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You can pick the perfect fund and still end up with the wrong life. That’s the uncomfortable truth we dig into with independent financial adviser Luke Hurley from Videre Financial Planning, because the biggest mistake we see isn’t investment selection, it’s skipping the vision that should sit above every financial decision.
We start with three grounding ideas: time is your most precious resource, happiness is the real end goal, and money is only the enabler. From there we get practical fast. Luke shares the questions that uncover your “why” (not just “security” or “freedom”, but what that actually means day to day), then shows how to turn values into measurable milestone goals you can plan for without pretending you can predict the future.
Next we define financial independence in plain English: the point where you work because you choose to, not because you have to. We talk about finding your personal “number” by auditing your real household spending, and we add UK context with retirement spending benchmarks. We also pressure test the rule of 25 and the 4% rule, including why they can mislead if you ignore State Pension, NHS pension, rental income, tax, and how spending often changes later in life. Finally, we get into why a pension can sometimes be the last pot you touch and how that links to inheritance tax planning and long term investment strategy.
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
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Dr James (01:43):
When it comes to investing, everybody gets super
excited about the investmentpiece as in which stocks to buy,
how much to diversify theportfolio, what accounts to use,
everything along those lines.
But actually, there's a littlebit more to it, and there's a
crucial first step that has tocome before we even think about
anything to do with investing ifwe want to get the best
(02:05):
results.
Independent financial advisorLuke Hurley joins us today.
He represents the VidereFinancial Planning.
Luke is going to be sharingwith us a little bit more about
what we can do in the very firstplace to ensure that we
actually get the results we wantfrom our investment portfolio.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
(02:27):
Smart Money Members Club alsoincludes multiple mini courses
and webinar series with financefor dentists, including how to
become as tax efficient aspossible, as well as
understanding investing.
All of this content counts asverifiable CPD, and you can
download your certificates thereand then on completions each
lesson.
In addition to this, we alsoinclude a whopping 10% discount
(02:47):
on your dental indemnity and 5%discount on lab bills for dental
principals, amongst other perksand discounts for members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Another episode of DennisInvest Podcast Team with Return
in Face, Mr.
Luke Hurley.
(03:08):
We're here to talk today aboutyour vision, the strategy that
you need to have in order toensure you're making solid
financial choices.
When we talk about your vision,well, well, a big part of that
is your is your number, uh,really crystallizing how much
you need to retire.
And this is something thatoften goes awry with people and
their financial plans, giventhat we're all just programmed
(03:30):
to, how can we say, just buildthe biggest asset portfolio that
we can feasibly achieve.
Uh, what that sometimes meansis we're sacrificing time, time
that we could have otherwise hadoff, or time that we could have
otherwise been financiallyfree.
Luke, how are you today, myfriend?
Yeah, really well, thanks,James.
All good my end.
Awesome.
Well, listen, I think this isone of those episodes where I'm
going to do less talking ratherthan more, which I'm not so good
(03:53):
at, but I'm gonna I'm gonna domy very best for the good of the
audience, for the benefit ofthe audience today, because we
all want to benefit from yourexpertise whenever it comes to
deciding what param orunderstanding what parameters
and things that we need to knowin order to, how can we say,
crystallize the vision, so tospeak, and be efficient about
our investment journey.
Luke (04:13):
Sure.
So yeah, for me, the uh thevision stage is probably the
most important when it comes tobuilding out a financial plan.
Um it's underpinned um from aphilosophical perspective by
what I consider to be three keycore principles, um, which you
know you can you can you candebate, but for for for me
(04:33):
they're um universal uh and andthey're absolutely uh vital.
So the first one is that timeis our most precious resource.
We've only got so many uh yearsof life, uh, and it's important
to recognise that and to to getthe most we can out of the life
that we have.
Um the second uh is thathappiness is our ultimate goal,
given that we time is our mostprecious resource.
(04:54):
And the third is that money isan enabler or a tool um for us
to um live the best lifepossible.
So those three principles forme underpin financial planning.
Um, and it's key then to drilldown well, okay, we don't know
for certain, but how much timerealistically could you have
left?
Um, because goals are um uh inan ideal world, they're they're
(05:17):
uh measured in terms of time andand duration and um time
horizons.
So um we can look at ONS dataand we can make some accurate
guesses around that.
Then in terms of addressing umyou know money money as a tool
and enabler, the question thereis what for?
So you know it it's differentfor everybody.
What is your money really therefor you to achieve, what's
(05:38):
important to you in life?
Um and that's about that that'swhere it comes we come on to
the first section, which isunderstanding or or realizing
what your why is, what yourpurpose is, what the meaning is,
your North Star, um what is thedriving force behind your
financial plan?
And it can be as simple asjotting down really what your
values are, what's um what whatyou know what what is at the
(06:01):
core of of what you're lookingto achieve.
So simple questions like umwhat is mu most important about
money to you, what's the moneyfor, what makes you happy, um,
what are the experiences you youyou most enjoy, what are the
environments you most enjoy themin, who do you most enjoy
spending your time with.
All of those questions shouldelicit the information around
(06:21):
what's what's most important toyou in in life, um, and that
should be right at the top ofyour financial plan, driving
most of your decisions, um, andand you know, you should you
should be aligning your valueswith your with your money.
Um, so for me, some simplequestions like that.
Um what I what I I I hesitateor or what I don't like to see
at that point is somebodysaying, Well, the most important
(06:43):
thing for me is financialsecurity.
It's okay, well, financialsecurity to allow you to do
what?
So it's it's taking it a stepfurther than than simply um some
of the the regular answers thatyou see, which is fine.
I want financial freedom.
Okay, well, freedom to do whatexactly?
What do you want to use thatextra time for?
Um, that's how you really divedeeper into the question of what
is your why, and that's how youstart working your way through.
(07:05):
If we talk about Maslow'shierarchy of needs, that's how
you start working your way upthe the levels um towards
self-actualization if you're ifyou're talking about the top of
the the pyramid.
Um, so that's that's for me isthe starting point.
Dr James (07:19):
You know what?
And when you were saying justthen, I uh I used to be off I
I've I've I've grown up a lot, Ihope, in the last few years.
And one thing that I never everbothered to do uh back in the
day was actually have a goal,really, or a hug I had goals,
but maybe not crystallizedgoals.
Like this is exactly how I wantit to look, right?
Because I swear the number oftimes you write down what you're
(07:43):
actually trying to achieve,you'll realize that a lot of
your actions are completelyparadoxical to you achieving
that goal.
So for example, I'll say this,right?
Uh, time for kids, right?
You're actually working reallyhard to get all this money to
have time for kids, right?
You know, that's that's thegoal whenever it comes to
financial freedom or financialplanning, right?
But in reality, you probablyhave the assets to be able to be
(08:04):
retired and have the time to dothat years ago, but you feel
you're so programmed and you'reso conditioned from years of
doing it to think that youcontinue to have to do it.
But you don't know what that isuntil you write it down.
And that's maybe for someonewho's like, I don't know,
middle-aged, 40s, somethingalong those lines.
That's one example.
There'll be loads of them outthere.
Luke (08:21):
Yeah, it's it's shining a light, um, reflecting, and then
really considering whether youractions are aligned with your
values.
Um, and there's lots of peoplethat sort of sleepwalking and
pay lip service to this stuff,but they're not actually um you
know, engaging with it and andand aligning what they do with
with with what they're whatthey're necessarily saying.
Dr James (08:43):
Awesome.
So that's the first stage, Isuppose, in crystallizing your
vision, and then how does itdevelop from there?
Luke (08:49):
Yeah, first stage for me is um work out what your why is.
And there's from a from aplanner's perspective, there's
other questions that we do, andwe can go in a deep dive.
And it may be that somebodyanswers those questions and
realizes that they've gonecompletely the wrong track, in
which case there's otherprofessionals that they might
want to speak with.
But it's just a useful exerciseto add context and to frame a
financial plan.
Um, once you've done that, thenext step really is to go into
(09:12):
some more specific goals, um,which some people are put off by
the word goals, and and um itcan be quite a daunting process
for for some people, it's a bitof a loaded word for some
people.
Um, for me, it's quite easy.
It's it's there's there'sthere's two main categories.
You've got uh what I wouldconsider to be um spending goals
or milestone goals, which arevery specific uh events with
(09:34):
attached spending requirements.
For example, for me, I knowI've talked to you talked about
this on the on the podcastbefore, but that might be for
me.
Um, my children going touniversity, it might be my
children getting married, itmight be gifting some money to
help them get on the housingladder, for example.
That's very specific.
I can attach uh a time horizonto it, I can attach a monetary
(09:54):
amount to it, um, I can reallygive it some um some some some
context.
Um, so that that's the firsttype of goal, and and they're
really that that involves someguesswork.
Okay, you can't get this stuffentirely accurate, but it's
about putting some stakes in theground, having some guesses
about what the future mighthold.
Think of family milestones,work transitions, you know,
(10:15):
ambitions on that front,business targets, important
birthdays.
Uh, it might be real lifestylestuff, it might be particular
going on a particular type ofholiday, it might be um changing
a property, buying a biggerhouse.
Whatever it might be, it's ait's a clear milestone goal
that's that's got some form ofspending um attached to it.
They're one-off costs that weneed to factor into our and into
(10:37):
our plans.
Dr James (10:38):
I can tell you thought about this in great detail
because it's very much likebang, bang, bang.
These are the components, thisis the precise point at which
you think about this, and thisis how it works.
And I I remember you telling methat stakes in the ground
analogy uh a while back, and Ireally like that.
You know, it's just a point tonavigate towards rather than it
being a fixed outcome that we'regoing to necessarily achieve,
(11:01):
because you can't you can't saywhen it's gonna be.
You can never say whensomeone's gonna get married,
particularly if they're likefive years old.
Will they ever get married?
Exactly.
Luke (11:09):
They may never get married, right?
But um, if they do, I'm gonnabe prepared for it.
Um, so yeah, measurable andtime-bound in an ideal world,
that's what we want these goalsto be.
We should be able to measurethem and we should be able to
attach a time horizon to them.
That's key.
Um, and these are gonna bedifferent for everybody.
I mean, I I from my experience,I see a lot of the same kinds
of things come out through thediscussions that I have with
(11:31):
clients.
Um, but you know, everybody'sgot different uh goals and
objectives, and and things areyou know look slightly
different, and also based onlife stages as well, there's
there's there's cleardifferences between people.
Dr James (11:43):
There we are.
So get some stakes in theground and get some figures
associated with those.
And then I suppose we'rethinking to ourselves next,
okay, cool, how do we startmaking progress towards that
really?
Luke (11:56):
That's yeah, so the the the the um future step is really
looking at the strategy to toto achieve those goals, right?
But the um on top of themilestone goals or the the
spending goals, we've got ouruniversal ultimate number one
financial goal for everybody,which is financial independence.
Um and so when I said I don'tthink it's actually that
difficult to go through a goalsetting process.
(12:18):
Really, that's because the themost important goal for most
people when they're building uptheir wealth is to know um what
do they need in order to befinancially independent um in
the future?
Now, financial independence isuh the point at which you're
working because you choose to,not because you have to.
So it it's quite clear.
Um, and it's it's aboutmeasuring um when or how much is
(12:38):
enough for you individually asa household, how much is enough
for you to achieve the lifestyleyou want without having to go
into work to build up yourresources any further.
Dr James (12:47):
Do I recall you telling me once upon a time
there's a distinction betweenfinancial freedom and financial
independence?
Luke (12:54):
Um I kind of I I do use them interchangeably.
I I think um I think you canachieve financial freedom before
you achieve financialindependence if you would really
want to drill down into it, um,because it might be that you
change your working environmentand and it's more a little bit
more in the present term asopposed to um financial
independence, which is is for mevery much tied to going to
(13:16):
work.
Um so yeah, I think there'smaybe slight differences, but I
also see them used iinterchangeably.
Dr James (13:24):
Um it's go on, sorry, sorry.
Luke (13:27):
No, no, go you go.
Sorry.
Dr James (13:28):
I was just gonna ask, is there any sort of distinct
and the re I'm asking this, doyou, you know, from the point of
view of you being immersed inthis world as a professional, is
there any sort of distinctionor terminology that's used
insofar as let's say you hit thepoint where you've got
financial f financial freedom,if we want to term it that,
right?
Where you've literally your uhthe money, your cash flow from
(13:49):
your investments covers youroutgoings.
But that's it.
Are you with me?
It literally keeps theelectricity on, keeps you fed
and watered, like a decentlifestyle, right?
But there's not really a wholelot there on top to go and party
and do other and do fun stuffand experience life.
Luke (14:06):
Yeah, I think there's different t yeah, totally.
Um for me, the way I've nowdefined financial independence,
it's it's tied to somebody'sdesired lifestyle, which
includes um your essentialspending, you know, your
survival costs, shall we say,and your personal discretionary
spending.
There is a I think I do feelthat it needs to be aspirate
aspirational.
(14:26):
I don't think you necessarilyneed to say, you know, I think I
think you can sh aim higher,and some people might call that
financial abundance or financialfreedom, and where it's about
pushing that even further up.
Um, I have seen certain uhcharts where they say, you know,
financial security is gettingall your basics covered, then
you've got financialindependence, and then you've
got financial freedom, which iswhat you, as you say, it's it's
(14:47):
about going further and reallypushing that discretionary
spending.
It it's yeah, it's it's allit's all a it's all useful,
however you want to categorizeit, it's about working out what
your the cost of your lifestyleis, and if you want to pushing
nudging that up to not only bethe lifestyle you've got now,
but the lifestyle you want uh inin the future, and that's
really how you work out yournumber.
(15:08):
Um, so the the um the key isit's a personal figure per
person, how much is enough foryou?
Um, why is that important?
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(17:04):
of this podcast.
Luke (17:09):
I think I I you know ultimately there's three types
of people.
There's those that don't haveenough, you know, then they're
not they're not on the righttrajectory, they're not going to
achieve financial independence,they haven't been saving enough
for for their retirements.
Unfortunately, in the UK, thatthat at the moment is the is the
landscape for an awful lot ofpeople, um, worrying levels, in
fact.
Um you've got those that get itjust right, they've got enough,
(17:32):
and they have timed thingsperfectly, they've they've done
their planning, uh, they've beenon the right trajectory.
Um, and then you've got thethird camp, which is those that
have too much.
And what I mean by that istheir their family, their
household, the futuregenerations are due to pay a
pretty healthy tax bill um ontheir demise through inheritance
tax, where they've worked hardall their life and paid tax, and
(17:54):
then what's left is then taxedon death.
Um, so kind of threecategories.
Now, for dentists, do I seethose that don't have enough?
Well, I've I've met I've metsome, but most people tend to be
on the right trajectory.
Um I do see lots of people fallinto the camp of having having
too much um and thereforeneeding to put in place some
(18:15):
some form of plan to deal withtheir their uh inheritance tax
liabilities further down theline.
Um so yeah, there's there's thethree camps.
Now why that's important for meis if you don't know that
there's we're human, so ournumber one fear, or most
people's number one fears uhwhen it comes to money is
running out, okay?
So it's a it's a it's a deepdown human fear we're gonna run
(18:37):
out of money, and that'snatural.
Um if you don't know thatyou've got enough, then you can
go throughout life living thelife of somebody that didn't
have enough, and that's that'sthe key thing to understand.
Defining whether you're on theright trajectory actually
informs your decisions today.
Dr James (18:53):
So it's about plotting forward and working out when
you're gonna have enough, andthen you can come back into the
present and make various andmake sure Dennis who invests now
has those original principlesthat you're living life in your
term making the most of it.
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(20:45):
of this podcast.
Luke (20:49):
But you're only funding one person's ISO and £20,000 is
being saved.
Well, £80,000 is being is beingspent in one way or another.
And then it's about beingintentional and going in and
having a deep dive as to okay,where is that £80,000 actually
going?
Um, and then you might findsome leaks, you might find that
there's some some some wastagealong the along the way, or you
(21:10):
might just find that actuallythat's your that's the cost of
your lifestyle, and that's whatyou that's what you're aiming
for.
Um, but that's that's that'show I would go about working out
what what you need um as ahousehold.
Dr James (21:20):
And you know, I actually love that method that
you highlighted just thenbecause there's probably a very
deep part of our human psychethat tries to not acknowledge
how much we are truly spending.
And if you just literally lookat the numbers, there's nowhere
to hide.
And I I get it, we can modifythat and we can reel it in and
what have you, but at least it'sa place to begin.
So that's some very, very, verysimple, actionable information
(21:43):
for anyone listening to thepodcast today.
You can use it to figure outyour number per se, and then
naturally that's gonna changeand move around with time, given
that retirement for most peopleis many decades away.
So naturally, inflation isgonna move that around and what
have you.
But it's it's it's a cool, it'sa cool exp ah, I almost said
the word experiment, but I meanI don't know, I don't know if
(22:04):
it's an experiment so much.
It's a cool, how can we say,yeah, just thing to look into
and investigate, really.
Luke (22:10):
Yeah.
Um some interesting facts.
So uh I was reading theseearlier.
So 77% of people in the UKdon't know how much how much
they need in retirement, um,based on the survey completed.
Uh, 51% of people think thatthe amount that they're being
forced to pay into theirpensions through alter
enrollment is enough to see themthrough.
(22:31):
Um, unfortunately, for lots ofpeople, that's that's not going
to be the case, which is whyit's important to interrogate
these numbers.
Um, 20% um are confident thatthey are saving enough for
retirement.
So only 20%, one in five peoplehave that level of confidence,
which is why that clarity andand and actually knowing that
you're on the right path is soso important.
Uh 70% say that targets wouldhelp them save more, um, which
(22:55):
is really what we're trying todo, putting those stakes in the
ground.
Um, 51% of people focus ontheir current needs and wants at
the expense of providing forthe future.
That's I think that's a humantendency, okay.
That's a natural, excuse me,um, uh behavioral um uh trait of
human beings.
Uh, and 70% of uh 35 to 54 yearold self-employed savers have
(23:17):
less than £25,000 in a pension.
Um now I I don't see too manydentists in that position if I'm
honest, and this is a nationalUK wide survey, but it it's just
some inter interesting context,I think, in terms of where we
are as a nation.
Dr James (23:31):
Seventy per cent of thirty five to fifty five year
olds have less than twentythousand in a pension.
No way.
Oh my goodness.
Luke (23:40):
Wow, that is we call it a savings gap.
Dr James (23:43):
the or the savings gap it's it's a concept widely
talked about in the in thefinancial planning profession
that we've got so many peoplethat that just are not saving
enough money for for the futureand you know there's actually a
flip side to that which isinteresting and I sometimes
observe with dentists even iflet's say I say I talk you you
know when you talk to dentistson the phone and they're like oh
(24:04):
yeah I'm gonna do my very bestto max out my ISA this year I
was pretty close last year I gotthe 18000 in and you're like
even you know forget even maxingit out what a fortuitous place
to be that's unbelievable that'samazing right but dentists
don't necessarily realize uh howcan I say how how how blessed
they are sometimes on that frontand also how that can sometimes
(24:27):
mean that actually they mighthave a lot of the things in
place they need to retirealready given that their savings
are so massively boosted relrelative to other people but if
you're mingling in with in otherdentist circles well your bar
is going to be not really somuch representative of you know
your your your kind of frame ofreference is not going to be
representative as to where otherpeople are so when you hear
(24:49):
stats like that it's just likeJesus that's that's crazy.
Context isn't it yeah it justmakes you reflect and it makes
you think actually do you knowwhat it's really important I
think about this stuff because Iprobably am oversaving and
overworking the um there's athere's a body of research
that's updated every year whichlooks at um the the national
(25:11):
averages for retirement spendingwhich again I think is useful
to to share with people umexcuse the coughing I've
recently come out of a bout ofCOVID.
Luke (25:21):
So for a single person um they have a level that they say
is like the minimum level thatpeople should be aiming for.
So for for a single personthat's £14,400 a year.
In London that's £15,700 a yearwhich for me is I mean it's
real survival stuff it peopleare going to really struggle on
that um to to make ends endsmeet in the in the current um
(25:42):
economy as a couple that goes upto £22400 or in London £24500.
The moderate level of spendingnationally um they've labelled
£31300 for a single person 32800when you're in in London um
43100 for a couple or 44900 ifyou're in London and then what
(26:04):
they deem to be a comfortableretirement level for somebody
that's on their own that wouldbe 43100 in London 4500 as a
couple it's 59000 in London61200.
Dr James (26:17):
So that there's some very very um rough averages for
for the national picture uh fora dentist the takeaway should be
that um as a if if that ifwe're a couple then we should be
aiming for 60k plus um andthat's that's once everything's
paid off ideally you know yourmortgage is gone that's just
money that's been spent onliving life um on lifestyle for
(26:39):
a single person as I say 43 or45 thousand um per annum to um
to cover all your outgoingsdiscretionary and essentials
interesting context is sovaluable context is so valuable
right because each one of us ourrealities are to a greater or
lesser degree distorted from theaverage that's out there and
(27:01):
that can work both ways you knowit's not just we're not just
talking about the finance ofdentists we're talking in every
other area of our life how doyou know that you're doing well
you're doing not so well whereyou could be where you should be
unless you understand where thebar is and that's why I love
those stats makes you think onceyou have the um the the number
(27:22):
that you're aiming for the um sosome some people will will talk
about the rule of 25 which isyou take the the income figure
that you need you multiply it by25 uh which ties in with what
we call the 4% rule and thatwill give you a capital sum.
Luke (27:39):
So the capital sum is is the amount that you're aiming to
have in uh in savingsinvestments pensions for you to
to to draw down on to to uhensure you don't run out of
money now that's based on someresearch based in the US which
in in rough terms and andthere's lots of um caveats to
this and it's very simplisticsuggests that if you have a if
you invest a lump sum of capitaland you take four percent at
(28:02):
the outset so let's say amillion pounds is invested and
you take 40k a year if youincrease that every year with
inflation um as a as a portfoliowithdrawal then based on back
testing of historic scenariosyou you shouldn't run out of
money now there's there'scaveats to that that's US based
is there's gray areas aroundthat around charges and various
other things but that's that'sthat's often if you hear about
(28:24):
the 4% rule that's what it'salluding to and to get to that
figure is simply work out whatthe income amount is and
multiply it by 25.
Now for from my perspectivethat is there's lots of flaws in
that which is um namely itdoesn't allow for regular
sources of income so it does notuh factor in state pension NHS
pension it doesn't factor in buyto let income rental property
(28:47):
income you know it's it's uh itdoesn't allow for changes in
income over time so on averageum people probably spend about
40% less um in their 80s than intheir 60s so that method of
thinking of just working likethat original income figure just
purely looks at at the sameamount all the way through I
think that's flawed.
(29:08):
So there's there's lots of lotsof flaws in in the in the
process it it's useful as a backof an envelope calculation fine
um but really what our role isas financial planners is to use
financial modeling software toactually have a bit more of a
deep dive into that and work outhow your number's going to
change over time and thenoverlay that with where are the
(29:29):
what resources and what assetscan you use factoring in tax
implications of different taxtreatments from from different
accounts how will you meet thatspending requirement to enable
you to be financiallyindependent um so there's a lot
more complexity when it comes toactually taking that number and
then delivering a financialplan.
Dr James (29:46):
Another thing to point out about that rule of 4% is
that just as you were saying,obviously it doesn't factor in
income from other sources tolet's say somebody's business or
let's say somebody's uh wellspecifically somebody's dental
practice.
And there's this whole mindsetwhere we have to get this to we
have to start uh how can we sayuh divesting or you know
(30:08):
changing our investmentportfolio when it when it's in
our pension or when it's in ourITA uh switching it around so
that we're not as heavilyexposed to assets that retain or
the assets that give us how canwe say uh like orientated
towards growth or orientatedtowards returns whereas if you
actually have enough income fromyour other assets you might
(30:28):
just choose to leave yourpension just to compound ad
infinitum it doesn't you don'tactually have to touch your
pension.
Yeah so here what I'm saying iswhat I'm saying is um that
actually if you're stashing awayloads of money in the pension
just realize that it might evennot even necessarily be for you
whenever you get there that'scrazy it's actually for your
(30:49):
kids yeah it's it's what I'msaying is people make this stuff
really simple but there's waymore to it than what meets the
eye.
Luke (30:56):
The the pension is a great example because when we do
retirement plans for peopleoften it's one of the last um
accounts that we're we'remodeling for somebody to access
because of the um theinheritance tax side of things
so if let's some say somebodyhas capital in their in their
estate maybe they've sold a abusiness and they've released
some capital it makes far moresense for them to draw down on
(31:19):
that capital rather than thecapital in their pension where
where the the tax treatment isdifferent around inheritance
tax.
So yeah completely and that'swhere having a proper financial
plan and knowing that is isabsolutely vital um because it
enables you to then come backand go okay well actually if the
pension is one of the lastthings that we need to touch
then the time horizon isn't 60for example for the pension and
(31:41):
therefore um where you getthere's some investment products
out there where they say thatyou know 60 is like the
finishing line and that they'regoing to change the asset
location the asset mix of theportfolio as you get closer to
that point well actually if youdo a plan and you and you
realize that the the pension isis actually going to be there
until you're possibly in your90s or or beyond and it's going
to pass on to future generationsand it's an intergenerational
(32:03):
account then it might be thatyou come back and change the
asset mix.
Dr James (32:07):
Plus you've stashed a lot of money away throughout the
course of your journey that youmight have been able to I don't
know have a little bit of funwith as well potentially
potentially potentially it justshows why planning is so helpful
and understanding this stuff.
And it actually it's about 50reasons that come back to what
we were saying at the start whyfiguring out your vision is so
important.
Because you probably might beworking way harder than you need
(32:28):
to until you figure out yourgoals quite literally.
Luke (32:31):
It underpins everything and and and that's it it's it's
about addressing the fear ofrunning out of money, bringing
things back into the present andthen making your decisions with
that with that information,informed decisions, make smart
choices um and uh yeah uh checkthat you're on the path right on
the right path and if you'renot do something about it.
When it comes to investing, everybody gets super
excited about the investmentpiece as in which stocks to buy,
how much to diversify theportfolio, what accounts to use,
everything along those lines.
But actually, there's a littlebit more to it, and there's a
crucial first step that has tocome before we even think about
anything to do with investing ifwe want to get the best
(02:05):
results.
Independent financial advisorLuke Hurley joins us today.
He represents the VidereFinancial Planning.
Luke is going to be sharingwith us a little bit more about
what we can do in the very firstplace to ensure that we
actually get the results we wantfrom our investment portfolio.
As ever, you can claim your CPDfor this episode within the
official Dentists Who InvestSmart Money Members Club.
(02:27):
Smart Money Members Club alsoincludes multiple mini courses
and webinar series with financefor dentists, including how to
become as tax efficient aspossible, as well as
understanding investing.
All of this content counts asverifiable CPD, and you can
download your certificates thereand then on completions each
lesson.
In addition to this, we alsoinclude a whopping 10% discount
(02:47):
on your dental indemnity and 5%discount on lab bills for dental
principals, amongst other perksand discounts for members.
Please use the link in thedescription to claim your
verifiable CPD for this episode.
Another episode of DennisInvest Podcast Team with Return
in Face, Mr.
Luke Hurley.
(03:08):
We're here to talk today aboutyour vision, the strategy that
you need to have in order toensure you're making solid
financial choices.
When we talk about your vision,well, well, a big part of that
is your is your number, uh,really crystallizing how much
you need to retire.
And this is something thatoften goes awry with people and
their financial plans, giventhat we're all just programmed
(03:30):
to, how can we say, just buildthe biggest asset portfolio that
we can feasibly achieve.
Uh, what that sometimes meansis we're sacrificing time, time
that we could have otherwise hadoff, or time that we could have
otherwise been financiallyfree.
Luke, how are you today, myfriend?
Yeah, really well, thanks,James.
All good my end.
Awesome.
Well, listen, I think this isone of those episodes where I'm
going to do less talking ratherthan more, which I'm not so good
(03:53):
at, but I'm gonna I'm gonna domy very best for the good of the
audience, for the benefit ofthe audience today, because we
all want to benefit from yourexpertise whenever it comes to
deciding what param orunderstanding what parameters
and things that we need to knowin order to, how can we say,
crystallize the vision, so tospeak, and be efficient about
our investment journey.
Luke (04:13):
Sure.
So yeah, for me, the uh thevision stage is probably the
most important when it comes tobuilding out a financial plan.
Um it's underpinned um from aphilosophical perspective by
what I consider to be three keycore principles, um, which you
know you can you can you candebate, but for for for me
(04:33):
they're um universal uh and andthey're absolutely uh vital.
So the first one is that timeis our most precious resource.
We've only got so many uh yearsof life, uh, and it's important
to recognise that and to to getthe most we can out of the life
that we have.
Um the second uh is thathappiness is our ultimate goal,
given that we time is our mostprecious resource.
(04:54):
And the third is that money isan enabler or a tool um for us
to um live the best lifepossible.
So those three principles forme underpin financial planning.
Um, and it's key then to drilldown well, okay, we don't know
for certain, but how much timerealistically could you have
left?
Um, because goals are um uh inan ideal world, they're they're
(05:17):
uh measured in terms of time andand duration and um time
horizons.
So um we can look at ONS dataand we can make some accurate
guesses around that.
Then in terms of addressing umyou know money money as a tool
and enabler, the question thereis what for?
So you know it it's differentfor everybody.
What is your money really therefor you to achieve, what's
(05:38):
important to you in life?
Um and that's about that that'swhere it comes we come on to
the first section, which isunderstanding or or realizing
what your why is, what yourpurpose is, what the meaning is,
your North Star, um what is thedriving force behind your
financial plan?
And it can be as simple asjotting down really what your
values are, what's um what whatyou know what what is at the
(06:01):
core of of what you're lookingto achieve.
So simple questions like umwhat is mu most important about
money to you, what's the moneyfor, what makes you happy, um,
what are the experiences you youyou most enjoy, what are the
environments you most enjoy themin, who do you most enjoy
spending your time with.
All of those questions shouldelicit the information around
(06:21):
what's what's most important toyou in in life, um, and that
should be right at the top ofyour financial plan, driving
most of your decisions, um, andand you know, you should you
should be aligning your valueswith your with your money.
Um, so for me, some simplequestions like that.
Um what I what I I I hesitateor or what I don't like to see
at that point is somebodysaying, Well, the most important
(06:43):
thing for me is financialsecurity.
It's okay, well, financialsecurity to allow you to do
what?
So it's it's taking it a stepfurther than than simply um some
of the the regular answers thatyou see, which is fine.
I want financial freedom.
Okay, well, freedom to do whatexactly?
What do you want to use thatextra time for?
Um, that's how you really divedeeper into the question of what
is your why, and that's how youstart working your way through.
(07:05):
If we talk about Maslow'shierarchy of needs, that's how
you start working your way upthe the levels um towards
self-actualization if you're ifyou're talking about the top of
the the pyramid.
Um, so that's that's for me isthe starting point.
Dr James (07:19):
You know what?
And when you were saying justthen, I uh I used to be off I
I've I've I've grown up a lot, Ihope, in the last few years.
And one thing that I never everbothered to do uh back in the
day was actually have a goal,really, or a hug I had goals,
but maybe not crystallizedgoals.
Like this is exactly how I wantit to look, right?
Because I swear the number oftimes you write down what you're
(07:43):
actually trying to achieve,you'll realize that a lot of
your actions are completelyparadoxical to you achieving
that goal.
So for example, I'll say this,right?
Uh, time for kids, right?
You're actually working reallyhard to get all this money to
have time for kids, right?
You know, that's that's thegoal whenever it comes to
financial freedom or financialplanning, right?
But in reality, you probablyhave the assets to be able to be
(08:04):
retired and have the time to dothat years ago, but you feel
you're so programmed and you'reso conditioned from years of
doing it to think that youcontinue to have to do it.
But you don't know what that isuntil you write it down.
And that's maybe for someonewho's like, I don't know,
middle-aged, 40s, somethingalong those lines.
That's one example.
There'll be loads of them outthere.
Luke (08:21):
Yeah, it's it's shining a light, um, reflecting, and then
really considering whether youractions are aligned with your
values.
Um, and there's lots of peoplethat sort of sleepwalking and
pay lip service to this stuff,but they're not actually um you
know, engaging with it and andand aligning what they do with
with with what they're whatthey're necessarily saying.
Dr James (08:43):
Awesome.
So that's the first stage, Isuppose, in crystallizing your
vision, and then how does itdevelop from there?
Luke (08:49):
Yeah, first stage for me is um work out what your why is.
And there's from a from aplanner's perspective, there's
other questions that we do, andwe can go in a deep dive.
And it may be that somebodyanswers those questions and
realizes that they've gonecompletely the wrong track, in
which case there's otherprofessionals that they might
want to speak with.
But it's just a useful exerciseto add context and to frame a
financial plan.
Um, once you've done that, thenext step really is to go into
(09:12):
some more specific goals, um,which some people are put off by
the word goals, and and um itcan be quite a daunting process
for for some people, it's a bitof a loaded word for some
people.
Um, for me, it's quite easy.
It's it's there's there'sthere's two main categories.
You've got uh what I wouldconsider to be um spending goals
or milestone goals, which arevery specific uh events with
(09:34):
attached spending requirements.
For example, for me, I knowI've talked to you talked about
this on the on the podcastbefore, but that might be for
me.
Um, my children going touniversity, it might be my
children getting married, itmight be gifting some money to
help them get on the housingladder, for example.
That's very specific.
I can attach uh a time horizonto it, I can attach a monetary
(09:54):
amount to it, um, I can reallygive it some um some some some
context.
Um, so that that's the firsttype of goal, and and they're
really that that involves someguesswork.
Okay, you can't get this stuffentirely accurate, but it's
about putting some stakes in theground, having some guesses
about what the future mighthold.
Think of family milestones,work transitions, you know,
(10:15):
ambitions on that front,business targets, important
birthdays.
Uh, it might be real lifestylestuff, it might be particular
going on a particular type ofholiday, it might be um changing
a property, buying a biggerhouse.
Whatever it might be, it's ait's a clear milestone goal
that's that's got some form ofspending um attached to it.
They're one-off costs that weneed to factor into our and into
(10:37):
our plans.
Dr James (10:38):
I can tell you thought about this in great detail
because it's very much likebang, bang, bang.
These are the components, thisis the precise point at which
you think about this, and thisis how it works.
And I I remember you telling methat stakes in the ground
analogy uh a while back, and Ireally like that.
You know, it's just a point tonavigate towards rather than it
being a fixed outcome that we'regoing to necessarily achieve,
(11:01):
because you can't you can't saywhen it's gonna be.
You can never say whensomeone's gonna get married,
particularly if they're likefive years old.
Will they ever get married?
Exactly.
Luke (11:09):
They may never get married, right?
But um, if they do, I'm gonnabe prepared for it.
Um, so yeah, measurable andtime-bound in an ideal world,
that's what we want these goalsto be.
We should be able to measurethem and we should be able to
attach a time horizon to them.
That's key.
Um, and these are gonna bedifferent for everybody.
I mean, I I from my experience,I see a lot of the same kinds
of things come out through thediscussions that I have with
(11:31):
clients.
Um, but you know, everybody'sgot different uh goals and
objectives, and and things areyou know look slightly
different, and also based onlife stages as well, there's
there's there's cleardifferences between people.
Dr James (11:43):
There we are.
So get some stakes in theground and get some figures
associated with those.
And then I suppose we'rethinking to ourselves next,
okay, cool, how do we startmaking progress towards that
really?
Luke (11:56):
That's yeah, so the the the the um future step is really
looking at the strategy to toto achieve those goals, right?
But the um on top of themilestone goals or the the
spending goals, we've got ouruniversal ultimate number one
financial goal for everybody,which is financial independence.
Um and so when I said I don'tthink it's actually that
difficult to go through a goalsetting process.
(12:18):
Really, that's because the themost important goal for most
people when they're building uptheir wealth is to know um what
do they need in order to befinancially independent um in
the future?
Now, financial independence isuh the point at which you're
working because you choose to,not because you have to.
So it it's quite clear.
Um, and it's it's aboutmeasuring um when or how much is
(12:38):
enough for you individually asa household, how much is enough
for you to achieve the lifestyleyou want without having to go
into work to build up yourresources any further.
Dr James (12:47):
Do I recall you telling me once upon a time
there's a distinction betweenfinancial freedom and financial
independence?
Luke (12:54):
Um I kind of I I do use them interchangeably.
I I think um I think you canachieve financial freedom before
you achieve financialindependence if you would really
want to drill down into it, um,because it might be that you
change your working environmentand and it's more a little bit
more in the present term asopposed to um financial
independence, which is is for mevery much tied to going to
(13:16):
work.
Um so yeah, I think there'smaybe slight differences, but I
also see them used iinterchangeably.
Dr James (13:24):
Um it's go on, sorry, sorry.
Luke (13:27):
No, no, go you go.
Sorry.
Dr James (13:28):
I was just gonna ask, is there any sort of distinct
and the re I'm asking this, doyou, you know, from the point of
view of you being immersed inthis world as a professional, is
there any sort of distinctionor terminology that's used
insofar as let's say you hit thepoint where you've got
financial f financial freedom,if we want to term it that,
right?
Where you've literally your uhthe money, your cash flow from
(13:49):
your investments covers youroutgoings.
But that's it.
Are you with me?
It literally keeps theelectricity on, keeps you fed
and watered, like a decentlifestyle, right?
But there's not really a wholelot there on top to go and party
and do other and do fun stuffand experience life.
Luke (14:06):
Yeah, I think there's different t yeah, totally.
Um for me, the way I've nowdefined financial independence,
it's it's tied to somebody'sdesired lifestyle, which
includes um your essentialspending, you know, your
survival costs, shall we say,and your personal discretionary
spending.
There is a I think I do feelthat it needs to be aspirate
aspirational.
(14:26):
I don't think you necessarilyneed to say, you know, I think I
think you can sh aim higher,and some people might call that
financial abundance or financialfreedom, and where it's about
pushing that even further up.
Um, I have seen certain uhcharts where they say, you know,
financial security is gettingall your basics covered, then
you've got financialindependence, and then you've
got financial freedom, which iswhat you, as you say, it's it's
(14:47):
about going further and reallypushing that discretionary
spending.
It it's yeah, it's it's allit's all a it's all useful,
however you want to categorizeit, it's about working out what
your the cost of your lifestyleis, and if you want to pushing
nudging that up to not only bethe lifestyle you've got now,
but the lifestyle you want uh inin the future, and that's
really how you work out yournumber.
(15:08):
Um, so the the um the key isit's a personal figure per
person, how much is enough foryou?
Um, why is that important?
Dr James (15:17):
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(17:04):
of this podcast.
Luke (17:09):
I think I I you know ultimately there's three types
of people.
There's those that don't haveenough, you know, then they're
not they're not on the righttrajectory, they're not going to
achieve financial independence,they haven't been saving enough
for for their retirements.
Unfortunately, in the UK, thatthat at the moment is the is the
landscape for an awful lot ofpeople, um, worrying levels, in
fact.
Um you've got those that get itjust right, they've got enough,
(17:32):
and they have timed thingsperfectly, they've they've done
their planning, uh, they've beenon the right trajectory.
Um, and then you've got thethird camp, which is those that
have too much.
And what I mean by that istheir their family, their
household, the futuregenerations are due to pay a
pretty healthy tax bill um ontheir demise through inheritance
tax, where they've worked hardall their life and paid tax, and
(17:54):
then what's left is then taxedon death.
Um, so kind of threecategories.
Now, for dentists, do I seethose that don't have enough?
Well, I've I've met I've metsome, but most people tend to be
on the right trajectory.
Um I do see lots of people fallinto the camp of having having
too much um and thereforeneeding to put in place some
(18:15):
some form of plan to deal withtheir their uh inheritance tax
liabilities further down theline.
Um so yeah, there's there's thethree camps.
Now why that's important for meis if you don't know that
there's we're human, so ournumber one fear, or most
people's number one fears uhwhen it comes to money is
running out, okay?
So it's a it's a it's a deepdown human fear we're gonna run
(18:37):
out of money, and that'snatural.
Um if you don't know thatyou've got enough, then you can
go throughout life living thelife of somebody that didn't
have enough, and that's that'sthe key thing to understand.
Defining whether you're on theright trajectory actually
informs your decisions today.
Dr James (18:53):
So it's about plotting forward and working out when
you're gonna have enough, andthen you can come back into the
present and make various andmake sure Dennis who invests now
has those original principlesthat you're living life in your
term making the most of it.
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I almost interjected then intokey little quotes.
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monthly income but also manageyour outcomes as much as
possible and therefore createmore profit to celebrate the
(20:24):
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This offer will end in thecoming weeks as soon as the
current CPD cycle is up.
To collect your CPD for thispodcast episode using the Smart
Money Members Club, feel free touse the link in the description
(20:45):
of this podcast.
Luke (20:49):
But you're only funding one person's ISO and £20,000 is
being saved.
Well, £80,000 is being is beingspent in one way or another.
And then it's about beingintentional and going in and
having a deep dive as to okay,where is that £80,000 actually
going?
Um, and then you might findsome leaks, you might find that
there's some some some wastagealong the along the way, or you
(21:10):
might just find that actuallythat's your that's the cost of
your lifestyle, and that's whatyou that's what you're aiming
for.
Um, but that's that's that'show I would go about working out
what what you need um as ahousehold.
Dr James (21:20):
And you know, I actually love that method that
you highlighted just thenbecause there's probably a very
deep part of our human psychethat tries to not acknowledge
how much we are truly spending.
And if you just literally lookat the numbers, there's nowhere
to hide.
And I I get it, we can modifythat and we can reel it in and
what have you, but at least it'sa place to begin.
So that's some very, very, verysimple, actionable information
(21:43):
for anyone listening to thepodcast today.
You can use it to figure outyour number per se, and then
naturally that's gonna changeand move around with time, given
that retirement for most peopleis many decades away.
So naturally, inflation isgonna move that around and what
have you.
But it's it's it's a cool, it'sa cool exp ah, I almost said
the word experiment, but I meanI don't know, I don't know if
(22:04):
it's an experiment so much.
It's a cool, how can we say,yeah, just thing to look into
and investigate, really.
Luke (22:10):
Yeah.
Um some interesting facts.
So uh I was reading theseearlier.
So 77% of people in the UKdon't know how much how much
they need in retirement, um,based on the survey completed.
Uh, 51% of people think thatthe amount that they're being
forced to pay into theirpensions through alter
enrollment is enough to see themthrough.
(22:31):
Um, unfortunately, for lots ofpeople, that's that's not going
to be the case, which is whyit's important to interrogate
these numbers.
Um, 20% um are confident thatthey are saving enough for
retirement.
So only 20%, one in five peoplehave that level of confidence,
which is why that clarity andand and actually knowing that
you're on the right path is soso important.
Uh 70% say that targets wouldhelp them save more, um, which
(22:55):
is really what we're trying todo, putting those stakes in the
ground.
Um, 51% of people focus ontheir current needs and wants at
the expense of providing forthe future.
That's I think that's a humantendency, okay.
That's a natural, excuse me,um, uh behavioral um uh trait of
human beings.
Uh, and 70% of uh 35 to 54 yearold self-employed savers have
(23:17):
less than £25,000 in a pension.
Um now I I don't see too manydentists in that position if I'm
honest, and this is a nationalUK wide survey, but it it's just
some inter interesting context,I think, in terms of where we
are as a nation.
Dr James (23:31):
Seventy per cent of thirty five to fifty five year
olds have less than twentythousand in a pension.
No way.
Oh my goodness.
Luke (23:40):
Wow, that is we call it a savings gap.
Dr James (23:43):
the or the savings gap it's it's a concept widely
talked about in the in thefinancial planning profession
that we've got so many peoplethat that just are not saving
enough money for for the futureand you know there's actually a
flip side to that which isinteresting and I sometimes
observe with dentists even iflet's say I say I talk you you
know when you talk to dentistson the phone and they're like oh
(24:04):
yeah I'm gonna do my very bestto max out my ISA this year I
was pretty close last year I gotthe 18000 in and you're like
even you know forget even maxingit out what a fortuitous place
to be that's unbelievable that'samazing right but dentists
don't necessarily realize uh howcan I say how how how blessed
they are sometimes on that frontand also how that can sometimes
(24:27):
mean that actually they mighthave a lot of the things in
place they need to retirealready given that their savings
are so massively boosted relrelative to other people but if
you're mingling in with in otherdentist circles well your bar
is going to be not really somuch representative of you know
your your your kind of frame ofreference is not going to be
representative as to where otherpeople are so when you hear
(24:49):
stats like that it's just likeJesus that's that's crazy.
Context isn't it yeah it justmakes you reflect and it makes
you think actually do you knowwhat it's really important I
think about this stuff because Iprobably am oversaving and
overworking the um there's athere's a body of research
that's updated every year whichlooks at um the the national
(25:11):
averages for retirement spendingwhich again I think is useful
to to share with people umexcuse the coughing I've
recently come out of a bout ofCOVID.
Luke (25:21):
So for a single person um they have a level that they say
is like the minimum level thatpeople should be aiming for.
So for for a single personthat's £14,400 a year.
In London that's £15,700 a yearwhich for me is I mean it's
real survival stuff it peopleare going to really struggle on
that um to to make ends endsmeet in the in the current um
(25:42):
economy as a couple that goes upto £22400 or in London £24500.
The moderate level of spendingnationally um they've labelled
£31300 for a single person 32800when you're in in London um
43100 for a couple or 44900 ifyou're in London and then what
(26:04):
they deem to be a comfortableretirement level for somebody
that's on their own that wouldbe 43100 in London 4500 as a
couple it's 59000 in London61200.
Dr James (26:17):
So that there's some very very um rough averages for
for the national picture uh fora dentist the takeaway should be
that um as a if if that ifwe're a couple then we should be
aiming for 60k plus um andthat's that's once everything's
paid off ideally you know yourmortgage is gone that's just
money that's been spent onliving life um on lifestyle for
(26:39):
a single person as I say 43 or45 thousand um per annum to um
to cover all your outgoingsdiscretionary and essentials
interesting context is sovaluable context is so valuable
right because each one of us ourrealities are to a greater or
lesser degree distorted from theaverage that's out there and
(27:01):
that can work both ways you knowit's not just we're not just
talking about the finance ofdentists we're talking in every
other area of our life how doyou know that you're doing well
you're doing not so well whereyou could be where you should be
unless you understand where thebar is and that's why I love
those stats makes you think onceyou have the um the the number
(27:22):
that you're aiming for the um sosome some people will will talk
about the rule of 25 which isyou take the the income figure
that you need you multiply it by25 uh which ties in with what
we call the 4% rule and thatwill give you a capital sum.
Luke (27:39):
So the capital sum is is the amount that you're aiming to
have in uh in savingsinvestments pensions for you to
to to draw down on to to uhensure you don't run out of
money now that's based on someresearch based in the US which
in in rough terms and andthere's lots of um caveats to
this and it's very simplisticsuggests that if you have a if
you invest a lump sum of capitaland you take four percent at
(28:02):
the outset so let's say amillion pounds is invested and
you take 40k a year if youincrease that every year with
inflation um as a as a portfoliowithdrawal then based on back
testing of historic scenariosyou you shouldn't run out of
money now there's there'scaveats to that that's US based
is there's gray areas aroundthat around charges and various
other things but that's that'sthat's often if you hear about
(28:24):
the 4% rule that's what it'salluding to and to get to that
figure is simply work out whatthe income amount is and
multiply it by 25.
Now for from my perspectivethat is there's lots of flaws in
that which is um namely itdoesn't allow for regular
sources of income so it does notuh factor in state pension NHS
pension it doesn't factor in buyto let income rental property
(28:47):
income you know it's it's uh itdoesn't allow for changes in
income over time so on averageum people probably spend about
40% less um in their 80s than intheir 60s so that method of
thinking of just working likethat original income figure just
purely looks at at the sameamount all the way through I
think that's flawed.
(29:08):
So there's there's lots of lotsof flaws in in the in the
process it it's useful as a backof an envelope calculation fine
um but really what our role isas financial planners is to use
financial modeling software toactually have a bit more of a
deep dive into that and work outhow your number's going to
change over time and thenoverlay that with where are the
(29:29):
what resources and what assetscan you use factoring in tax
implications of different taxtreatments from from different
accounts how will you meet thatspending requirement to enable
you to be financiallyindependent um so there's a lot
more complexity when it comes toactually taking that number and
then delivering a financialplan.
Dr James (29:46):
Another thing to point out about that rule of 4% is
that just as you were saying,obviously it doesn't factor in
income from other sources tolet's say somebody's business or
let's say somebody's uh wellspecifically somebody's dental
practice.
And there's this whole mindsetwhere we have to get this to we
have to start uh how can we sayuh divesting or you know
(30:08):
changing our investmentportfolio when it when it's in
our pension or when it's in ourITA uh switching it around so
that we're not as heavilyexposed to assets that retain or
the assets that give us how canwe say uh like orientated
towards growth or orientatedtowards returns whereas if you
actually have enough income fromyour other assets you might
(30:28):
just choose to leave yourpension just to compound ad
infinitum it doesn't you don'tactually have to touch your
pension.
Yeah so here what I'm saying iswhat I'm saying is um that
actually if you're stashing awayloads of money in the pension
just realize that it might evennot even necessarily be for you
whenever you get there that'scrazy it's actually for your
(30:49):
kids yeah it's it's what I'msaying is people make this stuff
really simple but there's waymore to it than what meets the
eye.
Luke (30:56):
The the pension is a great example because when we do
retirement plans for peopleoften it's one of the last um
accounts that we're we'remodeling for somebody to access
because of the um theinheritance tax side of things
so if let's some say somebodyhas capital in their in their
estate maybe they've sold a abusiness and they've released
some capital it makes far moresense for them to draw down on
(31:19):
that capital rather than thecapital in their pension where
where the the tax treatment isdifferent around inheritance
tax.
So yeah completely and that'swhere having a proper financial
plan and knowing that is isabsolutely vital um because it
enables you to then come backand go okay well actually if the
pension is one of the lastthings that we need to touch
then the time horizon isn't 60for example for the pension and
(31:41):
therefore um where you getthere's some investment products
out there where they say thatyou know 60 is like the
finishing line and that they'regoing to change the asset
location the asset mix of theportfolio as you get closer to
that point well actually if youdo a plan and you and you
realize that the the pension isis actually going to be there
until you're possibly in your90s or or beyond and it's going
to pass on to future generationsand it's an intergenerational
(32:03):
account then it might be thatyou come back and change the
asset mix.
Dr James (32:07):
Plus you've stashed a lot of money away throughout the
course of your journey that youmight have been able to I don't
know have a little bit of funwith as well potentially
potentially potentially it justshows why planning is so helpful
and understanding this stuff.
And it actually it's about 50reasons that come back to what
we were saying at the start whyfiguring out your vision is so
important.
Because you probably might beworking way harder than you need
(32:28):
to until you figure out yourgoals quite literally.
Luke (32:31):
It underpins everything and and and that's it it's it's
about addressing the fear ofrunning out of money, bringing
things back into the present andthen making your decisions with
that with that information,informed decisions, make smart
choices um and uh yeah uh checkthat you're on the path right on
the right path and if you'renot do something about it.
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