Lucent Financial Planning Ltd

You don’t understand what the title means do you? That’s ok, it’s Japanese and even if you were a Japanese speaker, you still wouldn’t understand as it’s in the wrong alphabet.

It’s one of those words or phrases that have no direct translation to English.

It means an awareness of the impermanence of things and a sadness at their passing.

Also, a wistfulness that this is how all things are and a sadness it will all end.

To me, it’s one of those phrases that haunts me and I think of it regularly:

• I see it in the faces of those that have lost someone

• I hear it in the stilted conversations of old friends that no longer have anything in common

• I feel it when I return from a holiday or finish something I enjoy doing.

It’s similar in tone to other sayings such as:

• This too shall pass

• Enjoy yourself, it’s later than you think!

  I’ll leave it at that, you know the rest. See, hear and feel the ‘mono no aware’ and double down on your efforts to enjoy it whilst it’s there.

Russia has invaded Ukraine and taken the world back 70 years or so to a time where darkness descended across Europe. To a time when countries were shut off to the world under Moscow's sphere of influence and Churchill's "The Sinews of Peace" address to Westminster College (Fulton, Missouri) gave the moniker of this isolation and threat 'the iron curtain'.

Hopefully, this will not be the beginning of another 40 year cold war, of children hiding under desks in nuclear war drills (psst, modern day self build, chipboard desks won't provide as much protection against Nukes as the old fashioned ones!), fear of people we don't know and a world where peoples are shut off from other peoples. This is why I think it will be ok:

You can't stop progress

The world is very different to the late 1940's. Back then, you found out information through new papers and the wireless or the newsreel at the cinema. Terrible times indeed, you go off to watch a film and are instead bombarded with the news! There were few colour photos and no way for you to tell others about your experiences unless a published journalist interviewed you.

Not now!

I read a couple of years ago, I think 2020, that there were more photos taken that year than in the entire course of human history put together! I don't know the veracity of that, but it's certainly a lot. It seems my niece takes half of them too.

There are multiple ways of getting the truth out that can defy government's propogandist reporting. We still have the wireless (kudos to the BBC for extending short wave frequencies to Russia so they can still pick up BBC World News for some unbiased reporting, even more to those brave souls out there reporting it.), newspapers and news programmes, but we also have Insta, Twitter, TikTok, You Tube... that allow ordinary people to get their experiences out there. Even blog writing programs like this! It aint all good...

These people have experienced the benefits that global connectivity, trade and sharing of ideas has produced and I believe they won't want to give it up.

Why is this important?

Information spreads easily now and you can't hold it back. The pen used to be mightier than the sword, now the re-tweet is mightier than both. Threats and intimidation do of course, still hold some sway. Misinformation will also slow things, but eventually, the truth will come out. Those the wish to oppress and whose arguments are based on falsehoods will be found out and hopefully humiliated by teenagers doing a dance on TikTok too.

"The arc of the moral universe is long, but it bends toward justice."

- Martin Luther King

Things are getting better

It just doesn’t seem like it! But, every year the following improve for millions of people around the world.

• Literacy rates

• Access to clean water

• Connectivity with the wider world

• School leaving world

• Sanitation

All of this gives the world access to a larger number of minds that are able to improve life for everyone else.

Even in the dark times, brought about by dim witted fools, it’s important to remember that the majority are aiming to make the world a better place. Some, a small part of their world, some are aiming to make the whole world better. Either way, this relentless striving will make things better for everyone.

Yesterday, I was mostly foraging. The brilliant sun shimmered off the frigid water that lapped mile long stretch of sands of the Pembrokeshire coastline. The Spring Tide caused by the alignment of the sun and moon was pulling millions of gallons water to the other side of the planet and exposing sands that are only seen 10-30 times a year. This was our chance! Around a dozen of us had come on a seashore foraging expedition to find our dinner. We had already spent the morning walking pathways and digging up wild garlic, sea radish and other such coastal foliage to flavour our dinner later in the day. Now, we needed to find the main course for our foraged and free sustenance.

Squirting

About a dozen of us stalked the wet sands and as those in front did, in their wake shoots of water came up from the sands as clams and Razor Clams (the long thin shells you may have come across) squirted water up from the sand. If you are not confident of nature, you'd think they didn't like you and were spitting, but, it was their propulsion system to drive themselves deeper into the sands as they felt the pressure of our feet. They were the initial target. We needed to spot them poking out of the sand before they felt us then grab them between thumb and finger and wait for them to tire then pull them out. Then, pop them into the groups dinner basket. The more experienced, noticed tubes of sand and a small squirt and would fall to their knees and dig a foot down to claim a clam the size of a fist.

After this, we took to the rock pools, peering down and seeing star fish, crabs, anemones, mussels, winkles, kelp and various types of seaweed I cannot recall the name of. People put their hands under rocks in the pools trying to find lobsters and edible crabs. We had no luck there, just the smaller things like mussels.

Every day, we are all foraging

It occurred to me, as I scavenged for food, that this was one giant analogy for the economic world in which we live. Sometimes the tide is in, and we will all make more money and have higher standards of living. Sometimes, the tide is out, and our standard of living will advance more slowly or even decline. And so, the relentless ebb and flow of tides and economic cycles goes.

Each of us has our own specialism at work and so it is in the sea. The Kelp grips for dear life onto the rocks as the waves crash over and photosynthesizes its energy from the sun. Bivalves such as mussels and other shellfish extract their nutrients from the water from phytoplankton or disintegrated kelp! Crabs, lobsters, fish, etc. live off the seaweed and molluscs. And so it goes around. Each organism has a specialism that takes advantage of a certain niche available.

Every day, regardless of economic circumstances, most of humanity will get up and go to work. They will try to find a way to make a living, in good times or bad and they will mostly succeed in this. Every day, they will improve how they do things, become more efficient and evolve to their niche, thus ensuring that the companies they work for remain or become profit generating.

Owning the great companies of the world

This is why, if you own shares in the great companies of the world, you will surely profit in the long term. Because every day, we get up and we go foraging and foraging produces profit, no matter how small. I'll admit, our foraging was a small profit, I ended up going to a Vietnamese Restaurant instead, which is probably just as hard to find in South Wales! But, with practice, we would get better and that's how we improve and that's what drives profits in businesses.

People, will not stop doing this no matter what happens. Dead calm or storm, tide in or out, we will go to work and get better and reap the ensuing profits.

The fishermen know that the sea is dangerous and the storm terrible, but they have never found these dangers sufficient reasons for staying ashore.

- Vincent Van Gogh

Russia has invaded Ukraine and at the time of writing (8.24 am GMT 24th Feb, 2022), no one really knows what is going on. This, of course, has sparked fear around the world of the possible spread of this conflict and from my part at least, copious amounts of pity to the people that live there that are caught up in the games of 'political leaders'.

Naturally, this has spiked fears in global stock markets and there has been a dip in values this morning for a few percent upon opening. I expect, this will also have some of our clients fretting about whether to make any amendments to their portfolios. The answer, is as always, no. You should not. No one is in control of world events, not even the people that instigated this one. It certainly should not be altering how you lead your life and invest / spend your money (provided you have a plan in place!).

I thought, it would be worthwhile putting this in perspective. Bad stuff happens quite often. Fear of bad stuff happening happens pretty much all the time! And most of the time nothing comes of it. If you're invested, and are still working , then you should still be investing regularly. In that case, you should praise the lord for this reduction in values caused by this war as it means you are buying more shares for the same money. If you are retired you probably have 15 to 30 years to live and are unlikely to withdraw all that money at once because then, what would you live on? My point is; you have time. You have time for the value of your investments to return.

Returns in 15 years since start of various wars on S&P 500

I thought I would take a look at investment returns when bad stuff actually did happen in the past and its effect on stock markets. Let's look at the returns of the S&P 500 (500 biggest companies in the US and makes up a large proportion of the world economy) in the 15 years from the outbreak of a number of wars.

First World War

Started July 1914 and from then until 15 years later the S&P 500 grew by 16.11% (dividends reinvested) per year with inflation rate at 3.58%

2nd World War

Started September 1939 and from then until 15 years later the S&P 500 grew by 12.51% (dividends reinvested) per year with inflation rate at 4.37%

Korean War

• Started June 1950

• Growth of S&P 500 of 15.34% a year

• Inflation at 1.91%

Vietnam War

• Started November 1955 (I didn't know this war lasted 20 years!)

• Growth of S&P 500 of 7.82% a year

• Inflation at 2.61%

Falklands War

• Started April 1982

• Growth of S&P 500 of 17.25% a year

• Inflation at 3.55%

Gulf War

• Started August 1990

• Growth of S&P 500 of 11.38% a year

• Inflation at 2.71%

Afghanistan War

• Started October 2001 (another 20 year war)

• Growth of S&P 500 of 6.77% a year

• Inflation at 2.07%

The saying goes, history doesn't repeat itself but it rhymes. It is the only guide we have and if, economically, stocks markets survived 2 world wars and all the other mistakes humanity makes, then I reckon it will be fine in this one. It's just a matter of time.

We have discussed before how what you really need in life to make you happy, is most likely to be something that is free anyway; time, love, friendship or time in nature.

There are for some, things that they just cannot do without and they are deeply depressed if they don't have them. For me, this is a few pints of real ale and a packet of pork scratchings or bacon and egg sarnies on a Saturday morning and chocolate brownies. Others might want designer clobber or flash cars, or business class seats on jets to exotic locations for pampered holidays. Whatever floats your boat. Some people want boats.

So, what do you need to do to increase your earnings to match your yearnings?

Earn more at work

Something that is easier said that done. These are things that you are likely to need to do that I have learned from the various business owners I have worked with and advised on finance. Ask yourself, "are your yearnings worth what is will take to get the earnings to satisfy them?"

• Take on responsibility - you will find you get paid for taking responsibility. Why? Because lots of people will not take it on. Businesses need people to step up and get things done.

• Show up - Do you duck out of things at work? Only do your 'core' hours? If you show up regularly and reliably whenever you are needed whether it is weekends or evenings, you will become indispensable and earnings will follow.

• Take on risk - as with investing, the more risk you take, the more you are likely to earn. Some businesses need you to take on personal risk, for example in Financial Services. You may need to put money into the business 'skin in the game'. This means you could lose out, but also, you are more likely to gain more.

• Earn money for the company - yeh yeh, you come in, don't have much time off, do what is expected etc. But what are you actually doing to earn the company more money? Or save it money? This is what companies exist for so ask yourself how you can contribute... then actually do it!

• Build Relationships - the more people you know, the more able you will be to help. The more people you help, the more use you are. This, in time, will bring opportunities that you can take advantage of as people will think of you.

• Get comfortable being uncomfortable - whatever you are doing you need to get it out there before you have perfected it. Show people your work, take feedback and improve it. This will make you feel uncomfortable! Get used to it and keep putting it out there.

• Put as much time into your work as possible. Outsource activities that use your time where they cost less to pay someone than you could earn in the same time. For example, get a cleaner, someone to mow your lawn etc. Use that time to get better at what you do and earn money through it

• Education - constantly be seeking to learn as this will help you earn more. This doesn't mean waiting for your employer to pay for you to go on a training course. It means doing your own learning of your own volition!

Other ways to earn money

Whilst you are doing all you can at work, the rewards may not be instant. So, in the meantime, you can look at other ways of making money:

Side Hustles! I love side hustles, everyone should have one. This is a smaller project that may excite you, or earn a regular income, or perhaps be something that could strike it lucky big time!

Are your yearnings worth it?

As you can see, there are a lot of sacrifices involved in earning more money and they are not guaranteed! It may all lead to nought with no greater earnings at all.

It might be, you decide your yearnings do not need to be sated and that you will be happier earning less. Which one wins for you? Earnings or yearnings?

There are many reasons why humans want to own things. Many buried deep within our psyche due to how we evolved over hundreds of thousands of years:

• Identity - what we have are symbols of the group we belong to., or want to being to. For example, why people wear football team shirts

• Sexual attraction - we think owning stuff will make us more attractive! Cars, clothes, swanky houses etc. we think they make us look hot! My new coat definitely does.

• Power - what you own can demonstrate how much power you have and can inspire feelings of awe, respect or fear in others.

• We live in a material world - we need food, shelter etc, without these we would be very unhappy!

• It makes us feel good - buying things releases dopamine in our brains making us feel good. Searching out the ‘new’ brings these chemical rewards. Which may go some way to explain why we are rarely happy with what we have got.

So far, so boring!

All of these evolutionary psychological reasons for possessions are largely based on ‘things’. Which can be great and rewarding in their own way. How about non material possessions? Perhaps our most valuable possessions are:

• Free will - the ability to do what we want!

• Free time - having the time available to do as we please

• Free love - oops, scratch that one, it’s probably getting the wrong message across.

• Freedom to choose friends and social activities

All of which sound full of infinite possibilities that could fill your life with joy and delight (afternoon delight in the case of point 3, but again, that might be getting the wrong message across. This is serious god dammit!).

What we sacrifice to get material and non-material possessions

We need to sacrifice our time for work in order to earn money for some material possessions. It’s a fact of life. Your time will need to be sacrificed to provide shelter, food, warmth, etc. just so you can survive.

But after those needs are met, our sacrifices should be more considered. For most people, more money means more time spent trying to obtain it. Less spare time means more expense as you seek convenience and that comes at a cost. Case in point: I had a takeaway tonight because I couldn’t be bothered to be go shopping, so my dinner cost 5-6 times more than if I had done it myself.

Family, religion, friendship, These are the three demons you must slay if you wish to succeed in business. - Monty Burns, The Simpsons

What demons do you have to slay?

Make no mistake, this is a psychological battle! You need to decide which side you are on. Material or non material possessions? Favouring one over the other will certainly mean sacrificing something:

• Family / friends or more time at work to get money to buy a car.

• Missing the school sports day to finish a work project to get a bonus to spend.,, on sports gear for your kid because you are guilty about missing school sports day!

• Getting a bigger house that you need to work harder to keep, so you spend less time in it and more time in the office.

• Getting a bigger house and never being able to go out and see friends because you can’t afford to go to dinner with them. You get to stare at more expensive walls instead.

Can you see how circular all this is? One sacrifice leads to more of the same. No matter how expensive your car, you still look at the same road. No matter how expensive your house, you still watch the same programmes on Netflix.

I sell my time to get enough money to buy it back. - James Richardson

"Our time is on loan, only ours to borrow." That's what Paul Weller sang in the Changing Man. Someone else probably said it too, but, as it is on loan and it's 5.45pm and I want to go home (walking) for my tea, I am leaving it at that. After all, our time is on loan and there ain't much left, so messing about trying to find the originator of the quote isn't using it well, is it?

What is time?

Time is something that cannot be bought or sold, that you have but is running out and that people ask you for. Time happens, whether you experience it or not. For example, when you are sleeping. Time slows down when you are bored, or reading a mundane blog article that is trying be philosophically profound and yet actually reads like it is written in a hurry by someone that hasn't got time to write it and really just wants to eat their dinner.

Time is a succession of events that happen in apparently irreversible order. In physics, there is the suggestion it doesn't have to happen in certain order but as sure as night follow day, future follows present and present follows past and dinner follows blog writing, it is apparent to humans that there is a set order that cannot be altered.

Time speeds up as we get older. It may not actually do (talking about time is a minefield when physics come in to it!) but it certainly feels like it does.

I am 44. This is halfway through the average longevity statistic I quote of 88. If I get to 88, it is more than likely that I will feel the 2nd 44 years went past much more quickly than the first 44. I know it is speeding up.

The trouble is, you think you have time - Gautama Buddha

You know you don't have much time, why are you using it trying to get possessions?

I think you realise, in your heart of hearts, you don't have much time. Most people spend a lot of time trying to earn money to get 'things' that they will 'own'. As a financial planner, many people say to me how they will not want to stop work, for example, until they have paid their mortgage off. Until they 'own' their house.

When you die, you will slip into the abyss of nothingness. Whatever your beliefs about what happens after life, there is certainly no baggage allowance. There is no 20KG in the hold and one small bag for the overhead locker. You are not able to wear a coat with large pockets to smuggle more stuff into the next life.

How do I know? I watch a lot of archaeology programmes! They are always digging up graves or tombs of people that have been deceased for millennia and finding artefacts that were deposited with them to 'use in the next life'

If you cannot take it with you, then do you ever really own it? Surely, having the use of it for as long as you need to and would enjoy it for is enough?

Learn to enjoy things without owning them. Ownership is nothing, access is everything. Visit a library, a park, or a museum. - Author: Joshua Becker

Get your priorities right

Being able to afford the continued use of something is what is most important. Today, I met with people that could afford to retire today. They would have needed to borrow some money on a mortgage, that they could easily afford to repay in 2 years when they are able to access their pensions. They have the wealth but do not have liquidity of cash (property investors, take heed!) They can afford to keep all they have and instantly stop the work they do not enjoy, but didn't want to be in more 'debt' and wanted the comfort of owning their home outright before they retire. All very sensible, one might think.

But, in light of the above, is it? 2 years more work you don't need to do to earn more money you don't need, to die with and you cannot take it with you. All in order to 'own' something you never truly own because when you are dead you will not own it then!

The cost of 2 years is massive! Those two years might be the only 2 you have left. When you are on your last legs, what amount of money would you give to have those 2 years of healthy life back? If it is not everything you own, then perhaps you should re-evaluate.

The things you own end up owning you. It's only after you lose everything that you're free to do anything. - Author: Chuck Palahniuk

“Welcome Sir, welcome to Ascot racecourse.”

Having arrived at the owners entrance of Ascot racecourse, to pick up our badges for the day (badges are like access all areas passes), we gave them our names and were given a number of pieces of paper and directions

“Are you here for a winner ? Are you confident of your chances today?”

She didn’t know the name of our horse but was in good cheer and so were the four of us.

“I think we are in with a shot, but it would be fantastic even to get a place” the head of our group said. “This is what we do it for, Saturday racing at places like Ascot!”

We all trooped off excited then exited the building into howling gales and ice like rains.

We jostled through the throngs in the grandstand  building trying to find the owners and trainers bar. Eventually, we did. The host’s list of directions had gone completely over our heads as we dreamt of watching our horse be led into the winners enclosure and it turned out the 15 minute detour was unnecessary as it was next door to the entrance.

I’m not an owner of the horse in question. I’m part of another syndicate of the same people that owns another horse. But not this one, as I was repeatedly told throughout the day, as the reason my opinion didn’t count! There was a spare ticket so I happily jumped in the saddle to come along.

The syndicate of schemers

This is a group of people that club together to buy a horse and split the training costs. They’re big beasts and so cost an arm and a leg to get one yourself. We aren’t talking about top horses either, these are lower league and people do it for fun and love.

It’s made up mainly of business owners that have been successful in their field and love racing (from what I can tell they also love drinking and eating!)

We sat in the owners and trainers bar and got stuck into some Guinness. There was a bit of talk of respective business hassles or opportunities. Ok, it was mainly hassles! People don’t like to boast and what worries us is usually what we talk about more isn’t it?

Everyone talked rationally and logically about their problems and how they could be resolved. Others chipped in with their thoughts. All what you would expect from successful business owners.

Dreamers

Then, the conversation returned again to horse racing. We had a table bet over who would score the most points throughout the day. 3 points for picking a winner, 2 for 2nd and 3 for third. £20 in and winner takes the whole pot.

What struck me about this bunch of people is how dreamy they are about horses. They get really soppy about them! It’s lovely to see and hear about. Throughout the rest of the day I learned things that I would not expect from schemers:

• Speaking to the jockey before hand, they all said to pull him up if he getting too hard for him, they weren’t that bothered about the race if the horse got hurt.

• Being at Ascot was a dream come true itself! Let alone the chance to walk in a winner.

• One had bought his first horse and it had died of colic (stomach issues) having only raced once. He jumped in and bought a second horse!l as didn’t want to give up.

• It really is the taking part that counts! Winning once is almost an impossible dream. Winning regularly is an even rarer deed. They all know they are going to be disappointed most of the time. And some of the time, heartbroken. But maybe, just maybe one day it will happen!

• The amount of cheese I ate from the buffet was unacceptably large. I thought it was pretty normal! Point taken and noted.

• All were in awe of the trainer when he sat down with us for a drink at the end of racing. The horse had run well and come 3rd. We had stood in the winners enclosure! The trainer talked of how hard it is to win and how the horse that had died was a going to be good and how rare it is to find one like that. But maintaining health is just another obstacle to getting the results you want.

Dreamers and schemers

Are business owners more likely be dreamers? Is that what compels them to start a business? That they can see the light that others can’t through the dark clouds of risk and despondency when their efforts do not come to fruition?

Maybe.

Here are two quotes about dreamers. One serious, one not. Both I agree with.

All men who have achieved great things have been great dreamers - Orison Swett Marsden

You gotta have a dream. If you don’t have a dream, how you gonna make a dream come true? - Oscar Hammerstein II

Either way, I like being around it. Long live the dreamers!

We have had a few prospective clients come to see us recently that have been... difficult. This is not to say they have been nasty or anything like that. I am sure they are lovely people! But, when they left, we certainly haven't been hoping they would return too quickly.

We get it, coming to see a financial adviser is scary

You're worried. The news is full of stories of people that have lost some / all of their money on an investment. During the commercial break, there is an advert about an adviser spending your retirement funds on a life of sun and jetskis in the Med. You open the post in the morning, and you have a letter from your pension provider full of 'Anti-Scam' leaflets.

I think this awareness is great! It's important to highlight it, but also, it's important to understand that as ever, it is the small minority that experience this and also the small minority of advisers (they're not advisers! They are just saying they are. And some are criminals,) that own a jetski.

The most usual outcome is... well, it's boring. Spend less than you earn, save the difference, invest in a pension, and enjoy a comfortable retirement. That is the norm.

We understand that you may be fearful and that may lead to trepidation and you not being the usual outgoing, bubbly, friendly character that you are. Also, you might be intimidated that you don't know much about money. You know what? I know nothing about what you do! Not a jot. We know about money as it's our job, just like you know about your profession.

As such, we are happy to let it go and assume you will perk up when you know us a bit better and trust us more. We are willing to earn that trust.

We want to work with you if...

There are thousands (hundreds of thousands) of people we can work with, but we can only look after hundreds. So, we want to work with nice people! People that:

• Are fun to be with

• Are open with us and willing to let us help them

• If there is a misunderstanding, will give us the benefit of the doubt until we can show what has happened.

• Join in the fun with us.

• Listen to what we say and enact it. If you don't like what we are saying, be willing to go through the reasons why and change your mind.

We will put ourselves through the wringer for you and emotionally it is hard for us to do that for so many people! Although rewarding, it's flipping draining going through people's highs and lows with them.

We might not necessarily want to work with you if...

• You don't want to tell us anything about your money. How do you think that is going to work out? How can we help you if we don't know about it? Have you ever been to a Doctor with a problem and said "Alright Doc, somethings wrong, I've got loads of symptoms but I'm not telling you. Can you guess?"

• You believe your 'mate down the pub'. Unless I'm your mate down the pub, you should absolutely not be listening to them and I don't really want to spend half our time together discounting their spurious investment beliefs. I want to talk about you. If you want to do what they do, get them to advise you!

• You know how to do everything already. Don't come to a meeting to tell us that! Just don't come in the first place. Let me have a tea break.

You absolutely don't know how to do everything we do by the way. The people that are like this are usually the ones making the most obvious mistakes. This is the mother of all points! You think we do just investments. What we really do is help you make the right decisions.

Why be so guarded, secretive and prickly? Let us in, we can help. If you don't want help, leave us alone!

Truth never damages a cause that is just

Mahatma Gandhi

A rough guide to how to take profits from your business. None of this is nailed on, you need to take advice for what is most appropriate to you, other shareholders and your type of business. Think of it as ideas and not a full plan. There is tonnes of nuance to this so ask your accountant and financial planner for help.

Working 9 til 5, what a way to make a living —Dolly Parton

Well, you’re a business owner, so it’s probably 6 til 8. But, Dolly is still right, what a way to make a living! It’s awesome. But, let’s get you straight to make those hours worthwhile.

First thing, make sure you have enough money on account to provide all working capital, emergency money for when things go wrong (pandemics!) and to take advantage of opportunities. Earn the money first and worry about the rest later.

Profits up to around £50k

Many accountants will advise drawing a smaller salary, £8-£12500 and then dividends taking total income up to £50k

The smaller salary ensures you pay minimal national insurance but still get your State Pension contributions.

Drawing dividends means you would pay Corporation Tax, but then use your annual dividend allowance of £2k (so zero tax on that) then on remainder 7.5% (8.75% from April ‘22).

Alternatively, taking a larger salary up to £50k may be more appropriate, but you will pay less Corporation Tax (saving 19-25% from April 2022), more National Insurance (employers NI 15.05% from April ‘22) and also more employee national insurance.

Profits up to around £100k

If you don’t need it to live on, you could start paying more into a pension. After the first £50k, this is one of the cheapest ways of getting money out of your company. £40,000 a year, plus ability to carry forward some of that allowance from previous 3 years if you didn’t use it (provided you had a pension at those points.)

Maximise its use!

Profits over £100k

If you withdraw more than £100k then you would start to lose your personal allowance for income tax. This is the tax free amount of £12570 we are allowed to earn without pay by income tax. So, we recommend not exceeding this and if you do to take a significant amount over to make it worth paying the equivalent of 60% income tax.

If you do, don’t go over £200k as if you’re paying your employer pension payments you will start to lose annual allowance too, due to the ‘taper’.

The money from that, if you don’t need it could be invested in VCT’s or EIS. Tax advantages products that give 30% income tax refund on the amount you invest.e.g you pay £20k and get £6k income tax refund.

More profits than that?

Then it gets more specialised and you really do need a plan. But, if you follow the above it will get money out of your business and keep the amount in it to a minimum. Why do this?

• Whilst in the business the money could be lost if got sued etc. there’s a reason you set up a limited company.

• Investing within a business is not as tax efficient as you pay corporation tax on profits and have no tax efficient allowances E.g. ISA, to use

• If get too much money in a company it can affect entitlement to Entrepreneur’s Relief or Business Relief for inheritance tax.

Other things to consider

Protection - you can use your business to get tax efficient life assurance for your family. But you should also look at income protection, you’re the business owner an no one pays you sick pay if you can’t work.

In all the above, consider the level of risk you wish to take (business risk, investment risk etc) before deciding on doing anything. Tax efficient products are tax efficient for a reason - there are strings attached! Find out what they are and see if they are worth it.

What are you in business for?

Consider this. There are lots of reasons I am in business for:

• To help people

• To help colleagues

But, I originally started as I needed to earn money to live! I talk everyday to people about living a great life and enjoying themselves. You should do this.

Accumulating money in a company is no good for you, accumulating money to withdraw so you can have a great life is! That’s why you do it and you deserve to because you create jobs for other people so they can have a great life too.

Never get so busy making a living that you forget to make a life.” —Dolly Parton

We all know the story of people that become rich beyond their wildest dreams and famous with it, only to lose the lot and end up bankrupt or back to where they began again. Often, boxers, lottery winners or business people.

Sometimes, this is due to some misfortune and sometimes due to poor planning. For example, with tax bills or choice of life partner leading to expensive divorces. But does it need to be like this?

Making a million (or ten) and doing it all over again

I love it when businesses are successful, and the founder is able to get out with a healthy bank balance. It's a lot of risk starting a company and also a lot of effort with no guarantee of getting anything out of it. 60% of businesses will fail within the first 3 years. So that's a tonne of heartache and losing money to boot.

Once people are successful, it is like a bug! They know they can do it and so often want to start a new venture and this time it will be bigger and better! They will make even more money this time around. They assume it will be bigger and better because they have learned from their past mistakes and now think they now have the winning formula.

This optimism / arrogance can lead to them taking bigger risks because last time it worked out fine. They have more money available from the sale of their first business and so may be less wary of costs.

Maybe they just got lucky?

It's hard to be humble enough to admit this, but, maybe they just got lucky? Perhaps, their business was just in the right place at the right time and managed to capitalise on it. Perhaps, they happened to meet the right person at the right time that was able to super charge their business. This may be a customer or an employee, or someone else that had an influence on the business. Or someone that could take their product and make a business of it... you might think like Dragon's Den here.

If you got lucky once, then why do you think it will happen again? Well, you don't, because you put this success down to your own abilities. We all do that to a certain extent; we overestimate our impact on things.

You may have been brilliant the first time around, you may have made all the right moves at the right time and got the success you deserved. Next time though, you may do it all again and do everything right but then... you just get unlucky. Starting a business before a pandemic, or example. Events you have no control over can destroy businesses and no matter how well you react; it might just be too much bad luck.

You don't need to risk it all again

Entrepreneurs resist this urge! I know it is strong inside you, but there is no need to end up at square one. It is possible to:

• Work out how much money you need for the rest of your life and keep that aside. Put the rest into whatever venture you want and if you lose that... stop. Do not raid your 'rest of life' fund.

• Plan for unjust loss of money and protect it as far as possible using legal structures.

• Planning for taxes is pretty simple! Do it, pay an expert that takes liability for it, keep them as low as possible and pay them on time. Low bills, no fines and no worries!

• Invest the money required in a manner where there is no chance or permanent loss of capital. Fluctuation of value, yes, but not permanent loss.

"Avoiding permanent loss of capital is the number one rule." Bruce Berkowitz

Luckily, there are people that can help organise all this for you (I know this as I am one!) to make it as easy as possible and so that you end up in a position where you can concentrate on your next venture, knowing you are secure.

It's Valentine's day 2022 and if ever there was an example of how money is about love, this is it!

It is estimated that the total spend on V Day in 2022 in the UK will be £1.37 Billion (Source: The Internet). BILLION! I can hear the gasps of some of the romantically challenged of the UK muttering that it feels like it.

After meeting our survival needs, I think that most money is used because of Love. Let's look at how. I am what is known as 'a soppy old sod' so if you disagree to this, keep your thoughts to yourself!

Gifts for family and friends

Every year for birthdays, Christmas, Marriage, Valentine's Day, special occasions, or just because we see something nice that we think a person we know will like, we buy gifts to make that person feel appreciated, smile etc.

Think of the money that is spent on this! It is billions! Why do we do it? Because we love them! And it makes us feel good. We earn money to spend it on those we love and that, in my opinion, is its sole purpose.

Socialising with family and friends 

Dinners, parties, drinks at the pub... think of all the moeny we spend on meeting people and hanging out with them, finding out their latest stories, laughing with them, crying with them. Most of my spare money goes on this because I like to see the people I love (I also like real ale, cream cakes, dinner etc, but that's love too!)

Saving so you can give to family and friends

People will go without something they love so they can give money to the ones they love. Most typically a parent in order to give to their child so they have a better life.

We all know that story and it's probably the most moving one. That money is love.

Using money to give to charity

For the love of humanity! We give money to charity to express love for strangers and help us love ourselves a bit more. That money is love.

Love of things / hobbies

Football fans that pay thousands for season tickets to support the team they love, people paying money for handbags or cars, following the cricket team around the world, spending fortunes on their pets... it's all for love!

I hope you spend your money on your loves

If you have a partner, spend money on them tonight! Enjoy it and make them feel special. If you don't, spend money on yourself and make yourself feel special.

Money is love!

We want it all don’t we? We want to be able to do whatever we want, stay in bed if we want to, not to do anything that makes us uncomfortable, lounge about, run about and roam where we want to. We want our ideas taken seriously, to be listened to and for others to put them into practice as that’s gives us a feeling of respect.

And yet, we also want to earn more money than we really need, praise heaped on us by others, to be liked and have a purpose so that we get excited about life. We want the people around us to be self sufficient and not need our help too often.

Conflicts of interest

Obviously, a lot of these things are mutually exclusive! No one will listen  to us if we don’t listen to others. If we lounge about and stay in bed, then we are not going to be paid well.

We don’t want people walking through our garden, yet want the right to roam across the countryside. At what size does a garden become land we have the right to walk through?

If we don’t praise and appreciate others, then why do we expect the same back?

If we don’t help others, why do we expect to be helped? Examples of this abound at the moment. Some, for their own reasons legitimate or not,  refuse to get vaccinated against covid but are happy to turn up at the hospital for help when it happens to them.

If we won’t let ourselves be uncomfortable, doing the things we don’t want to do, we would never get good at anything. Everything is hard at first. Because it is new. I personally believe only the hard things are worth doing.

Just what is it that you want to do?

Internal conflicts of interest lead to mental conflict. Conflict leads to stress. Why do you want to do that to yourself ?

It is impossible to do everything you want, be everything you want and earn everything you want. You know why? Because when you get there, you will want  a little bit more. A little more praise, a little more money, a little more free time.

Acceptance

Life is bleeding hard a lot of the time. Illness and death abound and we can do nothing about it. Let’s not make it harder on ourselves though this internal conflict.

• Decide why you want.

• Then go after that.

Others, (wives, husbands, friends, colleagues, society) will want different things from you. But, quite frankly, stuff ‘em. If they love you they will understand. If they don’t then who cares what they think?

The following is all under my mantra that I can do what I want as long as it doesn’t hurt others. That’s the number one rule!

If your partner wants you to earn more money and that will mean you doing something you don’t want to; Tell them to earn it.

If you’re expected to help someone and you would rather help another, do that.

If you want to stay in bed, have a duvet day and it doesn’t impinge on others, then do that.

It is so important to have a list of things that matter to you most, write them down. Then write down what you wouldn’t like to do and if they are conflicting weight it up and decide which trumps which.

For example:

Earn more money so can spend  more on kids to give them a ‘better life’

That will mean more time spent at work. More stress and maybe more money.

That means less time spent with kids, a poorer mood when you are with them, missing out on school plays (that could be a bonus!)  and therefore not as good a relationship. But hey, the extra money will mean a ‘better life’! What will lead to the better outcome for you?

Staying in bed : immediate comfort. But, less likely to achieve what you want to. What is more important? If you really want to achieve it, you’ll jump out! If not, stay there and order delivery breakfast!

The 14th Dalai Lama sums it up well, and who wouldn’t want this:

Inner peace leads to a peaceful individual and then this peaceful individual can build a peaceful family, then a peaceful community, then a peaceful world

Many times, people will come to us and explain that they are able to do everything themselves well enough. Which is fine, a little self-confidence is an awesome thing! But, if you feel that way don't come in the first place, I would rather have a tea break!

I find financial planning incredibly easy. I know what to do and how to do it. I have tens of thousands of hours of real-world experience and academic reading behind me.

I know so much that I am going to tell you, beloved readers (all 2 of you!) all of it now for free. The following are these tens of thousands of hours of research condensed simply so you can go off and do it yourself.

Financial Planning on your fingers - quick and simple

• Invest 100% of money in a globally diversified portfolio of shares

• Save spare income into this.

• Only sell out when you need the money and for no other reason than you are going to spend it.

• Keep costs low as possible

• Keep taxes as low as possible

Losing weight is quick and simple too

• Calculate your required calorie intake

• Consume less than this in calories each day

• Do more exercise

• Eat foods high in fibre

• Cut out alcohol and sugar

Simple but not easy

As we can tell, the UK is full of people that are slim and in no way obese. They are also all incredibly wealthy.

Fin.

Er, no! I am a right little porker! It's really flipping hard to lose weight and keep it off. Shamefully so, for me at least. Do you know why? It's because the human mind, although capable of the most amazing things is also incapable of thinking too far into the future and shutting out its emotions. Hence, why on a Friday afternoon I am debating whether to have a kebab after the few tipples I am planning on having. It's no debate really, I am telling myself not to, but I know I will have one (no raw onions please, dear kebab-Sir, and extra chilli sauce & garlic mayo).

Investment Return v Investor Return

For the 20 years preceding 31/12/2019 the S&P 500 averaged 6.06% a year. The average equity fund investor earned a market return of only 4.25%. That’s 1.81% difference every year!

On £500k that is over £9k a year… and this compounds.

That is just one reason why you need an adviser. You will bottle it. You will think you are being clever when you are buying or not buying shares at a certain point. Let me tell you, you are not being clever. You don’t know the market movements of the future as you do not own a time machine or a working crystal ball (last available on rental from Rumbelows circa 1991). No one does! And so you will fret and not do what is most likely to bring you success.

A financial planner will work on this with you and highlight the mistakes you m are making to enable you to think more clearly. They will help you clear your mind of blocking thoughts.

That’s why I, a financial planner of 15+ years ask for help from others in our business. We all need an adviser.

This is a story about the mouse infestation I had in my garage a few years ago. One day, I went to the old cupboard (1940’s I reckon) and opened it up to be confronted by a pile of husks from a broken bag of bird seed and a mouse with the fattest cheeks you’d ever seen. It froze, and we eyed each other. It put the seed it was holding down ever so slowly and tried to inch away.

Meanwhile, naturally, I was screaming and running about yelling for my wife. After she had calmed me down and a few days of thinking about how to get rid of the mice, I decided on my plan of action.

Not wanting to kill the little blighters, I’d elected for some humane traps and bought a bag of Maltesers as bait. A big bag. One for the mice, one for me.

3 blind mice

For the next week, I would bait the trap with a Malteser and crush up another one and put it around the entrance to the trap. Sometimes, I didn’t bother putting any around the outside and just bait the inside.

I tried a number of nights and the following morning I’d go out to see if I had any mice to release up the park on the way to work.

If I baited the outside., I would catch a mouse every time! If they tasted the delicious Malteser they would be tempted for more by the smell of it inside.

But, they would rarely eat all the Malteser outside the trap. They wanted the big one! They left the low hanging, erm, Maltesers and went for the dangerous goal.( I get that it’s a mouse and didn’t know it was a trap, so couldn’t have weighed up the danger. But I’m trying to explain something through a story, so bear with, ok my loves.)

All of the mice got released up the park. Which I like to see as some kind of mouse heaven to allay my guilt about separating them from their mouse families. But in reality may have meant they met their end another way. However, two of the mice, both whom ignored the Malteser outside the trap, got in and ate half of the Malteser. Scale wise, this is probably like eating one the size of your head, I don’t know what their last moments were like in that hyperglycaemic state, but i hope they enjoyed eating it all before they died.

The third blind mouse

This reminds me of the almost countless number of times someone who has more than enough money, delays retirement for:

• A redundancy payment

• An inheritance to be paid out

• Whatever else they think they should wait for

Why? You already have enough, the free and easy Maltesers at there to be gobbled up and enjoyed. Yes, you will have more but:

• You will never be able to eat it all! So what’s the point?

• Whilst you sit in the trap (your work) waiting to eat it all, you might die

• Whilst you sit in the trap (your work) waiting to eat it all, your family and friends maybe being take away from you, to the great park in the sky.

Once you have enough money, your goal should be to use it wisely. These mice had enough Malteser and they went for more they didn’t need. Do not be the third blind mouse!

Enough is as good as a feast - proverb

I only heard about this last week at a client meeting and even better, I know one of them will read this! Yes, WM, you can stop reading now as this is your story! I often say to people to stop worrying about ‘what if such and such goes wrong’ and think more positively as it is more likely that ‘what if everything goes right!’ and that is been their attitude, despite a few horrible things happening along the way.

I never thought they would do it!

This is the story of an couple of clients that I have advised for 9 years now. What is so wonderful about advising people for these lengths of time is that I get to see their life change and hopefully, with a bit of help from me, develop into something better!

In this time, I have seen them grow from parents to ‘empty nesters’, to grandparents and now to being fully retired and loving life!

2-3 years ago I never thought this would happen. One was working part time and quite happy doing a few days a week. The other was entrenched in their business man job! Talking about grown up things like strategy, profit and stuff like that. You know, language straight out of The Apprentice! Only with someone that was good at it! I thought, this was a fella who’ll work for a good few years yet, maybe well into 60s when he doesn’t have to.

Work less and then work a lot less

Before the dreaded lurgy struck, he had decided to work a shorter week. But with the arrival of Covid and change in work that occurred, decided to stop altogether and keep an eye open for something else. I thought for sure, he will be back in another ‘business man’ role sooner or later.

As we all have become experts in disease over the last two years, one disease can kick out another and stop it taking hold. Here, it seems COVID’s lockdown kicked out the work virus that had been incumbent on him for decades.

The first thing I said, after some biscuits and tea, as had walked to their house so needed sustenance, was “are you still looking for opportunities then?”

“No way! We are both done for good”

Nothing gladdens my heart more than news of a permanent retirement to an awesome life!

The reason? In the past year they had:

• Been on 7 (seven!) holidays. On one occasion coming home for one night, picking up some clean pants and then going again the next day!

• Taken up an art class

• Kite surfing

• Model aeroplanes

• Golf (standard)

• Become grandparents

Essentially, they had seized the day and made the most of it. They love dot so much they didn’t want to stop and go back to their old ways. Trying out new things and carrying on the ones they enjoyed and ditching the ones they didn’t.

They were / are open to change and adventure and sought it out. Where opportunities presented themselves they thought “why not? Let’s give it a go”

I for one, bloody love it. And, they sincerely deserve it, so I hope they continue for many a year in the vein.

Model retiree award goes to you!

"Alright Laddie", it was JZ, my divisional manager on the phone. He was Scottish and I am no Irvine Welsh so am not going to bother to write a Scottish accent. Imagine a soft Scottish accent though, from a jovial bloke and you'll have it. JZ gave me my first break and in my eyes was a bit of a legend. I was sat in my car having just finished a meeting. It would have been around the summer of 2006 or 2007.

"Listen up, Stevie. We've got a problem and I think you're the man to fix it. We have had a complaint. 2 consultants have been and the customer is kicking up a fuss and they won't go back. I think he is a bit of a handful. You have a calming effect on people, I need you to go and see them and sort it out for me. Do the whole thing in one meeting. Will ya do that for me?"

"No problem, gaffer", I replied.

Nothing can be that bad, and they weren't complaining about me, so I thought 'how hard can it be'? I rang the colleague in the call centre that had arranged the meeting and got the details. I went off there two days later.

A long, hot drive

It was one of those climate changing, thermometer bustingly hot summer days. The temperature was well into the 30's and I was off on a 2-3 hour drive there and then the same back. On the way, for my 12 o'clock appointment, I was thinking about how I could be back for 5 ish and then maybe go to a beer garden somewhere.

I arrived at their home, parked the car on the street. I never park on the drive. I can't reverse and will inevitably hit something. No one wants their prize begonias smashed by a financial adviser do they? The few times I have done this, I have broken down a) at the office of a company that supplies parts for Land Rover. And B) where the client owned an Aston Martin. Both times, they were existing clients that howled with laughter at the Bravo 2 Zero.

Anyway, back to the story. I approach the front door with the lining of my suit trousers already starting to stick to my legs. It's flipping hot. And it's wide open. No surprise really, it probably lets a through breeze in.

The gentleman appeared in a shirt with the top 3-4 buttons undone. After all, it was hot. And NOTHING else. I could tell the through breeze was certainly having an effect on some swingers.

Keep it cool, Stevie, keep it cool

Hmm... should I say something? I elected not to. I was on a call following a complaint about 2 other advisers. Keep your head down, sort it out and get home to that beer garden!

"Hallo! It's flipping hot innit! I'm Steve from..."

I was invited in and offered a cooling drink. We discussed the refreshing benefits of traditional lemonade and I kept my eyes upwards. They discussed their naturism and how they enjoyed it and how upset they were with the other advisers (one female, one male) that had been and refused to talk with them unless they got dressed. I am getting increasingly uncomfortable as I sat there sweating in my suit and thought about joining their naturist club. There then followed some scenes that are etched on my memory:

• The scene of a man silhouetted in the summer sun with his legs apart in the power stance, pointing at a bird table.

• After walking to a bureau to get a passport out he dropped it in front of me. He instinctively dropped to pick it up whilst I leant forward to do likewise. Nose came perilously close to crack.

• When checking out his roses in the back garden, the mocking howls of nearby kids were also a highlight.

You’re expecting a lesson from this aren’t you?

Well, there is no lesson. It’s just another appointment where we encounter the idiosyncrasies of humanity. I still remember it and probably always will, unlike some other meetings. I got on the car and rang the adviser the had been before. “You bastard”, I said. He guffawed immediately as he knew what had happened. He and JZ had stitched me up and he proceeded to tell me about his encounter. He did buy me a beer for it in the end. One beer for a lifetime of those silhouettes I see every time I close my eyes on a hot day.

We lost a client recently to another adviser. Which, is highly unusual! I think it is the first time where we haven't recommended a client finds an adviser (or we have suggested one to them) that is more suited to what they want.

I realise, we are not for everyone and when we first meet people we aim to get across how we work and how we will present our advice as early as possible and with the ability to walk away without charge, so that this is less likely to happen.

They had elected for a dual advice approach because they felt some kind of loyalty to the existing adviser and thought that they would get better ideas from two advisers and be able to put them together to get better results. Instead, it resulted in confusion and higher overall charges.

How this came to pass

We met a few years ago and I was aware at the time that he had another adviser that had been with a number of years. My approach in the past, when confronted with this, is to accept it and then hope our excellent service leads to us becoming the sole adviser. I am an easy going character and I recognize it can be scary to commit to us all in one giant leap, so I have been happy with this.

We have talked several times where I have compared what the existing adviser is doing and these were the results:

• Overall costs - 2% a year compared to 1.25%

• Invested at a lower level of risk than should be, this has led to significantly lower returns than should have received.

• Invested in tax wrappers that mean are paying more tax than they should (e.g. £0!)

• Their investments take advantage of "global pool of investment talent' - which academic evidence shows doesn't exist.

• They were an adviser that were a 'restricted' firm and not 'independent' like us.

• Of least concern is investment performance as there is not great control over that, and comparison of that told me that our recommended investments, when risk adjusted, had performed better.

What went against us?

Our advice fee is 0.85% a year compared to 0.50% but that is included in the total cost comparison indicated above of 2% v 1.25%.

Also, we are a small company, which may have been a concern, compared to a national advice firm I can understand why there may be an initial preference for the larger option.

Long term trust

Based purely on the evidence, there is no way they should have left us for them.  Putting aside the rather large facial features I have, the stale miasma that surrounds me, the irritating high pitched nasal whine I emit and the cruddy jokes that I would normally assume are responsible for people not wishing to see me again, I can only assume the reason was due to having a longer term relationship and felt they were more trustworthy, as they discounted the rational facts I presented.

Pretty much every argument in choosing between us is accounted for in the above. I told an investment analyst about this and they said:

'The net end balance will be significantly less under the “global talent pool of investment”, the evidence shows. Bid them a farewell as you can only lead a horse to water Steve! 👋'

Why does this hurt so much?

I find it incredibly hard to have the 'lead a horse to water' attitude and shrug it off. I have to say, it was like a punch in the guts. I don't know why. You don't have my aforementioned physical and character traits without having extensive experience of being dumped! Even my wife dumped me when we first met!

The loss of this client doesn't make a big difference to our firm monetarily. I'll certainly miss our meetings as I enjoyed their company.

I think it is the fact that I know, to the core of my bones, that they are going to be significantly worse off in the longer term because of it. It really gets my hackles up and I don't like it.

What to do instead in situations with two advisers?

I think that I am not going to get in this situation again. It hurts me too much emotionally and I'd rather not have to go through that. I am not sure I can 'lighten up' enough not to feel it. There are some that say you would not expect a battlefield commander to only be in charge of half their troops, and so as an adviser you should look after all the money, or none of it. I think I am coming around to that.

Having one adviser is the best solution as:

• You have one plan, all the money works towards making that plan work

• As all under our advice, costs will be lower than being managed by two plus advisers due to economy of scale

• An investment plan with two advisers may have competing interests... all the money should be moving in one coherent direction.

• Things will certainly get completed more efficiently, with less conflict and thought.