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Dave and Scott are excited to have their second guest, Jay Lawrence, an investment manager, on their finance podcast. They discuss the importance of seeking financial advice and investing for the future. Jay emphasizes the need to start saving and investing early, as compounding interest can significantly increase wealth over time. They also discuss the concept of consumption smoothing, where individuals spend money throughout their lives rather than waiting until retirement. The debate revolves around balancing financial security with enjoying experiences in the present. Dave. Scott. How you doing? I'm good, thank you. Good. I'm really excited today. Are you? Yeah. Generally? I just had a really good day. No, it's more because we've got our second ever guest on. Yeah. And that means that we have two people listening, which is... That's more than we ever thought. It's a big markup. It's a big markup. So there's up to and our guest today. Do you want to welcome our guest today? Yes. It's Jay Lawrence. Hello, Jay. Welcome, guys. Thanks for having me. So today's pod is going to be a finance episode. Obviously, it's going to be very interesting, probably more interesting than Jenny. I would be very surprised. And I thought with you, Dave, you are going to be bored out of your mind on this one. Yeah. I mean, I might be slightly bored with the topic, but at least it's not just Scott. At least they'll become banter. It's going to be an improvement. No, thank you very much, Jay, for coming. Thank you. Yeah. Jay and I used to work together. Jay is an investment manager, works for one of the UK's largest wealth managers. So yeah, thanks, Jay. Thanks for coming. Appreciate it. Thanks for having me. Yeah. Appreciate your time. Do you just want to give a little intro of who you are? Yeah, I guess I'll start by saying that I'm a professional investor, which means that I get paid to look after other people's money for them. And you'd be surprised by the number of people in the UK who don't seek financial advice or professional investment advice. A number of people in the UK just either don't focus on it at all, or they just try and figure it out themselves. So that's where I come in and try to bridge that gap between those people who don't have the knowledge and then the people that do. I'll be very honest, despite doing a few episodes of this podcast, I'm definitely one of those people that just tries to hit and hope with financial stuff. I'm getting better. Scott's advice is helping, but absolutely, I can resonate with that person who just attacks it, which I've never advised people to do with their health, but for some reason with my money, I do so. For some reason, we think we've got it all figured out. It'll be fine. It's a really good point because it's like, as you say, you'd go to a doctor if you had an injury. You'd go to a mechanic if you fucked your car, but people don't always go to a professional to sort out their money. It's a weird kind of culture thing. I don't know. Why is that? Well, one of the issues probably in the UK is that we don't teach it in schools. The earlier you start to invest and to save, the greater your potential is that you're going to have a large portion of money at the end of your career. That's something that we don't think about and take seriously. Like I said, it's not taught, so it's something we have to figure out for ourselves. It's usually when people start to earn money and a serious amount of money that they start to think about, what do I do with this extra money? Everyone knows about bank accounts that pay a high level of interest, but some people don't understand about the stock market. They think it's risky. However, everybody should be contributing, for example, to a pension. The earlier you start to put money away into a pension, the greater the time that they've invested and then the greater time for that to compound over time and then to create money in the future. Particularly when it's your retirement, you want as much money there as possible. I think one of the key things that we don't think about is that, and it's the same with your health as well, is that we're expected to live a lot longer now. The average life expectancy is probably in its 80s now, where, for example, when the pension was first introduced, the average life expectancy was just nine years. Now we have to live longer and provide for that in a much longer time span than ever before. It'll be the same for you in the profession that you do, Dave, where we need our bodies to be able to live longer. We need to be able to make sure that we're not looking at our bodies now just to get us to 60, 70 years old, but maybe even to 90 years old. If you've got grandchildren in the future, you want to be able to pick them up. I don't think everyone will be able to do that if they just do nothing and just sit there and hope for the best. No, it's a great point. I'm always using that kind of analogy and that phrase of making sure, for example, weight training when people get older. I always use that activity of, yeah, do you want to be able to pick your grandchild up? Invest in your body now for the future. You saying that, and I completely agree with what you've just said, and yet I feel like a bit of a mug and I feel that you two are about to just shake your heads at me because when I first qualified as a physio and joined the NHS, there's an NHS pension, which is pretty good. As pensions go, I believe, they pay into it quite a bit of money. I was 23, just finished my Master's, spent quite a lot of money travelling, came to live in London and was like, do I want to put X amount a month into this pension that is going to come back to me a long time away, or fuck it, let's opt out, have the money now and enjoy the next few years, which I did. But on the opposite side, the advice that you're giving to your clients is to essentially invest in their body for the future, and without trying to get too boring about this, going back to that compounding element, if you start saving £400 a month when you're 30 years old, and also let's say 35 years old, and you invest that for 30 years, £400 a month translates roughly to about £600,000 in retirement. If you started that journey just 10 years earlier, and it compounds at 7% a year, which is quite a modest amount, you would have over a million pounds. So it's almost double. If you can generate an interest or a return on your money of 7% a year, it will double every 10 years. So if you can get to a position in 30 years, within an extra 10 years, it will be worth double that. So the earlier you start to save, the better. And that's what we need to start taking seriously. I think in financial advice or awareness is the sooner you start making those sacrifices, the more you're going to have in the future. Can I say something controversial? So I recently found out about a concept called consumption smoothing, which I've stolen. So I read a book called Die With Zero. It's written by this hedge fund manager who essentially is saying that he's made tons of money. And his whole thesis is that why die with loads of money? What's the point? You want to spend it all before you die. And if possible, you want to spend it literally to the pound. On the day you die, you want to go to literally zero. If you can get it to that, you've basically conquered life, because that means that you've spent it on things that you want to do and all this kind of stuff. And the idea of consumption smoothing is that when he first became an investment analyst, he had a mate who they were both 24 or something. And his mate was like, right, I'm going to go traveling for the next year or something like that. And he said, why don't you come with me? And he was like, no way. I've got this plan in my head. If I stick to this path in this investment bank, I'm going to earn x, y, and z by 30 years old. I'm going to be able to have loads of money, and then I can do it afterwards. And his mate went away, went traveling, had a really great time. He got back and pretty much got back into the same role a year later, spent all his money, didn't have anything left. But he just got back into his role, started working again. The guy that wrote the book got to 30, and he was like, right, now I'm ready. I've done what I want to do. I can now afford to go traveling and do what I want to do. And so he goes, and he goes to like backpacking hostels and like all this kind of stuff. But he said that my experience was so much more different because of my age from when I was 24 to when I was 30 that I was trying to live out the experiences whilst I was 24, whilst I was 30. So I just didn't enjoy it as much. Like, I'm 30. I don't want to be spending time in like some six-pound-a-night hostel with like all these teenagers kind of thing. And he's probably gone through those years of nicer things. Yeah, yeah. Rather than just come straight out of uni, you don't mind those hostels. You don't mind slumming it. Exactly. You don't really care. And so his concept is that you, on average, will exponentially earn more money as you get older. And he says that whilst you're younger, almost take from your future self, spend it now. This is my philosophy. I was right. I'm with Scott's philosophy. I'm out of the job. It's just the concept of that you can't, instead of getting to your retirement, your 60, and then start spending, or when you have money, then start spending. It's because if you think about it on a graph, you kind of go, no spending, no spending, and then, boom, I can start spending money. If you're just smoothing out that consumption as you're like giving a certain age and as you get older, if you then, when you are 30, assuming you haven't put any money into a pension, for instance, you disproportionately put more into it to almost compensate for the money you didn't put in. Because if you're earning, you know, you start working, you're earning 20 grand, you can only put, you can only afford to put like 200 pounds a month away. But when you're 30 and you're earning say 60, 70 grand, you can now afford to put a thousand pounds away or something like that, making up these numbers. But it's an interesting concept of like, I get you, obviously you will lose out on potentially seven to 10 years performance, which is something you have to be aware of, but are you also missing out on experiences? That is a question. Yeah. And what's more important? I think it's all just the courses. It depends on what you prioritize. Now, I think the way that my brain has been programmed over the last 10 years is to probably start thinking about the future more. And I can use a tangible example of my parents who have started to save for their retirement much later in life, and they're playing catch up now. Now, they do have a lot more disposable income because kids have left home. They've got higher salaries now because they're older, but they are now putting disproportionately more of their money into a pension, but they are literally now just playing catch up in the last say 10 years before retirement. And the one piece of advice I think they wish they'd given themselves when they were younger is to have started that process earlier. But at the same time, we now have a very globalized world. We can jump on a flight to South America for like probably sub 500 pounds now. It is a huge temptation now for us to go out there and enjoy ourselves. We all live through Instagram and TikTok and things like this and see all these amazing places to go to. So I think there is definitely a temptation to consume as opposed to save. But I think that there also needs to be that balance there because I don't know what the outcome looks like as if when you get to 65 years old, you have to continue working, for example. Or in the case of you, Dave, you get to 70 years old and your body is not capable of looking after itself for the next 20 years. And I feel like you have to have that balance and you have to be able to do something today so that your future self will thank you for it. Yeah, I think balance is probably a key word. I'm definitely not saying to people, I was not expecting this. I was like, finally someone on my side. Definitely don't take that as go get a massive loan. So what you're saying is if we can condense these little clips down and basically make it sound that Scotch just said, fuck saving money, go out and spend, go to South America. Yeah. And I've actually done that in the reverse way around because I went straight into work and rather than doing the gap year thing where you go and travel around to the cheapest places you can find, I actually did that in my late 20s and early 30s. And I have to admit, when you do it with a bit more money, it's so much nicer. I've been in hostels that are literally like a couple of dollars a night or something along those lines. I've also spent a little bit more and had a bit more luxury and that experience is also quite nice. Yeah. Well, this is going down a rabbit hole. I really didn't think so. But to appreciate the good stuff, you've got to have had the shit stuff, right? True. So when we went, we, but Scott and I went traveling to South America when we were what, 20, kind of 23-ish, wasn't it? Yeah, around that. And we stayed in a lot of, us two and another mate stayed in a lot of really, really terrible places. And then weirdly on our last night, the flight, because we'd just finished the Inca Trail and the flight home from Peru got cancelled because of wind. So they put us up in this five-star hotel and there were all these people in the queue crying their eyes out because they couldn't get back to their family. And we were like, been away for three months. We got a room to ourselves, double beds, baths. It was the best hotel experience of my life. We all had separate baths, say separate. And we all just texted each other in the bath being like, this is amazing. But yeah, I think away from chat about traveling and hotels and hospitals versus hotels, I've got a question. When I made that decision a little while ago, initially to go, I'm not going to put the money into pension. Let's think about today's Dave and future Dave can worry about it at another point. I've wisened up and I have changed my philosophy on that. But at that point, I did also have this little thought in my mind of, yeah, the NHS pension is good. But if I took some money a month and invested it somewhere, obviously, rather than a public pension or like a company pension, what's the opinion on maybe taking whatever percent of my earnings would be going into my pension automatically versus investing that money with some advice from one of you guys, for example? I think that what you're really looking at there is, are you going to lock it away into a pension where you cannot touch it for the next 30, 40 years? Or do you want to put it into something which is a bit more liquid and easier to access so that if you do have an emergency, you can't take money out of your pension in an emergency. But if you invested it in a separate vehicle, an ISA, for example, or just invested it into a stocks and shares account, then you could easily liquidate that and take it out whenever you want and use it almost as a savings fund. And there are merits for doing both. You get tax relief if you do it for a pension. So you would just get to essentially whatever money you pay to whatever your marginal rate of income tax is, the government adds that on top and puts it in there. So again, you're getting that additional enhanced benefit for the future, but it's for the future. And it's a future that is a very, very long way away if you're in your 20s or your 30s. And it's very, very difficult to think about. Sticking on, so let me just jump in. I've got another controversy. So if we're looking at, if you're listening and you're kind of early 20s and early to mid 20s, and you've just got your first job, you're on a pretty kind of your entry level salary, I'd like to get both your opinions here. And again, this is something else that I've heard recently from another podcast. And instead of investing what small money you might have to put into something, whether it's a pension or an ISA, should you be investing in the S&Me 500? Okay. I've stolen that. And what I mean by the S&Me 500, instead of the S&P- That's crazy. What the fuck? Instead of the S&P- Who's making things up now? This is a good point. So the S&Me 500 is investing in yourself. So when you're early on, and you might not have any industry qualifications yet, you might not have certain other experiences and skillsets, instead of, say, putting over £200 a month, if you said, I work in finance, one of the standard routes to go down, and this is if your company didn't pay for it and stuff, you could go and pay for an industry level qualification, which on average will put your salary up by X amount. So if you're earning, say, 10% on the S&P on average, just as a per year, as a number, if you could, say, increase your salary from 20 to 30 grand, that return from that investment is actually a lot better. So the question is, and this is not a yes or a no, it's like, what are your thoughts on if you are on that stage of your life? And I guess that's a very specific question is that, should you actually be investing in yourself? Because you probably will get a far better return that way than the other way. Well, I think all of us in this room have probably done that in some capacity. Scott, me and you have taken postgraduate professional qualifications, and Dave, I'm guessing you've done something very similar. Yeah, loads of extra courses, different tuition and days, things like that, to improve myself as a physio and clinician so that I've got more respect in the industry and I'm ultimately, I guess, going to make more money. I think my opinion on it is very much, I like that philosophy because I'm investing, you know, it's a bit of a gamble, but it's in something I enjoy. It's in the industry. It kind of aligns with what I want to be good at. So I'm going, I'm going to invest money to potentially make more money, as you said, but also I'm going to enjoy that process a little bit more, a little bit like recently I've pumped, instead of saving money, I've been pumping money into making a business, which hopefully one day will make me more money than if I had not taken that risk. And you use the word gamble there as well, but it's certainly much less of a gamble if you're investing into yourself, because as long as you back yourself, you know that fundamentally there's going to be a tangible benefit at the end of it. There's not going to be a guaranteed tangible benefit, but there is going to be something that you can say, I'm going to work hard at this and I'm going to put money into myself and I'm going to make this work. And the chances of succeeding are probably much higher. Do you think the marginal gain of doing that starts to diminish the older, more experienced you get as you gain more skills, or do you think it is just like you can continue building skill sets and qualifications forever? Question to both of you as well. I think, and actually as a physio, it doesn't happen all the time, but you can legally get called up at any point to go, right, in the last two years, we want to see your CPD log. What have you done? What extra courses? What reading? What podcasts? We need evidence that you have invested in the most recent evidence in healthcare. Obviously, healthcare is a constantly updating profession. So the CSP could ring me up tomorrow and go, right, we need your two year CPD folder of all the stuff you've done. So I'm kind of in a good way forced to do it. And I actually think it's funny, isn't it? Experience and time are always the same thing. You can do a job for ages, but not change your ideas, not challenge yourself. I unfortunately know physios that still do things that physios did 30 years ago, which has kind of improved to be nonsense. Therapeutic ultrasound, rubbing ultrasound on someone's knee, and it's going to promote tissue healing. No evidence for it. If you read any paper in the last 30 years, however, people are still doing it. So I think going back to your question, you're not going to, from a financial point of view, as you get more experienced, you might feel you don't need to do those things to keep your professional development up. But I think it's just as important, maybe less so from a financial point of view, though. Kind of went on a tangent there, didn't I? But you've also gone down a tangent, which I think is quite important, which is I certainly see it from the healthcare side of things that how much has changed in the last, say, 30 years as evidence has become more apparent, more studies are being done, we've got better analytical data available to us. And I've certainly seen that we've taken some concepts and almost flipped them upside down. And even if you look at, say, the food pyramid is a good example. Do you trust that the food pyramid today is the same, well, what it was 30 years ago, it should be the same as it is today. We've now looked at all the things like carbs and proteins and fats and stuff, and we can debunk some of those things. And it's probably exactly the same with the ultrasound, as you say. Do you think there's been a lot of change in your industry? There has. I'm sure we're going to all get onto a social media rant in a minute. But maybe I'm in an echo chamber and I follow the things that I agree with a little bit in the health and fitness industry. But there's a lot more promotion around exercise, strength and conditioning, good strength and conditioning stuff out there. Whereas I think previously, the physio world, the chiropractic world is very hands-on treatment. And actually, the evidence has gone, that stuff plays a part but isn't the primary focus. And I think, again, whether it's an echo chamber, but I think better information is getting out there. And it's less easy to live in the dark ages as a therapist, because you get found out nowadays. And people go, no, nonsense, call it out. Interestingly, when I met physio for the first time, we were talking about something and I said, oh, you do basically massaging, don't you? And they laughed in my face. And she was like, no. And then actually when, and I think lockdown taught me this a lot. And Scott, me and Scott were actually traveling in America around this time last year, actually. And I sprained my ankle quite bad. And then we were going, you remember the story? How did you do it, Jay? I'm not going to go into it now. I really want to know. Funnily enough, it actually did involve one of these sort of like pseudosciences that's very popular these days, which is going for a cold dip in the ocean. And I've sort of got swept out. But I actually sprained both of my ankles post lockdown. And I don't think that's a coincidence that we sat indoors for, say, two years. And we didn't get much exercise, muscles weakened, and we got out of the habit. The first one was playing football. The second one was on holiday. And when I got proper treatment, it was all about identifying the muscles in the body, which had essentially gone to sleep, that were no longer working or no longer activated or weak. And that is the complete opposite to what I believed when I was younger about physiotherapy. Because I thought that physiotherapy, you go and you get like a sports massage. And then actually now it's like the science is you go and do restorative or you build yourself up and you get the foundations right so that you can perform better. The phrase I always use is I want really the aim of physio for me, let's say an acute injury like spraining your ankle, the tissue is going to heal. And that takes time. And there's a few methods maybe. And this could be a controversial topic and go on for ages. But there are things we can do to aid that process and speed that up slightly. But it's still just time that's going to do its thing. But the really important thing about the physio is go, identify why you've sprained your ankle. What can we do to make sure you don't do it again? It's like a proactive approach rather than a reactive approach. And I still think unfortunately, the medical system in this country becomes very reactive. You go and see a doctor, they give you some pills. And they haven't got time to really educate around loads of different factors. In those early stages, a little bit of hands on massage work might help. But the real key of being a good physio is identifying those roots, not just treating the symptoms. Treat the causes, get somebody in a better place than when they first walked into your room. How much of this do you think is what we've seen from our parents generation? Because I look at our parents' generation and think to myself, they're nowhere near as active as we are. That's not necessarily for everybody. That would be different. But I think generally speaking, we as a generation are a lot more active. And maybe it's because we're younger. And maybe we don't know what we look like in the future, whether we'll still be exercising. But I think there's a lot more information now. There's a lot more, particularly on social media, there are a lot more people that are influencers who are becoming famous from health and fitness in some capacity. And I was very lucky to have actually found a YouTube channel about stretching. And that got me into a really good stretching routine in lockdown. And it's something I've kept up since. And I would say it's like game changer for my body. And I'm hoping to continue that probably for the next 20, 30 years. I want to be mobile and I want to be relatively supple going into my later years. But what do you think? Do you think that there's a bit of a disparity between the way that we view health and fitness as a younger generation relative to our parents? I think so. I think we are still not as good as we should be. And again, like you said about finance, this stuff is still not really taught in schools. It's one of the big rounds I have frequently. But PE, for us, we went to the same school, was very much dead football, go and play football. There was no education around exercise, health, strengthening, flexibility. But you can build biology in and make biology fun rather than it being in a classroom setting. I always say anatomical literacy or biological literacy of what people have always surprises me. Sometimes people have loads of knowledge and really great knowledge. They've done sport from an early age. But people come in and they go, I can stretch your quadriceps and they look at me like I've said something in a foreign language. And none of that stuff is taught in school about your body, about looking after yourself. And I feel PE is all games based. I guess where a lot of people are now getting this all like self-education is through internet, and it's through social media influences. Because I think if you're into bodybuilding, you're going to be following a load of bodybuilders. If you're into like trading, you're going to be following a load of trade influencers who can give you tips and stuff like that. And that's where people seem to just be like getting this information from rather than, as you say, in school, which is really interesting. Whereas school education is very vetted and it's very structured, the internet isn't. There's a lot of bro sites in there. Yeah. Particularly in the bodybuilding community, there is a lot of what you should be eating and drinking and workouts you should be doing. But it's probably relevant to the person, but there should be a fundamental set of principles that you can follow. And it's the same in your finances as well. There should be a fundamental set of principles that you could follow with that. So I've actually got some stats on the percentage of Gen Z who get their financial education from TikTok. Do you want to guess? I'm going to guess it's over 75%. What age did you say? Gen Z. Yeah. I don't even know what that means. 18-ish. Okay. I don't even know. I'm going to go with 50%. 80% according to this website. Yeah. And I think there's another stat and this is from the FCA actually from their website. It was like 56% of under 40s get their get their financial education from podcasts, from the internet, basically. Yeah. Podcasts like this. But it's just like, that is such a high number that there's going to be a lot of shit in there that people are going to take for granted. And I think we kind of started to touch on it through lockdown. And we're going to kind of know this is that crypto was like going off, right? And it seemed as though that every man and his dog had a new crypto that said it's going to the moon. So you need to be investing in it. I'm just going to put it out there. I got caught up in one of these as well. I actually invested into one that somebody on Twitter was pumping really hard and it ended up being a scam. And I've actually, and I didn't put much money into it, but I lost money to a scam on a crypto literally in 2020, like a crypto grifter. And it's like, again, I think at one point, but Kim Kardashian was actually promoting cryptocurrencies on her Instagram. Like it was that mental. That's the crazy thing. Like, oh, it just, it gets to me. So it really boils my blood again. More, I'm more thinking of the health and fitness industry. But the same with this, like how impressionable young people are, especially when celebrities have fuck all knowledge about, you know, no qualifications. They're not the people that should be the ones being listened to. And you know, I'm not pooping crypto at all. By the way, I think it's, you know, there's potential good that can come out of it. And just because it's down at the moment, like it's not, I'm not just going to say I don't invest in it. But I think you need to make your own informed decision on that one. But I think it was very hard not to get caught up in some kind of social media like wave and just being like, yeah, that seems like it's a really good investment because everyone says it's a good investment. So it must be a good investment. But when everyone, when you see all your friends are making money and you get FOMO and everyone falls into this trap as well. Everyone gets FOMO when their friends are talking about something or they're making loads of money and you're not. And you're sitting there on the sidelines and it always seems to be the moment when you get involved is when it goes to shit.