Now that’s what I call Financial Independence! 19


Some people on the internet say that The Escape Artist is running out of fresh material.

What nonsense!

If I was running out of fresh material, then how could I be coming up with original gems such as Now That’s What I Call Financial Independence! 19??

Answer me that.

Yes, The Escape Artist is back to review more classic songs about financial independence in the guise of a music critic from the NME…armed with increasingly tenuous metaphors, earnest prose and psycho-babble.

Got Your Money (Ol’ Dirty Bastard)

They say that possession is 9/10 of the law. Well…it certainly seems like the business model of most wealth managers is based on inertia. They got your money.

Customers of wealth management firms are often paying 2.0% – 2.5% per year. The problem is that fees are deducted silently, invisibly and stealthily. This will cost you hundreds of thousands of pounds over your lifetime. Maybe millions. Don’t believe me? Check the maths and calculate your own investing costs.

How many clients know how much they are paying in total (including adviser fees, fund management fees and trading commissions)? People are being fleeced while they bury their heads in the sand. Its part-tragedy, part-farce.

Yes, I understand that many people want help. I’m all for financial planners helping people to save and invest. But there is a good reason why I charge clear, fixed fees for my financial coaching. People work best together when their interests are aligned.

If you don’t know upfront how much financial advice is costing you, then you’re probably being screwed.

If I could turn back time (Cher)

Do you remember the story of Kate who becomes a millionaire by getting a job aged 18, saving £167 per month for a total of £15,000 AND THEN SAVING NOTHING AFTER THE AGE OF 25Compound interest is a beautiful thing.

Sadly though, many people procrastinate and miss out. If I had £10 for every time someone had told me that they wished they could go back and tell their 18 or 21 year old self to start saving…well, I’d be a wealthy man.

But you can’t turn back time. And sadly, Cher did not start saving when she was 18. As a result, Cher is so poor these days that she can’t afford clothes, having to make-do with with a Borat-style mankini she got from a jumble sale. Never one to seek attention, I can only imagine Cher would have been *mortified* at being half-naked on a ship full of male sailors.

The best time to plant a tree was 30 years ago. The second best time is now.

Ice Ice Baby (Vanilla Ice)

Why didn’t Cher invest in the stockmarket when she was younger?

One reason is that sensible savers are often terrified of the ups and downs of the stockmarket so they get stuck in cash. But here’s the problem. Your cash is like an ice sculpture at a party. You can’t see it melting away…but it is. Inflation guarantees that your cash will lose its real value over the long term.

Let’s Get It Started (Black Eye Peas)

It would be wonderful if everyone reading this could learn from Cher’s mistake, take action and get their compounding machine working.

But sadly, people continue to procrastinate and invent excuses rationalisations why now may not be the right time (Brexit, Trump, trade wars etc etc) to start investing. If you are dithering about which Vanguard fund is best, or whether perhaps it might be better if you did this, that, or the other, you are losing the initiative. Meanwhile the enemy (debt, lifestyle creep, conformity etc) is creeping up on you as you lie dozing in The Duvet of Complacency.

When investing, there will never be a situation in which the geopolitical outlook is clear and you have all the facts to feel comfortable with your decision. Guess what…you still have to get started.

Don’t Stop Til You Get Enough (Michael Jackson)

Do you have to wait until you get to 25x your spending before quitting a job you don’t like? I say no…but some people are scared reluctant to quit until they’re SURE they have enough. This even has a name: One More Year Syndrome. 

When it comes to debating the Safe Withdrawal Rate, Michael is a STICKLER. He’s annoyed that The Trinity Study only considered 30 year retirement periods. He writes lengthy blogposts on sequence of returns risk. Not for Michael the breezy assurances that you can trust the 4% rule of thumb and everything will probably be fineMichael advises a 2.75% withdrawal rate (note the 2 decimal places) and, whatever you say, he can be more cynical cautious.

But, for my money, Micheal seems a little dogmatic and prone to binary thinking. The Safe Withdrawal Rate is a concept not a number.  The idea that you reach financial independence retire in your 30s/40s/50s and never earn another penny nor get any state pension strikes me as ludicrous unrealistic.

I Won’t Let The Sun Go Down On Me (Nik Kershaw)

One of the sneaky tricks of The Prison Camp is to encourage you to let yourself go (both physically and mentally) as you get older.  As we discussed in Get Rich Without Mobility Scooters, many people seem to give up physically at about age 30 and just accept that its a long slow inevitable decline from there.

The Escape Artist says: fuck that. Much of what we think is ageing is just the result of the awful modern Western diet (processed carbs) and sedentary lifestyles. I can bench press more now than I could in my yoof. I’m not competing with anyone else but I am competing with myself.  

Sure, I know where this is headed and soon we will all be dead but I’ll be staying as strong as I can for as long as I can.

When The Going Gets Tough (Billy Ocean)

Yes, I know this song is cheesier than a bag of Wotsits that’s several years past its sell-by date. But I love the cameo appearances in the video from Danny De Vito, Kathleen Turner and Michael Douglas.

It would be lovely if everyone could get to financial independence without any effort, any resistance and any sacrifice. Sadly the universe just doesn’t work that way.  Life isn’t fair.

No one said it was gonna be easy.  On your Path towards financial freedom, it will often feel like 2 steps forward, one step back. But the journey will improve you. As well as wealthier, you will end up happier, more resourceful and definitely not a complainypants.

These are The Inestimable Advantages of Hardening The Fuck Up.

A Little Party Never Killed Nobody (Fergie)

So yes, there will be times when it feels tough…but pursuing financial independence does not have to be all sacrifice, deprivation and extreme frugality (whatever the media say).

I suggest you enjoy the ride and party along the way. Its easy to get drunk socialise and party for next to nothing. The trick is to recapture that vibe you had at college or the Friends vibe in your 20s. Adulting doesn’t have to be expensive (or boring). Who needs fancy dinner parties or restaurants? Some cheap booze from the supermarket, some friends and some banging tunez (free) are all you need for a party.

As I may have mentioned before, you should enjoy the journey not just the destination.

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  1. Michael Jackson died in part due to his commitment to a massive 50 date residence in London.
    Why did he do it?
    For the money? Maybe – he had a lot of hangers on and high spending habits.
    For the glory? Maybe it’s similar to One More Year – like One More Encore – he wouldn’t just let the sun go down on him.
    Now he is dead – he was a mess psychologically and goes to show that fame and fortune can’t make you happy – it takes more and sometimes less is more. 🙂

  2. as someone who can’t always hear the lyrics of songs – I’ve loved your NTWICFI series.
    It turns out that there have been gems of wisdom on the airwaves alongside the usual pop rubbish.

  3. Mark Griffiths · · Reply

    I was Kate in 1989. Except I was 24 and was (still am) a bloke. Here’s how it worked out for me.
    I started saving £200 per month into a personal Allied Dunbar pension and was of course encouraged by the adviser to opt out of SERPS (later called the State Second Pension) for the State top-up. £200 was a lot back then, about 17% of my salary. Over the years, what with mortgages, then working freelance, returning to school, more freelance and then employment, I first decreased, then halted briefly and then increased contributions. 14 years later in 2003 I had paid in £50k but my pot was only worth £65k.
    Looking closer, I noticed the Non-Protected Rights element was worth about 18% more than I had paid in but and the Protected Rights (SERPS) portion was worth 70% more than the State had paid in for me.
    There had of course been the dotcom bubble leading to a stock market tumble in 2001 but what got my attention was the difference between Non-Protected Rights and Protected Rights performance. I knew it had to be something to do with fees and so I began my investigations and learned;
    • Bid offer spread 5%. That’s an immediate 5% loss on new money going in and when they re-balance the fund.
    • Capital Charge units 3.5%. This means another 3.5% loss on any new money in the first 2 years and on any increases after that for a further 2 years. This only applied to Non-Protected Rights contributions. Quite shocking. Protected Rights (SERPS) contributions were not subject to the 3.5% Capital Charge which is the only factor that could account for the difference in growth (18% v 70%)
    • Annual fund management charge 0.75% per year
    • A handful of other much smaller charges
    So to minimise fees, I stopped making pension contributions altogether. A couple of years later I was able to join my employer’s pension scheme which had very low charges. Then finally, in 2017 I was able to access my fund to move it penalty free into my employer’s scheme. Having avoided the worst of the fund charges, it had grown to £245k. That’s £65k to £245k over 14 years which is 10% compound interest.
    In the 1990s, Financial Services was in its wild west phase. Things are different today and clients have the resources to be much more informed than 30 years ago. Starting a pension early is great, but understanding the range and amount of fees that will be charged is key to wealth building. The compounding machine is the eighth wonder of the world but high fees cause its clutch to slip.

    1. Thanks Mark, this comment illustrates the past horrors of the financial services industry.

      But the truth today is that its easy to invest with very low fees:

  4. You are so right about the carbs! Too many too young and for too many years. Hmmm. The inverse of investing…..

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