Ask us anything: What is the secret to quick wealth?

0:01You know what I love, Damo? Things that save me time. You don't have YouTube Premium, mate, so I just don't believe that. Granted, I'll give you that one. However, I've got one for you. A great time saver in personal finance is Money Week magazine. They spend a lot of time distilling the biggest stories in personal finance down into consumable chunks, so you don't have to scroll and scroll. They give practical tips on savings, investments, pensions, the UK economy, the global economy. It's like your five a day, but for finance. If you want to give Money Week a try, you can get six issues in print and the app absolutely free by visiting moneyweek.com forward slash money.

0:34After your trial, you'll save an extra five pound a quarter on the subscription, which is exclusive to Making Money listeners. And that's moneyweek.com forward slash money. But there's a link in the description if you just want to click that.

0:50Welcome to our mini episodes where we answer your biggest questions about money. I hope everyone's strapped in for another conversation with Tomein. Yes, strap aboard. Stay ready so you don't have to get ready. Stay ready so you don't have to get ready. That was brilliant.

1:07LAR wrote to us saying, I hear about the usual investing long-term to build your wealth, et cetera. That means he's been listening. I do do this with my global all cap, but what can I do in the short or medium term to grow my wealth? There's no easy answer here because what you're asking for is a good return short term. and you know, find me that and I'll give you some money. I think, you know, the best way to produce income outside of your job that isn't long-term investing or putting it in a savings account is to start a side hustle or a business. But, you know, that's a whole nother rabbit hole, isn't it?

1:45I mean, I did that and I turned it into a job, but it wasn't easy. I think we should do an episode one day about side hustles and other income streams. Yeah, you are Mr. Side Hustle. you're just nothing but sides no mains just sides yeah just sides no mains just little assholes just pure sides mate yeah dog walking I hear you make a lot of money dog walking these days I'm not even joking I've got a couple of friends who like dog sit dog walk the people go on holiday they sit in the house look after the dog they get paid loads every day so yeah Jay Lyle sat here asking how to achieve a better return on their cash savings and your answer is go walk some dogs mate I'm just trying to give ideas for side hustles.

2:29Yeah, no, pretty good. It's pretty good. Yeah, the thing is like there's no missing thing out there that you could put your money in that no one else's that provides a better return. Actually, right now, the return on cash savings is better than it's ever been. Well, better than it's been in, sorry, not ever been, better than it's been in the last 10 years. So it's actually a good time to be in cash. short-term options for money. It's short-term money because you need it short-term. It's not really money that you should be taking risks with because you need it in the short-term. Longer-term, you deploy money into the markets, into equity.

3:09If you're saying, I want extra income, well, then you need to add value to the world. And the way you do that is through a business, through a side hustle, through something else. But that is not easy. If you have a substantial amount of capital, not substantial, but if you have a fair amount of capital, you could also invest in other people's businesses. So therefore, you don't have to think about your own side hustle. If you know anyone who's got a business or you want to be an angel investor, there's lots of things you can crowdfund and get a return on. But I would definitely say invest in something that you understand the business very well.

3:43You're a Mr. VC now, aren't you? I am VC. You've moved on from crypto AI and web three. And now you're talking about, oh yeah, just get into a bit of VC. I know this guy. Someone's got a good business. Like my friend asked me all day, he's like, look, do you have like five grand you could put in my business? I said no, but I could have said yes. So yeah, there's sometimes people give you deals on there. They need some money to expand, to set up, to build, get a new site. Yeah. I don't think you actually need that much money to start a side hustle as well. I mean, I started my YouTube channel on a phone with a piece of blue paper, behind me probably total investment of about 400 pounds i mean by the time i invested in camera gear and like spent thousands i was probably earning like five to ten grand a month from it so that 400 quid was turned into five to ten grand a month but there was also about 50 hours a week of work in that so if you if you're not putting money and you're putting time so you know i wish i had an answer for you it was like oh just put it here and that's that's going to get you 20 % a month but it doesn't exist.

4:48Well that was nice Damien, just stomping all over their dreams. This is a making money podcast, not making people cry podcast. Just stomping all over their dreams Damien.

5:01Alright next one, so Gannon got in touch to ask when should you consider setting up a limited company? I've set up a couple in my past, I'd say when you're worried that someone might sue you so um i'm not even joking i'm just what you want to you want to make sure that you're not fully liable but it depends what industry you're in you know you can yeah those just one of those industries where people regularly sue you when you're scared of litigation all right go on then genius when's the best time to set up a limited company um when it becomes more tax efficient uh to operate through a limited company the thing is like what people don't realize about a limited company, I think the media often, you know, bashes company directors over the heads and be like, oh, they pay themselves in dividends and all of these things.

5:50Yes, limited companies are quite tax efficient, but they can also be really inefficient. So for me, as an example, I moved the channel into a limited company so that no one sued me. Yes, T. No, it was more because I thought it'd be more tax efficient. And it is to a point, but any money that comes into my business, I have things like VAT and corporation tax I have to pay on those. I can claim back some of the VAT and I can offset expenses against the corporation tax. But the corporation tax, I have to pay it 20 % or whatever. And then any money that I take out of the business to put in the real world, to put into my bank account so I can live off it, I then have to pay income related taxes on that, which are like dividend tax and things like this.

6:33So there's two layers of tax for a limited company. There's the business taxes and then there's your personal taxes. It can often feel like through a limited company, you've got all this money and it's just trapped in the business and you can't take it out. You know, I can't just blow it on a holiday or whatever. Whereas in the normal PAYE world, you kind of just, you pay your income tax, you know where it's at and then off you go. Where the benefit is, is also wrapped in that negative. I can choose when I take money out of the company. So I can choose when I pay my income taxes. Whereas for a PAYE income or sole trader or whatever when you get paid you're taxed on it there and then so if you just suddenly get a big client that pushes you into the highest rates of tax you can't go or just chill for a little bit so that i can pay a little bit less tax i think speak to an accountant is the right answer with this you know if you're looking at forming a limited company they'll be able to tell you if it's more tax efficient or not than than staying as a sole trader or whatever other options that you're doing at the moment yeah outsource it to an accountant that's what i always do when in doubt ask damon and if he doesn't know then i was my accountant that's pretty much my life it's worked so far so no complaints here next one we've got a good one though i like this one gareth asks emergency funds how much should they be where do you store them go on jimane all right good finally my time to shine so people might say keeping the savings account but if it's a proper emergency and all the bank or the bank goes under or like something happens your wall pops off and there's It's like, look, you think this is a joke.

8:04If you lived in Ukraine or Russia, yeah, you know, whenever there's a war, they don't let you like withdraw money from the bank account. So people queuing up for the ATMs around the block, going into the banks, the bank's like, we've got no money. I say the best way is to, the safest thing to do is diversification. Don't smile, Damien. I know what you're thinking. You put a little bit of it in the bank. You keep a little bit in cash. You keep a little bit in equities. You're going to say crypto, aren't you? And you keep a healthy amount in decentralized currency which is also cryptocurrency. But yeah, if it all goes wrong, you want to be prepared for the worst.

8:38My car broke down. I'm going to pay the guy in a block of gold to change my tire. Look, put it this way. Do you take Doge, mate? I got it on this pen drive right here. Look, you can send it anywhere in the world. I'm being deadly serious, David. All the people that got stuck in Russia, in Russia and Ukraine, they cannot get access to any money. I mean, yeah, that is an extreme example for sure. And like you say, in those kinds of situations. Yeah, yeah. I mean, there's levels to emergency though, right? I think most people are freaking like the boiler breaks, not that they get invaded by a dictator.

9:12I'm ready for the zombie apocalypse. Yeah, I mean, so that's like the war chest. That's the like bug out or whatever they call it, where you bury stuff in the woods and that. At the minute, I'm more three to six months worth of living costs in an easy access account. I used to keep a proportion of it in premium bonds because the rates on savings accounts were so low. that I thought, why not just roll the dice and try and win a million quid with premium bonds? But the rates on high interest savings accounts have improved to the point where you think you're throwing away maybe 5 % or whatever by risking it with premium bonds.

9:46And also you can get good rates with money market funds, which is where I keep a lot, a big chunk of my emergency fund at the minute. So our money market fund is just like a short-term bond fund and they pay quite good rates as much as say 6%. I made a video on them actually. well explaining them briefly and ramin who's coming on the show did an excellent video so maybe we'll link that in the show notes that explains them in more detail and i think it's three to six months of essential living costs and that probably comes from the fact that most people can find a job within three to six months and the worst emergency bar you know nuclear apocalypse or zombies or whatever you're planning for to is um the fact that people might lose their jobs so you know three to six months is enough time for you to get a new job so obviously you don't need to go oh my household my household on in total spends three grand a month but we're saving 500 quid of that and 400 quid of that is on meals out or whatever you just look at the essentials of like your bills and living costs and keeping the wheels going and you extrapolate that out by three times so i'd imagine it's significantly lower than what you're actually spending you In my household, I think the fixed costs that keep us going, not including the car payments, which you would need to factor in debt payments would be included, but I think the house costs about three grand a month, which is all food and bills and all of that.

11:09So that times by three would be pretty much there, plus car payments or whatever debt, because you need to service debt within that as well. Don't forget, because that would be an essential asset. So you're not going backwards through that time. But yeah, just the basics.

11:30What kind of topics do you want us to cover in season two of Making Money? And are there any guests you'd just love for us to have on? Let us know at makingmoneyatkindling.media or message us on Instagram. 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. See you next week.

11:55We'll see you next time.