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everybody, welcome back to the Money Mechanics Podcast. I'm Sarah Poynton-Ryan, and this is Adam Smith that we're joined with today. I'm super excited about having Adam with us today, because what we're going to talk about is a slightly different angle, actually, than what we've done on previous episodes. To give you a bit of an intro as to who Adam is. Adam is my broker. So as most of you know, I invest in property, which means that I need lending and insurance and these sorts of things, bridging loans and all this sort of stuff. When you're buying assets like property or other assets as well. Quite often, what happens is you leverage other people's money. And I talked about this in the book at quite some length. You leverage other people's money. You leverage the bank's money. So you put a deposit in and the bank lends you the rest. So what, what Adam does, a broker does, is to help people to find the money that they need to plug the gaps. So we're going to be talking today with Adam about money, all things, money, investment and so on. And yeah, let's see where the conversation goes. So Adam, thank you for being here. Thank you. Tell us a little bit about who you are, what you do. Obviously, I've summarised it a little bit, but

tell us a little bit more about that. Yep, so my business is essentially to like you said, I think you said it perfectly, find finance for people to buy property and and why, I sum it up like that is because what of what we cover, you know, that's anything from residential buy to let commercial mortgages like you've touched on their bridging. Basically, if you if you want to buy a property, we'll find a way to finance that property through whatever tool or means or you know, or instrument you want to use. And also, at the moment, we're also launching our business finance proposition as well, because many of our clients are self employed or business owners, they'll often come to us and say, Oh, can you get me a business loan I've got, you know, I want to finance, you know, this piece of machinery or this vehicle. So yeah, we just kind of listen, you know, for provide an extra service to our clients, alongside what we do with the finance and the insurance as well. So, yeah, quite a broad spectrum.

Brilliant. Thank you very much for that. So let's talk a little bit about money. So in terms you obviously spend a lot of time working with people who have a lot of money, actually, because a lot of the investors I know, obviously a lot of the investors that you work with are people that are building portfolios, growing, growing, growing, all the time. What do you think it takes to be able to handle a lot of money?

I would say probably one of the most common things I noticed between people is the ability to take risks more easily, so they're generally less cautious people. It's less about the negative side of what might go wrong, but more, okay, well, if you know if it works, what does that mean that I'd say that's a common trait that people that I work with, that I would consider to be successful, share that they're less they're less concerned about the detail and more about getting it, the vision, done.

Yeah, that's really interesting. So rather than focusing on, oh, yeah, but what if it goes wrong? This is how wrong it could go. We could lose everything. It's more of, well, it could go wrong, but if it goes right, these are all the really exciting things and the opportunities that present themselves.

Yeah, absolutely. And then knowing, like, you know, some people think, Oh, if you've got a mortgage, oh my God, you've got this much outstanding. But then what they don't realise is, what, what's the asset that it's tied to? You know, the fact that it's leveraged. You know people, you know, most investors always refinance, don't they, you know, and take up to the maximum amount. And, like you say, build their portfolio, because the debt is not taxable, is it, you know? So a cautious person might say, well, actually, you know, I'm going to sell my buy to let property now, because it's not making much money, it's causing me hassle. But, you know, I've got a capital gains tax bill of x, and you just think, well, that's just you're not your mindset is not geared up for doing it if you're thinking like that. So it's definitely, I would say it's like a mindset thing of how, how can I leverage as much as possible? Is a common trend that I come across with the successful people. It's not, you know, if you. Compare that to someone just buying a house to live in. They're more concerned, oh, this is the monthly payment. Is it affordable? It's completely different

headspace, yeah. So I'm sure you'll have an opinion on this. So let me ask you, we as a society, generally, what I tend to hear people saying is, I'm gonna, you know, get a job, get married, get a job, buy a house, get a mortgage, pay off my mortgage, and then in my old age, I'll be able to live mortgage free on a house, right? What are your thoughts on having being mortgage free as a goal for Joe blogs public, so not the super successful people, not like millionaires. I'm just talking about standard people who are maybe don't have investments, but have their own home. As a society, being mortgage free is definitely something that people want and have. And I hear a lot like that's a lot of people's goals. As a broker, someone who understands how the money moves around this space. What are your thoughts on having that as a goal?

What I would be looking at is their overall picture. So do they have any other investment savings? Do they have a business that provides them with income? Because if your goal is just to pay off your house, well, you still got to pay for bills. You still have to pay to live. Is it you know, you really saving that much money if you're, if you're a residential homeowner, and your mortgage payments 1000 pound a month, that's not really an awful lot. So well, you're saving 1000 pounds a month. Great. But what I would be thinking about, more importantly, is, you know, can I build a business? Can I build some investments that are then going to pay me that 1000 pounds a month, passively or semi actively, or whatever that? It's kind of like, again, it's like what you've always been taught, isn't it? You know? Oh, you must do this. You must do that. You must get married, you must have children, you must do this. But, but why is it? Yeah, it doesn't. It's it's not always. It could be that a good idea for some people, if they've got businesses, other assets, but generally, for the average person that's working a nine to five job that's going to retire and then go on a minimal pension income or estate, but it's just kind of like it's not, it doesn't actually make that much difference if you're saving 1000 pounds a month in the scheme of life. Yeah.

Okay, a very short interruption of the episodes. I want you to get back to listening. I just wanted to remind you that the Money Mechanics weekly newsletter is completely free, and we'll send this out to you every week. All you've got to do is find the link in the show notes and get signed up when we send this out to you, this weekly newsletter is going to include things that will help you to become a better money mechanic. It could be things like what's happening in the markets, things like budgets, how that's going to impact you. And I'm also going to share a lot of insight into what I'm doing in my own portfolio and in the portfolios of the guests we've got on the podcast, to really just help you understand what you could do differently to make your money work as best as it can for you, make sure you go and find that link and get signed up. And I think this is the thing, like a lot of people don't realise that they can take money out of their homes and invest it in a different way. So again, like, if I look at my grandparents, my parents, generations, being mortgage free is, like, absolutely the goal. And then I've got friends who are my generation and younger, who, because they're in a in a group, in a friend group, or whatever, where actually that's just what we do, they're also all doing that. And they talk to me and I'm like, you don't want to do that. You want to do this. Or what have you thought about maybe just doing this and buying something or put it into the stock market, or doing something like that. And I'm always, not always. I'm often given the response of, oh, no, that's too risky. I don't want to borrow money here to make more money there. And this, again, I think comes back to your point of the mindset of risk versus reward when you're considering leverage, which is interesting.

I think, I think it's like every aspect of your life, people that are willing to take more risks. Let's take someone, for example, that has a job. They've got normal job, could be in anything, and they get their salary every month. That person might think it's too risky to go and find a new job, because what if the new job doesn't work out. What if they don't get, you know, get kicked out, or it doesn't go to plan? That's, again, that's a low attitude to risk you're never going to progress. You what? One thing is guaranteed you if you don't take risk, you won't get the reward. So it's actually, I would argue, it's more riskier to sit there and do nothing than it is to kind of aspire for something more. And the only way you will if you stay doing the same job, inflation is going to erode what you're getting over time and to the point where you'll be sitting there 10 years later going, well, actually, I'm even worse off now than I was 10 years ago, because in real time. Terms for me, you have to take calculated risks. And sometimes you know you just have to, even if you don't have all the facts, just take a leap of faith, because actually, the worst thing could be doing nothing at all.

I think often, like when we think about the I talked recently at an event, and we were discussing in the room, somehow the banks have convinced us to leave our money in the bank where it was roaded by inflation, where we are guaranteed to lose money, is better than potentially making money, potentially losing money. Somehow we've got, I don't know how they've done it, best marketing team in the world, right? Because how have we can been convinced that leaving money sat there so that they can make a lot of money from that money is better, even though we're guaranteed to lose, is better than maybe us winning. It's wild. It's definitely a conversation for another day, probably, but it is what most people believe so where money is, where, like investing or taking risks with money is concerned. Like, have you ever taken a big risk that's not paid off? Yeah.

I mean, yeah, many, many times, many times, probably had more not pay off than than did, but I can remember the times more when it has paid off. Even if it didn't pay off, it would have been like, never a huge it was never more than what I could afford to lose. Because you've got, like, a capacity for loss, haven't you, basically, in any kind of investing, you know, you put it you know, you only invest or bet what you can afford to lose. You know, I've bet on, you know, if we go basic things, yeah, I bet on, you know, I like to bet on boxing now and then. And yeah, I've had some fights where I thought, yep, no guaranteed. And yeah, I've lost, like, a few 100 quid or whatever, but I could afford to lose it. So it wasn't the end of the world, but I'd say that for me, the biggest things that have paid off is where I've had an opportunity. So I can think back to the earliest time when I was at university, one of the nightclubs, clubs closed on a Thursday, where everyone used to go. So I spotted an opportunity, and with a friend of mine. We set up another event at another club that wasn't open. And, yeah, I mean, we were doing back then on big nights, maybe like three grand a week. We'd split half of it with the club, so you'd come out, and this was like 2005 six, you know, you'd come up. I was about 2021, 20 ish, 1500

pound a week for 21 year. Yeah.

So so that again, and that was only the opportunity, spotting an opportunity and taking a risk where it might work or it might not. And again, it wasn't a huge amount to lose, maybe a few 100 quid, but when you're a student with, like, not a lot, it's quite a big deal. And again, you know, my my business now that I have now I started that just from an opportunity spot when I was working at another firm, and they were all financial advisors, and I'd worked there for years, and no one, no one did mortgages because it wasn't targeted so they what you weren't rewarded for doing mortgages. And I spot the opportunity of working with 170 odd pensions and investment advisors. Well, actually could use this as an introducers scheme and set up. So that's what I did. And yeah, don't get me wrong, first six to 12 months was the hardest, but every six to 12 months, it gets a bit easier, you know, and you, you get better and better, and you build and you you start taking people on, and you know all of this, but that's, I would say, is probably the biggest risk I'll take, because of the you just, you know, you just don't know, do you, nothing is guaranteed, and that's why you get rewarded for it, because if you, if you that, the return on investment has to be big for people to do it, otherwise everyone would just have a job, right? So when it, when I'm trying to think a really big one, that's That's messed up, I think it's interesting that

you can't immediately think of it, because probably, and this is definitely with me and you, I imagine it's the same. Even the ones where you've copped it up have taught you something. It's actually been really beneficial. So you don't really see it as a massive negative. Is that? All right, it went wrong, but, yeah, we got this from it, or the opportunity was this, or we went in this direction. That's definitely the case with me, like the on all the investments, or, you know, the people I've hired, the money I've wasted, the things I've done that really would with hindsight, like the wrong things to do. Every single one of them, whilst it's cost me money, has taught me something that I'm really grateful to now know so it says a lot about your mindset to risk and reward, which is great. Yeah.

I've definitely got a high tolerance to it, like I think I've got the ability to kind of not think too much, but just enough. I think if you think too much, you'll never do anything, because you'll talk yourself out of it. You know, I think what the biggest thing I've learned, and this is from any kind of business that I've ever tried, however long you think it will take double it,

and however much you think it's going to

cost double it. And that's the reality, isn't it? It's double the time, double the cost. That is. That is the biggest learn that I've had. Never underestimate the time or the cost it's going to take and and don't be afraid to do the hard work, you know, like it's people think running a business is great and you're doing all this fantastic stuff. Yes, you do get to do nice things now and then, but it's hard work. You know, it's really tough. Time consuming. There's no nine to five, Monday to Friday. This all the time, and I work all the time, but I enjoy what I do, and that's why now I've, you know, started to build the proposition of what we're offering for you know, this year just gone, it's been a big year for us. Now, directly authorised through the SCA which is, again, been great

work to get to that point.

Yeah, right. So, you know, it's, it's, yeah, a lot of time, a lot of money, a lot of, like, heart has gone into it. And now the next thing that I'm really excited about is launching this, this kind of business finance proposition fully so you, you just, I've learned as well, like you always have to look back from where you were at the start or a year ago, whatever. Yeah, because I don't know about you, but sometimes you can think, I just need to be doing more. It's not enough. But then if you look back now, when you started what you're doing, you'd be like, Wow.

I was talking about this recently, because someone said to me, I was having a bit of a shit time. I was having a bit of a wobble, because we all have them, right? And a friend of mine said to me, Sarah, 10 years ago, you'd have begged and given your left arm to have this problem. Yep. And it gave me a real spin on perspective, like, just in the moment, I was like, you're actually not wrong, like, I 10 year ago, me, so I've been running my business for 10 years, like, like, almost that last week. So it's my my decade anniversary, and, like, it's been wild. There's been ups and downs, left, rights, zig zags. There's been business partners have come and gone. There's been all sorts of things that have gone on. I've started multiple businesses, closed some down, won some lost some like it's been mad. But in all of that, on the days when it's hard, and you know, even if you don't have a business and you have a job, when you look at your life actually, for a lot of times, those really hard things that you're going through, if you look back, like you've just said, it's quite possible, in a lot of cases, that you'll be like, actually, it's a good problem to have, really, although it's a problem and I don't know how I'm going to get through it, or where I'm going to go with it, or what it's going to cost me, or, you know, blah, blah, blah. 10 year ago, me would have been really grateful to even thinking about having this problem. So that perspective on it just helps you to navigate differently. I think, Oh, 100% 100% so Les, obviously you speak to lots of people buying houses for their own residential purposes, for investment purposes, like that's your main customer base that you're speaking to. I have conversations with people where they say to me all the time, I would never get a mortgage right. And often, I think it's actually just a misunderstanding of what is, what is the best way to present your finances to get a mortgage, because in reality, again, correct me if I'm wrong on this, but my my understanding is provided a lender can assess the risk of lending you money and see that you are a safe pair of hands with their money, then they are likely to lend your level of risk. Their level of risk might dictate the cost of that lending, and that might be affordable to you or not, but most people can get a mortgage provided you can present your finances in a way where you can show you a safe pair of hands. Would you agree with that?

Yeah, absolutely. So there's different lenders out there to suit different people. You know what I mean by that is, you know, not everyone's the same, not everyone has the same credit profile, etc, etc, yeah, you know, not necessarily the same kind of income, type of income, whether it's employed, self employed, whatever, right? So, you know, what we do is assess your specific circumstances, then tailor that to a lender and a product. So that's why people should be using brokers, because you get to benefit from their knowledge and experience. I mean, I got a case at the moment, first time buyers you. Mrs. Credits all great. Mrs. Isn't so, you know, I looked in and I thought, yeah, it's one of those. It's not great. It's going to be hard to hard to place, the interest rates going to be higher. And I told them this. And then there was a lender that we do quite a bit of work with, and what we get our clients to do is download, like, a check my file report. So you've got all three agencies, Experian, Equifax and TransUnion. I just basically said, Look, download this report, send it to me. I sent it to one of the bbms that one of these lenders that we use, and I just said, is it one for you? Would you do it? And they come back? Yeah, we'll do it on this product. So it's like, even though, I mean, this credit report was bad as well. It was like, it was bad, like defaults and all sorts. And it's one of them when I think maybe, like, I'll try anyway, because I want to see if I can help that person. Yeah, and they came back, we got a decision in principle on it. They've now had the offer accepted on the house, and the four applications gone in yesterday. So it's, yeah, I mean, you just think to yourself, sometimes there's a there's a lender for everyone, because lenders, and I call them lenders, not banks, because it's more than just your high street bank. They they want to make money. They're in the business of making money, and they're only going to make money if they lend now, if the interest rates they charge are higher because of your circumstances, then that's good for them, right? They're going to make more money. So they'll always assess, but people will pay their mortgage first before anything else, especially if it's their home.

Yeah, exactly that, especially if they're home. So what would you say is the biggest mistake that people make when thinking about right? I'm thinking about buying my first house. I'm thinking about buying a new house. What mistakes are they making on their bank statements that lenders go absolutely fucking No way, versus where lenders go. Do you know what? That's fine. We can get over that. Like, tell the audience what they

need to be doing. Payday loans are a big no no payday

loans because it demonstrates poor cash flow management, right?

Yeah, yeah, yeah. So payday loans excessive gambling. So not just like, you know, a little bet at the weekend on the football or boxing or whatever. Like, constant gambling can be bad.

So like, multiple bets, all day, every day, different times, things like that. That's gonna be a problem. Well, I

would say, Look, if you nothing wrong with having a bet or anything like that, but if you like a bet, set up a different bank

account for it. Ah, okay, so the main bank account you're gonna apply for your mortgage on, they're gonna pay for your mortgage from there. That's the one they're going to check. So if you're going to have activity, because there are people that like, make their living from gambling and stuff like that, right? Definitely. So let's use them as an example. Your advice would be to have the main bank that they're like bills and normal day to day stuff, the mortgage real life stuff, let's call it. And then other activities in a different bank account. So then the banks thing that you send are the ones for this account, yeah?

So, like, a fun account, like, you know, maybe they're, you know, something, they got disposable income in whether it's as long as it's disposable income, you know. And then maybe they, you know, they go out, eating out, or go and do activities, take cash withdrawals, that kind of thing. I'd always say, Have a fun account, yeah, yeah. You know, like, yeah, that you could spend on fun stuff. Yeah, exactly. And then have your proper account where you, like, you know, good one to use would be, like, a revolute, or something like that, where you have to, like, top it up and that kind of thing.

Well, I have this set up in my world, not because of gambling at all. But I've got, definitely not. I wouldn't have a clue. I don't even really know how to place a bit. I'm a bit useless and stuff like that. Investing. I can do full exchange trading. I can do, I suppose that's the same sort of thing. But like, I've got Monzo as my main account, and then I've got nationwide as my joint account, and then I've got Chase Bank as my like, fun money. There's no money in Chase because it's, like you said, it's I'm going to do something with it. Chase pays cash back on certain things. So I move the money there, then I spend it, then I get my cash back, and I move my cash back back. So I'm always trying to maximise the spread of that money. Like, how I can get that money working for me, so even if I only spending it, that's kind of the same setup,

yeah, absolutely. And the other one that they don't really like is Klarna. So if you're buying, like, you know, paying free, and it's on a jumper or something like that, for fair quid, I mean, people would be like, what? But yeah, people do do that. They pay for a jumping, for that fake quitting, free instillment and things

about this in the book, a lot like Klarna has a lot to answer for, actually, and even, you know, I was in, I was, I was buying my mom birthday present recently, and I was in, like, JD sports, and there was a person putting like, a 16 pound, like T shirt on Klarna. And I was like, yeah, it's. If you can't afford a 16 pound t shirt, you just wear the t shirt you've got, like, just don't have it. Because, you know, yes, all right, we spread cost, and we spread risk, and, you know, those sorts of Buy, buy bigger things. But Klarna actually isn't great for a credit score. It's not great for a lender. And also, the reality is that, you know, oh, it's like, it's just, you know, five pounds three times. But then if you do that and you buy 100 items on that, actually, it all adds up. And I think people lose sight of it. I think Klan is actually and similar. Payment schemes are catching a lot of young people out at the moment, because you get, like, credit cards was my, my era, like, we all just put money on credit cards from uni and ran up, I ran up loads of deer. I think clan is the kind of new version of what that was for me.

Yeah, it is specifically in, like, the sub 30 age group. So, like, what the Gen Z's definitely is them, yeah, our age group, no, it, but sub 30, definitely, it's a big thing. I think

our age groups more like credit cards trying to get 0% balance transfer in, like, living in that zone, because that's what we grew up with, right? But when you've got these payment schemes, and it's so easy now, you've got PayPal paying three, you've got Klarna even, I mean, even John Lewis has got like a pay and three. American Express now has got like a pay in three. It's really dangerous,

yeah, and that's why I'd say those things. Aside from that, I mean, people say, oh, you know, in and out of the overdraft, but it doesn't really affect an application, in my experience, like, if you're in your overdraft, yeah, you know, especially if it's not a massive overdraft, you know, like, few 100 quid or something. I've never seen that effect.

And, mean, most banks aren't given overdrafts of, like, 10s of 1000s. Are they? Like, I mean, I haven't had an overdraft for years. I've got no idea what they do now. But it's not going to be like, loads and loads of money, is it?

No, it is. It's, they're the they're the main ones that you'd have, or loads of cash withdrawals, you know, like, that's another one that raises flags, but yeah, aside from that,

so like, where you're taking 50 pound out here, 50 pound out there as cash every Friday night, every Friday night, 50 at like seven and another 50 at like midnight. Yeah.

Alex, unexpected and there, yeah, unexplained cash withdrawals they don't like. And then people put in deposit in I guarantee you, if you've got 500 to 1500 plus deposited in cash regularly, they'll question that as well. Where does that come from? Because for like money laundering and things like that. So like,

um, things like Vinted and stuff like that. Now, when you take your money out of Vint, is that, I don't you might not even know. This might not even be a question for you. It's probably more of an accounting question. But would, would a lender consider that income these days, like, if they see because people are selling stuff like on Vinted as like, this

depends how much of it was coming in, really. So if there was, like, loads of it, they'd probably question what it was.

But is this a business? That is it? Yeah, but then

if they've got their, you know, so they got a job, and they got their pay from wherever, every month coming in, just and it was only if a little bit of vintage, then they'd probably just assume you're selling things on Vinted. But if you were self employed, then they'd probably question it more on the account, there'd be a case by case basis, really, whether the lender, it all depends on frequency and amounts, right?

Okay, so then also there'll be, there's a lot of people that listen to this podcast I know that are carrying debt, right? So whether it be credit cards or personal loans or car loans or all of those things, potentially, how do lenders view people that are carrying debt? Is it mostly around the maintenance of that debt, or is it around the level of debt that's the problem?

So it could be so with regards to that, it's probably good to distinguish between residential and investment. Yeah, investment, it's not gonna have any impact on it at all. Because for

those that don't know what that means, what's the difference between residential debt and investment debt?

So, so residential property, if it's for property purchase that you're living in, and they're basing it on your income and affordability, then it's going to factor into it. If it's, if it's you're doing a buy to let, or an investment purchase, and because you're, you're the amount you can borrow is based on the rental income, not on the person, on your personal income. It's not really factored in, to be honest with you, the debt it depends. If you've got a high street lender, they might not like it based on credit score, because your credit score might be lower because of the amount of indebtedness you've got. But for a specialist lender, they're not even going to bat an eyelid on it, to be honest. But with people can. Carrying debt. Now, if you're buying a house to live in, they'll do what's an affordability assessment. So they'll take your gross income, net income, and they'll, they'll extrapolate it to typically four and a half times gross income. Then they'll, they'll, they'll take out the credit commitments. So what I mean by credit commitments would be loans, credit cards, car finances, student loans, that kind of thing, and then that amount after that. So the net figure they would use to base your affordability. So if you've got a large amount of unsecured debt, that's going to affect your ability to get approved with certain lenders. And what I mean by certain lenders is more like high street lenders. Whereas, you know, you can actually have a high level of indebtedness, it just means that you probably go down the specialist lender route instead that, but then you'd pay more for the privilege. Yeah, so it's, again, it's it these kind of things more rule you out from the high street than anything else. But it is. It's definitely not a no. That's for sure. There'd be a specialist lender that would probably take it, like this case I just told you about, Yeah, interesting.

So in terms of, I hear all the time, again, in my education company, so I've got money mechanics, and I've got Cogito wealth. And Cogito wealth is our, like, property education specific company, and in cogito, people come see all the time, they say, I would love to do a flip. I would love to buy a house, add value and sell it, but because I'm in debt, because I have, like, I can't do it well, because I don't earn enough, I can't do that. And I say to them all the time, when you're doing an investment based actually, lenders aren't going to care what you earn. All they care about is wherever the asset can create the value that it needs to to be able to repay them and make you a bit so is, would you agree with my statement on that and, like, explain that to people, like, why that is and how that works? Yeah.

So I definitely agree with you, because especially if you're selling it, so you do it on a bridging finance and as you just said, they're looking at the assets. So what's the asset worth? And what's the asset going to be worth once you've completed the work on it? So they're only going to lend if the security, ie, the property, is what they what you're saying is. And then when they get a schedule of works to what work you're going to do, they'll look at that and go, Okay, so you estimate that the gdv, so the gross development value, so the finished value, once you've done all the work, is going to be Y, yeah, we'll end on that. And credit doesn't really massively come into it, to be honest, because the the exit strategy is selling the asset, so selling the property, so, yeah, it's not really well. It's great when you get, you know, cases like that, because they don't factor it in at all. They just look in on purely is, what's the value of the property now, how much is the works going to cost to get it done, and what will be the development value at the end? That's it.

I think this is some important people, important message for people to hear, because so many people I see starting businesses that they don't really love so they can earn money, so they can afford to go and buy an asset to flip. I'm like, actually, you might as well not if you want to do this, just skip to the end and just do this, because you can, you've got access to it. You can just, like, do it straight away. So I'm pleased that you've explained that. I think there'll be a lot of people who'll go, Oh, I didn't know that. And that's helpful for people to do anything they want to do. Yeah.

It's just Yeah, asset value is the main thing. I mean, you could even, you don't even need a job or an income. I mean, we did one recently in the woman's on benefits, Joe. I mean, so it's but she's got enough money to buy the asset, so like an inheritance. So you sit, then you're thinking, they still lend on it, even, yes, unemployed,

so it doesn't matter, right? Well, hopefully people listening to this will go and read houses, which is what we want to try and do, encourage investment. Let's talk a little bit about, like the education system around money, because you have children, right? Do you think that education is equipping kids for and your children aren't very old, but so maybe that's not but do you think education is equipping young people today to understand how to put their money to work?

No, so my daughter's 11 and 12, so both at secondary school now, but yeah, there's no education about money at all. No, no, it's not in the curriculum. It's not even a talking point.

And as you start to work with 2018, plus people, like under 30s, and you're talking to them about getting lending, do you think that lack of financial awareness, lack of financial literacy even is impacting the way that kids are not kids that I don't want to be patronising under 30s are using their money today.

Yeah, but I mean, it's even over 30 as well. Like, it could be 40s at any age, like, there's just a lack of comp. Lack of understanding. The problem is, and you summarised it, there is no education on it in schools. So it's, you know, instead, they'd rather spend time learning about all this pointless stuff. And then they're the things that actually matter. They don't. Then it makes me wonder, they probably don't want them to know. You know,

this is an interesting we in, oh, I've interviewed, obviously, a few people for podcasts now, and there's this common thing that they say, actually, the the world would be a dangerous place if the masses understood money properly, like we all do, because then you've not got basically worker bees working you've got people who are free and independent. And event they're not compliant, are they? When people have got freedom, they don't do as they're told. So, you know, on mass, that could potentially be quite a dangerous thing, which is why it probably will never be into the curriculum in the way that would really benefit everything.

It's not in their interest, in the government's interest, or whoever else is in charge, it's not in their interest to give people that education, is it so you're and that's why I think the opposite is taught. You know, you must go and get a job and you must work there. And that's because they, they want taxes

exactly that

everyone was self employed as a business owner, and then they all had really great accountants, the

tax revenue, no whatever, pay any tax Exactly. So it's,

it's the whole system is geared towards paying taxes to raise funds for the governments. That's, there's just no incentive for the government to educate people properly, you know, I truly believe that. You know it's, I've seen it with my own eyes. You know that they'll teach you mother things in school. You think, what? And then

parent then. So what is like? What are the top three things that you're teaching your children about money now, 11 and 12, that you think is, like, absolutely non negotiable, that they understand you have

to work for it, that you have to work for it like it doesn't, doesn't just float out the sky, even though they may think it does, like you have to work for it. And I made sure they see how hard I work, so they know, and I like, always working. It's like, well, yeah, you've got got bills to pay up, you know, stuff for you, you know, and they understand it more and more as they get older that it's not going to be given to you. So you need to go and work hard for it. And that's what I try and instil them above anything first, and then once you do get it, you know, you have priorities, don't you like, pay for your your mortgage, so you got a house to live in, then you can, you know, have some disposable income to them, put in towards investments. But, yeah, what's super important for me is like, to get them to the stage where they'll be, like, 18, deciding what they want to do, and then to just say to them, start a business as young as you can, really I think that's the best.

Do you think starting a business is the right route? Or do you think investing their money whilst working to learn how to be a specialist in their thing is a route that could also be beneficial?

I think it's child specific, to be honest with you, I think it depends on that individual profile of that child. So my oldest daughter is like, very intelligent, very intelligent, very academic. So good, math, science, etc, etc. She she wants to be well at the moment, she wants to be like a psychiatrist. So you have to go do a medical degree, and then that's great, because, I mean, I've got clients that are consultants, and they're they earn a lot, a lot. They're probably some of the top earners, because they've got NHS work and private work. So I would encourage that route all day long, but, you know, say, yes, do the NHS stuff, but then do the private stuff as well. My youngest daughter, she's not academic, but I would encourage her to kind of learn a skill, or whatever that skill may be, and then as early as possible, start running your own business, because in the business, like you said, You've had yours 10 years now you've compounded in that decade. Imagine starting that at 18, and then

about this in the book, like, it's devastating to me that I didn't know this stuff when I was 18, because I would fully be retired now, like, if I work back, my returns of like, an average of 8% a year from 18 till I was like 35 Yeah, I'd be very, very wealthy. I mean, I'm I'm not unwealthy Now, but I would be extremely fucking wealthy had I just put like 150 pound a month away, compound, compound, compound. I just done that, and I didn't, because I didn't know about it. And that's part of what the mission of Money Mechanics is. Actually all about, it's about helping people to just get there quicker, so that we and it doesn't matter if you're an entrepreneur or if you're someone who has a job like both, there's not one, right? Everyone's got to do the thing that's right for them. But the understanding the importance of getting started, putting your money to work as quickly as possible, is something that everybody should be benefiting from because, you know, I was speaking to a friend of mine not that long ago, and she was saying, like, she's probably spending 200 to 300 pound a month on like, Starbucks and shit that she doesn't need. The banks probably wouldn't enjoy her spending, but she can afford it. She earns really well. She works for a big company. She's got a big salary. She can afford it. And actually, 250, 300 pound a month isn't a lot of money to her. So I went through the compound interest calculate with her, and I said, if you put this here and you let it compound for like, the next 10 years, you'd be able to clear your mortgage, you'd be able to do this. And she was like, What the fuck I had no she had no idea. So she's now putting her money into, like, the s, p5, 100 and dividend funds, because, actually, that's way more powerful than keep drinking Starbucks. And it isn't until you understand it that you can really start to do it. And I think this, just this compound interest, is the thing that I think they should teach in schools at the most basic level.

Yeah, definitely. And like, he's touching that there's a reason why they don't want to, isn't there?

Yeah, because we'd all be mortgage free, and we'd all be like, in the Maldives,

no reliance on them. That's the that's the thing, isn't it?

This is it. So, in terms of, if there was one thing that you could like, rewrite, like, in terms of how society behaves with money, or feels about money like, like the masses, if you could wave a magic wand and just rewrite the way that it's dealt with. Is there something that comes to mind,

I would say the most it's kind of understanding the actual value. Actual value of it, or how hard? How hard? Yeah, how how much you you will earn based on how much value you can provide to someone. So you have to provide a commensurate it's not time, it's not how many hours you it's how much value you add to solve someone's problem that is important thing. So, you know, if you can, you know, take, let me take an example, you know, could do a business loan. Takes me an hour. You make two and a half grand, you know, and it's like, but you've that person needed that

the value that you've given the person is worth it, the fee to them,

yeah, so, you know, we've explored other options. There aren't any other options. This is the only option, right? Okay, I'll have the Think about it. Comes back couple of days later, yeah, let's do it. You provided a service to someone that has a need. So you've created value, whereas, you know, you might have to work in a normal job, like four or five weeks to get that.

So I can't remember whose quote this is, and I'll dig it out and I'll put it in the show notes before I release this episode. But someone's quite famous said that, in order, if you want to earn a million pounds, help a million people to figure out how to get what they want. So if you can add value to other people. They'll pay you as a consequence of doing a good job, in summary. And I think that's true. I think the if we can think about money like not money for the sake of money, but getting paid as a consequence of adding value and providing service and showing up, well then actually the money becomes quite fulfilling as well. Because you're doing something that you love, you're adding value to the world, contributing in whatever way. Do you think there's a difference between earning money in a really fulfilled way, like that, versus earning money just for the sake of, I need to chase the cash, like, in my mind, there's a difference. I've been in both of those shoes, like, there's been periods of my flight I've got to just build cash, like I've got none I need it. I need to chase the money. And then I've had periods of time where I'm like, I'm doing what I love to do, and I'm earning money, and that's great. But I think when I've been in that space, I've had the privilege of having money first. So the worry of money is not in the back of my mind, whereas over here the worry of money was, have you ever been in either

or both? Yeah, absolutely. There's times where you need, you know, yeah, you think, oh, I need to, need to pay my bills. I need money. Yeah, and it definitely, if you, you know, if the focus is on building your pot of money, then that, that what you said there, the worry of trying to chase it is is lessened, and you can focus on making sure that you're providing value for people. So, yeah, no, I'd agree exactly what you said there amazing.

Have you ever made a big mistake when it comes to money? But.

I'm probably, I'm trying to think of one a bit like that question earlier on the horses, yeah. It's like, what? Yeah, I'd probably, I've never risked more than I could afford to lose.

It's the number one rules all the time, never risk what will destroy you to lose. Yeah. And you always go, right,

yeah, so that's the thing. That's why I probably haven't really had any big losses, because I've never allowed myself to get into that position where it would be big.

That makes sense. Yeah? I mean, I could talk to you all day, matter away to you, but at the end of every episode, we have a rule where we ask you a question that the previous guest has left for you, and then we'll ask you for a question to ask our future guests. So the question that they've left for you is actually back to the education system a little bit. Do you trust the UK education system to add enough value to UK based kids to see the world improved, see the financial position of our country improve.

No, absolutely not. No, no. I thought, yeah, this, it's in it. Don't even get me started on that. No, hard, no, absolutely not for all the reasons that we talked about today.

Yeah, okay, so leave us a question for your our next guest, so it can be anything you want to ask them. They won't know who's given it to them. But, I mean, if you watch the episodes, you will, but

okay, I would say, How would you like to be remembered?

Wow, what question I love that. Do you want to answer it for you?

Yeah, go on. Then I would say. I would say how I'd like to be remembered is by people saying he always gave me the time of day, listened. That's what I want. Just to be like, yeah, just he listened. Whoever it is, just sat there and listened and had a conversation with me,

just made time. Yeah. I think for me, I'd like to be remembered as someone that you could have fun and adventures with. Like, for me, that's they're probably my two like most core values, fun and adventure, spontaneity, that sort of thing, whilst I live a very structured life, actually, because there's a lot going on in everything I do, I think I try to make sure that I carve things out that are fun and adventurous and spontaneous as much as I can so that I'm not living a very dull life in front of a computer all of the time. So yeah, I think that's probably how I'd like to be remembered. Great question. I love that we'll ask the next guest, Adam. Thank you so much. If people want to get in touch with you, or connect with you, or whatever is, what's the best way for them to do that?

Either website, Alpha mortgages.co.uk, or Instagram as well.

I will get the links and everything into the show notes with this episode, and obviously, those of you, if you've connecting with Adam afterwards, make sure you tell him that you've come for the podcast, then he'll know there'll be some context around the conversation, and he can help you out with whatever you need. Adam, thank you so much for your time. Thank you for yours. Thank you feels you so much for getting to the end of the podcast episode. I really hope that you enjoyed it. I just wanted to take this opportunity to remind you that the weekly Money Mechanics newsletter is available to you completely free. This is a newsletter that I'm going to send out every week to just give you some ideas around what's happening in the markets, what's happening at a global level, what's happening at a lot more local level, so that you can better understand what you can do with your money to make it work for you for the future. I'm also going to share in the newsletter what I'm doing in my own portfolio, just to give you some insights into what my ideas are, why I'm making the decisions that I'm making, in the hope that it will help you to make those decisions in your own portfolios as well. All you've got to do is find the link that's with this episode, hit the link and subscribe, and that newsletter will start to come out to you every single week. I'd also really love to take this opportunity to invite you to drop me a review. I love the opportunity of getting to share these podcast episodes with you. It really helps me to better understand how we can do the best job that we can here at Money Mechanics, if you tell us your feedback. So drop us a review. Tell us the sort of guests that you want. Talk to me and connect with me on Instagram, you know, talk to us on YouTube, wherever you are hanging out. Tell us how you're finding it, and we can make this the very best podcast it can be. Thank you again for being such a valued listener. I appreciate you all, and I'll speak to you soon. You.

Transcribed by https://otter.ai