The Ultimate Guide to Finding Financial Success in a Rigged World (5 Principles) - Rob Dix
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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 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? 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 thing that is 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 rigged 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.

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 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, 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, 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 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 buyer. I was like, hang on, that's Ali. Cause I was like watching your stuff by then. And so it was like, yeah, kind of on weird parallel tracks. Exactly.

So we're going to talk all things money. So the title 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 rich slash investing slash saving, all that kind of stuff. And then I was thinking in the third part, we would talk about all things property. 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. Absolutely. 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 hobby. And then 2020 happened, which was like a weird year for every possible reason. But that's when 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, we've got to keep saving money.

It doesn't just grow on trees. Then suddenly, they need an extra £450 billion to fight COVID. So like, boom, okay, we've got it. £450 billion, let's go and spend it and let everyone, pay everyone to stay at home, pay people to go out to eat, remember that? All this really weird stuff. It's like, hang on a minute, what is going on here? And I realised 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

And so I just kind of wanted to get to the

unravel this mystery of what the heck it's all about. I think so much of the time, people put it in the too hard box and go, "Well, it's all these very clever economists, it's all these fancy words, I can't possibly understand it." But I have no real qualifications, I'm not particularly smart, I just did a lot of reading and figured it out and wanted to put it into a form to save someone else doing all that reading. So in five hours, they could get to where I got to in 500 hours. Fantastic.

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 you'll get all these weird... People are 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 about something to do with it, but that's about it. Lots of Oxbow lakes and stuff like that, but nothing that actually sounded pretty 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 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 and the other. And you're just expected to know what it all means. But were you ever taught it? I never was. No. Yeah, I think it's like, it's still one of those things that, you know, even though I've spent the last, I guess, like six or 10 years building a business that, well, you know, by definition is pursuing money 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 2%, like why is inflation good? Why is inflation bad? Like why can't we just print more money again? Something about inflation. Like all of these questions that like,

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 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'll 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 Ys deep, okay, well, why do we have inflation? Why is it deep? And 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. Hmm.

But it's a very scarily small proportion of people, I think, who actually have any idea what's going on. And yet, if you turn on the radio, which is generally a good idea not to do, but if you do, then there's always 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? People want opinions, but no one knows. It's just weird. Yeah.

Okay, 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 spend money. Do I really need to understand how it actually works and how it gets created and stuff like that? I think...

So 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 created it to give it to you. That's kind of cool. It's weird.

But you don't need to know that. But then there are plenty of things that you do need to know. So 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, we are going to end up having lots of inflation. So at the moment, time of recording this, there's loads of inflation. For a long time, we were being told it's just transitory. It's just a thing. It's COVID. 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 should be for quite a long time. Well, that's really helpful to know because you can then make 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 speak to one person, they'll say, oh, well, this is going to happen. Another person will say, well, that's going to happen. They're both eminently qualified economists. Sometimes they've got two people with Nobel Prizes, both saying the exact opposite of each other. Who do you believe? The great thing about actually understanding at the grassroots level is you then 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 people, people I know, like my my mom, for example, who will move heaven and earth to try and save a few quid at Tesco and make sure that she'll 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, 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 who would say that, oh, you know, buying a property in London is what everyone should do. And she'd be like, right, guys, you should buy a property in London. And those are huge financial decisions that have enormous repercussions for someone's entire life. 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

But people are just weird about money in general. So 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 the principle of the thing or they've just got these kind of weird beliefs about it. But at a 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 rigged 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 a fiction, because it's something that we've collectively agreed is a thing. Money is whatever we say it is. Anything can be money. Throughout history, all kinds of different things have been money. Shells have been money. Sticks with notches carved in them have been money. Anything can be money. It's just something that stands between transactions that we're making, because it makes things easier.

We use the pound in this country. The dollar is like the global currency. Well, why are they the thing? Because everyone agrees. And it's great if everyone agrees on something because it means that you can go out and buy pretty much anything you want when you've got an established unit to use. But it doesn't...

But money in itself doesn't have any value. Through a lot of history, money itself had value. So you have gold coins. So the gold in the coin would be valuable. 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. And there's been times in history when that's been stretched. But now, money...

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 go and get your hair cut, you couldn't just give them money. You'd have to find something that they wanted and give it to them and the whole thing would be a nightmare. But I think it's really useful to keep in mind that money is effectively useful.

just something that we 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 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 pegged to gold and it sort of

Essentially, the reason we believe in the US dollar is because we believe in the US government. 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've had various kind of versions of this thing called the gold standard in the past. But effectively, it's where currency... Initially, gold was the currency. Coins made of gold. And then you have other currencies. But those currencies are pegged to a particular amount of gold.

First of all, it was silver. So the pound has its name because it was a pound weight of silver. But then over time, that's kind of changed. 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 1971 where it was the first time that temporarily, this is only meant to be temporary, 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 was 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 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 kind of use 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's stopping you from just going and printing for your extra billion?

nothing at all. And so the result of that, if you 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, 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

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, for 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. So apparently there's this quote from Henry Ford. If people understood how our money and banking system worked, there'd be a revolution before tomorrow morning. What's going on there?

He said that, bear in mind, before a lot of the craziness that's happened recently. But we've already kind of touched on a couple of the key points. Banks can just create money. So you and I have to work for money. We try to 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. And it happens in front of you. And that's nuts that some entities have the special privilege to just create money. Yeah, how does that work? Why can't my business just create money? Yeah.

because that would be illegal. But it's all right for Barclays to do it. It's okay for them to do it because 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 just say, yep, you want to borrow this money, you want to borrow £1,000, so I'll type £1,000 into your account. And there's a kind of a counter entry where it's sort of that you owe it to them, but it's an asset, it's a liability, it's nonsense. But they create money that didn't exist before. And when you repay that loan, the money ceases to exist. So that's weird. And then...

The fact that the states can just create money as well. So we saw an example, talking about 2020, where the 450 billion that was needed to fight COVID was created. The Bank of England created it and gave it to the government to spend. And so it's just absolutely nuts. And then I think if most people realized this, you would get that whole thing of, well, hang on a minute. How is it that I'm having to work so hard and all

all yet money can 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, it'll probably be worth less anyway. And 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...

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 ticking along at a couple of percent a year. But 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

So if you had a £10 note and you 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 earn an amount of interest that compensated for that and more. Yeah. Because you'd still be coming out ahead. But 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 4% in an instant access bank account. That sounds pretty good because we can remember when it was nothing. But inflation is 8%. 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 borrowed £100 a hundred years ago, no, in fact, if you borrowed £20 a hundred years ago, that would have been enough for you to pay your rent for a month.

and go out for dinner with a change. And so let's say you borrowed it from 100 years ago. You come forward to today and you and your very elderly friend, your friend says, actually, can I have that 20 pounds back now? Yeah, sure. Hand over 20 pounds. You barely even notice it's gone. So the value of your debt has been eroded over time. So 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 got a mortgage now, then 10 years later, let's say I got a mortgage for 200K, 10 years later, that 200K would be worth less, 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 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 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 so so so and there are there are some there are in some it depends on how things are funded you can have some situations where someone needs to see a return on it but essentially like the the reason that we have uh

Yeah, the reason they have interest rates is because 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 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. And this is how the government kind of controls the money supply by setting interest rates.

to make people more minded to borrow and spend versus less. So if the government decrees that, hey, interest rates are now 0%, what's going to happen? Everyone's going to go out and borrow more money. Oh, because they can borrow the money effectively for free. Yeah.

Which is what happened for a long time. So we had zero rates for ages. And that's why it's one of the big reasons why the prices of property, stock market, anything you can think of went up. Because 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 going to sort of massively change the dynamic. But...

It's still the case that you've always got this inflation is such a core part of everything because there's no... You probably know that the Bank of England's target is 2% inflation a year, same in the US. 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's setting a floor on it. So if it's above it, as it is now, there's, oh, well, should we start 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 2%. So you've always got inflation of effectively at least 2% 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 do they want 2% rather than 0% or minus 2%? It's set at 2% for no mathematical reason. 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. I won't spend any money. Correct. Yeah. If I knew that a sale is coming six months from now, I would wait until, well, six months from now to buy the next iPhone or whatever the thing might be. So that's the theory. And so the idea is that's bad. So if you set it at 2%, even if you undershoot a bit, you're still above zero. So that's good.

Okay. I personally don't buy this at all because think of your laptop. 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 out and buy them because you need to eat this week. So I'm not convinced by this whole thing about deflation being bad. But now we've reached a point, which I think is a really important point, where deflation, it would be disastrous for the financial system because everyone, especially the government, has so much debt. So if you ended up... The idea is if you have...

and you've got a fixed amount of debt and you have inflation, then everything grows relative to the debt. So everything that gets produced is worth more, the debt stays the same, all good. If you have 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.

What we have now is a situation where the government has got about two and a half trillion pounds worth of debt. It's 100% of GDP. And so 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 that they borrowed more than they've brought in.

It's something like every year but six out of the last 50. And so there's nothing you can do about it. And so 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 growth, which isn't happening because productivity is rubbish, or actually just inflate the cost of everything.

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It's available on iPhone and Android, and you can check it out by typing in Trading212 into your respective app store. So thank you so much, Trading212, for sponsoring this episode. Why does the government need to borrow money? Can't they just press a button and print the extra 500 billion that they need like they did in COVID? Kind of, yeah. They could, but the risk is runaway inflation.

which is kind of what we've got now. So one of the big reasons that we've got so much inflation right now is that so much money was created, printed when we had COVID.

because they did just have to go and like they had to they had to kind of print some amount of money like it was impossible to know what the right 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 covid better than they went better off than they went in because of all this kind of money that was 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. 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. Yeah. Yeah. Because there was shortages for like PlayStations and stuff back in the day, chip shortages and everything. So there's a fixed supply of

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 like,

government clicks their fingers and every single person wakes up with an extra million pounds in their bank account. So you go, fantastic. I can 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 goes and tries to buy everything. So what happens? The price of everything has to correct upwards to maintain that scarcity. Okay, interesting. So someone listening to this might say...

Why does the price have to go up? Isn't it just the evil shopkeeper that's deciding to price gouge because everyone suddenly 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 price is a signal that tells markets what to do. If you could just keep the prices as they are, then you'd run out of everything. And so how do you manage demand? If there's only a finite amount of stuff that can be produced, then how do you...

How do you encourage people to produce more of it? And how do you allocate between what you should be producing? But price is the signal. So if everybody suddenly wants to go and buy grapes for whatever reason, the price of them 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 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 you just run out of everything. So it doesn't really help. There's still this kind of fundamental – there's a fundamental scarcity. And you kind of need money to be scarce as well.

Because if you end up with abundant money and scarce resources, well, that's inflation. Damn. Okay. But there are some assets or some items that the government does say you are not allowed to increase the price of this. What's the deal with that? That's basically trying to avoid ill effects of

If you have the price of lots of items going up, then it annoys people, but it doesn't matter. If people can't get a PS5, then it's not a big societal problem. But if the price of a certain medication goes up, then that's a really bad thing. So they try to control for that. And they 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 more. It's a bit like rent controls. I mean, so we can come to talking about property later. But when rents are going up a lot, then you'll go, oh, well, the answer is rent controls. Tell these greedy landlords that they can't increase the rent. Hmm.

That's sort of a solution, but 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 any more. The reason that rents go up is because there's more demand than there is supply.

So, if you say, "Well, rent is now capped at this level," then suddenly loads of people are willing to pay that level, 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.

Sorry, what's happening in Sweden? Sorry, in Stockholm, I think it is, they have rent controls. And so there's only a certain... You can only charge a certain amount. And so what you end up with is... It's like impossible to find somewhere to rent because...

There's no extra supply. And so you end up with a black market of people doing sublets and stuff like that because there's no way of finding anywhere. So that's a property example. But then it's the same for anything. Capping the price solves a problem in the short term.

But it doesn't really solve it in the longer term. So is it like, you know, people always complain about Uber and their sort of surge pricing. Yeah. What's the deal with that? Yeah, same thing. So the idea with that is surge pricing. It's both a way of allocating the demand that there is. So like you might look at that and go, oh, I'm just going to walk. It's not worth it.

So that is a way of kind of like reducing the demand and allocating the limited supply of cars that there is. But it's also a signal

to the market to come and participate. I've spoken to Uber drivers before who've said that when they get a notification that the surge pricing is in effect, they'll grab their keys and go out. That's pulled more people into the market. The price is annoying for you when you see that notification you've got to pay more, but it helps to sort out the market. People on the political left tend to be

I think anti-free market, anti-capitalism, pro-government controls of stuff. What would be their biggest, I guess, what's their most compelling argument for rent control and things like that? Like, what would they say? And by they, I mean we. Well, I think it's tricky because I think we could all recognize that

It's very easy to recognize the problem. It's very hard to actually give a solution. It's very easy to just kind of appeal to the market, leave the market to its own devices and that'll sort it out. Maybe it will, maybe it won't.

But even if it does, it can still cause a lot of pain either in the short term or permanently for certain groups of people. So it's really easy to go, oh, you know, 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 could end up with a situation where...

nurses just can't afford to live in the whole of London. And that's not good for anyone. So it's definitely not perfect to just say, oh, you know, let the market do its thing for any of these things. But then what you actually do about it is hard because normally 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 and make another intervention to fix that, and then another, another, another. And you end up in a situation where the government is trying to just constantly patch things over and do 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 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 is always going to be better than a few people at a Bank of England conference room going, oh, well, I think it should be this. The collective is always going to be smarter than a few individuals. So as far as possible, you want to leave things to their own devices, but you just can't do that fully. 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

is in almost inherently, and I'm thinking out loud here, and so please correct me if I'm wrong, is almost inherently an anti-economic thing where the government is like, screw the prices, we are going to fund everything, which is amazing. And it's just fantastic. But it does mean that, okay, cool, state funded healthcare system. Where is that money going to 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 and

in which case they have to pay it back at some point. Alternatively, the government could just quote, raise taxes on the rich, in which case, why can't we just raise taxes on the rich? Get the 80% tax rate, get these rich people, they've got enough money anyway. Landlords like me and you have too much money on our hands. We should raise taxes on the rich. What would be the counter to that view?

I think the counter that you always see from people who don't like that idea is, oh, they'll just leave. I'm not convinced. I'm sure on the margins some of them will. But people live in a place for a reason that's not just tax-driven. And it's very easy to say, oh, well, I'll just go and live in Portugal or something. But most people probably wouldn't. So I think you can, but you do get to a point where

There is only so much tax 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 you just go, this isn't worth it anymore.

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. You could end up jacking the tax rate right up. It just puts everyone off doing anything. You end up not really collecting any extra tax and a load of things don't get created. But where is that level? Who knows? 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 and 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 too hard and blah, blah, blah. But at some point, it's probably going to have to be the answer because you do have... Inequality is just absolutely... Because of what happened in 2008, which we could talk about a bit if it's interesting, because of what's happened with money...

inequality has absolutely exploded. And so if you do end up with this concentration of wealth for the 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 no kind of infinite amount of money that you can just tax away from people so everyone can have everything that they want. Economics is about scarcity, effectively, and how you manage the scarce resources you've got. Okay, so 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 sort of what the US does with property taxes and things? Property tax is closer to it. So there's a really popular among certain economists called land value tax, which is a bit like a wealth tax, but specific to land. So you basically tax...

the owners of land because someone has to own the land. You can't just pick your land off and take it off to another country. It's quite easy to do. There are basically lots of very good economic reasons why this is a good thing to do.

but it's probably not going to happen because many very, very powerful and influential people, including most of the House of Lords, are big landowners. So it's not likely to happen. But that would be one form of wealth tax. Another form would be you have to send in the value of all your bank accounts, all your ISAs, your stocks and shares accounts, all of that. You have to 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 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 inequality 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. You also tax things like working.

which you kind of do want people to do. And, and,

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 who you think don't even think of as high earners like teachers being pulled into the like the 40 percent higher bracket and so everyone's taxes go up there is only so much that you can have so much you can get

So at some point you have to go, well, 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 want it to be privatized. Yeah. Kind of narrative. Yeah, exactly. Man.

So I tell you interesting stuff. It's really interesting stuff. Like whenever 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 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 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 as like a check and balance against the government or something like that. But when the incentives are so aligned in favor of, I want to hold on to my money. How do you get anything done? 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 a key part of something like a land tax is supposed to be that 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 the 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 your earnings and your savings and your VAT and this and that, you'd also tax something else, which I think is a reasonable objection. But 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 then a higher and higher proportion of everything of all the tax revenue you get has to go to just paying your debt

Okay, 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 most people have heard of but i really think too much about what it is but that's basically lending money to the government um so 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 sort of have fee but then you have the inflation problem like you've you have to You've an inflation kind of ends up being a bit being like a tax anyway So basically you went 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 and

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 to the other country okay which you're then having to pay so that's costing you

That's cost. 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 it 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 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 kind of magical answer to the fact that there is only a...

There's a scarce amount of human effort. Human effort is kind of the limiting factor. And so when you have productivity improvements, so like you have AI means that everyone can now do more with less. Well, that's great. That means that that's great productivity means that now we can now produce more.

the same amount of people working for the same amount of time can produce more stuff, 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. But there has to be some kind of balance. So 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 would. The reason that productivity is important is because it's about this limiting factor. The amount of stuff humans can create is the limit. So raising that limit is a good thing. It makes it easier for people to... Everyone can get what they want with less effort, which is what everyone ultimately wants. So it's like when the tractor gets invented, suddenly it's

people are less likely to starve because it's easier to make food. So similarly, if you could wave a magic wand and create a house, people would be less likely to be homeless because it's just easy to create houses. And then you're capped 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. And so something like AI is effectively like a magic wand for certain industries. Unfortunately, it's not yet a magic wand for something like building a house, but a tractor would have been a magic wand for growing crops.

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 or so 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 worked for them and so that's what so that's

That's what you ultimately want. The only way to keep the party going and keep 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 print more money and you dish it out to people and you give them everything they want today,

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'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, 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. 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. And so similarly, if you're running a hospital and suddenly your doctors and nurses and everything were twice as efficient.

or you had twice as, or the medication, I guess, was half the price because it was easy to wave a magic wand and produce it. Everyone benefits from the growth of the hospital business, as it were. Yeah.

Exactly. And that's the wonderful thing about technology. Because if you can 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 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 amazing.

because it allows you to do more with less. And so, but then you've got this kind of weird tension that that's deflationary. But because if you're doing more with less, if everyone kind of gets their job done in half the time and then sits around, then that's kind of deflationary because you need less.

less money but that's kind of a side point that we don't need to go we talked about that deflationary is not inherently bad it's only bad if you have lots of debt absolutely and therefore the government thinks it's really bad because they have a lot of debt that's it yeah so yeah you've 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 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 just doesn't work anymore. If you could have a completely painless reset where everyone just goes back to the beginning and starts again on a different grounding, then you'd be welcoming things getting cheaper. Because, well, why not? Why wouldn't you? So what's stopping us from having a reset?

Historically, when systems...

change they sort of change messily and it turns out to be not great for for anyone so like on on the side on the other side 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 this is something that used to happen quite a lot like in the in the biblical times of debt jubilees where every so many years they just

And if you did that, it would kind of be, well, in a way, great. But also, you basically ended up saying to all these people who loaned you money, sorry, you're out of luck. And so I don't know what the ramifications of it would be, but it would probably not be very pretty. It's also associated with changes of power. So if you end up with the US kind of not being the dominant country, the dollar underpinning everything anymore, and you ended 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 when it's going to 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 $1 billion plus in revenue are being powered by Shopify. So like

So is the stuff that we've talked about so far basically 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 the core thing that is important to understand and why you could say it's rigged against you.

is this point about the rate of inflation being higher than the rate of interest. If you're guaranteed to lose buying power by saving money, then that's not good. I think that's probably the most important thing to understand. It's like, okay, well, 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. You can't have interest rates being too high

because everyone's got so much debt. If you jacked interest rates up to 15%, then it would bankrupt everyone, including the government. The government's own borrowing costs have gone up so much because of the rise in 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. You can't have interest rates going too high.

But you also need to have a pretty decent amount of inflation because there are actually lots of good reasons why you'd have inflation anyway to do with 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.

debt pile. They don't want it to be as high as it is now because it makes everyone very unhappy. But if you could have 4-5% inflation forever, or for at least the next 5-10 years, I think they'd probably be quite happy with that. That's why

I believe that we've kind of come out of this era of very low interest rates, very low inflation, and going into an era of having much 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 Bank of England that supposedly independently sets interest rates. Supposedly? Yeah. I mean, 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 can decide how much to borrow and how much money to print. So the Bank of England can decide how much money it wants to print in 2020. It just so happened to decide to print the exact amount that the government needed to cover its own spending plans when it needed to borrow money for COVID. So I'm not convinced by that independence. Ooh, interesting. Okay, cool. So at this point, we've understood a bit about money. We agree that the financial system is rigged against us.

In the book, you talk about a few different principles as to how normal people can make money work for them and can prosper in this potentially, well, in this very rigged financial system. So I wonder if we can go through some of those. Okay. And so 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 save 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

as we've just covered, even if 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 save than not to save.

But you then need to go and do something with it because it's crazy. It should be the case that 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 were identical to the rate of inflation, then we'd all be happy.

we'd be happier if it was higher than that, it'd be even better. But if it's higher, the government has to pay more often interest rates to 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 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? I think...

For kind of, let's say, people 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

rewarded for saving because all of this stuff is a relatively new phenomenon um you they're probably more likely to kind of keep on like using cash ices 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 term like real terms so if something's you're

in real terms, it's what you have to deduct the effect of inflation. So if you look at it, you're the amount, great, I'm making 3% of my bank account. That's wonderful. But if you look at it in real terms, after deducting inflation, it could be minus 4%. So that's kind of a mistake that people make, kind of a general level. But people, it's hard to say what is a mistake because everyone, like we 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, then it's not a mistake, is it?

Yeah, that was one of my biggest takeaways from Morgan Housel'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 off a mortgage because I can get a better return in the S&P, which may be true and may be rational. But...

Paying off a mortgage helps me sleep at night. So what am I really optimizing for here? Absolutely. Yeah. There's a really good episode of, I think it was for Economics Podcast, where there's some research about what economists think that we should be doing, about decisions we should be making about money, things like savings and paying off mortgages. And the economists became 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? Ah.

Do you have any rules or principles that are helpful for you and for maybe people that you would advise around saving money each month? I think it's very personal. Something that I really believe in is intentional spending.

So, obviously, 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 deny yourself everything, but you...

but it's very easy to fall into just spending money for the sake of it 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 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 spend money on whatever makes you happy and just be conscious of what you're spending. 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 spent.

Don't give yourself a limit, but the rule is every time you spend money, you have to write it down. You have to physically write it down. I can do it in your notes app or whatever, but 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 making you think, okay,

Do I really want to do this? Will I want to write this down in two minutes time? So it's quite a good way of kind of making yourself question every spending decision you make without going into budgeting, which I think can be really useful, but it can also be too rigid. Yeah. It's almost like, you know, I've had a bunch of experience with tracking calories and macros to try and get gains. And even just when I write down how much protein I'm taking in, I'm like, oh, I'm

this is radically different to sort of just having a mental model 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 cut and you're trying to cut calories and just just knowing you have to track it you've just 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 the

some like weight loss experiment where half the group did nothing and the other half of 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 really

Okay, nice. Principle number two you say is take on debt responsibly. What do you mean by that? Some people might be thinking all debt is bad. Debt is a terrible thing. You want to be debt free as soon as possible, etc. So caveat city. Debt is a tool. It's a powerful tool. You don't want to mess around with power tools. If so, if you're in a vulnerable situation or you don't know how to use it as a tool, then you can just stay away from it.

If you want to not have any debt because that makes you feel more comfortable, then that's fine too. All that is fine. But if you want to use debt, then it can be a powerful tool because of exactly what we were talking about earlier. You get the other side of this dynamic. The inflation is reducing the amount of your debt faster than 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, 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 next to my interest rate on my mortgage. Exactly. That's it. So it's definitely not as straightforward as it was. So when you had zero interest rates, then it's just, oh, we're just going nuts. Why not? If you could lock in that low rate forever, then it'd just be rational to just go and borrow as much as you possibly can. People.

people did. But now it's obviously more complex than that. But yeah, you're exactly right. It's the same. Inflation is doing you a favour every day. You don't see it. You see the interest payments that you're making out, but you don't see the effect of which is the real value of your

Debt is being paid down for you by inflation. And it aligns you with the government. So the government's borrowing more money than anyone else. They benefit from it so much, isn't it? Interesting. Yeah, I guess...

One thing that's really surprised me about the US, when I watch personal finance US 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 locked it 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...

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 if you think about it, the bank is taking on a huge amount of risk because they're having to give this to you for all this time. They don't know what's going to happen in the future, but there's some way in which it all works itself out. 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 there aren't that many...

10-year kind of products, around 10s as far as you go. But even if it meant I was paying more, I'd go and lock everything in for 10 years if I could. It's like, well...

It could go down a bit, but it could also go up a lot. So it's asymmetric. So that was the mental model that I didn't have because I've only ever lived in a time of 0% interest rates. And so when I got like a 1.5% for two years or 2% for five years, I was like, oh, come on. Obviously, I'm going to 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,

Yeah, we had all these people calling in to ask us questions on our podcast. When interest rates, when you could borrow for less than 2%, you go, "Oh, what do you think? Should I lock in? Rates could go down a bit." They could go down a bit, but also, are you not happy with this rate? Just lock it in for as long as you can. Nice. Yeah, I should have called in a question for the podcast.

What are the different types of debt and are some better than others? Mortgage debt is pretty much the best type of debt you could have. Obviously, a lot of people don't want to have debt on their own home, but the good thing about it is it's relatively cheap. You can borrow a lot of it because it's against the value of the asset. If you're looking at investing in property, you can normally borrow up to 75% of the asset. Because the asset is expensive, it means you can borrow a lot of money quite cheaply.

A lot of really bad stuff would need to happen for them to suddenly ask for it back. 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 multiple percent in a day, at which point they'd go, "Oh, actually, you've breached this limit now. We want it back." Oh, is that a margin call? Yeah, exactly. Ah, okay. Right. That makes sense. So, mortgage debt is pretty much the best type there is.

Other types of debt are borrowing against assets like your stocks. Not a good idea for most people. Very, very dangerous. Things like student debt or whatever. It's not something to use as a financial tool in terms of going and investing probably, but can still be a good thing to do because it allows you to

gain future earning power. So you're basically investing in your future ability to earn more money yourself. In theory. In theory, yeah. It doesn't always work that way. And like 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. Principle number three, avoid fixed income investments.

what is a fixed income investment and why is it bad? So the main type of fixed income

Income interest is bonds, which is effectively lending money to either the government or a big company. You'll lend a certain amount of money for a certain amount of time and you'll start making a loan to a friend effectively if you're mean enough to charge them interest. 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 3% or whatever it is. Okay.

The problem with that is that the income is fixed. 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're guaranteed to lose money on your principal over time. Yeah. Isn't this what happened with Silicon Valley Bank or something? They put 75% of their cash into 10-year bonds the day before the government announced interest rates were going through the roof or something absurd. Everyone's like, oh my God. Yeah.

Yeah, that's a different thing. So what I was just talking about is if you hold a bond all the way through to when you eventually get it paid back, you know you're going to receive back the same amount of pounds or dollars that you gave, but they're going to be worth less because of inflation. But what often happens is you invest in bond funds.

which means that well let's park that and take the example of the Silicon Valley Bank which is easier so they were in a situation where they might not have been able to hold it for the full 10 years because if people come back and ask for that money back they need to sell that 10 year bond early and because without going into the

of bond pricing, which is really tedious, you end up where you actually might have to sell it for less than its face value. So they ended up in a situation where if they'd been able to hold it for the entire time, no problem, but they couldn't do that and so its value fell. But from the perspective of the book, my kind of issue with it is like, well, yeah, 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 bonds. I'm not a financial advisor. Yeah, because financial 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 equals safe. Yeah.

But you disagree with that assessment? Which is sort of true, but then the idea is that they're meant to move in opposite directions, and so they kind of balance each other out. If the stock market's doing really badly, then people should move money to bonds instead. 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 ever. And I think

that the mechanics of how things work 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, stocks don't perform, nothing performs. It's not good. Principle number four, invest in real assets.

Talk to me about that. Yeah. So real assets basically mean stuff that you can touch, which is property. Also like infrastructure, like government building stuff, commodities, gold, oil. Might not want to touch oil. Things like that. Real actual stuff in the world. Really? You should invest in gold.

I'm not saying that you should invest in all commodities, but gold is actually really interesting. But as a general kind of principle around real assets, it's just like, 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 real. So people can choose not to buy something else, but you can't really choose not to buy any of this stuff. And

it's um if we're going into more troubled times as we might be as we kind of get to the end of this financial experiment then 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 smp and it did

And I was like, okay, cool. But that's the extent of my knowledge about gold. Would you recommend normal people buy gold as an asset class? It's so difficult to say about any of this stuff because it all depends on your objectives. All I can talk about is what I do, which is that I have...

small allocation of gold because 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 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 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 pretty much one of the most liquid markets in the world. Okay. And so when you invest in gold, do you physically own gold bars or is it like buygold.com or whatever the thing is? I don't because I wish I did because it'd be cool, but no. So there's loads of different ways of getting exposure to gold, including kind of like...

gold funds where it's kind of financialized 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 load 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 if you ask them to post it to you they actually would oh 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. Okay. We're going to talk more about the property stuff in a little bit because that's, I think, a big discussion. But principle number five, invest in the stock market boringly. What do you mean by boring? I mean, a couple of different things by that. So one is mostly not stock picking.

Because for most people, trying to pick individual stocks is a really bad idea. It's a highly skilled thing that most professionals can't do. So why would you be able to do it? 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.

Also, boring in terms of the type of company you invest in. This has happened now since the book was written. But when I wrote it, it was like you had companies like Netflix and Tesla and everything else flying high because it's all very exciting and everyone wants to invest in these companies. 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 higher interest rates like we do now, suddenly it's like, oh, actually making profit today sounds pretty good. Maybe we should have companies that do that. And so companies that are 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

Growth is fun. And as long as you make money one day, it's all good. Yeah. As you said that, it reminded me of just something I've been thinking a lot 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 money later. 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, et cetera, et cetera, et cetera. And then when you press the monetization button and you've raised 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. But I gave a keynote last week when I was in Austin, Texas 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, 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, there actually is no guarantee that that money will come later. Yeah. So I'm all about like building the money trees and the monetization routes right now rather than worrying about it for later. Yeah.

Yeah, it makes a lot of sense to, it makes sense to kind of give away more than anyone else, kind of like how we built our business. And it's kind of like deferring gratification, I suppose. And that makes a ton of sense. But then you also need to know, I suppose, validate that there is a business there and that you will be able to do something with it.

And also, 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 this? 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 and the audience has responded very, very negatively. And they're like, oh my God. Hmm.

Because I guess people already have weird thoughts about selling. Yeah. And 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. Definitely want to ask you more about the business thing shortly. So, okay. So, but we've, so we've talked about investing in the stock market boringly.

We have a couple of questions from the audience in our Deep Diver community on Telegram. So I'll just throw a couple of those at you and then we'll have to talk about property investment. Let's do it. So a question from Clianthy says, what are some habits that cost people the most financially? Hmm.

I'm going to take a slightly different way into this to answer it because I think most of it's obvious. A lot of it comes back to conscious spending and things like that. People do – everyone. You do it, I do it, everyone does it to some degree. Spend the money on things that they don't need to. There's no universal version of that. What you –

And the answer is different for everyone. So what you should do is spend very little on your home. If you want to get your housing costs as low as you possibly can, because that's 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 general rules around all this stuff. But I do think that what a lot of people do is probably more on the earning side. So people...

The answer to basically everything is to earn more. Just like investing, earning ridiculously high returns from your investments is really hard.

Very few people can do it consistently. The reason you've heard of the people who can, like Warren Buffett, is because there aren't many of them. You can earn a certain amount of return, but pushing that boundary is hard. There's only so much you can save. You can cut to the bone, but you can't save beyond zero. There's only so much. The variable you're left with is earning. Spending more time thinking about earning is the best thing that people can do. That can be a

a side business, a creative business or that kind of thing. It could also be just having a more intentional approach to your career. Like you could be kind of, if you really like treated your career as a kind of, like you are the product, you're taking yourself 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 kind of taking a strategic approach to your career. I think probably people spend too much time thinking about like the investing and the saving parts and not enough time on the earning part. I totally agree. I think that's a fantastic, fantastic point. 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 financial asset. Anything else you would advise people on that point? What you just said is so important. Your earning power, especially when you're young, is the best financial asset you can ever have. You can generate a potentially infinite amount of wealth from your own earning power.

Most of us don't, but you can. And 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. If you're 24 years old and you've got £10,000 to invest, then it's a really bad idea to be spending a really long time thinking about how can I invest this £10,000 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.

So you should really be thinking about how can I grow my value? Because ultimately, what you earn is a multiple of 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 a small amount per person.

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

You can do it in a job by, "Okay, well, how can I grow the skills that are going to make me super valuable in this role that I'm in now?" Then go and play that company off against others to go and maximize my worth, what skills are going to be 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 reach more people? An employer is like a monopoly buyer of your time. How could I go and do something, create a business or do something that will allow me to grow and reach, create value for a large number of people? It's all that sort of stuff. There's so many different ways of doing it.

the ultimately it comes down to leverage in some form or another trying to find finding a way to be to reach a large number of people whether that's through media or through a business or whatever else or just learn to be super like incredibly insanely valuable for one particular employer or whatever so they just have to pay you a shitload 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 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 going to 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 is a limit to how much value you can provide within the system of the NHS. Yeah. But 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, was asking the other day, oh, you know, we were having a conversation and I said, you know, we were talking about some, some issues that she's having and stuff.

And I said, you know, 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 that was a joke, but let's think about it. What would it take for me to double to, what would it take for me to consider doubling your salary? And she just never thought in that way before. She was like, oh.

I guess 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 saying, look, if you added an extra 500K of value to the business, of course, I'm going to pay you an extra 100K. Like it's just a no brainer. So let's figure out the way you can add 500K value. Or if you do that inside of your own business,

or a side hustle or something, you get all 500K of the value. Whereas I just think people don't really think in those terms. No, I completely agree. And I think that's where people are costing themselves. I think the question is about mistakes people are making. That's it. It's not thinking in those kinds of terms because you do just... It must come from school and from uni and everything else. You do just see your salary as something that is a fixed thing. But

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. You might offer them a raise, but you're not going to do that. Why would you? But it's down to them 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 more people. No one's going to just pay you more for fun. Yeah, exactly. Yeah.

Okay, next question from Nacho Martin, who says, what is the most effective way, in your opinion, to manage finances as a couple? I think it really helps if you are aligned to start with.

Because back at the very beginning, you got money blueprints from your parents. It's all very ingrained. I think if you grew up with a certain attitude around money and things about - if you grew up with an attitude that money is evil or people put money bad, if you grow up with like - you really have very, very little. So even when you've got a lot, it's hard to realize that you've got a lot. 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, 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 didn't 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 the other person into it and have conversations about it is really helpful because

because it's very easy in a couple to have one person who's going off and learning a load about whatever it is. Maybe they think that they've decided that Bitcoin is the future because they've read all this stuff about it. 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. You have to go on that journey together and keep a line. If we have alignment in the first place and then keep that alignment.

Nice. What are your thoughts on joint account versus individual account versus individual plus joint, all that stuff? Man, I don't know.

I've been, I'm very old. I've been married for a long time. And so our finances have been joint for a really long time. So I've just never really thought about other ways of doing it. I don't know. What do most people do? I don't know. Like I've been polling a few friends about this and listening to a few podcasts about it. One way is that 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 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, quote, 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 permission for that, which might rub you up the wrong way. All these different factors. But I guess, how long have you been married for now? Like...

12 years, 13 years, something like that. Yeah. So it's just everything goes into one big pot and you just don't think too hard about it? Yeah. And it's, I don't know, it's kind of, it's probably not the sensible, like, you know, 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,

We looked together eight years before we got married, so it was like, "This is a lifetime thing, so it doesn't matter. It all sorts itself out." But there's lots of situations where in the early days of a relationship, you probably don't want to necessarily go and do that. Then you get situations like, what do you do if 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? You don't want that. That's weird, yeah. I don't know how you crack it.

If you're open to sharing, are there any instances in your, I guess, 20 years of being together where you've had friction related to money in the relationship? And if not, can you, and if not, I guess, why not? Because like most people argue about money, apparently, according to the stats. I can't think of any.

we've got a really boring marriage we just get on really well don't argue about things but we but I think there has been like processes of having to become aligned on certain things and so I had to like I've kind of got this natural kind of

scarcity mindset thing and so just so I'm always I'd always be like trying to trying to not spend money and not doing ridiculous things like walking for half an hour instead of spending a pound for the bus and things like things like just don't make any sense and my wife is far more well adjusted and so had to kind of get to a

I think we're to, she had to kind of bring me over to a point of going like, 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 we 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 and 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 yep

Okay, most people would say that's money down the drain. What the hell are you doing? Yeah. And that's wrong because I've done a video about this. 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 something so i like to i just like i could

I just like freedom. I like feeling that 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 then that means something. Whereas if I go, well, if to do that, I'd have to wait until...

I'd sold my house and maybe it's not a good time to sell my house. I just don't want that. And I also don't want their responsibility. I want it to be someone else's problem if something breaks. And so 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.

Ultimately, the whole rent versus buy thing, no side can ever 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 it can surprisingly be a better deal to rent. On the case of where I'm living, I worked it out. If I owned where I live now as an investment, the yield would be something like 2%. I could get a better return going investing in most other things. I'll do that instead of locking up money in this asset that's not earning anything.

But also, I think what people miss about this whole debate is you're always going to have housing costs. Always. It's impossible not to. So...

If you're not paying 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 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. 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 live in it. 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. It's really complex. I think actually, if you figure it all out, homeownership 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 I own property and I have all the benefits of capital appreciation and your mortgage being eroded by inflation and all that good stuff. I just don't live in it. Yeah, nice.

I mean, those are exactly my reasons for renting a place in London, which is, and I've also done a video about this. 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, because I live with my brother. She'd be like, why don't you guys just buy a flat in London? I'd be like, okay, well, firstly, where do we begin? Like, firstly, we couldn't afford to buy this place in London, even if we tried.

And then she'd 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 zone six and it's miles away. And it's like right now while we're young, it's like we want to be in central London. It's easy to get people on the podcast. We have a room for the podcast. All of the different things add up. But I think the way my mom thinks about things, it's that psychological component of like,

oh my goodness, renting is money down the drain. And that is such a strong belief. And getting on the property ladder is like, oh my God, the ultimate financial decision. I imagine you speak to a lot of people who have those identical worldviews.

Oh, like renting his money down the drain, getting on the property ladder is the best thing you can do kind of thing. There's a lot of them in the YouTube comments. Yeah, it's so entrenched. You'll never change anyone's mind. And I'm not interested in changing people's mind. I think it's worth it if someone's open to it to kind of understand that there is a different perspective. But it's just so entrenched.

There's not a lot you can do about it. But I think the whole concept of a property ladder doesn't really work anymore. It used to be the case that people would 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. First-time buyers, by far the most typical property for them to move into is a three-bed house. And so because people are doing everything later in life and you're often...

It's harder to buy a home 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 is no kind of concept of trading up. And so it's just, yeah, it just doesn't... There are lots of reasons to expose yourself to housing and all the rest of it. But if you don't know for sure that you're going to be there somewhere for a long time, then the costs of moving are huge. Like the snap duty. 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 don't know for sure that you're going to be in that place for, say, five to 10 years, then...

it's probably not going to work out. And if 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. How much of a goal do you think it should be for someone to buy their first property, whether or not they live in it or don't live in it? Tricky. Because property...

Especially property with a mortgage, for some of the reasons we talked about, is just historically, it's a great bet to make. Because even if property only goes up in line with inflation, the fact that you've not put all the money in, so you're effectively leveraging inflation.

If you put down a quarter of the money and inflation is 2%, then your annual return will be 8% because you haven't put all the money in. That's a pretty good bet. You're leveraging a force that the government and the central bank and everyone else is trying to make happen. Along the way,

peaks, crashes, all this stuff will happen. But over the very long term, that is a great thing to be exposed to. But if you do it to own, then there are drawbacks. We just talked about them. And if you do it to invest in, then it's also really hard. If you invest being a landlord, I'm not expecting any violence to come out at this point, but it's hard in that you're taking a lot of financial risk

Like you're taking a huge amount of money, which for most people will take years and years and years to save up. And you're putting it all into one asset. So that's hard. 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. What do you think of this whole stuff around like you often hear the narrative of

Which is true. 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 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. People's salaries are not going up.

in line with the prices of houses for all sorts of reasons, of which some of them might be the government is evil, but there are all sorts of reasons beyond that. And so it actually is just genuinely hard to get on the property ladder. 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 is harder. But it's a matter of

It's been a matter of policy. We kind of skirted over this, but when the 2008 financial crisis happened, the response to that was to print a load of money. And then basically that money went to people who owned

assets. 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. One of the points of that was to make people who owned assets and were wealthy even wealthier. You've had 15 years of that happening. If you owned assets in 2008,

great for you. And if you didn't, not so great for you. So it's got way, way, way harder. And the way that that's been kind of papered over right now is like longer mortgage terms. So like 20% of new mortgages are being taken out for 35 plus years because that's a way of spreading the payments out and making it work.

But there's got to be a limit at some point. Like in other countries, you get mortgages that your children inherit. So you can go quite a long way with it. But I don't know what the answer is. It's hard. And I guess for individuals who want to prosper in a financial system that's rigged against you, the way I often think about this is save 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. 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 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. It's easier said than done. But ultimately, you have to kind of let go of this idea that the default path is not good. There was a time when the default path was okay. You can go and you could get a job.

You could keep that job forever. That job would allow you to have a decent standard of living and own your own home and everything else. Then you'd retire and you'd get a pension and that would be great. But that default doesn't exist anymore. The default now is that your 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 old. The default's no good. You have to take responsibility and change something, which is fantastic.

It's really hard to do, but I think you kind of have to get into that mindset. Speaking of business, what does your portfolio of businesses look like?

And 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 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 thing.

building a business around a key person of influence around a personal brand, you and the other Rob. So what does that look like and how did it evolve over time?

I credit the other Rob with all the clever stuff around this, but he was always very firm on giving everything away, like give away all the knowledge and sell the implementation. And so 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. But we didn't do that. So because we were never selling anything in that way, people kind of trusted us. And so it was easy to build that up.

That's what we did for a long time because the economics of the business behind it has been through different iterations, but effectively, we are enabling high-value transactions for a small number of people. Because the economics for each sale are really good, we can afford... And it costs us 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 us to make it work. And we've never run ads on our podcast or anything else because why would we? 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 late, as you know. 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 everything. Yes, not a good business. Which is probably why you sold it. Yeah, tough, tough. The good thing about it is...

is it's sticky so it's like you're it's 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. But when we started, we had a tax consultancy for a while. We were following the audience. I had a call with one of your tax consultants many years ago. It was quite helpful. It was like a one-off thing. Yeah. There's nothing wrong with the economics of that, but 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 it's 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 Hub Invest, the business you know about, helps people buy property. And they've also got a fund, which is newer, which is to basically enable people to buy into a property portfolio with a far smaller amount of money. So 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, et cetera, et cetera.

It's just like the hard stuff is just a bit of a faff. And a bit of a faff at scale when running a business, as you know, is an enormous faff. 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 so we like creating stuff and yeah teaching and all the rest of it teaching educational stuff and writing educational books and yeah so if you didn't spend all your time dealing with a load of aggro and stuff which has nothing to do with that then then it's no fun yeah uh how big is your team like what does the business look like um it's about 40 people four zero bloody hell what did they broadly do

Property is annoying, as you know. And so we've got a team of people who are involved in getting transactions through. So from the point of saying, yes, I want to buy this property to actually...

owning it we're going to have to hold people's hands through that process i really appreciated that as 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 pick the property for you and that's all great but i think the

So that's a whole team. There's a whole team around. There's a sales team, so the people you'll speak to who actually will go through your strategy with you in the first place. There's a lot of finance because of the fund. And so we've got a whole finance team with accountants and all the rest of it. And just lots of other – oh, we've got the team who goes out and actually finds the necessity investments in the first place.

And then lots of other stuff, like HR, IT, all that kind of stuff. And so it adds up to a lot. It's relatively... It doesn't sound it, but it's relatively lean. But there's just so much going on that it's not the kind of business... You couldn't run it with three people. It's just not possible. And if you only did the invest business and got rid of the property fund stuff, what would that look like? So you could then...

you'd lose some finance and compliance and all that sort of thing. So I don't know what proportion of the business would be, but you could definitely slim it down somewhat. And then what's your and the other Rob's role in the business? Yeah.

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 by 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 sort of 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 kind of 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 we're like

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 are working things are 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've 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 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 and that's just like a huge hack 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, yeah. Okay. I guess it is. Yeah. 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, which is just so great about the whole content thing. Because it goes for your audience as well. Just like your, and your customers are kind of pre-selected as well. Like 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 worldview already. Yeah, exactly. They're kind of your type of person. And when I hang out with them in real life, like we did a meetup in Austin last week for like 80 of our previous students. They're all great. Yeah. They have great vibes. They're the sort of people who vibe with my stuff, make similar kind of content. They want to be YouTubers. They have businesses. It's like, oh, I just love these people. This is what you want. Any tips for someone listening who is interested in setting up a sort of business like this where it's like your content, free content,

In my head, I call it the 99-1-1 rule, which is 99% of the content is free, 1% is paid for the 1% who can afford it. Or something to that effect. Oh, 1% are services for the 1% who can afford it. I love the fact that we charge 5K for our course, our implementation e-course, 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. Yeah, so any tips for someone who loves the idea of that approach?

creatorpreneur business model? 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'd do it from scratch. I think that

I would definitely encourage that model because I think 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, well, 99% 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. Yeah.

I suppose that you'd have to make really sure that there is a business there and it has to be like high value, high margin, high whatever 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 1% for something that actually they don't want it or they don't charge enough to make it work. Do you see any examples, interesting examples of like your students doing things like that?

Yeah, essentially the business model that most educational channels that I know go down is exactly that.

where most of the content is free, some of the content is paid, but then you get into the issue of where do you draw the line? One way of getting around that is don't draw the line at all and just charge for implementation. 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 make a course, we put it all together in one place. We give the worksheets 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 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. 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, but also when starting a YouTube channel. Like our team holds people's hands through the process because it's actually quite hard and quite like emotionally hard rather than like conceptually hard. And

And so all of those, I think, are ways to monetize the education business. But then we see people who are, and we're trying to go into this ourselves, you could release physical products. That's a whole faff, but then it does mean you have a business that's potentially saleable. You can make an app. Apps with subscription revenue seem to be a great thing, but the startup costs are absolutely enormous and it's hard to compete with apps, which are more of a commodity than other things. So the

pros and cons of every business model but i think i still think it's a great a great way to to make money it's weird isn't it you could you can ask someone to pay for an app and i'm like what no apps are free but 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 it's like seven quid a month come on

Yeah. I think it's great. It's a great, great model. And it's worked really well for us and it works really well for others. Do you think about how much you are tied up in it? Is your business saleable and do you care? It's not saleable and I also don't care because...

I think someone would have to offer me a stupidly large amount of money to part with it. 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'd still do a podcast because it's just cool. I probably wouldn't sell courses. That's the only thing that I wouldn't do if I had all the money in the world.

But having said that, we are trying to, and so partly this is why I'm keen on the property thing, because it is a thing that is completely decorrelated 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 saleable. 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, which currently we don't have because it's all tied to my personal brand. Interesting. What about for you guys?

I think that there's a way of making it saleable, but we've got no interest in doing that anytime soon. Because I think with the fund, we've deliberately given it a different brand and it comes to a point where it's its own thing. There are reasons for investing in it which are completely different from

we're the podcast guys and so I think like it's almost a point like we are 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 but for the most part got no problem with being the

Being the podcast guy. Being the podcast guy, yeah. Well, Rob, thank you very much for being the podcast guy. You've helped me get into property investing, which has been a somewhat fun journey, somewhat, but I'm sure I will be even more 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 gonna 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.

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