Money Tips That Will Change Your Financial Life - Rob Dix

you reach adulthood and suddenly you're spending like at least a third of your life pursuing money and people are talking about mortgage rates and swap rates and bond yields and this and that and other it's like and you're just expecting to know what it all means but will you ever talk to it I never was today I'm joined by Rob Dix now Rob is an investment fund advisor and he's the co-presenter of one of the UK's most popular business podcasts called the property podcast Rob is also the co-author of The Ultimate Guide to property investing which is the Bible of property investing in the UK and his most recent book is called the price of money how to prosper in a financial world that's rigged against you I realized that I'd been working in and around money for about 10 years and I didn't really understand where money came from how it works and all the rest of it and if I didn't then what chance does anyone else have in this conversation we kind of split up into three parts in the first part we talk about what money is and how money works and some of the complications around things like inflation and interest rates and the cost of living crisis and the conclusion really of the first part of the conversation is that we live in a financial world that is rigged against normal people like you and me the core core thing that it's important to understand and why you could say it's rigged against you if you're guaranteed to lose buying power by saving money then that's not good then in the second part of the conversation we talk about Rob's five principles for being able to prosper in a financial world that's right against us and then we end with a bit of a discussion around property and around business specifically ultimately what you earn is kind of a multiple of how much value you create and how many people you can reach to create that value for your earning power especially when you're young is the best financial asset you can ever have hey friends so before we get into the episode I've got some very exciting news that I'm finally able to share with you and that is that I have written a book now if you've been following the podcast for a while you'll probably know from some of my conversations with authors in particular that has been quite the journey over the last three years this has been the single hardest thing that I've ever done in my life but after three years it's finally here and I'm delighted to announce that my book feel good productivity is now available for pre-order it's going to be published later this year and you can find a link down in the video description or if you head over to feelgoodproductivity.com all one word you can check out the website and the website is absolutely sick now the central idea for the book came from a realization that I had while I was working as a doctor a few years ago and trying to juggle everything with my YouTube channel and my business and I kind of realized that the secret to productivity isn't discipline it's in fact joy and sure hard work and great and willpower and determination and all of those things are good in small doses but for most of us they tend not to be the sustainable route to consistent productivity but I realized through a lot of experimentation and then diving into a bunch of research that actually the secret to productivity that feels enjoyable and meaningful and sustainable is to find a way to make your work feel good to find a way to make it feel energizing and enjoyable and if you do that you'll be more productive in your work but you'll also have way more energy to give to the other things in your life that matter to you and this isn't just my own personal experience but it's an idea that's been validated by a bunch of studies in the fields of Psychology and Neuroscience as well and so the writing process of the book over the last three years has involved reading hundreds of research papers interviewing academics and experts in the fields of like psychology and procrastination and motivation and spending years trying to condense it into a format and cut out all the fluff and try to do it in a way that's like engaging and actionable at the same time so that's what the book is about it is a science back guide on how to do more of what matters to you in a way that feels enjoyable and meaningful and sustainable and if you enjoy this podcast then I can basically guarantee that you will love the stuff that's in the book there are nine chapters each chapter has six different experiments in it that you can try out in your own life and so there are 54 different experiments strategies that you can apply to your life starting from as soon as you read the book and the idea is that you apply these and you see if they work for you and over time you'll build your own feel-good productivity system now if you do decide to pre-order the book then that would be awesome because firstly helps me out and secondly I think the ideas in this book can be genuinely life-changing and if you pre-order the book it will be delivered straight to you on release date later this year or to your Kindle or your audible account and I'm narrating the audiobook by the way or to their hardback hardback version of the book If you prefer to read physical copies of books and if you do pre-order then please do be sure to save your receipts because I'm going to be announcing a bunch of really exciting pre-order bonuses exclusively only for people who pre-order the book and so final thing before we get into the episode is just want to say a massive thank you to you guys by watching the videos by subscribing on social media by listening to the podcast you have made this book possible um without you guys supporting the channel and everything that I do there's no way penguin would have come knocking and been like hey do you want to write a book and so I'm like this has been like such a rewarding experience and I could not have gonna come to this point without your support so I just wanted to say massive thank you from the bottom of my heart for that so that's it from me do check out the book If you like at feelgoodproductivity.com it'll be linked Down Below in the podcast description and the show notes as well for now let's get into the podcast episode itself so Rob thank you so much for coming on the podcast thank you for having me this feels like a pretty weird moment for me because I've been listening to your voice I since like I've been listening to your voice since like 2017 when I first got into the idea of property investing through your podcast and then I read the book that you and the other Rob wrote uh The Ultimate Guide to property investing or something like that which literally taught me everything I know about property investing and I've also invested in four properties through your company and so when I saw that you'd written this book work I was like oh sick we've got to have you on the podcast so thank you so much for coming on it's great to be here and like since we after you read the book I think it's I can't remember where I sort of I think your name kind of popped up as a bar I was like hang on that's Ali because I was like watching your stuff by then and so it's like yeah you're kind of on weird parallel tracks exactly so we're gonna talk all all things money um so the type of your book is the price of money how to prosper in a financial world that's rigged against you so I was thinking we start off talking about kind of understanding the whole money system and then I want to talk about your five rules for kind of money slash getting ready from slash investing slash saving all that kind of stuff yeah and then I was thinking in the third part we would talk about all things property um you buy and also rent your property which is kind of what I do so it'd be interesting to talk about that and I'd love to hear more about the economics of the business you've created around the idea of property investing sounds good to me fantastic okay so why did you decide to write a book about money well I got interested in economics around about 2008 because of the kind of what the hell's Happening Here type thing but I kind of was interested in it as a as a hobby and then 2020 happened which was like a weird year for every possible reason but that's when like we just had a Whole Decade of like there is no Magic Money Tree it was a decade of austerity it was all about getting rid of the deficit and all that kind of thing and it's like you know we've got to keep saving money it just doesn't just grow on trees then suddenly they need an extra 450 billion pounds to fight kobit they're like boom okay we've got it 450 billion let's go and spend it and let everyone paid everyone stay at home pay for people to go out to each remember that all this really weird stuff it's like oh hang on a minute what is going on here and I realized that I'd been working in and around money for like 10 years and I didn't really understand where money came from how it works and all the rest of it and if I didn't then what chance does anyone else have and so I just kind of wanted to get to them unravel this mystery of what the heck it's all about and I think so so much of the time people kind of put it in the two hard blocks and go well you know it's all these very clever economists all these fancy words I can't possibly understand it but I had no real qualifications I'm not particularly smart I just kind of did a lot of reading and figured it out and wanted to kind of put it into a form to save someone else doing all that reading and so in like five hours they could get to where I got to in 500 hours fantastic um and so what was your understanding of money growing up and I guess you know viewers and listeners might be able to relate to it because we're not really taught a lot about money in school not at all I mean I think we massively inherit money blueprints from our parents and so what you're you're kind of you'll get all these all these weird people weird about money as well right like people have very strange attitudes about it most of the time it doesn't make logical sense people just kind of have these beliefs and fears and things around money that you kind of inherit from the people around you when you're young but you don't talk about it or at least in my family I don't think most families you end up talking about it and then at school I think we might have had like one lesson once ever had something to do with it but that's about it lots on oxbow lakes and stuff like that but I think I'd actually something to be useful and so you never really learn and so you end up in this weird position where you reach adulthood and suddenly you're spending like at least a third of your life pursuing money you don't really know what it is and you're expected to make all these decisions about money and people are talking about mortgage rates and swap rates and bond yields and this and that never it's like and you're just expecting to know what it all means but will you ever talk to it I never was no yeah I think it's like um it's still one of those things that you know even though I've spent the last I guess like six six or ten years building a business that well you know by definition is pursuing money to some to some degree I still have to really try and wrap my head around okay interest rates interest rates are going up what the frick does that mean okay I vaguely understand inflation but like two percent like why is inflation good why is inflation bad like why can't why can't we just print more money again something about inflation this like all of all of these questions that like I I find myself asking to friends who are in finance and they have good answers to them and I'm like okay I'm just about keeping up and it it just it gets pretty confusing pretty quickly yeah it does and then even if you dig a bit deeper if you ask a second or third question it will often turn out that those people don't really understand it there's this kind of surface level explanation but then if you go like a couple of y's deep okay well why do we have inflation why is it different then it kind of unravels quite quickly and it turns out that there kind of is no answer or it's just well we've sort of ended up here somehow but it's a very scarily small proportion of people I think you actually have any idea what's going on and yet if you turn on the radio just generally good idea not to do but if you do then there's always like people giving their opinions about what's going to happen and explaining what just has happened but most of it's just like astrology I think it's just like the markets went up yesterday why well people want opinions but no one knows it's like it's just weird Okay some some people might say well fine I know how to use a computer but I don't need to understand how a computer works I know how to use money I know how to make money I know how to how to you spend money but do I really need to understand how it actually works and how it gets created and stuff like that I think you probably need to of what I cover in the book you probably need to know like a good 70 I'd say some of it is kind of just for fun like it's kind of cool to know that Banks just create money out of thin air so if you go and get a bank loan there's no concept of like oh we'll just pop into the back and see if we've got any money spare they will literally create it out of nothing that money never existed before and they greeted it to give it to you that's kind of cool that's weird um but you don't need to know that but then there are plenty of things that you do need to know so like understanding understanding things like the national debt and inflation and all this sort of stuff is really important because it gives you clues about what the future is going to be like and if you're going to make the right decisions about your money it's helpful to know or at least some kind of clue about the path that the future is going to take so if for example people we are going to end up having lots of inflation so the at the moment I'm recording this there's loads of inflation for a long time we were being told it's just transitory it's just it's just a thing it's covered it's going to pass and now that seems like it's not going to be the case and my contention is going to continue to be a lot higher than we think it think it should be for quite a long time well that's really helpful to know because you can then make the the right decisions about the Investments you make and how you approach your finances with that in mind but the thing about understanding the actual principles behind it and why that's the case is then you don't have to take anyone's word for it because like I said earlier everyone's got an opinion so if you you kind of you listen you speak to one person they'll say oh this is going to happen another person said well that's going to happen they're both eminently qualified economy sometimes they've got two people with Nobel prizes both saying the exact opposite of each other who do you believe yeah the great thing about actually understanding at the Grassroots level is you don't view them don't have to take anyone's word for it you can come to your own view yeah yeah that makes a lot of sense I think if I if I think to you know people people I know like my my mum for example who will move uh Heaven and Earth to try and save a few quid at Tesco and make sure that if she'll like call me back when I've I've driven off to Tesco because I haven't taken the club card keychain with me to grab the coupon thingy and yet for the big financial decisions like getting a mortgage uh she would have no idea what the word interest rate even means and what a mortgage even is and would take the word of like one of our uncles who maybe has a couple of properties and to who would say that oh you know by buying a property in London is what everyone should do and should be like right guys you should buy a property in London and there was a huge financial decisions that have enormous repercussions for someone's entire life yeah uh and I think for a lot of people not understanding what is actually going on means that at best you make an uninformed decision about these enormously big things and at worst you make a terrible decision about these enormously big things exactly and it's almost too too intimidating and too scary to think about and so you do just end up taking someone else's word for it because it's easier then people aren't as weird about money in general so like there are plenty of people you've got plenty of multi-multi-millionaires who will always drive back to collect the club card because it's a principle of a thing or they've just got these kind of weird beliefs about it but I do kind of a bigger structural level yeah it really helps to actually understand it's not and it's not that hard even people people it's kind of made to be hard and it's made to be boring and complicated but it doesn't have to be okay nice so let's get started um the price of money how to prosper in a financial world that's ridiculous that's rigged against you I guess firstly what is money and like where do we where do we start this whole story money is I've called it fiction because it's something that we've collectively agreed is a thing so like money money is whatever we say it is so anything can be money throughout history all kinds of different things when money shells have been money like sticks with like notches carved them have been money anything could be money it's just something kind of stands between transactions that we're making because it makes things easier so we we use the pound in this country the dollar is like the global currency or why are they the thing they they just because everyone agrees and it's great if everyone agrees on something because it means that you can like go out and buy pretty much anything you want when you kind of both you've got an established unit to use but it doesn't but money in itself doesn't have any value like through a lot of history money itself had value so you have like gold coins so the gold and the coin would be valuable um or you'd be able to like the first banknotes you could go and actually hand that banknote in at the bank of England and get a set amount of gold in return so the money itself would have value but for the and there's been times in history when that's been stretched but now money just is money is money because we say it is and money is extremely useful because if you didn't have it then it would be a nightmare to get anything done like how would you if you wanted to to go and get your haircut you couldn't just give them money you'd have to find something that they wanted and go and give it to them the whole thing would be a nightmare but I think a kind of a pro it's really useful to keep in mind that money is effectively just something that we are kind of a collective very useful illusion because then when things get weird which they do when you start going deeper into money it kind of helps you kind of realize why that's the case and it breaks some of the illusions that we have around like the pound or the dollar having a fixed value because they don't hmm yeah when I when I was getting into all the crypto stuff I I started reading into some of this and you know the 1970s gold standard and how money was pegged to Gold but then it became not Peg to gold and it sort of uh essentially the the reason we believe in the US dollar is because we believe in the US government yeah I wonder if you can speak a little bit about that for people who might not be familiar with that side of the story that's a really big deal so they so we they've had like various things version kind of versions of this thing called the gold standard in the past but effectively it's where like every where currents you started to have like initially gold was the currency yeah coins made of gold and then you have other currencies but those currencies are pegged to a particular amount of gold so the but first of all it was still like the pound has its name because it was a pound weight of silver um but then over time that's going to change and then at times of War you kind of suspend all that and go well actually we need to get a load of money so forget that but then it always comes back to being backed by something again but then it was the so 1971 where it was the first time that and temporarily this is only meant to be temporary the the US dollar was no longer worth a specific amount of gold it was just worth whatever it has value because we say it is and this is this is on a temporary basis over 50 years ago and that's a big deal because when you have a currency that is linked notionally to an amount of gold then it puts a constraint on how much of it can be created so that there is only so much gold in the world there's only so much of it you can pull out of the ground every year and then it gets progressively harder to pull it out of the ground because you've kind of used up all the easy stuff so there's only so much extra money that can be created when that's done away with then well what is what's stopping you if I'm just going and like printing an extra few extra billion nothing at all and so the result of that if we go and look at the total money supply of the US or the UK or pretty much anywhere else you'll sort of see a line that's completely flat that pretty much the whole way through history then you get to the 70s and it goes like that and it just goes up like a hockey stick pattern and that's because so much extra money has been created in the last 50 years and the magnitude of it is just shocking I'd encourage anyone to go and look at a chart on it just because it's just Bonkers and it kind of makes you realize okay the last 50 years it feels normal to us because it's the only time we've ever known but historically it's completely abnormal and it's not going to last forever it can't last forever uh so apparently there's this quote from Henry Ford uh if people understood how our money and banking system worked there'd be a revolution before tomorrow morning what's what's going on there well so he said that bear in mind before a lot of the craziness has happened recently but we've already kind of touched on a couple of the key the key points so like Banks can just create money so you and I have to work for money um we try and arrange our lives so we can get as much money as we can we're working as little as we can but we have to essentially work Banks can just create it out of nothing it happens in front of you and that's just that's nuts that some some entities have the special privilege to just create money yeah how does that work why can't my business just create money because that would be illegal um and that's all right for Barclays to do it's okay for them to do it because it's it's a it's a very it's a whole strange complex thing but basically a banking license is literally a license to print money and so it allows you to to just say yep I will you want to borrow this money you want to borrow a thousand pounds so I will I'll type a thousand Pounds into your account and there's a kind of a counter entry where it's it's like that you owe it to them but it's kind of their it's an asset it's a liability it's it's but it's not it's nonsense but they but they create money that didn't exist before and when you repay that loan the money ceases to exist so that's weird um and then the fact that the states can just create money as well so we saw talking about 2020 where the 450 billion that was needed to fight covid which is created the bank of England created it and gave it to the government to spend and so it's it's just absolutely nuts and then if I think if most people realize this you would get that whole thing of well hang on a minute like how how is it that I'm having to work so hard and all and yet Money Can't other people can just create money and the thing about it is that when money is created it's the people who are closest to the money creation who tend to see the biggest benefit of it and so then it'll pass its way through the system and eventually by the time it gets to your ordinary person or someone else has already profited from it and inflation means that by the time it gets to you'll probably probably be worth less anyway inflation is a whole other type of weirdness that we should talk about yeah okay so is this what you mean by a financial world that's rigged against you there's one yes but there is one other particular way in which it's been rigged against most people recently which is um when you inflation is something that now everyone's very aware of but for a long time no one really thought about inflation much because it was like ticking along a couple of percent a year but when you when something happens for a couple of percent a year for a lot of years it compounds into something that's quite a lot so the pound has lost half its value in the last 20 years so that's kind of weird so if you had so if you had a 10 pound note and you got lost it 20 years ago found it today it would buy you half as much stuff as it did 20 years ago that wouldn't be so much of a problem if you could put that money into the bank and an amount of interest that compensated for that and more yeah because you'd still be coming out ahead that for most of History that's been the case the rate of interest has been higher than the rate of inflation but since 2009 that's not been the case so at the moment people are feeling pretty good about the fact that you can get nearly four percent in an instant access bank account that sounds pretty good because we can remember when it was nothing but inflation's eight percent so you're actually losing even more than you were before so the way that the financial system is rigged against you is that the money that you have is losing money every year it's costing you more to buy the things that you need and by saving money there's nothing you can do about it because even if you save money your savings are guaranteed to be losing value but if you've got debt then you see the other side of that equation and that's actually quite a good thing what do you mean so if you have um if you borrowed um 100 pounds yeah 100 years ago No in fact if you brought 20 pounds 100 years ago that would have been enough for you to pay your rent for a month and go and go out for dinner with the change and so like let's say you borrowed it probably 100 years ago you come forward today and you and your very elderly friend you know your friends your friend friend says actually can I have that 20 pounds back now yeah sure hand over 20 pounds you barely even notice it's gone yeah so the the value of your debt has been eroded over time so if you even if you never actually pay off a penny of it the amount of pounds that you owe Remains the Same then the actual amount that you can the actual buying power is always being eroded and so if you have a mortgage for example and you and you've got a mortgage now then 10 years later let's say I've got a mortgage for 200k 10 years later that 200k would be worth less yeah but I would still have to only pay off 200k correct So based on so yeah it's roughly half in the last 20 years so you took out you borrowed it 20 years ago today you owe the same number of pounds but if you're if your value of your asset has increased in line with inflation if your income has increased in line with inflation then it's so much easier it's twice as easy for you to pay back that mortgage as it was when you took it out and so is that why interest rates and mortgages are a thing in that the bank is like hang on this money this mortgage is going to be worth less X number of years from now therefore we need to we as the borrower need to pay an ongoing fee I guess to give the bank something or how does that work not really because remember the banks kind of create the money so yeah so so and there are there are some there are in some it depends on how things are funded you can't have some situation where someone needs to see a return on it but essentially like the the reason that we have um yeah the reason they have interest rate is because then is that it's putting a price on money and it goes into a whole load of technical stuff that we don't need to get into today but when when interest rates are low you're more likely to borrow money because it's cheaper and when interest rates are high you're less likely to do it because it's costing you more um which and this is this is how the government kind of controls the the money supply by setting interest rates to make to make people more minded to borrow and spend versus less so if the government decrees that hey interest rates are now zero percent what's what's gonna happen everyone's going to go out and borrow more money oh because they can borrow the money effectively for free yeah which which is what happened for a long time yeah we had zero rates for ages and that's why it's one of the big reasons why um the prices of property stock market any anything you can think of went up because people could people could borrow money to go and buy assets okay and because of supply and demand if people are buying the things the price of the thing is going to go up yeah exactly and so when people have been saying oh for the last 10 years property has been going up and up and up and up it's a big partly because it's actually been so easy to get a mortgage yeah everything's been going up because Money's been kind of effectively free and then now that's not the case and so that's gonna massively change the dynamic but it's still it's it's kind of it's still the case that because you've always got that this this inflation is such a core part of everything because there's no like you you probably know the bank of England's Target is two percent inflation a year same in the US um there's no reason for that to be the case it's just they've decided that that's what it should be but that means that you that that that's that's setting a floor on it so if so if it's above it as it is now then oh if I'm actually restart trying to do something about this but if it's below then it's Panic stations we need to print a load of money do whatever we can to get it back to the two percent so you've always got of inflation of effectively at least two percent over the long term which is making everyone poorer so that's kind of what I mean by the system being rigged against you and why why do they want two percent rather than zero percent or minus two percent it's at a two percent for no like mathematical reason it was just it was a suggestion that someone made once they ended up getting taken on but the theory of it is that deflation is bad so if things are going to get cheap if you know things are going to get cheaper in the future it's not it's I won't spend any money correct yeah if I knew that a sailor's coming six months from now yeah I would wait until well six months from around to buy the next iPhone or whatever the thing might be so that's that's the theory and so the idea is that's bad so if you said it at two percent even if you undershoot a bit you still you still above zero so so that's good okay I personally don't buy this at all because like think of your laptop like laptops are always getting cheaper you know if you wait another six months you'll always be able to get something better for the same money but you do it anyway because you want the thing and if you want to get your groceries this week you still go and buy them because you need to eat this week so I'm not convinced by this whole this whole thing about like deflation being bad but now we've reached a point which I think is really important point where deflation and it would be disastrous for the financial system because everyone especially the government has so much debt so if you ended up and you kind of the idea is if you have inflation then and you've got a fixed amount of debt and you have inflation then or Everything grows relative to the debt so everything that you could everything that gets produced is worth more the debt stays the same all good if you have um deflation then you've got the opposite of that so the debt is effectively growing as a proportion of everything else which would be a disaster with what we have now is a situation where every where the government has got about um two and a half trillion pounds worth of debt it's 100 of GDP um and so if they're they they can't have deflation because that means that that debt is growing and growing and growing as a proportion they need to have inflation because that's the only way to stop the debt from growing they have to borrow more money every year they've borrowed money in every year except they bought they borrowed more than they've brought in and something like more every year but six out of the last 50. and so there's there's nothing you can do about it and so the the amount that's borrowed it just goes up every single year so the only thing that you can do to stop that getting completely out of control is to either grow the economy with economic economic growth which isn't happening because productivity is rubbish or um actually like just inflate the cost of everything this episode is very kindly brought to you by heal I've been using hula I've been a pain customer of huel since 2017 since my fifth year of medical school when I first discovered it and basically what it is if you haven't heard of it is that it is a meal in a shake it got the perfect balance of carbs and fiber and proteins and fat and it contains 26 different vitamins and minerals all you do is add water or milk to the powder usually I use water you 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amount was but I think it kind of went they ended up going over the top so everyone everyone kind of not everyone but a large proportion of people came out of covert better than they went better off than they went in because of all this sort of money that was sort of created and dished out so what that so that then creates that everyone goes and tries to spend all that money yeah there's no extra supply of anything so supply and demand you end up getting inflation so they could go um so you can't just go absolutely nuts and go everyone have whatever you want because you're not creating anything extra anything new in the real world so there's always there's only so much stuff that's being produced yep yeah because I wish the shortages for like PlayStations and stuff back in the day chip shortages and everything so there's a fixed Supply everyone wants a PS5 and therefore the price goes up and up and up the black market starts to happen people start reselling it on eBay and that you're saying that that phenomenon plays out across everything that anyone wants to buy and therefore the price of everything goes up exactly and we call that inflation yeah so if you had um like government clicks their fingers and every single person wakes up with an extra million pounds in the bank account so you go fantastic I'll go buy whatever I want but creating extra money hasn't created any extra stuff so everyone rushes out to spend their extra million pounds and girls and tries to buy everything so what happens the price of everything has to correct upwards so to to maintain that scarcity okay interesting so someone listening to this might say why does the price have to go up isn't isn't it just the evil shopkeeper that's deciding to price gouge because everyone's only got a million quid it doesn't cost them any more to produce the product so why are they putting the price up they don't have to but prices are price is a signal that tells markets what to do it's it's if you you could just keep the prices as they are but then you'd run out of everything and so like how do you manage demand if there's more if there's if there's only a finite amount of stuff that can be produced then how do you how do you kind of encourage people to produce more of it and how do you allocate between what you should be producing you you that price is the signal so if everybody suddenly wants to go and but and buy grapes for whatever reason the the price the the the price of them could would go up because that's the way of controlling the supply of what you've got and it's a signal to get more people to come into the market and produce grapes it's like if you if you if you don't if you don't have prices there's no way of doing that so in my million pound example there could also be a law saying you're not allowed to increase prices everything's the same as it was but then just went out of everything so it doesn't really help there's there's still this kind of fundamental there there's sort of there's a fundamental scarcity and you kind of need you kind of in money to be scarce as well because if you end up with abundant money and scarce resources well that's inflation doubt okay um but there are some assets or some items that the government does say you are not allowed to increase the price of this yeah uh like what's what's the deal with that that's just trying to that's basically trying to avoid ill effects of um of like if you have if you have the price of lots of items going up then it should kind of it annoys people but it doesn't matter if people can't get a PS5 then it's like it's not a big societal problem but there are some but like if the price of a certain medication goes up then that's a really bad thing so they try to control for that and it's they can't they kind of have to do it but it doesn't really help because if the price of it did go up then in theory that would encourage more people to come into the market to produce that thing yes and you'd end up with with more it's a bit like rent controls I mean so we've been coming to talking about property later but with like when rents are going up a lot then they'll go oh well the answer is rent controls tell these greedy landlords that they can't increase the rent that's sort of a solution but that just that doesn't encourage any more property to be produced to be created to be brought into the market it actually discourages it and it doesn't produce anymore the reason that rents go up is because there's more Supply than there there's more demand than there is Supply so if you if you say well rent is now capped at this level then all the people who suddenly loads of people are willing to pay that level yeah but there's no way of allocating the housing that you've got so loads of people end up they don't have the option to pay more to get something they just have nothing okay so this is what you get in Sweden where okay where sorry what's happening sorry and um in um Stockholm I think it is but they they have um they have rent controls and so there's only a certain you can only charge a certain amount and see what what you end up with is it's like impossible to find somewhere to rent because there's just there is no there's no extra Supply and so you end up with like a black market of people doing sublets and stuff like that because they're just there's no way of finding anywhere so that that's a that's a property example but then it's the same for it's the same for anything like you cut capping the price sort of solves a problem in the short term but it doesn't really start in the longer term so is it like you know people always complain about uh Uber and their um sort of like charge thingy surge pricing search pricing yeah what's what what's the deal with that yeah same thing so the idea with that is so surge pricing it's a way it's both a way of allocating the the demand that there is so like you might look at that oh I'm just gonna walk it's not worth it so that is a way of kind of like reducing the demand allocating The Limited supply of draw of cars that there is but it's also a signal to the market to to come and participate so I've spoken to Uber drivers before who've said that they when they get a notification that the surge pricing's in effect they'll grab their keys and go out so that's pulled more people into the market so the price is kind of annoying for you when you kind of see that notification you've got to pay more but it helps to sort out the market I feel like okay so people on the political left tend to be I I think anti-free Market anti-capitalism pro-government controls of stuff what's what would be their biggest I guess what's what's their most compelling argument um for rent control and things like that like what what would they say and by that I mean we because yeah well I think It's tricky because I think we could all recognize it's very easy to recognize the problem it's very hard to actually give a solution and like it's very you can't it's very easy to just kind of appeal to the market argue leave the market to its own devices and that'll sort it out maybe it will maybe it won't yeah but even if it does it can still cause a lot of pain either in the short term or permanently for for certain groups of people so it's very so it's really easy to go oh you know because it's like let rents increase because you know some people will be willing to pay it and those who can't will move out but then you end up you could end up with a situation where um nurses just can't afford to live in the whole of London and that's not that's not good for anyone yeah so it's definitely not perfect to just say oh you know let the market do its thing for any of these things so but then what what you actually do about it it's hard because normally when you start it's when you start making an intervention you make an intervention with the best of intentions but then it will have some completely unintended consequence on something else so then you'll have to go make another intervention to fix that yeah and then another another and you said you end up with a situation where the government is trying to just like constantly patch things over and be and doing more and more when really to the greatest extent possible I think you just kind of want to leave the economy to sort itself out because the economy is like it's an emergent thing of all of us as individuals doing whatever we want to do freely transacting with whoever we want to and so the signals that the economy is giving it's always going to be better than like a few people that are Bank of England conference room oh well I think it should be this like that the the collective is always going to be smarter than a few individuals so as far as possible you want to kind of leave things to their own devices but you just can't do that fully um and I guess the issue with leaving things to their own devices is that then the people like nurses who are absolutely core members of keeping a society functioning but are not economically incentivized to do so they get screwed over because I guess something like the NHS is in almost inherently and I'm thinking out loud here and so please correct me if I'm wrong it is almost inherently an anti-economic thing where the government is like screw the prices we are going to fund everything which is amazing which is fantastic but it does mean that okay okay cool state funded Healthcare System where is that money gonna come from the government could just keep printing more and more of it but then you'll have inflation and then the price of everything goes up and people complain alternatively the government could borrow the money from somewhere in which case they have to pay back at some point alternatively the government could just quote raise taxes on the rich in which case why why can't we just raise taxes on the rich like you know get the you know 80 tax rate like get these rich people they've got enough money anyway landlords like me and you have too much money on our hands we should we should raise taxes on the rich like what's what would be the counter to that view I think you the the counter the the counter that you always see from people who don't like that idea is oh they'll just leave um I'm not convinced I'm sure I'm sure like on the margin some of them will but you'll go you'll people live in a place for a reason that's not just tax driven and it's very easy to say oh well I just go and live in Portugal or something but most people probably wouldn't so I think you get I think you can but you do get to a point where um there is sort of there is only so much tax you can you can collect before people start going well actually I'm just not going to bother earning anymore because it's not worth it to me and you can argue about where that threshold is but there is a threshold where just go physically it just isn't worth it anymore and that's not a good thing because if you assume that people are creating economic value for people by whatever they do then you want them to be doing more of it and not doing less of it so you could end up jacking the tax rate right up it just kind of puts everyone off doing anything so you end up not really collecting any extra attacks and a load of things don't get created but where is that level who knows and I think and I think a very fair counter would be well there are plenty of people who are not earning money through their hard work they're earning it because they've got a whole load of assets and maybe they've got those assets because they were passed down to them maybe they've got those assets because of something that they did 20 years ago and then because of zero interest rates everything else the value of those assets has gone up and so those people are not productively doing anything so tax them and I think that having a having a wealth tax is something that always kind of gets thrown out as being off too hard and blah blah blah but at some point it's probably going to have to be the answer because you do you do have like like inequality is just like absolutely because of what happened in 2008 which we could talk about a bit if it's interesting you you right because of what's happened with money inequality has absolutely exploded and so if you do end up with this concentration of wealth in a small number of people then you have to somehow sort of tax that small number of people you have to but there is still a limit there is still there is still no kind of infinite amount of money that you can just tax away from people so everyone can have everything but they what they're still economics is about scarcity effectively the man how you manage the scarce resources you've got hmm okay so on this like just following this thread on the wealth tax the idea would be that you tax people not as a percentage of their income but as a percentage of their overall wealth yeah is that is that sort of what the US does with property taxes and things property tax is closer to it so there's um there's a really um popular the popular popular among certain economists um called land value tax so which is a bit like a wealth tax but specific to land so you you basically tax the the owners of land um because you know someone has to to over there and they can't just pick the you can't just pick your land off and land up and take off another country so it's quite easy to do and they're they're basically lots of very good economic reasons why this is a good thing why this is a good thing to do um but it's probably not going to happen because um many very very powerful and influential people including most of the House of Lords are big landowners so it's not it's not likely to happen but that would be that would be one form of wealth tax another form would be you know you kind of have to sort of send in the value of all your with all your bank accounts all your Isis your stocks and shares accounts all of that you have to sort of send it in every year and then you get taxed a percentage of that I'm not saying it's practically easy it's not I'm not necessarily here saying advocating it and saying this is the solution I don't go there in the book but while we're having the conversation I think we have to recognize that there is that inequality is going is going to reach a point where something like that has to happen because if you think about it taxing income tax is just so weird because you tax things that you don't want people to do like smoking sure you also tax things like working we can kind of do want people to do yeah and because because you can't in a way to kind of go and get more taxes kind of get nervous about well you know there's if you even if you tax the hell out of the richest one percent that still only gets you a certain amount so everyone else has to pay more as well so everyone ends up paying more more tax you end up with like quite a lot of people you think don't even think of as high earners like teachers being pulled into the like the 40 higher bracket so everyone's taxes go up there is only so much that you can so much you can get so at some point you have to go well yeah you have to find another way of doing this or you have to say the government has to say actually well we're not going to provide all the services that we're going to and so yeah and then you get the whole like well the government's trying to destroy the NHS they just wanted to be privatized yeah kind of narrative yeah exactly man what's interesting stuff it's really interesting stuff like whenever I I start even vaguely thinking about it or talking to anyone about sort of economic policy and things I just kind of think man like running a country must be so hard because there's there's no easy answer to any of this stuff no and I guess something even something like the wealth tax it's like yeah just the way that our government is set up means that it just so happens that the House of Lords Lords has a lot of has a lot of land and so it would be pretty hard to pass a wealth tax or a land tax law against them and like you would think that well the House of Lords is there is like a check and balance against the government or something like that but when the incentives are so aligned in favor of I won't hold on to my money yeah how'd you get anything done yeah outside of I don't know a military coup and get rid of them and stuff which might be what some people are advocating for yeah exactly and the key a key part of something like a land tax is supposed to be that you that replaces all other taxes so if you tax that then you don't have to tax people's earnings which kind of makes sense I think they they're quite right concern that a lot of people would have is that they'd actually just add that on top so as well as taxing you on on you on your earnings and your savings and your vat and this and that and the other you'd also tax something else which I think is a reasonable objection but because again because it comes back to the debt so much debt has been built up over the last 50 years that just covering the cost of the interest on that debt is huge especially now interest rates have gone up a bit well quite a lot so we now spend as much on just paying the interest on the debt as we do on defense and soon we'll be paying as much on the interest on the debt as we do on education so if the debt keeps growing that a higher and higher proportion of everything of all the tax revenue you get has to go to Just paying your debt okay I I still don't quite understand why the government has to borrow money because if the government let's say if the UK government borrows money from the US surely to people in the UK that is just the equivalent of printing more money because they don't realize where the money's come from and because once the money's in the system the price of everything goes up so why is the government trying to borrow money at all from like hey where does the government borrow money from and then why do they borrow bother borrowing it rather than just printing it yeah so they borrow money from um all sorts of all sorts of places including so like if people have um bonds as an investment bonds probably something you've got most people have heard of but I really think too much about what it is but that's basically lending money to the government and also lots of people have those in their pensions um lots of people um in other countries have those those as Investments lots of countries have those so like China is a massive owner of U.S debt and so you borrow from other countries other individuals things like that um that's where it comes from um as an alternative you could just create it but then you end up you you sort of have the but then you have the inflation problem like you've you have to you you've and inflation kind of ends up being a bit being like a tax anyway so basically you end up ultimately paying one way or the other but if you're I I get why you wouldn't have inflation if you're borrowing from people in the UK as part of the Pension funds or whatever but if you're borrowing from borrowing from China where like that's essentially free money that's coming into the system somewhat uh somewhat without a link to the UK so why is borrowing from China any different to pressing the print money button um it's different because if you're borrowing money from another country you're having to pay out interest ah to the other country okay which you're then having to pay so that's costing you so some proportion of the taxes you collect Go to paying them back okay whereas if you just printed it you won't have to pay back and then sort of you end up with more money in circulation yeah exactly so by borrowing money from China you end up with some more money in circulation but but by the fact but the fact that you have to pay it back means it's not as much as if you were to just print the money yeah that's right essentially there is no there's no kind of magical answer to the fact that there is only a that there is there's only there's a scarce amount of human effort human effort and it's kind of the limiting factor and so when you have productivity improvements so like you have you have ai means that everyone can now do more with less well that's great that means that that's great productivity it means that are now we can now produce more the same amount of people working for the same amount of time can produce more um more stuff yep which means which means you can then support a greater amount of money you kind of need a greater amount of money to represent that greater amount of stuff yeah okay but they always have to be there has to be some kind of balance so if you you just you if you kind of went and like trebled the amount of money without growing the amount of stuff and that's where you have problems okay so this is why everyone cares about like country productivity yeah and stuff yeah because if if so if hypothetically we could just wave a magic wand and Magic up a house out of nowhere would that basically solve the housing crisis I guess it works I mean the the reason that that productivity is important is because it's about it's about this limiting factor yeah the amount of of stuff humans can create is is the limit so raising that limit is is a good thing it makes it easy it makes it easier for people to I mean everyone can get what they want with less effort yeah which is what everyone ultimately wants so it's like when when the tracker gets invented in invented Suddenly It's people are less likely to starve yeah because it's easier to make food yeah so similarly if you could wear the magic one and create a house people would be less likely to be homeless because it's just easy to create houses yeah and then you're captured by the amount of land you have physically on Earth rather than the amount of Builders and property developers you have willing to build houses yeah and so something like AI is effectively like a magic wand for certain industries unfortunately it's not yet a magic one for something like building a house but a tractor would have been a magic one for growing growing and harvesting stuff yeah exactly so it's kind of it's good news all around and so if it means that you know if you use it in medicine and so doctors can now sort of like I don't know diagnose things more more quickly also more of their time doing the things that they really need to be doing rather than sort of messing around with things that they don't then that means that there's more output per hour works for them and so that's what so that's that's what you ultimately want and that's and that's the only way to kind of the only way to kind of keep the party going and keep giving giving people more and more and more is to find ways of producing more the shortcut to doing that is to create more money if you if you if you if you if you print more money then you and you dish it out to people and you give them everything they want today a then great but really you're just kind of borrowing from the future in a way you're kind of you're papering over the facts that you you're pretending everyone can have what they want but in reality they can't damn I don't think I've ever quite understood that before because I guess like if I think of my business it makes a lot of sense I'm very keen on for example my team using AI for stuff because if we can do twice the amount of work in half the time yeah suddenly it means we can produce more stuff if we produce more stuff it means we can sell more stuff which means we make more money uh if we make more money it means that I get richer but it also means we can then hire more people to do more things and it's like this pursuit of more and more and more and eventually if we assume that the job of my business is to create videos and podcasts like this one that people can listen to that will help them build a life they love generally everyone benefits When a particular business grows yeah and so similarly if you're running a hospital and suddenly your doctors and nurses and everything twice as efficient or you had twices or the medication I guess was half the price because there was it was easy to wave a magic one and produce it everyone benefits from the growth of the hospital business as it were yeah exactly and that's the the wonderful thing about technology if because if you can if you can like 3D print a house and so it's quicker and easier to do that if you could use AI in your job and so you now own you can now get it done in half the time and spend the other half the time doing something else that's valuable or even just relax instead because that's a valuable thing then that's great and so technology is is amazing because it it allows you to do more with less and so but then you've got this kind of weird tension that that's that that's deflationary but because if you're doing more with if you're doing more with less if everyone kind of gets their job done in half the time then sits around then that's kind of deflationary because you you need less money but that's kind of a side point the way we don't need to go we talked about the deflationary is not inherently bad it's only bad if you have lots of debt absolutely and therefore the government thinks really bad because they have a lot of debt that's it yeah so yeah you kind of got this kind of perverse situation like we've ended up like I've said say in the book that we're coming we're like 50 years into a financial experiment where it kind of it has to come to an end you can't just keep growing debt forever and ever and ever and ever and ever there comes a point where it's just it just doesn't work anymore if you if you could if you could have a completely painless reset where everyone just kind of goes back to the beginning and starts again on on a different grounding then you'd be kind of welcoming things getting cheaper and because well why not why wouldn't you so what's stopping us from having a reset historically it's just it when systems change fake sort of change messily and it turns out to be not great for for anyone so like on on the site on the other side of of for everyone who has borrowed money There's A lender and so if you suddenly go actually guys you know what we're just going to wipe out all debt and this is something that used to happen quite a lot like in the in the in biblical times though that jubilees were every so many years if you go and wipe out all the debts yeah um and if so if you did that it would kind of be well in a way great but also you'll basically end up saying to all these people who loaned you money sorry you're out of luck and so I don't know I don't know what the ramifications of it would be but it would probably not be very pretty it's also associated with um changes of of power so if you end up like with the US kind of like not being the dominant country um the dollar underpinning everything anymore and he ends up with China or somewhere else having that power instead then it's probably going to be messy so you kind of at some point you're going to end up with some kind of either a hard reset or a soft reset of the whole system but no one knows what it's when it's gonna happen or what it's going to look like this episode is very kindly brought to you by Shopify now Shopify is great we've been using Shopify for the last several years to power the e-commerce side of our business when selling our planners and we're also using it to power the back end of the e-commerce section of a tech brand that we're in the process of building out more details to come on that in a while but Shopify is sick it's basically an all-in-one Commerce platform that you can use to sell pretty much anything online or in person or through social media platforms and it's great it's an all-in-one platform that lets you build and grow and manage every aspect of the process from literally zero to powering like billions of dollars of Revenue it's super easy to get started you don't need to learn how to code they've got a bunch of really like nicely designed templates that will make any e-commerce site just look absolutely sick and they power more entrepreneurs than anyone else so there are millions of businesses in the world across 175 countries that use Shopify to be able to sell stuff and so if you're interested in potentially starting a business or growing a business then I'd highly recommend using Shopify like I said it's what we use to sell our stuff on the internet It's amazing And even companies like gymshark that are doing like one billion plus dollars in Revenue are being powered by Shopify so like you know that you have a lot of room to grow on the platform anyway if you want to give it a go and sign up for a totally free trial to see if you like it then head over to shopify.com forward slash deep dive and that URL will be linked down in the video description and also in the show notes and thank you so much Shopify for sponsoring this episode so is the stuff that we've talked about so far basically a reasonable a reasonable starting point as to why the financial system is rigged against you and me and the people listening to this podcast so I think if we can kind of say like the core the core thing that is important to understand and why you could say it's rigged against you is this point about um the rate of inflation being higher than the rate of interest so if you if you're guaranteed to lose buying power by saving money then that's not good and so that I think that that's that's probably the most important thing to understand so okay well it's that way it's been that way for 15 years why is it going to continue being that way well that's because of what we've just been talking about so you have to you can't have interest rates being too high because everyone's got so much debt so if you if you jacked interest rates up to 15 then it would bankrupt everyone including the government so the government's own borrowing costs have gone up so much because of the Rises interest rates we've had even over the last year if they went up too much further then you end up with basically all your tax revenue goes to paying back the debt and there's none left over for anything else so you can't have interest rates going too high but you also need to have a pretty decent amount of inflation because there's actually lots of good reasons why you'd have inflation anyway to do the globalization but even if you put that aside well why would the government want there to be inflation well because that's how they effectively shrink the value of their ever-growing debt pile and so you they don't want it to be as high as it is now because it gets heavy it makes everyone very unhappy but if you could sort of have like four four or five percent inflation forever or look for at least like the next five ten years I think it would probably be quite happy with that so that's why I believe that we've kind of come out of this era of very low interest rates very low inflation I'm going into an era of having um much higher higher inflation higher interest rates but crucially the rate of inflation is higher than the rate of interest and it is the government who pulls the lever on the interest rate and then inflation is a thing that just happens yeah and it's the it's the the bank of England that supposedly independently sets um interest rates but supposedly yeah I mean it's it's it's a brunt it's a branch it's a branch of government it technically has Independence for the purposes of setting rates but if you just look at human incentives I just don't believe it at all and it's like in theory they they can decide how much to borrow and they just happened to just oh and how much to and how much money to print for the bank of England can decide how much money wants to print it in 2020. it just so happened to decide to print the exact amount that the government needed to cover its own spending plans but it needed to borrow money for covert so I'm not convinced by the independence oh interesting Okay cool so at this point we agree that we've understood a bit about money we agree that the financial system is rigged against us um in the book you talk about a few different principles as to how normal people can make money work for them yeah and can prosper in this potentially well in this very rigged Financial system yeah so I wonder if we can go go through some of those okay um and so principle principle number one forget about growing your wealth with savings yes what does that mean so it's not saying don't save so you need to have an emergency fund that's cash you if you're saving up for something like a house deposit then you need to have that as savings not expose it to the markets where Anything could happen so nothing don't say and of course you have to save because that's the precursor to investing you have to save money before you can invest it but saving you can't just save because as we've just covered you'll you'll even if you're you've got you've got your money in the best possible bank account that's paying you the biggest amount of Interest you're still earning less than the rate of inflation so you're losing buying power so it's better to it's better to save than not to save but you then need to cut you need to go and do something with it because it's it's crazy it should be the case that you you can just save your money and you'll earn a return on it so without taking any kind of crazy risks you end up doing quite well but unfortunately that's not the case and that's not the case because the rate of interest is lower than the rate of inflation yeah but if it if it were identical to the rate of inflation then we'd all be happy we'd be happier if if if if it was it was higher that'd be even better so so by the time the government has to pay more often interest rates to that all the debt that they've got and the government has all this debt and therefore the government's unhappy yes and also anyone who's ever borrowed money is unhappy because the mortgage rates are going up and then maybe they can't afford the mortgage and the house gets repossessed so some people are happy and are unhappy regardless of which side of this interest inflation rate kind of equation we're on pretty much yeah what mistakes do people make when it comes to saving um I think for kind of let's say people of 30 and younger they probably kind of got a more realistic idea of savings because they've grown up with until the last couple of years your savings just don't do anything for you you can see it's like literally like 0.1 and so you kind of know that I think for the older generation because for most of History you have been rewarded for saving because all of this stuff isn't relatively new phenomenon um you they're probably more likely to keep on like using cash Isis and things like that and just kind of keeping a lot in cash because they see it seems like that well you know it's a good thing to do but that's because they're not they're just kind of they're not factoring in inflation so like it's called like in like I've heard it's another economic terms like real terms so if something's in real terms it's like you have to you've deduct the effects of inflation so if you look so if you look at it the amount great I'm making three percent in my bank account that's wonderful but if you look at it in real terms after deducting inflation it could be minus four percent so that's kind of a mistake that people make a kind of a general level but people it's hard to say what is a mistake because everyone I've said at the very beginning everyone's weird about money and like you can like there are lots of people who are very wealthy who keep loads of money in cash and you could say well that's a mistake because if you were investing this then you'd be able to do even better but if it makes you feel comfortable and relaxed and happy that it's not a mistake is it yeah that was one of my biggest takeaways from Morgan Hazel's book the psychology of money around how what is rational is not always what is reasonable and previously I used to say that like oh I would never pay for mortgage because I can get a better return in the s p which may be true and maybe rational but paying off a mortgage helps me sleep at night yeah so like you know what am I really optimizing for here absolutely yeah there's there's a really good episode of um I think it was Freakonomics podcast where there's like some research about like what economists think that we should be doing what about make decisions we should be making out money things like savings and paying off mortgages and The Economist getting very upset because it's not what people actually do in reality so what's the point of saying what people should do if people actually feel completely differently um do you have any rules or principles that are helpful um for you and for maybe people that you would advise uh around saving money each month um I think it's very personal um something that I really believe in is um intentional spending so obviously you can't some people can be in situations where you really need to save the absolute maximum you possibly can for some possible reason but I think even if you're not in that situation then you don't have to like deny yourself everything but you but it's very easy to fall into just spending money for the sake of it not barely even noticing it so you're you're doing it to impress someone you're doing it because you thought it would you kind of you did make you happy once but now it doesn't or you didn't you don't really think about it it's very easy to just kind of spend money without kind of thinking about what makes you happy so I'm a big proponent of um intentional spending so just so spend money on whatever makes you happy and just be conscious of what you're spending so rather so obviously there can be situations where having a budget is helpful but rather than having a budget I think it can be a good idea to just write down everything that you spend so don't don't give yourself a limit but just everybody rule is every time you spend money you have to write it down and you have to physically like write it down I can do it in your notes app or whatever but just don't if you're back if you go I can go into my bank and see that that's different you need to actually be doing it because then in the moment it's kind of making you think huh do I really want to do this do will I want to write this down in two minutes time so it's quite a good way of kind of making making yourself question every spending decision you make without going into budgeting which I think can be can be really useful but it can also be too rigid yeah it's almost like uh you know I've had I've had a bunch of experience with tracking your calories and macros yeah to try and get gains and even just when I write down how much protein I'm taking and I'm like oh this is radically different to sort of just having a mental model of of like a guesstimate of how much protein I'm taking in yeah which is radically different to not thinking about it at all it's exactly the same thing and if you're and if you're if you're on a custom you're trying to cut calories and just just knowing you have to track it if there's like like am I going to feel good about myself if I have to go and put this into my app in five minutes time it means you're less likely to do it yeah it's that thing around um you know there was that study that some like weight loss experiment where half the group did nothing and the other half the group just weighed themselves every day and the group that weighed themselves every day just like lost lost weight by default just because being aware of a number even if you take no active action to reduce that number you know awareness is the first step and then you subconsciously start changing your behavior yeah it's so true and so I bet if you if you were writing I bet if you just like wrote down your word count every day then then the same the same thing would apply okay nice um principle number two you say is take on debt responsibly what do you mean by that um some people might be thinking all debt is bad yeah debt is a terrible thing you want to be debt free as soon as possible etc etc so caveat city um the debt is a tool it's a powerful tool um you don't want to mess around with power tools if so if you if you're in a valuable vulnerable situation or you don't know how to use it as a tool then you can just stay away from it um if you want to not have any debt because that makes you feel more comfortable then that's fine too um all that is fine but if you want to use debt then it can be a powerful tool because of exactly what we're talking about earlier you kind of you get the other side of this Dynamic your the inflation is reducing the amount of your debt faster than the then you're having to pay interest on it oh interesting so even though the interest rates are high right now and I feel the sting of the mortgage payments because I'm like bloody hell this has gone up way more I'm actually getting a good deal because inflation is higher than that interest especially even though it doesn't feel like it because I can't feel the effect of inflation as much as I can feel the monthly extra 600 Quid that's disappeared yes to my interest rate on my mortgage exactly that's it so it's definitely not as straightforward as it was so like when you had zero interest rates then it says oh we'll just go and that's like why not like about if you could if you could lock in that low rate forever then it was like well you'd just be rational to just go and borrow as much as he possibly can so people did um but now it's like obviously more complex than that but yeah you're exactly right it's the same like inflation is doing you a favor every day you don't you don't see it you see the interest payments that you're making out but you don't you don't kind of see the the effect of which the real value of your debt is being paid down for you by inflation so and it aligns you with the government so like the government's borrowing more money than anyone else they benefit from it so watching you interesting um yeah I guess one thing that that's really surprised me about the US when I watched personal finance U.S YouTubers you can lock in an interest rate for 30 years on a mortgage yeah whereas here it's like five years if you're lucky and I'm like damn I wish I'd looked at in for five years like three years ago I know yeah how can they just do that for 30 years and why can't we do that in the UK I don't know I think it's it's but I think it's because of the way everything ends up getting insured by the government ultimately I don't know how it all works but there is a reason why they're allowed to because I because if you think about it the bank is taking on a huge amount of risk like if because they they happen to give this to you for all this time they don't know what's going to happen in the future but if there's some way that which it all works itself out um but yes sadly we can't do that so when interest rates were low I was trying to lock everything in for as long as I possibly could and I was like and like there aren't that many like 10-year kind of products around tens as far as you go but even if it meant I was paying more I'd go and lock everything for 10 years if I could because it's like well it could go down a bit but it could also go up a lot so it's symmetric so the Ultimate model that I didn't have because I've only ever lived in a time of zero percent interest rates and so when I got like a 1.5 for two years or two percent four or five years I was like oh come on obviously I'm only gonna I'm gonna go for 1.5 for two years because I get optionality and then I can exit the mortgage two years from now and 1.5 is less than two exactly and now I'm like tap yeah yeah we had all these people kind of like um calling in to ask us questions on our podcast and we're like when interest rate when you could borrow for like less than two percent and go oh what do you think should I lock in like rates could go down a bit they could go down could get out of it but also are you not happy with this rate just like log it in as long as you can nice yeah I should have uh called according a question for a podcast um what are the different types of debt and are some better than others yeah so um Mortgage Debt is pretty much the best type of debt you can have like best I mean obviously a lot of people don't want to have doubt on their own home but the great the good thing about it is you get it's relatively cheap you can borrow a lot you can borrow a lot of it because it's about the against the value of the asset so if it's you're looking at investing in property you can normally borrow up to like 75 of the asset and because the asset is expensive it means you can borrow a lot of money quite cheaply and they're not going to it would a lot of really bad stuff would need to happen for them to suddenly ask for it back and so if you up with the property Market tends to not go through massive swings and it certainly doesn't on a day-to-day week-to-week level whereas you can borrow against your stock market portfolio but that could go down like multiple percent in a day at which point they'd go oh actually you breach this limit now we want it back so without a margin call yeah exactly ah okay right that makes sense um so you so so that so prop so Mortgage Debt is pretty much the best type there is um other types of debts are borrowing against yeah assets like your stocks not a good idea for most people like very very dangerous um things like I don't know like student debt or whatever like can still it's not something to use as a financial tool in terms of like going and investing probably but can still be a good thing to do because you're it allows you to gain future earning power so you're basically investing in your future ability to earn more money yourself in theory yes yeah it doesn't always work that way um and like quite credit card debt or whatever like generally the interest payment is so high that whatever you did with it would have to have such a ludicrous payoff that it's just not going to happen okay I have more questions about the mortgage thing but we'll come to that when we talk about the property stuff cool um principle number three avoid fixed income Investments uh what is a fixed income investment and why is it bad um so the the main type of fixed income interestment is bonds which talked about which is effectively either which is lending money to either the government or a big company um the reason this so you'll you'll lend a certain amount of money for a certain amount of time and you'll start making a loan to a friend effective effectively if you'll mean enough charge of Interest so I'll lend you money for this period of time you'll give me my money back in 10 years and every year you'll pay me three percent or whatever it is um the problem with that is that the income is fixed so you so even if um if you're not only might what you're receiving not be enough to keep up with inflation but also the money that you get back in 10 years time is going to be worth less than it is today so you'll get it you're you're guaranteed you're kind of guaranteed to lose money on your principal over time yeah isn't this what happened with like Silicon Valley Bank or something they put like 75 of their like cash into 10-year bonds like the day before the government announced interest rates were going through the roof or something absurd everyone's like oh my God yeah that's a that's a different thing so like what I was just just talking about is that if you if you hold a bond all the way through to when you eventually get it paid back you know you know you're going to receive back the same amount of pounds or dollars that you gave but they're gonna be worth less because of inflation um but what often happens is you invest in bond funds um which means that um well that's Park then take an example of the Silicon Valley Bank which is easier so they they were in a situation where they might not have been able to hold it for the full 10 years because people if people come back and ask for that money back they need to sell that that 10-year bond early and for because without going into the mechanics are Bond pricing which is really tedious you you end up where the you actually might have to sell it for less than its face value so you end so they ended up in a situation where if they've been able to hold it for the entire time no problem but um they couldn't do that and so it's value fell so yeah but then but from the but from the perspective of the book you know my kind of issue with it is like well yeah you kind of if if this if if inflation in the future ends up being higher than you think it's going to be then this is not the best idea and I should say as well lots of people disagree with this like financial advisors will tell you about the importance of Bonzer I'm not a financial advisor so yeah because the first advisors are like oh you know the bonds are like the ones that you can trust because you can trust the government and it's safer when you do the risk adjusted stuff yeah stocks equals risky and bonds equal safe yeah we just agree with that assessment but it's sort of true but then the the idea is that they're meant to do do like move in opposite directions and so they kind of balance each other out and so Universal like if the if the stock market's doing really badly then bonds people should move money into bonds and said bonds should do better so it kind of balances you out last year that did not work at all it was the worst year for a diversified portfolio like that since like ever and I think that the mechanics of how things work are fundament have fundamentally changed so now that's not necessarily going to be the case anymore so you just end up with like yeah bonds are just like bonds don't perform socks don't perform nothing performs it's not it's not good principle number four invest in real assets talk to me about that yeah so real assets basically means stuff that you can touch um which is property um also like infrastructure like government building stuff um commodity gold oil I don't want to touch oil um things like that things that work like real actual stuff invest in gold um I'm not saying that you should invest in all Commodities but Gold's actually really interesting but as a gen but as a general kind of principle around real assets it's just like when if things if they tend to do well when there's inflation it's a very general rule because it's stuff that people want and need and it's like real so people can choose not to buy something else but you can't really choose not to buy any of this stuff um and it's um if we're going to go into a more troubled times as we might be as we kind of get to the end of this financial experiment then or owning actual real stuff that people need is a pretty good idea and gold is kind of a special case because it's like it's got real world uses but it's mostly an investment asset but I guess if we look at the price of I mean I've never looked at the price of gold very much I think I did one time because my mom was like why don't you invest in gold and I was like surely it's not going to outperform the s p and it didn't I was like okay cool yeah but that's the extent of my knowledge about gold would you recommend normal and normal people buy gold as an asset class it depends it's so difficult to benefit for any of this stuff it all depends on your objectives all I can talk about is what I do which is that I have a small allocation of gold because it's an it's an inflation hedge so broadly you expect gold again because gold is something real you expect gold to keep up with inflation over time and so at least if what you could at least you're not kind of losing money by keeping gold but you wouldn't want to have everything in Gold probably unless you believe in the imminent collapse of everything because you're it's not going to suddenly grow in the same way that the stock market does yeah and how liquid is gold as it were it's um it's very it's pretty much one of the most liquid markets in the world okay and so when you invest in gold or do you do you oh physically own gold bars or is it like buygold.com or whatever the thing I don't because I wish I think it would be cool but I know um um so there's loads of different ways of getting exposures to Gold including kind of like gold funds where it's going to financialize but what I do is I own physical gold but it's basic but it's in basically you buy it through a company and it's all like in a vault so I've got one big Vault with a whole of gold and then they can sort of like say well Ali then your bar is this one like you've got this amount of it so if you ask them to post it to you they actually would ah so um but in reality you don't want to do that you just want to own the thing but have someone else have all the hassle of looking after it nice that sounds handy um okay well we're going to talk more about the the property stuff in a little bit because that's um I think a big big discussion about the principle number five invest in the stock market boringly what do you mean by Boring win a couple of different things about that so one is um mostly not stock picking because for most people stop trying to pick in visual stocks is a really bad idea it's a highly skilled skilled thing that most professionals can't do so why would you be able to do it um and even if you could you could probably make a better return by going and spending your time doing something else to earn money so most people shouldn't be having the exciting time of picking stocks um also boring in terms of the type of company you invest in so this is kind of this has kind of happened now since the book was written but when I wrote it it was like you had like companies like your Netflix and Tesla and everything else well flying high because it's all very exciting and everyone wants to invest in these companies and when money is cheap or free this is fine it's like making profits one day is absolutely fine they're like well this is great it's growing fast but then when the environment changes and you have um more and you have higher interest rates like we do now suddenly so I'm actually making profit today sounds pretty good maybe we should have companies that do that and so so companies that are like like called value stocks start doing better as people are more interested in boring companies like Consumer Staples things that people actually need it's not they're not going to suddenly tedx in value and start selling loads more stuff but it's just boring and predictable so that's kind of that's kind of happened now to a large extent but I think that's going to keep on happening because having it's profit like money now is going to continue to look attractive compared to what we had in the past where it's just like as the growth is fun and as long as you make money one day it's all good yeah I as as you said that it reminded me of just something something I've been thinking about recently which is when building a YouTube channel and a business around this sort of thing historical advice has always been about grow now worry about making or worry about making money later yeah and that's always been the advice I've given to people like don't worry about monetization unless you physically have to you know grow the audience for two years give value away for free Etc et cetera Etc and then when you press the monetization button and you raise a course or a book or whatever the thing might be suddenly you'll have all these people who know like and trust you and you'll have a torrent of people waiting to buy your product yeah but um I gave a keynote last week when I was in Austin Texas uh to a bunch of like beginner YouTubers that we have in our course and I found myself saying that you know what actually if I were building a YouTube channel today I would really focus on profitability I'd really focus on monetization not quite from day one but maybe day like 91 once I've made my first 12 20 50 videos however many might be just like really thinking about the business model of it because even in that Creator economy thing like you work you we these days you have to work so hard to get views it's not like back in the day where once you grew subscribers you could basically guarantee a certain number of views now every video just has to be good yeah and if you're going to work for the views anyway you may as well try and get the money from it now because you that there actually is no guarantee that that money will come later yeah uh so I'm all about like building the money trees and the the monetization routes right now rather than worrying about it for later yeah well it makes a lot of sense to it makes sense to kind of give give away more than anyone else kind of how we built our business and it's kind of like do like deferring gratification I suppose and and that it makes a ton of sense but then you also need to know I suppose to validate that there is a business there and that you will be able to do something with it and also like I suppose you can you could end up having a whole audience of people who just expect things for free then you ask them to pay for anything this is outrageous how can you possibly do as you sell out yeah there are a bunch of YouTubers that have fallen into that sort of I guess trap where they've sold something the audience has responded very very negatively and they're like oh my God because I guess people already have weird thoughts about selling yeah it's already like a hard enough thing that when you get the backlash which is what you feared all along Suddenly It's like oh my God I knew it was a bad idea to sell any product on the Internet definitely yeah um definitely want to ask you more about the business thing uh shortly so okay so but we've so we've talked about investing in the show in the stock market boringly um we have a couple of questions from the audience in our deeper diver community on telegram um so I'll just give you throw throw a couple of those at you and then we'll have to talk about property let's do it so a question from uh cleanthi says what are some habits that cost people the most financially I'm going to take a slightly different way into this to answer it because I think most of it's obvious like there's like there's there's all sort of people who are a lot of it comes back to like conscious conscious spending and things like that and so like you could people do everyone you do what I do it everyone does it to some degree you like spend the money on things that they don't need to and there's no kind of universal version of that um what you but and the answer's different for everyone so like what you should do is spend very little on your home like if you you want to get your housing costs as low as you possibly can because that's your probably your biggest cost for most people so you want to get as low as possible I don't do that at all because I have young kids I spend a lot of time at home I want to live in a really nice place and I want to live somewhere super convenient so I spend a lot of money on my housing so to other people that would be the wrong thing to do but it's the right thing for me so I think it's very hard to have like kind of general rules around all this stuff but I do think that what a lot of people do is probably around more on the earning side so people the answer to basically everything is to earn more like just like investing in earning like ridiculously high returns from from your Investments is really hard and very few people can do it consistently and the reason you've heard of the people who can like Warren Buffett is because there aren't many of them so you can earn like a certain amount of return over return but you're like pushing that boundaries hard there's only so much you can save yeah you can cut to the Bone but you can't say Beyond zero so it's like there's only so much so what the variable you're left with is earning and so the spending more time thinking about earning is the best thing that people can do and that can be a a side business a Creator business or that kind of thing it could also be just be having more intentional approach to your career like you grew like you could you kind of if you really like entreated your career as a kind of like you do type you you are the product you're taking your self really seriously then you probably should be job hopping and kind of trying to sort of like apply for new jobs frequently and move up and because that's how you earn more and if I'm taking a strategic approach to your career I think probably people spend too much time thinking about like the investing in the saving parts and not enough time on the earning part I totally agree I think that's a fantastic fantastic Point um any advice Beyond job hopping for people who are like oh hello I guess I you know I'm listening to this and I haven't really thought about my career as it's or sort of my earning power as its own like financial asset um yeah anything else you would advise people on that point what you just said is so important like do see like your earning power is especially when you're young is the best financial asset you can ever have like there is you can you can generate uh potentially like infinite amounts of wealth from your own earning power most of us don't but you can't but you can and they they the younger you are obviously the more years you've got to do that and also the more time you've got to develop skills that will allow you to do that so I think really really thinking about how to maximize your own earning power is what people should be doing so like if you if you're 24 years old and you've got you've got like 10 000 pounds to invest then it's a really bad idea to be spending a really long time thinking about how to how can I invest this ten thousand pounds to maximize my return on it because even if you outperform the market by 10 it's still not much in the scheme of things CBC should really be thinking about how can I grow my how can I grow my value because like ultimately like you what you earn is kind of a multiple of how you how much value you create and how many people you can reach to create that value for so I suppose the economics of it with a YouTube channel is you reach a large amount of people but you only get like a small amount for per per view or whatever but then you've got a course so you're creating a larger amount of value for a smaller number of people but it's like but that's the kind of way to be thinking about it and so there's and ultimately so you can do it you can do it in a job by oh okay well like what's the how can I grow the skills that are going to make me super valuable in this role that I'm in now and so and then kind of go and play that company off against others to go and like maximize my worth what skills are going to be it's like the most valuable in the future maybe at the moment it's things around AI building your knowledge there but it could be well how can I go how can I reach more people and so like an employer is like a monopoly buyer of your time and so you like well how can I go and do something create a business or could do something that will allow me to go and reach create value for a large number of people so it's all that sort of stuff and there's so many different ways of doing it but kind of the ultimately it comes down to leveraging some form or another try and find finding a way to be to reach a large number of people whether that's through media or through a business whatever else just learned to be super like incredibly insanely valuable for one particular employer or whatever so they just have to pay you for sure yeah that's the thing I think this is something that I've really started to appreciate as I now own a business and employ people just that like I think in the past though and and certainly the way I see some like a lot of people I know think about salaries is like you know like wages almost where it's like oh you know my employer is doing me a disservice by not increasing my wages and you know I'm gonna kind of get my act together and ask for a raise but they've they've said they don't want to give me a raise and it's like fundamentally if you provide value then you then they're they're almost forced to pay you for that value outside of certain like controlled Industries where as a nurse and as a doctor there's a limit to how much value you can provide within the system of the NHS yeah but with outside of the system of the NHS there is an unlimited amount of value you could potentially provide and so one of one of my team members was was asking the other day oh you know we were having a conversation and I said you know uh we're talking about some some issues that she's having and and stuff and I said you know if if we could wave a magic wand what would solve some of these issues and she sort of jokingly said well if you doubled my salary we would solve a lot of these issues and I said okay I get that was a joke but let's think about it what would it take for me to double to to what would it take for me to consider doubling a salary and she just never thought in that way before she was like oh I guess in in her mental model is like a salary is like a thing it's a fixed thing it's not a completely made up arbitrary thing that a business owner or an employer just decides it's like it's fixed and you know the way you campaign for a salary increases you follow the steps and you ask the right questions and stuff fundamentally I was I was saying look if if you added an extra 500k value to the business of course I'm going to pay you an extra 100K like it's just a no-brader so let's figure out the way you can add 500k value or if you do that inside your own business or a side hustle or something you get all 500k of the value whereas I I just think people don't really think in those terms no I completely agree and I think that's that's that that's where people are costing themselves I think the question was like the mistakes people making that that's it it's like not thinking in those kind of terms because you do just it must come from from school and from uni and everything else you kind of you do just do you see your salary as something that is a fixed thing but it you you have to be the one to you have to be the one to change it because you as an employer you're not going to suddenly offer to double the salary of any of your team members like you might offer them a raise but you're just not gonna you're not gonna do that why would you but it's down to them to make that to make that happen in the same way as if you want to earn more money as the business owner you have to find a way of going and creating more value for for more people no one's going to just pay you more for fun yeah exactly um okay next question from Nacho Martin who says what is the most effective way in your opinion to manage finances as a cup couple um I think it really helps if you are aligned to start with because sit back at the very beginning like you're gonna be like money blueprints from your parents and it kind of it's all it's all very ingrained that I think if you if you grew up with a certain attitude around money and sort of things about if you've got to grow up with an attitude that money is evil or people put the money bad or if you grow up with like you like you're you really have very very little and so even when you've got a lot it's hard to realize that you've got a lot and that's hard to change so if you're entering into a serious relationship with someone I wouldn't do this on date number one or two um but have but having that alignment is really important so that's the first thing pick the right person but once you're beyond that I think the best thing that you can do is talk about it and not talk about it in terms of like people talk about like having a having like a money date every month where you sit and go through your finances and maybe that would work for some people I think a lot of people it wouldn't but if it would great but if not if it's just something that you talk about if so if you like if you're the person in the relationship who is um reading or listening to podcasts or whatever about this kind of thing trying to bring that other person into it and have conversations about it is really helpful because it's very easy in a couple to have one person who's going off and like learning a load about whatever it is and maybe they think that they've decided that Bitcoin is the future because they've read all the stuff about it and the other person might get to a point of agreeing but because they haven't been on that whole journey they're not just going to LEAP straight there so you can't have to go on that that journey together and keep a light so if we have alignment in the first place and then keep that alignment nice what are your thoughts on joint account versus your account versus individual plus joints all that stuff mad I don't know um I've been I'm very old I've been married for a long time and it's very and so our finances have been joined for a really long time and so I'm just never really thought about other ways of doing it I don't know what what do most people do uh I I don't know like I've been pulling a few friends about this and listening to a few podcasts about it one one way is that both both parties have individual bank accounts but then there is also a shared one and they sort of pay into it x amount every month sometimes it's proportional to income sometimes it's not depending on how people feel about stuff and so you can have a sort of your individual account is for discretionary spending that you don't have to get permission for like if you wanted to buy a gift or like wanted uh to buy a PS5 and you knew that you know that would be your personal pot and apparently that's nice because it means that you only have to discuss the bigger things that affect you both as a couple but like for little things like discretionary spending on a PlayStation in your case you may not have to get quick permission for that which might rub you up the wrong way like there's all these different factors but I guess how long have you been married for now like 12 years yeah so it's just everything goes into one big part and you just don't think too hard about it or yeah and it's I don't know it's kind of it's probably not their sensible like you know it's it's probably not the sensible thing to do but I don't know just kind of like way into it like you know this is a when we look together like eight years we got married so it's like you know this is a lifetime thing and so like it doesn't matter it's all it all sorts itself out but but there's lots of situations where it's okay in the early days of a relationship you probably don't want to necessarily go and do that and then you get situations like what you do for like one person's earning way more than someone else then does the person who's not earning so much have to go to the other one and ask for money like you don't want that so yeah so yeah I don't know how you crack it um if you're open to sharing uh are there any uh any any instances in yours but I guess 20 years of being together where you've had friction related money in the relation in the relationship hmm and if not can you if and if not I guess why not because like most people argue about money apparently according to the stats hmm um I can't think of any foreign marriage we just get on really well and I don't don't argue about things but we but I think like there has been like a pro like processes of having to become aligned on certain things and so I I had to like I've kind of got this natural kind of scarcity mindset thing and so just so I'm all I'm always I'd always be like trying to trying to not spend money like doing ridiculous things like walking for half an hour instead of just spending a pound for the bus and things like things like that just don't make any sense and my wife is far more well adjusted and so I had to kind of get to uh I think we're to to she had to kind of bring me over to a point of going out look it's fine you can you can do this and then like doing things like um um going and like we made a decision to like go and rent a really a really expensive flat to live in because you wanted to and it took me a long time to get there to get the final like okay this doesn't make sense and like we don't have to do this whatever but it's the right thing to do and so we had to kind of work our way through that um but I ended up sort of like speaking to friends about it and stuff and like getting outside perspectives as well because which I think is useful because like when it comes because we are all weird when it comes to money like talking to different people about it seeing how they do things is really helpful yeah okay nice thank you um I think that segues us nicely into uh property so you rent the flat that you live in yeah that okay most people would say that's money down the drain what the hell are you doing yeah um and that's wrong because I've done a video about this um but when why do why do I do it so I do it because mainly it's um purely even if it didn't make Financial sense you could debate whether it does or not um I would still rent because I want the flexibility so I don't I just don't like the idea of being tied into sub to something so I like to I just like like I just like freedom I like feeling that I even if I don't want to do something I could so if I want to go and live in a different part of London a different city a different country or whatever I could go and do it with a couple of months notice I'm probably not going to do it but I could and that then that means something but it's not able to do that I would have to I'd have to wait until it's old my house maybe it's not a good time to sell my house and there's not no I just don't want that so and I also don't want their responsibility I wanted to be someone else's problem if something breaks and so they they have to fix it so there's all these psychological reasons and lots of people have the exact opposite psychological reason because like well I want to own my house so I know that I have somewhere that's mine that's stable that's blah blah blah so you can't ultimately the whole rent versus buy thing you can never no no side can never win on that because it comes down to these psychological factors which people are just going to have different motivations on but on the financial side there are situations there are situations where you where it can surprisingly be a better deal to rent so I've on the case of where I'm living I worked it out if I owned if I owned where I live now as an investment the return would be like something the year would be something like two percent so well I could get a better return going investing in most other things and so I would I'll do that instead of looking up money in this asset that's not earning anything um but also people I think what people miss about this whole debate is there's always you're always going to have housing costs always it's impossible not to so if you're not paying pay money to a landlord you're paying money to a bank so when you make your interest payment the majority of that especially in the early years goes to paying the the interest rather than paying down the capital so you're either renting property from a landlord or you're renting money from the bank it's the same thing even when you've paid your mortgage off then you've still got housing costs because as well as the costs of upkeep and everything else you've also got the opportunity cost of what you could be doing with that money so if you live in a million pound house that's completely yours well that's great you can't do anything with that million quid except living it so it's not really a lot of good whereas you could instead go and invest that in something else that produced a return for you so it's really complex and I think actually if you figure it all out um homeowner you need homemanship come out ahead for tax reasons for lots of reasons but ultimately my position is you have to own something you have to own assets but you don't have to live in your assets so you so I I own property and I have all the benefits of capital appreciation and your mortgage being rated by inflation and all that good stuff I just don't live in it yeah nice I mean the the those are exactly my reasons for renting a place in London uh which is and I've also done a video about this because it was it was in a way of a video to try and like because my mum would always be like this is a terrible decision like why don't you just work because I live with my brother she'd be like why don't you guys just buy flat in London and be like okay well firstly like Where Do We Begin like firstly we couldn't afford to buy this place in London even if we tried and then and then to be like okay but like the house like it doesn't have to be so expensive like why not go into zone six it's like well because it's done six miles away and it's like right now while we're young it's like we're going to be in central London it's easy to get people on the podcast we have room for the podcast all of the different things add up but I think the way my mom thinks about things about things into that psychological component of like oh my goodness renting is money down the drain and that is such a strong like belief yeah and like getting on the property ladder is like oh my God the ultimate financial decision yeah um I imagine you speak to a lot of people who have those identical worldviews money down the drain getting on the property ladder is the best thing you can do yeah kind of thing there's a lot of YouTube comments um there's yeah you will never it's so entrenched you'll you'll never change anyone's mind like and I'm I'm not interested in changing people's mind I think it's just so it's like worth it if someone's open to it to kind of understand that there is a different perspective um but it's just so entrenched there's not a lot you can do about it but but I think the whole concept of a property ladder doesn't really work anymore because it used to be the case that people would like go into a one bedroom flat and then they'd maybe trade up to two bed then move into a house it doesn't happen anymore like first-time buyers and by far the most typical property for them to move into is a three bed um it's a three-bit house and so because people are doing everything later in life and you often it's harder to buy homes in your 30s by the time you're doing it or whatever you kind of move straight in there and often just stay there forever so there's kind of there is no kind of concept of of trading up and so it's just yeah it just doesn't you there are lots of reasons to expose yourself to housing and all the rest of it but if you if you don't know for sure that you're going to be there somewhere for a long time then the costs are moving huge like the snap Duty like if you bought a place in London the stamp Duty on it would be extraordinary and then if you decided three years later you actually didn't want to be there anymore then you'd end up paying it all again somewhere else and so that's the thing and so I think there's lots of benefits to owning but then if you really if you don't know for sure that you're going to be in that place for say five to ten years then it's probably not going to work out and if when when you're young and you want to have all the options open to you do you really want to be tied into one particular geography because of this one thing that you own yeah agreed um how how much of a goal do you think it should be for someone to buy their first property whether or not it's whether or not they live in it or don't live in it tricky um because like Pro property especially property with a mortgage for some reason we talked about is just it's just historically it's a great bet to make because you've got even if property only goes up in line with inflation the fact that you've not put on you've not put all the money in so you're effectively leveraging inflation so you're left so your so if you put down like three chord if you put down a quarter of the money and inflation is two percent then your annual return will be eight percent because you you don't put all the money in so that's a pretty good bet you're you're leveraging a force that the government and their Central Bank and the central bank and everyone else is trying to make happen so like along like along the way Peaks crashes all this stuff will happen over the very long term that is a great thing to be exposed to but if you do it to own then they'll drawbacks we just talked about them and if you do it to invest in then it's also really hard like if you're invest being a being a landlord I'm not expecting any violence to come out at this point but it's hard in that in that you're kind of you're taking a lot of Financial Risk like you're you're taking a huge amount of money which for most people will like take years and years and years and years to save up and you're putting it all into one asset so that's hard like if you're not spending if you're not nervous about that and you're not spending a lot of time researching it then you probably should be so it's tough um what what do you think of this whole this whole stuff around like you often hear the hear The Narrative of which is true um you know it's impossible for young people to get on to buy any property these days because the prices have gotten so high and then we're ending ending up renting for forever and things like that I guess it sort of feeds back into our initial discussion around like there are no easy answers to this problem yeah because the price goes up because supply and demand and it's hard to make houses and we can't just wave a magic wand and 3D print a house yet um people's salaries are not going up in line with the prices of houses uh for all sorts of reasons of which some of them might be the government is evil but like there are all sorts of reasons beyond that and so it actually is just genuinely hard to get on the property ladder yeah is it just one of those things that I guess we just got to live with it yeah it's one of those how do you solve it when you wouldn't start from here type problems it's just like I don't it's it is harder um there's but it's a matter of it's been a matter of policy like we kind of skirted over this but like when um the 2008 financial crisis happened the response to that was to print a load of money um and they then then basically the effect that money went to people who owned assets and the the that was it was deliberate the idea is if you make asset owners feel wealthy then they'll go and spend money in the economy which will then get the economy going again so it was the point of that one of the points of that was to make people who owned assets more wealthy even wealthier and so you've had like sort of 15 years of that happening and so people if you if you owned assets in 2008 great for you and if you didn't not so great for you so so it's got way way harder and I it's hard the way that that's been kind of papered over right now is um like longer mortgage terms so like 20 of new mortgages are being taken out for 35 plus years because that's the way of spreading the payments out and making it work but there's got to be a limit at some point like it's like in other countries you get mortgages that your children inherit so like you can go quite a long way with it but I don't know I don't know what the answer is it's hard yeah and I guess for individuals who want to you know prosper in a in a financial system that's rigged against you uh I you know the way I often think about this is safe to get the emergency fund step one step two invest in yourself to boost your own earning power ideally start a business or a side Hustle and now you've got money yeah now you're and and now you're winning in this financial system that's rigged against you but for a lot of people the oh so I've got to start my business is a I mean it's just it's just the fastest way and I suspect probably most reliable way to actually make decent money unless you're in Investment Banking or something like that yeah which if you are you would know it anyway exactly but it's easier than easier said than done but ultimately like you have to go and let go of this idea that you that the default path is not good uh there is a part there's a time when the default path was okay like you can go and you could get a job that you could keep that job forever that job would allow you to have a decent standard of living and um own your own home and everything else and then you'd retire and you'd get a pension and that would be great but that default doesn't exist anymore like the default now is that you you're living standards are falling you can't afford to own a home there probably isn't going to be a pension by the time you're by the time you're old so the default's no good so you have to take responsibility and change something which is it's really hard to do but I think that's you kind of have to get into that mindset yeah yeah speaking of business what is your portfolio of businesses look like and because I guess like one thing that really struck me about the property podcast when I discovered it in like 2017 was that you guys were running the Playbook of build a personal brand give out content for free monetize it on the back end and I was this was like six months into my YouTube channel and I was like oh I love what these guys are doing I can see that these guys are really switched on when it comes to the whole building a business around a key person of influence around a personal brand you and you and the other Rob yeah so what what does that look like and how did how did it evolve over time a credit the other Rob with all the clever stuff around this but he he was always very firm on giving everything away like give give away all the knowledge and sell the implementation and so yeah it allowed you to and we allowed us to kind of like move the free line a really long way because like if you're selling courses which is like the typical way people in property monetize you're always having to hold something back um but um we didn't do that so um because we were never selling anything in that way people kind of trusted us and so it was easy to build that up so that's what we did for a long time because the end the economics of the business behind it because it's kind of been through different iterations but effectively we are making enabling high value transactions for a small number of people so because we you the economics for each sale are really good we can afford and it process because media is kind of Costless in terms of distribution we can have 99 listeners who pay us nothing forever for that one who does and that's fine and it's great and everyone wins so there's never any pressure for for us to make it work and we've never we've never run ads on our podcast or anything else because well I would there's no there's no point so we've been through kind of different we kind of followed the audience in terms of what they wanted and so we built up an audience like what do you want well you want a letting agency so we started by the way as you know and um I imagine that's quite a hard business yeah turns out really hard where you're like being like squeezed on the margins because people are price sensitive on that particular front and yeah everything not a good business that's probably why you sold it yeah tough tough the good thing about it is it's sticky so it's like you you're it's it's you you kind of you get a client once and you can keep them for years and years and years um but it's tough operationally really hard and the margins are not good um but then when we started we had like um like a tax consultancy for a while we're kind of following the audience and then I had I had a call with one of your attacks in front of like many years ago yeah it was quite helpful it's like a one-off thing yeah um and that was just like there's nothing wrong with the economics of that but it's just kind of we would we just ended up like stretching ourselves really thin um because we were doing like the classic thing that you're meant to do which is like well you know you build up an audience you find out what they want um Turned out what they wanted was a lot and so we tried to do a lot so it was just kind of too much yeah so we've now we've kind of divested all that stuff and gone back to something the real core of it is like we give away all the education we do all that and I love doing that um and then behind it we've got property I've investor business you know about that helps people uh buy property and they've also got a fund which is newer which is to basically enable people to buy buy into a property portfolio with a far smaller amount of money so that's they're two different kind of models but they're both based around the same core thing which is just investing we know how to invest that's a bit we can do all this operationally really hard stuff yeah let's not do that yeah we've really had the same exact same realization with our business where when we try and do too many things because they are the right things to they feel like the right things to do because people are asking for them and because you know when the audience says they want something it's like great let's give it to them etc etc just like the hard stuff is just just a bit of a faff and a bit of a faff at scale when running business as you know is uh in an enormous bath and it takes Focus away from the small amount of things that are driving the most value definitely and as why do why did you get into this in the first place why did I get into it we like creating stuff and yeah teaching and teaching educational stuff and writing educational books and yes so if you didn't spend all your time dealing with a load of aggro and stuff which is nothing to do with that then then yeah how big is your team like what does the business look like um it's about 40 people 4-0 what did they broadly do um property is annoying as you know and so um we've got a team of people who are involved in getting the um or getting transactions through so from the point of saying yes I want to buy this property to actually owning it we've got to have to hold people's hands through that process I really appreciated that that's part of the process yeah that's for me that's the like the the selling point is supposed to be like we get you a discount and we put the property for you and that's all great but I think the actual hand holding is a really big part of it um so that's the whole team um there's a whole team around that there's a sales team so that people you'll speak to who actually will like go through your strategy with you in the first place um there's a lot of Finance because of the fund and so we've got we've got a whole a whole Finance team with accountants and all the rest of it um and just lots of other oh we've got the the team who goes out and actually finds a necessity investments in the first place and then lots of other stuff and like hrit all that kind of stuff and so it's um it adds up to a lot it's relatively it doesn't sound it but it's relatively lean but there's just there's just so much going on that that um it's not the kind of business you couldn't run it with three people it's not possible and if you got rid of if you if you only did the invest business and got rid of the uh property fund stuff what would that so you could then you kind of you'd lose like bits or you'd lose kind of like some finance and compliance and all that sort of thing so I don't know I don't know what proportion of the business would be but you could definitely you could definitely slim it down somewhat and then what's your and the other Rob's role in the business those um it's evolved in a big way over time and it started out with us kind of figuring out as we went along and we kind of like buy default you were kind of joint CEOs which is a terrible idea because then it's just like everything is either both of your problem or you both leave it for each other so shouldn't do that um but then um then we've all been I've we've been through lots of different iterations of air where we're each looking after different parts um where we've now got to is go to my happy place where I'm mostly doing the education part of it and doing the newsletter and the YouTube channel and all that kind of thing and the other Rob is the actual CEO and so he has book ultimate responsibility for running the business but we've now been doing it for such a long time that we've eventually worked our way around to a place where we've got a really good team so a lot of the stuff just happens and that took a long time to get to a long long time yeah it takes ages to get to a place where you feel like yes things things are working things are and I don't I don't know how you I don't know how you find the right people other than just like have a lot of the wrong people and keep the ones who work out but we kind of ended up with like an amazing team and some of whom have been with us for like eight years and stuff and got us like absolute Superstars but I don't know how you find the Superstar every time yeah we have and we we now have a very extensive interview process but it's also ideal and I guess for for you as well like for us we can recruit from our audience yeah because it's like I speak to friends who run companies and they're like oh man recruiting is so hard I'm like really oh oh yeah okay I guess it is if you don't have so much inbound yeah that's the best thing like yeah there's a pre-built filter which is another great widget which is so great about the whole content things it goes for your for your audience as well just like your and your your customers are kind of pre-selected as well like you're you're not going to have that many customers I imagine who are a nightmare to deal with because they've been filtered through your world view already yeah they're kind of your type of person and when I hang out with them in real like we did we did a meet-up in Austin last week for like 80 80 of our previous students they're all great yeah those great Vibes they're sort of people who Vibe with my stuff makes similar kind of content they want to be YouTubers they have businesses like I just love these people this is what you want um any tips for someone listening who uh is interested in setting up a sort of business like this where it's like your content free free content you know I I in in my head I call it the 9911 rule which is 99 of the content is free one percent is paid for the one percent who can afford it or something to that oh one percent off services for the one percent who can afford it um like I'd much rather like I love the fact that we charge 5K for our course but our implementation e-course yeah for a tiny number of people which funds the entire business to be able to give all the content for free to everyone else yeah exactly um yeah so any tips for someone who loves that the idea of that business model um I'm not sure because we've just kind of it just kind of happened and I don't know how I would now go and do it intentionally it's one of those things where if you kind of tell the story if you tell the story in retrospect it all makes perfect sense but I don't know how you do it from scratch I think that I would definitely encourage that model because I think it's it's more sustainable than any other way of doing it that I'm aware of and it just avoids any kind of it allows people to have all the stuff but nine percent of the stuff for free which is great you don't have to worry about arbitrarily drawing a line somewhere which is amazing it means you can out-compete everyone who is trying to hold back um I suppose that you'd have to have to make really sure that there is a business there and it has to be like high value high margin High whatever to to make it work so you wouldn't want to spend years like that building a business and then realize when you try to charge that one percent for something that actually that I want it or they don't charge enough to make it work yeah but do you see any examples interesting examples of like your students doing things like that yeah um essentially the business model that most educational channels that I know go down is exactly that um but where most of the content S3 some of the content is paid uh but then you get into the the issue of where do you draw the line uh one way of getting around that is don't draw the line at all and just charge for implementation yeah but I think the other way of getting around that line is by saying you know what we're just going to give everything away for free slowly over time but when we when we make a course we put it all together in one place we give the worksheets the the tangible assets or the somewhat intangible assets bundled together and so yes technically someone could find out all this information by looking on the internet but what they're paying for is the uh curation they're paying for saving time and they're paying for the support options we offer along the way to kind of hold their hand yeah because actually holding someone's hand is a ridiculously valuable thing when they're buying a property as I've been handheld by Jawad one of your team members yeah uh or but also when starting a YouTube channel like our team holds people's hands through the process because it's actually quite hardened quite like emotionally hard rather than like conceptually hard um and so all of those I think are ways to monetize the education business yeah then we see people who are and we're trying to go into this ourselves you know you could release physical products uh that's a whole faff but then it does mean you have a business that's potentially salable you can make an app apps with subscription Revenue seem to be like a great thing but the startup costs are absolutely enormous and it's hard to compete with apps yeah uh which are more of a commodity than other things so the pros and cons of every business model but yeah I think I still think it's a great a great way to to make money it's weird isn't it you can ask someone to pay for an app what no apps are free then you ask people to spend five grand for a course yeah of course it's weird like the the people who spend five grand on our course we say Hey you know we'd recommend vid IQ Chrome extension oh is that free dude come on who cares yeah I think it's great it's a great great model and it's it's worked really well for us and it works really well for others but do you think about how much you are tied up and they're like is your business is your business salable and do you care uh it's not salable and I also don't care um because I think someone would have to have to offer me a stupidly large amount of money to part with it yeah and even then I would really consider it because if I think what would I do if I had all the money in the world I'd still make YouTube videos and I still do a podcast because it's just cool yeah um I probably wouldn't sell courses that's the only thing that we that I wouldn't do if I had all the money in the world um but having said that we are trying to and and so partly this is why I'm keen on the property thing because it is a thing that is completely Decor related to my popularity on the internet yeah but also why we want to build a productivity app and like Tech accessories because those are potentially sellable and just as you said having the option to know you could sell it if you wanted to but even if you don't want to take the option there's something nice about having that freedom yeah which currently we don't have because it's all tied to my personal brand interesting what about for you guys I I think that there's a way of making it salable but got no interest in doing that yeah so anytime soon because I think with uh with the fund like we've deliberately given it a different brand and we've and we're it's like it comes to a point where it's like it's it's it's its own thing like there are reasons there are reasons for investing in it which are completely different from the where the podcast guys and so I think like it's almost a point like we are uh almost like we're advertising the fund or we're an affiliate for the fund or whatever but it's like that's not that's not us and so we're trying to create a kind of Separation just because that seems to kind of make sense nice but for the most part I've got no problem with being the being a podcast guy and the podcast guy yeah well Rob thank you very much for being the podcast guy you've uh helped me get into property investing which has been uh of a somewhat fun Journey somewhat uh but I'm sure I will be even more thankful for uh thankful for it as things compound over time and thank you so much for coming on the show thank you for having me all right so that's it for this week's episode of Deep dive thank you so much for watching or listening all the links and resources that we mentioned in the podcast are going to be linked down in the video description or in the show notes depending on where you're watching or listening to this if you're listening to this on a podcast platform then do please leave us a review on the iTunes Store it really helps other people discover the podcast or if you're watching this in full HD or 4k on YouTube then you can leave a comment down below and ask any questions or any insights or any thoughts about the episode that would be awesome and if you enjoyed this episode you might like to check out this episode here as well which links in with some of the stuff that we talked about in the episode so thanks for watching I do hit subscribe button if you aren't already and I'll see you next time bye

Sponsored by Huel - go to https://www.huel.com/deepdive and with your first order you’ll get a free t-shirt and shaker. Sponsored by Trading 212 - To get free fractional shares worth up to 100 EUR/GBP, you can open an account with Trading 212 through this link https://trading212.com/promocodes/ALI. Terms apply. This is not financial advice. When investing, your capital is at risk and you may get back less than invested. Past performance doesn’t guarantee future results. Sponsored by Shopify - visit https://www.shopify.com/deepdive to sign up for your free trial. 📚 Check Out My New York Times Bestselling Book Feel-Good Productivity! 👉 https://go.feelgoodproductivity.com/podcast 📧 Sign up for LifeNotes - my weekly newsletter where I share actionable productivity tips, practical life advice, and high-quality insights from across the web directly to your inbox. 👉https://go.aliabdaal.com/lifenotes/podcast When it comes to building wealth and getting rich, a lot of us want a quick fix answer / that miracle thing that will make us a millionaire. But really there’s no secret formula to get rich quick and personal finance is actually pretty straightforward, but a lot of us tend to shy away from learning about how money really works and where it comes from because we find it boring or because it requires us to do that slightly scary thing of projecting 20 years ahead. So today we have a guest to help us simplify all things money and finance in a digestible way. Rob Dix is an investment fund adviser, co-presenter of one of the UK’s most popular business podcasts (The Property Podcast) which I’m a big fan of, and the author of four best-selling books about property investment. Rob’s most recent book The Price Of Money: How to Prosper in a Financial World That’s Rigged Against You, is the book he wished he had on the topic money growing up, because despite the fact humans spend their entire lives trying to earn more money very few of us understand how it works and the best way to use it. Season 6 Episode 11 00:00 Intro 04:35 Why did you decide to write a book about money? 07:15 We're never 'taught' about money 13:25 What is money? And why don’t people understand it? 20:12 How is the financial system rigged against us?32:12 How does inflation work? 38:15 Surge pricing 42:00 State funding and taxation 45:09 Wealth tax and why the government borrows 52:44 Productivity in economics 56:45 We’re 50yrs into a financial experiment 59:51 Rate of inflation is higher than the rate of interest 01:02:40 Principle 1 01:09:42 Principle 2 01:15:17 Principle 3 01:18:34 Principle 4 01:21:30 Principle 5 01:25:40 What habits cost people the most financially? 01:34:00 Managing finances as a couple 01:39:30 Why do prefer to rent? 01:45:36 How much should buying property be a goal? 01:47:30 Getting on the property ladder 01:54:55 Your property business and team 🔗 CONNECT WITH ROB 🎥 YouTube Channel - @PropertyHubUK 💻 Website - https://robdix.com/ 🎙 The Property Podcast - https://propertyhub.net/podcast/ 🐦  Twitter - https://twitter.com/robdix 📸 Instagram - https://www.instagram.com/therobdix 📱TikTok - https://www.tiktok.com/@therobdix 🔗 CONNECT WITH ALI 📲 Join My Telegram Community - https://t.me/+bH5gLHty5kBiOGZk 🎥 YouTube Channel - https://youtube.com/aliabdaal 🐦 Twitter - https://twitter.com/aliabdaal 📸 Instagram - https://instagram.com/aliabdaal 💻 Website - https://aliabdaal.com 👥 Linkedin - https://www.linkedin.com/in/ali-abdaal/ 📚 RESOURCES MENTIONED The Price Of Money by Rob Dix - https://geni.us/DypFlP The Complete Guide to Property Investment: How to survive & thrive in the new world of buy-to-let by Rob Dix - https://geni.us/eq9Jq Freakonomics by Steven D. Levitt and Stephen J. Dubner - https://geni.us/jxr3a The Psychology of Money by Morgan Housel - https://geni.us/MI5akgK 📄SHOW NOTES & TRANSCRIPT Visit the website for the transcript and highlights from the conversation - https://aliabdaal.com/podcast/ 🎙 ABOUT THE PODCAST Deep Dive is the podcast that delves into the minds of entrepreneurs, creators and other inspiring people to uncover the philosophies, strategies and tools that help us live happier, healthier and more productive lives. Want to start your own podcast? We use Transistor! https://go.aliabdaal.com/transistor 🎧 LISTEN FOR FREE Apple Podcasts - https://podcasts.apple.com/gb/podcast... Spotify - https://open.spotify.com/show/7gZkflC... RSS - https://feeds.transistor.fm/deep-dive 🙏 LEAVE A REVIEW If you enjoyed listening to the podcast, we'd love for you to leave a 5-star review on Apple Podcasts to help others discover the show :) https://podcasts.apple.com/gb/podcast... 👋🏼 GET IN TOUCH You can also Tweet @AliAbdaal with any feedback, ideas or thoughts about the lessons you've learnt from the episodes and we can thank you personally for tuning in 🙏 PS: Some of the links in this description are affiliate links that I get a kickback from 😜