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Money matters. I wish that I knew tall when I was an investor, a business owner and a money educator, understand it better compound

Sarah Poynton-Ryan 0:12
international budget investment to recover from debt. No one explained to me that your money to align us at work is about normalizing the conversation. I

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Hey, Money

Sarah Poynton-Ryan 0:27
Mechanics. Welcome to the Money Mechanics podcast. My name is Sarah Poynton. I'm an investor, business owner and money educator, and in this episode, we're going to be busting money myths. So this is the last episode of the series. It's been an incredible series, and we've covered a lot of different things. And whilst we've been doing this, we've had lots of feedback from listeners and telling us that there's certain things that they've learned about money that they'd like clarification on, and also that there's things they've been told about money that they're not sure if it's true or false. So what we've done is we've taken the top 10 money myths that we've been told about from you guys, and I'm just going to handle some of these so you can better understand the circumstances around each of them. So there's 10. We'll just go through them in order. The first one is that you need a lot of money to start investing. Well, I don't agree at all. And the reason I don't agree is because of a thing called fractional shares. You can actually take 10 pounds, five pounds, 10 pounds, 20 whatever you've got available to you, and you could buy fractional shares in companies like Coca Cola or index funds, where you can buy fractional shares, and that will allow you to get started with a tiny bit of money. The key to investment success is actually starting. The key to investment success is not waiting till you've got loads of money to then become an investor. Investing is what will make you wealthy in the long run. But start today. Literally, just do it. Start with a 10 out if that's all that you've got, you do not need to have a lot of money to start investing. Myth number two, debt is always bad. Debt is terrible, not true. There's a difference between good debt and bad debt. And I've, I've written a whole chapter about this in the money mechanics book. Make sure you get a copy, if you haven't got a copy yet, and read this chapter, because some debt is debt that's going to generate you an income. Okay, so let's say a mortgage on a buy to let property that's going to generate cash flow for you when you rent it out. Well, that's good debt that's adding to your pool of cash, maybe a business loan that you're going to use to buy stock that you can sell for a profit. That's debt that can be leveraged to increase your income, to increase your money. Bad debt is your high interest credit cards, your car finance, your overdrafts, your whacking your holiday to Ibiza on a credit card, like that sort of stuff. That's not good debt. That is debt that's going to drain your resources. It is debt that if you don't keep it under control and clear it quickly, it's going to cost you an absolute fortune. But not all debt is bad, not all debt is created equal. So don't completely shy away from debt, because actually, when you understand the difference between good and bad, you can leverage good debt to make yourself more wealthy, and you can avoid bad debt so that it doesn't drain your resources. The third myth is that saving is safer than investing. I'm not sure I agree with this at all. In fact, I think you know with inflation, when you really understand what inflation is and how that's impacting the value of your money, inflation is eroding the value of your money over time. So Okay, your bank balance, if you've got 100 pounds or 1000 pounds, or 10,000 pounds, the balance, the number on the screen remains the same if you just let it sit there, right? But how far that money can go is reducing over time because of inflation in roving eroding the value of your money. So arguably, you could say that leaving money sitting in a bank is guaranteed to lose value. The cash stays there, the number on the screen stays there, but the value of that money, what you can do with it, erodes over time. Whereas if you invest that money, yeah, of course, there's risk attached, it could go down, however, it has the opportunity to also increase, whereas when it sat in a savings account, it doesn't really have that same opportunity to increase. So I think it's important again, we've talked about this through this whole series of the podcast, having your emergency fund, clearing your bad debt, all of that sort of stuff. Make sure you follow those rules. Make sure that you are starting small. You're not investing what you can't afford to lose. All of those rules have to apply here. But saving isn't necessarily safer than investing, it's just different. Investing is more likely to outpace inflation than savings interest is, so you've got to decide what's right for you. But stating that saving is safer than investing isn't actually factual. I wouldn't agree. The fourth one is that financial free. Is only something that wealthy people have. Well, again, I disagree, actually, because financial freedom, in its very nature, is slightly different for all of us. Okay, because you know, what does financial freedom mean? Really? What it is is that your investments, your money, is in a place where it is generating enough money for you to live on, where you don't have to work. You don't have to trade your time for money, necessarily. Now that could be a combination of business ownerships, shares, stocks, dividends. You know, there's all sorts of ways that you can become financially free. It's not necessarily always going to be through investment, but you don't necessarily have to be wealthy to be financially free. Because what does wealthy mean? It's, it's a subjective thing. You know, for some people earning 5000 pounds a month is, is wealth? For other people, that's just not enough. You know, for people who've got billions, 5000 pound a month is, you know, pocket change, quite literally, pocket change. Whereas for some people, 5000 pound a month is like an absolutely incredible amount of money that they would love to aspire to have. The thing about financial freedom is it's going to be different for everybody. So you've got to decide what that looks like for you. You can have financial freedom as long as you are intentional and disciplined in the way you approach your investments and the way you manage your money, you don't have to wait to be wealthy to then have access to it. Is it something that can happen overnight in 10 minutes flat? No. Is it something that everybody is going to be able to access super fast? No. Is it something that everybody has the ability to get to by being disciplined and intentional with their money? Absolutely So live within your means. Be sensible in the way that you invest, don't spend more money than you earn. All of these things are going to make a difference to get you to a point where you've got, ultimately, fuck you money. There's a whole chapter in the book about how and what fuck you money means, and that really is when you've got fuck you money, that's the true financial freedom position that we're aspiring to have. Now the fifth one is an interesting one. Renting is throwing away money. Why would anyone ever rent? Now, arguably, you could say that renting is paying someone else's mortgage and renting is making someone else wealthy, but renting isn't necessarily a waste of money, because what renting does is provide you with a bit of flexibility that you don't have if you have mortgages, you don't have, you know, for you, if you've got a mortgage and you want to take your money out of a property, or you want to move, or you want to sell, or you know your situation changes, you have to wait to sell that asset to be able to get out of that contract and to be able to get any funds out of it when you're renting, you've got flexibility. You can give 30 days notice, and you can move to Spain if you want, right? You've got that flexibility. What renting can do is give you that financial breathing space to open yourself up for opportunity in other areas. So let's say that you're buying a 200,000 pound house and you need a 50,000 pound deposit to do it well, to buy a house and have a mortgage and live in a property that you own, you have to get 50 grand together. Now, yeah, you could say, well, if I wasn't paying rent, I could build that 50 grand faster. Of course you could, that's obvious. But what if you've got 10 and you're renting? Well, that 10 could be invested into something else, to be generating an income from it, or to be going up in value. And because you've not had to invest that 10 yet, you can put it to work quicker, whereas with if you're buying property and you're having a mortgage, you have to wait to have that port and then you invest it in your deposit. It's slow, it's cumbersome sometimes. So renting might actually give you that breathing space and allow you to benefit from other opportunities. So renting is not necessarily throwing away money. I think this is a very personal choice. And you know, if your situation lends itself to renting, go for it. There's no judgment here, right? If renting is better for you, then do it. If being on the property ladder is better for you, then do it.

Now, the sixth one is someone messaged me this, you need to pay off all your debt before you start investing. Now, again, I wrote a whole chapter about this in the book, because there's a rule of seven. And I talked about this in one of the episodes as well in this series, you want to clear your high interest debt before you start investing. It's not important to clear all your debt before you start investing, and the difference is the rule of seven so if your interest is costing you, if your debt is costing you more than 7% a year, then you want to clear that debt before you start investing. If your debt is costing you less than 7% a year, let's say you want a 0% credit. Percent credit card, then you don't have to clear that debt before you start investing, because your investments could clear the balance of the debt 7% if it's more than 7% then you want to clear that first. If it's less than 7% you've got the choice as to whether to clear it first or. Choose to start investing next. You don't have to pay off all of your debt before you start to invest. The seventh one is you should only focus on one source of income. Get really good, get really focused and just have one income. This is one of the most terrifying things that I hear. No, no, no, no, no, we need multiple streams of income, right? Because if you've only got one source of income, what if it disappears? So if you've got a job, right, and you work for somebody else, and they pay you a wage, and that's your only source of income, and that person drops the ball and loses. The business loses or sign. You know, they do a deal and it doesn't work out. What do you think happens to your income? It disappears, right? You're reliant. You're made redundant. You know, your company goes bust. Whatever it is, one single source of income, it doesn't matter how good you are at earning that money. It is not necessarily a safe place for you to be in terms of financial positioning, right as a money mechanic. What we all have to have is multiple streams of income. So you can totally have your job, totally have your income, your main income in there. But you know, think about investments. Think about dividends. Think about the side hustle, things that you can do, selling on Vinted, renting out your parking space. You know, whatever it might be, is there a way that you can add income streams to your life? Because when you've got one income stream, the risk is super high. It's actually, if you lose that income stream, you lose all your money. Whereas if you've got multiple income streams, if you lose one the others might be able to just buffer that storm until you can replace that other one. So I absolutely disagree that one single source of income is the best way to approach your money. I absolutely think that you should have multiple streams of income. The eighth more income means more wealth. Nope, not necessarily. I say this a lot, you cannot out earn a spending problem. You cannot out earn a spending problem. It doesn't matter if you earn a million pounds a year, if you spend 1,000,010 pounds a year, you will still be broke. So a lot of people, when you you know, when you're a low income, middle income person, sometimes what happens is, we look at people with money and we think, God, they earn loads of money. But I know clients that I've worked with who've had multiple six figure salaries because they work in the big, big corporate jobs, and yet they come to me with help on fixing their debt, because what's happened is they've got a 10 grand a year pay rise, or a 50 grand a year pay rise as they've moved jobs or moved around, or they've got a bonus. And with that 10 grand a year pay rise, what they did is they went and bought a new car, and the car cost 60 grand, and they put it on finance, and the interest is clicking up. But also, because they've got a 10 grand a year pay rise, they've also gone and, like blown a bit of cash to celebrate. Well, 10 grand a year is actually not that much money. When you're over spending. It doesn't matter whether you've got 100 grand a year pay rise or a 10 grand a year pay rise, if you spend more than you've got, you will always have no money. So actually more income means more wealth is entirely untrue. I know plenty of people who earn 20 grand a year who are very comfortable financially because they have really clear financial goals. They have an emergency fund set aside for when things go wrong, they invest, and they put money into the markets. They are invest heavily in dividends, and they have got multiple streams of income on 2025 grand a year. You don't have to earn a shit ton of money to create more wealth. What you have to do is manage your money like a money mechanic, and do it really well, and that's what will create your wealth? That will create a bigger income and that'll allow you to reinvest back into the things that you want to invest in. So no, I totally disagree that more income means more wealth. It definitely doesn't. Myth number nine, you need a financial advisor to succeed. I don't agree with this. I don't think you do need a financial advisor. I think if you're somebody who wants to learn what a financial advisor can tell them, give them, educate them on, then absolutely go and find one. But I think there's an awful lot of content available, just like this, podcast, books, YouTube channels that you can watch that will teach you a lot about how to start investing without having the cost of a financial advisor. Now, obviously a financial advisor. They're accredited, they're qualified. They can give you actual advice. They can say, invest in this thing. I can't do that. I'm absolutely not a financial advisor. But what I can say to you is, go and research this, because when you understand this, it's going to allow you to make good investment decisions or good decisions with your money. It's. DIY invest in has never been more accessible. Free trade is obviously the platform that I talk about a lot. I love free trade. I think it's amazing. We'll put the link for free trade with this podcast episode as well. You absolutely can be a DIY investor. You don't have to have a financial advisor. Understand, though, that when you're a DIY investor, you have to do some due diligence, maybe a bit more than you would if you had an advisor. You have to do a bit more research, a bit more reading, but that's just you taking control of the action, being disciplined and intentional in the way you're approaching your money. So no, I don't think you do need a financial advisor if you want one, go and get one, but success doesn't rely upon it, and then the 10th one. Once you have invested, you shouldn't touch your portfolio. So while long term investing is important, and having a layer in your if you remember back to the episode we talked about the garden of growth, having a layer in your portfolio that is long term investing, I think, is quite important. It's still very important for you to review and rebalance your portfolio regularly to make sure that it still aligns with your investment strategy, it still aligns with your goals, and it still aligns with your risk profile. Because as things change, as markets change, as technology changes, as you know, costs of things change, the performance of your portfolio will also change. So if you just buy a stock today, or you buy into a fund today, and you don't look at it for 40 years, well, you you know, you could lose it all. It could, you know, it could absolutely go up up, up, up, up. But if you don't look at it, you're never going to know what it's doing. So I think here, the key to this is making sure that you're not checking it like every five minutes. If you want to be a trader and you want to trade, you want to buy and sell, buy and sell, and you're trying to scout profits off of each of those trades, then yes, absolutely look every hour, every couple of hours, every couple of days and buy and sell, buy and sell. But if what we're talking about here is investment long term, then what I'd say is I, what I do is I check like monthly at the end of each month is when I make my monthly decisions on what I'm going to do, and then I have a quarterly and an annual check in on my portfolio, and I look at its performance, and actually, the platforms give you all the answers. By the way, you don't have to be good at maths or good at tracking and spreadsheets and all the algebra and everything that goes into it, because you go on free trade, and you can click a button and it will tell you whether you've earned 20% or 40% or you've lost money. You don't have to know how to do you just have to know how to click the button, and it will tell you whether you've outperformed the market or not, if you're investing, then make sure you've got those check in points, because actually that awareness is going to help you to learn. But also, if it no longer aligns with your risk profile, it no longer aligns with your targets in terms of what you're trying to achieve with your money, then you have the ability to change it, whereas if you never check in, you don't know what's going on, then you know, you'll never know what's going on. That's been our 10 myths. And this wraps up this series of the Money Mechanics podcast. Thank you so much to everyone that's tuned in. Watched us over on YouTube, listened in on audio to everybody that's messaged in, everybody that's emailed in. It's been amazing talking to you and seeing and learning what you guys are up to. Thanks to everyone who's ordered a copy of the book as well. It's amazing. My name is Sarah Poynton. This is the Money Mechanics podcast. Thank you so much for tuning in. If you're on YouTube, subscribe to the channel, hit like, drop us a comment, share this with your friends. If you're listening on audio only, then make sure you leave us a five star review and share with your friends as well. I've been Sarah Poynton, thanks for listening. Bye.

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