Discover key investment strategies and the importance of understanding your personal investing DNA in the latest episode of WealthTalk with Kevin and Christian. They explore a range of topics from digital assets and property strategies to private equity and diversification, offering invaluable insights for building a resilient and tax-efficient portfolio. Tune in to transform your approach to investment and secure your financial future.
In the latest WealthTalk episode, Kevin and Christian delve into the world of investments!
Tune in and discover how to craft a resilient investment portfolio and learn why knowing your investing DNA is crucial for long-term wealth building.
The episode is a treasure trove of insights, covering digital assets, property strategies like crowdfunding and P2P lending, and unique investment opportunities in private equity, venture capital, and collectables.
Whether you're exploring cashflow strategies, diversification across multiple asset classes, or seeking tax-efficient investment methods, this discussion promises to enhance your understanding and mastery of investments that match your interests and goals.
Don't miss out on these valuable lessons to bolster your financial independence and security.
Resources Mentioned In This Episode:
>> Brand New! Wheel Of Wealth [WT226]
Next Steps On Your Wealth Building Journey:
>> Join the WealthBuilders Facebook Community
>> Become a member of WealthBuilders
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Christian Rodwell (00:03.101)
Welcome to Wealth Talk. My name's Christian Rodwell, the membership director for Wealth Builders, joined today by our founder, Mr. Kevin Whelan. Hi, Kevin.
Kevin Whelan (00:09.934)
How are you my friend? I haven't seen you for ages. What have you been up to? Sounds like it's been an age. I mean on the podcast.
Christian Rodwell (00:13.405)
Well, well, apart from last night, of course, at our event. I know what you mean. I know what you mean. We've been on our travels, haven't we? So how was your recent train adventure, Kevin?
Kevin Whelan (00:26.222)
Yeah, the train adventure. You know how when you were a student, I mean, it's a long time for me, and people used to go on rail track holidays, you know, around Europe on your student discount card, right? Well, I did it slightly differently. So me and my wife did a trip in sort of, you know, first class travel, but on trains. And we ventured from London.
I had a little overnight stay in London and then we went to Paris for three days. Did all of the usual things in Paris. It was fantastic. And had the opportunity to see how surly those French waiters are despite my best efforts and my best French, which I've got to say, Chris, it's not bad, you know. I've been speaking French for a very long time. And then from there down to Bordeaux and looked at some of the wine territory there, which of course is the most famous in the world.
and still can't get my wife to drink red, but there you go. Entre de mer is her wine, you know, which is the white wine in the territory. And then from there to train to San Sebastian, which is allegedly the culinary capital of the world. Had some fantastic Spanish tapas and thing called pinchos, which are little small bite -sized snacks of just wonderful, delicious things. And some great beaches there, by the way, north of Spain, not often.
Well traveled, I think. And then from there to Bilbao. And in Bilbao, we went to the Bilbao, you know, the football stadium there because they'd recently just won the Copa del Rey. And you know, I'm a mad football fan and definitely mad if you support Newcastle United, but there you go. Even madder if you support Fulham, I suppose. But so it was a great trip and then flew home from Bilbao. So had a real good chance to practice my French.
Christian Rodwell (02:09.021)
So.
Christian Rodwell (02:13.341)
Thank you.
Christian Rodwell (02:16.829)
you
Kevin Whelan (02:25.198)
good chance to get a little bit of Spanish in there as well, because it did a little bit of that school as well. So languages fascinate me and the number of French words in particular in the UK language fascinate me. About 25 % of the English language is made up of French roots and stems. And I'll touch on that in a little while, but before I do that and monopolize the podcast talking about holidays, I mean...
Philippines has got a connection to France, right? That's where you've been. Tell us about that.
Christian Rodwell (02:54.909)
Yes. Yeah, no, I did venture over there. I love my tropical beaches and the Philippines has got some of the best in the world. So yeah, absolutely fantastic. And visiting, you know, family over there and yeah, really, really good time. So both of us feeling refreshed and raring to go. And of course we came off the back of our London Investment Insights event last night, which was truly wonderful. And we'll be sharing more from that event and our guest speakers in the weeks to come.
Kevin Whelan (03:23.662)
Yeah, but a full house though and talking specifically around markets, you know, a market in particular, I think we focused on cryptocurrency and obviously the timing of that being relevant with the halving. And while we're not an advocate at wealth builders of any particular style or any particular market, we do like to educate people and it's not always our expertise on hand. We had three excellent speakers all with different insights into the world of cryptocurrency.
And, uh, and hopefully that, um, you know, with a full house of wealth builder members and guests and many more similar events to come. So if there's a marketplace that you would like to know more about something, you know, you think we could add as a podcast episode and indeed an educational event, uh, because we're passionate about bringing education to people, because I think I'm very concerned about people's lack of education in certain areas, Chris. And I think.
We're going to touch on that today, aren't we? Because people can dive into markets because they don't know any better in some sort of vain hope that there's a, I don't know, there's some kind of magic pill that if they take that, they're going to manufacture all the wealth they need rather than do the work of understanding what needs to be done. But yeah, it was a good event and we'll have some videos to share and other things to share about that.
Christian Rodwell (04:43.293)
Yeah.
Kevin Whelan (04:49.646)
But anything you want to add about that, Chris?
Christian Rodwell (04:49.917)
Yes. Well, just that we, we talked about cryptocurrencies last night with one of our speakers. And I think in the last 20 years with the onset of the internet, with technology, we've seen a whole diverse range of alternative investments enter the market now. And as you say, Kevin, often a lack of education and sometimes they can be quite sexy. The shiny penny syndrome might creep in for some people. And of course that could lead to, you know, added risk.
So we're going to cover some of these alternative investments today, but it all sits underneath pillar three of our seven pillars of wealth, which is the investment pillar. And most people Kevin, traditionally, they build wealth in land or stock, traditional investing methods, but we're seeing changes.
Kevin Whelan (05:36.366)
Yes, those traditional methods of, I suppose, for the most part, even in pillar two pensions and pillar three investments tend to be either cash or the stock market. And of course, both of those have had their own trials and tribulations recently. Not least the cash market deteriorated, you know, is
rapidly, didn't it, during when we had the stable times when interest rates were low, if you were a saver, you weren't making anything. And then interest rates changed again. And they became almost an easy option. And with interest rates around 4 % now, you can get 4 % on your money in national savings and in cash. We've still got massive amounts of people who've got their money still thinking about the old days.
when interest rates were like 0 % and you could only get like 0 points something in cash. And one of the challenges with that, particularly around business owners, Chris, we noticed that business owners stockpile cash because they don't want to pay the tax on their dividends. And they'll often have a lot of money in cash, but they're not shopping around for the interest. And you get, you know, for example, one of our wealth builder members, you know, we, we talked about that and there was a...
national savings product just offering a few months ago, five point something, right? So he said, I'd like to do that. But you know, the market itself of the national savings needed a checkbook. You had to write a check, you know, and it sold out in a few weeks. And by the time the guy had organized a checkbook for his pension, you know, it had gone. Now they had 4%. So, you know, the interest rates are starting to drop down. So the point being, there is no market that you just
Christian Rodwell (07:08.061)
Wow.
Kevin Whelan (07:24.43)
participating, there are continual changes that you have to be aware about. So I, you know, I always encourage people to be grounded and to be participating. And we've mentioned that many times in the podcast about understanding and getting into how your asset is working. How does the asset work? How's it working now? What's it likely to do? What's the risk perspective on that? And we also saw.
many of our clients with large sums of money, Chris, looking at diversifying so they didn't have more than 85 ,000 in one bank account for banking risk. And we wouldn't have had banking risk if we'd go back 20, 30 years. You never saw banks being under pressure. And we don't know whether that will ever come back. But as we've seen it in 2007, 2008, we have to pay attention to our cash, which is why we've created partnerships with a couple of organizations that help.
that process. And so it is with the stock market. We saw the stock market crash in 2007, 2008. You know, we always have markets go up and down. And that's never a worry if you're in for the long term. But if your life is spent accumulating money, in other words, you're investing, there are two ways to invest fundamentally, Chris. One is for capital gain and the other is for cash flow. Now, wealth builders really favor first,
cash flow and accumulation second because cash flow gives you safety, security, you can spend the money and the money's rolling in. When it comes to accumulation, the only way you can get access to the money is you have to cash it in. And if you cash it in, there are tax implications, if you cash it in, there are risk implications. And most people's problem in the UK and America at the minute is running out of money before they run out of life.
because they're accumulating money to retirement and then that money is in the market with no other diversification, no cash flow. And they don't know, they really don't understand it. They delegate it and that delegation very quickly turns into abdication, as I've said many times. And that abdication means they feel helpless, they feel lost, they feel completely uncertain. Whereas wealth, for me anyway, and there are many definitions of wealth Chris, but the wealth definition for me.
Kevin Whelan (09:48.654)
is how you create income certainty when life fundamentally and assets fundamentally are uncertain. And it's about piecing together the various assets that you can invest in and create more certainty by that diversification and understanding the role they play. And I think when people get tempted into alternatives, and we'll talk about those, they often get tempted by a headline.
And they don't take the time to understand the risk. They don't take to understand where the value is. And in some cases, to be honest, Chris, I've seen Ponzi schemes out there, you know, where there is no value intrinsically, the value is just the exchange between people putting money in and taking money out. And there's no asset that fundamentally underpins that. Now I would never share and show any examples of Ponzi schemes on the podcast, but there are some out there and I can see that people are falling for them.
And social media has a lot to do with that as well because of the headlines. And it's easy to say I've made 20 % this month or 10 % this month, but it's not sustainable. It's not consistent. And in the end, all of these things will crash and burn at some point. And that's when all the big casualties come. People lose their confidence. People lose their relationships. They lose their money. You know, I've seen genuinely Chris, I've seen it. I've seen people sell their business for multi -millions and then don't know what to do to invest the money.
Christian Rodwell (10:58.141)
Hmm.
Kevin Whelan (11:13.838)
invest it in things they they're not a master of. They were mastering their business, you know, in French, they call that a mitier. You know, what are you a master of? And we love that word mastery, don't we, Chris, because we want our investors to master the art of understanding how that investment works. And then from mastery, you could start to become a niche. And when you really dive deep and understand it, that's when true mastery comes.
So I encourage people to master their investments, not just drift and dive in to something which they could be diving into a puddle that's two feet deep and seriously hurt themselves. If I'm not mixing up too many metaphors, but I'm passionate about it because I see so many people get hurt when they don't understand what they're doing.
Christian Rodwell (11:57.917)
Hmm.
Christian Rodwell (12:04.509)
Yeah. So we were speaking to our members and guests last night at the event and a few different suggestions of investments were coming up. And what I've done, Kevin, is just pull together some of these alternative investments or what might be kind of put in that basket. And I've put four categories. So I'll read these out just so we can get an idea, Kevin, and you can give me some thoughts, perhaps. So the categories I thought were first of all, digital assets, which can include cryptocurrencies.
Kevin Whelan (12:15.886)
Okay.
Alright.
Christian Rodwell (12:31.229)
NFTs, which are these digital signatures of music and art patents and domains. So these could be some alternative investments. Then you've got property. So crowdfunding, P2P lending and real estate investment trusts, so REITs as well. So they could be classed as alternatives. And then in business, private equity, venture capital, startups as an alternative. And the fourth category, collectibles, such as art, wine, watches and coins.
Kevin Whelan (12:34.67)
Okay.
Kevin Whelan (12:47.022)
Mm -hmm.
Kevin Whelan (13:00.398)
Yeah, all of those and there's probably, there are probably others Chris as well, like we see many of our clients who accumulate a lot of cash, they often become a bank and they become a lender. So they can actually become a lender themselves and therefore that's an alternative investment where you're investing in pillar number seven, which is joint ventures and other people's projects. And again, risks, risks abound everywhere and
that's the whole thing is understanding are you investing for capital gains or cash flow? Do you understand how the asset works? Do you understand the volatility of the asset? Have you created what I call a risk register? So you know a risk register is not anything complicated. We talk about risk and due diligence in our wheel of wealth Chris and maybe you could make that available as a download.
Christian Rodwell (13:50.845)
Yes, and I'll point back to the episode 226 where we showcased the brand new Wheel of Wealth.
Kevin Whelan (13:57.518)
Okay, so we won't go into that then if we've done a whole podcast on it. But the essence of the due diligence piece is to document the risks and there are risks in every investment. There's no risk -free investment of any kind. Nothing is risk -free. So because nothing is risk -free, that means we can be agnostic on what people invest in. But if you make a list of, well, what are the risks? What are the risks of liquidity? What are the risks of losing capital? What are the volatility risks?
you know, list all the risks and then share those risks with somebody else, whether it's a coach, whether it's a buddy, whether it's a spouse, a partner, whatever, so that you've got the counterbalance of somebody else's view alongside yours. Because all too often, you know, people are making decisions on their own. I mean, typically that happens, isn't it? Your ice is your own, your pension is your own. Usually investing tends to be an isolated activity and I encourage at least there's one other person.
And ideally somebody who masters that asset already and can help you understand the risks to see whether it fits into your own DNA, which is another important point, Chris. And I know I'm rambling a bit today, but then, you know, you said we're refreshed, we're recharged, we're ready to go.
Christian Rodwell (15:10.685)
Well, let me pause you on that point because I've got a question which might tie into the personal DNA and the personal plan. So, well, let's take a half time break and we'll head to Trustpilot because we've had lots of reviews coming in whilst we've been traveling around the world. And I'd like to read one out from Susan, who kindly said that wealth builders are honest and transparent with no hard sell, which is pretty difficult to find in the shark infested waters of the property strategy investing industry.
Kevin Whelan (15:15.566)
Alright, I will stop holding me back.
Christian Rodwell (15:39.229)
I joined Wealthbuilders to help me with our SaaS journey. They held my hand every step of the way and introduced me to my professional trustee who have also been very helpful and supportive. The Wealthbuilders community and their resources have given me a lot of knowledge and whilst they can't make the decisions for you, they are a very helpful and knowledgeable sounding board. Thank you to all of the Wealthbuilders team.
Kevin Whelan (16:00.75)
Very nice and it's always humbling to hear, you know people speaking about what we're doing in in their own words and and it reflects and continues to reflect our DNA. So I'm going to go back to DNA, right? So You know, I encourage this principle of What's been termed investor DNA? Which is to start to think about investing with what you
fascinated by, what you want in the end to be a master of, you're back to that point, and deliberately do that and there's nothing wrong with exploring, this is the wheel of wealth, the starting point being education, nothing wrong with exploring things to see whether you like them and then talk to other people who are doing it to see whether the practical application of that is something you could do within...
your interest, your time horizon, the amount of money you've got, all of those things touched on in the Wheel of Wealth. And once you have made a decision that you want to go deeper, then go deeper. Understand all of these things that I mentioned before, how does it work and so on. Because once you can understand how value is created, then you can apply your own distinction to find how you can niche and add more value for yourself.
And for the most part, that's really, really difficult in markets because, you know, when, when people ask me for opinions, which they do, especially when they meet me live, right, Chris, you know, people always say, what's your opinion on the state of this market, the state of that market and so on. And, um, I have the same answer all the time, which is, you know, I don't deal in predictions, I deal in principles and I never give personal opinions unless at least three things happen.
Number one, you acknowledge that this is a personal conversation, that nobody's recording it. Number two, you've provided me either a nice cup of frothy coffee or better still, a nice glass of red wine. So there's a personal exchange in there, so it's free. And number three, you don't do as I do and I'm not going to tell you what to do. I'm just going to say dig deeper. So as long as you know that that's the outcome, I'm not trying to give someone a recipe.
Kevin Whelan (18:20.974)
for, ah, you should do this. I encourage people to explore their own DNA. But that being said, you know, I do have a view about markets and that's equally important. That is you surround yourself with the idea of what assets appeal to you, what assets don't. Then you start to build, you know, a fortress of ideas. You build like a, in investment speak, we call it a core and satellite approach. You have a core of things that you...
want to do, you're a master of, and then you build satellites around the outside of diversification things. But that doesn't mean chuck the money into things you don't understand, understand them and then decide how much is appropriate for that. And that's a really good way of doing that. And certainly one of our coaches, Manish, I was often talking about that when he's coaching people, the core and satellite approach. But you have to have a core and your core is your DNA. So who are you? What are you interested in? What are you fascinated by?
what calls to the very nature of who you are and what you want to do. So for example, Chris, I'm not a trader in the stock market. Not that I don't have the intelligence, I just don't like it. So if I don't like it, I don't want to be a master of it because why would I focus on things that I don't intend to have mastery over? So that's an example. And so while I have an opinion about assets, because I'm always asked about them and I need to understand them,
and being grounded to know that things are constantly changing. I mean, look, when I started, Chris, this is going back 1990, give or take when I started becoming an advisor professionally, here's something, right? You won't have heard this before. The rate of exchange for retirement in 1990, in other words,
Christian Rodwell (20:06.269)
Thank you.
Kevin Whelan (20:15.726)
If you owed £100 ,000 in your pension, what you could buy for that today is typically around 4%. So I've got £100 ,000, I'm going to get £4 ,000 a year. In 1990 it was 15%.
Right now in 1990, it was 15%. Will it ever come back? I don't know. But if you're not paying attention to the annuity market, if you're not paying attention to that market, you can't know whether it's a good thing or a bad thing to have an annuity. And I'm not going to get into that today. Pros and cons, always pros and cons. But nonetheless, if I knew the annuity rate was 15%,
Christian Rodwell (20:35.933)
Yep.
Kevin Whelan (21:03.694)
And let's say I wanted to have an income and I'll pluck a random figure out of the air, right? If I wanted 60 grand a year, right? Then I could just put the amount of money, or 400 grand and get 60 grand and the rest of the money is building wealth for the future, topping up the income and so on. So you can, you have to change your plan according to the state of different markets and then how they interact with each other.
Christian Rodwell (21:30.941)
Thank you.
Kevin Whelan (21:31.118)
big problem at the moment, there's a big conversation about this, the everything bubble. And the everything bubble says traditionally, Chris, you know, people diversified because one thing went up, one thing went down, this principle of correlation. And so you'd have, you know, the stock market goes one way, interest rates go another, bonds go another, and that diversification made sense. But since the market changed in 2008, things can go all in the same direction all at the same time.
And when that happens and it will happen and it did happen, so it will happen again, you have to understand that you can't get that correlation by just simply going cash, stocks, bonds, property. You have to understand more markets. And that's why I think this is a good episode to discuss.
Christian Rodwell (22:15.517)
Yeah. And on that very point really it brings to the forefront, the holistic nature of what we do at WealthBuilders. We talk about diversification, but there are seven asset classes, seven pillars. So whilst you may be in investments and diversified across many investments thinking that's okay, as you just said, there are times now where all of the investments might be down, which could put you in a difficult situation. Hence why we advocate trying to build wealth in as many of those different...
pillars, those different asset classes.
Kevin Whelan (22:45.518)
Okay, that being said though, Chris, we need to circle back to the definition of wealth that we give, which is about creating cash flow from the ownership or control of assets, because cash flow has got more certainty to it than accumulation. So when things go up and down, but you've got cash flow, it doesn't matter. If you've got a piece of property yielding you 50 grand a year or whatever grand a year,
And, you know, as long as the rental market, I mean, that's a market in itself, but, but while if the rental market is static for you and you're getting 50 ,000, but your property prices or your portfolio goes down from, you know, 1 million to less than that, it doesn't matter because what you want is cash flow. But when you're in the accumulation, it, I don't know, there's something about when things crash, people panic.
You know, they have the link between accumulation. In other words, what's the value of what I've got. And when things happen, which they always do, devastates people's confidence and sometimes makes them then overreact into more risky things to try and compensate. Where I would say the best way to deal with that is to start to build that nice combination of cashflow to get you to security.
and then start to diversify into capital or create capital projects that you can make money relatively quickly. And certainly property would be one of those, you know, where you do something, create value, then sell it, and then you've got more capital, then you're locking in some of those capital gains as you go. Or if you're making consistent cashflow on any asset, I think I've heard one person called about investing the steam. You know, you've got, you've got the
the full kettle if you like, but then the steam, the cash that comes out, you can reinvest that to diversify, to lock in things. And that way you can play a much more solid diversification game. But anyway, I think we're dealing with strategy, not the individual markets.
Christian Rodwell (24:35.485)
Hmm.
Christian Rodwell (24:49.821)
Yeah, yeah. And again, it comes back to really the benefit of having others around you that you can talk to, having a community of people that are doing these different things, and then you can get a good feel for what feels right for you, because everyone will have their own personal plan. And one of the points I wanted to mention when you were talking earlier about some people losing all of their money, you should never put more than an agreed amount. So if that's 10 % of your total capital, and you would...
It would not be devastating if you were to lose that 10 % in any one investment.
Kevin Whelan (25:22.766)
Absolutely right and that's creating your own set of rules and 10 % is an example, it's not a recommendation. It could be 1 % in your case, it could be any percent, but the idea of thinking that through and making those decisions consciously and intentionally is really important rather than randomly, which is what we see. So should we dive into some of those markets Chris?
Christian Rodwell (25:44.477)
Sure. So there's been a lot of talk obviously around Bitcoin and the halving recently, hasn't there? And we had the halving event a week ago, didn't really see too much change in the Bitcoin price, but actually, you know, reading up and typically the previous halving events, it's been actually 12 months later where that price increase has been seen. So...
Kevin Whelan (26:03.63)
Yeah, yeah, you could argue, you know, halving is, is a is an important calendar date in the event of those people are interested in, in cryptocurrency. And while I'm not going to talk or dive into that, I'm not an expert in it, frankly, I do not have mastery of cryptocurrency. I'll leave it for others. But but there is a cycle or an apparent cycle, you know, whether it's a year after or 18 months after when the price goes up.
But in the end if you go back to what I was saying at the beginning you have to decide what what is cryptocurrency as a strategy and it's not cash flow It's an accumulation play so nothing wrong with choosing to try something for accumulation if you're intending to Get involved in it understand it and learn the language of it speak the language of it Surround yourself with people who are doing it so that you understand what you're doing and that's
That's all I'm going to say about that. But it is an accumulation model. There's no automatic steam that you can generate or seeds that flow out that you can replant. It's banking capital gains. And there's nothing wrong with that, by the way, as a strategy. If you're making consistent capital gains, take some of the capital gain off the table and reinvest that in something else. But I rarely see people with cryptocurrency do that. They're putting their hopes on what that value is. And there's nothing wrong with that.
but it's a strategy for building wealth. I'm not certain on its own. It's a good one.
Christian Rodwell (27:34.621)
And any comments on being regulated, unregulated, how that may impact?
Kevin Whelan (27:40.622)
Well, that's an interesting question. Look, regulation is an interesting word, right? So let's, soapbox, soapbox. All right. So look, let's go there, right? Because some people say, hey, wealth builders, you're not regulated. So therefore, is that an issue? Well, it isn't an issue because see building wealth is not a regulated activity. And what does regulation mean? It means
Christian Rodwell (27:50.525)
I've already opened a can of worms here.
Kevin Whelan (28:09.934)
The governing body who are the financial conduct authority, the FCA, create a set of rules, which I think are appropriate for what we would call retail investors. You know, those people are not going to get into mastery. They wouldn't be listening to this podcast with the intention of mastering very much at all. Their life is taking them over and they're building whatever they can through the traditional pillars of having a house, having a pension in the stock market.
in having some ices in the stock market. So those things are all regulated activities and, and appropriately so. But regulation doesn't protect people from losses. See, regulation doesn't regulate losses. There's no regulation for a loss. If you invest your money in a fund and the fund goes bust, it's not protected. You know, whatever you invest money in, the risk is if you're, if you're missold, if somebody sells you something,
that is inappropriate for you because you paid them to give you some advice. Now, that's entirely right that that should be in that way. But when you build a business, that's not regulated. You're not paying someone to advise you whether to go into business to do this or that. If you build a property portfolio, you're not asking an advisor to tell you which properties to buy and what rent to charge and where to buy it. These things are not regulated.
So I think the whole concept of regulation is relevant for retail investors, but for entrepreneurial people, they build their life using their own regulation, which is their own DNA, their own wheel of wealth and their own process of working out the gap between where they are now in terms of being able to have an income stream that could give them the life they want or the life that they would choose to have and a legacy for the next generation. And by the way, that's not regulated either.
So there's no regulation in life. It's regulation in some products. And I think people can get too hung up on regulation and has regulation saved people? You know, have we, have we seen banks behaving well? Have we seen financial institutions behaving well? Um, we've seen banks and institutions double dipping, you know, there's a nice French word, Chris, back to French called arbitrage. Right.
Christian Rodwell (30:04.669)
Thank you.
Christian Rodwell (30:18.365)
Mm.
Christian Rodwell (30:32.573)
Mm -hmm.
Kevin Whelan (30:33.806)
which is an important word to understand because arbitrage recognizes that in every market, and if you think simplistically, you know, about a souq or about, you know, any kind of marketplace, and I've visited lots of markets in France because they're fascinating and much better than our markets, there's buying and selling. And whenever there's buying and selling, there's arbitrage, which means there's a difference between what the buyer pays and what the seller...
paid for it to get in the first place. And some people call that commission, some people call that just profit, but the banks and institutions and the platforms have been double dipping, right? It's regulated activity, but they've been double dipping. In other words, they hold money on cash. They charge you to hold the money on cash on the platform, and then they get a percentage of your interest without revealing it.
That's just not right. It's double -dipping. It's arbitrage on the QT. Still a regulated activity, but it's been found out and now that's going to be. But so much of regulating, regulated companies are abusing that regulation by assuming that, hey, we're regulated, therefore we're protecting you. But in fact, in many cases they haven't been and they've been abusing that position of trust. And that's my soapbox rant over.
Christian Rodwell (32:01.821)
Yeah, no, thank you for that. Very interesting. So let's move on to the next category. Let's pull out perhaps crowdfunding, peer to peer lending, looking at that.
Kevin Whelan (32:01.934)
regulation.
Kevin Whelan (32:11.502)
Yeah, look, a new one, a fascinating market, you know, getting involved really in funding other activities. And there are three types of crowdfunding. Crowdfunding peer to peer work, they're similar language in the same way stocks in the stock market, you know, a similar language. So let's not get too deep into the language. But it basically means you take money if you choose to look into this market.
And there are three markets within crowdfunding generally. One is genuine peer to peer, which is your lending money to people. And that's through things like Zopa and other places where the money goes to people and the people pay interest on the money. Now you can challenge your own ethics on that. I'm not sure the value of wanting to lend money to people to go and spend on consumer goods. I'm not sure about that, but.
there's an opportunity for those people who want to get involved in that. There's also the property market. So there's lots of good companies around where they act as an intermediary, a platform between the buyer and seller. They've got the arbitrage in the middle and they're managing or helping to manage the property projects. And we've seen some good track records in that and some decent returns in the crowdfunding market in property. And then you've got crowdfunding in business where...
You've got again, you've got a market maker, somebody in the middle making their arbitrage, acting as a go -between between the investor and the business. And you can lend money to that. And we saw when we did an interview recently with Louise Hill, do you remember Chris Goh Henry? They raised like five million from CrowdCube, you know, which is one of the market makers in that space for business. So there's nothing wrong with that. It seems an ethical solution.
And if you understand it and why it exists and then you can understand your risks, then there's nothing wrong with that as a market. And certainly, you know, I've seen many of our wealth builder members use some of their money in those markets, sometimes to understand them. And therefore it's a test of their understanding. It can also be a small test of your willingness to master or it could be just simply a diversifier. So, you know, that's an interesting one, Chris.
Christian Rodwell (34:34.429)
So I guess similar to that, we're talking property there specifically, but traditional businesses, there's obviously big private equity, venture capital, but the opportunity now for what's known as fractional ownership as well through mutual funds.
Kevin Whelan (34:48.846)
Well, mutual funds or other versions of mutual funds, mutual funds is an American term, but when you're investing in any kind of unit trust or anything that's created, whether it's regulated or not, you're getting a fraction, which is what you're doing when you buy a share, you're buying a fraction of ownership of a company. But you have to understand again, what's the return with the share, you know, and certainly...
If you look at Warren Buffett, it's all about ownership of shares with a high performance dividend that will survive in different market conditions. When it comes to fractional ownership, the big danger of fractional ownership, I've seen Chris is fractional ownership is something that's not very liquid. So, you know, if you buy into the fractional ownership of a hotel in the Caribbean, well, what do you own? You know, what do you own? Half a room in a hotel? You have to understand what it is you own and then how do you...
Is it valued fairly or is that arbitrage unfair? You know, somebody sold it to you, valuing it at a hundred thousand, but it was actually only worth 70 ,000, but you're not in the Caribbean. I'm not dissing the Caribbean. Any other country could have, it could apply to Bulgaria, Romania, anywhere where I've seen these things happen. And invariably what I've seen is overvaluation. You don't go, you don't do the due diligence. So you buy a ski shell in Bulgaria and you pay.
100 grand for it but it's worth 70 grand and you just didn't know you just took it on face value with the gloss of the brochure or the gloss of the person and so I think fractional ownership nothing wrong with that in shares where there's liquidity transparency but where you can't get the liquidity in the transparency I think it's fraught with danger.
Christian Rodwell (36:36.669)
Mm hmm. Okay, so the final category, the collectibles and your definition of an asset, Kevin, something you own that is not you, puts money in your pocket whilst you're asleep, you can pass on. So what about art, wine, watches, those kind of things?
Kevin Whelan (36:50.766)
Well, and gold come to that and precious metals. Look, they're great diversifiers. I know people who've got mastery in that. I know one of our clients loves buying watches and kind of almost has the view like the Patek Philippe that you never own it. It's part of legacy. So I wouldn't say it's a way to build wealth. I would say it's a way to engage in an interest that could fascinate you and you might make some money. You might not. We've all seen probably the Antiques Roadshow and
other places like that where, you know, if you're interested, that's great. If you're not interested, you know, if you're going somewhere, deliberately look for a particular type of art that appeals to you or a particular type of, um, whatever it would be, glassware or, um, you know, any kind of asset that you think interests you, nothing wrong with that. There's a way to build wealth and to secure a future. No, but as a way to...
create your interest, have a collection and be interested in that and to be fascinated by it. I think it's fantastic. It's like a hobby, isn't it really? Like I'm, I've got a hobby of playing golf, I'm not going to make any money out of it. And I don't, I don't collect old golf memorabilia, but some people do because they like the collection. It's not really about the wealth. And we know different people like gold and silver and there are ways to make money from those with trading, but that's going deeper into understanding how those markets work. So.
There are some markets you can trade and you can make money from, but generally speaking, if they're tangible assets. And by the way, Chris, generally speaking, other than gold and cryptocurrency, which you can hold in a pension and fascinating, if you think about it, you know, if you've got a pension fund, which you've got tax relief on and you can buy a piece of property or you can buy gold or you can buy cryptocurrency in it, you're getting the value of the tax relief. So if one would argue.
at least intellectually, you're getting a discount on the value because the government's contributing 25 % or whatever they're contributing in tax relief to your risk. That's not a reason to take more risk, but it's a reason to think about that. But you can't hold art, you can't hold NFTs, you can't hold items in your pension, in your SaaS, but you can own gold, you can own crypto, and you can own property.
Christian Rodwell (39:12.221)
Hmm.
Kevin Whelan (39:15.278)
So again, that's another way to understand your leverage in your market. If you've got a pension, do you want to own different things other than just exclusively the stock market, which is where the regulated pensions would redirect you. And that's why so many of our members who become more entrepreneurial requests and to discover their DNA, start to invest in wider things, not promoted by us, but just, hey, the world is your oyster. So where are you going to go with it? Then off you go to decide whether...
Christian Rodwell (39:26.717)
Hmm.
Kevin Whelan (39:44.366)
SAS is right for you, which is why we put it specifically on the roadmap in 2024, haven't we, at stage seven on the nine -step roadmap. Have we published the new roadmap for people to see as well?
Christian Rodwell (39:50.397)
Hmm. Hmm. Hmm. Yeah.
It's on the WealthBuilders website. Absolutely. Head to wealthbuilders .co .uk forward slash membership. You can find out about all of the different ways that we help our members to achieve financial security within three years. And you mentioned pensions there. Another tax -efficient way of investing is through ISAs and we were talking about peer -to -peer lending. So an innovative ISA might be something to think about.
Kevin Whelan (40:19.406)
Yeah. Well, yeah. And lots of people don't even know they exist. So again, it's that being grounded, understand your marketplace when something new comes in. So, you know, for example, I'll touch on innovative ISA, but innovative ISA and ISAs, you know, there's a new ISA coming as well, which is all about the ability to invest in British companies to encourage investment in equity in the UK. So look out for that.
The innovative eyes will allow you to, instead of traditionally investing in either cash or the stock market, allows you to put that money into crowdfunding. So if that interests you, you can do that. We've also had this year announced, this tax year, the abolition formally of the lifetime allowance for those people with larger pensions. And we've also seen a change in the national insurance contributions, which is meant for anybody who earns over.
26 ,000 I think, you get a 2 % reduction in your national insurance contribution so you'd be saving tax. So if you're saving tax, you don't notice it's gonna get swallowed up. If you notice it, you can plant the seed. I go, well I'll put my national savings saving into something I don't understand with a view to using that money as a way to want to go and understand it. See what I mean? So you do it intentionally.
rather than in some vain hope you do it deliberately and intentionally with something you can afford to lose or something that you realise is a new gain, which you could do in the debits process as well. You discover some money in there, you could invest that or some of that. Not forgetting the mortgage, Chris, if you have one to think about that as interest rates change, you know, if you've got a mortgage, should you compare that to paying off your mortgage or looking at offset mortgages, which is again another.
Christian Rodwell (42:00.125)
Yes.
Yeah.
Christian Rodwell (42:08.413)
Mm.
Kevin Whelan (42:09.902)
marketplace that we haven't talked about.
Christian Rodwell (42:11.101)
Coming from that French word of mortier until death, right? Okay, well, I can hear Alan barking in the background. He must be ready for his walk, Kevin, so I better let you go.
Kevin Whelan (42:15.054)
of death, yeah, yeah, exactly.
Kevin Whelan (42:22.35)
I think you better let me go Chris, but that was a fun reconnect.
Christian Rodwell (42:24.733)
Yes, we meandered around the investment world there, didn't we? But it was interesting.
Kevin Whelan (42:30.734)
We did. And just as a precursor, I'm going to add something, Chris, I'd like us to pick up on the next podcast, if it's okay with you. And it's about a different definition of wealth that I was reminded of. I'd heard before, but I was reminded of and you and I like to follow other leaders and thought leaders. And the gentleman's name is Richard Buckminster Fuller or Bucky Fuller, as he's known.
and he's dead now, but definitely a visionary of his time. And I was reminded, and I'm going to probably do a quote on this and do some posts on this, that wealth is measured by how long your money will sustain you if your income ability stopped. So in other words, if you know the life that, you know, your security figure,
say it was 3000 a month and again I'm using a random number and you've got 300 ,000 in accumulated assets. If you're looking at accumulation, which many people do as a net worth, then you know, you've got, you can divide three into that and say I've got a hundred months. So I can live a hundred months and that's my wealth measure. I'd like us to explore that a bit more and dive into that a bit more as a concept because I think it's quite an interesting one.
For those people who do tend to focus on accumulation, it will show them how long they've got and in fact they'd be forced to sell it if they didn't have cash flow coming in, whereas if you've got 3 ,000 a month coming in, your number is infinite.
Christian Rodwell (44:13.021)
Yeah. Yeah. No, I'd love to do that. Okay. Well, thank you for listening today. If you enjoyed this episode, please do share it with a friend and we'd appreciate that. And of course, head over to wealthbills .co .uk. Have a look around. We've got all of our 249 episodes or 240 actually, sorry, we're 10 away from the big 250. And you can go back and see all the different categories there, talking about tax, investments, property, all seven pillars.
Kevin Whelan (44:35.278)
Okay.
Christian Rodwell (44:42.909)
of wealth. All right, Kevin, we will we will be back same time, same place next week.
Kevin Whelan (44:47.95)
Yes, until then my friend, see you.