Ask us anything: Is gold a good investment?

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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1:18Hello. So we're going to be back with our full length episodes on the 4th of September, and we've got some incredible guests lined up. Including Devon Meaden from Dragon's Den and a deep dive on what you should put in your investment portfolio with Ramin Nikisa of PensionCraft. We're also going to be talking about what to do with your mortgage and how to get a pay rise. But until then, we wanted to answer some of the many questions that you've sent to us. We really appreciate everyone who's sending their questions. Thank you so much. We love hearing from you, so make sure you keep them coming in.

1:47So, first question. Andrew wrote to us. Love the podcast. I'm reading The Psychology of Money. It's a great book, by the way, by Morgan Housel, is it? Is that how you say it? Yeah. Housel. It deals with like cognitive biases and some of the mind traps that we have around money. I mean, The Psychology of Money kind of says it all. He asks, so Morgan talks in the book about having enough. What is and will be enough for Damo and T? Before we go into this, T, do you want to read that little section? Well, as the best reader here, sure. All you do is blinkist. a little summary of it all right so first book i've read in a while um john bogle the vanguard founder who passed away in 2019 once told a story about money that highlights something we don't think about enough at a party given by a billionaire on shelter island i've been there kurt vonnegut informs his pal joseph heller that their host a hedge fund manager had made more money in a single day than heller had earned from his wildly popular novel catch 22 over its whole history heller responds yes but i have something he will never have enough deep i know i um i did some research recently around uh achieving financial goals and one of the things is that a brain needs like a clear and defined goal to be able to break it down if we have like big abstract goals like be rich the brain really struggles with that to to process how we get there and we end up um fantasizing about winning the lottery so if you have a defined number your brain then finds it much easier and you're much more likely to hit that it's like the whole set of goal hit the goal five mil five mil yeah you know when i was a kid i always thought like a million once i got a million pounds i'll be set for like a million pounds is not very much money nowadays no i don't even think five mil is that much money to be honest but i think five mil is a lot of money but yeah Yeah, but if you start thinking about properties, like if you have like, say you want a property in California, a property in London, a property in like Dubai or like South of France.

3:48Just enough. Yeah, just a couple of those, you're going to be looking at like five mil. Yeah. So yeah, if you want a villa somewhere, they're around one to two million. So then you've only got three more left. So, and then you've got your house where you live. So I think - So you want three houses? Yeah, I want three. Maybe like two - Paid off? Yeah. Two, one house paid off and then like holiday homes. Yeah. So you can rent them out for the rest of the year when you're not there. And would you live off that money? Yeah, the passive income. It's all about the coming in every month. Yeah, mine's a bit more like, I'm not that bothered about the property.

4:19I'd like a paid off house, obviously, but two million pounds inside of a stocks and shares ISA invested in a global index fund. Because that produced me about 80 grand a year tax-free, 60 to 80. And I mean, you know, I wouldn't say no to three million in there, but like two millions are probably enough. But my main thing is I like to travel a lot. So, you know, obviously I want... 80 grand a year tax free, I can travel on that. And there's another story in the book that I remember about like a really successful Indian entrepreneur who moved over from poverty in India, went to America, was worth hundreds of millions, but legitimately, but ended up going to prison because he committed fraud, because he was desperate to be a billionaire, because he felt, you know, like the poorest person in the room kind of thing.

4:59So I think enough is about defining what enough is to you so you know when you hit it. If you have a loose goal around it, you never hit it. And then you get there and you see another mountain, another horizon, and you start trying to climb that, don't you? Yeah. And I think another thing is people don't really think about, like you hear about people who win the lottery and people always say, oh, if I just had a million pounds or I had like half a mil, I'd be set for life. But then you don't realize once you get that half a mil or a million, you get a bigger house and then you've got a garden.

5:25So you've got to pay for a gardener and you're like, oh, I've got a pool, but then you've got to maintain the pool or you get a nicer car. And that costs more to change the tires, costs more to change the engine. So I think people don't always think about when you get that money, everything in your life is going to suddenly become more expensive. So you see like all these millionaires who like 50 cent end up selling their 50 million pound house because they couldn't afford the maintenance of the garden and the ground. You can afford the Lambo, but can you put the fuel in it? Exactly. So I think people have, that's why it's good to have a serious number, a tangible target, because otherwise you're not really prepared for the additional costs.

6:00It just acts as like a flag in the ground that when you get there, you go, I said I would be happy when I had this. I'm still miserable. What's going on? I want more. Yeah, but at least it adds as a checkpoint. Whereas, you know, just the constant pursuit of more is that hedonic adjustment thing where you're just on a treadmill and it just keeps running faster and faster and you never feel satisfied. You know, so I think set a clear number for you. That's 5 million, three homes. For me, it's 2 million inside of an ISA. You love an ISA, don't you? Yeah, love it. Tax-free. So we throw around numbers like two and five million.

6:33They're obviously a lot. Five million is a lot of money, even though you don't think it is. But yeah, I mean, two million, and I know it can sound big and a bit unrelatable, but it's actually quite achievable if you invest consistently over a long period of time. You know, for me, that's the two million figure is the point where I could be like, okay, I can retire now and not work if I wanted to. I mean, 5 million might seem a little bit much, but if you put the steps in place and you've got a solid foundation of investments, it is achievable. I mean, I know quite a few - Of course you live in London and everything's more expensive down here.

7:04Everything's more expensive in London. I know quite a few people who've made millions like at a young age. Not you, though. Not me, not yet. Obviously, some of them might have been in crypto, so, you know, some of them got a bit lucky. but there are things if you get investments in early enough and if you compounding to get something very undervalued if you're looking at a long term play not like in next five years I'm going to have five million but if I'm looking at next 20, 30 years I think it's very achievable yeah yeah so Dave asks is gold a good investment? Mr. Drip over here Mr. T might have dabbled in a little bit of gold but for those of you in audio land listening to this podcast T's absolutely covered in gold He's got a gold watch, a gold ring, a gold Jesus piece, a gold bracelet that's got some nice little stamps on it.

7:54What do they mean? Cartier. Cartier. They just mean Cartier. If you know, you know, yeah, Cartier. Okay. Jesus has got diamonds in his hair. I got him from Jerusalem actually on holiday. Okay. Yeah. How much is all that gold worth do you think? Not five mil. Let's say about eight grand. Oh my God. Okay. yeah yeah this is why i don't always feel too safe where i watch where i'm going out here as well the producer's house where is it will setting me up yeah we're setting me up for after i'm gonna walk out and there's gonna be like 10 guys outside i might rub you stick in the ice well i mean is gold a good investment um so people people see gold as a store of value don't they they put money into it because it's it's seen as like traditional money or before before money became notes a hedge against the dollar is that what people say yeah yeah or a hedge against inflation there you go yeah but i took a look at this so it's a patchy hedge against inflation over the long term it typically from the paper that i read acts as a good hedge against inflation over generations so a lot of generational wealth is tied up in gold But for individuals like me and you over 20, 30 years, it's not guaranteed to move against inflation.

9:17But what it is good for is it typically moves in the opposite way to stocks and bonds. So that will mean that it's good for diversification, if that's your bag. But for me personally, I kind of follow Warren Buffett's view on it. It doesn't produce any income. It doesn't multiply. You know, it's just a yellow rock. for me for i'm not rich i'm not looking to to secure the value of my wealth i'm looking to grow it so for me personally i buy income producing assets yeah i will caveat that though with it's a pretty gangster isn't it having a bit of gold i got dreams of having a gold brick in a safe with some like moleskin dossiers so i mean like and a bag of diamonds 10 000 in unmarked bills so i'll do it for that you've been watching too many movies yeah um i think i don't for me gold's not very exciting you're covered in it i mean i mean to be fair if i ever get in trouble i ever get like you know kidnapped or yeah jesus will save me i'll pull one of my one of my bracelets or rings and i'll be all right chunk off buy a chunk off yes right so our next question is from alan he emailed us to ask do you believe the stock market will always only trend one way in the long run or have i only found out about the stocks and shares isa index funds etfs etc a bit too late Yeah, I hate to break it to you, Alan.

10:37You broke it. You missed the boat, mate. It's over for you. Yeah, you turned up too late. Everyone else is balling out with 8Ks worth of gold on them and you sunk the ship. No. So historically, markets have always trended upwards. When I say not all markets have, you know, Japan and there's other markets that have not recovered. But globally, the return has trended upwards. America obviously has as well. And if you look at what's faced those markets over those time periods, I would say that times have definitely been worse than they are now. You know, yes, things are bad, but there's always comparables.

11:16High inflation in the 80s, high interest rates in the 90s. The 70s was ropey at points. There was a couple of wars and world wars in there that weren't very nice either. So, you know, the world has been through a lot. and really the way I look at it is when you invest in long term what you're saying is will businesses continue to make money will they find ways to increase their profits earn more cash and deliver value to the world if the answer to that question is yes then the likelihood is that the stock market will continue to rise over time because as inflation pushes devalues currencies people push their prices up they make more money so I am confident in that sense does that have anything to do with the world's population is growing and like businesses are growing and there's definitely a lot a large portion of that so like you could say like with the american businesses like the big boys like google and and apple and that a lot of markets are still opening up to them like india and places iphones you know in the same way though there's the chinese markets are getting a foothold with 10 shen and you know these kind of companies are becoming huge as well one of the reasons i i buy a global index is because i'm not confident in my ability to say when an empire will fall you know when will america not be the top dog i was doing some research on this and it looks like there's still another 80 years left in in them according to ray dalio who like kind of predicts these things but you know on a global perspective my view is as long as the world keeps turning businesses will keep making money and if that ever changes then we're all kind of screwed anyway.

12:51So I mean, the last time I can really think that this theory was kind of broken was obviously lockdown. Yeah. Like the world kind of stopped turning for a bit and like you saw airlines crash, loads of stocks crash, but now they're all back up, aren't they? Well, the NASDAQ, which is like the big tech businesses in America has had the best start to the year ever. So, you know, all these people that were like, I'm just going to take my money out and leave it and not get involved. They've missed out. Crypto even, you know, Bitcoin's having a great time, isn't it? Isn't it the best performing asset this year?

13:20One year, five years, 10 years. I think it's the best performing asset. All the crypto doubters. Yeah, I think it's all down to BlackRock trying to get a spot ETF, isn't it? Yeah. Yeah, but anyway, we digress. The thing is that no one knows what's going to happen and markets could stay flat or they could go backwards and they could do that for a long time. But I'm reassured by the fact that there's a hundred years worth of shit show behind me that the world has survived and kept spinning. and that's why I continue to invest and there's nowhere else really for me to put my money. So I guess in summary, Alan, you're not too late.

13:54We're all in it together and we're looking at stock market long term. So yeah, we'll go down with the shit. Yeah, we'll go down sinking together. You'll hear about it right here. What do you want to ask us or future guests? Email us at makingmoneyatkindling.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. Investments can fall and rise. In fact, that's almost a guarantee. Remember, past performance is no guarantee of future results. So your money is at risk with investing.

14:32Also, remember, other fees may apply. I'm Damo. I'm T. And we'll be back next week answering some more of your questions.