Why owning a home won't fund retirement: The 65/20/15 rule

1. 0:00 – 2:33

   Intro

   1. NSNischa Shah0:00

      We put a lot of pressure on people today that as soon as they start working, they need to get onto that property ladder, but there's ways to build wealth that don't require you to be in the real estate game, including three numbers that everyone should know when it comes to their personal finance: 65-20-15. Just knowing that creates a better life for yourself.

   2. NANarrator0:16

      Nishha Shah is the former high-profile investment banker, turned financial mentor.

   3. SBSteven Bartlett0:21

      Whose content has helped millions rethink their relationship with money... Break free from crippling debt... And take the first steps toward building lasting wealth.

   4. NSNischa Shah0:29

      Everything is trying to pull you away from your money. Cost of living going up, prices going up, fighting against marketing to keep your money in your pocket. You earned this. So it's becoming harder and harder, and I've gone through this. I followed society's version of money until I realized that if I continue living this way, the freedom, the choice, the options I want aren't gonna exist. Um, hold on, give me a second. And I felt really trapped at times, I didn't know how to escape. And I know a lot of people are probably hearing this and thinking, "I'm also in that place." And so I really feel like my purpose is to help as many people to go from feeling trapped to freeing themselves and using money to do that. Wasn't expecting that. Okay, so people are hungry for easy money tips, and these stay the same regardless of how much you earn. So we could talk about the peace of mind fund and doing that puts you ahead of 59% of Americans. Then there's building your emergency buffer, and this does more for your emotional wellbeing than earning over $200K. But, with the way the cost of living is going, you cannot save your way to retirement, so this is when you wanna move onto investing. That is the easiest way to make money and my principle with investing is very, very simple, and it's just ...

   5. SBSteven Bartlett1:45

      Listen, to my regular listeners, I know you don't like it when I ask you to subscribe at the start of these conversations. I don't like saying it, I don't like it being in there, none of us like it. It's frustrating. Do you know what's also frustrating? It's also frustrating when I go into the backend of a YouTube channel and I see that 56% of you that listen frequently to this podcast haven't yet subscribed, and so many of you don't even know that you haven't subscribed because I'll see in the comments section, you say to me, you go, "I didn't even realize I didn't subscribe." And that actually fuels the show. It's basically like you're making a donation to the show, so that's why I ask all the time because it enables us to build and build and build and build, and we're going for the long term here. So, all I'd ask you is if you've seen his show before and you like it, help me, help my team here, hit the subscribe button and we'll continue to build this show for you. That's my promise. Thank you to all of you guys that do subscribe, means the world to me. Let's get on with the show.

2. 2:33 – 4:33

   My Mission to Spread Actionable Money Tips

   1. SBSteven Bartlett2:33

      Nishha Shah, with your YouTube channel, which has accumulated almost two million subscribers in a incredibly short period of time, what is the goal? What is the mission that you're on? What is it you're trying to do?

   2. NSNischa Shah2:47

      Money touches almost every part of our life and impacts so many choices, from where we choose to live, uh, what we choose to do for a living, what our weekends even look like. So my mission is really simple, it's take the complicated financial jargon and turn it into easy, practical, actionable money tips that anyone can implement and understand.

   3. SBSteven Bartlett3:11

      And what kinds of people in what kinds of financial situations? Because obviously we've got millionaires on one end and then-

   4. NSNischa Shah3:16

      Yeah.

   5. SBSteven Bartlett3:16

      ... we've got people like me at 18 years old that are struggling to even get a couple of quid together to feed myself.

   6. NSNischa Shah3:23

      The principles of money stay the same regardless of how much you earn.

   7. SBSteven Bartlett3:26

      Mm-hmm.

   8. NSNischa Shah3:27

      And although my mission is to help make money more accessible, the principles, the underlying thinking, the mindset can be applied whether you're making $50,000, $500,000 or more.

   9. SBSteven Bartlett3:39

      And we don't really learn about money.

   10. NSNischa Shah3:41

       We don't.

   11. SBSteven Bartlett3:42

       We don't. Nobody in school was teaching me about money. My parents didn't teach me about money growing up either. So someone like you who can simplify some of these big complicated words or terms or strategies I think is, um, is of the moment, but also more needed now than ever because people are complaining about cost of living crises and prices going up and inflation and all these kinds of things. Is that, is that what you're seeing?

   12. NSNischa Shah4:06

       Absolutely, and at the same time, it's becoming harder and harder to save our hard-earned money-

   13. SBSteven Bartlett4:11

       Mm-hmm.

   14. NSNischa Shah4:12

       ... because everything, whether it's marketing, whether it's needs going up, everything is trying to pull you away from your money.

   15. SBSteven Bartlett4:22

       And who are you?

   16. NSNischa Shah4:23

       I'm a qualified accountant, so I s- I studied finance at university initially, then I qualified as a chartered accountant and then I spent nine years in banking.

3. 4:33 – 8:39

   Trauma and the Link to Money Attachment Styles

   1. SBSteven Bartlett4:33

      And do, do you think your sort of psychological or emotional or, I don't know, trauma response to money plays a role in our relationship with money?

   2. NSNischa Shah4:42

      Absolutely. We definitely all have our unique relationship with money and a lot of it comes from our upbringing. It's like an invisible backpack that we carry that we don't even realize that we're carrying it. And it could be fed through us through what we've experienced firsthand or whether we've just been an a f- a fly on a wall hearing a conversation between our parents. And what might feel invisible at the time has such a big impact on the way you see money, how you use it, how you earn it, grow it, spend it, save it, everything.

   3. SBSteven Bartlett5:12

      Mm-hmm.

   4. NSNischa Shah5:13

      But, that said, you can understand what to do to start making it and turning it into your favor.

   5. SBSteven Bartlett5:20

      What was your relationship like with money when you went to university?

   6. NSNischa Shah5:22

      I didn't understand what money meant to me, so I followed society's version of money. So I bought all the things to make me look better, all the things to make my lifestyle look better, and I did that after graduating for years and years and years. That was the path that I followed for a very long time until I realized that if I continue living this way and spending my money this way, the freedom, the choice, the options I have or that I want aren't gonna exist.

   7. SBSteven Bartlett5:55

      Was there like a catalyst moment where you realized that? Or was it just an accumulated feeling?

   8. NSNischa Shah6:00

      So for a long time, I believed in this blueprint, go to school, get a job, climb the ladder, and security will follow. And I did that to the T for almost a decade-

   9. SBSteven Bartlett6:11

      Mm-hmm.

   10. NSNischa Shah6:11

       ... nine years in banking. And I'd say it was about halfway into my career where I was w- me, I met this amazing woman. She was basically my mentor, and we were working on multi-billion dollar transactions late into the nights for weeks in a row at times. And we were in the middle of one of the largest deals that we've done, and overnight, she lost her job. Overnight, she was made redundant, and the very next day, I was asked to replace her. And I remember thinking at the time that this person believed in financial security, this person believed in the blueprint, and it was taken from her. And now I'm in her shoes, what's to say that the same won't happen to me? And that was the first time I saw a crack in the system, and I realized if you give someone else the power to feed you, you're also giving them the power to starve you. And that's when I really understood, okay, I need to learn about money. I need to stop spending it in the way that I'm spending it. I need to stop having this mindset around money because what it's done right now is it's kind of trapped me. So what I did was took it, took the power back in my own hands, did everything I needed to learn how to save, spend, invest, budget. And it came very easily to me because I was in banking-

   11. SBSteven Bartlett7:28

       Mm-hmm.

   12. NSNischa Shah7:28

       That was, it was financial lingo and I could simplify it very, very easily for me. And that's really where my mindset or my change in thinking around money changed, and that's the same moment where I started my YouTube channel.

   13. SBSteven Bartlett7:42

       Oh, okay.

   14. NSNischa Shah7:43

       That was it.

   15. SBSteven Bartlett7:44

       'Cause a lot of people bury their heads in the sa- sand. I was looking at some stats earlier on that said the vast majority of people just have this sort of avoidant relationship with their financial situation-

   16. NSNischa Shah7:53

       Yeah.

   17. SBSteven Bartlett7:53

       ... with financial literacy, with their bills, with their bank statements. I mean, there's like longstanding jokes on the internet that people just don't open their banking apps.

   18. NSNischa Shah8:01

       Yeah.

   19. SBSteven Bartlett8:01

       They just don't look at it.

   20. NSNischa Shah8:03

       Yeah, yeah. There's, there's even a terminology for this and it's called the, uh, ostrich effect, and it's a cognitive bias that explains people will avoid looking at negative financial information-

   21. SBSteven Bartlett8:13

       Mm-hmm.

   22. NSNischa Shah8:13

       ... because of the fear of how it makes them feel. It's the same reason why we don't check our bank account after a night out or we don't open, there's a, a pile of bills on our table and we don't check them. But it's that thing, avoiding it, thinking that, "Oh, it's just gonna disappear if I don't look at it," it's that thing that keeps you stuck. It's that thing that makes you realize, "Oh, I don't even know which direction I'm going." It's the disorganized finances, yeah.

4. 8:39 – 12:03

   The 4 Steps to Take Control of Your Finances

   1. NSNischa Shah8:39

   2. SBSteven Bartlett8:39

      So someone's listening to this right now and they resonate with this idea of they're slightly avoidant, they don't really have a plan, they're kind of just, they get paid, they, they answer their bills, and then they wait, wait 'til the next payday. They're not being intentional with their money. Is there a step one in taking back control?

   3. NSNischa Shah8:56

      The very first thing, number one, that I would say to do is build a peace of mind fund.

   4. SBSteven Bartlett9:02

      A peace of mind fund.

   5. NSNischa Shah9:04

      This is not about maths, it's not the mathematically optimal thing to do, but it is the psychological because as we've discussed, money is as much about emotions as a- as it, as it is about numbers. So what I would say is go through the last 30 days of your bank statements and calculate exactly how much it costs for one month of your living. So mortgage, rent, utilities, bills, minimum debt payments, car payments, whatever that total is, that's the amount that you wanna save up for your peace of mind fund.

   6. SBSteven Bartlett9:40

      Okay, so I go through my last, uh, 30 days of my bills. I find out that it's cost me, let's say $1,000.

   7. NSNischa Shah9:46

      Okay. That's one month of your core living expenses, yeah.

   8. SBSteven Bartlett9:50

      Yeah, so I need to save $1,000.

   9. NSNischa Shah9:52

      You don't need to invest it, you don't need to save it, you don't need to, it's not for a holiday. The reason why you wanna save this is because when life does what it does best, which is throw curveballs, you wanna make sure that you have it handled. If a boiler broke, breaks, your car dies on a Monday morning, the last thing you want on top of the stress of dealing with that thing is the financial stress of how you're gonna pay for it.

   10. SBSteven Bartlett10:14

       Mm-hmm.

   11. NSNischa Shah10:15

       That's what this thing covers. It tells you, "I've got peace of mind. Whatever life throws at me, I can handle it." And saving that one month's of living costs puts you ahead of 59% of Americans and 30% of people living in the UK. 59% of Americans unfortunately can't pay for a $1,000 expense and 30% of people in the UK can't cover one month's of their living expenses if something happened.

   12. SBSteven Bartlett10:43

       What is, what is step two in that regard?

   13. NSNischa Shah10:45

       Step two, this is where we do move into the mathematical optimal thing. This is you cut the financial bleeding.

   14. SBSteven Bartlett10:51

       Okay.

   15. NSNischa Shah10:52

       And what I mean by that is I get so many, so many times people ask me, "Nisha, I have $4,000, $5,000 sitting in my bank account. What should I do with it?" And my first question back to them is, "Do you have any high interest rate debt?" Because if you have savings of $2,000 earning 4%, but you also have credit card debt at 20%, you're leaking money more than you're making it. It's like pouring water into a bucket with holes in it and wondering why it's not gonna fill up.

   16. SBSteven Bartlett11:20

       Mm-hmm.

   17. NSNischa Shah11:20

       So what you wanna do is you wanna take all of your debt that you have, rank it from highest to lowest.

   18. SBSteven Bartlett11:25

       In terms of interest?

   19. NSNischa Shah11:26

       In terms of interest rate, and then everything above 8%, you, you wanna make minimum payments across everything first, and then everything above 8%, you wanna throw your extra savings into the highest interest rate first, to the debt with the highest interest rate, and then move down in that order.

   20. SBSteven Bartlett11:41

       And interest rate, is that paid monthly or yearly?

   21. NSNischa Shah11:43

       It's paid monthly, yeah.

   22. SBSteven Bartlett11:44

       It's paid monthly. So if I have £1,000 loan on a credit card and the interest rate is 10%-

   23. NSNischa Shah11:50

       Yeah.

   24. SBSteven Bartlett11:50

       ... I'm paying £100-

   25. NSNischa Shah11:53

       Paid monthly over the year, they're gonna pay 100.

   26. SBSteven Bartlett11:55

       Okay.

   27. NSNischa Shah11:55

       But that's split out into monthly payments, assuming that they're not drawing down more on that credit card.

   28. SBSteven Bartlett12:01

       Are you against credit cards?

5. 12:03 – 14:00

   Paying Your Debts

   1. NSNischa Shah12:03

      Credit cards are good if you're using them the right way, really good if you're using them in the right way. And that means the points that you're using, the rewards that you get for it, the bonuses that you get from it, all really helpful only if you're paying them off in full every single month. If you're not using that or if you're not doing it in that way, which is kind of what they want you to do because they want you to miss these payments because that's how credit card companies make money, by your missed payments. If you're not doing that, then the benefits just don't weigh up.

   2. SBSteven Bartlett12:30

      Okay.

   3. NSNischa Shah12:30

      It doesn't make sense. Use credit cards, but use it in a way that stacks up in your favor, not in the credit card company's favor.

   4. SBSteven Bartlett12:36

      It's almost paradoxical that you'd use a credit card, but only if you can afford to use a credit card.

   5. NSNischa Shah12:41

      Yeah. That's exa-

   6. SBSteven Bartlett12:42

      Do you know what I mean?

   7. NSNischa Shah12:42

      Yeah. You gotta, you gotta think about it, "Can I, can I pay for this thing outright in cash? If I can, then I can chip it at my credit card." And that's the, then normally it's property if you're using it to make money, healthcare, education. But for anything else, unless it's making you money, yeah, you, that's the way you wanna think about it, 'cause it does encourage extra spending otherwise.

   8. SBSteven Bartlett13:01

      Okay. So I'm gonna pay off my high-interest debts first with any spare cash that I have.

   9. NSNischa Shah13:06

      Yeah.

   10. SBSteven Bartlett13:07

       What's number three?

   11. NSNischa Shah13:08

       Number three is build your emergency buffer.

   12. SBSteven Bartlett13:12

       Okay.

   13. NSNischa Shah13:13

       So this, this is your core living expenses that we've already calculated in step one, and you wanna times that by three if you are single, you have, um, predictable income.

   14. SBSteven Bartlett13:26

       Mm-hmm.

   15. NSNischa Shah13:27

       Or you wanna times it by six if you are head of household, you have a mortgage, you have unpredictable income. That's your emergency cushion and it protects you from the bigger life things. It's a very, it's the third thing you wanna do. It protects you if you lose your job, if you have a health scare, if there are dependents that you need to care for. This kind of buys you that time. But there's really interesting research from Vanguard that actually showed saving three to six months of your living expenses does more for your emotional wellbeing than earning over 200K.

6. 14:00 – 15:12

   The Emergency Financial Buffer We All Need

   1. NSNischa Shah14:00

   2. SBSteven Bartlett14:00

      So just the peace of mind again?

   3. NSNischa Shah14:02

      It's that breathing room, yeah, three to six months of breathing room in your bank account. It just moves the needle. It's the peace of mind, it's the security, it's the stability, one of the core human needs. And it's interesting because we, we're kind of looking at making more money and earning more and we're chasing the next number, and actually the thing that's gonna have the biggest impact or move the needle on our financial wellbeing is, at this stage, having that three to six months of living expenses saved up.

   4. SBSteven Bartlett14:29

      It's all relative, right, at the end of the day? So if, uh, and, uh, it's, it's incredibly stressful, and I've been there, when you don't know if you can pay this month's rent, if you don't know if you can feed yourself, um, but also the sort of un- back of the mind knowledge that if something were to happen, you'd be screwed. Uh, it's an incredibly stressful way to live. And you might not even realize the stress consciously, but you might just feel it. It might just be an angst in your life.

   5. NSNischa Shah14:52

      Yeah. And I, I, this applies at any income level. Even people w- earning six figures who are living paycheck to paycheck-

   6. SBSteven Bartlett14:57

      Mm-hmm.

   7. NSNischa Shah14:57

      ...who don't have that emergency buffer in place, they have that anxiety. And also that same report showed that having that three to six months with the, the people that they surveyed, their productivity at work was better just from knowing that they didn't have that financial stress.

7. 15:12 – 17:14

   What to Do With Saved Money

   1. NSNischa Shah15:12

   2. SBSteven Bartlett15:12

      I know millionaires, people that have a lot of money, that are in a similar position in the sense of they are stressed and anxious because their overheads are also in the millions every month and there's a lot of money coming in, but there's a lot of money going out. So they're still sometimes just one or two months away from being at zero.

   3. NSNischa Shah15:29

      Yeah.

   4. SBSteven Bartlett15:29

      Um, it's a different type of stress because their sort of subjective experience and lifestyle is better, uh, on a day to day, but it's interesting that it's, it's really relative to, uh, your, your outgoings.

   5. NSNischa Shah15:39

      Exactly.

   6. SBSteven Bartlett15:40

      What's the, what's the fourth point then? So I've got, so far I've got have a peace of mind fund, um, which is one month's expenses. Number two is pay off high interest rate debts. Number three is build an emergency fund, which is three times your monthly expenses if you're single and six times if you're in a relationship and, uh, and there's people depending on you.

   7. NSNischa Shah15:57

      Yeah. Most people actually stay here.

   8. SBSteven Bartlett16:01

      Okay.

   9. NSNischa Shah16:01

      A lot of people just save, save, save, save, save. And I just wanna, before we move on to step four, I wanna say that if you're saving, you only wanna save for one of two things. The emergency fund and the peace of fund, mind fund that we spoke about. And the second thing is for any goals that you have in the next five years, whether that's a house deposit, car pay, car deposit. Other than that, you don't wanna be saving that money. It's gonna be... The value is going to be eaten away quicker with inflation if you're just keeping it saved in a bank account. So that's when you wanna move on to step four, and that is investing.

   10. SBSteven Bartlett16:33

       Okay. So you don't wanna save, you don't wanna over-save?

   11. NSNischa Shah16:35

       You don't wanna over-save. Know when to stop saving and start investing.

   12. SBSteven Bartlett16:40

       And when does one start investing and stop saving?

   13. NSNischa Shah16:43

       After they've saved the three to six months of their living expenses.

   14. SBSteven Bartlett16:45

       Okay.

   15. NSNischa Shah16:46

       That's the third step. At that point, once they've done step one to three, this is the point. And the reason why I say this, Steven, is because if you start investing before you've got through steps one to three, and you don't have your savings set aside, and the market goes down and you have an emergency, you're gonna have to pull that money out at a loss.

   16. SBSteven Bartlett17:03

       Yeah.

   17. NSNischa Shah17:04

       Or you're gonna have to go into debt, which is why that was step two, cut the financial bleeding.

   18. SBSteven Bartlett17:08

       Mm-hmm.

   19. NSNischa Shah17:08

       So it's really important to have steps one to three done before yous even think about investing.

8. 17:14 – 20:05

   Do These 3 Things Before Investing

   1. NSNischa Shah17:14

   2. SBSteven Bartlett17:14

      Okay.

   3. NSNischa Shah17:15

      Those three to six months is your core living expenses. So it's, forget all your spending on the things that you love or the things that make, might make life good. It's just the things that you need to absolutely survive. Because if you do j- jo- lose your job, you're not gonna be out partying and spending loads of money. You're gonna think, "Okay, how do I pay my bills for the next three months?"

   4. SBSteven Bartlett17:35

      Mm-hmm.

   5. NSNischa Shah17:35

      "How do I survive for the next month?" That's the thing that's gonna cover that off.

   6. SBSteven Bartlett17:39

      Okay. Right.

   7. NSNischa Shah17:40

      Yeah.

   8. SBSteven Bartlett17:40

      So it's not like the season ticket at Manchester United or the Louis Vuitton jackets. It's-

   9. NSNischa Shah17:44

      No, no.

   10. SBSteven Bartlett17:45

       It's just your, your, your heating, your bills, your food.

   11. NSNischa Shah17:47

       Exactly.

   12. SBSteven Bartlett17:48

       Survival.

   13. NSNischa Shah17:48

       Yeah.

   14. SBSteven Bartlett17:49

       So number four is investing?

   15. NSNischa Shah17:51

       Number four is investing. For a while, we've heard of the phrase "save for retirement."

   16. SBSteven Bartlett17:57

       Yeah.

   17. NSNischa Shah17:58

       Saving for retirement. You cannot save your way to retirement. With the way cost of living is going, with the way inflation is going, with... The price retirement is gonna cost by the time you get there. Saving is just not enough. You have to be investing your money.And there are two main ways that you can invest. But before I even say that, most people know that they should be investing, but they don't do it. They say, "I'll do it tomorrow, or next week, or next year."

   18. SBSteven Bartlett18:24

       Or "when I'm rich."

   19. NSNischa Shah18:25

       Or "when I'm rich." And then by the time they do start, they've missed out on the most powerful lever that they had going for them, which is time. That is one of the most important things when it comes to investing, because of the way when you start investing with small recurring amounts, it just compounds over time. So early, often, when it comes to investing, there's two avenues to invest through. The first is through your employer-sponsored retirement account.

   20. SBSteven Bartlett18:51

       Mm-hmm.

   21. NSNischa Shah18:52

       And the second is through your own individual, uh, tax-advantaged account.

   22. SBSteven Bartlett18:58

       What are those two things?

   23. NSNischa Shah18:59

       The first is done through your employer. So what they do is they invest on behalf of you. In the UK, you're automatically enrolled into it. In the US, you'll have to check, check with your HR and get yourself enrolled into it. And what this does is your company, before y- it pays you or puts money into your bank account, it takes a small percentage, you can decide how much, and it puts it towards investments for you, on behalf of you, pre-tax. So you're not paying tax on that amount. You're putting it into an investment account and then that money is compounding for you pre-tax.

   24. SBSteven Bartlett19:29

       Do all employers do this?

   25. NSNischa Shah19:31

       Most employers do it, not all employers do it. And some employers have a match, which means if you put some money in, they will also match that amount that you're putting in.

   26. SBSteven Bartlett19:40

       So how do I know if my employer does this?

   27. NSNischa Shah19:41

       Check with your HR.

   28. SBSteven Bartlett19:42

       And is there a cap?

   29. NSNischa Shah19:43

       There is a cap to how much they will match.

   30. SBSteven Bartlett19:45

       Yeah.
9. 20:05 – 23:01

   Why You Should Save for Retirement

   1. NSNischa Shah20:05

   2. SBSteven Bartlett20:05

      And when can I pull that money out?

   3. NSNischa Shah20:08

      When you reti- at retirement. So this is for your retirement. You're looking after your future self. It's today's you planting seeds for future you. That's what this is about.

   4. SBSteven Bartlett20:17

      What about people that say, "Listen, retirement's a long way away."

   5. NSNischa Shah20:20

      Yeah.

   6. SBSteven Bartlett20:20

      You know? "Uh, uh, I'm gonna be, what, 65, 75. It's just a long way away. I wanna live a good, I wanna l- live it up now, Felicia."

   7. NSNischa Shah20:27

      Yeah.

   8. SBSteven Bartlett20:29

      "I don't wanna be putting money in a box that I can't open for 50 years."

   9. NSNischa Shah20:32

      And you wanna spend the money now just to live the good life?

   10. SBSteven Bartlett20:34

       Yeah.

   11. NSNischa Shah20:35

       The good life? I, the most important thing when it comes to money is understanding what you want and then making sure your money backs those decisions. And I say this because when I was in the graduate scheme, there were two very different people who worked in my team. And the first person who sat opposite me on the bank of seats in front of me, he used to come in in his Ferrari, and he, on Monday morning when we're talking about what we did over our weekend, what we did on the weekend, he would talk about the Michelin star restaurants he tried, the last-minute trip to Italy, and his computer screen was the next car that he wanted. And on my left was Phil, who later became my mentor, and he came in with his packed lunch. He wore the same shirt-tie combo that I could probably remember and sketch it from memory.

   12. SBSteven Bartlett21:20

       (laughs)

   13. NSNischa Shah21:20

       And he had his holidays, he had his vacations, but he was a lot more selective about them. And I didn't see it at the time, but now it's so clear to me that they were chasing very different things. The person opposite me, he was chasing this good life, the stories, the status, the memories, and that was important to him, and he went for it. But Phil, and I visited him just before I came to LA, him, his wife, um, his two kids, dogs, in their countryside home, and he was enjoying the retired life. He was loving life. He bought what he wanted, which was early retirement, freedom, time, choice. Neither path is wrong, but both paths, both people required taking a series of trade-offs.

   14. SBSteven Bartlett22:08

       Mm-hmm.

   15. NSNischa Shah22:10

       Both had to make some sacrifices. And I think that's the thing that people miss. Sometimes it's so easy to say yes to the thing right in front of you, because the benefit is there. The benefit is immediate. You don't realize what you're going to miss out on later on in life.

   16. SBSteven Bartlett22:22

       So the guy that was sat opposite you with the Ferrari, what was the trade-offs he was making?

   17. NSNischa Shah22:26

       He was probably going to be, end up working for the, until he had retirement money to spend. He was gonna spend his life at banking, but he was gonna live it big, but he wouldn't have the freedom, the choice, the time, 'cause his spending and his income matched each other.

   18. SBSteven Bartlett22:41

       Mm-hmm.

   19. NSNischa Shah22:42

       And so what I want to just say is for anyone saying, "Oh, I just wanna live it big, I wanna enjoy the money," find out what is the thing that's most important to you and make sure your s- your money choices stack that decision. Because the wrong choice isn't choosing the wrong path, it's just not knowing that you even had a choice in this whole thing.

10. 23:01 – 27:41

    Spending Money for External Validation

    1. NSNischa Shah23:01

    2. SBSteven Bartlett23:01

       Do you think the guy that sat opposite you with the Ferrari was in any way insecure? Was there an element of seeking validation?

    3. NSNischa Shah23:10

       There might have been. Yeah, there might have been. That's m- That, that might have been what made him happy, but I think it's also not having the self-awareness to... If that made him happy, then by all means. But if it didn't make him happy, and a lot of people do that, do this, me included. I've, I've gone through this, I've done it. When you don't know what makes you happy, you end up just doing things that gets you that external validation. And for some people, it might mean, "Okay, you know what? I actually do enjoy this new car. It does bring me happiness." But for others, it might just be a facade, and later on, they, uh, later on in life, they just realize that actually no one really cared. "The only person who cared was me, and although I did it for other people, it's, uh, now I realize that, all the trade-offs I had to make as a result of it."

    4. SBSteven Bartlett23:52

       'Cause happiness and external validation, they're like cousins.

    5. NSNischa Shah23:56

       Yeah.

    6. SBSteven Bartlett23:56

       But they're not the same guy. Do you know what I mean? They're like, they look, they're kind of like of the same family, but one of them's the, like, dysfunctional sibling. But they kinda look the same, you know?

    7. NSNischa Shah24:07

       Yeah.

    8. SBSteven Bartlett24:07

       When you look at that guy in his, in his Ferrari, you go, "Oh, he must be happy." And he comes in and he's probably got a smile on his face because he's talking about his Ferrari.

    9. NSNischa Shah24:14

       Yeah, yeah, yeah. That's what he's built himself on, I guess.

    10. SBSteven Bartlett24:18

        But I don't know if that's happiness. He, you know, the guy without the Ferrari might be...

    11. NSNischa Shah24:22

        I think universally, most people, what they want is...... the freedom and the choice and the time. I think more people are after that and that can make more people happier than any status symbol.

    12. SBSteven Bartlett24:36

        Hmm.

    13. NSNischa Shah24:36

        Because when you do end up going down the route of buying something to make your, make you happy, you're on a hedonic treadmill. You're then buying the next thing, and the next thing, and the next thing and you get those spikes of happiness. There never is really long-lasting fulfilling happiness.

    14. SBSteven Bartlett24:51

        So investing strategy number one is asking your employer about their investment scheme?

    15. NSNischa Shah24:55

        Finding out if your employer has, yeah, an, a retirement plan-

    16. SBSteven Bartlett24:58

        Yeah.

    17. NSNischa Shah24:58

        ... and making sure that you're invested into it enough to cover the match that they offer.

    18. SBSteven Bartlett25:03

        What's strategy number two?

    19. NSNischa Shah25:05

        The strategy number two is your own individual tax-advantaged investment account. This is an ISA in the UK. And this is where you put your own money, after tax, into an investment account, and then the money grows over time, tax free. So when you pull it out at the end, you could, with, um, the UK, you could pull it out in five years, in 10 years, or in retirement, then you can j- withdraw that money tax free. So both of them have taxable advantages. One is when you put the money in, you're getting the tax advantages, the other one's when you draw the money out, but they both have tax advantages. And so you're putting the money in and it's growing tax free. That's a really big deal. That's huge. That's, that's money that's compounding for you and you're not paying tax on that.

    20. SBSteven Bartlett25:48

        But there's a limit?

    21. NSNischa Shah25:49

        There's a limit. Uh, annually, it's 20,000 but-

    22. SBSteven Bartlett25:52

        In the UK or the US?

    23. NSNischa Shah25:53

        ... it, it changes, um, year on year. At the moment, I believe, uh, $7,000 but with a quick Google search you could stay on top of whatever the current limit is for the account or the taxable advantaged account that you're investing in.

    24. SBSteven Bartlett26:04

        So I get paid, I put it into my... in the UK it's called an ISA.

    25. NSNischa Shah26:07

        Yeah.

    26. SBSteven Bartlett26:08

        And the, the limit is 20K. So if I put 20K in, let's say-

    27. NSNischa Shah26:12

        Yeah.

    28. SBSteven Bartlett26:13

        ... if it goes to 100K because the investments go really well, is the whole 100K tax free?

    29. NSNischa Shah26:19

        Yeah. You're not paying capital gains tax, you're not paying interest, um, sorry dividends tax.

    30. SBSteven Bartlett26:24

        So pretty much that's the first place everyone should really be investing if they want a- an alternative to investing in their pension?
11. 27:41 – 31:14

    What to Invest In

    1. NSNischa Shah27:41

    2. SBSteven Bartlett27:41

       And what should I invest in?

    3. NSNischa Shah27:42

       My principle with investing is very, very simple and it's just keep it, keep it simple and do it for the long term, so I say index funds and target date retirement funds is what you wanna invest in.

    4. SBSteven Bartlett27:53

       What's that?

    5. NSNischa Shah27:55

       An index fund is, well, an index, think of it as a list of companies, so the S&P 500 is a list of the largest, the top 500 companies, to keep this really simple. FTSE 100 is the top 100 companies in the Lo- on the London Stock Exchange. The fund is a pot of money that invests in the companies on that list. So by investing in an S&P 500, you've invested in a small piece of the top 500 companies in the US. That's what an index fund is. And so even if one company goes down, you're diversified and so there'll be another company that will... and the other companies will bring it back up again.

    6. SBSteven Bartlett28:38

       And what kind of performance can I expect from investing in the S&P 500?

    7. NSNischa Shah28:42

       Historically speaking, um, the long-term average has been eight to 10% per year depending on the years and the timeframe that you're looking at. That is different to a one-year holding period. It could go up, it could go down, you just don't know, so the longer you invest for, the chances of you getting that eight to 10% on average increase.

    8. SBSteven Bartlett29:04

       Is eight to 10% gonna make me rich though, Nisha?

    9. NSNischa Shah29:07

       How long are you doing it for?

    10. SBSteven Bartlett29:09

        You tell me.

    11. NSNischa Shah29:11

        If you have a lump sum amount that you're like, "Okay, you know what? I have 2,000 that I wanna invest, what should I do with it?" Um, it's taking me five years to invest this, I would say 1,900 of that, don't invest it. 100 of it, invest. And I'll t- I'll, I'll say why I'm saying this. The 100, I want you to invest it, for anyone listening, I want you to listen, I want you to invest that because I want you to see and feel the emotions when you see your money go up over time. Sure, it's gonna be small, it's not gonna make you rich, investing that, but you're gonna instill that good habit early on and you're gonna remember that. Because the remaining amount, you're gonna put that towards increasing your income. That's the first thing you're gonna do. Think of your income as a river and your specific milestones, life milestones, as buckets across the river. So you have retirement, you have your house deposit, you have your car payment that you're all saving up for. Those buckets will fill up faster the quicker and wider that river is. That is your income that's coming through. If you don't have much of an income coming through, tho- those buckets are gonna take ages to fill up. That's why I say if it's taken you a long time to save that amount, I actually would recommend you putting that money towards increasing your income first.... before investing it. If however, you have disposable income, you have an- a reoccurring amount that you can invest monthly, use that to your advantage, harness the power of long-term compounding growth because that is the thing that is gonna make you rich. Sure, it will take 25, 30 years, but that is leverage that you don't get through your day job, it's your money working for you without you having to be there.

    12. SBSteven Bartlett30:55

        So you would suggest if you're really at the early level to focus on increasing your income, investing in increasing your income?

    13. NSNischa Shah31:01

        Yeah. That's the first thing. If you're figuring out, "Okay, I need to increase my income, it's taking me a while to earn this amount and I only have a lump sum of $2,000, $5,000," focus on increasing your income. Yeah, that's what I would say.

12. 31:14 – 44:49

    How to Get a Salary Raise

    1. NSNischa Shah31:14

    2. SBSteven Bartlett31:14

       And how does one focus on increasing their income?

    3. NSNischa Shah31:16

       There are a couple ways to do this. So the easiest way to increase your income is asking for a pay rise, increasing your responsibility, the work that you do, your contributions, and saying to your boss or your manager, "This is the value that I've brought, this is the responsibility that I've taken on, this is what the market is paying for a similar role, and this is why a- a pay rise is fair." The other option-

    4. SBSteven Bartlett31:44

       Did you ever ask for a pay raise?

    5. NSNischa Shah31:45

       Multiple times. Multiple, multiple times. So I-

    6. SBSteven Bartlett31:48

       When you were in investment banking?

    7. NSNischa Shah31:49

       Yeah. It's one of those things where if you don't ask, you don't get. Of course you'll get but, uh, y- you sitting there and thinking the hard work is gonna show without you asking for it, it's unlikely.

    8. SBSteven Bartlett32:05

       Let's re-

    9. NSNischa Shah32:05

       You're gonna have to build a case and say, "Okay, these are the things I've done, this are the things that we said we were gonna do or I wanted to work on in my performance review," which is what I had. You go to the end of the performance review, "And these are the things I actually did and this is where I went above and beyond."

    10. SBSteven Bartlett32:20

        So if I'm your boss, Nisha-

    11. NSNischa Shah32:21

        Yeah.

    12. SBSteven Bartlett32:21

        ... can we just re- replay one of those conversations you had.

    13. NSNischa Shah32:24

        Yeah.

    14. SBSteven Bartlett32:24

        You were sat in a performance review and w- what did you say to me?

    15. NSNischa Shah32:29

        I would say, "Hey, Steven."

    16. SBSteven Bartlett32:31

        Hey.

    17. NSNischa Shah32:32

        "Three months ago or six months ago, we spoke about, um, the things I needed to do to get promoted or to get a pay rise and we mentioned X, Y, Z. And I've done all of those things here and here is the feedback that I've got, here is where I've gone above and beyond, and this is some extra things that other people or the 360-feedback that I've done and that, this is what it says." Yeah, and that's when I'll say, "Do you think that this is the bracket that we discussed? Do you think that's fair?"

    18. SBSteven Bartlett33:05

        Research shows that women are much less likely to ask for a pay rise, and when they do, they are less likely to get one compared to men. Is that kind of what you found?

    19. NSNischa Shah33:17

        Yeah, I've seen those facts and I think it's really such a shame that when women ask for a pay rise, it may not be seen in the same way as when a male counterpart asks for the pay rise. And the factors that we can control are the being prepared, having the book of all the things that you've done, but I recommend, and this is things that I'd done when I was in an organization or when I felt like even I was being paid less than my male counterpart, is speaking firstly, if there's an HR team in your department, speaking to them and asking, "Am I online or am I aligned to the average for my department and for what my role is?" They can give you a really good guideline as to whether you are underpaid or whether you deserve a bump to be more aligned to the general pay in- in that role.

    20. SBSteven Bartlett34:09

        Mm-hmm.

    21. NSNischa Shah34:09

        And the second thing is have an ally or have someone in your workplace that you could always speak to, whether it's a mentor, whether it's a colleague, and it's worth always speaking to other people about money. It's such a taboo topic.

    22. SBSteven Bartlett34:22

        Yeah.

    23. NSNischa Shah34:23

        We hate it, we hate talking to someone else about their salary, what they're making, but the more financial transparency that we encourage, the more we can learn from each other.

    24. SBSteven Bartlett34:33

        Yeah.

    25. NSNischa Shah34:34

        Openly ask the person next to you, "Hey, this is, what you get paid," as much, as hard as that is-

    26. SBSteven Bartlett34:39

        Mm-hmm.

    27. NSNischa Shah34:39

        ... open up that conversation. But the other way to increase your income is actually through switching jobs, switching companies. Because there's so much research that's been done and the most popular one is actually one cited by Forbes that says people who stay at the same company for two years or more on average earn 50% less over their lifetime. And I've made a video on my salary year by year over the last, over the nine years I spent in banking and the biggest pay jumps that I saw were from switching companies. So those are the- the two ways that I would actually say, yeah, increase your income, by asking for more or by switching.

    28. SBSteven Bartlett35:28

        I do think one of the most effective ways that I've seen as well is just looking at the industry as well and presenting a case from the industry and people have done that to me several times. They've, over the last 10 years, they've come to me and said, "The industry pay for my role and my seniority level in this part of the world, in this city, is this, I'm currently on this, um, is can we have a conversation about- about this to rectify it?" And I can't think of an instance where I haven't been receptive to that, especially if it's justified 'cause actually sometimes the employer doesn't know. The employer doesn't know that they might be underpaying you, um, that's a- a genuine possibility. I know that sounds like crazy talk but sometimes employers don't know because a lot of roles that we're hiring for these days are new roles, they're not roles that existed 10 years ago. Even in podcasting like this, it's hard to find benchmarks for what people were paid in podcasting 10 years ago-

    29. NSNischa Shah36:19

        Mm-hmm.

    30. SBSteven Bartlett36:19

        ... for different roles that now exist in our industry. So it's worth having a good conversa- uh, an honest conversation. And I do think, I do think from the employer's standpoint, it's worth leading with-... the value that you've brought, like you've said, versus blunt demands. Because humans are human beings and you can turn someone's nose up or their back up by the way in which you deliver your message. But delivering it from an evidence-based perspective and saying this, "These are the kind of the accomplishments that I've made, and these are the responsibilities I've taken on, and this is like the industry, um, average and I love being here and I wanna stay here. Um, so I was wondering if it'd be possible to have a conversation about my salary." I'd receive that very, very well.
13. 44:49 – 48:59

    What Is Opportunity Cost?

    1. NSNischa Shah44:49

    2. SBSteven Bartlett44:49

       My brother is, was an investment banker. He now works full-time, um, helping with my money and helping in my, my companies. He went to LSE. He's a very smart guy. He's always been like the boffin in the family.

    3. NSNischa Shah45:01

       (laughs)

    4. SBSteven Bartlett45:01

       He always talks to me about this term opportunity cost. So when I told him, I said, "I wanna buy this house in Cape Town," he was like, "You know, this is gonna cost you X millions. Um, think about the opportunity cost."

    5. NSNischa Shah45:12

       Yeah.

    6. SBSteven Bartlett45:12

       And he always, every time I say, "I wanna do this," he's like, "Think about the opportunity cost," and he, he basically stands in the way of it. What is opportunity cost and why should, why should p- people be thinking about this when they're spending their money?

    7. NSNischa Shah45:24

       So every pound or dollar that we spend is one less that we could use on something else. And that is the opportunity cost in essence. And we often don't think about life in terms of opportunity costs because we only look at the thing that is in front of us. So your brother was telling you about how you can make more money investing somewhere else, but what you saw is this one thing in front of you and you thought, "No, I don't even know if I'm gonna make this money elsewhere. I don't know if that's gonna happen. This thing is right in front of me."

    8. SBSteven Bartlett45:52

       Mm-hmm.

    9. NSNischa Shah45:53

       And that's the thing with the, with... The opportunity cost is always a, a trade-off of what you can see and what you can't see. But with every decision you make, there's something else that you're saying no to. It's coming at the cost of something else.

    10. SBSteven Bartlett46:03

        I was thinking about that as you were, you were talking, and just to give a bit of color to this for people at home and a good example of opportunity cost. So like yesterday I bought lunch for the team, right? And the lunch cost $100. It was like this salad bar in, in Los Angeles. Cost me $100. Fine, $100. Who cares? But then when I think about the numbers you shared earlier on, if I'd taken that $100 and put it into the S&P 500, in 40 years, assuming I got 10% return a year-

    11. NSNischa Shah46:28

        Yeah.

    12. SBSteven Bartlett46:28

        ... which is like the average of the S&P, that is almost $5,000. So in terms of opportunity cost, buying the team lunch for $100 has effectively cost me in opportunity $5,000 that I would've had, um, presuming that return in 40 years from now. So that lunch yesterday actually cost me potentially roughly $5,000.

    13. NSNischa Shah46:49

        Yeah. And I guess for you, it's-

    14. SBSteven Bartlett46:52

        That's the last time the team are getting lunch.

    15. NSNischa Shah46:53

        (laughs) Yeah. But on the other side, you might have missed out on how the team felt-

    16. SBSteven Bartlett46:58

        Mm-hmm.

    17. NSNischa Shah46:58

        ... going to that lunch and the invisible benefits that you might have got from that. Whether it was just the memories at that moment in time, whether it's the motivation, whether it's the culture that you're bringing in, that's the thing that-

    18. SBSteven Bartlett47:10

        Mm-hmm.

    19. NSNischa Shah47:10

        ... you might miss out on if you choose that $5,000 in X years of time.

    20. SBSteven Bartlett47:14

        And I guess it's a balancing act as well. Like, do you know, I was thinking about the guy you mentioned with the Ferrari, and if he were to die today, one could argue that in fact he played life correctly.

    21. NSNischa Shah47:25

        Absolutely. He lived big.

    22. SBSteven Bartlett47:26

        Because he lived it.

    23. NSNischa Shah47:27

        Yeah.

    24. SBSteven Bartlett47:27

        He saw it. He did it. And this is, I think, the difference you see in people. Some people have that long term view and they think, "No, I want my money when I'm 65 or 70 in my pension fund," and other people play a bit more short term in their life and go, "I just wanna have good experiences now." And so it's hard to understand who's right because we don't know how the story ends, I guess.

    25. NSNischa Shah47:45

        Yeah, and I think there's a fine line, but there's also a way to balance living in the present with planning with, for the future by understanding that you are going to allocate a specific amount of the money that comes in towards the here and now, and then the rest, you are going to look, use towards the future you. Because there's something very rewarding about spending now when you know the future you has already been looked after. It makes you want to spend it without thinking, "Oh, w- what is this coming at the opportunity cost of?"

    26. SBSteven Bartlett48:16

        Do you think people should buy a house if their objective is to make money? Or do you think there are other opportunities like the S&P 500, like using your tax-free ISA?

    27. NSNischa Shah48:27

        A lot of people listening probably don't have, or are on their way to building a deposit or working their way to have the money for a deposit. If they're putting themselves under pressure and they think that they're just buying a house...To build wealth, I would say actually look into investing through that stocks and shares ISA as a start. That is tax-free. If you haven't even started through that stocks and shares ISA, which by the way, 75% roughly of people in the UK aren't investing. So yeah, I would definitely s- say open that up first.

14. 48:59 – 53:47

    Should You Split Your Investments?

    1. NSNischa Shah48:59

    2. SBSteven Bartlett48:59

       And do you think one should split a proportion of their investments into different categories of risk? 'Cause you've got like crypto on the, uh, one side of it, which sometimes feel like being at roulette table, and then you've got things that are typically safe like the S&P 500.

    3. NSNischa Shah49:13

       Yeah. I'm gonna say with the stocks and shares actually when you invest in, and a lot of people also wanna invest in crypto, but they also wanna i- invest in individual stocks as well.

    4. SBSteven Bartlett49:21

       Mm-hmm.

    5. NSNischa Shah49:21

       Should I go after the next big winning company stock? Should I invest in this stock? Um, what I wanna say is that there's two parts to think about, the returns, but also the behavioral concepts. How you feel when it comes to investing. Because your, one of the biggest impacts on market performance is your contributions, but also your behavior. So Fidelity did a res- uh, found that people who invested in funds underperformed the fund that they were in. It sounds impossible. It sounds ridiculous. It sounds impossible. How can you be underperforming a fund that you're in? But then when they looked into it, they found that when fear and anxiety took over, or when the market dropped, these people bought, sold, bought, sold. They essentially danced in and out of the fund, as a result, underperforming the, the fund that they were already holding.

    6. SBSteven Bartlett50:28

       Okay, so when, when it went down, they sold.

    7. NSNischa Shah50:30

       Yeah, when it went down, they sold. When they went up, they bought. And so what you wanna do is you wanna invest in something that makes you buy and hold. Fidelity looked into the groups of people that had invested in their funds to see which group performed the best, and when they looked into it, they found one group significantly outperformed all other groups when it came to investment returns, and that was dead people. Dead people outperformed the living when it came to investment returns because they didn't touch their investment account. They just set it, forget it. They didn't chase the next company stock. They didn't go after the thing that's gonna go up really quickly and down really quickly, and that all ties into the behavior. You're not letting your emotions drive the investments. And by the way, the s- they found out the second-best performing group were the people who forgot that they had a fund in the first place.

    8. SBSteven Bartlett51:23

       Mm-hmm.

    9. NSNischa Shah51:23

       So when it comes to deciding what allocation you want your portfolio to be, it's understanding, okay, what is gonna give you the returns? But also, what is the thing that's gonna help you stay the course even when the market goes and drops? What will make you feel like, "Okay, I can still stay and hold my position"? That's how to decide what kind of percentage portfolio you want for yourself. And I've done that with my portfolio. There's, with crypto, it's less than 2% of my overall portfolio. I've invested the amount that I feel like it won't make a difference if I lose it, and if it goes to the moon, great. And that's how, when I say somewhere here, the last thing I wanna do is encourage people before they've even set up the financial foundations to invest in something that can go up and come, go down when 75% of the population isn't investing.

    10. SBSteven Bartlett52:12

        Mm-hmm.

    11. NSNischa Shah52:13

        And the reason why they're not investing is because, and I keep hearing this from time and time again from the people I speak to, is that either they're really scared they're lo- gonna lose money or they don't know where to start. And so when it comes to losing money, I always say do the foundations first. Set up your portfolio there, and then move on to speculative assets should you wanna go down that path.

    12. SBSteven Bartlett52:35

        I remember the first time I invested and I, I downloaded this app and I put some money in there, and then I watched it. And I was watching it so much and it was going up and down and up and down, and like three, four months later, I sold it. And I didn't really make a... I think I lost a couple of, a couple o' hundred quid or whatever. And then I watched th- that same investment over the next five, six, seven years just go to the moon.

    13. NSNischa Shah52:57

        Yeah.

    14. SBSteven Bartlett52:57

        It went up and I remember thinking, "Fuck, I should've just kept it in there." And then the best investment I ever made correlates to what you were saying because I lost my password.

    15. NSNischa Shah53:05

        (laughs)

    16. SBSteven Bartlett53:05

        I like lost the password to log in. (laughs)

    17. NSNischa Shah53:08

        Yeah, yeah, yeah. (laughs)

    18. SBSteven Bartlett53:09

        And so I couldn't do anything about it anyway, and I watched it and it went down and up and down and up and down and up. But over five years, it went really, really high.

    19. NSNischa Shah53:15

        Mm-hmm.

    20. SBSteven Bartlett53:15

        And so when I first started investing in crypto and I invested in Ethereum and now Bitcoin, my strategy was the same. My strategy was get the, the private keys and give half of them to one person that I trust and half of them to the other person that I trust. And even if I want to, I can't do anything about it. And that's proven to be one of my greatest returns in investing because I just, I don't even know what's going on with it. I'm not paying attention.

    21. NSNischa Shah53:37

        Yeah, and that's the thing. You've just taken the emotions out the equation.

    22. SBSteven Bartlett53:40

        Yeah.

    23. NSNischa Shah53:41

        There's no fear, greed. There's nothing else that controls your financial decisions other than logic.

    24. SBSteven Bartlett53:46

        I

15. 53:47 – 56:45

    What Does Nisha's Portfolio Look Like?

    1. SBSteven Bartlett53:47

       think actually, uh, on that first investment I made when I was like, must've been in my early 20s, I needed the money.

    2. NSNischa Shah53:53

       Mm-hmm.

    3. SBSteven Bartlett53:53

       Like, I didn't have the emergency fund or a peace of mind fund. So when it started to go down a little bit, naturally you kinda panic. So I think in that, the second season of life where I started investing in Ethereum and Bitcoin, it didn't really matter if I lost the money, so it made it easier to hold my nerves. And I think nerves are such a huge part of investing. Um, it goes to what you said earlier, like it's worth taking $100 or 100 pounds or whatever you can, which is a really inconsequential number of money, and putting it into some kind of S&P 500 or even a stock just to feel that.

    4. NSNischa Shah54:21

       Mm-hmm.

    5. SBSteven Bartlett54:21

       Almost to like train your psychology and emotions of like what the ups feel like and what the down feel like.

    6. NSNischa Shah54:26

       Yeah, exactly.

    7. SBSteven Bartlett54:27

       So your investment strategy, your portfolio, you mentioned it there.

    8. NSNischa Shah54:30

       Yeah.

    9. SBSteven Bartlett54:31

       What does it look like?

    10. NSNischa Shah54:33

        It's 40% funds.

    11. SBSteven Bartlett54:36

        Okay, what kind of funds?

    12. NSNischa Shah54:37

        Index funds.

    13. SBSteven Bartlett54:39

        ... the S&P 500.

    14. NSNischa Shah54:40

        S&P 500. Uh, I also do international markets, so UK, um, so emerging, developed, uh, across all sectors, I also do. And I keep it very, very diversified. S&P 500 target date retirement funds that automatically rebalance. So, target date retirement fund, for anyone who's listening and w- wondering what it is, it's essentially a fund that has different types of investments within it. So, you could go onto a platform of your choice that you use to invest and you could type in target date retirement fund, and at the end of every fund would have a year, and so you wanna pick the year that is the closest to the year that you plan to retire, so if you plan to retire in 2050, that's the year that you'll pick. And what that fund does is it rebalances and ch- the, the percentage of different investments changes to become more conservative as you approach retirement.

    15. SBSteven Bartlett55:38

        So it starts to protect you a little bit more?

    16. NSNischa Shah55:40

        Exactly.

    17. SBSteven Bartlett55:40

        So it goes risk off, it kind of goes less risky, or-

    18. NSNischa Shah55:43

        It becomes less risky 'cause you don't wanna be investing the same when you don't have that much time as you, i- if you're investing in your 20s, 30s, you have enough time to ride out the stock market waves.

    19. SBSteven Bartlett55:53

        So that's 40% of your portfolio?

    20. NSNischa Shah55:54

        That's 40%. 30% is real estate.

    21. SBSteven Bartlett55:57

        Okay. In what parts of the world?

    22. NSNischa Shah55:59

        Uh, no, just in the UK.

    23. SBSteven Bartlett56:00

        Just in the UK? Okay.

    24. NSNischa Shah56:01

        Yeah. Then I'll say about t- 25% I'm putting back into my business at the moment.

    25. SBSteven Bartlett56:08

        Okay.

    26. NSNischa Shah56:10

        And then the remaining is between crypto and, uh, cash, cash and cash reserves.

    27. SBSteven Bartlett56:15

        Okay. What about investing in yourself? 'Cause, 'cause, you know, we think about education and skills and stuff like that, should we be investing a small amount of money into ourselves in some capacity?

    28. NSNischa Shah56:27

        100%. I think you just don't stop investing in yourself at any point in time. It goes down to increasing your income, increasing your skills, increasing your value, which then has a knock-on effect on everything else that you're investing into.

    29. SBSteven Bartlett56:44

        It's a really interesting

16. 56:45 – 57:36

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17. 57:36 – 1:01:19

    The Best Book to Learn About Finance

    1. SBSteven Bartlett57:36

       You actually, you made a video, um, about 40 books that you've read that improved your own financial literacy. If there was one book that you recommend people to read, that you think is most accessible and will advance their financial literacy in the most profound way, that did that for you, what book would you recommend?

    2. NSNischa Shah57:54

       Think and Grow Rich by Napoleon Hill. It's not actually about financial literacy, but it's around money mindset. And the other book to start with when it comes to financial literacy is also The Richest Man in Babylon. When people don't learn about money, it's because they find it quite boring-

    3. SBSteven Bartlett58:13

       Mm-hmm.

    4. NSNischa Shah58:14

       ... and not very interesting, so The Richest Man in Babylon does a good job in intertwining a novel into financial literacy concepts.

    5. SBSteven Bartlett58:23

       I've not read that book. I've heard a lot about it though.

    6. NSNischa Shah58:26

       It's, the underlying principles when it comes to money don't really change much, and it's, really starts with the basics when it comes to saving and spending, so it's a, it's a good starting point.

    7. SBSteven Bartlett58:35

       Are there any other principles of, of building wealth that we haven't talked about? I mean, we, we haven't talked about payday routines, um, but I've had you talk at length about what we should do when we get paid every single month. Some of the things we've talked about already, like, uh, knowing your reference point, which is, w- was point one, right?

    8. NSNischa Shah58:57

       Uh, that was your peace of mind fund. I guess-

    9. SBSteven Bartlett58:58

       Yeah.

    10. NSNischa Shah58:58

        ... knowing your reference point is essentially just understanding where your finances break down and what buckets they fall into.

    11. SBSteven Bartlett59:06

        Mm-hmm.

    12. NSNischa Shah59:07

        So, I would... Actually, so this is really important for anyone to know and it's the three numbers, it's called the 65-20-15, and it's three numbers that anyone should know when it comes to money and their own personal finance.

    13. SBSteven Bartlett59:24

        Okay. 65-20-15, okay.

    14. NSNischa Shah59:27

        And the way it works is you wanna, the idea of it is to take your net income, this is your take-home pay after you pay taxes, not the number on your job description, the number after you pay state contribution, all other taxes, and you wanna split that into three buckets. The fundamental, which is your core living expenses, everything that is essential to your living costs, mortgage or rent, utilities, the groceries, minimum debt payments, car payments, all of that should make up approximately 65% of your net income.

    15. SBSteven Bartlett1:00:05

        Okay.

    16. NSNischa Shah1:00:07

        The 20%, that's for your fun spending. These are for the pottery painting that you book last minute, the Glastonbury tickets, the Pilates class. That should make up about 20% of your take-home pay. And the remaining 15%, that's for your future you. That's today's you planting seeds for tomorrow's you, and that should go to savings, investments, and extra debt payments. And those are three good numbers that I think everyone should know and understand as a good starting point to try and benchmark your numbers or your income.... against those spending categories. I would say, however, if you are someone who is living closer to paycheck to paycheck-

    17. SBSteven Bartlett1:00:50

        Mm.

    18. NSNischa Shah1:00:50

        ... those numbers might look slightly different, and it might be that you're, you wanna dial down that fun percentage to have enough saved over for the future you, so you can continue contributing to your savings investments. Or if you're finding that your housing and mortgaging is higher than 80, 90%, start with, when it comes to future you, start with what you can, whether it's saving 2%, 3%. Start somewhere. You just wanna build that habit.

18. 1:01:19 – 1:04:40

    Should I Buy or Lease a Car?

    1. SBSteven Bartlett1:01:20

       And in terms of spending, should I... You mentioned cars earlier, and we talked about houses briefly. Should I be buying a car or should I be leasing a car?

    2. NSNischa Shah1:01:28

       A car is... Let me just say, it's one of the two areas that most people overspend, and it's because we don't just buy the numbers.

    3. SBSteven Bartlett1:01:38

       Mm-hmm.

    4. NSNischa Shah1:01:38

       We buy the emotions of the car, how the car might make us feel, how we will look like in the car, the family memories we'll create in the car. And I know 'cause I did this. When I, um, got my first job, the very first thing I did was upgrade my car. I went into a car showroom, found a car that I thought I'd look cool in, walked out with the car an hour later, drove out with the car, and didn't run my numbers, didn't check if I could afford the monthly payments, and for the next couple of months, was figuring out how I was going to make the rest of my finances meet. And car dealerships know this, so they will manipulate the monthly payments in a way that makes you buy more car than you can afford. And if you don't understand how the numbers work, this is probably one of the quickest ways to destroy your chance of building real wealth. The way I recommend buying a car is to buy something that's three to five years old, straight. And I say three to five years old because at that point, it's enough, it's, it's depreciated enough as someone else's expense and won't depreciate as much during the time that you have it. But if you are someone who is wealthy and you don't mind taking that hit on the depreciation, or you want a nice car every couple of years and you wanna trade it in, and you don't mind the fact that it's not the best financial choice, then lease. That's how I think of the buy and the lease situation. Then you also wanna think about how much can you reasonably afford as a monthly payment when it comes to, um, the proportion of your income that you're spending towards that.

    5. SBSteven Bartlett1:03:10

       So what do you... Do you buy new cars or do you...?

    6. NSNischa Shah1:03:13

       No. I actually... At the moment, it was more economical for me to get a taxi everywhere, so I don't have a car.

    7. SBSteven Bartlett1:03:18

       So you've run the numbers and thought, "The amount I'm traveling away from home, makes more sense just to Uber."

    8. NSNischa Shah1:03:24

       Get a taxi, an Uber every time. Yeah, I'm saving on the... For me, and it makes sense for this point in my life. It might be in five years, 10 years time, that I want a nicer car and I don't wanna restrain myself from having it, but for now, with the numbers, I can use that numb- that amount somewhere else.

    9. SBSteven Bartlett1:03:41

       What about other things we spend money on? Wh- where are the big sort of traps in spending that, that we haven't mentioned? So we talked about cars, talked about houses. What about, uh, iPhones and iPads and technology?

    10. NSNischa Shah1:03:53

        I think there's traps in spending in almost everything that we do that we don't even see. Going to a grocery shop, which is a fundamental living cost for everyone, you're fighting against marketing to keep your money in your pocket. You walk to a shop, a grocery store, they have the eggs, the milk, the bread right at the back, which makes you walk through the, the shop to get there. They have the premium products eye level, the sweets for the kids are the kids' eye level. So these are also areas where you don't even realize that you're overspending because there's these subliminal marketing messages around you.

    11. SBSteven Bartlett1:04:29

        Mm-hmm.

    12. NSNischa Shah1:04:29

        So that's one area where people spend where it's just, like, spending on the necessities, but not even realizing that there's a way to, um, save there. Uh-

19. 1:04:40 – 1:07:35

    Should We Sacrifice Some of Our Enjoyments?

    1. NSNischa Shah1:04:40

    2. SBSteven Bartlett1:04:40

       So what do you suggest? Going in, going into those supermarkets with a shopping list?

    3. NSNischa Shah1:04:44

       Yeah. I mean, that's one way. Shop... Going into, uh, going into the sh- uh, going into the supermarkets with a shopping list. Also checking if you're shopping at the cheapest supermarket near you. I mean, shopping at M&S and Waitrose is different to shopping at Aldi, if that's where you wanna save your money and you're more paycheck to paycheck and you're thinking about whe- where to save your money. Other areas where people overspend is everything now can be bought as an impulse buy. You can buy now, pay later. There's Apple Pay on your phone. There's so many debt financing methods that make you pay more. And so just understanding, running this budget, running these numbers, understanding what you actually have available to spend towards these things is a really good way of fighting against everything else that is trying to take your money away from you.

    4. SBSteven Bartlett1:05:30

       What about, like, iPhones and iPads and stuff like that? Do you think people should be getting new ones or...?

    5. NSNischa Shah1:05:35

       The way I think about this is the law of diminishing returns. When you first get something, there's a really big impact on your happiness. When you first get, like, a, an iPhone and you don't have an iPhone, that's good, that's big. You like walking around with your iPhone, thinking, "This is pretty cool." Then with every upgrade, that diminishing return starts to plateau.

    6. SBSteven Bartlett1:05:56

       Mm-hmm.

    7. NSNischa Shah1:05:56

       It's not as exciting. So actually thinking about, do I need the next upgrade or is that something I can pass up on? But always remembering that the first time you buy something is worth it. The upgrades after that, the happiness doesn't increase as much.

    8. SBSteven Bartlett1:06:11

       And what about hair, nails, dyeing your hair, and all those kinds of things? D- do you think people should be trying to sacrifice those kinds of things as well or...?

    9. NSNischa Shah1:06:20

       I'm not in this camp of trying to save money on everything.

    10. SBSteven Bartlett1:06:23

        Mm-hmm.

    11. NSNischa Shah1:06:23

        I really do believe that you should have a percentage that you allocate towards the fun things in your life and not being restrictive about what it is that you love. If it is getting your nails done, getting your hair done, getting a new bag, go for it, enjoy it. As long as on the other side, that's not at the opportunity cost of you in five years or you in 10 years.

    12. SBSteven Bartlett1:06:46

        'Cause you talk about this term lifestyle inflation-

    13. NSNischa Shah1:06:49

        Yeah.

    14. SBSteven Bartlett1:06:49

        ... which I've never heard before. What is lifestyle inflation?

    15. NSNischa Shah1:06:52

        Lifestyle inflation is when, as your income increases, your spending also increases in a way that you think might be necessary, but actually they are all necessities being hidden away as just upgrades and luxuries. It's essentially your spending rising at the same pace that your income is increasing. And what you wanna do to counteract lifestyle inflation is you wanna make sure that your spending increases, sure, you wanna treat yourself, you wanna reward yourself, but not at the same pace that your income increases. You wanna make sure that the gap between your income and your spending is getting wider as you earn more money, not narrower.

20. 1:07:35 – 1:11:16

    What's the Best Way to Track Your Numbers?

    1. NSNischa Shah1:07:35

    2. SBSteven Bartlett1:07:35

       What's the best way for someone to track their money? 'Cause there's lots of figures here. Some people aren't mathematically literate.

    3. NSNischa Shah1:07:40

       Yeah.

    4. SBSteven Bartlett1:07:41

       Um, s- many people don't wanna be in Excel documents. Are there simple tools or an app that I could use to track my spending and saving and income?

    5. NSNischa Shah1:07:50

       So many bank accounts nowadays have categorized spending within them.

    6. SBSteven Bartlett1:07:54

       Mm-hmm.

    7. NSNischa Shah1:07:54

       And it'll tell you what you're spending and what you're spending on, so if you are someone that, even me, I don't sit every single month and ca- track every single transaction, but I do have a ballpark figure in my mind based on my banking apps about what I'm spending and where. And the key isn't, "Oh, sh- should I be allocating this much here? I've overspent here. Oh, I spent a little bit more on my trip than I needed to." The key is are you saving 10% minimum of your salary? Whatever you decide to do with everything else, that's up to you.

    8. SBSteven Bartlett1:08:27

       Mm-hmm.

    9. NSNischa Shah1:08:27

       And when you think about it that way, you think of this whole budgeting, managing finances as a lot more freeing than something that's restricting you. If you're someone who doesn't wanna sit in the spreadsheets, spit in the numbers, just think, "What am I saving and what am I spending? Am I sp- saving the right percentage? Cool. Doesn't matter how I'm allocating the rest." That's what I recommend for those people.

    10. SBSteven Bartlett1:08:48

        Are there, like, budget trackers that are already built-

    11. NSNischa Shah1:08:50

        Mm-hmm.

    12. SBSteven Bartlett1:08:50

        ... that I can use? Because, you know, my bank might tell me how much I'm spending, but it doesn't necessarily, d- d- doesn't necessarily inform me in real time of how much money I have left.

    13. NSNischa Shah1:08:58

        Yeah. I mean, I have a budget tracker which actually tells you in real time. It's not connected to your bank accounts, but when you put your numbers into it, it will tell you what you have left to spend for the remaining of the month.

    14. SBSteven Bartlett1:09:08

        And what is that? Is that an Excel document or...

    15. NSNischa Shah1:09:10

        It is an Excel document, yeah.

    16. SBSteven Bartlett1:09:12

        Can I have your Excel document?

    17. NSNischa Shah1:09:13

        Yeah, sure.

    18. SBSteven Bartlett1:09:14

        I'll, I'll link it below so people can use it if they wanna use it.

    19. NSNischa Shah1:09:17

        (laughs)

    20. SBSteven Bartlett1:09:17

        What about, um, m- money and love, th- and how these two worlds collide? Because I, I was speaking to Kevin O'Leary recently o- on the show and he was telling me that one of the reasons people end up in divorce is because of financial insecurities and pain and friction and a- arguments. Do you get a lot of messages from people about money, love, joint bank accounts, all these kinds of things?

    21. NSNischa Shah1:09:38

        I have a lot of questions about, from people asking firstly how to bring up the conversation of money and secondly how to manage their finances with a partner in a way that keeps the autonomy (laughs) but still makes it feel like you have a shared life.

    22. SBSteven Bartlett1:09:57

        What are those big questions?

    23. NSNischa Shah1:09:58

        When it comes to how to bring up a conversation-

    24. SBSteven Bartlett1:10:01

        Yeah.

    25. NSNischa Shah1:10:01

        ... I guess, with your partner, this is really important because the top two reasons why people argue or why couples argue is money and sex. And when it comes to money, it's lack of transparency, lack of openness and lack of shared goals together. And that's not to say, yeah, you should go on a first date and ask someone what their credit score or debt utilization is, but it is to say having those conversations, asking the right questions in a way that can help you understand someone else's money beliefs in a way that can help you create a financial life together.

    26. SBSteven Bartlett1:10:45

        So what should I be asking my partner? I'm your partner-

    27. NSNischa Shah1:10:48

        Okay.

    28. SBSteven Bartlett1:10:48

        ... what do you, what do you say to me and when do you say it?

    29. NSNischa Shah1:10:51

        I think there's levels of the questions that you could ask someone.

    30. SBSteven Bartlett1:10:54

        Mm-hmm.
21. 1:11:16 – 1:16:23

    The Role of Money in Relationships

    1. NSNischa Shah1:11:16

       save it-"

    2. SBSteven Bartlett1:11:17

       If I said Lamborghini, "I'm gonna rent a Lamborghini for, for two months"-

    3. NSNischa Shah1:11:19

       Yeah.

    4. SBSteven Bartlett1:11:21

       ... what should you then do about that?

    5. NSNischa Shah1:11:23

       You take that information and you understand this is what the person values.

    6. SBSteven Bartlett1:11:27

       Yeah.

    7. NSNischa Shah1:11:27

       Because money is just a symbol for what the person values, and if they, if they wanna spend it on a Lamborghini, that, that's not to say you should then judge the way they're spending, but you take that information, you understand what do you wanna do with it. Is this way of thinking something that you wanna have a life with?

    8. SBSteven Bartlett1:11:44

       Okay. Is there, is there a good answer to that question?

    9. NSNischa Shah1:11:48

       I think it comes down to understanding, because even if someone says, "I just wanna save," you might think, "Okay, this is great, it m- it's stability, security," but you might be someone who wants experiences.

    10. SBSteven Bartlett1:11:58

        Yeah.

    11. NSNischa Shah1:11:58

        You wanna spend on flights to take your friends and family away around the world. So it's just about understanding how your money values fit in with their money values and are they completely in conflict with each other or are they, actually do they marry up and can you see yourselves creating a financial life together? Because if someone's like, "Oh, I'll spend all my money on, uh, like status symbols and not save anything," and you're a saver, that is gonna be a cause for arguments.

    12. SBSteven Bartlett1:12:25

        Yeah. Especially if, uh, you get bad news and things get tight-

    13. NSNischa Shah1:12:30

        Yeah.

    14. SBSteven Bartlett1:12:30

        ... and someone loses their job and then when things get tight, you're really gonna be focused on the money. Or you have kids and, you know, any sort of pressure on the budget.

    15. NSNischa Shah1:12:38

        Exactly. And, like, other questions, and that, and those kind of questions come down further, further down the line actually, I guess, as well when it comes to financial goal-setting. But I guess there's another question you could ask someone and, and is, and it comes back to what we spoke about at the start of the podcast is where did your beliefs about money come from?... because so much of the way we think about money is inherited through what we saw our parents do, what we saw during our upbringings, and it has an impact on the way we are with money. It might be that we're an impulse spender as a result of it, it might be that we see debt in a certain way. It might be that we're really frugal. But what that does is that opens up a conversation of empathy and compassion rather than judgment. And that automatically can lead to more conversations about, "Okay, how do you view debt? How can we manage our finances based on your views and my views? And how can we work together as a whole to make this sustainable?" And then the- the next question is like when it comes to family and kids and how you're gonna manage your finances there. That's when it comes to like the third layer of questions, where you ask- asking someone, "What does our two-year, five-year, 10-year goal look like? And if we were to merge our finances together, what would that look like?"

    16. SBSteven Bartlett1:13:49

        Should we merge our finances together, Nisha?

    17. NSNischa Shah1:13:52

        My straight answer to this is no. We have very unique individual money personalities and habits, and we're getting married later in life where these personalities are really set in stone. And you know how they say opposites attract in a relationship? The same goes with money. Savers typically attract spenders, and spenders typically attract savers. So if you have a saver saving and then a spender who's spending the savings, that's gonna be a cause for arguments regardless of if there's financial shortcomings.

    18. SBSteven Bartlett1:14:24

        Mm-hmm.

    19. NSNischa Shah1:14:25

        So what I recommend is having a team fund and then a me fund. Team fund is for the grown-up adult stuff, the joint expenses; mortgage, rent, bills, council tax. And this isn't 50/50. You both pay into that proportionate of your income. 90% of your household income that you're making, you pay 90% of the expenses. You're bringing in 30% of the household income, you're paying for 30% of the expenses. That's a team fund. And then you have the me fund, and this is for your own individual personality to stay alive, your own money habits. No one else can see the way you're spending here. If you have a match addiction, go for it. If you wanna buy that nice watch, go for it. You can do whatever you want, spend this money however you want. If you wanna save it, save it. But that way you're creating that unity, but also having that autonomy. And I think this is really, really important for both parties, women and men. But specifically for women, they wanna- you want them to have their independent access to their finances. And I've seen situations, I've spoken to people who have merged their finances, and it's... When the relationship has turned sour or unsafe, they haven't been able to know what to do because they haven't had the independent access to their money.

    20. SBSteven Bartlett1:15:53

        Do you think people should be getting prenups? Did you get a pre-... You're married, aren't you?

    21. NSNischa Shah1:15:58

        I am. I think everyone has a prenup, whether you know it or not. Prenups, you could either have your own customized prenup-

    22. SBSteven Bartlett1:16:12

        Mm-hmm.

    23. NSNischa Shah1:16:13

        ... or you could have what the state is telling you as what's gonna happen if you decide to go your separate ways.

22. 1:16:23 – 1:22:02

    What Is Passive Income and How to Get It

    1. NSNischa Shah1:16:23

       Depending on where you are, the prenup holds different values. So some areas might not look beyond what the couple agree and they just say, "Okay, this is what the couple's agreed. This is how the finances are gonna be split or the assets are gonna be split." In the UK, and I'm not a divorce lawyer or anything, I don't believe that the prenup is fully legally binding.

    2. SBSteven Bartlett1:16:49

       Mm-hmm.

    3. NSNischa Shah1:16:50

       So it's useful to have in some circumstances, but it's... The courts will still look past it and see what is fair as a couple.

    4. SBSteven Bartlett1:16:59

       This term passive income-

    5. NSNischa Shah1:17:00

       Yeah.

    6. SBSteven Bartlett1:17:00

       ... is quite a popular term. What is passive income?

Episode duration: 2:09:00