I want to cover exactly what I’d do if I was starting out all over again, having learnt what I have over the years. How I’d improve my financial position and how I’d get myself into the position of being able to invest and secure my long-term future.
If you’re not happy with how your finances are, or you’re terrified of thinking about it for too long, or you just want to be rich as fuck at some point in the future – but can’t see how you’d get there, then this is for you!
I had entrepreneurial parents, so grew up being surrounded by business and money. I definitely had a huge advantage over most people, purely from exposure to that world. But I still had the same issues everyone else has.
So many questions, and I got the answer wrong pretty much every time. But I’m nothing if not optimistic, so I always thought if I did it again I could do a better job. So I learnt from my mistakes and kept on keepin’ on.
Now I’m in the fortunate position of being able to share what I’ve learnt and help you skip a few painful, and expensive, lessons.
That’s basically what school drills into us right? Which makes sense. You’re being taught by someone who followed that exact path, they don’t know any differently, and they probably aren’t inclined to stand there and say;
Hey, I fucked up my life, don’t make the same mistakes I did. Break free, do something better than this!
Even if that’s what they think.
But actually, it’s not that bad a path. I work with professionals who have taken this route (to varying degrees), and then with entrepreneurs who can think of nothing worse than working for someone else for the next 40 years.
I’ve been both, and I’m not as judgemental as some people and think there is only one way to go. The best thing to do is what’s right for you.
Great plan. It’s relatively stress free (depending on your job), it’s fairly uncomplicated, and you have a good degree of stability in your life. It makes planning much easier, and honestly there are lots of times each month I miss these positives about working for someone else.
Where people often go wrong is in the Investing part. They kinda forget to do it. Your job probably has some kind of work place pension scheme now, which is nice and all, but probably going to give you less than half the income you’re currently on.
Dunno about you but retiring and living out the rest of my life on a tight budget sounds shit.
I want my retirement to be the most fun possible. I want to go on random holidays and have mid or three-quarter life crisis’s and buy a Harley or something daft.
So what’s the alternative?
If you have a job and you aren’t saving, then you can’t afford the life you’re living.
If you’re living like your life is being recorded for Instagram, you’re being a dick and need to have a quiet word with yourself.
If you’re not being insane, but still aren’t making enough to save, then you need to get a better paying job. Or a second job.
If you’re an entrepreneur and it’s been a few years and you still aren’t making enough to save, you might have to consider the fact you might not be cut out for the self-employed life. It’s not a failure, maybe just a fact.
Harsh, probably. Unpopular, certainly. But it’s the truth.
Save. Save now. Save in the future. Save hard. Keep on saving.
Earn more than you spend. Put the surplus into investments that produce more money. Use that investment money towards buying more investments that produce even more money. Repeat until you end up being able to retire sooner, or richer.
This is the life plan I’d give my 18/21 year old self if I could go back in time.
Don’t bother with university. It’s a waste of time and money. I was fortunate in that I stayed at home and was the generation that didn’t have to pay huge fees for uni. So I left without much debt. But I did waste 3 years of my life not working, earning, and being able to save.
So even though I was debt-free at the end of it, university “cost” me about £75,000 in missed salary. If I’d stayed at home for the first 3 years of my working life, I could have realistically saved say £35,000 of that.
£35,000 invested for 25 years (so I’d be mid 40’s) would equate to about £500,000. Not enough to retire on, but a nice chunk of change by anyone’s standards.
If my time machine got stuck and I ended up talking to my 21-year-old self after university, I’d slap me. Then run, cos 21-year-old Damien was hard as nails. I’d definitely kick the crap out of me now.
Once I’d calmed me down again, I’d say stay at home, get a job, don’t be a bellend and spend all my money on cars, and start investing in the stock market.
Really simple things like; not getting a brand-new car every 2 or 3 years, not partying most weekends in Liverpool with friends, not renting or in my case buying a house as soon as I could.
Instead, setting up a standing order on the day I get paid and transferring that money into a Stocks and Shares ISA and investing it, then figuring out how to live on the remaining money for the rest of the month.
I’d also tell me to educate the shit out of myself on all things long term finance. Nothing too heavy, but at least familiarise myself with the stock market (I did a business & finance degree so I was pretty handy at that anyway), how to buy property for investment purposes, what the bond market was all about, how commodities worked.
I wouldn’t tell me to be the super geek I actually became and specialise in an asset class. Instead I’d just want to get enough of an idea to be able to invest for the long-term.
Choosing the right investments and seeing a return immediately or within a year or two is really, really hard. Getting investments right over decades is a piece of piss. History has a habit of repeating itself, so just look at what’s happened, and there’s a pretty good chance it’ll happen again.
But just in case you’re wrong, buy all of the asset classes so you can afford to be wrong on one or two of your investments.
Last thing I’d tell me, was to get the balance right. Life is 80% boring most of the time, so make sure the 20% of excitement is really what lights you up. For me, I should definitely have bought a motorbike sooner, I should have travelled a bit more when I was younger (on a strict budget of course), and I should have done the random shit I wanted to do rather than just think or talk about it – helicopter lessons, clay pigeon shooting, Krav maga training camp, etc.
It’s a bit of delayed gratification, a bit of being sensible and sticking to a budget, and a bit of being kind to yourself.
Who knows what the future will hold. Maybe I’ll live to 118 like I want to, so I can see in the year 2100 and say it was shit compared to 2000 and then die (#LifeGoals), or maybe I’ll get run over by the Yellow Submarine in Liverpool when I’m next back home. Either way, I’d like to be able to look back on my life and say;
“I’ve spent my time and money wisely. I enjoyed the work and the experiences I had because of the money I made. And I’ve still got enough to leave my [kids / favourite charity / favourite hooker] enough money to not have to worry about finances.”
That, to me at least, is the reason I invest for my future but freely spend money on stuff, things and experiences in the meantime.
I’m not here to tell you how to live your life. I honestly don’t give a shit what you do. It’d be nice if you built up enough money to chill out though and retire well off so if we are friends we can go travelling and stuff together.
Come on over to the Facebook group https://www.facebook.com/groups/TEPIFoundations if you’re just starting out and need some pointers in which direction to head.
For those a bit further along who might wanna know specifics… the long-term goals / Key Performance Indicators I’d set myself financially would be;
Saving spent on fun stuff
Invest in Shares
Invest in Bonds
Invest in Property
Invest in Commodities
Leave in Cash
For the astute amongst you, you'll see that works out to be 135%....
No, I haven't had a stroke. I can still do maths.
What this means is I would aim to save 25% of my salary each month. I'd then aim to spend 10% of my salary on fun / stupid stuff (cos life's for living right?).
Of the remaining that I invest, these are the percentage splits I'd use.
What’s right for 'Past Me' probably isn’t going to be right for you, so do your own research and come up with a plan that’s ideal for you. If you need help, get in touch and we can work together for 3 months on pulling together the ideal long-term strategy for you.
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