Dr James, 0s:

We're here to talk today on the topic of why work longer than we need to or have to. Now, here's the thing you might enjoy going to the clinic. That is completely cool. But I'll tell you what if there's like a sweet spot that you can achieve in terms of how many clinical hours that you have and how much free time that you have, that's ideally where we want to be, and you know what? It just so happens that understanding money and understanding assets is one of the best ways to get there, and that's exactly what we're going to talk about tonight. I've got with me Mr Anick Sharma and we're going to delve in to how this is possible and how this can be achieved. So, Anick, whenever you're ready, the stage is yours.

Anick, 41s:

Yeah, so we're going to start talking about why people work longer than they need to, why it happens, go through a bit of a case study and things the audience can start to think about, or the remedy to it. So if we start and think about why people work longer, life gets in the way of so much and we're all guilty of it. We're incredibly busy people. We can take a head in the sandbox approach and unless we dedicate time and have that accountability, there's such a massive danger of getting it wrong. Now, when we think about why we might want to stop working, it it's pretty much for retirement and around retirement there's no real guest room for it. You can't get around to it later and you're not getting any younger. So it is so important to get crystal clear and accurate. But without a doubt it is, I see, in my experience, the biggest reason people work for longer than they actually need to. It's not having a plan or a strategy for the future. Now you may already be investing or have existing provisions, but I challenge you and say for what context have you defined your end point? And for most, that end point is retirement. But how do you know if you're at that end point if you haven't taken the time to define it, and all actions that we take should be working towards that. Once we have that context, it's much more manageable to make life changing decisions such as how much do I need to sell the practice for, or can I afford to go down to three days a week? Should I even buy a practice in the first place? And once we quantify this, we can calculate the level of expected return needed or how much we even need to invest to get there. But without that plan, missing the context of what we're actually aiming for, can ultimately undermine investment decisions. So by having a plan, we'll know exactly how long, if at all, we need to work for and how we can make life flexible for ourselves. And it's all about working smarter and not harder. So currently you might be at point A. You want to get to point B the future or point where you want to stop working altogether. A plan or some sort of strategy. It draws the line between the strategy or investment decisions that are most likely to get you there. You can't draw the line without the context of defining point a and b. Um, I've said this before, but not having a plan for the future, similar to going on a long car journey without google maps. It's incredibly easy to get lost once life throws its unexpected road close signs or to navigate around that. Having a well-structured plan can help navigate those winding roads and the path between A and B remains clear and adaptable to life's unexpected curveballs. But people might also choose to work for longer, and that's cool as well. But people might also choose to work for longer, and that's cool as well. I've come across many clients who just love working, and the fact they the thought of finishing work is unbearable to them. But having that flexibility and freedom to decide if you want to, it's powerful and something quite a lot of people do aspire for.

Dr James, 4m 6s:

Excellent. So, yes, I believe you know. A saying springs to mind that I really like. I think it's by Seneca, and that saying is if a man knows not to which port he sails, then no wind is favorable. I really like that, right, because there'll always be a prevailing wind, but you have no way of judging whether or not it's useful to you or not unless you've actually defined your journey and destination. And it seems completely nonsensical that a ship would ever leave port without planning its destination. But that's how so many of us meander through life and it sounds. It sounds like it's like almost kind of like uh, day one of make a, you know, making a plan where you define your objective, but we just don't do it, we just don't get the time and listen. I say that with compassion, because we've all been there 100 and it happens all the time.

Anick, 4m 55s:

Um, having out some sort of time in our busy lives to think about what the future holds or what our north star, our values. Life gets in the way of it kids, family commitments, just faring around the day-to-day, it quickly gets pushed down the priority list. But if we don't make it front and centre, it's so easy to get to a point where you think actually I want to start retiring or thinking about stopping working from now. But if you haven't made provisions to get there, you can quickly see life pass you by. And the earlier you start that conversation or thinking about it, the more powerful the levers are to pull if you're not on track to achieve that plan.

Dr James, 5m 35s:

I guess a good follow-up then is because I can almost hear subliminally people potentially in the audience being like yes, okay, that's all well and good, let's have a plan, but how do we set? How do we set good goals, how do we set a clear plan that makes sense and is feasible?

Anick, 5m 51s:

I'll go through a case study in a moment, but for the audience it's worthwhile just thinking what are your drivers to life? And it might sound a bit wishy-washy or high level, but what is it you actually want out of life? Because there's no point in creating a plan where you're in the Bahamas eight months of the year. You might not like the Bahamas. Think about what your drivers are, what you actually enjoy, what your passions are, and from there it's easier to start quantifying that down. How much are those passions, how much are those hobbies, those interests? What does perfect look like? Or, if you're struggling to think about what the perfect next phase of life looks like, think about what your worst possible retirement could be. I call that the anti-goal and once you frame it that way it's a bit negative. I know it's easy to think about the worst possible situation. So what would you? What do you need to do so that doesn't occur?

Dr James, 6m 46s:

that is true. That is totally a thing where it's like, if you can think about you, think about the reality that you want, and then you think to yourself, okay, if I didn't want to get there, what would all the things that I do be? And if, whenever you draw that up, your life resembles that because sometimes it does right, then you're like, okay, I have clarity. So now I know what I've got to fix and it's kind of it kind of hacks your psychology a little bit, because it's so much easier for us as human beings to pick holes and stuff and find the danger, rather than for us to be able to find advantages or possibilities or or or roots, so you can hack that little part of your psychology. You've come across that before yeah, it's really powerful.

Anick, 7m 28s:

I see it used quite a lot. Excellent cool. Should we have a look at the case? Do you? Let's do that great plan? Let me share my screen so I'm about to introduce you to adam and natasha. Adam's a engineer, large corporate. Natasha's a practice owner. They have three children broadly similar ages in private school and they want to consider future gifting for the kids wedding deposits, house deposits. They don't really have a plan, but in their mind they want to retire age 65 and that's essentially where they came to me.

Dr James, 8m 9s:

So let me share just the green button at the bottom, by the way, annick, if you're uh familiar with zoom I'm not, but I'm getting there all good, all good. And you know, just just in the meantime, while annick's doing that, you know, one of the most powerful things about a case study is it just pulls things out of the ethereal. And, annick, am I right in saying that this is a client of yours or a former client?

Anick, 8m 38s:

yeah, names. Names have been changed, but yeah it's a real life situation. Oh okay, there we go so we'll start with a balance sheet and the balance sheet's a record of what you owe and what you won't. So we can see here total cash between adam and tasha about 400 000 pounds, and they've very much been save, save, save, get as much cash as possible for the future. So adam about £80,000 in the joint account and £150,000 in Natasha's account. We'll come back to the ISAs they're holding. For now Adam's got £185,000 in his pension, natasha's got £150,000. Main resident property £950,000, with about a £200,000 mortgage. Natasha's practice we have in a pound here and we'll come on to that in in time. But it's really important to not necessarily say I'm going to sell the practice for however much and that's going to be all my retirement. So having some sort of resilience and being able to play with how much that number needs to be is important. Skipping to the bottom, then, net worth about 1.6 million. So now we'll have a look at the income statement for the current year. Let me just hide the chart a minute. We'll come on to that. So Adam has £45,000 a year from his employment. Natasha has £12,500 salary and she takes some dividends here at the bottom. This is just some interest from the cash accounts, but overall total income within the current 24-25 tax year about £156,000. We've done a load of mapping with Adam and Natasha and I'll bring that chart back up now. So on the left is the current year which we've just been through, and on the right is every year between now and age 100. Why age 100? Well, it's better to assume longer than statistically likely. So we don't want to be in a situation where we create a plan and run out of money. So the blue represents a salary which we've just been through. These purple bars are ongoing dividends. This bit of green at the bottom is the state pension and we can see here this turquoisey blue colour is Natasha's NHS pension. So I just go to age 68. We can see here this is now in payments and we have various other bits of state pension coming in and private pensions coming in as well. So when we map out point B, essentially we can build in varying income assumptions along the way. So we've had a look at balance sheet and income statement. Let's have a look at expenditure In a similar way. We'll go through the current year and then we'll look into the future. So you've got some household bills here. Various personal expenses holidays is a big one for Adam and Tasha. Some kids expenses here the mortgage cost. It looks a bit light at the moment but it's because we're in a part year. We've only got a few months left of this tax year. Various motor expenses they are key motorists and like the cars and at the bottom here we can see total expenditures £114,000. £34,000 of it is tax, which if you take it off, means lifestyle cost of £80,000 a year, which equates to about £7,000 a month roughly. So if I bring the chart back in now, it looks a bit hectic in the moment so I'm just going to remove the one-off spikes and we'll come back to it. So, similar to the income statement, the different colours represent different sections and we can see these big pink bars are for the kids. Private school fees. But throughout all the conversations we've had, holidays and travel are massive for them and they had their minds from age 65 they want to go travel and do a load with the kids maybe grandkids at that point, who knows. So we bake this in. But just go to age, which is at 67, 168. We can see here how those jump up to 50,000 pounds for this 10-year period. Here they were keen for some sort of care cost allowance, so that was a key driver for them. So we've assumed this within the model as well. So I'll bring in these one-offs, which makes it look a bit messier and skews it a bit. These are the yellow bars are varying cars along the years, for the kids as well, but these pink bars here they represent the wedding costs, house deposits for all three children. And again, such a key driver. Just take that off because it gets a bit messy. So we're not going to have a look at cash flow. And cash flow is essentially a liquid asset chart and looks at all what's coming into their life essentially and what's going up, and it maps it to say do they have enough? Blue's good, red's, bad. So a very high level. Key takeaway Age 100, we're about 2.8 million in deficit, which, as it stands, they can't afford to stop retiring age 65, which is exactly what they want. So we start off here and the capital chart liquid assets are decreasing. The reason for that they're spending more than it's coming in. There's a slight spike here. That's from the private pension kicking out some tax-free cash and after they stop working it it all just goes red. So they can't retire and actually they'd have to work to about I think it was 87 88. They'd have to work to about I think it was 87 88. Yeah, so in order for this financial plan to work, or their financial plan, they'd have to work until age 88 to live their ideal life. Um, that's a whole lot of time difference and essentially dying zero. And this is the issue of not having a plan. If they didn't take the time to think about it and to find their point b? Um, eventually they would have got to a point and thought I want to stop working. And they have no idea how long they have to work for and should be plodding along without pulling those levers. It could have been really bad. So it is so important to have a plan because then you can turn around and ask the big questions and see do you actually need to work longer than you need to?

Dr James, 15m 9s:

let's just pull this back so, annick, just to be clear, that previous chart that you had that was. Should they continue the way they are, based off that previous balance sheet?

Anick, 15m 21s:

yeah, exactly so everything they told me about their perfect expenditure, their perfect retirement point b and then wanting to retire at age 65 shows that well, they can't afford to because they lose. There's a 2.8 million pound hole.

Dr James, 15m 38s:

Essentially, and there's one other thing to point out from that chart. You know they're fit at the beginning of that chart, just there they're 50,. Okay, they've got 400K in net assets and they're 50. So on the face of it, on paper, at that time, that actually looks really good, but it's only whenever you actually get into the nitty gritty and say, okay, cool, how much, how long can this last me, how much can this wealth last me and for how long? Yeah, on the path that I'm currently on and this is, this is kind of where I suppose it lulls you into this false sense of security.

Anick, 16m 14s:

Absolutely, and it's so easy to think. I need to save, I need to invest. But what? For? What is your point b? Money, investments, certain type of accounts they're all tools to help us on our journey. Yes, there are better tools for the job and better ways of investing and better investment strategies than others, but they are all tools to hopefully live out the life we want. So we have a big hole we need to fill. We can do a couple of things here to really have a look at how tricky it would be to overcome it. So essentially, I'm now looking at what rate of return do we need from the pensions and ISA to fix this? It might take a moment or two because it's quite a complicated calculation, but by doing so we can. We can essentially turn around and say is there anything we could be doing on the investment front before we talk about high-level planning things? And then, in terms of working for longer, can we make our existing assets work harder? The answer is no, because they would need a 16% annualized return to fill this hole. Now, that's 16% every single year for the rest of their life. To give some context to this number, the S&P, which is the US stock market, a proxy for global equities, has done about 10% per year going back to 1926. Now, along that 100 year time, let's call it, there's only been about six individual years where we've been plus or minus 2% within that 10% amount. So to get 16% compounded per year is it's not feasible at all, so let's just get rid of this. So I mentioned about Natasha's business practice as well. So what we can do is say how much does she need to receive net in her pocket to fill this hole, essentially, and we can have a look at this so she needs to receive, after tax, about 4.5 million pounds. That's in the future, so in today's terms it's about 2.9 million. Having had a conversation with her um, she doesn't think she can fetch this. So we've built out a plan or we've defined point b and, through the process of planning and taking that step back, we're not on track to do so. But this is where really joining the dots within the plan is crucial. So we did a whole load of analysis and work together and we carved something out together. So, going back to the balance sheet, let me just double check it and say that's fine. Going back to the balance sheet, there's a lot of SaaS in cash here and it's really important to have a cash contingency which the joint bank account covered. So, after various conversations the best way to do it we decided to chip the cash into some ISAs or into some sort of investment account. Say so, I just zero that out.

Dr James, 19m 38s:

So by chip you mean take some of that wealth that they had sat as cash in the bank account and transfer it across to an ISA to get some growth.

Anick, 19m 48s:

Yeah, so essentially we're saying we're investing in cash proceeds I know it's labeled as an ISA to get some growth. Yeah, so essentially we're saying we're investing in cash proceeds and I know it's labeled as an ISA there, but it's essentially an investment account.

Dr James, 19m 56s:

Yeah, and just to be clear, this was money they already had in their account from the get-go. It was liquid cash that they had that was sat there idle.

Anick, 20m 6s:

Exactly that. Infl inflation is one of the biggest risks to a plan. Now, essentially, if cash is paying let's call it three percent and inflation's at four, our money's going backwards by one percent each year. Compound that over 50 odd years. Our money's worth next to nothing and all of a sudden we're we're now in retirement. Our money's worth nothing. We can't. We've lost our peak earning potential and we can't afford to live out our perfect life. That's risk, because in that situation it's so difficult to try and get out. Um, so we looked at investing some money. There's also quite a lot of cash within the business itself and, having had a conversation with Natasha, there's a lot of scope to make employer contributions within the business itself and, having had a conversation with Natasha, there's a lot of scope to make employer contributions from the business into her pension. Now, as I'm sure many of the attendees know, making employer contributions is so efficient because it's corporation tax deductible, which is ideal. It also removes the business concentrated risk from within the business to Natasha's. She's getting money out essentially. So you take that concentrated risk, diversify and put money into her pension, which is good. So let's have a look this is going to be interesting, oh wow it's massively different just by tweaking a few things and making things a bit more efficient. We wrote a 2.8 million hole before. Now we're dying with about 260k.

Dr James, 21m 59s:

So it's huge and I guess I guess one more thing to say, not that, not to jump in, but you still haven't even factored in the sale of the dental practice at this stage, have you?

Anick, 22m 9s:

exactly so it's absolutely rosy, but can we do better? So we then had a conversation. They originally came wanting to retire at 65. I said, based on their current run rate, not likely until late 80s, made a plan, checked in and it works. But planning is only good in that moment. It's really important to continuously iterate on it because life changes, things happen and over a few more conversations thoughts about retiring even earlier happen. So if we move this slider along, it's a key day. It essentially moves all the income assumptions and expenditure assumptions and whatnot. So if they retire at 60, based on everything we've just seen, with the change to the pension investments, there's about a £700,000 shortfall. But as you say, James, we haven't factored in business sale yet shortfall. But as you say, James, we haven't the facts in business sale yet. So if we run the same exercise, how much they need to receive so it doesn't drop below zero age, say 60. So to stop it crashing, let's just show this Natasha needs to receive a 1.2 million pound exit or receive that in her bank in the future, which works out to about 900,000 pounds in today's terms and given the state of her practice, that seems really reasonable and being able to do. This exercise is powerful because the buying and selling process is stressful for all parties. The sellers want to get the maximum price, the buyers want to get the lowest price and quite often I see clients trying to push the price up, but for no real reason. Yeah, everyone wants more money. Of course they do. But if you can turn around and say I'm not going to bother having all the stress from the practice sale I know how much I need and it's fair then it can really streamline the entire process and I've seen that work quite well. So all of a sudden, now they're retiring at 60, they're spending their 50k year on holidays from age 60, they're able to do what they want, and this all stems from having a powerful planning place checking in on it and they can now retire a lot earlier. They don't need to work for longer than they want to. Let me just remove that. So that was it in terms of the case study. If you want to ask any questions, I James no, listen, I mean I think so.

Dr James, 25m 1s:

The big thing was, the big epiphany was there for me was that I mean you were just demonstrating that it wasn't like there was a drastic change in their circumstances. I mean it was you created that plan or you optimized their investing strategy, which led that chart to go from a plan that was just completely unfeasible to a plan that was actually completely feasible, just because we shuffled a few things around with regards to what they already had. And then that was before you even got into the practice exit, which no doubt will have added on top of that. So, in other words, by defining their goals, shuffling the deck and having a little bit of modeling, financial modeling and what have you? They realized that they maybe not, maybe weren't quite all retired already, but certainly they were very, very close, a lot closer than they thought.

Anick, 25m 51s:

Yeah, exactly and having a head in the sandbox approach. Again, going back to what I was saying at the start we're all busy, but if we don't just take a second to pause and think about where we're at, all of a sudden you could be at age 65 and realize I can't actually do this because I didn't make provision earlier on, or you might narrow your options down. Don't get me wrong. That was an incredibly quick snapshot, and a real financial plan takes a lot longer to construct and there's so many more levers that can be pulled um. But mathematically, going from retiring age 80 whilst maintaining that lifestyle to being able to go at 60 and shaving all that years and all that time, um, it is so powerful. Yeah, yes, it is a linear model and things change and the unexpected happens, but that's why it's so important to continually revisit the plan, make sure you're on track and apply any course corrections.

Dr James, 26m 46s:

It needs to be you know what a big thing to point out as well and this was something that I realized through getting to know yourself and look over the last few years was what you were talking about whenever it came to that conversation of the price of the dental practice. On exit, because we're all trained to think to ourselves right, how can I get the biggest exit possible? And that's what we default towards. And and listen, it's good to do that, right, but wouldn't it be even better to have some sort of tangible number attached to it where you can think to yourself right, as long as I get this, I know that I'm home and dry and anything else on top of that is a bonus. And hey, do you know what? When you have that number defined, I've seen people, you know, I've had friends who've clung on for like three years to get a better number or a better exit. Maybe they could have sold that practice and not, you know, sealed off into the sunset for three years because they had enough. But for some reason and I have no idea why, it's not standard yeah, it's really difficult.

Anick, 27m 44s:

um, time is our most precious resource. Um, real wealth is all about time, memories and moments with those that mean the most for us, and in that example, they're spending more time working away instead of doing things that person wants to do. Don't get me wrong. If they absolutely want to carry on working, then fair play, but for most people I encounter it's not always the case, and it is so powerful. I guess some of the key takeaways would be just start thinking about what your idea looks like, what your vision is, life is for living. Money investments are the tools to get us there. Create a plan for yourself to retire and what your journey is going to look like. Revisit it regularly and have some sort of objective sounding board before life change decisions. Plenty of time, families have come to me or people have come to me wanting some sort of objective sounding board before life change decisions. Plenty of time, families have come to me or people have come to me wanting some sort of pension or investment advice without the context of why and what they're working towards. They might even be able to live out their ideal life and I've had that before where people have put off coming to see me or having these conversations when they're already retired. A plan can be life-changing and you might realize that you are already retired let's talk technical.

Dr James, 28m 58s:

You talked about transferring some of that money across to invest in accounts. So I believe it was a nicer, wasn't it? Because they had some money in the pension already, wasn't it? From memory?

Anick, 29m 7s:

yeah, yeah, you, you won't be able to shift that 160 into a nice and one go.

Dr James, 29m 12s:

Simplification, yeah yeah, yeah, yeah, exactly so. Yeah, of course, representative figures. But what did we do? What did you do differently in that investing account? What, as in what, did we invest that money into? Because this is where I see people fall down sometimes. What did that in that model that you built just then? What assets did you use in those investing accounts to be able to generate that that increase or uptick in net worth with time?

Anick, 29m 40s:

so I'll preface this answer with. It's a representation. It's not actually a financial investment advice for anyone, sure, um? But when we think about what we should invest in, there's three dimensions. The first, and without a doubt, is the most important factor, and that is what is the minimum expected return we need to help deliver our plan. We've just seen an example for that before I made the changes, and it was 16 needed to to achieve that plan. So by that definition, if we're trying to chase that, it pretty much rules out the main four asset classes. But once we started moving some things around, that expect or need for return dropped down. So then we layer it in with risk capacity and that's just a bit of a fancy way of saying can we withstand the short-term losses? So they had 10, 15 years to go, which meant if the stock market dropped in by 20% over a week, a month, a year, quite frankly it doesn't make a difference, because they had such a long time period to weather those storms. Then the third thing is how we feel about volatility, and that's probably not as important as the first two, but the best plan is one that's going to be stuck to, because time and time again, people will buy when the market's high and then end up selling when there's a crash and selling low, and that sort of behavior is destructive to investors. And staying the course is so important. But within the context of adding those three factors in it was investing into a globally diversified stock market portfolio. People ask me what about? Should I put all my money into UK stocks? And there's no rational reason to say the UK will outperform any other company, and there's a load of evidence around this. So a really good starting point. If you decide to invest that way, start with a global market capitalization approach broad market, highly diversified, 20 or 1000 companies. So when it comes to diversification, investing diversification is our best friend and the closest thing you'll get to a free one. Um, so it is so important to have all of our eggs in various baskets. So if one company goes down, it's not the end of the world, um, and with that as well, we can have low cost options. In investing terms, lower costs are better. So in life we generally used to get what we pay for. If someone buys a hundred thousand pound car, you'd expect it to be have more value than a thousand pound car, whereas investing it's not the same. The cheaper. Something is say, an investment fund. That means more returns delivered to you as the investor without taking on any more risk. So it's a pretty good place.

Dr James, 32m 31s:

So, where possible, look at investment costs, because they will compound within the investment fund themselves over long periods of time and you know when I had a question as well and we definitely want to throw the mic out to the audience in just a second or two questions actually just popped into my mind. How often is it in your experience, when you get into the nitty gritty of looking into someone's investing accounts, that there's something there to optimize? Is it a common thing, or are usually most people on the correct path?

Anick, 33m 1s:

all the time. I'm yet to encounter someone who I can turn around and say you know what? There's not a single thing I changed to optimize it at all.

Dr James, 33m 9s:

Um, I'm hopeful, but I'm waiting there you go. Well, I think, when you see the standard of some of the funds that are out there, that people seem to have a lot of their wealth in. Well, that adds up what you're saying basically. And then the second side of things was this let's say somebody's had that big old exit from their business, okay, and they got a lot of money into their personal name. Usually they get it into their personal name. So obviously, if you have a huge old windfall all at once, you can't just go and stick it all in an isa, which is what you were saying a second ago. So what tax effect, apart from just investing all our money in a personal name, like in a gia or something along those lines? What other options are out there for someone in that position?

Anick, 33m 51s:

so this is where the cash management side of it is so important. So ideally it depends on the investment strategy. So if you're in some sort of global equity market funds, you'd probably want a few years' sight in cash anyway, just in case markets drop and you have some sort of protection there. Isa is incredibly tax-efficient too, but the conversation it's a conversation. How tax-efficient does someone want to be? What are their views on inheritance tax? Can we do anything before that? Because out with ISAs and pensions, they probably are two most tax efficient vehicles. But then you can start. If it's a big exit and it's more money than anyone will ever need, you can start to think about a trust and maybe family investment companies and you can go into an entire rabbit hole and there's so much to cover there. But pretty much you can use those sort of vehicles to help be tax efficient and pass wealth on through generations and have levels of control etc. Et cetera.

Dr James, 34m 55s:

Excellent, good to know, yeah, and high level knowing what the options are is super valuable. I've got a few more questions that I can ask, but of course, we want this webinar to be live and interactive. So what I'm going to do right now is I'm going to throw the mic out to the floor. Would anybody like to ask Anick any questions? Whenever it comes to investment strategy, or even just broadly not just not just the strategic side of things, but more the tactical side of things, as in with regards to funds and how you might optimize your accounts now is a really great chance, and if everybody's camera shy, feel free to pop the questions in the chat. That's also cool as well, but definitely welcome to jump on camera. Is everybody on the webinar this evening? Or, if we don't have any takers, I can just go ahead and fire some more things out there. Let's see what we get. I realize I've just sprung that in everybody, so maybe that uh, maybe everybody hasn't had some time to prep, so maybe they might like to do that, which is totally fine as well. But, yes, listen, anything under the sun is cool to talk about on this webinar tonight, so feel free to do that, guys, should something pop into your head, or we can just turn through as well. That's completely fine, we can do that, shall we?

Anick, 36m 11s:

annick sounds good to me let's do that.

Dr James, 36m 14s:

You were talking about the. I'll give everybody some time to think. In case anybody gets some questions, feel free to pop them in the chat or feel free to just shout out as well. Either is good. But yeah, annick, you were uh one thing that was interesting as well that you were talking about just a second ago. You showed how, in that initial scenario, uh, where things, there was a lot of cash just sat in a bank account not really really doing anything, that for that couple, to get the outcome that they wanted, which was to retire at a certain age, they needed what was it? Like a 3 million exit from their dental practice or something along those lines.

Anick, 36m 47s:

It was some sort of crazy number. Yeah, it was a high number.

Dr James, 36m 49s:

Yeah, which is a lot. The dentists out there will know that that is a lot for a dental practice. So the dentists out there will know that that is a lot for a dental practice. So consequently, if they're kind of clinging around waiting for that number, well they might be waiting for a little while, and not just a little while, but many decades longer than they thought was necessary until they did these calculations. So that's just worth pointing out.

Anick, 37m 9s:

That was something that caught my eye yeah, having context for what you're aiming for and what number you you need is important. If it's not attainable, then levers need to be pulled or some sort of intervention if, if you want to live that ideal life, um, now, if if you can't, then it's probably a conversation of resetting expectations. Um, but it can be quite difficult to hear that at times, especially if you have your heart set on giving money to the kids and paying for the wedding and house deposits and taking them on holiday. But the earlier we can get there, the more likely, hopefully, we can make that into a reality boom, there we go.

Dr James, 37m 54s:

Stevie rob has just popped a question in the chat, so let's, we've got a few questions uh, flowing in now, so stevie rob shout out. Stevie rob has popped a question in the chat. Is there any software out there for diy retirement planning and then follow up to that that you recommend? Not just any old software, the good ones the recommendation part.

Anick, 38m 17s:

I don't know. It's not something I've ever needed to look at. Um, I use a very good bit of kit. To be fair, I guess, if you want to go down the diy route, what I've just shown you is essentially a fancy spreadsheet with a good interface. So, depending on how comfortable you are with assumptions um, I like assumptions a lot, but I appreciate not everyone has that same level of fun um, try create yourself in terms of your income, your assets, what you like your expenditures going to be some sort of inflation assumption, investment return assumptions, asset class assumptions, on and on and on. But, yeah, I don't really have one I can recommend, unless you want to model that out on Excel yourself.

Dr James, 39m 5s:

You know what? I tried to do one for myself one day, and it's a little harder than it looks. There's getting the best out of the software and knowing what's what, and factoring in inflation and state pension age nhs pension in and of itself is so complicated. Uh, so it's it's. It's easier said than done, isn't it cash?

Anick, 39m 25s:

to be fair for my cfp, I have to muzzle it all out on a spreadsheet, so I do appreciate the pain there we are understood.

Dr James, 39m 32s:

Next question this is a fairly broad question and this is from. Zoom is not being my friend tonight because it's just squeezing these little names in their corner and I can't read them. So we've got a question from Socorro Riley, and Socorro says what is the most amount of money one can invest with the best tax benefits? Broad question. I guess it depends on circumstances, right, Anick?

Anick, 39m 59s:

100%, James. It absolutely depends on circumstances and it depends on what you define as best. So reducing your tax bill might be what you define as best there, but in doing so you might have to give up control of funds. So where I'm going with that is say putting money into a trust, that could mitigate inheritance tax. But then there's other complications as well, especially if death occurs, the tax within the trust itself. Whenever we think about taxes, it should be viewed in the lens of inheritance tax, income tax, capital gains tax generally. There are loads of others. But if you want to keep it at a high level, pensions are incredibly tax efficient or continue to be so. I often get the question should I put money into my ISO or pension? Now, with a pension you get tax relief. So if you're a higher rate taxpayer it only costs you 40 pence sorry, 60 pence to put every pound in your pension because it gets topped up. Essentially with tax relief. Now you can. There are various rules about how much you can put in there, but roughly you can put 60 000 pounds when you earn over 200k. There are very complicated rules, so be careful there. But pensions from that benefit of tax relief, you can't really compare them. Yes, there are rules around when you can take them out, and with an ISA it's flexible. But to put money in an ISA, it's already taxed, whereas if it's from a pension pension, you can put it in pre-tax money, which is it's good good to know.

Dr James, 41m 40s:

Let's talk to the associates in the audience tonight a little bit as well, people who are not necessarily going to be business owners. Have you got words of wisdom for them? Any words of wisdom for them? You're welcome. So, coro, just saw the message in the chat. But yes, anyway, back to what I was saying words of wisdom for the associates. Maybe the people who don't have this huge exit on the cards or they're not planning on a business yeah, absolutely.

Anick, 42m 1s:

Optimize your finances, your life. Get your investment strategy solid. Um, even if you can't put 60k into your pension or 20k into your isa, get some money in there. Um, depending on how that's set up between your associates, might have a limited company filling private money, private revenue, through there. Just start doing things. Optimise. If you can't max out allowances, it's fine, just start essentially, once compounding starts doing its thing, you look back in however many years and realize you ended up in quite a good place absolutely spot on.

Dr James, 42m 42s:

And then I was going to say something else as well. Do you know, whenever it comes to you've got this whole, here's something I always see people say and they're like, hey, don't you just take all your money and put it in the s&p 500 and you're good? I hear that logic so much, and it's not always the case, right, Anick?

Anick, 42m 59s:

Yeah, it's not. So the S&P 500 makes up about well, it's 500 of the biggest companies in America. Now the US stock market makes up about 60% of the entire world, which, from a global perspective, it's still incredibly concentrated. For a risk perspective, yes, the US stock market has produced the great innovation of the world and the returns have been stellar. But you can start thinking about what about the cost of participation, the rebalancing strategy with a withdrawal strategy, the um, investing strategies, um, putting money in the s&p 500 is not suitable for everyone. It's incredibly volatile and, as we've just seen with the financial plan there, if you don't need that minimum level of risk, then why are you necessarily subjecting yourself to that? Or is that level of volatility suitable as you start approaching the next phase of your life, around retirement? 2008, I think the S&P dropped about 28 29 percent or so. If you haven't got your strategy right as you approach retirement, what are you going to do in that situation when the market drops by almost 30% the day before retirement and you're about to take your money out? It's a tough situation. So, yeah, it's not as simple as just putting money into the S&P 500.

Dr James, 44m 29s:

I think, as you were saying, the closer and closer it gets to retirement, the more of a conversation there is there and perhaps there is more value that can be added from someone who is a planner yeah, I don't disagree with that statement.

Anick, 44m 42s:

I suppose as well, having a good foundation at outset is really important. You can optimize your route to retirement or future life, whatever that might be and put yourself in such a good situation that by the time you get close to retirement, you can you're in such a strong position to make the most out of life. Um, but yeah, you can pull a lot of levers as you approach retirement, but that doesn't mean we should not take note of it before retirement yes, absolutely, absolutely.

Dr James, 45m 15s:

And this is the thing. Just to reiterate what I was saying a second ago, it can make more and more sense to have that conversation, but it doesn't mean that it doesn't make sense long before that as well. That is the key thing to emphasize right there. But yes, anyway, Anick, lots of wisdom dispensed tonight on this webinar, lots to take home for the guests or for the people who have joined us this evening to chew on and process. And what have you? If you were to give us some high level summary of everything that you just said? Three or four pointers, everything over the course of this webinar condensed into three or four action points, what would you say that those are?

Anick, 45m 53s:

Think about your future, what you want that to look like. You might not even want to retire. You might want to work for however long. Think about point B, define point B, then think about are you on track to get there essentially, and if not, what interventions can you personally make to make sure you are on track for that next phase of life?

Dr James, 46m 18s:

Awesome, some hot takes right there, and I'm going to add another one in as well. When it comes to investing and understanding it, if you really know the characteristics of how those assets work, you'll know what's feasible and realistic as well. Because I think there's a lot of the time, I think like to go back to what you were saying a second ago, you know, or during your cashflow presentation. You were saying that it may be possible for that couple to drastically turn things around Should they be able to take their wealth and put it into an asset that would return 16% year on year. But 16% doesn't actually mean anything until we know in Context, relatively speaking, how feasible that is to achieve, and we know. When you know that the S&P has done like 10% every single year, then all of a sudden, us aiming for 16% is actually gunning a little high, and what you're hoping for basically is for some sort of asset to, you know, outperform anything that traditional assets have ever done in the history of man. And then, all of a sudden, you're starting to think to yourself right, my foundations for my retirement plan maybe are not as solid as I once expected, and that's why it's so important.