The Net Worth That Puts You In The Top 10% (And Why You Still Won’t Feel Rich)

0:00just over £1.2

0:03million.

0:05That is what your household is worth on

0:08paper the moment that you cross into the

0:10wealthiest 10% in this country. Not the

0:15top 1%, not the yacht and helicopter

0:18lot, just the top 10. And when you hear

0:231.2 million, your brain does a thing,

0:26doesn't it? It goes, "Oh, boat." It goes

0:28handing notice in on a Tuesday morning

0:31and never looking back at the rotor

0:32again. Except I've sat across from

0:36household after household sitting on

0:39that number and way more and almost 90%

0:44of them I would say do not report to

0:47feel rich. 110% in the entire country

0:52and they're still sort of like checking

0:54the price of petrol at the pump before

0:56they fall pull into the forcourt right

0:58and they feel slightly mad about it and

1:01I'm not surprised like there must be

1:03something wrong with them because the

1:05spreadsheet says one thing and their

1:08reality their dayto-day their lived

1:10experience says something completely

1:12different and there's nothing wrong with

1:14them right the reason is hiding in what

1:191.2 million is actually made of. And

1:23once you've sort of seen it and how it's

1:25decoded, you will never look at your own

1:27numbers in the same way again. I

1:30absolutely assure you. So net worth,

1:32right, quick refresher, literally just

1:35everything you own minus everything you

1:38owe. That's it. That's the whole

1:40picture. Super super simple. What it

1:43never asks, however,

1:46and this is the part where it all falls

1:47apart, is whether you can actually get

1:51your hands on any of it. Whether it

1:53actually can make a material difference

1:54to your standard of living today. Net

1:57worth doesn't care about the money if

2:00it's available this afternoon or in 20

2:03years or the day before you die. It's

2:05just an asset on paper. So if you slice

2:08up that top 10% household, here is what

2:13the 1.2 really is made of. Okay, 40% is

2:18in property, right? So the equity in

2:20your home. So on the basis of 1.2

2:22million, that's about £480,000

2:25in these numbers. 35% is in pensions,

2:29right? So call that £420,000.

2:3411% is in physical wealth, which is like

2:37the car on the drive, the sofa, the

2:39telly, things like that. It's kind of a

2:40sort of like the contents of your house,

2:42expensive artwork, or whatever it might

2:44be. And what's left, the 14% that's left

2:47over is what I would call net financial

2:51wealth. So, savings, investments, that's

2:53what I would also call actual real

2:57money. So the reality is is that over

3:0085%

3:02of your wealth or people in that top 10%

3:05is actually invisible to your daytoday

3:08life. Right? Take the house first as a

3:11as an example, right? Because that's the

3:12big one, isn't it? Your home is a

3:15brilliant asset, right? Not suggesting

3:17that it's a bad asset. It's a great one,

3:19but it's also not money, right? It's not

3:22liquid money. It's a roof over your

3:25head. You can't hand a cashier a brick

3:27and ask for your weekly shop in return.

3:29And yes, okay, look, you could sell up

3:32and downsize. People do do that. We see

3:34that a lot. But you're then moving

3:37house, paying the stamp duty, paying the

3:40fees, and living somewhere smaller for

3:43the rest of your life, which is a fairly

3:45heavy price to pay for getting at money

3:48that you supposedly already own on

3:50paper. Until you do that process, the

3:55£480,000

3:57on paper does nothing for you on like a

4:01Tuesday morning, right? Doesn't do

4:03anything at all. And the pension, right,

4:07the £420,000.

4:10And I want to be uh super super clear

4:12here, right? That is a fantastic thing

4:14to have, tax efficient, doing exactly

4:17what it's designed to do. But if you're

4:2045, that money legally does not exist to

4:24you yet. It isn't yours today. It's

4:27future use, if that makes sense. You

4:31right now are wealthy on behalf of a

4:34person you haven't even met yet and may

4:36not exist. And listen, if you've watched

4:39this channel many times before, you'll

4:41know how much I sing the praises of

4:44pensions, right? But the truth is that

4:46you could have a million pounds in your

4:48pension at age 40 or 45 and you won't

4:51feel any wealthier today. You just

4:55won't. So, strip out the bricks, strip

4:58out the car, strip out the locked up

5:00retirement money, and your top 10%

5:03household is left with about

5:07168,000.

5:10that money that they can actually

5:12genuinely reach that could in theory

5:16sort of make a material impact on their

5:18life today. That's it. That's why they

5:21don't feel rich, right? You're a

5:23millionaire on paper running the cash

5:26flow of someone with £168,000

5:29to their name. It's crazy. So the

5:32question then is if net worth is the

5:36wrong number to track and to measure

5:38these things by the obvious question is

5:41well what's the right one? Well the one

5:43that I use with clients is something

5:45that I call accessible sustainable

5:48income and rolls off the tongue nicely

5:51doesn't it? Right? And the good thing is

5:53is it completely ignores your house

5:54right? Ignores the car ignores the

5:56pension at certain times of your life. A

5:59little bit more on that a little bit

6:00later. It looks at the money that you've

6:03got in play, so invested or whatever it

6:06might well be doing that you could reach

6:09this afternoon. And then it asks, what

6:12income could you throw off of that year

6:14after year without burning yourself out?

6:17The key phrase here is sustainable

6:20income. Sustainable. And for that, you

6:23need the safe withdrawal rate. Again,

6:26just a quick refresher, that is the

6:28percentage of an investment pot that you

6:30could probably take out each year with a

6:33highish chance that you won't run out of

6:36money, run dry over a 30, 40 year

6:39stretch. It's an old rule of thumb, but

6:42you know, some plenty of financial

6:44planners these days use maybe 3 and 12%

6:47to be super safe, but 4% is a brilliant

6:50old rule of thumb that works really

6:52well. But whatever it is, you get the

6:54point. It's around that mark. So 4% of

6:591.2 million, that top percent is 48

7:03grand a year. 48 grand a year.

7:06Brilliant, right? But the reality is, as

7:08we've already talked about, they can't

7:10touch most of it. So run the same 4%

7:14over the money that they can actually

7:15reach the £168,000

7:19and their accessible sustainable income

7:21comes out at £6,720

7:25a year. £560

7:31a month. The envy of like 90% of the

7:35population generating roughly what a

7:37teenager makes a Saturday job in a month

7:40in a cafe.

7:41That is exactly mathematically

7:45why the top 10% still potentially

7:49sometimes struggle and flinch at the

7:51price of petrol, right? It's crazy. So,

7:54do it on your own figures right now.

7:56This is always such a sobering moment in

7:58my sessions. Before you carry on with

8:00this video, just do this for me now.

8:02Whatever it is you've got in ISAs or

8:04investments, anything you could actually

8:06reach that's invested, times it by 4%,

8:09divide it by 12, right? That is the one

8:13number that genuinely should be running

8:16your life. Right? The other one just

8:18kind of runs your ego is how I would

8:22sort of describe it. Right? Now, if you

8:24did that and it made you wse, good. Keep

8:27hold of that. Right? Because the fix

8:29isn't just arbitrarily earning more and

8:33stacking more. Not at first anyway until

8:36you understand this. The fix is

8:39understanding that money lives in kind

8:41of like two tiers, right? And almost

8:44everybody only ever feeds one of them.

8:48I've been as guilty of this as anything.

8:50Tier one, this is the money for now,

8:54today, the accessibility. So under

8:56pension age essentially. So this is your

8:58general investment accounts, your ISERS.

9:00And again, don't know if we talked about

9:02this, but an ISA is just an account

9:04where any growth or interest that you

9:06make comes out completely taxfree. So

9:08that's what it is in the UK, many other

9:10tax privileges accounts across the

9:12world. So in regards to an ISA, there's

9:14no age lock in. You can get it at 40,

9:1730, whatever it is, whenever you like

9:19essentially. So, this is the tier that

9:22buys you options while you're still

9:25young young enough to kind of want them,

9:27right? Dropping to 4 days, taking 3

9:30months off work of a job or just getting

9:33rid of a job that's eating you alive

9:35without having to work out how you're

9:37going to put food on the table. It

9:39doesn't need to kind of replace your

9:42whole entire salary. This is this notion

9:44of work optionality. It just needs to be

9:47big enough so that you can

9:50breathe, right? That is the key

9:53reference of tier one. Tier two is the

9:55money for later, right? Your pension,

9:58things like that. The government hands

10:00you serious tax relief to put money into

10:02there for later. Of course, the catch is

10:05the lockup. We talked about it. You

10:06can't touch it until you're 55 at the

10:09earliest. And that is of course set to

10:10rise to 57 in April 2028,

10:15which makes it

10:17a freezer, right? It's real food. It's

10:20genuinely yours. It's just not dinner

10:22that you're going to have tonight. It's

10:24locked up in the freezer. And that trap,

10:26I see this absolutely constantly in my

10:29one-to-one sessions. It's people

10:31spending 20 years of their working life

10:34filling the freezer, right? Overpaying

10:37the mortgage, paying into pensions when

10:39the fridge sits completely empty. Every

10:44spare pound goes into like a pension or

10:46a house because both of those options

10:49feel responsible. And they are. They're

10:52just completely out of reach. They are

10:56in the freezer, not in the fridge with

11:00food that you can eat today. And then

11:04something happens, right? Someone sits

11:06down with me typically at 45. Absolutely

11:10done in, right? Burnt out, the kind

11:12where they've sort of like stopped

11:13sleeping properly because they're so

11:15stressed. And they will often show me

11:17the numbers. Let's say 1.3 million on

11:20paper. and they will say to me, "Look,

11:22Josh, look, tell me, I'm worth over a

11:24million pounds. I've got this top 10%

11:26figure. What are my options?" Right? And

11:30I'm often, more often than not, working

11:32through it. And the honest answer is

11:35that for the next 12 years or whatever

11:39it might well be before the pension age,

11:41they haven't got any. Not because they

11:43did anything wrong. They did all the

11:45work. They did the right things. They

11:48just posted every pound through a letter

11:52box that they can't open yet in a bank

11:54safe with a time lock on it. They're not

11:57bad things. They just have a natural

11:59time horizon. Now compare that with

12:02someone with a lesser net worth,

12:05something genuinely less, right? Smaller

12:07pot, smaller house, nowhere near that

12:09sort of sacred top 10% point, but they

12:13got 100 grand sitting in an ISA. And

12:15when the same burnout, that same stress

12:17arrives on the same Tuesday morning that

12:20they just cannot be bothered to do it

12:22anymore, they can take six months off.

12:24They can go and find something better.

12:25They can come back a completely

12:27different person. Not necessarily what

12:29you necessarily want to use that money

12:30for, but you can. On paper, that guy is

12:35the poorer one, but in the weak that

12:38actually matters. They're free and the

12:41millionaire isn't. It makes such a big

12:44difference. That conversation at 45 is a

12:48horrible one to have. It's also

12:50avoidable. And avoiding it happens

12:53quietly in your 30s, in your early 40s,

12:56by feeding the fridge as well as the

12:59freezer. So, here is what I would do

13:02right now tonight. Stop calculating your

13:05net worth. I just don't think it has any

13:08real utility or any merit. It's an ego

13:11metric. It's a lie in which whatever

13:14direction you want it to go. Okay, you

13:16can manipulate the figures however the

13:18however you want. The number that you

13:20worked out a minute ago that you worked

13:22through or I hope you did the 4% one.

13:24That's the one to stick on the fridge,

13:26right? That's the one that you should be

13:27focusing on. That's the one that will

13:29give you all the options because the

13:31thing that you actually want was never

13:35just an arbitrary 1.2 million. It's the

13:38option of waking up on a Tuesday,

13:41looking at whatever's in front of you,

13:43and being the one who decides what

13:46happens next. That's what you want. You

13:49don't just want a high net worth on

13:51paper. So, let's get on with it, shall

13:54we? You should watch this video here

13:56next because a huge part of all of this

13:58is actually working out when that 4%

14:01withdrawal number is actually big enough

14:04for you to be work optional or even

14:06fully retire. I go through everything in

14:08detail in this video here.