Ask us anything: How has being parents affected the kinds of decisions you make?

0:02Damo, what are you doing? well while we're waiting for our next podcast episode i'm sat here reading this magazine that's on the table about wallpaper very very quaint very old school you know what i never realized how much i missed those little rip-off sniffy perfume things that are in the middle but yeah i think um magazines are making a comeback mate in a world where everything feels digital and i'm just dying to put down a screen all of the time i quite enjoy sitting down with a magazine and having a read of it it's almost like you know buying a vinyl record yeah feels more real more tangible the music's more authentic it's richer yeah that's right which kind of leads us into today's sponsor one of the best finance publications in the uk is money week they're in print and online so you can get that nice magazine feeling in your hands money week sift and summarize the biggest stories in finance and then add their own journalism on top it means no more endless scrolling if you want to give money week a try you can get six issues in print and on the app absolutely free by visiting moneyweek.com forward slash money.

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1:15Welcome to our mini episodes where we answer your biggest questions about money. All right, Barry Manilow. So yeah, thanks for sending in the questions. I can't do a deep voice Once you hit puberty, it'll work for you. All right.

1:32So Alex messaged us and said, so too much of financial advice seems to be from the angle of someone who's in their early 20s, no fear and has a confident attitude. But what about your average cautious parent who just wants to learn a little better about finances and make good, safe decisions for their family? I'd like to hear your personal perspectives of being fathers and how it's impacted the kind of decisions you make. You're still coming to grips with yours, aren't you? Yeah, I know, mate. Six months in and I'm still feeling it. A lot more cautious. And also, for the first time in my life, I've actually looked at long-term investments.

2:06So before I was always like, I want to be rich, I want to buy a car, I want to buy some gold, I want to go on holiday, I want to buy another car, I want to buy a house. Now I'm thinking, okay, if I put this investment away now, when my kid's 20, he'll have X amount. So I'm looking like 20 years down the line, whereas before it's only looking one to four years down the line, probably. or like six months to four years down the line. Yeah, you definitely think longer term. And I think as well, all I did at the point where I had a child was I started to look at the structures that existed to help people invest long-term, like you say.

2:37So junior ISA, the junior SIP, stocks and shares ISA, a pension, because at that point you have a responsibility to make sure that they're okay, but also that you're okay so that they're okay. Because if you don't want to die before they're 18 or whatever and there's nothing there, So I think, you know, it makes you more sensible, but it also means you start to take more risks, but they're better risks. You know, in the past, like you say, the risks that you were taking were cars and gold and things, right? So now you're investing long-term, which some people might say carries a bit of risk as well.

3:11Yeah, but also when you're looking for a longer horizon, you can be less worried about aggressive returns and more stable long-term returns. So even looking at bonds, ISAs, stocks and shares, There's like everything, most of those are like quite long-term. Like, so you wouldn't really invest in the stock market if you're trying to get the money out in six months, unless you're investing in individual stocks. But the way I'm looking at investing now is all for 10, 20, 30 years. Yeah. As a cautious parent, you know, what I would be doing if I was starting again would be, I'd make sure that the household had a solid emergency fund, which is three months worth of living costs.

3:44So if I was to lose work, I could, you know, support the family still for that period of time. I would then be investing inside of a stocks and shares ISA for myself and maximizing any pension options that I get through work. And then also I would open a junior ISA for my child so that when they turn 18 to 25, I can support them in getting on the property ladder. And then I would be investing that in stocks and shares, not holding it as cash. And then I would also look at a junior SIP for them to make sure that, you know, in retirement, they're going to be okay. and then I've boxed off that bit of getting him on the ladder and the retirement.

4:20They'll be more than okay if you do them a sip. Set mate. Yeah. So I would open my little man's sip. Yeah, you could put like£10 a month into that. Yeah, and then by the time he's like 60. I mean, it might not be crazy numbers, but what it can mean is that at the point they finally realized that to stop being a mess financially, you've got a sip there that's already been ticking away where you can go look at what I've done for you over this time period and look at how that's grown and look at where it's at. Now it's your turn to start paying into it. You know, so most, I think most people don't get their head screwed on financially until maybe mid twenties, you know, and mid thirties.

4:57I mean, I think that's pretty early. I was going to say mid thirties. I mean, just from doing this podcast, a lot of my friends are not financially like, they might have money in the bank, they might have like savings, but they don't have investments and they don't know what they're doing with their pension. They don't have, they haven't bought their first property. Like a lot of my friends are. in their 30s in that position. And the junior ISA, they can touch that at 18 and you can't stop them really. Whereas the junior SIP, they can't touch that until retirement age. So the good thing is it limits their ability to spunk it.

5:27So they get to go through that journey and whenever they realize, oh crap, I actually need to save for my retirement, that's already there. You could even just stop contributing into it at the point they're 18. And like I said, 20 pound a month from a young age is going to make a massive difference. It's going to be something that's there. If I had a junior ISA at age 18, I would have blown it in freshers week in uni. Like the whole thing and just been like the biggest baller on campus. Yeah. And then had no ISA. So yeah, I think a junior SIP is probably better for... It's that ultimate security.

5:55You know that when you're long gone, that your son is sorted or at least got some money there. Pension concerns are massive for the future generations. But also you did mention earlier, I would probably look at junior ISA mainly because to help them get on the property ladder. So yeah, like obviously I want to help him with the deposit. You could invest within your own pot of money to do that, but then it uses up your own ISA allowance. No, I need that. Yeah. So you could do the child one instead and then just catch the letter when it hits the door when they're 18 and sit them down and go, this pot of cash, if you want it, it's for a house only and I'm going on the deeds or something, I don't know.

6:30There's ways of doing it, isn't there? Yeah. But yeah, I think that's pretty good advice. Yeah, that's, you know, if you're talking sensible and cautious, I think that's how I would be structuring it. That's how I do. Yeah. But obviously I've got a little risk appetite. so might tuck away one or two Bitcoin for the baby. In like 40 years, it'll be like, yo, you're a millionaire. And it's nothing to do with crypto.

6:54Okay, the next question. Do you want to read this one? Let's go for it. Swarty, Swarty, Swarty, Swarty underscore seven asked us on Instagram, where should I put my money as a higher rate taxpayer who has maxed out ISAs and premium bonds? Oh, this one. That's a question for Damien. So this reminds me of Lisa Conway Hughes and the conversation we had with her, if you remember. So she basically said that she had a client where she convinced them to pay£30 ,000 into pension to bring them into the lower rate taxpayer bracket. So from SWODY underscore sevens question there, it looks like maxed out the ISA.

7:30So put 20K in there and then maxed out premium bonds, which means there's 50 grand in premium bonds. so I would be saying what about pension contributions because they're highly tax efficient especially as a higher rate taxpayer so yeah I would be looking at pensions next SIP, work based, whatever your bag is As someone who's not maxed out on ISAs and premium bonds I could not tell you so I go with Damien's advice Well it's not advice Good point Do you know about premium bonds? Do you know they are? Have you got some? No They're a pretty terrible rate of return at the minute You know me that's not going to whet my appetite No I mean they're a lottery they're technically yeah but it's just like gambling and I already gamble heavily in cryptocurrency so I don't need to increase my exposure but yeah you can win like you can win quite a nice price can't you you can win up to a million quid really yeah once a month a million quid yeah yeah but how likely is that to happen I think it's like one in 144 million or something stupid you know it's however many people have got I don't know there's there's billions in there if but the good thing about them is that you can sell them at any time and get your pound back.

8:35So from a perspective of if you play the lottery, you should probably not do that and buy premium bonds every week instead with the money because over time you'll build up a pot of cash that you can take out anytime you want. And you might win. I keep some of my emergency funding there because it's like a roll of the dice. You know, it's a bit of fun in a way that it might mean like I might hit the jackpot. They give loads of prizes, but yeah, it's not the best return, you know, in terms of interest. Unless you win. yeah if you win obviously but you know the one person who wins a million takes away from everyone else who hasn't do you know what i mean so like the prize is even though the average payout might be like 1.5 or 2 or whatever it is the person who wins a million takes a lot of other people's prizes

9:20what do you want to ask us or future guests email us at makingmoney at kindling.media or just slide into the dms this isn't advice whilst we discuss individual examples we can't give you personal financial advice. What we can do is offer a perspective and discuss the issues. I'm Damo. I'm T. And we'll be back next week answering some more of your questions.