Full transcript
0:00The moment that your savings hit 100
0:02grand, something changes that no one
0:04really warned you about. The exact
0:06habits that got you there, the ones that
0:08work, the ones that you trusted, well,
0:11those same habits will quietly start
0:14taking it back off of you. And most
0:16people just never really feel it happen.
0:19See, what they do is they hand a slice
0:22to the market, a slice to the taxman,
0:24and a slice to inflation. And they only
0:27notice years later when they look up and
0:30it's eroded. So, before you do anything
0:33else, you pretty much have to change the
0:37way that you've been playing. Here is
0:40exactly what to do and what it costs you
0:43if you don't. So, here's the first habit
0:46that almost completely has to flip. It's
0:48the one that most people just walk
0:50straight past. Now, the whole time you
0:53were building this pot, right, saving
0:55hard, topping it up every single month,
0:57the real engine wasn't the money, right?
1:01It was you. Your pay packet, your knack
1:05for going out and earning and saving a
1:07little bit more.
1:08And back when you had like a thousand
1:11pounds to your name, that grand was a
1:14nothing was basically nothing compared
1:16to your earning power, right? The amount
1:19that you were earning and saving. So,
1:21you could afford to be a little bit more
1:23reckless with it.
1:25Chuck the lot in some crypto coin or a
1:29couple of racy tech stock uh tech
1:31stocks, watch it halve, and you're only
1:34down to 500 quid. Now, that's annoying,
1:37but a few paydays later and you're back
1:40whole again. You could just outearn your
1:44mistake. See, 100 grand turns that
1:47completely on its head. If you lose half
1:50of 100,000 pounds, you have waved
1:53goodbye to 50 grand. And for the average
1:58earner, or even a high earner, 50 grand
2:00of saving is what? Five, maybe 10 years
2:03of genuine sacrifice? The holidays you
2:05didn't take, the cars you didn't
2:06upgrade, all that sort of stuff. You
2:08cannot
2:10>> [clears throat]
2:11>> out-save and out-contribute those kinds
2:14of losses. You can't out-save and save
2:17your way out of a 50-grand hole within
2:19any timeframe that makes the slightest
2:22bit of sense. And it gets worse, because
2:24losing money and then making it back,
2:28well, they're not mirror images of each
2:30other. Let me show you what I mean. So,
2:32say you lose half of your pot. To get
2:35back to where you started, you don't
2:37need to make half back up again, that
2:4050% gain. You need to make a 100% gain.
2:45You need to double what's left just to
2:48stand still and get back up to the line
2:50where you first started. It's a bit like
2:53a shop or something like that. Sort of
2:55putting 50% off of something, you've
2:57probably seen this quite often, and then
3:00later putting 50% back on. Now, you'd
3:03swear in that scenario that you were
3:05back up to the original price, but
3:07you're nowhere near. A 50% loss needs a
3:11100% gain to undo it. And at a sensible
3:157% a year or something like that, that's
3:18the better part of a decade of your life
3:22just spent climbing back to the line
3:24that you were already standing on if you
3:26experience these losses. So, look,
3:30if you got to that 100,000 threshold by
3:33making one or two big, concentrated
3:37bets, look, maybe you bought crypto at
3:39the right time. Maybe you rode a couple
3:42of stocks that just absolutely went to
3:44the moon. Then, honestly,
3:46congratulations, right? I'm not going to
3:48sit here and tell you that that was a
3:49bad thing. You won that poker hand. but
3:53the move is now to take some chips off
3:55the table because the thing that got you
3:58there will not keep you there, I assure
4:01you. Concentration more often than not
4:04is what builds wealth, diversification,
4:07spreading it wide, is the only thing
4:10that lets you keep it. I see this all
4:12the time. Once you've got to that point,
4:14you've got to take some chips off the
4:16table. I see it all the time with people
4:18that I work with. And what that does is
4:20it usually means if you've got one or
4:22two or three or four concentrated bets,
4:24it moves into something like a global
4:26index fund, for instance. It's basically
4:28just one fund
4:30that spreads your money across
4:32thousands of tiny slices in the biggest
4:34companies in the world all at once. So,
4:36the idea is that so no single bet is
4:40going to drag you under and take all
4:42your money with it.
4:44Stop If you do that, what you do is you
4:47stop trying to like double your money by
4:49Friday, and you start building something
4:52that quietly throws off 7, 8, 9, 10% for
4:56decades. And at that size, at 100,000,
4:59that's where the real work happens,
5:03right? Because your gains start earning
5:05gains of their own. That is compounding.
5:10And somewhere around 100 grand, it
5:12quietly starts doing more of the heavy
5:14lifting than your savings ever did.
5:18Boring.
5:19And boring is the whole point when you
5:23get to this level. And then,
5:26there's tax, which is where I watch
5:28people bleed money without ever feeling
5:32a single cut. When you've got 10 grand
5:34invested, tax is a rounding error,
5:38right? You barely think about it. But at
5:40100 grand, it's the difference between
5:43keeping your gains and handing a slice
5:45over to the taxman every single years
5:49every single year. So you've got capital
5:51gains tax. That's the tax on the profit
5:53when you sell an investment for more
5:55than what you paid for it. Now that many
5:58years ago I remember was quite a big
5:59allowance that used to let you make a
6:02fair amount before they even touched you
6:04for capital gains. That tax-free slice
6:06of gain has now been hacked down to
6:08£3,000
6:10a year. And the amount of which you can
6:13take in dividends which is again your
6:15just cut of profits from the companies
6:17that you own a piece of before tax
6:19bites. That has been chopped down to
6:22£500.
6:25So if your 100 grand is just sitting in
6:27a bog standard general investment
6:29account which is simply just an ordinary
6:31investment account with no tax
6:33protection wrapped around it, you're now
6:36near enough guaranteed to be handing
6:38money to the taxman every single year.
6:41And it's not a one-off kind of killer
6:44blow.
6:46It's worse in many ways because it's a
6:48slow puncture. You never really hear the
6:52kind of tire lose a little bit of air
6:55each day, but you just notice eventually
6:58that you're driving around on the rim of
7:01your tire, right? It's brutal.
7:03And
7:04every pound you give away in tax is a
7:07pound that is no longer for you working
7:10and compounding. So over 20 years that
7:13quiet leak doesn't cost you thousands.
7:16It can cost you the better part of a
7:19six-figure sum over your lifetime.
7:21Growth that you just simply never ever
7:25got to see. And the fix is not clever.
7:28It's not exotic. It's wrappers. Tax
7:32wrappers. So again we've already
7:34mentioned it. Max out your stocks and
7:36shares ISA. Remember that is just an
7:38account where every bit of growth or
7:40dividends that you create held inside it
7:42is invisible to the tax man. It's up to
7:4420,000 pounds a year that you can put
7:47into that. And if your money's there for
7:49the long haul, right? More of a
7:50long-term objective, your pension. It
7:53has your tax relief on the way in. The
7:56government talks up tops up what you put
7:58in even before the money started
8:00growing. As a guaranteed uplift on day
8:02one before the market's even done a
8:05simple thing. Make sure you're using
8:07these wrappers. But the one thing that
8:11catches the careful people, the sensible
8:13ones who'd never even dream of touching
8:16crypto, is the opposite mistake
8:19entirely.
8:21It's catch because plenty of people
8:25don't just gamble their way to a hundred
8:27grand. They get there the hard way,
8:29right? Head down, premium bond, savings
8:32account, money in a building society.
8:35The number ticking up slowly year after
8:38year.
8:39And then you look at that pile of cash,
8:41and I know so many people like this that
8:43have this arbitrary level, and they just
8:46feel safe because the number on the
8:49screen never falls, right? It only just
8:52goes up over time as you add to it and
8:54it has a bit of interest. That
8:57is the trap right there. The number
8:59standing still is the exact thing that
9:02hides what's actually happening to it.
9:05Cash is not a safe
9:09asset. It's an asset with a guaranteed
9:11loss baked into it, stitched right into
9:14it. You just can't see the loss because
9:17it never shows up as a number on your
9:19screen. So say you've got a hundred
9:22grand earning, let's say, 3% in a
9:24savings account. Well, the real cost of
9:27living, your rent, your food, your
9:28energy bills, inflation, is climbing at
9:32five. You are going backwards in real
9:35terms by 2% a year. Every single year.
9:40In what your money can actually do for
9:43you, in what it can buy for you. Look,
9:45it's like standing dead still, but
9:47you're on an escalator that's heading
9:49down. You feel like you're staying put
9:51and you're secure, but you're not.
9:53You're losing ground the whole time,
9:56smoothly,
9:57quietly.
9:59And you only clock it when you look up
10:01and the floor that you're aiming for is
10:03further ahead than you even started.
10:06Let's put some real numbers on it.
10:08A hundred grand in cash on that kind of
10:11gap in 12 months buys you what 98,000
10:15would have the year before. Now, that
10:17doesn't necessarily seem like a lot. But
10:19leave it 10 years and that same hundred
10:22thousand pounds, the number on the
10:24screen still reading a pound untouched
10:28hundred thousand pounds, buys you what
10:3281 and a half grand buys you today.
10:35You've not lost a single pound on paper.
10:38The statement looks identical. You've
10:40still got all those magic thresholds
10:42that you've been clinging onto.
10:44And you're getting
10:46you're getting on for what? 20 grand
10:48poorer in terms that you actually in the
10:51terms that actually count,
10:53which is what money can actually buy and
10:56do for you. So, the key thing here is
10:59once you've got your safety net sorted,
11:01I'm not saying don't have any cash
11:02whatsoever, right? Something like three
11:05to six months worth of outgoings.
11:07Somewhere between five, 10, or 20 grand
11:10that you can get your hands on fast.
11:12Every pound beyond that that is just
11:14left sitting stagnating away is a pound
11:18that's quietly being eaten. And the only
11:21way to stop that bleed is to put it to
11:23work in things that have over the long
11:26run comfortably outrun inflation and
11:29rising prices. Things like the stock
11:31market, bonds to a lesser degree, but
11:34then much less risk, property, things
11:37that are assets that are going to build
11:38that wealth, money that grows, instead
11:41of money that just sits there slowly
11:44shrinking while also telling you that
11:47it's safe. Now, the absolute key part of
11:50all of this is understanding
11:53where you should put your money to work
11:55that is working for the hardest for you.
11:57But also in a place that you know
11:59matches your objectives and the level of
12:01risk that you want to take because the
12:03stock market isn't for everybody, which
12:05is why I really think you need to watch
12:08this video here next because there is
12:10one way to set up your investments to
12:12make sure that you never panic and sell
12:15your investments at the worst time. So,
12:16give it a click and I'll see you there
12:19so we can get your money working as hard
12:22for you as you did for it. See you
12:25there.