Samantha Rosenberg: The Behavioural Science of Investing

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

[00:00] Samantha Rosenberg: To build wealth, you need time in the market, and you don’t have more time in the market than today. You’re speaking my language. We’re sitting on the sidelines. Yeah. When we ask people who they go to for financial advice, we get two very clear answers. My dad, and then my friend that works in finance. Oh, interesting. There’s 300 billion of cash savings sitting with 25 to 45 year olds in the UK. 67% of the UK are getting 2% or less from their savings as well. So cash and bank, which is just mind-blowing, because that’s probably most of that 300 billion. According to behavioural science, we have two systems of thinking. We’ve got system one and system two. System one, we make the vast majority of our decisions in. It’s very quick. And then we’ve got system two, which is slow and deliberate. And system two is really where a lot of our our financial decisions should happen.

[00:49] Sammie Ellard-King: Yeah. One thing we see happening around us is the speed of social media, even to the extent of the user experience of some of these apps. Yeah. Where it feels like I panic. There’s adrenaline that’s happening in system one. And that’s a key thing that came out in our research. How do we move people into system two? Hello, and welcome to the Money Gains podcast. We are back this week with a very special guest in Samantha Rosenberg, who is the co-founder of Bilong or Belong. Which one is it? And today we are gonna be talking about investing into the stock market, but from a very different angle, much more on the emotional and behavioural side of investing, which has such a big impact in how we make decisions on a day-to-day, but also on the long term, which funny enough is all about be long. And you are gonna love this episode, guys. So make sure you stay tuned and let’s get started on the Money Gains Podcast.

[01:49] Sammie Ellard-King: The Money Gains Podcast. So Sam, welcome to the Money Gains Podcast. How are you? I’m good. Thanks for having me. I am very excited about today. Me too. I’m a huge fan, so it’s very surreal to be here. Thank you very much. Thank you very much. But we spoke on the phone the other day and we dived a little bit into belong, which is what we’re mainly going to be talking about today. But honestly, like I just think it’s awesome. Thank you. You’re welcome. Honestly, I think it’s great. It’s just completely different. And I think that’s going to set us really nice up for the chat today. Like, it’s investing with a difference, guys. And like this just doesn’t come around very often, does it? Yeah. There’s a there really is a lack of innovation uh in the space, and we’re looking to tackle that. Yeah, 100%. But I want to start a little bit with your earlier days because your journey’s amazing. Obviously, you you know probably heard the accent already. But where do you hail from?

[02:42] Samantha Rosenberg: From South Africa. Okay, cool. So what got you into where you are today? Do you want the long story or the short one? It’s very fun. Umce upon a time. I won’t get that far back. Uh uh, so I was born in Johannesburg, born and bred in Joeberg. I then went to university in Cape Town, which is the best city in the whole world. Plug. Um and I studied economics. I I I just kind of randomly chose economics. I think it was the only way I could do law in a in a commercial degree. So I did economics and law. I remember sitting in my first economics class and turning to the guy next to me, and I was like, what is economics? And he was like, it’s just supply and demand. And I was like, oh, okay. Nice. Um turns out it is literally just supply and demand.

[03:37] Samantha Rosenberg: Degree done. Give you a first. Yeah. So I did that. Uh I actually fell more in love with the economics than the law. So I stuck with the economics. I had done a double major and I decided to do my master’s in economics. And in doing my masters, I came across behavioural economics, which had kind of just landed in South Africa in the academic space. And it’s essentially the intersection of psychology and economics. And my research, my master’s research looked at the determinants of gambling addiction amongst the poorest households in South Africa. And I just love this idea of being able to take human behaviour and explain it using a mathematical equation where the y variable was addiction, and we just need to identify what all the x variables are and how they’re weighted. And by understanding that, you essentially are unpacking human behaviour into its component parts, which means you can then influence the the component parts and therefore the end behaviour.

[04:36] Samantha Rosenberg: Positively? Yeah. Positively. It happens, it can happen negatively. There’s a lot uh that has been done in the behavioural space that we call it sludging instead of nudging. Okay. Um it gets used negatively. We just had Black Friday. Yeah. Um we could have a whole podcast episode on that. 100%. Um, but that’s all that’s all grounded in behavioural science, the way people behave, the way they behave with their money. Um and since my master’s research, I’ve just been obsessed with both understanding human behaviour, specifically around how people make decisions with their with their money, and then how we can help people improve it. Because a lot of it happens subconsciously. Um What are the triggers that you find in kind of the behavioural aspects of people perhaps falling into gambling?

[05:27] Samantha Rosenberg: Uh so there were uh kind of different uh categories. There’s the demographic stuff, so gender, income, all of that. But from a behavioural perspective, one of the key predictors of gambling addiction was in fact uh well, having an addictive personality was one. So the research showed that people were going in and out of gambling addiction. But when they were going out of gambling addiction, they were going into a different kind of addiction, alcohol or smoking or drugs, and then coming back into gambling addiction. So they’re kind of oscillated between uh addictions. That was one. And then most interestingly, the illusion of control. Oh, interesting. So people with a higher illusion of control are more likely, where they think that they’re more in control of their destiny and fate and luck and all of that are more likely to um take up with gambling.

[06:18] Samantha Rosenberg: So you also see like um like people perhaps with more purpose were less likely to gamble with or say business owners or for example, people that were actually maybe contributing to society in a positive way. Yeah. So uh kind of career or occupation was definitely one of those. Really? That’s so interesting. Because I I I do see that. Like a lot of my friends, even now, you know, they’ll even they’ll, you know, they either they’ll say, Oh, you know, it’s not a problem or whatever. And for a lot of them it isn’t, they just flutter on the weekends and things like that. But all of them have what I would regard, and sorry for anyone to listening to this who’s in those fields, like semi-mundane jobs or trade roles. So they feel like their release happens through gambling. That’s interesting.

[07:03] Samantha Rosenberg: And it makes its way into investing. Yeah. Very much so. Because it’s also like a thrill, and usually they’re shorter term crypto pro type individuals, um, which causes issues on that side of things because they’re playing with the stock market, which is very different. Yeah. So when I say that, you know, I studied gambling addiction and I’m now uh a wealth tech founder, it sounds like they’re pretty that’s quite a far leap, but it’s actually not. There’s so much overlap. Uh the whole premise behind behavioural economics is that we are contrary to traditional economics, that says that we’re perfectly rational, perfectly self-interested, we’re actually in many ways perfectly irrational, in that we’re irrational in these predictable ways. We’re very much irrational in the same ways. Um, the context just changes.

[07:56] Samantha Rosenberg: Yeah, 100%. So you’ve done that MBA, and then you’ve moved here. So I did so I did my master’s in behavioural economics, and I fell in love with this idea of helping people make better financial decisions using my understanding of behavioural science. I wasn’t really sure if there was a career in that. Uh, I kind of imagined I’d probably go into management consulting, which is where most economists tend to go. And it was while I was looking for a job in management consulting that I was introduced to someone who had just started the team the first team of applied behavioural economists in Africa. And it was a very small team. I think there were three or four of them at the time. And I joined that team and I operated very much as a management consultant would.

[08:43] Samantha Rosenberg: Right. Uh, but in the behavioural science space. Uh, given my interest in the way people make decisions with money, I worked on the financial services portfolio for the team. So the rest of the team was working on public health and a whole lot of different interesting things. I was working on financial services. So working with all the big banks, the insurance companies, the investment companies, on understanding the end customers’ behaviour. Why are people not saving for the long term? Why are they withdrawing their pensions early? Why are they not taking out insurance when they should? All those sorts of things. Uh, understanding the behaviour and then implementing different product or communication changes using behavioural science. Oh, that sounds like such a fun job. It was such a fun job. Yeah. Absolutely loved it. I loved it. Because you’re kind of seeing it from the like the entire spectrum, right?

[09:28] Samantha Rosenberg: Yeah. And you’re seeing data probably crossover across decisions, buying decisions. It was fascinating. Yeah. And really it was this financial, these are massive banks, the largest in Africa, some of them, and uh representing this uh very traditional slow-moving industry, and it’s the intersection of that, and an individual human on the phone with the call center making a really big decision about their finances in a minute. Yeah. Yeah. Uh so it was it was it was really interesting and it was really gratifying because with behavioural science, you can see the impact almost instantly. Yeah. We change a script in the contact center, and all of a sudden someone has gone from not having a pension to having a pension.

[10:16] Samantha Rosenberg: Yeah. Just from a like we even see that. Yeah. When we do our programs, like one small emotional word can literally triple the amount of sign-ups overnight. Yeah. And it’s just insane how language and the intersection of language and our money happens just by how you present it, right? Yeah. Yeah, it’s brilliant. So you’ve done this management consultancy kind of role. Yes. So I did that for five years. You did that for five years. Yeah. Wow. Um, and I was ready to do that for the rest of my life. Yeah. Uh, but I just decided that maybe there was more. Um, I was still quite young. And you kind of got that like I got the itch. On the one hand, it was I was very happy if uh to hear if someone had said to me, You’ll do this for the rest of your life. I was like, wow, that that’s a pretty good life. I love my job. But it was also kind of like, what else is out there that I could be applying this, these same, the same expertise to? Uh and I was very interested in fintech, which at the time wasn’t as big in South Africa. Uh so, and at the time, also my brother, my older brother, was doing his MBA at London Business School. And so I was kind of seeing this, this almost duality of me for having found my dream career really early on, and my brother having moved across the world doing an MBA at London Business School, having this really exciting life, going through all this professional and personal development. And I was kind of like, mm, that looks quite fun.

[11:46] Samantha Rosenberg: Yeah, challenge yourself. Yeah. Let’s go for it kind of thing. And just see what and see like where where I land. Yeah. I suppose with that, like in your head, you’re like thinking you’re interested in the think tech space, where better in the world, other than here or maybe Sam Fran, right? So it’s That’s exactly it. Yeah. Yeah. So you’re like, okay, let me go and get some exposure in that. That was exactly it. And that’s how I found myself in the UK in London. Cool. What a cool journey though. I just really wanted to like unpack that because I just think it’s so cool that like you’ve gone through that and then you’ve decided, no, I’m gonna stop doing this now and I’m gonna scratch this. I’m gonna move halfway across the world. Yeah. Same time zone though. Same time zone. Like it’s a big move, right? How did you find the move? Was it nerve-wracking for you? Do you think? No, I must say it wasn’t. There’s a huge South African community in London.

[12:33] Samantha Rosenberg: Yes, massive, yeah. Um, so I I I I kind of landed with my bum in the butter. My brother was already here. I literally moved into the apartment below him. Oh, really? Okay. Hi, can I make some sugar, please? Which was like really fun for him. Um, so it was it was quite a comfortable move in that regard. Um so yeah, it wasn’t I think that what was more challenging was not knowing what you kind of I was going in blind. I was very much going into exploring the the personal development side of things. Yeah. Um, and figure out really what I wanted to do. And, you know, do I want to be a behavioural scientist for the rest of my life or do I want to go into investment banking? You know, it’s I was very open to coming out as as any at the end of the journey as anything.

[13:22] Samantha Rosenberg: 100%. But like are you applying your like behavioural science in a way into uh like investment banking? Yes, extremely valuable to those investment banks, right? Because they get all different types of people, usually not with that like psychological, psychological mindset, which actually when you apply psychology to a lot of investment decisions, you’re going to do all right, you know? Yeah. So I can imagine you were probably like, Do I go where do I go from here? But what did you then move into at LBS?

[14:38] Samantha Rosenberg: So at LBS, I came straight out, I actually started Belong while I was at LBS. So it’s a two-year program. Nice. And by the end of my first year, I think my co-founder and I had already incorporated the business. We’d actually already started fundraising. Amazing. Um, and it was through LBS that I both met my co-founder and then uh we came up with the idea for Belong and and started it. And the story behind it’s quite cool, isn’t it? Because you met Nick Hungerford. Nick Hungerford is yeah, absolute legend. Absolute legend of the game, founder of Nutmeg, co-founder of Nutmeg, and like just uh Titan in the business. Totally. But he spotted something in you, didn’t he? I remember you saying this. And I loved it. I’m still not quite sure what it was. Um in his in his he was one of my guest lecturers for one of the entrepreneurship classes. They do this really cool thing where um in a lot of the uh the classes, there’s a business case that you look at, and in our case it was Nutmeg, and but they changed all the names, and so it wasn’t called Nutmeg in the class, it was called something else, and the founder’s name was something else, and it took us on the founder’s journey. And you’ve got a group of like a hundred MBA students saying, like, what he did right, what he did wrong, what he should have done differently. And what you don’t know is that he’s actually sitting in the class. The the actual founder is sitting in the class listening in. And then at the end it’s revealed, okay, this is actually X company, and the founder is in the class, and they had then have a chance to respond and explain why they made the decisions they did.

[16:11] Samantha Rosenberg: I love that. It it’s so cool. It’s really cool. So then they get up and they and you can question them basically. Yeah, yeah, yeah. So this was the at the time he was in Singapore, he wasn’t in the UK anymore. So he was he was listening in virtually. Yeah. Well, we were actually all remote by this point. It was um it was lockdown, yeah. Yeah. And he revealed himself and he started talking, and and at some point he said something along the lines of behavioural science is the future of of fintech and specifically wealth management. And that just stuck with me. And of course, I then reached out to him and I was just looking for an internship in fintech. As I said, I was interested in going into fintech. Um, and I said, you know, I’ve got this back on behavioural science. Do you know anyone looking for my expertise for an intern like role? And please give me a job at Nutmeg. Unfortunately, he’d already left, but but if you still know anyone at Nutmeg, um and then he we got chatting and he really invested in his time in me, which was just this like a complete blessing. Uh I had I didn’t have a lot of I guess insight into what more I wanted to do other than I knew the two pillars were fintech and behavioural science.

[17:28] Samantha Rosenberg: Where’s the crossover for you at that point? Yeah. And what does that mean? What does that look like? What kind of company is it? Is it a startup? Is it a scale-up? Is it investment banking? And he then helped me tie a lot of it together. And then we got to the end of I don’t know, not the end of anything, but a couple of weeks or months in of of chatting and him very much mentoring me. And at which point he said, you know, I want to introduce you to someone and I think you two should start a business together. Yeah. Just love that. It’s like picking out the best bits of someone’s mind and then going, you guys should speak. Yeah. It it’s it was, it’s just I I I’m well, I’ll be forever grateful for that. Yeah. He changed my life. He literally changed my life. Oh, I can see it. Yeah. But it’s just brilliant for him. And then to like put you two together, and then what was that like? Like, you know, it’s like, oh, hi, we’ve just been matchmaking. Yeah. It’s kind of like a blind date, isn’t it? It was a little bit.

[18:25] Samantha Rosenberg: It felt a bit like a blind date. Um, and he so he put us together, we started chatting, and it was instantly obvious why he had put us together, just as we started unpacking our interests and what we wanted to do with our careers and the things we were seeing around us that were bugging us, problems that we wanted to solve, and things we were experiencing personally that we wanted to solve. Uh, because what I had been speaking to him was about building wealth. And, you know, at the time there was a lot going on in terms of trading, day trading. Robinhood had just taken off. There was a lot with Revolut, and I was watching all my classmates day trade, essentially. Um, I think there’s definitely a space for that in the market, but it it really bugged me that there wasn’t what struck me, bugged is a bit of a an understatement. It struck me that uh we weren’t doing multiple long-term wealth. Yeah. And I think a combination of the gambling research that I’d done and seeing how people make decisions, all those years working in a more traditional institutional space and understanding this gap in long-term financial decision making. Yeah. And then seeing this like quick um wave of very short-term decision making. Uh it made very clear this opportunity to do more in the long-term space. 100%. And of course, I then have the behavioural science understanding or the behavioural economics understanding of why we’re not making long-term decisions. Um, so that’s where I was coming from is you know, as a generation, we’re not doing enough to build long-term wealth. And it’s because our brains are acting against us and everything around us is acting against us. It’s all encouraging us to think shorter and shorter and shorter term and instant gratification. And Avion, my co-founder, who’s back, she has a very technical financial background. She worked in leverage, uh leverage investment banking. She then worked in FinTech for a while. And she had been speaking to Nick. They’d gone to business school together at Stanford and had remained friends, like pre-nutmeg, and remained friends uh over those 10 years. And she’d been speaking to him about, you know, more the mathematical side of it. To build wealth, you need time in the market, and you don’t have more time in the market than today. We literally will never have more time than we do sitting right here. And we’re speaking my language. We’re sitting on the sidelines.

[21:04] Sammie Ellard-King: Yeah, we are. Yeah, and that’s and and Avion was kind coming to the conversation with, you know, how do we get people invested earlier with more so they can benefit from compounding? Warren Buffett has been out there speaking about like buy and hold, get in earlier, don’t be you don’t have to pick stocks, you can buy index funds for years. Why aren’t we listening to him? I know. The biggest and the best. Yeah. I completely agree. I think the what you said there, and I’d love to see your thoughts on this, knowing what you know, having gone into the gambling, seen that like Robin Hood GameStop saga kick off, and like that was wave of like retail investors getting into the market, dipping their toes in. Do you feel like social media and online marketing had a massive impact and still has a massive impact on that entire conversation?

[21:57] Samantha Rosenberg: I think so. I think social media definitely has an impact for good and for bad. Um, but it’s also what we see our friends and our communities doing. That’s been one of our key findings in our research, is where we go to for financial, let’s call it, we can call it guidance, advice, really financial inspiration, is we look at what the people around us are doing. And especially people who we trust and people who we hold in a high regard. Uh so when we ask people who they go to, customers who they go to for financial advice, we get two very clear answers. We get my dad, a lot of us going to our dads for financial advice. Oh, yeah. Often I say that to dads, and they’re like, Oh God, I hope not.

[23:49] Samantha Rosenberg: Yeah, I don’t know. But isn’t that really too I’m hoping he was teaching me. Um, my dad and then my friend that works in finance. Oh, interesting. Yeah. Okay. Because they’ve got a mate who does the thing and this is what he says. Right. Um, and when that friend who’s working in finance is doing it, maybe in a even a in a sophisticated way or in an uh an informed way, and we see that, and it seems really easy, we kind of do the same thing. Yeah. No, it’s true. And sometimes those conversations are very useful and helpful. But often more often than that, not they actually are, but we kind of see the stock side of them too, sometimes. Yeah. And I suppose it’s like what’s going on around them as well. Like their mates have leveraged car finance and like they’ve got everything under the sun, Gucci bags, maxed out credit cards because it’s all happening around them. And then they’re like, oh my God, now I should be doing Bitcoin and GameStop. And then it’s like, uh actually, no, like take a step back and there is a better approach.

[24:52] Samantha Rosenberg: And I think another part of it is just the speed at which things happen. Yeah. You know, according to behavioural science, we have two systems of thinking. We’ve got system one and system two. System one, we make the vast majority of our decisions in. It’s it’s very quick. It relies on pattern recognition, on habit. When you get into the car, you put your seatbelt on. If I say what’s one plus one, you can instantly say two without having to calculate one plus one. So that’s system one. It’s fast, which is great, but it’s susceptible to mistakes because we’re relying on pattern recognition. And then we’ve got system two, which is slow and deliberate. And system two is really where a lot of our our financial decisions should happen because it’s calculated. You’re weighing up pro you’re weighing. Sorry. Sometimes my accent gets the better. You’re weighing up pros and cons. Um, you it’s it’s yeah, it’s much slower and less susceptible to error. But if we made all our decisions using system two, we’d be a very inefficient humanity. So we have to use system one for most things. But the financial decisions should happen in system two. One thing we see happening around us is the speed of social media, even to the extent of the user experience of some of these apps, yeah. Where it feels like I panic. There’s adrenaline, I need to make my decision really quickly. There’s red and there’s green, and I just need to make a decision. That’s happening in system one. And that’s a key thing that came out in our research and which we have aimed to tackle in our experience is how do we move people in in people into system two?

[26:35] Samantha Rosenberg: Yeah, and obviously, like in system one, especially with like apps like Robin Hood, where you buy and it goes, well done, like confetti, poof, and you’re like, yeah. And that’s like playing on that kind of almost that kind of like dopamine receptor in you, similar to that like Tinder match, that same like, oh, I need more. And so it’s that’s where the crossover with gambling is so apparent to me. The instant gratification. Yeah. And to be clear, Robinhood is a fantastic product for people who know how to use it. Exactly. And and the pattern recognition that’s happening in system one is not resulting in errors. Yeah. For a lot of people, that’s not the case. I completely agree. I do think there’s like a good, it’s a good way to perhaps start if you’re doing smaller amounts, because it’s not necessarily like, especially at the beginning, you know, yes, like everybody wants to be told to buy S&P 500 and just or global index funds and just do that. Yeah. We know that that’s the right strategy, me and you. But for someone who’s like new to it, who just wants to dip their toe in, yeah, like getting to know the markets in those ways, I feel like it has its benefits. And that the problem I have with it is the people that aren’t so susceptible to the emotional impact of that. And that 20 quid that they put in is literally their 20 quid that they should probably be spending on food or whatever, because they have spent all of their money in the bedding shop or uh down the pub with friends or whatever, then the emotion side of that is like very addictive.

[28:08] Samantha Rosenberg: Yeah. And also, you know, there’s definitely a place for short-term investing um in that way, but it needs to be coupled with a cornerstone long-term investment. Yeah. Yeah. And like almost like an MBA in how to do it. Like because it’s really hard. Like it’s ridiculously hard. Yeah. You know, I was I I’ll be honest. Like I did I’ve did it loads. I’ve did it done it loads over the years. Some’s gone well, most haven’t, right? And that’s someone who put pretty much understands what’s going on. And even now, I just now I’ve moved into every single individual thing that I buy, it’s still a five to ten year hold.

[28:54] Samantha Rosenberg: Yeah. So even on the individuals, I don’t even dip in and dip out. Yeah. The only time I will buy is when things drop because I’m believing in that company being a winner in 10 years’ time. Yeah. And that’s my only play that I like get involved with. But initially, like when GameStop was happening and things like that, and you’re sitting at home in COVID and you’ve got all this furlough money sitting there, like you’re gonna dip your toe in. Yeah. And you’re probably gonna lose some money. Yeah. And because it’s really easy to do it. That’s one thing that we’ve seen in this industry over the past 10, 20 years is accessibility. Lower fees, you just download the app, you get through. Um, accessibility is great, low fees are great, but it does mean that there’s lower bar barriers to to entry for the customer.

[29:41] Samantha Rosenberg: Yeah, 100%. Which is a massive positive. Like the success stories off the back of the technology rise in fintech is gonna be enormous. It’s gonna change society for the better. Yeah. I suppose there’s just a lot underneath that. And I suppose that comes in with the education piece about actually how to do this better. It’s not about having less of what’s there, it’s just more uh infrastructure around it to enforce it. Yeah. Um, in more positive ways. Yeah. I think for some of these apps that perhaps are more on the gamification side, there should be some sort of like element of you have to complete this like basics bit of education first before you’re even allowed to use the app. And I think that that that would change the way like their interaction to come with it. And I think it would save a lot of people a lot of hardship and money in putting into these things.

[30:29] Samantha Rosenberg: But your business idea, you should sell that. It’s coming. What’s the space? Um, no, that I love this though. So you’ve met your co-founder, yes, Avion, and you’ve sat down, you’ve had this conversation. What was the the baby of that conversation? What happened? Like, what’s that process of like coming up with a fintech app? Yeah. It fascinates me. Yeah, I always laugh when I tell when I tell this story, or actually, even when I hear any other founding stories, because personally, for me, it for both of us, it wasn’t this aha moment of like, okay, we’ve done it, we’ve found the problem, let’s now figure out the solution. We’re starting a business. I don’t know at which point we were like, okay, yeah, we’re gonna start a business and this is gonna be the product and we’re gonna incorporate it and we’re now gonna go out to fundraise. It’s it was a bit of a blur. Um, and there wasn’t this epiphany that we had. Yeah. It almost just very organically steamrolled into a business. Uh, but after that first conversation, what we well, there were a couple more conversations of just kind of fleshing it out and really defining what the problem was. And it was because it was something that we were both experiencing, you know, I had a master’s in economics, I’d worked in financial services. I very much understood my own irrationalities when it came to how I managed my money. Had an MBA. Well, I was halfway through an MBA, and I still didn’t have a cent in the market. I didn’t have a pension. I wasn’t investing. And I was sitting there talking about talking to Avion about how it’s this huge problem that we’re not doing it. I I myself wasn’t doing it. And she has a similar story where she also knew that she should be doing more. So we were both experiencing this problem, and it’s not really a problem that’s top of mind for even our customers, you know. Oh, yeah, I should be building wealth for my future self.

[32:25] Samantha Rosenberg: Everyone knows that, don’t they? You kind of know it. And when when you say it, it’s like, oh yeah, I should. But it’s not something we think about all the time. And as Avion and I started speaking to each other about it, we were like, wow, this is a massive problem in my life. And you spoke to like your whole class, didn’t you? And then that’s when that’s what that was our next step, yeah, was to speak to other people. We’re like, if the two of us are having this problem, there must be others. So let’s go talk to other people and understand, get their take on it. And as I said at the time, I was still doing my MBA. So I had 500 of my classmates to talk to. And I just started doing one-on-one interviews. I’d be cool. First question, do you invest? Second question, why not? Um, or if they did invest, what got you into investing? So really starting to peel back the layers on what the barriers to investing were, but also what the triggers were to get people to start.

[33:15] Samantha Rosenberg: Do you think then that like did they all do they all answer honestly? Was there a little bit of like, No, Oh yeah, I’m an investor. But realistically they’re not. I often reflect on this. It was quite funny because sometimes I mean, most of the time people responded honestly, but there were a couple of instances where there were a couple of instances where customers where it would kind of be like, so do you invest? And they’re like, Oh yeah, yeah, I invest. I’m like, oh okay, when was last time you invested? It’s like, no, it’s it’s been a while because you know I’m studying, so obviously I’m not actively investing now. I’d be like, oh, okay. Um, what did you used to invest in? It’s like, uh, you know, a little bit of this, a little bit of that. That’s so interesting. I find it personally interesting because I’ve never invested before. Yeah, uh me neither. Sorry, I thought you invested, like, no, I I actually haven’t really invested. And it was just so eye-opening how we we just like all walk the walk, but we can’t talk to the talk or whatever they want to.

[34:18] Samantha Rosenberg: They don’t say it, do they? They don’t want to say it because then they feel like they’re behind, and then it like makes them feel bad about it. So they don’t want to even address it. It’s totally understandable. Yeah, I get it, of course. Um but yeah, so that’s a status thing, isn’t it? Yeah, it is. Yeah. It’s so and I think that’s where also where the gap is, is that it’s such an emotional thing. It really is. It’s there’s the logical side of it and the rational side. And every single person I spoke to, those were literally the smartest people I’ve ever met, the people I studied with. And every single one of them that I spoke to rationally would be able to explain why investing is important and how to do it. Um and that’s what a lot of the industry is solving for is like, do you know what it is? Do you know how to do it? Great, download this app. But there’s more to it. There’s this psychological, behavioural, emotional aspect to it that I don’t think has been tackled.

[35:18] Samantha Rosenberg: What do you think is that trigger? What are you seeing most there on that side of things? Because that just fascinates me, because that’s what we that’s our business. You know, we educate, we give you all of the tools and solutions. And then you look at some of the, like, even like some of the investing modules that we have out and things like that, and you see completion rate like 70% or 17%, and you’re like, oh, so the people that have actually started, they’ve taken the first steps to doing it and not finished. Don’t know why. Something takes over at that point where it’s like, okay, now open the app and like get started. You’ve got a strategy here. Yeah. Um, and they don’t. And I it fascinates me.

[36:03] Samantha Rosenberg: Yeah. I don’t know why that is. That’s really sad to hear. Yeah. Well, I think there’s there’s obviously a s a psychological aspect to it. It’s a stumbling block that they’re not getting through. Yeah. And I wondered if you kind of had done any work on this. So much research. Right. So very early on, Avion and I set out to build the most customer-centric wealth fintech in the world. We’re like, we’re going to start with the customer. At the point of the problem, before we even talk about a solution, let’s just really understand this problem and talk to as many people as possible, as many customers as possible. And then even in building the solution, it’s let’s let’s build the solution with our customers. So the first thing we did was once we had started fundraised and we were starting to build, was set up a customer advisory board. And we literally built our product with our customers and we got so much insight from them. It was like weekly research that we were doing. And if I were to summarize though what those, I guess the blockers are that we’ve identified, there’s two rational ones. And these are kind of the top of mind reasons for why people tell us they aren’t investing. You know, we ask people, we ask every single person I ever asked. One of the first questions I asked in the research was, do you believe that saving for the future is important? And every single person has I I’ve never got no to that answer. Everyone says yes. And then the next question is, are you doing enough? Do you feel like you’re personally doing enough? So we agree it’s important. Do you feel like you’re personally doing enough?

[37:32] Samantha Rosenberg: Right. And only 30% of people say yes. 30%. 30%. Wow. Do you think that’s a lot? I think it’s a lot. I think I I’d say no now. Yeah. Like even I would say no now. I think that’s just maybe the maybe it’s different types of people. Yeah. But that’s really that’s really interesting. But it’s yeah, it is and it’s different types of people. Because some of those 30% probably are doing enough. Exactly. But a lot of them definitely are. I think I’m being selfish and thinking about my own. Yeah, no, I would say I’m definitely not doing enough. Yeah. Um, but there is so there’s definitely, at least in that regard, there’s some like element of I I’m already doing enough. And we do know there’s a cohort of coaching. Which is great. Yeah. But still low. Yeah. Yeah. It’s just well, if 100% of us agree that it’s important, why are we not doing as much as possible within your means? Um so within my means, I’m doing as much as I can. I just wish I had more means and then I’d do more.

[38:28] Samantha Rosenberg: Yeah. Totally. Um and when we then when we say, okay, so you believe that it’s important to be saving and investing for the future, but you’re not doing enough, why not? The the first two reasons we get, which I call the, I call them the system one reasons because they’re like the the top of mind knee-jerk reasons. One, I’m not an investor. I don’t work in finance, I don’t have a degree in finance, no one ever taught me how to invest. That’s the first one. And what comes with that is I don’t know how to pick stocks, it’s really risky, all of that. The second reason we get is I don’t have enough money to invest. And you ask people what enough is, no one really knows what enough is. But they just have this feeling that whatever they have is not enough. So those are the first two reasons. And then as we start having the conversation, we get what I call the system, the the more emotional or self-con uh subconscious reasons.

[39:30] Samantha Rosenberg: Yeah. And these are I’ve lost out on too much time. I should have started 10 years ago and now it’s too late. Oh, it’s too late. It’s too late. And these are like 20, our target customer is 25 to 45. So these are definitely people who haven’t lost out on too much time. No. Um, but there’s almost this we call it the sunk gain effect. Yeah. So the sunk cost effect is, as we all know, when you continue doing something because you’ve already sunk the cost. Sunk gain is where you continue not doing something because you think you’ve already sunk the gain. You know, there’s no point in starting now. Yeah. That’s one reason we get risk, not enough money. They’re the system one. You call them system ones? Uh yeah. Or just like the knee jerk, kind of like the conscious reasons for why. And then the subconscious reasons mainly around So the one is there’s a couple.

[40:19] Samantha Rosenberg: So the or a few. The the one is around I’ve lost out on too much time. Yeah. The next one is uh I like the feeling of liquidity. I know it’s more than I need. Oh, cash in the bank. Cash in the bank. Yeah. I feel like I’m in control of it. And it feels really scary to give up control because investing feels like giving up control. And I consciously know it’s more than I need, but subconsciously I want to hold on to it. It feels like a safety blanket. And that’s not to say that these people shouldn’t be holding on to cash. Of course you should. You your emergency savings should be fully liquid. Um, you you need cash to live. Yeah. But, you know, according, like we estimate that there’s 300 billion of cash savings sitting with 25 to 44, 25 to 45 year olds in the UK.

[41:06] Samantha Rosenberg: Yeah. 300 billion of cash savings. It’s just mad, isn’t it? I think it’s like six, and it was like I saw a stat the other day, it was like 67% of the UK are getting 2% or less from their savings as well. So cash and bank, which is just mind-blowing, because that’s probably most of that £300 billion. Yeah. And when we speak to our customers, so that’s that’s according to data from Bank of England cash, ISA data. When we speak to our customers, we’ve got over 60% of our customers have more than £20,000 sitting in what they call excess non-emergency cash savings. Just sitting there. Sitting there. Oh, wow. And I don’t want to give up control of it. Then we’ve got things like another reason that we get is I know I’m smart enough to know that if I invest, I need to do it regularly. So I need to make an investment and I need to commit to it. But I also know myself and I can’t commit. So I’m not even going to start because there’s there’s no point. Um, and then there’s present bias. Why should I make a sacrifice today for some stranger 10 years from now?

[42:10] Samantha Rosenberg: I heard you say this and I loved it. Yeah. Like I don’t know that person. I don’t know that person. We’ve actually, it’s been proven, we didn’t prove it. It was proven long before us, that the decision to invest today, that me making this decision today, I use the same mental models with the decision to keep 100 pounds for myself today or give 10,000 pounds to a total stranger 10 years from now. Yeah. That’s the decision to invest 100 pounds today. So knowing that, like, how do you even start to break that? Like, you know, you’re thanking your future self. Yeah. No one enjoys hearing that. No. How do you connect? How do you really connect to that future self? Yeah.

[42:55] Samantha Rosenberg: Um, and that’s a challenge. And that’s a challenge faced by the entire industry. That’s a challenge that it’s why it’s something I identified in the gambling addiction research, present bias. It’s something that I saw throughout my five years working in finance. Uh, and it’s it’s really the thing, I’d say the key thing blocking us, behaviourally blocking us from investing over the long term. And then coupled with that, there’s no brand in this country, or as far as I can tell, broader than that, that’s owning a narrative around long-term thinking. So, how can we expect people to save and invest for the future if there’s no real uh narrative around it, or even more importantly, kind of example of it or role model for it? And we ask people, we say, when if you could go to anyone for financial advice, anyone in the whole world. So it doesn’t have to be someone you know, who would you go to? And people say Warren Buffett.

[43:56] Samantha Rosenberg: They say Warren Buffett. Yeah. Thank God. That’s it’s great. Yeah, we want them to say Warren Buffett. But is Warren Buffett our most contemporary advantage? I thought you can say Elon. And I like I don’t know, yeah, for okay, but I like, yeah. But like for financial advice, as long as you say Warren, I’m I’m okay. Yeah, great response, but it tells us that he’s our most contemporary financial influencer when it comes to long-term investing. Yeah. There’s been no one since Warren Buffett that we can look to and say, that is the person that I want advice from with my money. And we need more of that. Especially no one in the UK at all. Yeah. Like I I couldn’t even tell you. The thing is with Martin Lewis, probably is that kind of figure. He won’t touch investing with a barge pole. So, and that’s something I just feel like lets that down a touch because there’s only so much you can tell someone to save on their energy bills and their insurance until they really do need the next phase of wealth building. And so there’s no real standout figure. Hopefully, one day we can both change that.

[44:55] Samantha Rosenberg: Sammie and Sam. Yeah, let’s do it. Double team act. I’m into it. Um, are you Sammie as well? Uh, to some people. Yeah. MMY though. Your MMY? Yeah. Um IE. Yeah, I like that. I like the IE. It’s the girl version, apparently. Really? Yeah. So I get it in school. So is mine and the boys? Well, boys is like one M and an I. Oh, I quite like that. Yeah, it’s quite cool, isn’t it? Most of the British Sammies that I never said one M I. Nice. But what you were saying there about Warren Buffett is so true because like, how are we gonna find and also he’s like 97 man, like you know, Charlie Munger is 99. His legacy will live on. It will, because like I think it’s like it’s just so hard to like say, because even he doesn’t actually buy index funds. Yeah, he buys companies, but he holds them for like 30 years, yeah. And then he gets rid of them and changes things around. I mean, we we’re we just put out a video. Um, we’re actually about to put out this video. Um it’s not even been filmed yet. The script has been written. But last year they did 97 billion just from buying and holding strategy. Wow. Which is just absolutely insane.

[46:09] Samantha Rosenberg: That is amazing. And it’s it works out something like, you know, I think it’s like three and a half thousand pounds a second. And all he’s done is bought bought and held great businesses. Yeah. And I just think that it’s such an underrated strategy. And it just goes to show that like he’s 97, now he’s doing that. At the first, that compounding was not happening like that. Yeah. Time is being his most biggest friend. Absolutely. And he says that. He and he and he’s, although he doesn’t do it himself, he says if you’ve got anything less than he talks in dollars, if you’ve got anything less than $100,000 of savings, buy the S&P 500 or buy an index fund. Don’t, don’t look at alternatives, don’t look at private equity, don’t, you don’t have to be creative. Get to your first hundred thousand, invest that in index funds, and then you can do what I’m doing.

[47:03] Samantha Rosenberg: Yeah. Yeah. I completely agree. First hundred thousand pounds, your net worth explodes. It’s very insane when you look at the numbers and the sh the time frames it takes you to get to the next jumps. Yeah. So if you just get yourself to that goal, it really does change. I think it’s 627% faster is 900 to a million than it is from zero to a hundred. Yeah. Which is just wild. And that’s with a 10,000 a year investment. Yeah. Which is just crazy. So you found this very much like on the behavioural side, you’re seeing these problems. This birthed a solution for you, which was belong. Yeah. Cool name. Thank you. Obviously. But it’s got a kind of double edge for you, do you think?

[47:48] Samantha Rosenberg: Yeah. Because it’s like belong as the community and then belong as well. Because another thing that came out in our research was feeling, I I guess it’s linked to this finding that people are saying, oh, I’m not an investor. Uh, and therefore I don’t invest because I’m not part of this group of people who invest. And it’s actually you do belong. You belong to this investing community. Um, and that’s the we everything we do in our business, we say there’s the emotional and the rational. The emotional coming from my behavioural background and the rational coming from Avion’s very technical financial background. Um, so the belong is belonging to this movement in a lot of ways. And then the belong is belong the market, you know, be long term in your thinking.

[48:34] Samantha Rosenberg: Love it. Yeah. I like it because it’s you’re so right. Like I do feel like a lot everybody wants community in this day and age. And they want to feel like their friends are doing it, or someone that they now, obviously, with a crossover of online, you want to feel like you’re part of something. Yeah. Um, and that’s why we’re seeing such a massive rise in in communities, online communities. Yeah. And so being a part of something means something to someone because you used to know everybody on your street, and now you couldn’t even tell anyone, like you maybe know one or two neighbors, and that’s it. And we’ve lost that. And so bringing everybody back together and they feel like they’re moving in the right direction is so important for me. So I love that. Yeah. And also just reinforcing this idea that there’s more of us that believe in this thing, that believe in this uh strategy. But it’s very much a movement. Strategy is the boring word. It’s very much a movement of, you know, it’s it’s really cool to buy and hold. It’s really cool. It’s really cool to ride out a dip.

[49:33] Samantha Rosenberg: Yeah. And that’s what we should be celebrating. Like cheers when the when the um market goes down. And what we’ve seen, I mean, we we haven’t been live for very long. We’re still very early in market, but what we’ve seen is that we’ve had a couple of dips over the last few months, and we see customers putting more in. Um, I love that. Yeah, which is because they’re thinking long. They think they’re thinking long. Yeah. They’re not panicking. No. And a lot of that, I believe, is because we’ve put a lot of work into taking customers out of system one and into system two when they’re in our app. We designed our whole experience around meditation apps. Oh, cool. Yeah.

[50:18] Samantha Rosenberg: I didn’t know that. That’s really interesting. So instead of looking at other calm tech experiences. Very calming, very slow. Very slow. Yeah. The onboarding is quick. You can get onboarded in five minutes. Yeah. But the experience. There’s no like charts bunching around and colours throwing at you, which is it’s all very like neutral colours. Interesting. Um so that was a conscious decision. That was a very conscious decision. So I think me and Chris, who’s actually in this room, we went through the site and we were like, it just, it’s beautiful. Like it feels very like you you flow through it very nice and slowly. So that’s very much intentional from your side. Very much intentional. Because and and really at the core of belong is these two things. And again, it’s the emotional and the rational. The emotional is customers wanting an experience and making sure that that experience is it’s indulgent and it’s, I want to be, I want to live in this app. It’s luxurious. Luxurious, and it makes me feel something when I’m in it and feel good things. That’s the emotional or the or the behavioural side of belong. And then it’s product innovation, which is the financial side. We, they just our generation is faced with an entirely different macroeconomy compared to the generations before us. But we’re still selling them the same old financial tools that just aren’t as relevant to us.

[51:39] Samantha Rosenberg: No. No. That kind of expensive pension fund or those types of things, which are just mutual funds or whatever, which have their place, absolutely. But you know, I’m not beating down on them in any way, shape, or form, but they are old school and people don’t want that as much anymore. They they haven’t been built for us. No. They were built in a time where we still believed that people were making financial decisions in a perfectly rational way and were perfectly had all the information available to them when they made those financial decisions. That’s not the case. We now know that’s not the case. We know that this generation wants an experience, they want more tailored solutions. That we’ve identified all these behavioural blockers that customers are exposed to and are experiencing, and we’re tackling those head on.

[52:28] Samantha Rosenberg: So knowing what we know, the experience, the way that you thought about it, you stand out completely because you can’t just jump on there and buy Tesla. Like what happens and what’s the kind of experience for the customer and the main product? Yeah. So you come onto our app, it’s it’s a mobile app, and you make a very finite number of decisions because that’s also what came out of our research. I keep saying out of our research, but this is all this is how much research we did and how committed we were to making our decisions based on that research of what our customers and our customer advisory board were telling us over the build-out. And one of the things was choice overload. I go into other apps. The first question they asked me is, what’s my risk appetite? I have no idea. I think it’s low. And then the next question is, which of these 4,000 funds would you like, or which of these 300 FTSE index trackers were you just want?

[53:27] Samantha Rosenberg: Or with different names. Yeah. Yeah. ACC, D I S T, income, all of this. It’s mind-boggling. Yeah, and they close the app and they never open it again. Yeah, totally. So we were very committed to decreasing that choice overload. So you make really three decisions when you come onto our app. First decision is how much would you like to invest? Minimum is a thousand pounds. You can invest anything from a thousand pounds upwards. Um, and of course, there’s guidance around how to make that decision. It should be excess cash that you can afford to put away for the long term. Second decision is which of these four index tracking funds would you like to invest in? Four. There’s four. S&P 500, MSCI World, FTSE, and ESG.

[54:14] Samantha Rosenberg: ESG’s in there. Last touch. Yeah. Our custom advisory board. Yeah. Kind of give the people what they want. It’s got to be done. It’s got to be done. We get it more and more every day, and it’s such a nice thing to have on there for sure. So those are the four. Um, the second decision. The third decision is whether or not you would like to apply for a boost loan. Now, the boost loan is our our USP in a lot of ways. It’s the thing that a lot of our customers and our investors have gotten excited about. And this is where in the innovation, the real, I guess, technical financial innovation comes in when it comes to the product. Um, of course, that I think we can argue that there’s a lot of innovation in the experience. But this is like more pure innovation. And essentially how it works is you have the option to apply for a loan to match your upfront investment. It’s optional, you don’t have to do it. Um, but how it works is you come on, say you want to invest 5,000 pounds, you then have the option to apply for another 5,000 pounds, which will be added to your investment that day. The full 10,000 pounds then guests invested in the fund that you chose. So you’ve now got 10,000 pounds in the market rather than 5,000 pounds. And you then repay the 5,000 pound boost loan out of your pocket over the course of five years.

[55:37] Sammie Ellard-King: Five years. It’s a five-year loan. And what that means is that you are benefiting from having a larger amount in the market compounding while you repay out of your pocket. So you almost one way to think of it is borrowing against your future self. Yeah. You know what I’m gonna ask. I’m sure you get this in everything. Well, alone, that sounds risky. Sounds really risky. Sounds really risky, right? Like, but how you’ve done the numbers. Obviously, with Avion on the back end there as well, that’s in who’s been in leverage finance and understands these things. The numbers are mind-blogging and we went through them, but I’d love for you to take us through them and the risk associated with it. Yeah, because there is some, but of course that the risk is lower than you might think.

[56:27] Samantha Rosenberg: Yeah. And of course, there’s always risk associated with investing. Um, but adding a having a larger amount, it compounds the upside as well as the downside. Um, and that was something we had to tackle on on day dot. Uh, just to rewind a bit, the way we so some of the components that led to this feature uh were customers telling us that they feel like they don’t have enough. And if they had more, they’d start investing. So this is, you know, you’re getting more. It’s getting that start with a bigger amount. Yeah. Oh, I feel like I’m an investor now. Exactly. Gotcha. Also, the customers saying that, you know, I feel like I’ve lost out on too much time. Getting that boost on feels like that’s me catching up and I’m now where I would have been. So it’s kind of this catch-up feeling. Um, but then also more rationally, if we think about Avion’s perspective, where it’s very technical, to build wealth, we’ve already said you need money, time in the market. And, you know, if you need time and money to build wealth, we rarely have those two things at the same time. Because when we’re young, we have all this time, but we feel like we don’t have enough money. And when we’re older, we’ve amassed the capital, but we have less time. And unless you come from wealth, you rarely have those two things at the same time or simultaneously. And what the boost loan does is it gives you the cash to invest while you still have the time.

[58:00] Samantha Rosenberg: It’s just mind-blowing, really. So that’s like extra step. Yes. So they’re getting themselves in control and getting themselves that extra footing. Yeah. It’s such a different approach. And so it very much started with it, it didn’t start with how do we just juice returns. Yeah, yeah. Leverage is a great way to do that. Yeah, yeah, yeah. It started, it came out of the research and and the product. And then of course, the first thing we had to tackle was the riskiness of the product and how we can control that risk. So a couple of ways that we do it. The one way is in controlling how much a customer can borrow versus how much they invest. So it’s 50% LTV. So what we did was we back tested this over the past 79 79 years of stock market data. We we tested it against the S&P 500, the MSCI world, and the FTSE. And we modeled cus a group of customers taking out a boost loan every month over 79 years.

[58:59] Sammie Ellard-King: Wow. And assessed what their investments would have looked like over the five-year period, over each five-year period. And in no situation would a customer have realised a loss unless they made the active decision to walk away. So the market never fell below the value owing on the loan. So not once. 79 years. Yeah. That’s incredible. Um and even with all of those big, massive crashes in there as well. So the closest it ever got was what we call, I think it was, let’s call it 13% negative asset coverage. The lowest it would have ever gotten to, I think it was like the 2009 February cohort or something, um, is what we call 13%, we call it neg negative asset coverage. And in layman’s terms, what that means is that if a customer had bought 10,000 pounds of their own cash and had taken out a 10,000 pound loan, of course, over time, that’s no longer 10,000, 10,000 because you’re paying off the loan. It becomes 11,000 and that bit of growth and the loan amount is coming down. So it’s not always 50-50, it’s an amortizing loan. But for simplicity, let’s say it was 10,000 and 10,000, the lowest that would have ever gotten to was 13,000 pounds.

[60:23] Samantha Rosenberg: That’s great. And a customer would have had to make the active decision to say, I’m out, it’s fully liquid. They would have said, I’m out, and they would have realised the loss on their 7,000 pounds, but never more than that. Yeah. And then again, we know history. So you wait and you wait and you wait, and then look at what it was now. Imagine you were still holding now, you know, and that extra money was kicking in to get for you, right? Yeah. Additionally, we will never enforce any forced selling and we’ll never ask customers to bring more money to the platform. Nice. So what that means is that as long as you buy and hold over those five years and you keep up with your repayments, that’s really important, you will only realise a loss if you make the active decision to walk away.

[61:08] Samantha Rosenberg: So you have to sell. You’d have to sell to realise a loss. Yeah. That’s always the case. Yeah. Um, but especially here, we will never force you to realise a loss. And the only way that you are in a situation where you might realise a loss is where the market has gone down and you decide to sell while the market is down. So you’re obviously charging them on the money that comes in. How is that working? Yeah. So how would you do that? So the APR and the loan, basically, was it? The APR of the loan is six percent. Six. Currently. Okay. Yeah. That’s really strong. Yeah. And as we can we just pass on to the customer what we can get the data. Because it means tested based on their credit score or anything like that. Six percent fixed for everyone. Interesting. We do, however, do a full affordability assessment. So this comes into the risk management side of things. So we make sure that we do an affordable uh credit worthiness assessment. So we do an affordability check to make sure you can afford those monthly repayments on the loan, as well as a credit check and the combination of those two things.

[62:10] Samantha Rosenberg: So it is a full it is a full credit check. It’s a full credit check that we take our customers through. Which is wise, yeah. Yeah. Yeah. Yeah. Because you are playing with with with risk there, isn’t it? Really? You’ve you just let any Tom Dick or Harry in, then that can be quite detrimental to them as well as you. And then throughout the whole user experience, we have to make sure that the customer understands exactly what they’re doing and understands the risk. So we have what we call forced pauses throughout the onboarding journey and the boost loan application journey, where we literally stop the journey and say, you need to read this. And before you can continue, you need to make sure that you understand it and do not continue until you understand it. Yeah. Um, and doing it in a way that’s not just a tick box exercise, but I was going to say, like the scroll, you do the 13 pages, yeah, fine. It actually disrupts your journey that you have to read it. Um, because it’s no benefit to us if customers are coming onto our platform and they don’t understand how the product works and what the risk involved is.

[63:11] Samantha Rosenberg: So with that 6%, that’s obviously then the S&P is averaging eight to nine, sometimes 10. Yeah. Well, actually, realistically, if you look at most periods, it’s 10.52%. Yeah. So which means there’s a 4% potential upside for that person. Is that how you’re working it out? Yeah, kind of. So that’s how a lot of customers look at it. Um, so if we say the S&P has historically returned 10%, that was the example you gave, and the customer’s repaying 6%. The easiest, the most straightforward way of thinking of it is, oh, there’s a 4% difference. Yeah, yeah. Really, there’s a bit more nuance to that because the six you’re only paying six, six percent on half of the investment, whereas 10%, the whole investment is growing 10%. Totally. So it’s more, it’s closer to 3%. Um, because you’re only paying the 6% on half of the investment.

[64:07] Samantha Rosenberg: Yeah, yeah, yeah. So you’re paying 6% on 5,000 pounds, but you’re earning 10% on 10,000 pounds. Yes, of course. Yes, because you because you’ve matched it. Yeah. Understood, right. But it’s uh we actually prefer if in some cases, if customers immediately go to the six percent and the ten percent, because if they’re comfortable with that, then they’re definitely comfortable with the actual maths. Yeah, because that like that’s 100% what I would do. I’d like separate this completely out of my head. Okay, that’s my money, that’s working like that, and this is the loan, it needs to work like this for me to then bring it together. But together it’s very powerful. Yeah. Interesting. Have you how have you found people have taken that decision? Like, have you found that there’s been some pushback on it at all? Or is there have people been quite open to this? Yeah. Uh I’d say definitely customers are open to it. I think a lot of that is in how we how it’s explained to them and uh shown in the app, displayed in the app. Um, it’s all done with a s we call it the the future wealth simulator, where you put in your amount you that you want to invest, you put in the loan amount, and then you can test different market scenarios. Love the graphs. Such a good graph, but they’re very slow.

[65:21] Samantha Rosenberg: Yeah. They don’t bounce around. Yeah, but that’s what you want to see. You want to see your growth. Like, where am I doing? Why, if I make this decision, what happens to me? And it like I feel like everyone that plays around with graphs, like Nutmeg were one of the first to really do that. Yeah. And it was quite eye-opening when you could play around and be like, oh, wow, that’s what it looks like. Yeah. Like, that’s decent. Like, but what happens if I had a little bit more? Yeah. And what happens if so our return style goes from 0% to 16%? So you can literally see what would happen if I was actually like the market was returning 2% and I was paying 6% on a loan. And what does that do to my profitability after five years, 10 years, 15 years? Oh, I love that. Um, so I think that’s helped a lot with openness to the product. And then very interestingly, customers draw this analogy to a mortgage.

[66:11] Sammie Ellard-King: Yeah. And if so often when I explain the product to customers, their response will be, oh, it’s like a mortgage. Because in a lot of ways, it’s the structure of a mortgage. Yeah. It’s exactly the same layout, the appreciation on the property, appreciation on the market. Yeah. It’s really laid out the same way. So it’s very easy for Brits on it to understand. Yeah. And it also builds trust because it’s this model that we have for borrowing money to invest in an appreciating asset. And that’s that’s what we’re enabling customers to do. Um there’s arguments around, you know, in borrowing money to invest in a globally diversified fund versus a single idiosyncratic home. We don’t take part in those arguments, but uh our customers they they can draw the analogy and it helps them to assess the risk of the product in a lot of ways, because it gives them, as I said, this model with which to break down the solution. So they think of their mortgage and they say, okay, well, what happens if the value of the investment goes down? Yes. And then it’s like, okay, well, what happens if the value of my house goes down? Nothing as long as I keep making my mortgage payments. Um, and what happens if I miss a mortgage payment? It’s like, okay, what so so they know what it gives them the questions to ask.

[67:39] Samantha Rosenberg: I love it. So investing like a mortgage. Yeah. It’s a really cool way of looking at it. And it’s something that I feel like a lot of Brits can just get immediately. So you’ve not really got to explain that. You technically it’s a loan, yes, but yeah. Mortgages, guys. So great. Like we’ve got that kind of easy way into being accepting about it because we’re all obsessed with home ownership in this country. How can we get obsessed with monthly investing as well? Yeah. So is the product ISA or it is? Yeah. So you have the option you can open a general investment account or an ISA. Um, and the full amount goes into the ISA. So a lot of that’s what a lot of customers like is that you can max out your ISA by bringing 10,000 pounds. You get a 10,000 pound boost loan.

[68:28] Samantha Rosenberg: And after they’ve completed that loan, can they go again? Yes. How does that work? So that was one of our most requested features. So customers, a lot of customers say, okay, after my first five years, I want to take another one and I want to take another one and keep stacking them. Um so that’s of course an option. Once you’ve paid down your first one, you just apply for another one. Um, but a more recent demand from our customers, I say demand, I should say request, it’s more of a demand from our customers, and it’s something that we’re actively building at the moment, is what we call reboosting. So what customers are saying is I’ve got, so I put in 10,000 pound pounds, I got a 10,000 pound boost loan. The investment has now grown and I’ve paid down some of my loan. I want to bring more money and get another loan. So I want to bring another 5,000 pounds and get another 5,000 pound loan. And that’s what we’re busy working on delivering.

[69:20] Samantha Rosenberg: Okay. Um, as we speak. So if they come to the table with more from that point on and your means tested, you’re good to go. Totally. So we’ll take you through the same process, you take you through another creditworthiness assessment. Um, and it’s still the same LTV. You can never borrow more than the cash that you have put down. Um so always controlling for that 50%. I love it. I think it’s great. I think it’s so cool. And I just love seeing innovation in that field. Yeah. And so uh you for me, you’re following the right strategy of long-term investing, taking the like short-term aspect and thinking about these things all the time, and just pop your money in, let it grow. You’re investing in human progress in some of the biggest funds in the world.

[70:07] Samantha Rosenberg: Yeah. So basically you’re saying that, you know, the world’s got to go to shit if like if this is gonna go wrong. Yeah. Which, you know, yes, you’re fed negative news on the news every day in the world, but there is a million positive things happening every day, too. You just don’t hear about them. Yeah. And guess what? These companies are growing and they’re growing fast and they aren’t gonna stop growing. Yeah. So do you want a bit of it or you don’t? Yeah. And that’s that’s what we say. We say, you know, do you believe that the US economy is going to continue growing? That’s that’s if you can answer yes to that question, the S&P 500 is a great investment. Do you believe that the world economy is going to continue growing? The MSCI world is a great that’s that’s kind of how we should be thinking about these things, not what’s gonna happen over the next week. Yeah. Um, it’s very much thinking about that, that long-term perspective.

[70:57] Samantha Rosenberg: It’s one of our mottoes, think in decades, not months. Yeah, I love that. Yeah, but we say it to everybody because it’s just if you do that, you’re gonna be better off. Yeah. You just are. And the instant gratification goes out the window. Well, what’s interesting is that another aspect of the boost loan is that it it almost pays on instant gratification, okay, but in a positive way, in a way that’s c constructive to long-term decision making. Because what we’re saying is we’ll double your money today. Like that’s very catchy. We I mean, we’re a regulated business. We don’t put that in our marketing. But if you if you are doubling your investment, I had 5,000 pounds, now I’ve got 10,000 pounds, I have to pay it back. But there is that instant gratification, but it’s constructive because now I feel like I’ve got more skin in the game. Totally. And I’ve got more. And it’s instant gratification, but in a way that feels like this savings plan over the next five years. And I know what I need to do over the next five years. And I just need to stick to the plan. And I’m more committed, and there’s this endowment effect of having the larger amount, and now I’m more committed. And then there’s the point I made earlier around feeling like I don’t have the discipline. And what those repayments on the boost loan do is they show me that I actually do have discipline when there’s a commitment device in place.

[72:12] Samantha Rosenberg: So you’re building the habit positively paying your future self. Yeah. And what we see happening with our customers is they say the repayment on the loan is 50 pounds a month, for example. Customers are then saying, you know, I could actually do 100 pounds. So they’re putting 50 pounds in to repay their loan, but then they’ve added a recurring top-up each month for 50 pounds. Penalize them for that. No, no, no. And that you’re encouraging them. Yeah, of course, of course. And that’s and that’s free. Right. Um, so you can bring more money to the platform. And so you are you using your own money as be long to do this, or is this done through like a lender panel or how does that work? In terms of the boost loan. Yeah. Yes, we raise that debt um from funders and then we unlend to the customer. Oh, interesting. Yeah.

[72:58] Samantha Rosenberg: I think it’s such a cool business model. Honestly, wish you guys like the best of luck because I I really like it. And you never know, I might actually be jumping in myself. Because it’s I think it’s just really cool way just to get myself up to the levels that I want to be at, you know. Yeah. And you know, I think it’s important, especially as well. I’ve sort of hit that FSCS protection level. I’m like, hmm, do I want to keep adding more into this type of account or do I want to grow it elsewhere? So yeah, I think you guys have really landed on something. And I like I honestly think it’s uh such a cool concept. So yeah, I wish you guys the best of luck. Thank you. Um, this has been really good fun. Yeah. Thank you so much. Thank you. Uh it’s really nice speaking to someone that’s like thinks about the way that we interact with money in the way that we do. And like hearing those limiting beliefs come up about investing, it’s an all too common conversation. And I just think the more people out there, the better is really the trying to change that for it’s gonna change our society for for the positive.

[74:00] Sammie Ellard-King: Yeah. Um, so yeah, that’s amazing. Thank you so much for coming on. Thank you. Thank you for having me. Yeah, it’s been really good fun. Um, where can people find you? Uh belong.co is our website. And if you’re looking for our app in the app store, it’s belong, but the quickest way to find it is belongwealth. Okay, wicked. Um, we will leave links in the show notes to that for you guys as well. Thank you. And uh yeah, thanks, Sam. We’ll see you soon. Thank you. Wow, guys, that was an amazing episode. I was so fascinated by the loan aspect of investing, like putting your money in and then getting it matched was just something that’s so different and treating your investments like a mortgage with Belong. Really interesting, never been seen before, brand new product to the market, and I really enjoyed this episode. But, guys, if you are on YouTube, make sure you hit that subscribe button. If you’re listening on Spotify or Apple Podcasts, leave us a five star review. We need to grow the show, and it really does help in more ways than you will ever know. But guys, we’ll see you next week, and it’s been a pleasure. Peace.