliant, they’re always sold very well. But again, our job is to be between our client and the big mistake. And the big mistakes are everywhere. So it’s just being consistent with our clients over time to try and help them avoid all of that.

[45:53] Sammie: And if they’re insistent, then maybe you suggest an allocation which might bring the colour.

[45:58] Andy: Yeah, if we need a release valve, it’s called the ROB account, the rush of blood account, it’s called the investment play pen. The one I prefer is the dicking around account. Yeah, you can have a dicking around account if you want, that’s absolutely fine. We’ll carve that out over there, let me know how much, and good luck to you. And it’s usually a couple, and you say, yeah, yeah, well, yeah, we can do that, we can set you up a dicking around account. And usually the wife says to the husband, you have been dicking around though, and he goes, yeah, I have been dicking around, haven’t I? It’s framing, words are weapons. If you say investing play pen, it sounds cool, oh god, I’ve got an investing play pen, I’m a serious player. Whereas if you call it the dicking around account, I mean, they might do really well in it, who knows? But as you know, the typical DIY investor is prone to blow themselves up.

[46:42] Sammie: I have a dicking around account, because I enjoy it. And if I lose all my money in it, then oh well, the global index funds are still doing their thing.

[46:54] Andy: This is our job, we’re in the business, so I open up accounts for everyone and try lots of different things for research purposes, because we’re in the money business.

[47:00] Sammie: Totally, yeah, and I’ve researched that platform, so I’ve got to do it. Yeah, but I don’t do that again. Exactly. Yeah, that 2x geared leveraged oil fund has not done so well. Yeah, yeah, we’ve all been there. But I wanted to touch on something which is happening recently, and I think it’s becoming a bigger and bigger thing, and that is generally around AI and how it’s affecting the world. But we had one of the biggest people, richest man on the planet, the other day, Elon Musk, talk about saving for retirement. And he did talk about 401ks, but it has bled over into lots of conversation in the UK around pensions and ISAs. And he said that saving for retirement won’t matter in 10 to 20 years because of AI. And as a UK financial advisor, what went through your mind when you heard that?

[47:51] Andy: I do follow Elon, I’m interested in what he’s up to. Obviously the companies he’s involved in, he’s arguably creating the future tech stack for human civilisation. So when he does speak, you should take note. It would have been interesting for him to expand on that, because me and you are both wondering exactly what he means by that. So AI, I’m a huge tech fan. I’ve been using advanced tech as soon as it comes out, ever since I’ve been in business. So I’m very pro-tech. I’m pro-AI, I’ve been using it for many, many years. I think I did a podcast on ChatGPT in February 23, where people were thinking, what on earth is this crazy man talking about? So I’m very much pro-AI. I’m insanely excited and I’m insanely petrified at the same time. You can hold those two thoughts in your mind at the same time. Yeah, it’s gonna have a huge impact on money, personal finance. I think it’s gonna strip it to the essence of a lot of things, which is gonna be very, very useful. So the truth tellers, the people that have been doing good things, it’s gonna enhance their proposition. The sort of people that have been a bit sharky are gonna have the light shone on them a bit brighter, I think. But Elon specifically talking about AI, I’m petrified of how helpful AI is gonna be from a medical advancement point of view. Google have got a department, they’re trying to fix all diseases, yeah, and when Google step up to this, they’re gonna have some impact. So we plan currently for a typical two-person retirement of about 30 years. I don’t know about you, but I feel like the medical profession at the moment, I mean, they’re doing a great job, don’t get me wrong, but I feel like they know nothing about me. If I got something wrong with my feet that I had recently, I saw five different people over five different months, five different explanations, haven’t got a clue. If I can go into some AI booth that just scans me, knows me inside out, and that’s then my AI medical profile, going from, they’ll know, nerve 6.79, Andy’s got a slight blemish on it. So what I’m saying is, it’s gonna lead to us potentially living longer and longer and longer. We might have to introduce the sell-by date to the human.

[50:20] Sammie: Have you seen this David Sinclair thing, by the way? It triggers something in my head. They can fully regenerate old cells now, like fully, they did it on stage.

[50:29] Andy: So we might have to introduce sell-by dates.

[50:31] Sammie: Yeah, they reckon hundreds now, hundreds is what they’re gonna, hundreds, yeah.

[50:36] Andy: So that would push back on Elon’s saying that you don’t need to plan for your financial future, you don’t need to plan for your future lifestyle expenses. Because I’m thinking, well, if AI is gonna shorten our lifespan massively, then that plays into that statement. I think, I mean, people will be working longer. So typical working people will be retiring at 70. I mean, this is me in my 2026 brain, I’ve got no idea what’s gonna happen in the future. So I think people will be retired for longer, which means you need to plan more. But then what do elderly people spend their money on? They generally, early on in retirement, spend it on holidays and experiences. Will that become cheaper, more efficient? Is AI going to have an impact on that? It’s like a U curve, isn’t it, in retirement?

[51:27] Sammie: They spend, it blows out, and then they go back up when they need care.

[51:31] Andy: And then the other thing I think he’s referring to, which obviously he’s hot on, is humanoids. And they will be initially helping in the house, looking after the elderly. A huge cost and burden is elderly people on their children, because obviously the children have to be around a lot more to care for them in their final years. Obviously, will this impact the care home sector? I’m sure the care home sector are not worried now about humanoids, but they will be at some point in the future, because again, it’s a huge cost to support elderly people in their final years. Isn’t it something ridiculous, like you spend 40% of your entire medical budget in your first 12 months of life, and then you spend 55% of it in your last 12 months of your life. All the cost is there, and in the middle it’s just minimal. But again, that is what it is. So in terms of him saying, you don’t need to fund and invest for your future retirement, again, he needs to be asked more questions on that.

[52:44] Sammie: Well, he said 401k specifically, but he’s just basically saying pensions.

[52:48] Andy: Don’t worry about pensions because AI will fix all that. Yeah, but in what way? You know, so what, I’m gonna have an AI girlfriend on my phone so I’m happy, I’m then gonna have a humanoid doing my ironing, but I’m not going out because I live in this amazing virtual world in my house.

[53:06] Sammie: Yeah, I can’t work because AI took it. We just don’t know.

[53:09] Andy: The thing that was interesting about AI, Elon’s also said about universal high income. People talk about universal basic income, and he’s like, well, why do we have to have a basic income, we’ll be awash with cash, everyone can have a high income. So it’s like, well, what are we gonna do? Because if work is reduced to touch points, what are we gonna do? And he’s saying sports and the arts will increase. Currently we have a huge sports industry, people go and watch sports, get involved in sports, but technically they’re not essential for human life, it’s a choice. The arts, museums, theatre, cinema, it’s a choice, it’s not essential. You don’t need to watch a film and watch football to survive, the basic essentials of life. What they’re saying is leisure activities will increase because you’ll have so much more free time, there’ll be so much more sports and so much more arts. Because how are humans going to fill their time? We’re gonna have humanoids doing all the stuff in the house we don’t want to do. It’s like, well, what am I gonna do for seven days? I’ve worked for three minutes today and I’ve earned a little bit of money because I’ve had to just check in with my robots. We just don’t know. As I say, I’m excited and petrified.

[54:20] Sammie: Yeah, but then there’s also the AI Armageddon type conversation too, so it’s like, well, yeah, there’s also the risk there, they get smarter than us, it means we don’t need you, there’s that.

[54:33] Andy: I mean, yeah, the people I’m consuming at the moment, Demis Hassabis from DeepMind Google, the Anthropic guy, Dario Amodei, and Jensen Huang from NVIDIA, and then Elon. Just listening to them in conversation is scary, but they are at the forefront of this. It’s nuts, isn’t it?

[55:01] Sammie: Moonshots, by Peter Diamandis.

[55:05] Andy: Diamandis, yeah, yeah. That’s a book, isn’t it?

[55:07] Sammie: No, it’s a podcast. That’s a series, okay, fine. And he does that, he has three of the biggest AI investors, and they do a round table once a week to talk through the AI news. Staggering, isn’t it? And every week there’s like ten points within a two-hour episode, and every single point you’re like, what? Yeah, and it just builds and builds and builds, and so it, the pace it’s moving at, we’ve had step ups in technology, but this just seems to be astounding. So let’s unpack that a touch. Because let’s say, for example, I walk into your office today, yeah. I go, mate, what do I do? I’m 35, or I’ve just sold my business, so how do you plan for that? Because it’s moving that fast.

[55:48] Andy: The good thing is, once you’ve got your investing principles and you understand the stock market, it doesn’t matter what’s thrown at you, you still stick with that plan. What I mean is the stock market is just investing in human ingenuity. Totally. The stock market is not static, it’s not as if you invest your golden coins in January 2026 and then it doesn’t move. There will be companies that fly, there will be companies that die, but if you invest in global equities, you’ll always own the beasts. Me and you, our biggest holding is NVIDIA. We have 4% of our clients’, sorry, of our own personal family’s life savings in NVIDIA. I’ve known NVIDIA for many years, I’ve never invested in them individually. So they are a winner of AI. 4% of our combined family’s life savings are in NVIDIA.

[56:44] Sammie: Mad, isn’t it?

[56:45] Andy: Mad, isn’t it? So everyone on the street that’s invested in their pensions, and if you said, oh, are you guys investors in AI and NVIDIA, they’d go, no, I don’t even know what you’re talking about. Have you got a pension at work? Yes, you have. Look at it, number one holding, NVIDIA. Yes. So we’re all invested in it anyway. That’s the great thing about owning human ingenuity, human capitalism, global equities, you’ll always own the beasts, but you don’t have to pre-find them, they’ll just rise to the top. So there isn’t any change. And again, it is a tough decision now for people to do, do I go to university, what do I study? The thing that’s quite interesting. Well, they said, do it just for the social, Elon Musk. Yes, of course, as we were saying before, should I go to university? Yes, 100%, nothing to do with the curriculum, it’s to do with, you’re gonna make lifelong friends for life, and you’re gonna have a laugh, and you’re gonna make a lot of mistakes. But the irony with AI, the job that it replaced first was the job that the most intelligent people did, computer programming. So it didn’t go after the entry-level filing jobs, I mean it’s coming after them now, and it could probably do it anyway. Most computer coders that we know and hear from say they haven’t written a line of code in a year.

[58:10] Sammie: Yeah, no, I don’t know, they haven’t listened to it all the time.

[58:12] Andy: Or they haven’t written a line of code in two years, they’re all just prompting. And how do you prompt the AI systems, do you talk to it? So you’ve got to get really good at talking rather than writing and coding. So we just don’t know what’s happening.

[58:28] Sammie: Well, it’s nuts. Like when we first started the app, we set aside an original budget, first, this is how much we’re gonna spend.

[58:37] Andy: Yeah, yeah, minimal viable product on the coding front was X budget, and you did it on 10%.

[58:41] Sammie: 10 people, and we now have a full-time CTO, and he has a couple of contractors for little bits and bobs, and then the rest of it is the machines. Yeah, and as he said, three months, one line, talks to code, code.

[58:55] Andy: Yeah, it’s interesting what’s gonna happen with the job model.

[58:58] Sammie: I mean, you don’t need me to say this, this is just obvious, you just need an ounce of intelligence to work out that there’s a lot of change coming down. That’s really interesting when you look at the S&P 500 as a total thing, a lot of the mid-cap insurance-based companies, if you look at price-to-earnings ratio overall, it’s 22, but these companies are now already contracted down to the six to seven mark.

[59:25] Andy: Wow.

[59:25] Sammie: Which is just really, I mean, they’re getting very cheap. Very cheap, but because they’re most likely to be affected by AI, they’ve come off that much.

[59:33] Andy: Who do you say is most likely to be affected by AI? Insurance companies.

[59:37] Sammie: Yes, because if you think about how much can be automated within that business, how slow those companies are, those old money businesses, they’re not the ones that are innovating and bringing things into AI. Whereas if you look at Apple or Google with free cash flow that are investing into technology for the future, oh, the investment, the upfront investment, the unknown investment is staggering.

[59:58] Andy: And how they’re gonna recoup it, there’s only one way they’re gonna recoup it, by charging subscription fees. And again, it’s gonna be like oxygen within your business, you can’t turn it off. So we’re gonna be paying a lot for these subscriptions sometime in the future. At the moment, most of it’s given away for close to free. But the real problem, again, I don’t know it well enough, it’s just other people mentioning it, is the replenishment of the data centres. Whereas electricity was a 50-year grid lifespan, apparently these data centres and GPUs have low single-digit years, then they need to be replaced. That’s more money being spent. And I don’t think we can, like mobile phones, take them from a wealthy country and sell them in a poor country. AI data centres, they all need to be of top standard around the world. So we just don’t know what’s happening. But yeah, prepare for it, have an open mind, and don’t be for AI and against AI, it’s not binary. It’s like, I know it’s gonna have an impact on me, I just need to work out what that is and then adjust accordingly. It’s not black or white.

[61:03] Sammie: So let’s go back to the book. What do you think is the chapter within it that would be the most surprising? And maybe what surprised you when you wrote it, do you think?

[61:15] Andy: Yeah, I found it quite hard to write the book. So I suppose I split it into the first section, the first chapter was, it’s all about you. Once you embrace that you are the problem when it comes to your money, but more importantly, you are the solution. So it’s not really going to be external factors that come into play for you to become financially successful, it’s internal factors, your mindset, your thinking, the amount of research you do, putting a bit of effort into it. So again, I think that’s quite a unique angle, because a lot of the other books talk about the things you need to buy that will make you successful. So it’s all about mindset and behaviours, regularly investing. When’s the right time to invest and how much should I be investing? The right time to invest was yesterday. How much should you be investing? More than you think. People always want a pandering answer. Oh, maybe wait till three months’ time when you get a pay rise. No, no, forget all that, yesterday, immediately. How much? More than you think. How much are you thinking? 100 pounds. No, do 500. I can’t do 500, I can do 200. We’ll do 200 then. Just get on with it. Everyone’s always got that number, the “I was thinking” number. If someone says, how much should I invest into my ISA, they want you to run off and do a spreadsheet calculation, and it’s not really about that. It’s, okay, why don’t you do a thousand pounds a month? Well, I can’t do that. Well, how much can you do? 300, we’ll do that then. Just take action and get on with it. Unlearning also is quite important. There’s various things that we pick up over the years, we’re all full of habits that we need to unlearn. And then just taking action around saving money. Saving money, yeah. It’s all tough stuff to get your head over.

[63:03] Sammie: This country, aren’t we, absolutely obsessed with it. And I think it’s important, like you take care of the stuff that’s happening this year, or if you’re going for the house, whatever, that’s great, but once that’s sorted, everything else, invest, yeah.

[63:18] Andy: Yeah, again, the thing I ask financial advisors is, do you think a pay rise is good for your financial plan? So I’m asking you, is a pay rise, let’s say you were a normal employee on a wage and you got a pay rise, is that good or bad news for your financial plan? Depends. Correct. On what threshold you’re at, what, if you’re getting technical about tax rates and weird stuff like that? Yeah, right. Let’s just put that aside, I’ll add some more meat to the question. Okay, I’ve worked it out, and you’re gonna get, after tax, a thousand pounds a month net. Is this good news for your financial plan? Absolutely, of course it is. Does it not depend still?

[64:03] Sammie: Okay, well, it depends what you do with it. Correct. So if you go and lifestyle inflate, well, you might as well never have had the pay rise.

[64:10] Andy: No, it’s really bad news for your financial plan. Yep. So if the typical person’s pay rise is bad news for their financial plan, that’s the headline. Because the typical person gets a pay rise, we’ll work off a thousand pounds, I know that’s very high for a typical pay rise, but we’ll just work off that. If, let’s say, the pay rise after tax was a thousand pounds, is this good or bad news for your financial plan? The answer is, it depends. It depends on what you do with it. If you only invest 200 pounds of that, which will be quite a typical but still punchy number, because they’ve already earmarked the 1,000 pounds for who knows what, lifestyle creep, a load of other stuff, new car, holidays, new gym. So if you only invest 200 pounds of that for your future self, your current self is now spending 800 pounds of it. So 20% is invested and 80% is spent. So now you are aiming for a bigger number in the future, your target has got bigger because your new lifestyle includes that extra spending.

[65:13] Sammie: Oh, I see why you’re looking at that. Yeah, yeah, yeah. Because you’ve added more things to the things you’ve got.

[65:18] Andy: Yeah, your lifestyle costs have now gone up.

[65:20] Sammie: So technically, if you’d done 600, 400, you’d have been better off.

[65:24] Andy: Yes. So if you invested 501 pounds into your ISA and spent 499 pounds on your current self, that pay rise is good news for your financial plan, because your future number’s gone down minimally by a percent. Most people are not financial robots. A financial robot would go, right, I’ve got a thousand pounds pay rise, yeah, all of it’s going in.

[65:46] Sammie: Yeah.

[65:47] Andy: All of it’s going in. But who’s going to ever say that? Typically, I ask this question to financial advisors all over the country, and these are financial advisors, you’d think they should know, and they all say pay rises are great news for financial plans, and then we break down the numbers like we’ve just gone through, and actually no, so a typical person would probably invest 100 pounds of that, believe it or not. A typical person. If that. Okay, so 100, 150, 200 pounds, we’ll be kind. For 99% of people, pay rises are terrible news for their financial plan. My biggest pay rise ever in my life, probably similar to yourself, was going from uni, generally having no job, let’s keep it simple, I did work at uni, to my first job. My first job was 750 pounds after tax a month. I went from zero to 750. That’s the biggest jump I’m ever going to have in my entire life. And I thought, my God, when I’m earning a thousand pounds a month, I’m going to be definitely saving the difference between the 750 and the thousand. Do you hell. When it starts coming in, you quickly readjust. So yeah, generally pay rises are bad news for your financial plan, because you’re going to consume more of it now, which means you need to aim for a bigger future number that you then need to live off.

[66:58] Sammie: Can I play devil’s advocate to that?

[67:00] Andy: Yeah.

[67:01] Sammie: Oh, Andy, I’m definitely gonna lower my lifestyle when I get to that point.

[67:07] Andy: Yeah, right, again, good luck with that, most people don’t. Again, when we plan with people in their early 50s, the big question is, how much money needs to be coming in every single month for you to live a comfortable and dignified retirement? That’s the question. How much money needs to come in every month for you to live a dignified and comfortable retirement? Assume the mortgage is gone, assume the kids are gone. And they go, oh, good question, never really been asked that before, blah, blah, blah. Seven grand a month, or whatever the number is, three grand a month, twenty grand a month. People come out with all different numbers. When we build plans, long-term forecasts, we generally take what they’re spending now on lifestyle. So lifestyle excludes mortgage, excludes contributions, and excludes kids, because they’ve got a finite length of time in the plan. And what’s left, we generally forecast that going forward. Most people find it very hard to reduce their lifestyle spending, funnily enough, especially in a couple, a heterosexual male-female couple, they find it very hard to reduce their expenditure. I think the only other people I’ve seen do it successfully are single males. I talk about it in an essay I wrote. OPM, you’ve heard of OPM, other people’s money. So when you are working, usually, you’re employed, you’re an employee, or even if you’re a business owner, like ourselves, when you’re working, money just flows in. You send invoices, you’ve got recurring clients, or you’ve got a paycheck. So whilst you’re in your working stage of life, money flows in. It’s your money, you’ve earned it through being an employee or running your own business, you’ve earned it, but it feels like other people’s money, OPM, just flows in, flows in, flows in. You think, this is fantastic, this is a great life. When you hit retirement and you’ve built up this amount of capital, pensions, ISAs, general accounts, and then you think, oh, I’ve got to withdraw some money from this, from my stash, from my pot, to sustain my lifestyle, weirdly it feels like your own money for the first time. That’s when people become a lot more conscious of their spending. Whilst they’re working, they’re busy, the kids are causing hassle, money’s flowing in, they don’t really worry about it that much. When you ask how much you’re spending per month, it’s like, all of it, I’ve never really thought about it. Obviously, the key thing is they need to be investing and increasing that every single month. What they’re spending, I’m not bothered about it.

[69:46] Sammie: So they’re kind of pushing that away, and then when they’re doing the other thing, they’re pulling it towards them, right? So yeah.

[69:51] Andy: So the wages, your own business, feels like OPM, other people’s money. Whereas when you’re retired and you’re drawing down on the capital, it feels like own money for the first time ever. Exactly. So literally, you have this high-flying couple that don’t give a monkeys what they spend. If I say, look, you can go online and do some comparisons, as if I’m doing that. When they start getting retired, they spend three hours trying to save 40 pounds a year on contents insurance, because for the first time it feels more painful. So this is what I’ve noticed with working with people for like the last 20 years. Whilst they’re working, it feels like other people’s money. And when they retire, it’s like, oh my god, it’s my money for the first time, and it has a real heavy impact on clients. They just become a lot more conscious of stuff, mate.

[70:41] Sammie: You’ve got a wealth of knowledge, you’ve been doing this for some time, and I think the book’s gonna change a lot of people’s lives. Well, thank you. Cheers, thank you very much. Yeah, because it is nice, it’s refreshing to have this kind of conversation, it really is. Because I do a lot of podcast episodes, you’ve done a lot of podcast episodes, over 300, and hopefully we’ll still be alive by the time we get to that point.

[71:03] Andy: Oh yeah, good luck if you get to 300. I think you will. This seems like your full-time job. Yeah, I know.

[71:08] Sammie: For me, it was a side hustle. Yeah, no, I love it, it’s good fun, but you hear a lot of regurgitated information from somebody else that they’ve put a little wrapper around and called it something, yeah. Whereas this has been quite refreshing for me, because it’s just like, no, this is what you need to do, what are you missing around, let’s not wrap it up.

[71:33] Andy: I think the title of the book’s quite good, quite on brand. I say things that people are gonna disagree with, but a lot of things I say capture people and they go, yeah, this guy says things that resonate with me.

[71:47] Sammie: And where can we get it?

[71:48] Andy: Oh, the book is on all the platforms. Amazon is the main one, because it’s got a bit of a swear word in the title, sometimes it’s quite hard to find, but type Andy Hart. And there’s a website [unclear]. Yeah, that’s it, really.

[72:05] Sammie: We always support when someone has a book out, we always pop it in our email list as well. Oh, thank you very much. Super, thank you. A little bit of a boost. So if you do miss it and someone’s screaming in the background and you don’t remember that it’s there, we will email it to you as well. So that’s great. Yeah, mate, honestly, thank you very much. This has been a really interesting conversation, and I hope to catch up again soon.

[72:26] Andy: Brilliant. Thank you very much, Sammie. Cheers. Thanks.