Overcoming Fear of Investing

Good man. sppread the seed around the world, Michael.. Producer Kate is just screwing over ns at the idea of spreading our seed. The corners go far and wide, Hi folks, and welcome back to another meaneingful Money Q and A with me, Pete Matthew. and me, Roger Weeks. The main man feeles like it's been a while since we've done this Well we have be because once, you've been jetting off to places and I've not. So it has been a while. Makes a change. It ye Prague and Berlin It'ertainly great. It was great. Yeah. it was I mean U Mentally restful, physically exhausting. So we walked fifteen, twenty thousand steps a day most days and two very different cities. Prague is obviously ancient and ome medieval architecture, very, very beautiful, very pretty wherever you looked. and we had epic weather. It was gorgeous the time we were there And then we got a train up to Berlin, which is very different. It's not a pretty city, but obviously steeped in history and very recent history. So it's pretty powerful and chilling to So the' stand on the Lust plats where the big rallies the rallies run and then Babel plats, which where the books were burned it was like powerful, very chilling and in both cities actually we had walking tours., which was great because you' learn a lot about that from somebody who's local Yeah about what it all means and actually the girl who did our tour in Berlin was four hours for our world to get. But she was a history and philosophy master's student. She' a Canadian but lived in Berlin for ten years. She was absolutely Brilliant. She were just listening in rapt attention as she told the stories of what had happened in these various places. So Oh wow. Yeahah, really good, really good break backack to work for rest.. I'm recording for rest that's fine. Yeah, yeah, you are. I know you've got stuff going on as well, but look, it's you know, here we are and if you want your questions answered, as usual, send them in. Hello at meaningfulmoney.tv Use a subject line podcast question you normally do that, mid? I do. I just link that out of you. All right, well let's get into today's questions then do you? Yeah. Notes and links as always at the show notes, meaneingful Money d.tv slash Qa fifty three and if you're watching on YouTube helpel us out. suubscriber numberbers building nicely there actually. and if you can like this video, subscribe to this channel if you're not already really helps. All right. Let's dive in.. We got some like war and peace questions, but not. Well a couple of them I see quite a few. So anyway, we've done some editing. F first one is from Bill D deffinitely this one is edited down. Hi Pet, Roger. I have followed Min for Money for around six years now and it's been an invaluable source of sensible advice which I've followed This has left my wife and I in a very good situation for retirement, as you'll see below. You deserve an MBE at least. I' been saying that for years, Pete. It's not happened. No really no Well, unless lots of nominations are going in and you know the Privy Council, wheverver it is looks at it and goes, Oh no,. Absolutely no. I live the this again. Well I do live in the dusty Okay, but Bill says I love the double act with Roger as well. That that's good. I am sixty two and my wife is sixty years young Our total pensions will be about thirty five gra a year, which is all we need for our basic living costs and general going out, etcetera We have a house worth seven hundred fifty thousandars with no mortgage and no debts. I have a DC pension fund around nine hundred twenty thousand and my wife around six hundred fifty thousandars Our two boys have just moved out of our house and so we are now retiring and re leararning life BC before children I'd begun looking into gifting them money out of excess incomees s as boys I like the idea of Givy with warm hands, and strangely, so do the boys I'd better do. Putting our scenario into Google Gemini, hereere we go. It's going to get more and more' it is and these things are going to get better. Using of plus with regular drawdowns and keeping within the current twenty percent tax band, we could each have around fifty thousand income after tax overver the next thirty years really can't see is spending more than forty grand a year tralling, and this will certainly reduce in time as we get older so we'll give the increasing access to our kids To keep the HMRC documentation simple, we plan to use our joint account to give gifts to the boys I'm guessing that we'll need to prove to HMRC that we have equal income to do this. Wan to pick this up in a minute So my wife will take eight and half grand less from her DC pension than I from mine. Hope that all makes sense I presume if our incomes are not balanced, we would have to pay out from our individual accounts and document both for HORC purposes In addition, I have two hundred grand to my wife around one hundred fifty thousand in ICEers and savings. I know we can each gift three thousand a year from the ICA as well as using excess income get I asked Google Gemini about this. Aarently I can use the ISA for certain capital This interesting. that. e to buy a new car, redo a bathroom or bedroom or a large holiday U Not sure what would be the position if we said our largest holiday year is paid from an ISA and any other holidays from pension and we still gift excess. It seems a very gray area. That's because it is, Bill. I'm sure in time HMRC will look closer into this area. So I think it'll be sensible to still use ICSEA in the next few years, not take everything from the pension possibly change the funds from accumulation to income and alive Okay, onene last thought is that this is all based on current tax rates. Inerent's tax no rate ban hasn't changeince two thousand nine and would be worth around five hundred and thirty grand today if it had, raisen with inflation. I'm presuming there will be increasing pressure to raise this given house price growth And especially after twenty twenty seven when pensions are included, best regards Well, ye. So a couple of things to pull out. One is this U balanceing Yeah, I'm guessing we will need to prove to HMRC that we have an equal income I think the main thing to say is that gifts are never joined technically. No, they're individuals. So if you know if your wife Bill had more income to give away, she could give it away, the fact you're in your heads, you gif you are both gifting to the boys. It doesn't necessarily mean that you've got to give ten thousand pounds each It's out of your income That is the income. if she's got They come No you know, the potential for income from a DC pension then it would arguably make sense to draw it. It Don't make sense to pay forty percent tax. No. I mean, it just happens to be you could say that you pay most of the bills bill and therefore your wife has got more excess income that she can gift away. There's no balance between the two at all. So I wouldn't undo your income and say, okay, she will draw less income. in order that that it's we don't fall foul No I wouldn't neither. That was a thing in reading this long question, that was a thing that stood right out to me at all this is something I've kind of come to fully kind of grasp more recently actually I'm ashamed to say because I've quite often said, well, yeah, you know, if you've got a couple But one of them dies You could probably argue with the revenue that that the surviving spouse made the gifts if it's from capapital If it's from Join capapital as long as one of you survives the seven years, you probably probablyroadly get away with it. Yeah. But if it's gifts of income, that's a different iss,n't? Gifts of income is really, really simple. So if you're saying actually we wouldd like to give eight and a half thousand pounds more And therefore, Bill, you want your wife to have an extra income to do that, You can do it. That's not a problem at all. Dfinitely. so you're saying keep with the twenty cent band, you're only going spend thirty five thousand pounds or whatever and you both get fifty Fill your boots and give it away if you want to. I can't see a problem in there. No, I can't see eith there You had a thought about this sort of using lump sums and U you know, it is grreay area, this is the problem and this is always the problem with HRC rules is that they're always well, we'll test them when we get then the far end of the line. It's all quite grreay and nobody can say HBRC won't say that's definitely the rule for this one and that's the rule for that one unfortunately. So if you have your normal holidays and you're paying for that out of income, that's understandable. I would say if you suddenly had your major anniversary or a major birthday came along and said, OK, we're going to go away on a cruise and spend fifteen or twenty thousand pounds and pay for that out of capital I can't see a problem in Newor at that point because that's an extraordinary amount of spending which you've allowed for in your capital. Yeah I agree with that. Ultimately you or your executors are going have to justify this. If you because it will be your executors who claim the exemption ultimately. And if HMRC choose to challenge, they're going you're going need to keep good records And they are going to have to be able to say this was an unusually large holiday Therefore, we drew that from capital. We didn't pay for it from income and we maintained our giving to our children. Y out of excess income This was yeah, an unusual, sort non normal expense. Weere if have an extension put on the house, you know, this is like, well actually we put money aside for that. It's not doing that every year, right Yeah, you're payingobody pays for the head of income. They pay for the head of capital, doesn't? Yeah. Exactly. So I think you know good records, but I think your thinking is generally sound, but there is no way to nail this down until that claim needs to be made, which is after you've died, Bill Yeah, but hopefully, If you start gifting now, you've got lots of years of gifting and your seven year rule kicks through the Yeah. anyway, you won't have to worry about trying to approve it? Yeah, exactly. So yeah Good question,ough, Rrian Quion, R. Question two., Thankfully is a slightly smaller one. This is from Anne. He says,ear Pete Roger, I can't thank you enough for the excellent free content you put out into the world. I recently got diagnosed with a degenerative condition which will affect me and my family down the line The podcast has inspired me to take control of my finances, including putting the right protections, insurances in place and using the investing to help navigate a more uncertain future. Thank you. The information is accessible and you guys make me chuckle as I go about my day. Well we chuckle all the time anyway. exactly glad. So down to the question, I am keen to make my life easy when it comes to managing my finances, but I have hit a wrinkle in my plan My preference would be to consolidate my pension into as few pension accounts and underlying funds as possible And too me, the levels of protection available through the FSCS seem too low to be compatible with keeping a pension or with one provider. Am I missing something How do you think about balancing this risk without ending up with lots of pension accounts with different providers Additionally, I've been selecting the same low cost all world tracker ETF across my family's Iices and sips. Is this inherently risky too? And should I aim to use different fund providers, perhaps that aim to achieve the same investment objective? Anyway, I may be being overcautious here or misunderstanding the level of risk, but any reassurance you would be greatly appreciated. Thank you again, Andy. Good question, Andy. We get this a lot, don't we? Yeah. know, it sort of comes up every a few episodes really, but You know, Yes, for most of us, you know, we get to a time of life where Really, those FSCS limits are too low. So for cash in the bank now it is one hundred twenty thousand per individual per banking you know per bank And with investment still it's eighty five. eighty five that she's not that much money, let's face say it. I mean if you think of Bill's question you know, nine hundred and sixty grand in pensions and six hundred fifty grand in pensions. And you know, most of us who are approaching retirement have got considerably more than the FSES. That's why we're able to retire So I mean, we need to sort of understand what's going on. We need to think about what the risk is and mostly it's risk of failure, isn't it of the provider of the provider going down. That's what the FS is covering. It obviously is not covering investment losses And that was like that. And so one asked the question what the likelihood of a provider going on? Yeah. And that's really quite minimal these days. Yeah Partly because even with further protection actually behind the scenes, they are not holding ono your money. They can't access your money. They've got to keep your pension money separate to their operating. That's right they have the cass rules. So you, your money is not helping them pay the bills andnding you wanted to draw it. whichich is obviously important. I mean, back in the day of with prorofits funds, you never really knew where the insurance companies were dipping into the with Profits fund to pay for the overseas convention and sort salespeop's trips to Vietnam and stuff. But You know, obviously there's very clear lines. The rules are called cast rules, the client assets sourcebook rules and they are you know, legally bound, not only to keep your money entirely separate from theirs, but also to reconcile and audit your money every single evening, essentially the end of every day so that they know how many units in every fund And in every port, each of their clients has to the penny. So there's all sorts of protections. And obviously any provider which is materially important is regulated by the Potential reggulatory authority, which is almost like an Uber FCA. It's like okay, this is the policeman for the big guns where there would be systemic issues if they went under. Imagine if the credential failed you know, or leegal in general, O of these massive names with, you know, hundreds of billions of money under their control That would be hugely problematic Vanguard. You know, trillions across the world. Can you imagine the impact? And so the oversight of those companies is more as a result and so it should be U One thing particularly pensions there is the difference between insured between insured pensions and platform pensions l Sips and stuff like that is with insured pensions, the old traditional they be like occupational schemes you would have had in the past un insured pensions with someone like prudultial exactly pensions. The older pension, if their class is insured Actually you're guaranteed a hundred percent of the fund value, essentially. Because the way they' built up. Yeah. Yeah with DB schemes, you've got the pension Potection Fund? Pension Potection Fund. That was what youre thinking of. was exactly I can see the picture of my mind what it was. And there you've got ninety percent protection for your pension before retirement and one hundred percent thereafter So you've got those in the background, but more and more people are having these sips Yeah and pensions that are based upon platforms. Yeah. And where the eighty five thousand pounds kicks in. Yeah I mean, ultimately If you think about what the chances are of your provider going bust and even if the provider went bust, your money cannot be called upon to shore up Company No. What would happen in the case of a platform pension is that the assets would be hoovered up by a third party platform that wasn't in financial difficulty Be that's a, you know, it would be cheap money It would be a cheap asset for them tover up. So let's say you know, platform A went bust and there's like a hundred billion quids that they're looking at there Well, pllatform B would be eyeing up that hundred billionquid and say, well, we'll just swoop in and take that because they're then going to get the fees on it your money remember is under trust. So the worst thing really that could happen is that you could lose access for a period of time while everything's being sorted. Platform A would have administrators in. the administrator's job is to keep things running while everything is sld it out while a buyer is soought And so you may lose access for a short while, but, you know, they would their first priority would be to get access get you access back to your for your money So I think The FSCS is covering an almost unthinkable It is. ye. The only real case would be fraud on a massive level whichich I can't even imagine with these days with the protections, how that could work. Well No, you think about the R Maxhole days dipp back in the seventies and eighties when people could dip into that that's not going to happen now. I mean, The number of pensions we look after that are not below eighty five thousand pounds A couldt do numerous, numerous, numerous. And it's people are taking the view saying, Well, actually, what's the chance of these going under And if Ass Pete said, that sit platform Aid goes under. actually a trustee is holding on to your funds under the bonnet and they just be hoovered up to somebody else. They would and give you access to it. So don I think You needed The eighty five thousand percent sounds horrible. D' get me wrong. Thatound like enough. But you need to chill a little bit. I think. as far as funds If you're committed to You know, like an all world tracker as you say. Well you can get those from anyone of a number of different companies. So if it makes you sleep a bit easier to have, you know, Vang Garden HSPC and LG and afidelity version of each of those then go faks. Thus You know, the cost difference will be negligible, I ain't gonna move the needle really, and that's an easy way you can build in a bit of diversification. But the same rules apply to those underlying investment companies. Your money is separate from theirs. They have to audit and reconcile your figures every night. So you know that's an easy way you can bring in some diversification We do sometimes suggest that If this is a real worry for you, you could use a different platform to your partner You could have one platform for pensions, another for ISIS. It brings in a little bit of complexity, but not a great deal. But honestly, what you don't want is like eight different pension providers and you're trying to work out your withdrawal strategy across all that So our general advice is this is something not to worry about Do what you can But you'll probably need to accept some risk in order to give yourself a reasonable level of simplicity in your affairs. Otherwise, it'd be completely unworkable. It would And we probably work for millions on one platform. Yeah. I don't lose a moment's sleep over it because of all the stuff we've talked about Well the previous question, you know, I've got nine hundred fifty thousand pounds, youve got six hundred and fifty. It's like Well, he'll have to have, you know, twelve pension funds. Yeah or pension providers. you know? And it's just not work you run out of providers in the end Yeah honestly. you would. And yeah, you know, it's a lot of passwords. So I hope that's helpful. Andy, obviously, we're sending you our very best wishes for your condition. hope. that You're able to sort of bear up in it all send in our love to you. but thank you for the question. Yeah Okay, this is question three from Michael. Hi, Roger and Pete. I am thirty two and I've been listening to the podcast for a few years and the advice rec you mean suggestions, thoughts. Michael. The advice, particularly about investing has helped me immensely. I have a question about investment portfolios when moving abroad. I moved away from the UK two and a half years ago or which point I stopped investing into Vanguard and moved to interactive brokers I still have a decent amount invested in Vanguard, but I'm not sure whether it makes sense to consolidate everything into one platform or keep it split over two I feel like those are two different questions. I don't have any immediate plans to return to the UK, although I imagine I will eventually. Do you think it makes any difference in how the investments are split or am I worrying about nothing Thanks for sharing any of your thoughts and perhaps clearing this up for me. Keep up the amazing podcast Michael originally from Cornwall. Good man. Spread the seed around the world, Michael, you know. Producer Kate is just screwing up and ns at the idea of spreading our seed. The corners go far and wide, but you're just gross, Kate. Yeah, yeah. I can't see any problem in keeping them separate them together I guess an interactive in brokers is offshore. I presume so, but you know, judicious Google search inbound? Yeah, mean Because Michael you've chosen Vancar for that particular reason when you're, I guess in the UK Um, and they're low cost and they do what you need to do I don't see any benefit in combining them for any particular reason unless interactive brokers have a A fee threshold or accessibility is better for them whilst you're abroad? Yeah I mean, you know, if you vanguard, obviously when it comes to rappers, we know obviously you can't invest in UK tax advantagage rarappers like I certain pensions while you're offshore, R? But you can keep money and yeah and so there'd be no issues there. I'm not sure really whether this is a question about his where he's living U just diversification But I think almost The answer is it doesn didn't really matter, Michael. Your dead right, Rog is about access and ease and convenience. So if it's easier for you to shift your vanguard money onto interactive brokers, while you are living abroad then do that. Yeah. Just understand you might need to do it the other way. So it might be worth conversation with interactive brokers. but I mean, it's interactivebrokers. co UK. they have a UK presence But from a very, very quick Google search in the last ninety seconds, it looks like a sort of platform which specializes in sort of multi jurisdictional investing. So and Yeah, I don't think anything more to say about that. It seems fairly straightforward to me. Yeah. I'm not worried I'll word to too There go Michael. What on, Michael. Hopefully that's hopefully our lack of worrying about that is ribss off to you All right, so question four, this is from Melanie, says Hi Pete Roger. I recently discovered your podcast and I'm working my way through the back catalog. Okay I'll see you in three yearses. Yeah. I'm finding it extremely informative and it is helping me demystify a subject I' found confusing for a long time. so thank you good it. That's the idea. My question is how do I calculate the amount I can contribute annually into my SIP whilst also contributing to a DV pension and AVCs? Two hundred pairs of mthers is the question where My annual gross salary is twenty five thousand seven hundred and forty four I open the sip to give me flexibility to retire earlier than ' sixty seven when I intend to access my DB pensions As well as my current local government DB pension, I've a deferred university DB pension from previous employment. Idally between sixty to sixty two and access a sIipP along with my stocks and shares ISA to bridge the gap. Thanks, Melanie We come across this a lot. Yeah yeah, we do it's not easy, depends on the DB scheme as well. The cururrent is local government, right? Okay So this is down to the pension input mail. Yeah, which You never find out until after the fact, you get to the new tax year what that was your pension input for the last tax year. The fact that Melanie's retirement age is sixty seven suggests that she's in a care scheme career average revalued earnings. So as opposed to a final salary. So that does make it somewhat easier as long as you know to the penny what your earnings were in the year that you're talking about But the reason why it's a problem, as Rog said, if you don't find out Your pension importput amount until after the end of the tax year is too late. prettyretty much to do anything about that tax year, isn't it And so There's going to be some calculation, doing, we'll get to that in a second, but you want to leave yourself some kind of headroom because you don't really want to overpay. and get an annual allowance charge a tax charge if you can help it Um, So pention in import mount for DB skin Right. Okay. what is all based upon your benefits, what your expected benefits are So effectively, the starting amount is what your earnings were or the amount you had in benefits last year You multiply that by sixteen. So some sort of random number. and then you add the lump sum on So that gives you the total value of your input last year O the the amount of your pension value effectively. And then what you need to do, you uplift that by CPI for the twelve month period. Yeah. So just we black by inflation So the end of September, that's not to do with the tax year, but it's now September September CPI is the calculation Yeah know. so Weirdly random, supp it' got to be somewhere, you know, you think it' be April. Yeah, you were March Why exactly halfway? I'm sure there's a reason people are smarter than me. And then what you do is then you take your ending salary Ar benefitsr benefits. Yes. multiply those by sixteen and add lumps' in And then you calculate the difference . So that is your pension input amount. So I'm just thinking I've realized I might be painting myself into a corner here as an example. So let's just say if the accrued pension was No, I'm not going to do. No. I'm going see our ten thousand cree, but then I realize that to our inlation. try to do a calculation of the flly. He's never going to work. He's never good.'ve fall into that trap before So The amount of pension you had at the start of the year multiplied by sixteen added to the lump sum take that whole figure and multiply it by CPI. thenen do the same sum, so your benefit in the pension at the end of the year. Multiply that by sixteen and add the lump sum No need to upify CPI in that. And it's the difference between those two figures Now It's a little bit easier with care schemes because if you know what your salary is and you know what the accrual rate is, you should be able to work your. a definite figure. Youve got a definite figure of how much you have increased your tensions behind in the year. So it is a bit easier But it's still not straightforward. Yeah. I mean some peder scheme trrustees might give you a bit of an indication of what that figure might be for your pension input. Yeah worth asking. But you've got to allow a bit of leeway either here or there. That's the difficulty with it. So it's never an easy thing to do this I think also one has to ask how big a deal it is that you absolutely max every year, whereereas you can. I think if your salary is likely to rise every year then you could say, well, okay I know what my pension input amount was for last year It's going to be broadly the same or a little bit more this year if my salary' gone up So You know, I can kind of use last year's figure as something of a guide building a bit of fat into it and say, Well, actually if that's the figure, then I've got this much headroom. And so I will with the ns And as opposed to kind of freting about being absolutely up to the limit on a year by year basis, just think w. broadly be okay I generally come from a sort of pattern of It wouldll be okay. You know, too many people come to us and say, Well, I want to get right to the penny. And it's like, that's okay. It's not really how my brain works. but you can You can still do great work and get nicely up to the annual allowance working on last year's figures And the other thing is if you do happen to overfund say by a few thousand pounds. when you do your tax return then HMRC will see that you've overfunded, they'll only claw back the tax relief you've got on the extra bit. There's no penalties, there's no fines. They'll say actually you've overfunded it by two thousand pounds and therefore you've had for pounds worth of excess tax relief We'll just take that back Yeah. so there there's no people could to jp up and down on top of you and find you and do this one say You're not going to debatht as prison or anything, if funding your pension Hope that's helpful for Manie. What I love about this is that You know, you're not on a high sour no But you're obviously contributing really well I mean, two hundredquit a month into AVCs that's some going. I mean, that's best part ten percent of your gross salary, which is epic, so well done. So I think the future is very bright. and even the fact that you're thinking about this kind of level of finesse is brilliant. So well done. Keep going. Right. This is question five from Tim. Hello Pete and Roger. I'm a long time listener and as a result in far better financial shape than I was for many years. thank you 's what we like, action being taken. In work, I'm often akin to the Sawshank redemption character Andy Defraay as I find myself offering financial or pension scheme advice to colleagues. Did he do that in the film? No Do he But, producer case not in us.'ve It's been a long time He was on financial fraud or something was it? Oh yes. Oh there you go. Sorry, Tim It's been a long time since I saw it' a brillant bndilm a long time. So they go. This advice ends with recommending your good sales in the knownledge repository that is a meaningful for money archiving books. Well, for that I'm grateful And I'm fifty six and just over four years from my planned early retirement at sixty one when I will have thirty six years contributing into a company DB scheme I plan on taking this in a stepped format with PCLS to offer higher initial payment until my state pension starts six years later at sixty seven. To maintain basic rate income tax, I am paying my maximum matched pension contributions plus ABCs through salary sacrifice keep just under the four percent tax limits My wife will be solely reliant on her full state pension having not contributed to her personal pension. She will receive this when I am sixty four, meaning our combined funding danger zone will be around three years, during which we may need funds to toppp up our income either from the PCLS pot or ISA savings to this final combined total So my question is You repeatedly talk about retiring with options, such as having pensions, ICS and savings, etceta But I'm concerned my pension and AVC fund will be totally concentrated with little else. After maximizing the pension and AVC contributions, it looks likely that I won't contribute enough to fund a savings port That could comfortably cover the three year danger zone Will this pension ABC concentration matter? Should I continue paying the ABCs to avoid higher rate tax or my income and recovering the tax rebate into the ABC port To me, this makes sense, but would funding a savings pot give us flexibility? to fund our pension gap somehow that I am missing. Do I need to target an ISA or other savings part? in my remaining working years. This prospect would feel like not living for today, but retirement is in touching distance So might it be worthwhile I can kind of feel the angstery. Yeah I think that's part of the problem We give people so much information peopleople know a bit of stuff And it's like, o I know a little bit but I don't quite know enough and therefore I worry people tend to overwry things and I don't think you need to oververw worry yourself too much timim with this No, I think probably not. I think So A one point here is whether the AV scheme is fully attached AC scheme is probably attached to the main scheme, Right? okay? Because if so, because normally our advice you would be like, well, you know, if this's PCLS, you can use that to provide diversification of withdraw sources. you know, actually had this conversation yesterday with a client The advice was to fully crystallize and hence produce money. you know, provide money outside of the pension po, which then they could ISR and GIA and have A kind of tax free withdrawal source. Yes, as well as the tax avoid income from the pensions. So If the AVC is fully linked to the main DB scheme and potentially available to fund tax free cash. Yes then he's not going to be able to take that AVC early No Well, I would be looking into possibly taking a DB scheme early. My thought process would be take a DB scheme early, access your tax free cash.. You have a mix of tax free cash and earned income Unearned income Um, which you pay tax on. because you will have no earned income at the time. so you can have a lump of your income popping out. You don't say How much your DB income will be, But you've got this gap and' I think it's bit of a bncy out by saying How much will my CB sch can be reduced by taking it early but it gives me access to the tax free cash, which will get me over this massive hump that I'm worried about. Yeah. I absolutely agree that's the case. And obviously, it sounds like there's reasonable flexibility in the scheme if there's a stepped option I think it That speaks to me the fact that the AVC will be linked to the main scheme. Yeah which obviously limits your options I can't Really imagine a scenario where you would voluntarily pay high rate tax. that's It sounds like a high price to pay to me for Yeah. It goes against the grain, doesn't it? say, it does. To give me flexibility, I'll pay the forty percent. It's like When you can still access your pension The place where your money is going to avoid the four percent tax. I can't see the reason why you do take that jab in the arm and say, o, Im willing to lose that. Yeah. I mean four years out. I mean, the scheme rules will give you current actuarial reduction for taking it early. I mean there is it depends on the scheme. those rules might be set in stone, they might you know, be reviewed every year or whatever based on uh, you know, the experience of this gemame, but I would be looking at planning on drawing it early and see if it works. The alternative is you retire but you do something else. Yeah and bringing in another income, you know, so it's not full retirement, you've not stopped work But you stopped, you know, from this company for that you've been with by then forty odd years So Yeah, there's some planning needed here And I think as well is if the AVC is fully attached, which it does appear to be If you can use the AVC to give you a taxree cash and it doesn't affect the amount of your income for the DB scheme apart from the actuial reduction If you're taking it early But the reason it's reduced is because you' taking it early No, you'll end up haveving that income for far longer sure It's like it's like when people say, should I take my state pension now or should I defer it? for twelveths becausecause I cant afford to. It's like, yeah, but it's got to work that much harder from that point on Yeah. becausecause you've missed a year years's worth of income. so yeah In preparing for this, Nick just made a note here about the marriage allowance. It's not clear Tim if your partner is or your spouse is working you know, if they don't have any earned income, then they can send a bit of their personal allowance your way. I mean, we're probably talking to two hundred and fifty two quid a year of income tax saving. You know, I don't going remove the needle very much, but every little helps. so That a little bit more take on pay could potentially go into your ISert or whatever and it will just help bridge the gap a little bit. So for the purpose of completeness I think it's worth mentioning that. but I would be if I was acting for you, I would be digging deep into that DB scheme and saying is possible for them not to be a danger zone you actually draw your income earlier. Obviously that's not advice. I think we might have used the word advice a couple of times. but I think most people listening to this know that we can't give proper advice in this format. We don't know anything like enough about the circumstances. So these are just Our thoughts you know, disclaimer caveat and all that. Okay, questQion six for. Well, that lasts one with all the caveats attached to it. This is from somebody called Cam It says to the Bruce, Springsteen and Little Steveen of the financial world. Hi guys, my name is Cam. I just had to say you guys are absolutely fantastic at what you do The knowledge you provide is generally incredible and immensely helpful I think I speak for all your listeners when I say without your podcast, there would be a lot of people struggling with personal finance. Keep up the good work, Pet and Rogerers.'s kinders and very likely to get your question answered, please. And here's your question, obviously. I am twenty seven years old. amazing. Sventeen months ago, I quit my nine to five and started my own dog walking business I've since trained to become a dog trainer too The businessusiness has gone from strength to strength and I'm very proud be. However, the change from going from a wage structure to a varied income per month has been a tough adjustment, especially when saving and wanting to invest and so on Contruary to my pension each month, good pay into A ISA each month for the first time home. goodood. The only thing I don't do is pay into a stock and shareres ISA Firstly, how do I open one I've listened to your podcast for well over two years now and I've listened to the majority of the back catalogue I feel like I know what to do, but it's a genuine fear that's stopping me from opening one, interesteresting I don't know how to explain it. It's almost like my head is telling me, don't open one, you'll mess it up Is it literally as simple as sign up to a provider? openpen an account, add money in each month I feel stupid saying I'm fearful of opening one, but I generally am. The last part of my question is simply, is there anything else I should be doing that I'm currently not? Insurance wise, I put income protection and the necessary insurances for my business, thanks once again, you absolute leegends. Thank you Kam, You're a legend is you Yeah abolutely. A twenty seven to think about these things already. Yeah and K unusual in he'll have this question answered twice because we answered it on Bank of Dad as well Those of you who don't know, Bank of Dad Podcast is me and producer Kate, my youngest daughter Um Broadly the same stuff but we're talking about specifically to younger adults. and so it kind of Obviously, much less retirement focused, but we have a lot of fun. It's a little bit more sweary than meaningful money, but only a little bit. I I'll be told not to swear. That's I know exactly. Yeah Yeah. Kate's just potty mailth honestly. Incredulity here. Okay we'd need to get you a camera and a mic.. Okay I mean, it's interesting. he says, you know, the change from going to a wage structure to a variied income per month has been a tough adjustment. And then the next breath, I contribute to my pension every month. I pay into a licer every month. and, you know, got insuranceces It's just it's brilliant. So Cam you're doing a brilliant job. Honestly, it's you're a sort of poster child, I think for for good financial management and we're obviously delighted that the The business is doing well, you know? All the stuff that applies to us as individuals also really applies to businesses, particularly for self employed. So you should have an emergency fund you know, to you know, continue paying your wages or whatever or your drawings if even if you have a few less customers one month or whatever So try and build up some reserves, all that sort of stuff. All good businesses do that and But it's funny, isn't it that we can get in our own heads. Yeah. We're really worried and fearful about opening an I. I think that's one of the things we try to say to people is If you think about taking the step, then take the step You, you can't really go wrong with these things. You can't's if you can't unwind it at some point in the future. You start one and it doesn't go the way you want it. You just stop it or you draw your money at or whatever. It literally is, cam, as easy as you say, you just log onto a website somewhere or an app and you sign it for an Iiceert and you start paying in Um Do you choose fund that goes under the bonnet Um but there's no Taking the step is the most important thing you do. Yeah And you're not going to break it. you're not going get it wr and because nothing is really Doable Yeah or nothing is fixable. So let's give you a bit of a hand. We'll put a link to a website called Boring Money. All right and on there is' a friend of mine called Holly who built that site and she They're really good at sort of comparisons between different DIY investment platforms, right? There's loads of them available So you're just going need to pick one, all right. But understand that you don't need to stick with it forever. So if you pick one and then six months, twelve months down the line, you feel like you're not really getting on with it, just move it, right That's easy as well go on to borring money and just have a look and then think, okay, maybe I'll try XYZ platform Literally go to the website or if it's an app, you can download the app And it will walk you through. you know, you just say, I want to open an ISA and it will walk you through what you need to do. You only really need basic information name, address, date of birth, national insurance number U these days obviously you have to identify yourself so you might need to take a picture of your driving license or whatever and upload it and do some kind of anti money laundering ID type stuff. But opening the The account is the easy bit. it will ask you how much you want to put in? Do you want to put in lum sum or do you want to start a direct debit and it walk you through step by step. honestly, it's really the easiest thing in the world. You probably do this in less than five. The thing then is what to invest in. That is you still you can't mess it up, you can't really get it wrong as such because there is no Right answer. and you can change it down the line But some of these platforms will guide you. I' ask you a bunch of questions, which you answer to the best of your ability like how you feel about investing, whether you've got any experience with it or stuff like that. and they might suggest an investment for you Theres stuff in the back catalog about investing generally, so so definitely sort of pick that up and learn from that. But really you just got to go in try here. And I think what you're already doing, Cam is you're paying into a pension and a lifetime ISer. I'm presuming the lifetimeSer is going to be stocks and shares rather than cash, but I don't know So you're already investing in one of those. so choosing a fund will be along the same sorts of lines you're doing already, but it might be slightly different because you may access that money sooner rather than you do the pension and therefore your fund use might be slightly different. Yeah. But you can go wrong. as Pete said, you can unpick this afterwards. Yeah, definitely. Meaning for Money Facebook group is a brilliant place to ask questions like this as well, reallyally helpful m if you want to really start. sort of adding to your understanding and a bit more focus canamp this meaningful accademy, particularly the buildild wealth thing Lads of ino there about how to choose your investments, but Honestly, the Facebook group is freeze. twenty five thousand people there all trying to help each other. So if you went in there and said I want to open my first o and chairs ISir You know, what platforms do people suggest, you'll get at least half a dozen, if not three dozen suggestions and you've got a bit of a starting point. so Be encouraged, Kam because it sounds like you're doing brilliant work and all the best for the business. Actually, your biggest worry was stepping out of your ninetine to five job and starting your own business. Yeah, man. Ething else that is easy. yeah, good. I think that will make sense, isn't it? O twice it does m sense that the listeners are not quite sure and the viewers now, but we'll be coming back all doing something right? Yeah. So hope those answers were helpful as usual, but please do keep them coming at hello at meaneingfulmoney. Tv with a subject line podcast question and we'll try to include them at some point in the future Yes. we are Well, these are still from January. I think we might be moving on to February next time, but we'll see. We're not even halfway through the year yet. So lots of questions still to come, but that's it for this week. Links at the show nototes meaningful Money.v slash Qa fifty three. Next time I'm having a conversation with a guy called Justin Harper, who is a chief markarketing offfficer at Life Sarch now ot a very long standing relationship with Life Sarch. They are life insurance advisors, absolutely brilliant at what they do. I talking with Justin about Life insurance for those of us who well, look like me and youew Rodge. All, A little bit more middle hands. Yes Handsome. Yeah, silver foxes. I'm moreable than you and I'm fourteen years younger than you, which was. Anyways, but that's a great conversation. I recorded it actually this morning before we recorded this one. so that's next week. So hope you enjoyed it this time. Thank you so much tuning and listening. Thank you Mr. Roger We weeks,P. We will talk to you next time