QA54 - Listener Questions, Episode 54

0:00But my very first car was a Mark I Escort GL. It was metallic purple with a black vinyl roof.

0:08Pete Matthew: Vinyl roof. And the cordillette kept on falling out. Probably because I used to strap surfboards to it and it got rusty with all the salt water and stuff like that. Hi, and welcome back to yet another Meaningful Money Q &A with me, Pete Matthew. Are we still here? I'm Roger Weeks. we are 54 this is q a episode number 54 we've still got enough questions for at least another dozen oh good every time we do one another half a dozen questions have come in so we're answering questions i think from february now this is going out middle july so basically we're not catching up at all no all right but as i say we're answering questions that people have an interest in so we're actually giving them back what they want so it's just not us saying you need to know this no exactly What do you want to know?

0:54Let us tell you. Yeah, for sure. So if you want your question answered, please send it to hello at meaningfulmoney.tv with the subject line podcast question. And at some point in the second half of the year, we might include it for you.

1:06Pete Matthew: Yeah, exactly. And remember, notes and links that we talk about today are at the show notes, meaningfulmoney.tv slash QA54. And let's get into it. Oh, actually, if you're watching on YouTube, do us a favour, like the video, subscribe to the channel if you're not already. It's growing nicely. Thank you for that. Okay, so do you want to do question one? Question one. This is from Jamie says, hello, Pete and Roger. I'm a chartered management accountant, so maybe I should know this, but clearly not. I'm wondering, is there a financial disadvantage of just taking the longest mortgage deal you can, i.e.

1:3540 years, for example, and then each time it's up for renewal, don't worry too much about reducing the term. As long as the mortgage interest rate is lower than the average long-term return you'd expect on the stock market, say minimum 6%, is it not just best to pay the lower monthly mortgage payments each month and keep the spare money invested. On a pound versus pound basis, aren't you better off? I understand the stock market can go up and down, but over the long term, I'm struggling to see what the disadvantages of this strategy are, apart from the apparent freedom of being mortgage-free. Thanks, Jamie.

2:06This makes logical sense. Ah, yes. It is logic, the point. Yeah, exactly. I think, Jamie, as we've said many times in the past, numerically, that could and probably would work out well for you. I think the important thing is as long as you spend the investment. Because the whole idea of this is you're saving long-term interest rates in return for long-term growth rates. And those long-term growth rates need to compound over time. So it's no good saying, I won't pay into the mortgage, but I'll pay into an ISA. And in three years, I'll have that out. It's done well. Because you're not comparing apples and pears then.

2:46Pete Matthew: Yeah, we've got a ring fence. I mean, it's funny, isn't it? Because back in the 80s and 90s, this was properly a thing, wasn't it? Oh, this was. Endowment mortgages and pension mortgages and even ISO mortgages and stuff. Or PEP. Were they PEP mortgages, actually? No. There wasn't such a thing as an ISO mortgage. Definitely pension mortgages. Pension mortgages, yeah. You know, that was exactly the point. You just took an interest-only mortgage, in which case the term doesn't matter because you're just paying the interest and the capital never reduces. But instead of paying down the capital, you saved into a vehicle with the pension ones.

3:14Pete Matthew: Of course, the idea is that the tax-free cash would pay off your mortgage. Not at all risky. And the problem with particularly the endowment ones is that in many cases, the underlying investments were crap. And people ended up going to be a long way short of paying their mortgage off. And there was a big scandal, mis-selling and all that stuff going on. Yeah, I think it's all down to the difficulty then was it's based upon what their expected growth rates were. And some companies, I'm not going to mention any, overestimated their ability to produce the returns you needed to produce the tax-free cash to pay the mortgage off or the endowment to pay the pay off.

3:48That's right.

3:48Pete Matthew: And this is in the days long before the transparency of platforms and sort of ETFs and tracker funds and stuff. These were very often with profits and endowments. With profits funds. I mean, opaque as you like. You have no idea what was going on under the bonnet. They just kind of promised a return. And if they didn't meet it, it was like, hmm, sorry, how bad. Which is not a great outcome when you've got the mortgage lender wanting their money back. Well, yeah, and then they had to then issue green or amber or red letters to a pension with profit policyholders saying, well, actually, I don't think he's going to make it.

4:20And you're 20 years down the line of a 25-year mortgage. He's like, what do I do now?

4:24Pete Matthew: Yeah, exactly. I'm going to be 40 grand short. Where am I going to find that from? So anyway, obviously, that's not the case now. And the fact I think that you're asking the question, Jamie, is that, you know, you're probably in the camp that wouldn't lean more towards the financial benefits of this strategy. and more away from the emotional psychological benefits of being mortgage free. I mean, in my experience, in our experience, more people prefer the latter, prefer the certainty of paying down the mortgage. But as Roger says, you almost certainly would be better off financially doing what you propose to do.

4:59Pete Matthew: But what you don't want to do is, you know, have a massive market crash right before you do want to pay your mortgage off or whatever, so it requires a bit more thought and a bit more sort of intentionality. but you will almost certainly work out better. You talked about a happy medium, potentially. Yeah, you could go for a happy medium. As long as you don't spend the money too quickly that you're saving up, because as I say, defeats the object of the compounding, giving you your growth back. But you could, one thing we might say, if you had a 40-year mortgage, you say, okay, what I'll do is I'll save into an ISA, I presume, because that's the way it would go, because it's tax-free growth then.

5:33And every so often, as that's done well, you say, actually, I'll take half that ISA and pay a lump of my mortgage then.

5:37Pete Matthew: Yeah. So you've got the benefit of the growth and the growth paying off the capital and plus more of your interest as well. So, you know, just one way of doing it is you get a foot in both camps if it's possible. Yeah. Jamie says he's struggling to see the disadvantage. I mean, yeah, I get that. I wouldn't be losing any sleep over it. If it's something you want to do, then give it a try. Remember the mortgage payment, the mortgage company are going to want their money back. So, I mean, if you really think about what could happen, you know, you marriage breakup and partner takes, you know, half the ISA with her but leaves you with the mortgage potentially.

6:21Pete Matthew: You know, it's a pretty worst case scenario, but there's all sorts of things. The great thing about paying a mortgage down is that it's certain. And that's ultimately what it comes down to. There's a lot of variables with what you propose, Jamie, but as long as you're prepared to stay on top of it and obviously given what you do for a living, you're not going to have trouble keeping up with the maths and reviewing it. So fill your boots, go for it. Right, this is question two. Did I say question? It's an odd word. Question two. Question two from Gary. Hi, why are these things not widely known or discussed?

6:51Pete Matthew: That's sort of broadly the question. I read this and is there a question here? Flexible ISIS. Rog, why are these things not widely known or discussed? because they're not I suppose yeah flexible ISA we do our best yeah Gary alright and flexible ISAs are ISAs that you can dip into and take money out throughout the year and as long as you repay that money within the tax year it doesn't affect your ISA allowance right so sometimes it's a bit weird we see on one of the platforms both platforms we use if we make a withdrawal save 10 grand for a client it will say remaining allowance 30 ,000 because they can put in their 10 grand that they took out, plus their ordinary 20 ,000 ICER allowance.

7:33Pete Matthew: You had a bit of a funny face on then, wouldn't you say? Well, I think probably what it is, is that they're not widely known or discussed because not many people access the flexibility of the ICERs. Because generally the ICER is a long-term thing. I mean, if you had a cash ICER that you wanted to dip into, you could do that, obviously, but not many people use them so not many people discuss them, probably. We'll try harder, Gary. SIP contributions when retired. We talk about that quite a bit. But generally, I don't think it's talked about a lot. Junior SIP when worried about junior ISA end date.

8:04Pete Matthew: I've heard that parents, family, grandparents don't want to pay into an ISA when you don't know how the child will react to suddenly having control of this ISA money at 18. Got a story about that in a minute. A SIP may be a better option. Potentially, but you can't access a SIP. Yeah, if grandparents are saving up to pay for the first house or the first car or university fees, then the SIP is no good for that, obviously. So it depends on what the plan is for the money. yeah it's a great great tool for building wealth for the grand child or child whatever you have because they can't access it until they're 57 or whatever it's going to be or 58 or 50 it depends on what old they are now yeah might have been access to 60 yeah so it's a great way of building their wealth for them but they've got to get there and they might want to buy a house and a car and go to university in the meantime so you've got to be careful as to what the use of that money is for Gary continues also want to watch if you are retired and contributing to charities and tick gift aid then HMRC may back charge you if you are not paying tax.

9:00Pete Matthew: That's true. But I mean, every single gift aid form says, I am a taxpayer and I have paid enough tax to cover the gift. So, you know, like read what you're signing. And then finally, emergency fund in money market fund. That's, I presume, as opposed to savings account. Yeah. Money market fund is not cash. No, money market fund is not cash. It's very close to cash, but it's still not quite cash. So you get a movement in underlying interest rates, the capital of that will move either way. so again so yeah I have heard a lot of people do put emergency funding money market fund yeah I have an issue with it really but I still would want a good chunk of it in cash yeah I got my emergency funding cash or premium bonds so yeah well there you go so Gary we try and talk about this stuff man but you know fly the flag tell more people about meaningful money and then more people will know yeah just so I had a meeting this week 11 years ago I was instructed by firm solicitors to look after somebody for a client of theirs who had died.

9:57Pete Matthew: He died intestate and was separated from his wife. Oh, right. And he had life insurance. So, you know, like where was the life insurance going to go? Right? There's no sort of no trust in place. Oh, goodness. Yeah, right. So court eventually decided that the money would go to their three children, minor children, right? Oh, right. So one of them was 16. So that basically went on to deposit because she was going to receive it at 18. Yeah. but the two younger boys, I think, were seven and five at the time. Oh, goodness. And one of them's just turned 18. So I had a fantastic conversation with him this week because his mum is freaking out about exactly what Gary says here.

10:36Pete Matthew: You know, he's only just got his first job. He's not got any experience with money and he's suddenly got a big chunk of money. I mean, we're talking six figures landed on him. Oh, goodness me. But it was a brilliant, he's a lovely, lovely lad and he's going to be absolutely fine. And for me, it's a real privilege to walk kids through this sort of scenario because in this case, there's a lot of weight in that money because obviously it's cost the family a vast amount for that money to be there. It cost him his dad. He lost his dad when he was seven. And so what was really funny, I was asking him what his hobbies were.

11:09Pete Matthew: He's like, I haven't really got any hobbies. But his mum says, well, you love cars. And all he wants in the world, right, is a Mark 1 Ford Escort. Well. It's like I'm about to give him 180 ,000 quid. It's like, go for it, man. You can get one of those for that. And his mum's like, really? I'm like, that ain't even going to touch the side. So maybe you buy something that's like concourse conditions and cost you 50 ,000 quid, then that's an issue. But, you know, of all the cars that he would have wanted, I thought, just like, don't buy a Porsche, right? Because not only will you kill yourself in it, but it will use all the money up.

11:41Pete Matthew: But it was such a lovely conversation, and he couldn't believe it when I revealed the figure to him. And I said, look, I will teach you everything you need to know, but this is just like a brilliant heads up. and starting point for adult life. So really enjoyed that conversation with him. Yeah, so it was good fun. I should have kept my Mark 1 Escort. Yeah, you should. It'd be worth a lot of money by now. You had a white Mark 2 or 3 XR3. XR3i, yeah. Convertible. No, one convertible. I had a red one initially, which was Jen's, with one of these rubber spoilers on the back, and I drove past the carriage, it's all a white one with a white spoiler.

12:16It's lovely. But my very first car was a Mark 1 Escort GL. it was metallic purple with a black vinyl roof.

12:25Pete Matthew: Vinyl roof. Yeah. And the cordillette kept on falling out. Probably because I used to strap surfboards to it and it got rusty with all the salt water and stuff like that. But yeah, one hell of a car. But it's your first car, isn't it? Yeah. So it's, most people worry about, you know, it's a kind of theoretical worry about kids coming into money at 18. In my admittedly limited experience, there were probably more, greater experience that most people have had. It's not the case. No. You know, they are young adults and can be taught. So that was question two. So question three is you. Number three.

13:00This is from Nick. It says, dear Butch and Sundance.

13:03Pete Matthew: What? I feel like this is a pattern. What were we last time? Bruce Springsteen and little Stephen. Butch and Sundance. I don't know which one's which. Let's not go there. Long time listener, first time caller. Thanks for all you do. filling in the gaps in our financial education that should but doesn't start at school. That's a big education. That's like the opening line for the Bank of Dad podcast. The Bank of Dad, yeah. Yeah, carry on, sorry. That's right, I was going to plug Bank of Dad anyway. Oh, yeah. I'm 56 and looking at my later career options, something that contributes back and can supplement my early retirement income.

13:38I enjoyed the episodes you did on becoming a financial planner, and if I were younger, I may well have gone down that route. Instead, I would like to help educate people on basic financial good practice. I'm particularly thinking about schools and young people. What options exist in this space? And if they don't exist and I want to create them, what sort of financial qualification would give me a good grounding so that I'm not just an enthusiastic amateur? I'm writing this in February, so if it makes it onto the podcast, Merry Christmas, everyone. Keep doing what you're doing. It's working, Nick.

14:07Thanks, Nick. We've gone past Easter. The longest day hasn't gone when we're recording, but it probably will when this comes out. Yeah, this will be going out back end of July, I think. So, yeah, good shout.

14:18Pete Matthew: Okay, so you don't actually need a qualification, but I think particularly if you want to go into schools, it'll serve you quite well. I think you wrote down. Yeah, Martin Lewis doesn't have any specific financial advice qualifications. He just, before he set up Money Saving Expert, he trained in law and journalism. So he was specifically into the financial aspects of stuff, and he's learned it all from there. So he's done a brilliant job for someone with qualifications, but he's down to looking after the normal man like we're trying to do and say, look, this is what you can do yourself. So yeah, old woman.

14:55Old woman, yeah, sorry.

14:58Pete Matthew: So like, if you, I mean, schools, honestly, I mean, we're still so far from doing this properly in schools. There have been some small improvements. There is, it's a part of, I think maths and numeracy between age four and 14. It's the basics of like interest. And, yeah, it is now. Producer Kate's like going, really? But, yeah, apparently it is now part of the curriculum. There's elements about, very basic though, about debt in PSHE and citizenship. Oh, really? So there's been very some small steps. But I think obviously teachers are under intense pressure anyway. And if this isn't their area of expertise, they're teaching something that they don't necessarily know about.

15:40Pete Matthew: So it's not going to be sort of driven home in a way that I think will really sort of stick. But I think there's a real need for this. There is some good stuff going on. So qualifications-wise, I had a quick look. There is something called the Certificate in Financial Services issued by the Chartered Insurance Institute, the CII. There's three exams, and it would give you some sort of credibility, I think. They would not be challenging exams. you'll be able to do and there'll be multi-choice answers. Online sittings, you could probably do that in two to three months maximum. There is a charity run by the Financial Times.

16:18Pete Matthew: It's called the Financial Literacy and Inclusion Campaign or FLIC, FTFLIC. And they have created their curriculum for secondary schools. So they've created some lessons. So it might be that you could kind of jump in on those and maybe offer to teach them, going to schools and offered to teach them. Whether you'll be paid for it or not is an entirely different question. Can't really sort of speak to that. And there's a set of books called the Oxford International Skills Books. We'll put links to these in the show notes. The latter ones have been written by a financial content creator called Mr.

16:55Pete Matthew: Money Jar. His name is Rotimi Merriman-Johnson. He talks a lot of sense. And he's been in Down the Street quite a lot recently. He's really sort of starting to have some influence to people who can make some changes. So he's written, I think, three of those books, but they are finance skills for children and young adults. So there's some stuff you can kind of look into, Nick. The question is whether you'll be able to be paid for that. Really, I have no idea. The alternative, of course, is financial coaching. And I've had conversations with Alistair Ford, who runs Meaningful Coaching. I've kind of lent Alistair my brand.

17:35Pete Matthew: He's a qualified coach and doing brilliant work. He's busy, though, because I keep filling up his diary. You know, and there's also an outfit called Wise Monkey Financial Coaching. I'll put a link to that in the notes as well. We'll do training for financial coaches. And you can build a good business doing that, and I think there's a real need for it. So just some stuff to think about. Yeah, I think if you think that teachers are stressed and overworked enough, if you can have someone come in willing to do some lessons for them yeah let them sit back you know it's the budget to pay them that's the thing yeah no it's a really good thing to try and get into and we've been shouting for years that nobody does it no exactly you know and you learn about debt and you learn about but it's like how to deal with your pocket money and your first job yeah you need to be able to deal with the money and know exactly where it goes it's like well you spend it all on suites today but you might better put it aside and get some interest and spend it on more on suites in the future so it's just little nuances, but yeah, good on you.

18:35Pete Matthew: Yeah, it's a noble calling. Okay, question four from Paul. Hello, guys. Hello, Paul. I've been an avid listener for many years, really enjoy the content. I finally have a question of my own. It's like, finally, I've been waiting for years. I finally come up with a question. I'm about to sell a property, which given this is a February question, it's probably all done and dusted by now. I'm about to sell a property which I own outright, and I would like some advice on where to invest the money going forward, not a chance for. We can give you some thoughts. Okay, i.e. bonds, ETFs, pensions are even considered premium bonds.

19:09Pete Matthew: I would rather spread the money into different pots rather than one product. I understand a pension will be the most tax efficient and I plan to put a small portion into my SIP and max out my stocks and shares. However, I'd rather be invested in something more flexible. I don't intend to utilize the money anytime soon, so I want to maximize its potential. I've already have been investing in index funds for many years and built up a nice portfolio through Stocks and Shares ISAs. Any advice would be greatly appreciated. Thanks, Paul. Oh, goodness me. We don't do advice, Paul. You know that. So only thoughts.

19:42Pete Matthew: Don't take any of this as gospel. We don't know enough about your situation. So how might you maximize that? I mean... The most obvious one, as he's already said, I'm going to put some into my SIP. Yeah. You get tax free for that. But you're limited by your earnings, obviously, so you've got to be careful you don't step over the line there. But you can do that every year. There's no reason why you shouldn't put some money aside and say, okay, I'll fund my pension over the next few years more than I would have done because I got this lump of money. Yeah, I think the obvious thing to do here is, once you've maxed your ISA, is to just put it in a general investment account.

20:18Pete Matthew: I feel like you're kind of fishing for some, it's like, okay, well done, Paul. You know, you've ticked off pension and ISA, and now you have qualified for the secret investing knowledge that we only dish out to people who have done that. I'm being facetious, I know. But honestly, there's no rocket science here. So if you're already investing in index funds, keep doing that. That's basically what it's about. If you want to play a little bit, if this is sort of an additional lump sum that you haven't had before, you could say, all right, okay, I'm going to ring fence a little bit of that. I've got some colleagues up in the country who call this their investing play pen.

20:54Pete Matthew: And essentially it's like, look, your index investing, your assets and pensions, that's your core. If you want to have some fun around the side, buy some crypto, put some money in gold or whatever, then do that. Just don't do that at scale because those are super high risk, could lose the lot investments. But as far as Rappi is concerned, the illogical thing is just a trading account, a general investment account. And it's as flexible as you want it to be. It's not tied away. You might decide to put some money in the bank or building and decide to tie away for 12 months or two years or three years, but that removes your flexibility.

21:26So all these things, you know how flexible your stocks and shares of ICE is. We'd only talked about flexible ICEs earlier on. So, you know, you can shove it in a GIA and it's as accessible as you need it to be. You can carry on funding your ICEs from there at some point in the future, but you can also access it when you want to. Just be mindful of any capital gains tax you make, but, you know, the tax is the price of paying for getting good growth, you know?

21:48Pete Matthew: Yeah, absolutely. I did do a video about what comes after pension and ICE. so we'll put a link to that in the notes as well. I'm not sure when that was. I can very quickly look actually. It was three years ago, but not a lot has changed really. Certainly not in that field since then. So check that out. We'll put a link in the notes. Question five, Roger. Question five. This is from Abby. He says, hello, Pete and Roger. Thank you for the excellent videos. Hey. I listen to them on my daily walks and while cooking and I always come away having learned something new. So thank you for all the insight you share.

22:21Pete Matthew: You're welcome. Yeah, it's not advice, it's insight. Well done, Abby. I have a question about planning my finances using the die with zero approach, especially as I have no children or spouse. I'm 52 this year and hope to hand in my notice in October 2026. Nice. So we're answering the question before actually it happens, which is great. Yeah. I've always been a saver, largely out of insecurity. So I'd really appreciate your thoughts on whether I have enough. And if so, how I can become a more confident spender in the next stage of my life. That's a tricky one. Here's a brief summary of my situation.

22:57I have around£300 ,000 across my ISA, GIA, premium bonds and cash savings. The allocation is roughly 20 % equities, 60 % UK gilts, 20 % cash. This part is intended to bridge the gap until my DB pension starts at 60. My DB pension is currently valued about£18 ,000 a year in today's terms and is inflation linked. I also have a SIP worth around£500 ,000, invested 85 % in equities and 15 % in money market funds. I have no debts. A small investment property brings in about£1 ,000 a month. Nice. My spending target in retirement is about£2 ,500 per month after tax. ChatGPT has told me that I likely have enough to retire, but I still worry about worst case scenarios, war, high inflation, very low future returns for the next 20 to 30 years, e.g.

23:43below 3%. Or needing long-term care since I don't have family support. I value your thoughts before I finally hand in my notice. Thank you again for all the work you do, Abby. Well, you've got things well turned up, I think.

23:58Pete Matthew: Yeah, it looks all right. I mean, you know, target spending retirement of two and a half grand a month. So 30 ,000 pounds a year, your DB pension will be 18 of that, ultimately when that happens. State pension, another 12 and a half, when that happens. That's going to be your 30 ,000 pounds. After tax. So you'd have to draw a little bit more, but you've got a lot of fat around the outside. Which means that things like long-term care, I mean, 52 is obviously young to be worrying about that. Last thing you'd want to do is to kind of dial back your spending in case you need long-term care in 35 years' time.

24:32Pete Matthew: But, I mean, given that, Abby's already thinking about bridging the gap. She's got her ISA, GIA, premium bond allocation, very low risk, gilts cash 80%, 60 % gilts, 20 % cash, only 20 % in equities because that's what she's going to draw for. That makes sense. Yeah, yeah, yeah. It's probably a little bit risk averse for my liking, but it's your money, Abby. But with half a million quid SIP, she can't access that for a few years. She's only 52 this year, so it's going to be 57 before she can access that. Yeah, but£30 ,000 over the next five years. Well, exactly. There's 300 grand. Yeah, so ignoring any interest or any growth on that fund, you'll spend half of that money potentially to get you to your DB pension.

25:22And then from then on, you only need to throw in another 12, 13, 14 ,000 pounds before tax.

25:27Pete Matthew: Another argument in favour of that being slightly risk averse, actually. You know, with essentially twice what you need to cover your danger zone. Yeah, you could really look at your asset allocation. I would, yeah, be looking. If I was advising you, which I'm not, I would certainly be looking at that asset allocation. I think it's probably a little bit, safe. Yeah, and then when you get to 57, you can trip onto the SIP and you'll have personal allowance you can use. So you're going to be an element of a plus or drawdown there. You have some tax-free cash and some tax-free income as well. You'll be getting really right close there.

26:07Pete Matthew: Oh yeah. Well over the top, I think. Yeah, I don't think there's any doubt that you have enough. Oh, and a thousand pound a month comes in from the rental property. From the rent. Oh my gosh, yeah, I forgot about that. So really, you're not going to touch capital. No. Or not much. For the first five years until you access your SIP, you're going to need, what, I don't know, £1 ,500 a month? Something like that. £16 ,000. Yeah. With£300 ,000 as a pot to draw from. Yes, so£20 ,000 a year for five years, there's 100 of your 300. And as Pete said, you could look at that asset allocation and say, okay, my savings pot is a little bit risk averse.

26:44Yeah. I could do a bit more with that if you wanted to. But if that's how you're feeling, that's how you're feeling. Yeah.

26:49Pete Matthew: It sounds like you're a fairly cautious person, worrying about worst-case scenarios. War, high inflation, very low future returns. Well, I mean, if you're worried about high inflation, gilts and cash is not the place to store money. War, obviously, is kind of an unknown quantity. Generally speaking, war can be quite good for stock markets, right? because the sort of industrial machine tends to spool up. But it's, I mean, that's a ridiculous oversimplification. And obviously there's lots more impact to war than that. But, you know, there's a reason why equities are the growth engine, right? You've got property.

27:28Pete Matthew: Equities are the growth engine because whatever is going on with the world, human ingenuity kicks in and we start, or we continue buying and selling stuff off each other. We might start buying and selling different stuff, but essentially companies make a profit no matter the circumstances. And so you've got property, you've got cash, you've got equities mostly in your pension. I think not only are you home and dry, I think you're going to capture pretty much everything and you're fairly nicely spread and diversified so that you're going to be protected from most things as well. You need to just try not to say, if war happens, I'm going to be ruined, just not the case.

28:10No, and if you look at the past history of the stock markets, the last 50 years, say, and the oil crisis in the 70s.

28:18Pete Matthew: We've had all these things. Yeah, and they've gone through and you say, okay, what could happen for low future returns? You know, we've had the banking crisis back in 2007, 8, whatever it was, and stuff like that, and COVID, and then the euro crisis. And it's like, hold on a minute. We've had all those, and yet we still had phenomenal growth in the stock market. So I don't think you really need to worry, Abby, about very low future returns for the next 20 or 30 years. That'll never happen. It might happen over a course of one, two, three, four, five, six years. But in the long run, it has always come back from things that have happened.

28:50Pete Matthew: Yeah. I mean, with the amount involved here, you could consider buying an annuity. It's good to think about because it locks in a rising income, assuming you choose a rising income. But you could consider buying an annuity. so handing over part of your pension fund particularly, or even you could purchase life annuity with some of your savings and investments, lock in a guaranteed rising income for life, then it doesn't really matter what goes on in the world because that will pay no matter what. And so if you're a very cautious person, that might be something to consider. Honestly, you are absolutely ripe for some financial modeling.

29:30Pete Matthew: Obviously, I would say that. we do it for a living so you know getting good financial planning help just to walk through some scenarios um but you can do that yourself if you've got the time and inclination uh you could join meaningful academy the retirement planning course gives you access to voyant which is the software that i use to do financial modeling for clients it's dead easy to use and there's like 50 videos in the academy to teach you how to use it and build up your plan step by step and a community in there that can help you. And we've got sort of tech support with the incredible Nick Mitchell, who is just a ninja, answering tech support questions with Voient and stuff.

30:07Pete Matthew: So one of the things people tell me about the financial planning process all the time when they come to it is that it gives them confidence and a framework for decision-making. I've yet to meet the individual who can factor in things like inflation, changing growth rates uh sort of really nasty market events and the recovery they're from you know to keep all that stuff in the head i've yet to meet that person and i've seen some pretty incredible spreadsheets in my time right but most people can't write them and so voyant will do that for you and the financial planning process if you do it with somebody will also uh walk you through that uh check out meaningful coaching as well uh my colleague and friend there alistair ford can build you uh a plan or you can check one that you've built for yourself in voyant right so there's a bunch of options and each of those will give you more confidence because we can stress test for you we can you know look at worst and best case scenarios all that good stuff so i think you're a prime candidate for that um uh definitely yeah i don't think and you know abby you've not got a problem.

31:19If you look at it, when your DB pension kicks in in eight years' time, seven, half, eight years' time, that's£1 ,500 a month in its own right. That's£18 ,000. And you get in£1 ,000 a month from your rental income. So that's your£2 ,500 a month apart from a bit of tax. So you won't need anything else and you've got a load of stuff which will get you between£52 to£58 without a problem.

31:42Pete Matthew: Yeah, and then another 10 years to stay in pension. There's no, I've seen, obviously thousands of financial situations in my time. I'm not even remotely worried about this, even retiring at 52, because it's clear your spending is in control. If you were telling me you're spending seven and a half grand a month, then I'd be like, okay, yeah, you know, that's going to be an issue, I think. But at two and a half thousand quid a month spending, no problem at all. And to voluntarily retire at 52. I know. That's some good going. That's really good going. So congrats and enjoy it. And yeah, only by the time this goes out, about three months away.

32:14Yeah.

32:17Pete Matthew: okay last one from ben who's doing this one me okay um ben hi pete and roger i'm a long time and regular listener and can even remember the time br before roger although the modern era partnership has been some of the most entertaining content on the channel good thank you okay the context was quite a big question but not too bad i'm 41 married with kids all out of nursery, so no childcare free hours. We have a house with a mortgage. I'm employed full time, putting 19 % of my salary into my DC pension. I maxed my employer contribution of 8 % with 6 % from me back in 2019 and have steadily increased my contribution each year up to the current 11 % plus the employer's eight.

32:59Pete Matthew: Currently the pot is worth 140 ,000 with monthly contributions of around $15.50 per month. I'm in the very fortunate position that my salary growth has outpaced inflation and I am now teetering on the edge of the 100 grand mark. We also receive a variable annual bonus, which is targeted at 10%. Okay, so that could nudge him over. Pre-COVID, we started a stocks and shares ISA, contributing 300 quid a month. But when my wife was furloughed and subsequently made redundant, we had to stop those contributions. Still, that ISA pot has grown to about 17 ,000. I'd like to build up the ISA to give us flexibility on drawdown in retirement, but struggling to find the spare cash.

33:39Pete Matthew: I don't think that's a amount thing. It's because it's being directed into pensions, right? Also mindful of creeping over the 100 grand threshold and reducing my personal allowance. So considering options like sacrificing part of my bonus this year into the pension. So the question, is it worth continuing to increase my pension contribution to 20 % and beyond at this stage or start to focus more on building up ISA contributions? Congrats on the success of the Meaningful Money podcast. it is always top of my weekly listening queue and continues to educate and inspire me best wishes Ben thank you Ben well done Ben so yeah

34:16Pete Matthew: it goes against the grain to pay more tax than you need to particularly 60 % yeah and it's 60 % between you know 125 ,140 whatever the figure is I think is you know it's not just 20 % it's not just 40 that would be 60 % for that 25 ,000 pounds so if you trip over I would really say try to keep below that threshold if you can. Get your net adjusted income down below£100 ,000 because you don't want to lose your personal allowance. Not if you can help it. No. And despite the fact it's not as flexible as an ISA, I don't know. Yeah. You're right. There's no part of me that says, oh, you know, you should just accept a notional 60 % tax rate to fund an ISA.

35:00Pete Matthew: You know, that's, oh gosh, that's very uncomfortable. the ball and especially at 41 when you're looking for flexibility when you retire well actually you may be able to do other things with other money between now and then to give you the flexibility but at the moment because of this yeah i mean you know if salary continues to rise ben you're going to get to the point when you're earning 130 40 50 000 pounds and you're definitely gonna lose it you're definitely gonna lose it your personal allowance is gone and you are where you are you still obviously do good work in the pensions um but if that's the case even after a pretty hideous tax rate, you're going to have more money every month to spend or to save.

35:36Pete Matthew: So, you know, keep a close eye on your control over your spending. You're obviously doing brilliant work pointing into pensions, but you never see that money. So if you want to build up ISIS, ask yourself, is there, you know, can you restart that 300 quid a month? Can you find it? Might not start at that level, but could you work back up to that? Could you start at 100 quid a month and then increase it remember the power of small regular increments start at 100 quid a month you know realize that that's probably you know if you've got family you know that's a night out at most you know do you know i mean you get a decent night out for 100 quid that might be a couple of nights out but if you've got your family you're probably not going out anyway but you could probably find 100 quid a month if you really wanted to ask yourself can you you say you're struggling to find it I wouldn't stop some of your salary sacrifice in order to find that and pay 60%.

36:34No, that just goes completely against the grain. But like Pete says, have a look at your cash control because it's so easy to spend when you are earning and your earnings have gone up and it's easy to build your spending up to meet your income. Still creeping. Pete said in the very first way about paying yourself first. So are you not paying yourself enough first? Are you leaving too much fat in the bank account and then it fritters away somewhere? But as Pete said, if you manage to do£100 a month to begin with, because you could actually find that somewhere, I don't know, then you will naturally spend less because you haven't got so much in the account.

37:15It depends on what you find is the most important thing for you. If you think it's important, then you'll try to do it somehow.

37:22Pete Matthew: Yeah, that's right. I think this is going to be something that is subject to review. So if your pay rise continues, and rather than putting all of that pay rise into your pension, maybe you just think, well, okay, I need to try and find some of that. So check the control you have on your spending and make a decision each year as to what you're going to do and try and find it if you can. And you don't mention if your wife works, if she's not currently maybe because the kids are young, but then she goes back to work, that's when you start to think, okay, we need to use this extra money now to build this flexibility for retirement.

38:05Pete Matthew: So the current situation might and won't continue forever. No. That's about all to say about that, I think. And if you get to the 130 ,000 or 140 ,000 pounds or 150 ,000 pounds earnings, remember the 60 % is only on the first 25 of that. Yeah, and there are 40. 45, yeah. So the effective rate above that is not 60. Not quite as bad. Psychologically. It is what it is, yeah. You know, you have to pay tax. And I mean, it's a problem with these terrible cliff edge things. So, you know, they're a terrible idea, but they are what they are. Yeah, there we go. So hope those answers were helpful this week.

38:40Please do keep them coming, despite the fact we've got loads in the pipeline. Please do keep them coming, because we want to answer the current ones as quickly as we can. Keep them coming. at hello at meaningfulmoney.tv with a subject line podcast question and we'll try to drop them in somewhere.

38:55Pete Matthew: Yeah, a few links this week. So go to the show notes for those, meaningfulmoney.tv slash QA54. As ever, we enjoyed doing this. Hope you enjoyed listening and watching. Thank you so much for being here. Thank you, Mr. Roger Weeks. No question. We will see you next time.

39:20Thank you.