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Investment & Retirement Income Planner
29th September 2020
If your life was one week long what day of the week would you be on, and what would you do about the rest of the week!? We explore this, and aspects of our financial lives that will hopefully help you to avoid mistakes and achieve your priorities.
When the destination is unknown it’s impossible to know where we are on the journey– PD!
This quote is attributed to the 21st Century philosopher Paddy Delaney!! OK, a philosopher I surely am not, but I’m very fortunate to work with some very interesting and thought-proving people. Our conversations frequently get me thinking, and this week was no different.
It was in a recent conversation with a client that it struck me; none of us know how long or short a duration we have left in our own journey. Therefore, wrapping our head around planning for the future is a major challenge, if for no other reason than we don’t know what or when that future will be! While I have personally never reserched it – that unknown must account for some of the reticence many of us have about preparing for the future, don’t you think??
Imagine you are travelling to a far flung destination. Unlike most journeys we undertake however, at no point in time on this journey do you know how close or far you are from reaching your destination. You do believe however that it will take somewhere between 1 day and 6 decades to get there!
So, you are enjoying it, making the most of most days and learning as you go. With the duration being so uncertain it makes it difficult to prepare and plan for the journey ahead. How would you perceive that journey!? How to you prepare and plan for the days, weeks, month, years, decades ahead!?
Last week I shared how our family plans for the journey – how we try to balance enjoying the now but also allocating resources to support us doing the things that are important to us further into the journey. Of course, there is the possibility that the journey could end sooner than later, so the prep for the future might be utterly futile!!
In his private journal (now a book – not sure how he would feel if he knew his personal journal was being sold to people all over the world nearly 2000 years later!), the Roman Emperor Marcus Aurelius said:
“Its not that we have a short time to live, but that we waste a lot of it.”
According to CSO our life expectancy is 78-82 years of age. Most us therefore probably reckon that we have plenty of time – multiple decades in which to do stuff that we like doing. Hopefully we all do – but none of us know for sure!
When we talk in decades or years, it’s like Monopoly money – there’s tonnes of it! Who cares if I get sent to jail and have to pay £200! Or if I land on my brother Dave’s hotels on Aylesbury Road and have to hand over wads of tiny notes – it’s fine, there’s plenty more Monopoly money where that came from! (Dave was the quite one of the family by the way, who craftily won most such family board-games, no surprise he’s an Engineer now!).
The point being – when we perceive that we have tonnes of something, it can be difficult to put a value on it, to mind it, use it wisely, preserve it. Aurelius encouraged us not to waste time, the same can be said of money.
I am constantly encouraging investors not to waste money by investing in schemes that deliver poor performance (Blog 127) or charge over-the-odds fees (Blog 121 on ARF Fees and Charges in Ireland). If we take Aurelius’ quote, maybe a lot of us are not valuing time as much as we possibly could. Here’s a thought that struck me recently – maybe it’s bats, but I do hope it will get you thinking and possibly be of value to some;
What would you do differently if your life was 1 week long!
Imagine your life-span was 1 week – how would that change your perspective? Taking a step back and looking at the ‘bigger picture’ for a moment (or as a former colleague used to say ‘lets take a helicopter view here Paddy!’). Putting our stage of the journey into context could be very useful thing to do in our financial planning.
Glass Half Full:
The purpose of looking at your life as if it were lived over the course of 1 week is not to be morbid or negative in any way – quite the contrary, it is to give us a perspective that we might not have had before!
I’m a glass half full person- but only when the glass is actually half full! Likewise I accept that the glass can get knocked over any minute – accepting where we are in our week-life could be a powerful perspective.
We’ll assume that our ‘life-week’ starts for us on Monday morning (0 years), and the furthest any of us get to is Sunday mid-night (100 human years). Using actuarial life expectancy averages, most of us hope to get to Saturday night (78-82 years of age)! So, on this basis each day of the week equates to 14.2 human-years!
Monday & Tuesday (0 to mid-20’s)
Traditionally, we spend Monday and Tuesday getting educated and gaining basic life experience. We are usually financially dependant on our parents until at least lunch-time on Tuesday.
Generally we don’t learn much about personal finance or managing money apart from basic spending or saving habits. Must of us spend any pocket-money or part-time job income on having fun and trying to impress our peers and attract a mate! We usually get our money habits and biases from our parents and close friends – be they good or not so good!
Some may be naturally entrepreneurial and therefore have the financial ‘jump’ on others – provided they can hold on the cash! I remember a lecturer in 1st year College telling us that when we eventually get out into the workforce we should save the first month’s wages and invest it for decades. Between you and me I used mine to buy a silver Swatch wrist-watch and a Mitsubshi Colt, both of which have accumulated to exactly €0 in value by now!
By Tuesday night we are usually independent of our parents or guardians. We are earning a living, learning our trade. Seeing as it’s only Tuesday right, most of us aren’t thinking too much about Friday night or Saturday – it’s too early in the week surely. When was the last time someone said to you, on a bloody Tuesday, that they can’t wait for the weekend!? Never happens! The same can be said here in our life-week – most of us ain’t thinking at all about Friday and Saturday. Let’s get through Wednesday and Thursday and then I’ll start talking to you about Friday!
The result being that most of us focus on the short-term only at this stage of the week.
Wednesday (30’s and early 40’s)
On Wednesday we really need to step up to the plate work-wise! We have a steep learning curve – gotta get to grips with real work, trying to climb the ladder or build a business. We have often borrowed truck-loads of cash on Wednesday, for houses and cars and heaven forbid, sofas!
We may be fortunate to have met a mate and may even now have brought a couple of other humans into the world. We therefore have it all to do, pay for increasing living costs, pay back the bank for the house, car and sofe, try to put some money aside for the children – because they’ll be asking for money when they get educated on Thursday and Friday!
We are also starting to think that we should be putting money aside, otherwise we’ll have none for the weekend! The adds on your phone are telling you that investing in a pension is the right thing to do – basically invest money Wednesday and Thursday, you get some form of tax relief by doing so – then it MIGHT grow, so that you can hopefully take it out and hve it to use on Friday and Saturday! In the back of your head however you are wondering it it’s worth it because you’re told you’ll have to pay tax on the way out too – sounds a bit iffy to most of us! (Read Blog 102 if you need to know if it’s a good thing to do by the way!)
You are also told that you need to buy four different types of insurance in case of all sorts of catastrophes that result in you not making it past Wednesday and your loved-ones do!
Anyway, financially speaking, Wedensday is all go – lots at stake, lots requiring your attention and it can be hard to know what to be doing!
Thursday (40’s to mid 50’s)
It’s on a Thursday that you really start to get tired, but you know tomorrow is Friday – that fact gives you a boost – get through today and your at the weekend – free as a bird!
You’ll likely be very busy in work on Thursday. You might have climbed to a role with lots of responsibility, or your business is either going really well or really bad, each of which means you are flat out busy!
Good thing is though that you might be making what you might refer to as ‘decent money’ on Thursday. As a result you can upgrade the house, the car and the sofa (and top-up the loans!) and you even put money aside into a pension for the weekend! If you have kids you will be paying out copious amounts of cash for them to be minded, entertained, trained and educated!
You know tomorrow is Friday, and all going well you are hoping to finisih early tomorrow, even finishing at 12pm!
Friday 12pm (62 human-years)
You check-in in work this morning, but you and everyone else knows that you are doing bugger-all work, it’s purely for show! Your mind is on the weekend by now.
You hope that you have enough money set aside for the weekend – you put a few quid into pension, you have a few quid in the bank, you’ve no plans to upgrade the sofa or the car, the kids have all moved out. You reckon you can have a big blow-out this evening (it’s Friday evening after-all) and then if you need to you could ‘tighten the purse-strings’ on Saturday. You have so much planned for Friday evening – you’ve been thinking about Friday evening ALL week – saving yourself for it – the time is now!
Seeing as it’s now 12pm it’s officially Friday afternoon you have a few glasses of wine with your work-mates. You have a laugh and even break out a few of your famous dance moves to mark the fact that the weekend is finally here!
The first thing you are planning to do once you leave work is have a quick drink on your own in the pub beside work, then get the train home to your partner and you’re heading out for a nice meal in your favourite restaurant. And to make it even more special, your kids are going to join you both. It’ll be great. From there you have a romantic evening lined up for just yourself and your partner – we’ll spare you the details!
Short of breath you wish everyone a ‘nice weekend’ and head out the door. Heading for that quick drink before catching the train. As you walk out, the sunshine is on your face and Bob Marley’s ‘Everything’s Gonna Be Alright’ sounds through your AirPods!
As you walk towards the pub you feel a pain in the centre of your chest. It’s mild at first, then it quickly gets pretty severe and you are about to fall over – grateful for the steadying hand an old lady shuffling past offers you.
Alas, her efforts are in vain – you fall to the ground. With Bob in your ear telling you that ‘This is my message to you-hoo-hoo’, your time is up. You won’t be making it to the meal tonight. You’re done!
Our character above had fun on Monday through to Friday midday – probably wouldn’t have changed a whole pile. They were pretty well prepared financially for the future and importantly their family will be reasonably financially secure with them now gone.
The biggest regret they may have was that they didn’t get to enjoy the Friday evening – the meal – the time with loved-ones. If they knew then what they know now would they have done something different? Maybe they would, maybe they wouldn’t – not for me to say.
Financially speaking, what day of the week is it for you? If you are in your 30’s or early 40’s it’s Wednesday, heading for Thursday! If you are in your 50’s it’s definitely Thursday! There may well be no reason to do anything differently financially, whether that is saving or indeed spending more! But hopefully an awareness of where you stand in your ‘week’ will bring perspective that will allow you ensure that you can arrive at a balance that is right for you.
Thanks for reading,
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