The Kickstart Garage #4 — Paul Merriman
Tags: Personal Finance, Financial Planning, Saving, Investing, First Time Buyer

Gavin (0.14):

“Welcome back to The Kickstart Garage, I’m your host Gavin Quigley and I’m accompanied by my co-host, Sam John Byrne. So, on today’s show, we’re joined by one of Ireland’s best personal finance gurus, you could say, Paul Merriman. Paul is recognised by many as a fantastic resource for people trying to get their head around budgeting, getting out of debt and making smart money decisions, having founded his own personal finance advisory companies. We wanted to speak with Paul about his journey.

Paul, thank you for taking the time to speak with us today”

Paul (0.44):

“No problem at all, gents, looking forward to this so thanks for reaching out.”

Gavin (0.47):

“Our pleasure, our pleasure. So before we start grilling you with some questions on how people can better improve their financial position, can you tell us a little bit about yourself? — how did you get started in the financial planning industry, and what were your inspirations for becoming a financial advisor in the first instance?”

Paul (1.04)

“Yeah, I can actually. So, I started my career, I didn’t go to college actually, but I went to college for a week, and couldn’t get by Rag Week, eh, and soon left and I ended up working in Dunnes Stores and I applied for jobs everywhere and I got a job in general insurance, so it would be motor and household insurance in a company called Wilson Alliance. I loved that job, it was great, I was 18, I was working in the city centre in Dawson Street. It was cool, and really liked it and then I was dealing with a broker team.

So, we would have been dealing with brokers from around the country, ringing in, looking for quotes for their clients. The internet wasn’t a big thing back then. There was not many websites doing quotations, actually none in fairness at the time. So, what would have happened, we would have been dealing with brokers, getting to know brokers, what their business was and I tried to get into the sales team in Irish Life and one of the guys on the sales team, Tom, advised me to try and get into the life insurance industry instead, it was more profitable.

So, off I marched to Irish Life, across the Liffey, down to Abbey Street, trying to get a job. I was unsuccessful first time around, I think I was too young for the car insurance or the fleet and they sent me off for a couple years sales experience.

So, I left my job in RSA, and then got a few years sales experience under my belt with the likes of Campbell Suit and Tayto actually, and it went well, liked it and then got back into Irish Life, and on the second interview. Actually from Irish Life point of view, they used to have a sales manager, one of the directors actually, sorry, sales manager, one of the directors, Paddy Finegan. When you went for the interview , they’d sent you a disk, a CD/ DVD, and it would be him speaking and a couple of advisors on the team talking about personal finance and how you change peoples lives and how you’d be advising clients on boardroom tables, then on building sites the next day and the kitchen table the next day, and how you could deal with everybody.

That was a real buzz for me, I thought it was great. So, got into Irish Life, did the QFA exams, in training and then ended up on a sales office in Stillorgan, and yeah got a few years under my belt there and absolutely loved it from day one. Literally loved the training, loved the role, it was brilliant and it was very profitable back then. It was in the Celtic Tiger so it was before the crash, a few years before the crash, so there was big money in the industry back then and it was great. Then, bang, the crash came.

So, that’s where it started and then after the crash, I started the CFP. So, that was kinda what you would call sales back then. You know, you had an agent with Permanent TSB, you were selling mortgages for Permanent TSB, as well as life insurance, pensions investments with Irish Life. But back then you would have typically been dealing with the guys, dealing with your clients in relation to trying to sell the product. So whether it was a pension or whether it was life insurance.

So then in 2009 or ten, this CFP came out, which is certified financial planner, and it comes around about financial planning and the lifestyle of a client and the journey a client would go on from say 30 or 25 or 40 years of age, or whatever age right the way to 100. It’s a real different way of doing business and I loved that as well. So it was one of the first in through the CFP in Ireland, I think there was about 80 of us that qualified in the first couple of years, 700 of us now, but we were first through the ranks.

In the middle of that I decided to leave Irish Life because I realised you couldn’t be a certified financial planner and be tied to one company, because it didn’t make sense. So, I left and skip a couple of years and life story here but I ended up buying a company called Pax Financial Planning in 2011/2012. It was myself and one guy, Conor Byrne. Conor came with me from the admin team in Irish Life and he came with me to be my, I suppose, admin support. And we now in 2020 have about three and a half thousand clients, almost 100 younger management. Just hired about seven staff in the last two weeks, with almost 30 staff.

Yeah it’s gone really well. It’s flying, it’s brilliant. We started the ‘AskPaul’ page, which was first on Facebook four years ago just giving commentary on interest rates and markets and I was kind of getting annoyed and I suppose a bit pissed off with the lack of knowledge that Irish people had around personal finance. They didn’t really understand the basics and I was trying to do my job but kind of was a bit frustrating so we decided to use Instagram after being a fan of Gary Vee’s instagram and Facebook — sorry Facebook back then.

Decided to turn the knowledge that I had into content and yeah we’ve about I think 40,000 follows over the platforms and now TikTok is flying in the back of it as well. Then it just really exploded. The business, I think turnover-wise a few years ago I think was about 600 grand. About 3,000,000 this year I think, just under 3,000,000.

So, it’s completely transformed the business using content for personal finance because I think people in our industry want to make it complicated. Want to make it complicated, want to make it sound confusing and want to make it almost difficult for clients. So I think we just brought a bit of a different approach to it, making it very very accessible for people. Talking about it in very very layman terms.

I always say personal finance is actually very easy. It’s not rocket science. So, once it’s explained properly and you can explain it in layman terms, it’s not that difficult to get your head around.”

Gavin (6.33)

“Yeah yeah, and I just want to touch on something you said there with Gary Vaynerchuck. He’s someone that I look up to a lot, and I think content is so important. Actually, I filled out a survey today that you put up on your Instagram there yesterday, Paul, and that was I think there was one thing. You started asking about what content would you like to see and that was the first thing I said, just keep releasing the content because I think it’s so valuable and it really comes across in your videos.

The content you put on your Instagram, is where I watch you the most, that you’re so so passionate about what you do and we’re going to go into some personal finance questions now in a sec. But, I just wanted to ask you, like you’ve obviously got this drive for helping people with financial planning and that’s why you went down the CFP route. Is there any other specific industry, or any other passions that you have that you might have gone into if you didn’t go down this route?”

Paul (7.27)

“Like, I don’t think so. I think, look when you get into starting to create content, you know, I hate saying, I like being an entrepreneur, I have a few different businesses. So, Pax is one, I have a property company, I have a software company I’m involved in as well — Clear Choice, which helps other advisors around the country with their software, and so, I think I’m an entrepreneur first and foremost.

But when you get into starting to creating so much content and we’re starting to get so much feedback from the content, and we’re helping so many. Like we’ve been answering questions, like we’ve only been doing consultations for last year and a half or something with people. I mean like four years creating content with not being able to get in touch with me. You know, so it was never, it’s now a place where people are coming to me for business, which is great. My business has done really well now. It was never meant for that, does that make sense? It was always meant to actually say “okay, let’s demystify this whole thing, this is everything you need to know”.

But then, you can’t do everything in video, it takes too long. You’re trying to get bitesize. Especially with the likes, if you look at TikTok, you’ve only got a minute, if you’re lucky, to try and get one point across, which is very difficult. So, people end up coming to you for business and looking for consultations. But I suppose, when I started creating the content, I’m not saying I’m a teacher, by any stretch of the imagination, but I do like creating the content and I do like taking those complex issues and try to teach them in a way, through video format, I suppose, which is quite cool.

So, I don’t know, maybe, maybe, teaching. But no other career, I suppose, or career path. I think entrepreneur-wise, I’ve always been an entrepreneur, since I was a kid. And like I said I have a few different businesses. So I think entrepreneur — first, financial planner — second. But financial planning is definitely my passion. I think it’s amazing, I mean the messages we get off people are mind blowing. You know, when they say they’ve done this, they’ve cleared loans, they got their first mortgage, reduce their tax bill from their parents.

They just, they blow you away. These are people that I don’t actually know. There are people that aren’t actually my clients. They’re somebody else’s clients, which is fair enough. But they got so much from the content, so I think that’s what keeps the passion alive.”

Sam (9.38)

“So by the sounds of it, Paul, you’re wearing many hats anyway. So, I’m sure people listening today would have pondered the thought of going it alone and starting their own business. I just wondering what advice you could offer to those people as well, that are looking to start off, even just one business, never mind multiple streams of businesses.”

Paul (9.53)

“Yeah, look, I think when you’re trying to start off, I did it the wrong way. Sorry, I ended up, sorry, I’m not saying I did it the wrong way, but I was very good at my career in Irish Life. So, I remember I was leaving the recession and my dad, who’s an entrepreneur as well, he has a building company, he’s done quite well for himself all his lifetime. He was very nervous about me going out on my own, but I was like well I’ve been doing it in Irish Life anyway, I can’t, like Irish Life was sales/target based, so you had to bring in x amount of clients a week, a month, a year.

So, if I didn’t do it in Irish Life, I wasn’t going to be successful anyway. So, I might as well have done it on my own and earn more money and start building my own practise, was my point. So, I learned my trade. I think a lot of people think it’s easy to open a business, but I think you have to learn your trade and become somewhat of an expert in a field, before you go out on your own.

So, let’s take a plumber, for argument’s sake. There’s no point in going into FAS for the first year, then setting up your own business. It’s just not going to happen for you. You might be the best plumber in the class, but you need the experience of working for somebody, see how they invoice, see how they get their sales in, see what their problems are or their tools, or insurance. What happens when a van breaks down, what happens when you hit the wrong pipe.

You know, all the goings on in a business. You need to learn that from somebody and I learned it by trade in Irish Life. So, it was very easy to apply into Pax, and actually, I just signed a new lease on that office I started off in Irish Life in Stillorgan, it was just the lease over ten years, I moved out a few years ago. So, I’m going back to that sales office I was brought up in, with my own team now, which is great. Looking forward to that.

But you need to learn your graft if you’re going out on your own. You need to earn your graft. But you have to cash. Now I was lucky, my business in financial planning, there’s no invoicing, it’s a commission-based business, it’s a fee-based business with your clients. So it’s a very clean business to run.

But you know, so many people I see making mistakes from self-employment, is that they don’t keep themselves cash-rich starting off. Soon as they start making money, they start spending money and they don’t understand how tax works. So, if you start your business in January 2021, and you’re a sole trader, or solicitor, or dentist, bricklayer, carpenter, you know, limited company for designer shoes, or whatever you’re going to do. You need to make sure you keep at least a third of your money aside for your tax bill, because it comes up the following year.

So, if you started in January 2021, you’re not going to get a tax bill until October 2022. That’s a long way to wait, and so many people waste so much money in the year one of business, that when it comes to the first tax bill, they don’t have the money. They need to borrow it from the bank, and now they have to try to save for next year’s tax bill while paying back the bank. And that’s when a lot of people give up, because they made a balls of it, basically. They just haven’t run their cash-flow properly, and I think anyone looking to get into business, you need to keep yourself cash-rich, that you don’t need to take money out of business for at least a year or two.

So, you know, if you have a mortgage of a grand a month or say €1200 a month mortgage and you’ve kids, and you’ve outgoings. Say it’s going to cost you four grand to run your life on a monthly basis, you need to have at least 48 grand, in my opinion, somewhere. So you don’t have to take it out of your business. Because when you take it out of your business, you’ve to pay tax on it. And again, puts your business under cash flow problems. So, big thing, keep your tax aside and make you’ve enough cash for yourself for one year without having to tap the business for money.

That’s probably from a personal finance, and a business advisory service one, is probably where I see most people make the most amount of mistakes.”

Sam (13.20)

That’s great advice, so I know you’re probably sick of asking money questions on Instagram live tonight. So I thought, will we pivot anyway into the personal finance bits anyway. So, there’s a great saying, “failing to plan is planning to fail”, and I’m sure many people are familiar with it. It was drilled into me by my secondary school business teacher. And not having a financial plan in place or goal, just keeps you working endlessly without any clear stopping point, and I know everyone’s goals are different and people have a different plan, depending on their situation in order to achieve that goal. So how should they set a financial goal, what elements should they consider in their financial plan in order to achieve that goal?

In addition, are there any resources that you offer, or are aware of, that help individuals conduct this exercise.

Paul (14.02)

Yeah, well I mean, lets run straight to the service we provide. The service we provide is a financial planning service where someone comes in for financial planning. Fees are around €250, it’s not for an hour, it’s for your plan. So it could take 10 meetings, five meetings, generally it never really takes just one meeting. So it could take two or three hours with myself or one of the team.

Now, why we do this, is that we send what’s called a CashCalc link. I brought this software in from the UK for the Irish market called CashCalc. A client would fill in a CashCalc, and when you fill it in, there’s a name, address, date of birth, what your savings are, what your outgoings are. And we ask the clients to take about 20 to 30 minutes to complete this link, before I even meet them.

So, you pay your fee, then you get this link. This link will ask you everything, from literally anything to do with personal finance, so what you have coming in, what you have going out. Have you any savings, have you any pensions in work, have you any old pension plans? Have you any loans? You know, basically assets and liabilities then the end of it, the most important thing, you touched on it there in fairness, Sam. Have you actually got any goals?

So when somebody fills in a data capture for me, data captures what it’s called, and there’s no goals, I get my team to send it back to them. There’s no point in paying me if you have no goals. You know, you can have all the money in the world, you could have one hundred grand in the bank, three hundred grand, a million, two million, and we get clients. I think one of the biggest clients we got through that was about five point five million in assets, looking for guidance.

And then, you know, we just get people with childrens allowance looking for children’s education fund. Or else we get people that are 20 years of age and they want to buy an investment property and the plan is three years away, but we can show them what to do and how to do it, because that’s what we know. That’s what we do. There’s an awful lot of people taking advice from, what I would call, barstool advisors, the aunty at the wedding, or the uncle at the wedding, your mam or dad, or whatever. It’s just completely changed from their generation, so you need to get a good financial planner to assess what your goals are, and tell you how you can reach them.

But I’m logical. Sometimes you could be able to reach those next year, or in two months time, or three months time. Like I had a couple on today, 28 and 27 years of age, earning 70 odd grand, a 140 grand, tank two great jobs, and they’re going to be going for a mortgage. They’ve a rake of savings, and they’ve a lovely house half a million, 550 grand to borrow, going for mortgage approval for them now and they’ll buy that house in about January/ February, they’re about to put an offer on it. But they just didn’t know what to do or how to do it.

So look, you’re right. That’s the service, we work out everything in between, so no matter what you want to do, your goals. Whether it’s pension, or you want to retire early, whether it’s buy a house, buy an investment property, reduce your tax, from an inheritance tax point of view. Or buy your mam and dad’s house house, or buy the farm or buy the business from your dad or whatever it is, we will be able to show you how to do it. I think that’s a phenomenal service and we’re quite proud of it.

There’s some financial planners going around, charging two and a half to five grand for those a year, and this is the problem with the industry. They make it so, you know, so out of reach for most people, which is a shame. So, we charge everyone the same, it’s €250, except it could be 10 meetings or two meetings. Sorry Sam, long way of answering this question. You need to have a goal. No matter what age you are, your plan is not worth the paper it’s written on, without a goal. You need the goal to be something you want to achieve.

Now, the goal might be, you might want to hit your goal in two years, but I’m going to tell you it might take you 10 years, but at least you know. So, you know, you need to have a goal. There’s no point in having a plan without a goal, you know, it’s like getting into your car with your Sat Nav to go somewhere but not putting in the final destination.

I was saying to people that financial planning is like weight management, you know? If you’re overweight and you want to lose weight, like the three of us guys, we know what to do if you want to lose weight. You don’t eat as many calories and you exercise, it’s not rocket science. People make it difficult, some people don’t know how to do it, there’s a bit of maybe, people have blockers in their brain about what to do or how to do it. They might be scarred from previous experiences and gyms, or whatever else. But you know it’s pretty simple on paper, write down your target weight, and you try and do it over a period of three months, six months, or 12 months.

Personal Finance is the exact same. It’s not rocket science. You write down what you have, write down where you want to go, and you work with a trainer or a personal financial planner, like me, to try and make sure we get you there, safely and in the right time, and with a plan that’s manageable, not one that’s too mad, you know? So yeah, that’s pretty much what we do, that’s pretty much what a financial plan looks like.”

Sam (18.31)

“Yeah, it’s not even enough just to have a plan in place. You’ve got to execute on that plan, and really once you have that road map in place, then you can kind of start getting your financial affairs in order. There’s a great saying by Robert Kiyosaki, and it goes “it’s not how much money you make, but how much money you keep and how hard it works for you”. And when it comes to getting our financial affairs in order, I think the biggest issue many people face is unnecessary spending, and we’re all guilty of it. Some of us are more aware of it than others, spending can be quite a bad, psychological habit that most people face. It’s really just another dopamine that we encounter on a day to day basis. Especially when we’re buying stuff that doesn’t really add value to our lives. People really need to understand the trade-offs or opportunity costs that exist when they’re buying something over something else, and there’s often a misinterpretation between a need and a want. In other words, that leads me onto my question, is there any advice you could offer to people outside of saying planning, or whatever, to eradicate poor spending habits. To help them get on the right track, or perhaps even just change their mindset when it comes to spending?”

Paul (19.35)

“Yeah, the best way you can do this, and to whoever’s listening to this at the moment, here’s a good example. Take your mobile phone out, and put in your net monthly salary, your net weekly salary, if you want to do it weekly, let’s do it weekly. Say you’re working 40 hours a week. So you know you’re bringing home 600 quid a week, now you divide that by 40, you’re going to find out what your weekly wage is, you know, what your hourly wage is. And when you see something for 400 quid, or 300 quid, or 100 quid, think to yourself, did you have to go into work for three hours out of your day to buy that thing?

That always helps clients realise. People forget they have to leave their house in the morning, they have to leave their family, their loved ones, drive in a car, okay not now with Zoom and new world of Covid, but generally speaking. Driving a car, getting a bus, getting a bike, or whatever it is. Get into work, do a days work, you mightn’t like everybody, it might be a stressful job, whatever that environment is, to get paid money at the end of the month.

So you have to work your ass off, generally speaking, to get paid a certain amount of money at the end of the week or the end of the month. It’s not a target to spend that money as much as possible. The idea is that money should be used to fulfill your life in a meaningful way, over the short, medium and long term.

So if you do have this thing of dopamine, and you want to buy something, and you need to buy something, buy one big purchase a week, orone big purchase a month, and set the money aside for that. But always look at your money to have a short, medium and long term goal. You have to cover your basics first, obviously, your rent or your mortgage or food, your heat, whatever it is, but you need to know what that figure is. You need to know your running costs are. You know, you need to run your personal finances like a business.

So you need to be able to say to yourself, look, if you’re married or you’re single, let’s say you’re a couple, married, say living together. You basically have an apartment together, renting or mortgage, you’re like your own limited company. You’re both CEO’s and your both CFO’s at this business, and you have to understand that what comes in and goes out of this business is going to make the business successful, or not successful. So if you’re spending too much more or spending more than you’re bringing in and you’re carrying short-term debt, and you’re continuously borrowing, the company is going nowhere. And if you keep your costs down and keep profit in your business, you know, it’s going to be a successful business. Again, it’s not really rocket science.

So, if you can equate your money, if you can earn, if you could figure out what you’re being paid hourly, if you’re on annual salary you’re not paid hourly, you’ll find out, you’re about 20 quid an hour, 40 quid an hour, 100 quid, 10 quid, whatever it is. When you go to buy something that’s like 10 times, like 10 hours work, it means you’ve worked one day that month just to pay for that one stupid thing that you probably dont need in your life.

But I do think as well guys, I think, not to say, when I meet clients and they haven’t got enough money, it’s never because you’re not getting paid enough, it’s because they spend too much. And they don’t know how to track their spending, and they don’t know what they’re doing. I used to get slagged all the time on radio and tv, talking about tap dancing around town with your debit card. Like when I do mortgage applications for people, and I show them what they spend, they’re all literally shocked about how many they spend. And when you print off their statements, they can’t believe they’re 20 pages of statements, and they’re all under 30 quid, just tap dancing, tapping their debit card everywhere they go. And they don’t know what they’re spending.

Where years ago, you know, my folks, or my dad would always have cash, because he was always paid in cash. Okay, it was a different era, 40 off years ago. But when he got paid, he would have his money in his pocket or what it is, a 100 pound a week, or whatever it is he was getting paid at all time. And you know, he would be able to see when he was running out of money. But people just don’t even look at their balances these days. You know, they just literally, you can tap on your watch, you can tap on your debit card. You can pay online, obviously, a big thing these days with Zoom as well.

So, I think tracking your money, and understanding how much you have, and putting a plan in place, is what you need to do. But I do think, a lot of people, you’re mentioned a dopamine, a dopamine thing, a lot of people do need that. You get to the end of the month, especially if they hate their job, or hate their life or their wife or their husband, or their k-, maybe not their kids maybe. But probably need to spend money. A lot of people do that, they spend money, they feel good about themselves. Whether there’s even a point, whether it’s a glass of wine, or whether it’s food or whatever you’re doing. But it’s about setting limits for yourselves.

So, I would always say to couples, and that couple I mentioned today, I said to them, “you need to set up a current account, a joint account, and if you find your running costs for your house are four grand. Say with your mortgage or savings account, or investment account, your insurance, or car, all the crap you have to pay for. Say it’s four grand, you put two grand in each, and then the change is yours.”

That’s okay if you have that structure in place. Then to blow that change, once you’ve ticket those boxes, does that make sense? So, I’m not trying to tell people to scrimp and save and not spend money. I’m just trying to say, put the boundaries in place to save, to invest, not have any personal loans. And if you have any personal loans, get rid of them quickly. And you know, if you’ve got two grand coming in a month and you’re single, and you want to blow 500 quid, and out of it 1500 quid, you’ve paid your rent and everything else, and you’ve invested a few quid for yourself for the future, well then knock yourself out. But just don’t do it, just do it with a plan, and thinking about how you’re spending, rather than just needlessly doing it and kissing your hard earned cash goodbye. You work way too hard to get money into your bank account, and you can kiss goodbye to it way too easily.”

Sam (24.53)

“Yeah, and you mentioned a good thing there, like your money is your time, you know, and there does seem to be a disconnect with people, I think, thinking that, I’m not too sure, maybe they think it’s not you know? Or it’s kind of in the back of their minds, or netted then somewhere. But, I mean, saving really is half the battle, but I suppose, we also need to think of ways of getting that money we save to work for us to invest in. Which we’ll move onto now.

So, I mean we’re living in historical times, where saving accounts and interest rates are basically negative, even before taxing and inflation. The government securities aren’t offering much of a return on it either, nor estate savings. In addition, it’s quite challenging in Ireland, I believe, to earn a decent return, because of the lack of access to low cost investment funds, and the high tax rates currently on those funds, under the current economic climate. How do you believe people should invest their money, in order to earn a good return whilst at the same time minimising risk?”

Paul (25.44)

“This is a really good question, and do you know what, you hit on so much in your question there, that’s, and I’m not in any way being disrespectful when I say this Sam, but the, okay lets just break down the question. Let’s talk about, first of all, that the, the costs of running an investment account, okay? So, they’re high, and the tax is high, and they’re two things people associate with investing ireland.

We get a lot of people reading American books, and reading or listening to American videos and content, I already mentioned Gary Vee, look at Tony Robinson, look at loads of different people around the globe, and Rich Dad Poor Dad — Robert Kiyosaki, and all these people. And our younger, our younger demographic are getting access to all this information, and they’re paralysed by it, in my opinion.

Investing is not actually that difficult. There are numerous investment accounts out there that are very easy to access. So I set up the AskPaul Investment Club and purely for is, the AskPaul Investment Club is not rocket science. The AskPaul investment Club is just me putting money into Zurich with direct debit. So I put in 500 quid a month, and I think about three or 400 people follow it now at this stage, and we bring in loads of people on a weekly basis. We’re doing it six months. So I put three grand, as of today’s date, December, I’ve put in three grand. And I have about €3190, so I’m up 6.2%. Which is phenomenal compared to deposits.

Now, the fund management charge on that account I’m charging, is about 1.25 to about 1.5, depending on whether you want early access without any penalties. Now, a lot of people lose their shit over that, you know? People are going “I could get Robin Hood over in America, I can get this in the UK, I can get this for zero”, and that’s great but you don’t live there. So if you’re investing three grand, let’s say six grand a year. Out of that six grand, you’re being charged 1.5%, you know, it’s pittance, in my opinion to be able to access a fund, like the Zurich Dynamic fund that has 1.5 billion under management. It’s 90 quid in the year. So, you’ve just been charged 90 quid by a fund manager, that has 1.5 billion under his belt, and he or she is allowing you in with your 50 quid, sorry I think the lowest you’re allowed is 75 quid a month, with you 200 quid or 500 grand, your grand a month, your 500 grand, whatever it is. You’re allowed into their fund and they’re going to invest in 400 stocks around the world for you.

So, you don’t have to do any lifting, and the tax is 41%, which is higher than 33% capital gains tax, but it’s done for you. So you don’t have to make any tax returns. So you’re saying, “hold on a second. I’m getting zero in the Credit Union, I’m getting zero in the Post Office, and I don’t know how to invest, I don’t know anything about it. I’m never going to read enough books to beat the fund manager that has 1.6 billion under his belt either, not a hope, unless I’m going to go in and be a certified financial analyst”, which not many people are going to do. Because actually, the amount of them that try and actually pass that exam are really clever and can’t pass it. It’s four exams and I think it’s basically 20% to 30% of a pass rate.

So, it’s not that difficult. But what people get hung up on sometimes, are the little bit of negativity. How could anybody say, like I get people, like honestly people Instagram me, and send me stuff on, I suppose more TikTok more than anything else these days, where they’re saying “that’s a rip off, it’s 1.5”. And I’m saying “would you calm down, it’s 90 quid”, it’s 90 quid out of a year from someone who’s managing six grand for you, and the same guy is managing a million for the fella next door, and three million for the corporation down the road. And he’s allowing you to go into his funds for 90 quid a year.

Now, okay we know that if you’re looking at a management charge of 1.5 and you’ve got 200 grand, or three hundred grand, but you don’t have that yet. So, get in, get the knowledge, find out how the fund works, get the emails every week, get the videos every month, to find out what’s going on in the market and learn. But I think there’s so many people get, and the only reason I set the AskPaul Club up, I was actually just kind of dumbfounded by how many people made a drama out of investing. It’s not that difficult.

Now the dynamic fund, I think is around 30 years, so it’s 1.6 billion in the fund. It’s on 11% per year since 1989. Okay, the MSCI World Index has probably done more. But Jesus Christ, it’s done so much more better than the deposit has done. So, you’ve probably been stuck in the deposit, you probably don’t know how to get into the MSCI Index, MSCI World Index, you don’t know how to track the MSP, we don’t have the structure in Ireland. So, you know, just stop, just get involved in a fund that’s doing phenomenally well.

So look, I know I get quite passionate about that because, you know, people are still sitting on a deposit and sitting in the banks, and they’re crying about getting paid at zero interest, and then you mention a fund like that and then you go “Oh yeah, but it’s at like 1.5 or 1.25, and if I was in America, I’d get it at zero off fidelity”. But you’re not in America, you know? If you were in America, you wouldn’t have to pay VRT on your car, you know? You have to pay way more tax on certain aspects as well.

So, I think, for me, if anyone is struggling about investing, I get this loads of time off people telling me, “I’m just going to buy Tesla through my Revolut account”. And I think: “Ah that’s great, are you buying that in US or you buying in euros?” “Huh?” “Okay fair enough, you don’t know”, “What’s your tax?” “Huh?” “Okay, well you don’t know either”

So, you really don’t know what you’re doing. You look like, you feel like you’re cool because you can pick out Revolut in the bar, and show your mate that you own like 20 quid worth of Tesla. Like, catch yourself, come on, like that’s not investing.

So, I do think we need to set a way, I know there’s a big argument I had about index and passive, and you can have that in a second if you want. But I do think, manage funds through a usage, through a life insurance company. Is it cheating? Yes. Is it going to give you the best returns in the world? 100 percent no. Is it going to give you 10 times more what you can get in deposits? Yes, and that should be enough for the average person. That was a big rant, I’m sorry!

Gavin (31.34)

No, no, you’re absolutely fine. And something you said you were going to discuss there, you said we could go into it, so we might as well ask you. We’re not doing too badly on time. What would your thought be on the whole active vs passive debate? Do you know any good passive funds? — Other than what you’ve mentioned so far.

Paul (31.54)

Yeah, the Vanguard fund is quite good. There’s, there’s loads of good passive funds out there that you can pick up. The problem with passive funds is that, in my experience, so, let’s get in a little bit into, when we’re talking about passive funds, you have to talk about behavioural finances, as far as I’m concerned. Because how people are reacting to their money going down is going to be a major problem for passive funds.

So you could pick up a passive fund, anyone listening that doesn’t know what a passive fund is, basically it just tracks your index. So let’s say, you’re going to the S&P 500, top 500 companies, New York stock exchange, and you’re just going to take a ride on that for the next 20 years. The problem is that if the S&P 500 falls by 60% or 50% and you have 100 grand in there, your see your 100 grand go to ten, go down to 90 grand, 80 grand, 70, 60, 50 and then maybe even to 45 grand. You lose your shit. No matter who you think read or who you think you are, the average person will not be able to handle that downturn.

So, why I don’t like passive funds, I like passive funds, sorry, why I don’t l like passive funds in the majority of my investment strategies, is: people react badly. And when they react badly, they make really poor decisions, and they come out of the market at the wrong time and they buy in again way too late. So they miss the best days in the market. You know, if you look what happened during Covid 19, markets fell by 25/30%, and then they rebounded fairly quickly, within two, two and a half month period. Everyone thought, including me, that it would take longer to recover from Covid 19.

If you would have jumped out, there was no way you would have got back in on time. Majority of investors got left out in the cold , they missed the best bounce in the markets. So what the Dynamic Fund does for me, the Zurich Dynamic Fund, in particular, is that the fund manager can go between 75% in equities and 100% in equities. That means he can go down to 25% into cash.

So, if a disaster comes along, or you know, like a, you know, a September the 11th, or something like the financial crisis of 2007. You’re relying on someone that has an analyst and has a big team to be able to get you in the market and put you in the right times and that’s really what it does, and it will give you a little bit of protection on the downside.

So, it’ll give you a better chance of staying in, because you have somebody holding your hand, during the shit times. Anybody can make money when it comes to markets when they’re doing well. It doesn’t take a genius to, if you look at what’s happening this year already with Zoom, everyone knew Pfizer were going to find a vaccine sooner or later. And you look at the likes of Zoom, and, what’s the other company I was thinking of? — or the Tesla joined the S&P 500. Like, everyone knows they’re good companies. It’s when those companies go bad, it’s what do you do and how do you react?

So look, from a passive point of view, I think it’s really good if you have a pension plan, and you’re in your 20s or your 30s because you can’t touch it until you’re 60. Does that make sense? But on the other hand, when I look at my investment strategies, I want my clients to become their own bank. So what I mean by that, is that I’m looking for people to have maybe 50 grand, 30 to 50 grand in an investment account. So when they go to change the car they can change to cash. When they go to upgrade the house, they upgrade it for cash, and the 50 gets to 60, then it gets to 100 grand, by the time you get to this. I try to get most people to 100/150 grand cash, by 45/50 years of age. I mean cash an investment account, not actually cash, but in investment accounts, and that means they can use their investment accounts to fund their lifestyle rather than having to go to the bank for loans.

That means their making their interests in money, rather than banks. And that’s a really good thing to be able to do. But you can’t do that if you’re in the passive fund, and the passive fund falls too much, because I think, you make the wrong decisions. So I think manage funds get a hard time. Everyone gets caught up in the manage fund won’t beat the passive, but it’s more, in my opinion, from what I’ve seen in my clients and Irish clients in particular, in the downturn. I never forget 2006/2007, 2008/2009, and people reacted to the markets as if the world was ending, guys, it was horrendous. And I seen how people reacted to -10/15/20%. So we all lost our shit. So, you know, you put that down to -40/-50%, there’s not a hope a client will stay in the passive fund. As much as you think you listen to people say “stay there for 40 years and we’ll all come good”. You won’t.

If you’re in a pension plan, there’s a different strategy, you can’t touch your pension until you’re 60. So therefore you can leave it in the passive fund, and literally forget about it, and say to yourself: “that money’s staying there and I’m not touching it til I wake up on my 60th birthday”. And you will do really well out of that strategy too.

But as I said earlier on, this is all about having goals, it’s all about having a plan, it’s all about maybe using, if you’ve got a grand a month spare, or 200 quid a month spare, or 500 quid a month spare, using a bit of both. So, a small pension plan, getting your tax relief, tax regrowth, passive fund, knock yourself out.

Looking for money between five and 15 years, I would go active manage, I would go something like the Dynamic Fund, 30 year track record, 1.6 billion in the funds, and it would give you a really good return that you’re trying to beat deposit. It’s never going to be the best account in the whole world, it’s never probably going to outperform the market that period of time, but it will do really really well.”

Gavin (36.52)

“Yeah, I think that’s really important as well, because there’s a lot of people out there who think that they know exactly what they’re doing but there’s a lot of information out there, and you need to understand that, there’s a lot of people that are my age, 25, who, like I was what 13/14 around the recession. I don’t know how I’m going to react if I got, like you say, let’s say i’ve got 20/30 grand in the market and I’m exposed to that drop, that massive drawdown, I’m fairly confident I’d think, ah I understand the market works, I know that I’m not meant to come out of it, but do I have that willpower? I don’t know.

And so I think that’s actually a really good point, and it’s what a lot of people aren’t really hearing at the moment from the likes of Robert Kiyosaki, from the likes of Tony Robbins. I love Tony Robbins, I’ve read all his books…”

Paul (37.41)

“Just to say this on Tony Robbins, I’m not having a go at Tony Robbins. He didn’t make his money this way. Whatever about Robert, and whatever about, if you’re looking at the likes of, eh, Buffett. Even Buffett didn’t make his money until he was in his 60s/70s. These guys didn’t make their money this way, and they’re preaching about how to make money this way, and they didn’t do it that way.

Tony made his money from being a successful entrepreneur. Like, I’ve made a lot of money in my life, and i’m not trying to be cocky here guys, whatsoever. I have four businesses, not one bit of my wealth has come from the markets. Like I can tell you that now. Not one fucking bit of it. I used the markets to beat deposit, that’s all I’m using them for because I’m an entrepreneur.

But, it would be like me getting to 50 and hopeful I might be worth 20 million. If I get to 50 years of age and I’m talking to kids and I’m saying “just track the S&P 500”. That’s easy to say, but not easy in action. Does that make sense? So sometimes it comes to personal finance. Yes it’s very easy to track the S&P 500 for 50 years and make money. But who has 50 years? Most people want to cash in their chips at some stage to raise their kids, would like to have more time off work, willing to leave work. Like 10,000 things happen in your lifespan at your age, at 25 and 60. You’re just not going to leave the money there for that amount of time.

So, it’s very easy, my point, and I’m sorry for getting too passionate about this, but it’s very easy for people to give advice on what looks right on paper, but it doesn’t actually play out that way in life. And that’s why I think I’m good at my job as a financial planner because I’ve seen that on both sides, and I can explain that to clients, and they can understand that.

But, you know, Tony didn’t put money into the S&P 500 until he was 15 and he made his money out of it. That didn’t happen. Like, he’s a bookseller, he’s a course seller, he’s a content creator. He sells arenas for gigs. Didn’t make it tracking the bleedin’ MSC World Index, or S&P 500. So, anyway, like I said, I think it’s very easy for people to preach these things, that they haven’t actually carried out themselves.

I’d be the first to say, I mean, I love the Zurich Dynamic fund, and the reason I love it is because it does really well and it beats deposit. It’s not going to make me a millionaire. Me working my ass off, and taking risks and being an entrepreneur. That only makes you money, markets don’t make, maybe, like anything, if I have a value of 20 million and I have three million spare, and I can get into stock shares and buy cheap companies and do all those things, who knows?

But generally speaking, you know, you look at anyone around Ireland, they haven’t made the money on the stock market. Ireland’s full of self-made, multimillionaires, working their asses off, building a business, paying taxes, getting employees in. That’s what the backbone of this country is made of. It’s not the stock market, and, you know, it’s never going to be either, as far as I’m concerned. But anyways, look guys, I’m maybe getting carried away. But I just think it’s really important for people to understand that. I don’t think it’s every explained enough. So I’m glad to get it kind of out on this podcast. It’s great.”

Gavin (40.30)

Yeah, yeah. No, you’re dead right, Paul and I think your passion, I suppose, can resonate with a lot of people, I suppose. It’s one of the first things that I mentioned about you, it’s why I follow you, and a lot of people I know do. And there’s a couple of things that you’ve mentioned, namely the people who are consuming this US-based content, and they’re looking for, I suppose, a vehicle, that’s going to be tax friendly. Where they’re not going to be hammered with tax. And so, me in particular, I’m looking at a pension as a long term solution, or at least one of my vehicles for achieving financial freedom, whatever that means for me. And so, it’s one of those things that us young folk don’t really talk about a lot, is pensions, and many young people listening, they may not have a clue where to start when it comes to those.

For anyone looking to start a pension, if that’s the road they want to go down. What factors do you think they should look out for, and how should they go about it?”

Paul (41.26)

“So the problem with, sorry, Gavin what age are you?”

Gavin (41.28)

“25.”

Paul (41.29)

“25. So, so from a 25 year old point of view, I’m going to do a, I’m going to give you a figure, because I’ve got my financial calculator here. So, I’m going to give you a few figures now in a second that might just help you get your head around pensions a bit more.

Right, so first of all, when it comes to pension plans, the problem is I have with people around 25 years of age when it comes to the pension plan, is that it has to be in a plan. So if you want to buy a property, want to buy an investment property in the next say, five years, there’s no point in really locking your money away, you know, until you get to age 60. You know, you have a short term need first. You have 40 years until you get to retirement. But pension plans come into play because, let’s think of a pension plan completely different to what you think it is. Let’s rewrite pensions for anyone your age, right?

A pension plan is just an account. Let’s just call it, the Bank of Ireland account, say, right. By the way, never go to a bank for a pension, they’re horrendously charged, okay? So never do that. So let’s just call it the Bank of Ireland account, okay? So, I’m saying to you, “Gavin there’s a Bank of Ireland account over in the Stillorgan branch of Bank of Ireland. And you go in and ask for the manager, Tom. He’s going to give you access to this account.”

This account, if you put 100 quid into it, revenue will give you 20% back the next day, or 40% back depending on your rate of income tax. So if you’re on the higher rate of income tax, I can give you 40 quid back on your 100 quid, on the lower rate of the income tax, I can get you 20%.

That’s either a 40% immediate return, or 20% immediate return, but you just can’t touch the money until you get to 60. Now, not just that. Every time you invest that money, so you invest that 100 quid in the S&P 500, or the MSCI Index, or whatever you’re going to track, there’s no tax to be paid, until you get to 60. So it’s compound interest on steroids. Okay?

So, this is amazing. You’re getting tax free growth for the next, in your case, 35 years, okay? So then we work out the figures and we say right look you get a 25 year old male, I meant 25 year old person, or we’re going to go 35 years. You’re going to put in over 35 years and we’re going to get you in at 8%, I think the market would do over that period of time. You’re high risk, high equity content and we say you’re going to be doing it for 200 quid per month. The future value of that 200 quid per month, at 8% return, is going to be 458 grand. Now, isn’t that amazing?

So, for 200 quid a month, or 50 quid a week, and not just that, you’re going to get tax relief. So if you’re on the lower rate of income tax, and I know they give you back 40 quid everytime you make your contribution, you’re actually getting way more than 8% return. You’re either getting 28–48 for the year because you’re for 40 back or 20 back on revenue.

Now that is a complete no brainer, for anyone your age to do. You can do it through a personal pension plan, you can do it through what’s called Personal Retirement Savings Account. If you’re lucky enough to work at, you know, Facebook or Google, or one of these big tech companies or banks anywhere, you’re going to be in a company pension plan. And you can actually make it an AVC outside of your company pension plan, into one of these accounts, and that is one of the most tax efficient vehicles you can get, and it beats anything that the Americans are doing. You can’t touch it until your 60, but it gives you one tick on your long term goals strategy. So that’s easy to get your head around, isn’t it?”

Gavin (44.40)

“Yeah, yeah. No, that makes perfect sense, and that’s why I look at my dad’s statement every year, he’s got a Zurich pension, and I’m just so, I remember looking at it a few years ago and I just became obsessed with it, because he’s always at me to start one. And that’s why I just wanted to get your advice on it, then you mentioned your Zurich fund there. Is there a particular company that you’d plug that you think are going to be able to give you the best service when it comes to pension, or issues that appear?”

Paul (45.47)

“No, there’s no service. What you need, what you need is an advisor, you need me, not being cocky, say. But the accounts are all the same with all the life companies. They’re all big, like again, the Zurich Dynamic Fund is just, by the way, I don’t get money from, people say it to me all the time, I deal with all the life insurance companies, but we do research on all the funds. So next year I might be talking about a New Ireland fund, actually Aviva have a good Merian fund that shone over the last year, ridiculously good return, actually beat the Dynamic Fund. Now it’s only over one year. Sure that’s on my monitor list for my investment committee to have a look at, and we’ll have a look at it again next year. And if it performs again next year, we might put it in the bucket to pick from.

Now, I’m only picking the dynamic funds because it’s one of the best performing funds, not because I like Zurich more than I like any other life company. It’s because it makes more money. So it’s literally that good, it’s not, I think many people sometimes there’s not that I get paid extra by Zurich because I mention them all the time. I mention them because it’s my investment choice, and I’m letting people know what I’m doing. I think that’s what people should follow because like anything, if you’re following somebody that you think are good at what they’re doing, you should be trying to follow what they’re doing, in my opinion.

But yeah, look, I think it’s Zurich Dynamic Fund, or else there’s a few in fairness, there’s a few passive funds out there that perform really really really well. In the life insurance industry are being wrapped, properly speaking, wrapped into a pension plan. So when you go into the pension plan, you can pick a S&P fund or a MSCI World Index and that would probably beat the dynamic fund over the 40 year period in fairness, or the 35 year. So I’d probably recommend one of those for you. But feel free to give me a shout after this and we can have a chat about, but eh, yeah, like I said, that’s a complete no brainer. It’s over, it’s nearly over half a million in the fund there for you, which is 100 quid a week, or 50 quid a week, and that’s even without your tax relief.

It’s a complete no brainer and everyone should be doing that. But, not if you want to buy a property in three years. Because if you want to buy a property in three years, you need to be really cash rich in this country to buy a property nowadays because you need a 10% deposit. Or you might say, “look Paul, I want to build an investment”, and this is why we do the consultations to find out what you want to do. You, you seen your dads, you’re going to have a completely different synopsis of pension plans than someone’s dad who hasn’t got a pension, hasn’t got a property.

So when people come into the consultation, they tell me what they’re about, what’s their DNA with money, what’s it made up of, what do they want to do. So if you said to me, “look, Paul, I want to buy an investment property and have three or four properties before I get to 50.” You could also do that, but I wouldn’t be putting money into the pension plan then for you necessarily. I might be getting you cash rich to get your first property under your belt as quickly as possible, and using all your residual income to clear that mortgage as quickly as properly.

So, you have a mortgage that’s free property, that you can mortgage to buy another two properties. So, like I said, everything is different, I’ll just be careful when I say people are listening to this, it’s not a one size fits all when it comes to personal finance, you know?”

Gavin (47.46)

“Yeah, yeah, and this might completely contradict what you’re saying, what I’m about to say, because I’m about to ask a generic question. I think a lot of people in my position are at the stage now, they’ve been working for a little while, they’ve got a bit of cash there, they’re sick of living with their parents, and so I just wanted to spend a little bit of time talking about people who are first time buyers. So considering our audience would mainly be in their mid-twenties, kind of, living at home, paying extortionate rent, as it is in Dublin, and the restrictions put in place by the central bank, borrowing a max of up to three or five times your income, that you mentioned. And it’s an environment of everrising house prices, it makes it nearly impossible to get a home. What advice would you share, generic advice again, for someone looking to buy their first home in ireland?”

Paul (48.32)

Number one, if you’re not with someone and your single, it’s actually next to impossible, to be honest with you. You know, if you’re 3.5 times your salary, unless you’re on a massive salary towards 80–100 grand yourself, it’s just not going to happen for you like. Well, it depends on where you’re living in Dublin, or down the country, but you know what I’m saying, it’s obviously easier when you have two people on the mortgage applications, so it’s very hard if you’re single.

First of all, let’s break down the question. You’re right, it’s impossible. The central bank have made it next to impossible for young people, first time buyers, it’s almost as if they want you to be renting, it’s almost like they want people to be caught in the rent trap. And even this year around Covid 19, they didn’t change the rules, they could have done something to help first time buyers.

Now, the central bank have a few things, I think it’s important to explain to the people who get too pissed off at the system. Central Bank are absolutely slaughtering this country after 2007/2008, the financial crisis, because there was no regulation in the banks, and the property market was able to run away with itself, and there was 100% mortgages and 110% mortgages, in some cases.

So, the country was in rag order after the financial crisis, and our country in particular, compared to any other European country, because we had a massive property bubble. And the Central Bank, basically, in my opinion, caused that by lack of regulation. Now, they have to be very prudent, they don’t want to get into a situation where people can get borrowing too easily, because it might be a situation in their view, that a lot of people will be unemployed next year or the year after for the second wave of Covid 19 comes, or try to be very prudent. But they could have done a few things to help people out at this stage.

Now, if you’re a first time buyer, I think I should probably say this in the best way possibly. If I was a first time buyer, and I was 25 years of age, property is only going to go up, I can’t see it going down for the foreseeable future, okay? I’m not trying to create a bubble, I’m not trying to get into the hype, I’m just talking about pure supply and demand. We have a massive issue with supply in this country and there are so many young people coming up that want to live and want to buy that the supply will always be big. I just can never see this government, or the next government getting the supply right.

So, I think when you have that, you’re going to be faced with what London was maybe 10 years ago, and actually, before the last financial crisis, where it’s just, there’s this massive supply issue. So, if I was a first time buyer at 25 years of age, I’d be saving my absolute backside off. Wouldn’t really be too concerned about pensions, and I’d be trying my best to get a deposit to get on the property ladder.

Now, I wouldn’t be getting on the property ladder for the sake of it, I’d be trying to buy a three bed a four bed, or somewhere I can put my head down and call my family home, for the next 10/15 years. And this again, brings back my experience as being a financial advisor in 2007/2008, when every kid had an apartment, or 18/19/22 years of age, were buying apartments, it was easy to get a mortgage. The problem is that if a crash does come again, sorry, when it does come again, it will come again, but I can’t see it in the foreseeable future, but you pay on a mortgage, you pay a lot more in the first five years.

So, if you buy a stop gap property, let’s say a two bed apartment, and you know, you pay a lot of interest in the first five years, and then you want to move, and you get your ideal family home. And you’re back paying again the first five years at a very high interest. You spend 10 years, and it’s not that much different than renting like.

You know, like people say rent’s a waste of money, but if you buy for five years, you flip it and you don’t sell it up for a profit or a big enough profit, you know it’s not far off. Like the interest is still pretty horrendous on a mortgage of three or 400 grand. So just be careful of that renting is a waste of money, kind of thing.

So, but if it was me, I’d be trying to get on the property ladder, and trying to find the next three to four years, and I’d be trying put plans in place to make that happen. Now, would I put the 100 quid or the 150/200 into the pension? Probably wouldn’t, to be honest, but yeah, I think you need to get on it quicker, rather than later, because it’s just going to get more difficult because we’re making a complete bags of it, as far as I’m concerned.

Supply is never going to be soft. There’s too much political madness in this country, when it comes to different parties, how our government is run, how planning is authorised. It’s just a complete hames. If you don’t want to be in a situation where you’re renting forever, I would be putting it on the high alert, for anyone in between, probably 23 to 30 years of age now to be putting plans in place and speaking to someone like me about how to get a mortgage for two, three, four, however long you can.

But don’t go out and buy a stop gap, is the point I miss trying to make there, don’t just buy any property for the craic, because that could be detrimental in the long term play.”

Gavin (53.04)

“Yeah, and it kind of leads me to my next question, and just for the people listening, I’m going to give you the exact situation that I’m in. So, I’ve been working for a while and I’ve saved up about 30 grand, and I’ve been reading these American books about house hacking, and I was convinced Brandon Turner’s book about rental property and investing for anyone wondering, and I was convinced, right I’m buying a three unit house, on the Dublin commuter belt. With the whole Covid thing happening this year, everyone’s going to be moving outside the city centre, I was thinking, “yeah, that’s definitely what I’m going to do.”

So, the commuter belt, Meath, Wicklow, maybe Kildare, I could get a three unit, rent out the other two rooms. I’m earning a decent amount and that’s doable, I’ve looked at Daft.ie. That would be another way of getting a passive income stream. So, that was my plan, and then now I’m thinking, like I get up at five in the morning, I’ve no experience of managing a property. Like, I’m 25, I’m thinking, maybe I just want to get a one bed in Dublin, and just have that privacy and get the mortgage and not worry about the passive income. And put the cash into a pension and a fund, do you have any advice, Paul, for that specific scenario? Do you think I should go for the three unit on the commuter belt, or get a one belt in Dublin and have my privacy, and put my money into other things?

Paul (54.26)

“Look, the one thing you said, which is probably not a bad way of thinking six months ago because you’ll be listening to the papers, you’ll be listening to the radio instead of looking at the papers. This thing about Covid 19 and people working remotely forever is not going to happen, as far as I’m concerned. I think everybody I know is dying to get back to the office. They’ve had their fill of it, you know. A lot of people aren’t suited, I’m lucky where I live, my house, I have my own office, my wife shares the work, and she looks after the baby when he’s home from school.

So, I see some couples Zooming a the kitchen table, and the baby’s running around the gaff, and it’s just a disaster for a lot of people, so this, I don’t think they’re going to have that situation that everyone was forecasting. I think a lot of people will be going back to the office and back to work as soon as this is over to be honest with you. That’s first of all.

But I do think the commuter thing is a good idea. I do think buy a property, have two people renting it out. Then it’s down to personal choice. But if you work in Dublin, and taking Covid out of it, what would you be doing in a commuter town, travelling in all that traffic, or on the train, or doing all that. That would be my worst nightmare. Like I would actually just rather live in the one bed apartment by myself for the rest of my life rather than having to do that. Not having a go at people that have to do it, fair play to you, it wouldn’t be for me personally.

Now, people disagree, they want a bigger house down the countryside, that’s absolutely cool. Different strokes, different folks. The problem when you’re reading these American things, with the double units, the three unit properties, renting rooms out and all that kind of stuff, is, again, what I would be doing for someone at a personal financial consultation is looking at three or four different scenarios.

Number one, renting yourself and buying a property. So you can actually buy a property as a first time buyer, not using the help to buy now, but as a first time buyer, buy a property, tell the bank you’re a first time buyer, get your keys two days later, go and rent it out. Okay, so you can do that and get on the property ladder and then get somebody else to rent out the property for you. And then you can continue to rent it yourself, whether it’s a room, if you don’t need, if you only want a one bed apartment, you probably don’t need your own house. Does that make sense without it being too harsh?

You know, you could just rent a room somewhere, but get the mortgage now, and get someone paying the mortgage, get it paid down. Or else if you’ve got a two bed, get somebody, one person to rent it off. The problem is whether you want to become a landlord, as a property investor, or whether you want to have passive income. When do you want the passive income to kick in?

There’s no point in going through all that hassle at 25 years of age and you want passive income when you’re 50 to retire on. Why would you put that effort in for something for 20 years, for passive income for 20 years. You would rather a lifestyle now, that was more practical to your current situation, your age profile, and who’s to know at 40 years of age, you know, you might have two or three companies. You might have a few different properties. So, it’s again, that timeline event of what’s important to you now and whether you want to do this.

Do you want to do it because some American dude did it and he’s now a multimillionaire, because there’s loads of ways to become multimillionaires, it depends on what your occupation is, what income you on now, is your income going to increase? Could you use the money to invest in your own business? Could you use the money to go back and do a Masters or a PhD to get your salary from 50 grand to 80 grand, and invest in yourself rather than invest in a house. There’s just so many other options, I’m not trying to confuse you now, but just, it’s very hard to give that straight up advice to one person, because I don’t know all the circumstances.

That’s why all the consultations are so good, I suppose, we take all this, like a financial coach all up in people’s heads, and find out what they want. If it was me, I would look, try to get a two bed somewhere. Or I would, again if it was a 10% deposit, I would, me, what I done, and what I would do again, is I would buy a three bed house in Clondalkin, or Tallaght or somewhere, you know, and be able to rent it out to, you know, RAS or government, that’s got a really strong rental, you know, you’ve got government tenants, people that are paying the rent the Dáil are paying the rent on the houses.

I’m originally from Tallaght, just using that example, property up there and Clondalkin. And so, yeah, that’s what I would do, those three bed houses, you’d probably get them for less than 300 grand, and they probably rent for about 1800 to 2000 a month in those areas, and you get government rent in and that’s what I would do and rent a bedsit in town, sorry, rent a flat in town for myself, or rent a room in town for myself. If I wanted to live in town, that’s what I would do.

But, what, you just said something very interesting with that question though, with the American thing and the book again, and it’s just so different here, but there’s so many options, but I would probably encourage you to buy the three bed house. Because if you ever needed to, you have it. But you only ever buy a three bedroom house if you can clear the mortgage as soon as possible, I can’t stress this enough. If anyone’s listening to this and thinking of getting an investment property, the biggest mistake in the world you’ll do, is life off your rental income.

So, say your rental income is two grand a month and your mortgage a grand a month, you need to pay, number one you have to pay income tax on the two grand anyway, but just say you’re left with 1400 quid anyway after tax. You need to use 1400 quid to pay your mortgage down and you need to put more money with it. You need to get that property mortgage free. So if you bought a property in Clondalkin, for example, and it was 270 grand, and you buy it now, and you clear the mortgage in 10/15 years, it’s worth 400 grand. You could use that one property to secure again buying two other properties.

Now you’ve three properties at 40 years of age, and you use the three rents from the three properties to clear the two new ones. Hope I haven’t lost you there. And that means by 55, you have three properties, mortgage free, probably bringing in eight grand a month passive income.”

Gavin (1.00.03)

“Yeah, deadly. That is a deadly answer, and do you know what the beauty of this all, is that I get to go back and listen to this all, I feel like this is completely targeted at me, but there’s so many people out there in a similar position to me and I think we’ll definitely need to follow this up. Probably going to have a consultation with you because you have my brain going 90 and I am consuming it all, I’m just getting excited that there could be a fantastic future for me there if I just play my cards right.”

Paul (1.00.30)

“And there is, you know, there is. You’re right, playing your cards right and making the right decisions, that’s why you need to get, I can’t just stress advice, you know, it’s just so important. What I just said there is the perfect plan, there’s nothing wrong with that plan and I genuinely mean that, I’m not being cocky. You could literally do that plan step by step, and it’s literally securing you with a ridiculous amount of guaranteed income at 50 years of age, or 55 years of age maybe. And then you put that that in with your 200 quid into you pension plan, you’ve got half a million in the pension plan by 60 and three rental properties giving passive income at 8 grand a month, at what 96 grand a year for five, there’s your final move just retire then, your laughing.”

Gavin (1.01.13)

“And it goes back to what you were saying about how it’s actually not that hard. You just need to know what your goals are and then you just need to map out what kind of saving and budgeting plan, and investing plan will map you towards that goal, you know?”

Paul (1.01.25)

“You need to speak to somebody who knows what they’re doing, this is what I’m saying. And again, I probably am being cocky saying this, and sometimes I struggle telling people this, I’m not saying how good I am, I don’t want to come across as condescending, we hate people like that. We, like, I’ve 20 years experience, I’ve seen everyone do this, I’ve been brought up in this and my own family, well my parents, my dad in particular, and my brother-in-law. You know, I’ve been brought up in stocks and shares, and pensions, and tax.

So, like I said, for me, I think it’s, that’s what we’re trying to let people, everybody should be able to know this stuff. It shouldn’t be how you’re brought up, it should be taught in school, even though it’s not. It doesn’t need to be in American book, is my point. It’s just, it’s so logical. You know, just reach out, get the consultation, and it’s literally, it’s an hour, and you could literally get that wealth of knowledge of what to do. That’s why I’m actually really proud of what we do. It’s great I think.”

Gavin (1.02.21)

“Yeah, you’re dead right, and we’ve talked a good bit about American literature, and things like that today, and I just want to finish now with one last question. Something, and I do believe it’s truly important, it’s self teaching and learning through reading books. I absolutely love reading books, and I always push people to read books as much as you can, and I always like to ask our guests, are there any specific books that you’ve read over the last few years, or in your career that have altered the way you approach your own personal finances? Or perhaps there’s a specific moment that penny dropped for you and you’re going to implement changes from reading a book?”

Paul (1.02.59)

“There’s one book that I read, I was doing the CFP course, I mentioned the CFP course earlier on, there was one book I read and that gave me all my knowledge in relation to the investment scene from an Irish point of view, and that was the Fundamentals of Investment An Irish Perspective. It was Brian O’Loughlin, two really good guys, I forget his second name, he’ll kill me now for that, oh yeah Frank O’Brien and Brian O’Loughlin is who they are. So it’s the fundamentals of investing from an Irish perspective.

Now I think the last publication was just after the recession, so I think it was about 2013 when they brought the last book out. It goes through the price of stock, it goes through everything you need to know. It’s actually nearly, you might have heard me mentioning today earlier on the certified financial analyst, very difficult course to pass, but the lads did the course, and this book is really good. And after that, that’s it, I don’t have anything else.

Rich Dad Poor Dad, I’ve read it, but again it’s, the problem, Rich Dad Poor Dad is good, it’s a good story, and it gets you thinking about money in a different way. A lot of that is correct what they say about a limited company structure, but I think, I think you have to be at a certain point in your life, and you have to be probably be an entrepreneur already, and be in business to get it because it makes it sound like it’s so easy and that’s what I hate about these books, or the Tony Robbins stuff and all that kind of stuff. It’s an ideal world that they paint, and it doesn’t go like that. It just doesn’t happen like that.

Now if you’re an entrepreneur already or you’re somebody that has a limited company or their own business, I think Rich Dad Poor Dad is a great book to read because you’re already doing money. But if you’re somebody that’s in college and you’re get consumed with having a limited company for the reasons Robert Kiyosaki mentions, you’re going to make a balls of it. And I’m not being smart saying that, I’m being truthful, because you’re in business for the wrong reasons.

So again, it’s very easy to say, again it’s very easy to write down on paper, that doing this makes sense. But it mightn’t make sense to you in your life, you know? So, I’m an entrepreneur because I always wanted to be an entrepreneur, I feel like I was born to be an entrepreneur. I love it. And then I take something out of Robert Kiyosaki’s book that I already knew, more or less, but I can practice it better, because I’m in business to be in business. I didn’t set up a limited company to build profits, sorry I did, but you know mean, not the way Robert explains it about putting your costs through your company, and building your wealth in your company. I built my companies to be an entrepreneur. I hope that doesn’t sound too corny, or too messy for people.

But just be careful what you read. Because I do think it’s easy to get ideas, the ideas of these people and confuse them with what you should be doing in life. So, I don’t know how to finish it on that note, because it might be a bit wishy washy, but I just don’t want people getting the, picking up these ideas that aren’t actually for you. I think that’s what a lot of people do. I think that’s why this content is quite concerned with the American stuff, and I keep going back to Tony. Tony is a great guy, I don’t know him obviously, but he seems to be a great guy, I love his enthusiasm, I love everything about the guy. But you know, wouldn’t go reading his books, you know, same with what’s his name 10X, Grant Cardone. It’s a different animal in America, you could borrow money like you could borrow money here in 2007. Like in 2007 there was 10 Grant Cardones in Tallaght. They were making that much money in property, and then the world went to shit.

You know, so, you know, it’s a different world we live in, you know, so just be very careful about that kind of thing and content. It doesn’t drive you to something that you don’t need to be in. So like I said, I hope I’m not being too wishy washy on that. Hope it adds value.”

Gavin (1.07.02)

“No, not at all. That’s exactly the kind of answer people needed, and the fact you didn’t, well that one book that you mentioned, I think we’re going to link that down below for people. It’s really important to look at things from an Irish perspective. But sure Paul, we could sit here and chat to you all evening, but I know you’re a busy man. I just wanted to let you know, we really really appreciate you gave your time today, and your insight is going to provide so much quality information with everyone listening today. Do you want to just let our audience know where they can go and find out more about you, if, let’s say they want to have a consultation or you want to see your content.”

Paul (1.07.33)

“Yeah that would be great, there’s a lot of content, a lot of free content as well, if you want to book the consultations by the way, if you want to book a consultation that’s great. You go to AskPaul.ie, or on Instagram, AskPaul_Now, or TikTok, AskPaul, don’t really use Twitter, but there’s a Twitter page there. But there’s a lot on the website. There’s a full library of content for everything I’ve done over the past kind of five years, and there’s literally everything you need to know about finance in there, but if you want to how it fits into your personal circumstances, you probably will need a consultation, and you can book in with myself or a financial planner team and no problem at all, it’s a really good process. So, yeah. That’s where you head.

Gavin (1.08.13)

“Great, well thanks again Paul, and thanks everyone listening and we’ll see you in the next one.”