Closing Thoughts and Future Questions

A tax manner never know. You never get a growth on it. Well, you are a tax evader. We've already established that this episode . Hi and welcome back to another Meaningful Money Q and A with me Pete Matthew. And allegedly me Roger Weeks, a man the myth, the legend. How do you bud? Yeah, I'm a leg end, yep . Yeah, do really well. Thank you. Yeah. Big week in the Matthew House this week, producer Kate has had an offer accepted on her first house. I'm sure it'll feature in a bank of dad episodes. We will do. Yeah. Yeah, yeah. So congratulations, producer Kate. And also, you know, youngest daughter, Kate. Yeah. And make sure you put some life insurance in place and critical illness and all that stuff be able to protect yourself. She's well taught. Yeah, I'm sure. We were talking about it walking dog ins the this morning, weren't we? What majority should I think about ? Okay, where do people go if they want their questions answered? If there were their questions answered, please send any emails to hello at Mingefulan money. TV with a subject line podcast question and Nichols sort them into a future episode for us. Yeah, indeed he will. And we are answering questions from january twenty twenty six currently. So if they're urgent, mark them as soon we' andll do our best to get them in a more timely manner. But as we're going through this today, remember any notes and links are at the show notes meaningful money dot slash QA fifty two. So check that out there. And as always, if you're watching us on YouTube . Channel's going very nicely actually growing nice and steady. Then help us out by liking the video. You know, if you think it's any good, your jury's out, it's too early to decide that. But if you do, hit the like button, subscribe to the channel, and it really helps us out. So thank you for that . Let's dig into it. This is question one. This is from David, Dear Pete and Roger. Could you provide an opinion on if and when it would be worth at least considering leaving the NHS pension scheme due to tax re asons, nice controversial stars . I can sense immediate puckering . Great choice of word. This is not something I ask on a whim. I am aware of the comparative value of public sector DB pensions versus other retirement savings methods and indeed encourage the staff I work with to pay in. I am a senior doctor in my forties with high NHS earnings and rental income on top. I am one of those affected by annual allowance tapering and have significant annual allowance tax bills every year with no end in sight. My projections are that I will have an annual AA tax charge of around thirty thousand pounds every year going forwards as my income is pretty stable . The annual AA tax charge is up to forty percent of the annual capital benefits accrued in any year. Lifetime allows count. Twenty times pension, three times lump sum yeah, we understand that . I pay this via the scheme pays system, but scheme pays loan docked from benefits at retirement wow is inflated at CPI plus one point seven against pension benefits growth of CPI plus one point five . So slightly worse by doing the scheme pays thing, but then at least you've got to find thirty grand as per year. I don't expect much sympathy as a high earner, but no one wants to pay more tax than they have to , of course , and I never hear my situation talked about other than snippets in the depths of Reddit forums. My plan is to keep plowing on and engage and engage a full scale planning review when I turn fifty , leaving up to ten years to consider avertive action once my wife and I have enough pension in offering invaded commerce there. Many thanks for your thoughts, David . No, we all have problems, man. It's that, you know , you know, you're obviously doing incredible work harding paid in the NHS , you know, for that which should be very grateful for and you should be remunerated . But yes, with that comes problems and that's what we need to talk about. You have provided some context which with some specific numbers, which you've asked us not to read out, which is absolutely fine. But you can just the fact that he is having a tapered a tapered annual allowance gives you some ideas to what the earnings are. Yeah . I mean, your first thought was what? Don't do it . It's the first knee drip, obviously, because it is such a good scheme . And yes, you are paying the annual allowance charge , but you're deferring that by having the scheme pays on it anyway. So it's not affecting your standard of living at the minute. It'll affect your standard of living in the future. But my immediate thought was yes, I understand . It's painful. Don't get me wrong , but you're losing forty percent, so you're still gaining sixty percent . And I think what you've taken the approach right was that you'll keep plowing on for the next between five and ten years. You said you're in your forties and you can do it at fifty . And then take a take a straw poll then and say, okay, what do we need? Is that enough? Do we need to carry on? But it is really difficult. It is I mean, like every fiber of our beings says don't opt out . Even though it's costly , the benefits will outweigh that cost because we'll see, you know, every year you're buying benefits that will hopefully pay out for many years and you're only paying tax on that extra benefits that you've bought once essentially. But I do get the pain. It's too simplistic to just say we'll just stay in the scheme. Yeah, right . So if we kind of thought experiment what you could do if you opted out, obviously you would stop accruing benefits in the scheme, but I imagine you've already got a pretty good baseline income level going to be paid out to you from pension age . So you could your annual allowance would still be tapered. You do mention in your notes though that some level of contribution is or employer contributions into the NHS scheme is included in GP's net profit figures. I didn't know that no did I? So I don't know that . That affects annual allowance tape. I'm pretty much sure it would if it's employer and it's the B in there. Yeah so yeah okay so I say you know you could if you opted out and you sort of recalculate what your adjusted income is and then you could contribute to a DC pension up to your tapered maximum annual allowance, whatever that is . But then you could consider other tax efficient options, I suppose. You could do that if you're in the scheme though. You know, if we spare money, couldn't you? You could VCT, you know, build up in VCTs every year , getting thirty percent tax relief on that. It would sort of offset the unpleasant tax bill every year, potentially something to think about. Tread carefully though VCTs are high risk . And psychologically, you know, saying I'm not no longer paying that thirty thousand pounds a year is quite nice. Yes. And I'm going to throw the money into my own pot. So therefore, that that should be fine. You know, your existing NHS DB pension scheme will still escalate. So whatever you've accrued already will grow up to your retirement age. But it's like Pete said, it's too simplistic to say stay in because there are other factors in the background, but it just seems to me at this age in your forties , yes, taking the action you're saying, you know, go to fifty and then say have we accrued enough and, then would be we not too painful to come out from that point onwards ? Is it worth ? I mean, assuming he's got the means . Is it worth just paying the taxes he go rather than doing scheme pays and paying essentially Yeah, but I suppose it's doing based benefits reduction, isn't it? Yeah. So you get a reduction in benefits in the future based upon the loan you've taken out to cover the fees. But I want to do the maths on that actually . No . It depends because like you said, Pete, is that you've got a really, really good accruing DB Schemboard in place. And if you keep funding that till fifty, you probably could afford to take a bit of a cut in income at that point in time and then save the cash that you would have like Pete said you could pay in cash instead. Well, if you've got sufficient cash, you could throw that into ISIS or whatever in the meantime and build up an external part around the side. Oh my god as a yeah as a balance to sort of paying the tax you could continue with the scheme pays things and instead if you got if you happen to have thirty grand a year that's spurning all in your pocket, then you could , you know, VCT that I think VCTs are made for people like David or David because , you know, you get the tax benefits they are somewhat acceptable accessible. You got five year sort of access period though, you would lose the tax benefits if you access them within five years and because they're early stage investments or smaller investments as a rule that can be less liquid. But there are some great VCTs around there which are reasonably liquid and you can roll them over and get tax relief on existing money every five years. So there's something to think about, but you need to understand what you get into. Yeah . But they're made for high owners , people with high tolerance for complexity and risk. Yes. So could be something to consider , but don't necessarily let the tax tail wag the dog seems that don't feel right for you. So it's impossible for us to say you know, yep, yep, just opt out. Feels fine. Yeah. Or don't don't you dare opt out. That again so fine. Puckering is right. Yeah . Definitely a weird one. All right, hold this out for David. Question two. Question two this is from Alfred. This says dear Peter Roger, I want to say a big thank you for all the guidance you provide. There really is nothing else like it, and it has been hugely beneficial in organizing my finances alfred. Well done, Alfred. And we didn't even write that for you, which is lovely. My question for you is how to structure gifts to someone who is going through the early stages of a divorce. My sibling is sadly in this situation and our mother is looking to make a sizable gift to us following the death of our father. How should we be thinking about this and are there any vehicles or structures such as trust that we could be using to avoid my sibling's spouse from being entitled to half of the gift. Grateful for any guidance you can provide in this matter best regards Alfred Yeah, it's a horrible situation to be in and we feel for your spouse sibling , Alfred this is more of a legal question really, but definitely it is, it definitely is. But if possible, we would probably be urging Mum not to make the gift now at this point, defer it until divorces take a long time and yeah, I mean , I guess at some point, I'm not very familiar with this, I'm pleased to say, but I guess at some point the financial settlement is locked in, but is it sort of potentially be reopened all the way till absolute until absolute ly? I mean, some people even go back after they because if you knew you're going to be receiving , you know, yeah, don't let the siblings partner at this point in time. Tell about this because they could come back potentially because you've deferred it. know, you've got to say to Mom, don't do it yet. You know, obviously , by deferring the gift, the seventy o'clock starts ticking later and all that sort of stuff . But I mean, surely that's better than half of it. have a place , right? Yeah. I mean from the way the question is worded Alfred, it suggests that this is an outright gift. It's not a deed of variation on your late father's estate. If it was, then there might be time constraints. That's got to be done within two years of the day of death . So that might be a factor, but if it isn't, if it's just an outright gift, you've just got to say just hold your fire, mom. Don't, you know, don't do it. It's just going to over complicate things. Now if she really wants to do it , you ask about structures, vehicles or structures . Well, a gift into a discretionary trust would serve a purpose. Someone could put the money into a trust where son doesn't have absolute right is a son. It says sibling. So I'm sibling so not necessarily so could be daughter actually . So you know, a sibling doesn't necessarily have doesn't have any right to that money, only a potential right because with discretionary trust the beneficiaries are usually declared as classes . So Mum would be the settler setting up the trust and say she can the beneficiary of this tr ust are my children not named my children and it's up to her as bot tlera and trustee to decide which child benefits and to what degree and that sort of lack of absolute interest would keep it out of the , you know, the grasp yes of the grasp of the divorce . But setting up a trust is not to be done lightly. There are loads of costs and hassle and admin issues. It's got to be registered with the TRS . You know, it'd have to do an annual tax return depending on the size of the gift. There may be initial inheritance taxes to pay, there may be ongoing taxes to pay , inheritance taxes to pay, there would certainly be income taxes to pay at the highest rate. You don't set up a trust like that and it's something you definitely need to see legal advice on this case, but I bet you the divorce lawyer would be saying for God's sake, don't make that gift. No, no, no, hold on as long as you can. Yeah . All right, this is from Steve. Hi . You're welcome, Steve. I'm glad it's been helpful. I have held I've held several GIA accounts for many years and I hold accumulating ETF's within the GIAs. Oh yeah remember now . Occasionally I have had to pay CDT through my self assessment when I have sold these ETFs, mostly I've always been a basic rate taxpayer. I have recently discovered that HMRC requires excess reportable income to be declared on accumulating ETFs . In the case of ETFs which receive company dividends, this means I need to take note of the reporting date of each ETF and add up all the notional dividends as if they were paid on the distribution date six months later. And if it's over five hundred quid, I should have paid dividend tax on the excess . Also, in the case of some of the money market fund ETFs I hold, these may have an ERI notional interest payment and this would count as being potent ially subject to income tax. Since I have sold many of these ETFs and I have not subtracted the ERI amounts from my total gain, I have probably overpaid CGT rather than underpaid as a basic rate taxpayer. However, if I was a high rate taxpayer I would probably have been under paying tax if I hadn't accounted for ERI. This is because the high rate dividend tax is much higher than the CDT rate. I now understand that to avoid having to calculate ERI on accumulating ET Fs each year and keep them running total for each one, most people simply buy distributing ETFs inside a GIA rather than accumulating ETFs and I'm in the process of ensuring all my ETFs are the distributing kind inside my GIAs. Definitely heard that before it does make sense. So we've got four questions which we'll answer very quickly in a row. Question one, should I be concerned about ERI or my accumulating ETFs? It doesn't sound like it matters going forward. No, I mean you are sounding concerned and you ought to be because if you're not reporting the excess reportable income, then you need to be doing so . But if you're switching then it the problem disappears, doesn't it? Yeah, because then you'll get the distributions and you know exactly what the distribution distributions are what it would be. So that's okay. Concern is an interesting word . I'm wondering whether your third question is why you might be that's reminding about it minded . But your second question is, do accountants calculate ERI for their clients on all the accumulating ETFs they hold? If so, how do they do it? Because there doesn't seem to be an easy way. I feel like an accountant should be able to do this. It's kind of but if they can't or if they won't then it's probably time to find a new accountant. But it does depend on the platform. You know, they can't calculate information, do a calculation without the information they need to do it. So it would depend on the platform what kind of information it produces but you know they should be able to just matter at the end of the day . Question three, do HMSC ever check? This is what you're concerned about, that the ERI on accumulating ETFs has been declared? My guess is that they would only bother for high rate taxpayers with large ETF holdings. How would HMRC even know that you hold large amounts of accumulating ETF s on which you should be declaring RI . Well, they don't . As with all taxation affairs, you do a self assessment , you are declaring all the income and the capital gains and everything you've got. Yeah . It's based upon you telling the truth. Yeah, I mean, interest from banks. The banks tell the revenue . Right? Yeah , because the HRC will send you a letter with a calculation if you don't have to do a Yeah, right . Obviously , pensions paid out to you are under PAY you know the revenue know about that. But investments they don't know not at all. Yeah, it's up to you to tell the truth , but they can spot check you anytime. And once they spot check you, they're going to dig in a bit. I should say so . Yeah. I had this and I think I mentioned it on the podcast before when I first joined CIS. Because we're technically Yeah, because we're technically self employed at the time. You claim your money and you see your car to get to and from your debit and stuff like that. And that's the area that you worked. The area you worked in. So the area so I lived in one area and I covered a different area for CIS. That's my call my debit the area covered . And I was claiming mileage for all the mileage I did whilst I was working. And the taxman came back to me and said, Well, you live there and you cover that area , that's travel to work. You can't claim for that Maidi . So I thought Maiden . So I said, well, I didn't know that . And thankfully and then I had to declare what for the past X number of years I've been doing it , you know, they didn't do a deep dive on me. I just said, well, okay, sorry, I'll recalculate those. And I told them what the figures were, and I owed them some money and I paid it back. It wasn't bad. But I didn't know what I didn't know, so you know, but so yeah, it's all about self declaration so and be prepared to justify it , you know, if they do decide to check. Didn't know you were a tax evader, Ron. Well, I tried, but it didn't work. I thought especially doing this job, you know, yeah, exactly. Why is it that hardly anyone seems to know about ERI on accumulating ETFs? Because it's really boring , right? Yeah, it's the right question. I mean might do a video on it sort of thing that's sort of thing a little bit of pillar content that it'll be when people are searching for it it might come up you know but this is not mainstream stuff. This is most people mostly Most investors are completely naive and unbothered really. As long as they get the returns , then you know they're not too worried about it. They're usually obsessing about which fund to buy and what the returns are like than about the details of taxation. So it might be something to do some content on. And it might then lead you to why am I doing ETFs rather than the Ox? Where it's not a problem, which is not a problem. Yeah, I mean I think it's a pretty good advert for Orix. But I think shifting to distribution fixes the issue. Yeah, it does. Yeah. Christian Forrach. A question for us is from Agnes. It says good morning both. Good morning, good morning, Agnes. I would like to start by thanking you for all the hard work over the past decade or so. I'm a mid forties year old woman who has no financial knowledge until about two years ago. I had a cancer diagnosis which led me to leave a very time consuming and stressful job and take over the family finan ces which have been neglected for the best part of twenty years . We are now in a much better position. We have filled our ices and that of our children, put more money to SIPs and open one in my case, and open junior SIPs for our kids. Our mortgages paid off too. I've listened to all your back catalog and in some cases relisten to episodes which have been especially useful to our situation. Thank you. Well, if you can sit there and go through the back catalogue, you're a better man than me, Agnes . My question rel ates to funds that have been done particularly well and what best to do with them. Some of my earlier fund choices are showing gains of around fifty percent. This seems extraordinary to me and I'm very happy with her return. My dad who's, much more experienced who's, been doing this for fifty odd years, tells me the best thing to do with these funds is to take out fifty percent of the gain and reinvest in a different fund. Come back to that in a minute. Yeah, we will. What would be your advice? Advice I'm afraid, but we'll give you some of our thoughts out there . Take out the whole lot and reinvest it, take out fifty percent and reinvest that as recommended by my dad or leave the whole lot in and hope it continues to grow. For background, I'm very happy with the gains, but we are very much on a catch up programme as we have started so late. The sums involved are still quite small. The ultimate aim is for my husband to retire early. I hope to work again too at some point once all treatment is finished, but only part time. I'm so grateful for everything you have done and always wait eagerly for the next episode to drop with very best wishes Agnes. Well, thank you very much Agnes. Thank you for listening to all the episodes. That's incredible and obviously wishing you well for recovery . I hope that the treatment I would hope it's finished by now given that we're answering questions from January, but hope you're doing okay . You know what ? We're so influenced out with so many voices. I mean, Kate was just saying to me this morning, you know, with this because she's going to be buying a house that she's already been inundated with well meaning you know thoughts and advice , you know, from colleagues and from friends and all that sort of stuff and it's like you have to almost let some of it go over your head because it can be very confusing. Everybody's got, you know, it's all well meant motivation is good. So what do you reckon about this advice from dad then, then Roger that , you know, sitting on a nice gain, take half of the gain out and reinvest that . Yeah , and I'm not wishing to disagree with you, Dad at all, Agnes. Especially if his system has worked well for him in all the years he's been doing it and all well done dad. Yeah, that's not a problem. We're not saying that. But we'd say there's no one best thing to do. Glad you said that . Yeah, exactly right. It might be the case if Dad had been buying individual shares as opposed to funds because back in back in time If your dad's been doing this for fifty years, he's probably buying individual shares back then because there weren't such a thing as funds around. Yeah, sure. And then in order to dilute the concentration you have in an investment in one share, the advice would have been, okay, take some mot out and buy something else to spread your risk. Well, when you buy funds, you've got the spread already in place. Exactly. Yeah . I'm really glad you said that. There is no right way to invest. Okay, we have a view on this but you know, we'd like to think we're right, but we know we're not. There is no right way to invest . There's many ways to invest . And you know, as long as it works and you're happy with it. Doing what Dad suggests will lead to you owning quite a lot of different funds fairly quickly, right? I mean, that's just, you know, you set a threshold, right? If a particular investment increases by twenty percent , you'll take half the gain, all the gain out or all of the whole all hal orf of the holding out and shift it into something else . It becomes like , you know, when you see those like videos of cells sort of splitting and then yes , one becomes two and two becomes four and four becomes eight and you get this sort of exponential growth in the number of cells. Well, I mean, to a lesser extent, you could very easily end up with a portfolio with twenty , fifty, seventy five funds in , which I'm not sure will serve you very well. So I don't think this is really about diversification , as you rightly say . Agnes is going to get diversification. I mean, we're going to find millions of pounds in one fund. Yeah, but inside those funds are twenty five thousand different holdings. So it's like you're getting diversification. You're already getting that diversification within the fund. That's what the fund manager is doing for you. There'll be individuals that are doing well. He then decides what are you going to sell off and rebuild something else for you. So you don't need to be doing that. As Pete said he's got clients with one fund , well within that fund, you got hundreds of different investments anyway. Yeah, exactly. If we're seeing a little bit jerky by the way, if there's some weird edits, that's because there's people drilling outside and we keep having to go and start sentences all the way through again. So I talk and we have talked here in the past about core and satellite investing . So if having just one fund kind of makes you nervous or one approach makes you nervous then you could a core and satellite approach basically says that most of your wealth building is done in a single approach and main sort of and we would always talk about, you know, asset class investing, passive investing, global, all that sort of stuff . But if you want to then have some fun around the side, you can do that. And you can do that. Those would be your satellite invest ments. You're not betting the farm on them, you're not sort of betting your future on them, but you're just having some fun around the side and diversifying a little bit. But you don't need to do that. I don't do that. I have a single fund. Yeah. You too. And it's just I let it get on with it. I would just say don't get too hung up on the fact that a fund has done well , right ? Or even sort of thinking about the numbers of that fund in isolation. So fund A has grown fifty percent, thereby that's done really well. I would only start to think about diversification if you want to think about it at all, if that fund becomes an uncomfortable proportion of the whole right. So that's the only thing really to think about as opposed to individual funds . Has it basically become unbalanced? Because you've probably taken Agnes , some time to decide on your fund anyway . So in your process of what sort of funds do I want and I've gone for this one, why then would you spend a lot of time then moving out of that if the fund is doing the job for you. Yep. Okay, this is question five. This is from Lisa. Hi. I hope you are well and can help a cornish last. Well a try. It does get you a buying to the second round, I think. So yeah, fair enough. I am thirty five and have never been able to budget or manage finances. In fact, I've always buried my head in the sand. You and loads of other people, Lisa, don't be self up. Unfortunately, when lockdown and maternity leave hit at the same time, geeze yeah, that's challenging . We couldn't afford our debt repayments. We'd purchased a house in January of twenty twenty two. We had no choice but to take out an IVA, an individual voluntary agreement . We are now in the sixth year of this as it was extended as we couldn't release equity from our home. This is due to end in November of this year and I've been doing my best to learn about budgeting and managing finances ready for when this ends. I've started a spreadsheet to start tracking expenses and I aim to start an emergency fund plus a pot for putting some money away for Christmas and birthdays. I've been discussing this with my husband and he thinks we should get an overdraft as soon as the IVA finishes to start building our credit rating, whereas I think we should get a small credit card that we pay off each time we use it . What do you think we should do as our first few steps coming out of the IVA to build more security for our future . Thank you in advance in advance, kindest regards, Lisa. Well done, Lisa. Yeah, well done you did. Six years of an IBA getting it clear. That's really, really great work. And then putting the work in behind then say, Okay, let's look at what our budget's doing. We need to make sure from now on you've learnt from what's happened. And it's been an unfortunate set of circumstances. , it's not your doing, ultimately. Yeah. But it's saying okay, let's make sure we secure ourselves for our future and doing all the right things . They said so many people are one set of circumstances like this away from major debt problems , homelessness and everything. So the fact that you've been able to stay in your home and as Roger said, you're thinking about emergency funds sinking funds for Christmas and birthdays, stuff like that. You're thinking about I'm going to be doing all the right things , so be encouraged, right? Now when it comes to building credit rating, we talked a little bit about this on the Bank of Dad podcast , which check out, might you might enjoy . So I would far rather personally, I would go with Lisa on this one. I just overdrafts, I don't they feel more negative to me and it feels like you're starting from less than zero every time and it's just that bit easier to dip more into it. It just feels like that. There's probably no objective treatment. Yeah. And in my experience in the past, when I worked for the bank and I was a lending officer for the bank , people found it difficult to control overdrafts compared to what they could do on a credit card. Now they both got their drawbacks. It's in your pocket. You don't see the money it's going . But the same could be with Old Draft, people would write checks on their accounts with not having any money and just expect us to pay it . And then when the pay packer comes in next month , that slightly gets taken off iter already. Yeah. And you don't really see your full pay packet. What you've got, the benefit with a credit card is your full paypack comes in and say, well, okay, what do I need to pay off my credit card now ? Yeah, I feel like a credit card could be more visible these days than perhaps it was then only because you know, if you like , let's say you have a Monso credit card or whatever, the balance is right there every time you log in . And I mean, you're going to need and it sounds like you're heading for this. You're going to need to be absolutely laser focused every single day. There's going to be no let up, right? But in order for you not to get in the same position where you were , you're going to have to track your spending every single day. Keep an eye on it and make sure that an overdraft or a credit card doesn't just slightly fall out your grip. So important, tiny little things can compound and you end up in a worse situation again . We talk about building a starter emergency fund doing that as quick as possible. So look for stuff you can sell, put as much as you can away into that as possible before you start thinking too much about Christmas and birthdays and stuff. Try and get five hundred to a thousand quid a month , five hundred thousand pounds behind you as an emergency fund. It's a buffer between you and the washing machine breaking down or you needing to put new brake pads on the car or whatever. I think you know, I think Martin Lewis is a gift to this nation. He's probably done more than anybody else to improve the financial health of the nation. I feel like financial advisers love to hate Martin Lewis because he doesn't talk a lot about investing or pensions, but he's really changing on that recently. It is yeah. Yeah, but the point is he's brilliant at stuff like this . So we've got a link to a money saving expert article on credit cards for people with bad credit . So read that just a little bit the Nickers clipped this from the website for us. So use them for small everyday spending. So just little bits. Maybe just say we are only going to put our food on the credit card. And obviously then repay it in full each month because that 's good use of credit and will build your score. Anything else to watch? Yeah, they do he does actually say within there actually what the Pete's just said, he set a direct debit up to pay the credit card. So you're going to come out. So you haven't got because sometimes the bill comes , oh I'd better check what's on there and it gets put aside under another pile of paper and you forget it. And what you don't want to do is miss the payment, even at the minimum payment at that point in time. No, exactly . But the thing you really did watch, as Pete hinted at, is higher interest rates. Yeah. If you've had credit problems in the past, then if you apply for a credit card, you probably find the interest rates should be high. Another reason not to leave any outstanding balance. Absolutely right. You know, it's they'd be crippling. You know, we're talking between thirty and thirty five percent, which is still ludicrous when interest rates are the way they are really . Never ever withdraw cash on a credit card, stupid charges and very often additional interest rates on that, right? That is just don't ever do it. And if whatever reason you get a balance on there that you can't fully repay at the end of the month, don't miss that monthly payment because that's your credit rating will go fairly sharply into reverse, right? So tread carefully , stay focused, but you've got this, Lisa. I think you need to both be together on this. This can't be one of you driving it. You need to be both committed to this and the future is bright. So good luck to you from us. And I think the saving grace for you is that you didn't you weren't spend thrifts and spend getting rid of your money to begin with. It's a set of circumstances that came along. So your mindset is already the right place for you. But if you avoid that in future, you can never get in that same position again You know, so many of us carry debt, particularly in our younger lives, right? So there's no judgment here . But if you don't get into debt again, you can't get into the situation that you found yourself again . So now with the IVA being clear, you're starting from zero. So now start to build. And yeah, the future's bright. Old power to you. Last one, Roger. Last one. This is from Nick's Salutations, Roger and Pete. Salutation. Salutations back, Nick. Yeah. My question is what to do with a lump sum inheritancy thing as a younger guy? An inheritancy thing? Yeah , yes. It made me laugh that was my parents have been very financially successful in business and incredibly generous to my brother and I and gifted us each an apartment a few years ago to make use of the first property exemptions, not sure what that is and the seven year gift rule. Possibly. Okay. And now that I'm mature enough to understand the opportunity I've taken control of the management of mine . While I understand it's an incredible income generating asset, I'm not a fan of real estate and I'm much more comfortable selling the property and investing in index funds within a variety of wrappers available in the UK . After fees and taxes, should I go through with a sale, I will net approximately three hundred fifty thousand pounds. My plan is as follows forty seven thousand pounds in premium bonds because I currently already have three thousand , forty thousand into my SIP limited by current salary , forty thousand pounds held in cash to be invested into a SIP in year two, potentially up to fifty two thousand pounds as my salary rises, the remainder into a GIA , all invested in Vanguard index tracking funds. Okay I'm twenty six working as an officer in the military, so I have an incredibly low cost of living, subsidized accommodation and no utilities. Oh, I should have joined an army And a non contributory DB pension plan, so no need to allocate money there, and I'm able to max out my stocks and shares ICE yearly just with my salary. I know these steps are good, but having the best part of two hundred twenty thousand pounds in a GIA paying CGT on the other end of that makes me a little unhappy, especially if I hold it for multiple decades. I'm aware that this is a real champagne problem , but do either of you have any recommendations on improvements to my plan and mindset or are you able to poke any holes in my approach? Should I hold more in cash to later invest into my sip? Better nice to sip over time, spend some of it even. I know it's an aggressive approach, but I'm sort of an all or nothing sort of guy even with investing as it is referenced by my seventy percent plus savings rate . But balance has always been hard for me to find. My goal is to be financially independent by thirty six Good on you good . I'll likely keep working, but I like the security of that and the saltery coined term FU money . Like you know what that means. Whatever you both think, I will deeply ponder over and analyze for many hours. Thank you both for the many episodes of top tier information. I would apologize for the lack of brevity, but I know you love it really. Thanks guys. You're both rock stars. Nick. Thank you, Nick. Lovely words. Yeah. . So we had a question on the pension. On the amount going in. Yes, because you said you're going to be investing forty thousand pounds into your pension, Nick . The thing that jumps out at me initially is you got a non contributory DB pension plan . There is still some pension input and it's all based upon the increase in your benefits this year compared to last year. So although you might think you can throw forty thousand pounds at your pension, you probably can't . You will need to find out where your pension input is for the tax year. And unfortunately you only find out about it the year after . Yeah, it's annoying. Because you'll have your annual allowance unless whatever the effective input has been . Yeah . So it's really difficult . Although that's all employee herb contribution. So yeah , yeah, you know, but still pension input. Yeah, it is. Yeah . So okay . I mean, the rest of it, max, premium bonds , you know, it's tax free, it's government backed, it's sort of it's a great place to give it an emergency fund. Yeah, that's the thing. Don't really need an emergency fund, but because of the assets you've got . Yeah, so fully ground into the SIP question mark on that, money held in cash to invest in the second tax year Question mark on that as well for the same reason. The other sort of main point is here is that you would end up with, you know, more than a couple of hundred thousand in a general investment account and obviously that's not tax wrapped . But But you know , you'd isolate it every year. You could bed and sip every year as well, you know, if you've got any headroom to be able to do that . So you know, yes, you're not going to hold it all in a JIA for multiple decades. You're going to overtime tax wrap it. It'll take you while there's only one of you, twenty grand a year . But you know, if you can put into pensions, then yes, if you want to be financially free by thirty six though, any money in your pensions are not going to be accessible for twenty one years at least . So you need to be thinking about other you know , you certainly need to be maxing ICE's lifetime well no lifetime ISIS sixteen . So You know, it might be that the taxation of the GIA is the price you pay for accessibility earlier on. You don't have your money if it's in a pension. No, no, exactly. And what we've said in several podcasts in the past is that people are wary of paying capital against tax. So they got a GI over here and if I cash in twenty thousand pounds, I'll have made a big gain and I've got to pay tax on it . Yeah. So should I just take out my ten thousand pounds and put that in the ICO because I'll then not pay the CGT . But what you're missing out then is from then on the tax the growth will be tax free. So it's worth in our view taking your full twenty thousand pounds and icing it because then you got you got long term growth in tax free. Yeah, even if you pay a bit of CGT on an annual basis. Yeah, just in that one you take each transaction on its own. Yes, you might pay a little bit of CGT realizing the twenty grand from your GIA , but for every year indefinitely thereafter that twenty grand is tax free for life . So you know, that's got to be worth paying a little bit of CDT for, you know ? It won't be a lot , you know, given your annual exempt allowance and things like that . You know, I think also given your goal to be financially independent, although you don't say ret ,i Ired don't think you're planning to stop work , but you're going to need flexibility , so you don't want to suck away too much into pensions . So yeah, I think even if you pay a bit of tax buyer money in GI, it's going to be worth it for flexibility. Yeah, and especially but you're doing a great job now. I mean , you're saving seventy percent plus of your income because problems is not a problem. But as Pete said, you need flexibility for the future and your goals will change over time. So yeah, not too much indeed pension, but I think you may have a bit of a difficulty in putting loads in depension because of this pension input period. Yeah, you might want to buy a house. You might yeah find apartment, you might have kids or whatever you don't say much about your sort of personal situation, but you might not life changes and we're a big believers in flexibility because nothing ever stays the same well laid plans and all that they end up getting changed just by the universe . So but it sounds like you're doing a lot right. I just wouldn't worry over much about CDT on a GIA . It's the price of having the opportunities that you've got, I think , you know, we all need to pay some tax. It could be worse, right? So you be okay. Don't let it worry too much. Well, the other alternative is you keep it all in cash, get no growth whatsoever, but don't pay the tax. So yeah, yeah. It is really worth paying the price to do it. Really is. Yeah. I'll recommend you take a little two quarter million quid with the cash and stick it on your mattress. Don't do that. A tax driver would never know. You never get any growth on it. you Well',re a tax evader. We've already established that this episode. All right, that's it in it. Yeah, I think that's it. I hope the answers were helpful. Always. If they weren't, it's nothing to do with us. The questions were too difficult . But please do keep them coming in at hello at meaningful money. TV with a subline podcast question and we will include it at some point at some point. Six months later, perhaps no. But that's it for this week. Thank you so much for listening. Any links that we talked about , go to the show notes, meaningful money. QA fifty two. Hope you enjoyed it as always. Thank you so much for listening. Thank you, Mr. Roger Weeks, we'll talk you next time.