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7 myths about money: the outdated financial beliefs which are making you poorer - with Rob Dix of The Property Hub

• Jeremy Cline/ Rob Dix • Episode 197

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#197: Rob Dix went from investing as a hobby to becoming one of Britain’s best-respected finance experts.  He explains the problems with traditional financial advice, the three different types of investment motivations, and how to make financial decisions that align with your goals.

What you’ll learn

  • [00:51] Common personal finance tips.
  • [02:18] Why Rob wrote his personal finance advice book and who it’s for.
  • [04:10] How the pandemic highlighted the money printing aspect of our economy.
  • [05:51] The problems with classic financial tips.
  • [08:15] Where people who aren’t financially literate should get help.
  • [09:49] Why cash savings are less important than people think.
  • [10:44] The myth of early retirement.
  • [11:27] What you should focus on instead of saving.
  • [12:18] Why you shouldn’t look forward to retiring.
  • [14:55] The myth of risk minimisation.
  • [17:17] The psychology behind investment strategies.
  • [19:43] The way financial advisors view risks.
  • [20:46] The benefits of using the traditional index fund approach.
  • [21:19] How long it takes compound interest to create exponential growth.
  • [22:50] The myth of index fund diversification.
  • [25:38] The different ways to measure inflation and why CPI doesn’t help you.
  • [27:45] The inherent risk involved in financial decisions.
  • [29:42] The three different motivations behind investing.
  • [30:40] The problem with buying a home as an investment.
  • [34:55] How house prices change over time.
  • [36:24] The danger of following traditional financial advice.
  • [38:54] How to approach your finances without getting overwhelmed.
  • [42:23] How to make a financial plan to meet your goals.

Resources mentioned in this episode
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For the show notes for this episode, including a full transcript and links to all the resources mentioned, visit:

https://changeworklife.com/7-myths-about-money-the-outdated-financial-beliefs-which-are-making-you-poorer/

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What if everything you've been told about personal finance is wrong? Make sure you have a pot for savings, diversify your assets, set aside 10% of your income. Is any of this advice really going to help you to build your wealth and achieve some kind of financial independence? Well, that's what we're talking about in this week's episode. I'm Jeremy Cline, and this is Change Work Life. Hello, and welcome to Change Work Life, the podcast where we're all about beating the Sunday evening blues and enjoying Mondays again. I'm a career coach, and in each episode, my guests and I bring you tips, strategies and stories to help you enjoy a more satisfying and fulfilling working life. My local paper recently had an article on personal finance featuring helpful tips, like make sure you pay into a pension, look for cash back offers, and plan your budget. Nothing new or ground-breaking, but does the standard personal finance advice really work? Is cutting your spending, investing in diversified funds, and buying your home really going to set you on the path to wealth and financial freedom? Making his third appearance on the podcast, I'm delighted to welcome back Rob Dix, property podcaster and one of Britain's most respected money experts. Rob's last book The Price of Money is a must-read for anyone who wants to understand the way the financial system really works and why it works against you. His latest book,

7 Myths About Money:

And the Truth About Finding Financial Freedom, came out last week as this episode airs. Rob, welcome back to the podcast. Thank you so much. Back for a third time. I always really enjoy it. So, I really appreciate it. So, if you want to find out more about Rob, I'll link to his two previous episodes in the show notes. But Rob, if it's okay with you, I'd just like to dive straight in. Absolutely. Let's do it. Cool. All right. So, your last book, The Price of Money, it was one of the most eye-opening books I had read, but it was also a bit on the depressing side, which I think is more of a reflection of the subject matter than the book itself. Is the new book the optimistic sequel? I think it is, actually. I wrote them in reverse, almost. And I had the outline and the concept of 7 Myths About Money years ago, like five years ago or more, maybe, because I saw the need for a personal finance book that goes beyond just the same old stuff that you've already said. You just see it again and again. So, I think we all know this by now. There's a certain number of people who want something more than that. So, I had that concept. Then, I side-tracked myself by trying to learn how the global economy works in The Price of Money. And I think the way that they've ended up, coming out in the order they have does work, because The Price of Money is very much like, here's how things are; here's how we got this way; here's how it's not going to change, and at some point it's all going to collapse horrendously. And I tried to tack a little bit of practical stuff on at the end, but it could leave you feeling a bit hopeless. But the point of this new book is to acknowledge that reality that, yeah, this is how things are. You wouldn't choose to start a system like we have now. But, nevertheless, there is lots that you can do. So, it puts it very much in the context of, you need to understand what the world is like, what the future is likely to offer in terms of returns, interest rates, inflation, all that kind of thing. There needs to be a background awareness of all that. But rather than just get depressed about it and think, well, everything's hopeless, I really do see this as a hopeful book where the main message is, look, there's loads you can do. So, be aware of what the world's like, but you can do more in terms of changing your own outcome financially than you possibly believe you can. Yeah. And it really makes sense to me to have that book against the backdrop of everything that was in The Price of Money. And I suppose from that perspective, the timing of the pandemic was quite fortuitous because it was that that really started to highlight some of this, especially on the debt and the money printing side. Absolutely. That's what woke me up to it. If you remember, it was just like no magic money tree. That was the thing that we were hearing nonstop. And then suddenly, COVID, boom, trillions of pounds out of nowhere. Hang on a minute. What's going on? So, that's what made me really dig into it and start to feel the need to figure it out for myself and then explain it to other people. So, everything that I say in the new book about what you should be doing, it's all still broadly the same. But I think having that background understanding, to see even little things like when you base things on the returns of the last 50 years, it's like, well, the last 50 years probably isn't all that representative in the grand scheme of things, so you should probably be careful about doing that. So, I think there's a lot to be said for having that background understanding. And in a way, the fact that things have got so much more dramatic over the last four years or so has been helpful, because more people are waking up, I think, to just what a mess things are. I'm seeing more and more not mainstream content about it, but things on YouTube with high view counts. I don't think we're going to start to see in the papers or anything yet, really calling out what's going on, but I think there's certainly more awareness than there was, which is a good thing. So, who is the new book for? And perhaps more importantly, what are the questions that they've got that makes them go, 'Ah, I'll read Rob's book, he'll answer those'? I wrote this book for people where this is probably not their first personal finance book. This is not their first encounter thinking about anything like this. And you alluded to all the normal stuff, say, spend less than you earn and save up. Have an emergency fund. Invest in a pension. And that is all good stuff. And, yes, you do need to do that. But I feel like there's a large group of people who get that, who know that, but are ready for a little bit more and ready for some of that to be challenged. Because some of that advice, I think, is outdated, and some, I think, is true but incomplete. So, things like save 10% of what you earn. As a general rule of thumb that you could give to absolutely everyone, yeah, that is so much better than not doing that. But then, there are some people for whom you could go, perhaps should go, way further than that. The whole point about diversifying and investing in index funds, that is great. Again, so much better than lots of the alternatives. But there are people who are ready for more than that and go, well, maybe if you're trying to do something a bit more ambitious, then you need more than that. So, I'm not trying to propose something completely radical that makes you upend your entire life and go off on some mad quest that has a chance of success, but also a big chance of failure, just plotting a slightly alternative course for people, I would say, who are a bit more ambitious. So, you're probably starting from a position where you're broadly fine. You're probably better off than a solid 70% of other people, but you want to do better. So, you either want to get there faster, so you want to be able to retire early, for example, or you want to get further. So, you want to get there with not just being comfortable in retirement, but having a super wealthy retirement or having a legacy or having whatever. So, it's about taking that next step, I think. If your book is for that 30%, where should that 70% go for help? That is a good question. I obviously would say this, but I still think they'd get a lot out of this book. Because I think there are very, very few people out there who don't know that you should spend less than you earn and that you should try and have savings, and that long-term investments are a good thing. I think everyone knows that. But knowing it and being able to do it are entirely different things. I think, obviously, for example, one of the things that I say in the book is, well, one of the alternatives I offer in the book is don't make a budget. Then I sort of say what you can do instead of making a budget. There are a lot of people who will need to have a budget, because money is so tight that they have to recoup things like that to make sure they've got enough money at the end of the month. But I still think that wherever you're starting from, you can get something out of this book because it's saying this is what you do, this is the starting point, but here's where you can get to. And I think the picture that I'm painting of where you can get to is, hopefully, inspirational enough and sounds easy and achievable and motivational enough that it might make you do the stuff that you know you should be doing. Because like I say, I think there's very few people for whom lack of knowledge is the barrier. It's the same as fitness. Everyone knows what to do to lose weight, but doing it is something completely different. So, we're not going to have time to go through all seven myths in detail. Can you give us a quick rundown, just the headlines of what they are? We start with the saving myth, which is basically that savings on their own, I think, are overplayed in terms of personal finance. Yes, you need to save, but it's a very quick first step. And I think it's an easy subject to give lots of advice about, which is why it appears in books, but actually, I describe it as the least powerful of the three things that you can do in terms of your finances. So, you're talking cash savings here? Yeah. So, yes, of course, you need to have savings. That's a prerequisite for everything. But I feel like you get entire books written about how to optimize your savings. I lay out a six-step process that you can use to basically put the whole thing on autopilot, having your savings be good enough, and then put most of your mental energy and effort into other areas that have a higher payoff. And that really links into the second myth, which is the early retirement myth. Which is basically, I'm going back into depressing territory again now, but the idea that retirement as we know it today is kind of a historical aberration. So, retirement is a very modern phenomenon in general, and the idea that you'd be able to retire in your mid-sixties and potentially live for another 30 years without working is not only becoming increasingly unrealistic, but is also undesirable. Because does anyone really want to spend at least three decades doing nothing? And if you retire early, then it could be half your life. And I just don't think most people who are in a position to do that would want to do that. That then takes us into a discussion about what you should do instead, which is basically, instead of focusing on saving, focus on earning. Because earning more is the solution to most things when it comes to personal finance. So, if you can find a way to earn more in your career, and then eventually exit the traditional career path and get into a way where you are making money by doing what you enjoy, money just comes, and it's divorced from strictly being linked to your time, then it's something that you can do forever. You can scale it up and down, you can be flexible, and retirement doesn't feel important anymore. Which is good, because retiring at even a normal age is hard. And it's more fulfilling to be able to do all the things, all the leisure activities and travel and whatever you'd like to do, but keep the money coming in. It takes all the pressure off your investments. And that reminds me of a conversation I had with a retirement coach recently. So, someone who helps people who are starting to think about retirement and what they are going to do. And it's a good point. I mean, you get actors and captains of industry who work well into their eighties and into their nineties. So, why would you just stop doing something if you enjoy it? And I suppose that's the key point, is finding the thing that you enjoy. Yeah. Exactly. And this very much ties back into the point around, you have more control than you think. Even within your career, I think having an attitude that everything is within your control is a really helpful one, even if it's not true. It's a helpful belief even if it's not a true belief. But acting as if everything is in your control and actually having a plan for your career and taking it in directions that you enjoy, building your skills, adding value, that then makes it a lot easier. Well, it means you're going to earn a lot more money immediately, but then it makes it easier to take that in a direction that allows you to focus on the things that you enjoy and keep doing it indefinitely. Because you're right. You see businesspeople and actors always working well into their eighties. And it could be just because they're greedy, but I don't think it is. I think it's because they enjoy it. And you hear the stories of the business leader who retires age 80-something, and then they die six months later, because it's just that much of a shock to the system. Yeah. That's it. And I think, if you're listening to this, and you absolutely hate your job, then this probably isn't the most relatable discussion. Because, of course, you hate what you do, and it takes all your energy, and it takes your time away from what you actually would like to be spending your time doing, then of course, you want to get out of doing that as quickly as possible. But there are so many stories, and I talk about a few of them in the book, where you get people who go from that, they're in that world, but they're saving as much as they can, and then they quit, and they're doing nothing. And they find that doing nothing isn't much fun either. So, you need some kind of fulfilment. And so, the argument I make is that it is possible to have both. And if you can be working towards that, that's far better than going from doing the whole FIRE movement thing, the early retirement thing, deprive yourself for 20 years saving 50% of everything, so you can then do nothing, which then turns out also to not be fun. Yeah. We might touch on the FIRE movement later on, actually. Two down, what's the third one? The next myth is the risk minimization myth. And this is, for me, my favourite, which is basically pointing out that lots of very clever people have come up with the financially optimal way of investing. And they basically solved the entire problem with loads of really fancy equations, but no one cares. It bears no relation to how people actually want to manage their finances in the real world. And this is getting to another really key point from the book, which is that there are three motivations that everyone's trying to balance. The motivation to protect themselves against disaster, the motivation to maintain their lifestyle while working less and eventually not working at all, but then also to improve their life. So, wherever you are now, if you imagine a hundred people lined up in order of wealth, wherever you are now, you want to jump up that distribution. It's not enough if everyone gets a little bit wealthier. You want to leapfrog some people. And that third motivation, the desire to improve, is the one that gets missed out of all the typical models that you see about cracking the correct asset allocation and the right way to think about how you invest. But it's also the one that is missed out of most personal finance books, I find, because it's the hardest to actually give any advice about. And so, the point that I make in this myth is that, basically, the financially optimal doesn't matter. What really matters is how you balance these three motivations. Because everyone has them, but they have them in different proportions. Everyone wants some protection, and everyone wants to eventually stop working, and everyone wants to improve on where they are. But one person will really want to improve on where they are and will be willing to take more risks to get there. Whereas for another person, yeah, that'd be nice, I'd like to have, basically, the lottery ticket, I'd like to have the option of that, but what really matters to me is being safe. And if you can work out for yourself the right balance of these three motivations, which is harder than it sounds, but if you can do that and then invest accordingly, then the real detail of your investments, whether you invest in this index fund or that index fund or whatever, really doesn't make that much difference. It's knowing what you want, as with everything in life, that is the real key. Yeah. And there's a remarkable amount of psychology here. So, I'm guessing that on the improving side, some people are going to have particular ambitions. Maybe they want to have the two homes, the place in London, the country house, and the Aston Martins in the driveway and all that kind of thing. And maybe that's your ambition when you're very young. But then, maybe when you're older, you start to think, well, actually, I'm quite happy just in my suburban house within commuting distance of London. Why do I need anything more? And so, yeah, I suppose it's interesting to see how your improvement bucket might change with your mindset as you get older. It definitely changes over time. But I say it's the only decision that you need to make. If you get this decision right about what you really want and how you balance these three motivations, then lots of investing decisions become irrelevant. But just because it's the only decision doesn't mean you only have to make it once. You actually need to hold it under constant review, because you're right, over time, we completely change how we feel about things and our attitude to risk. And of course, as we have more, we then feel more strongly about holding on to it, rather than risking it to get more. And so, I talk about the people who are investing in meme coins and crypto and all the rest of it, where it's frowned on as being irrational. But maybe it's not irrational. Maybe if you've got nothing to lose, and if you see what the traditional path looks like, and it looks less attractive than it ever has done before, then, well, being set a bit further back, you're okay with that, because the motivation of potentially improving on where you are now is far more positive. Whereas if you had someone, the life that you just sketched out with all these comforts and everything, then gambling all that on some stupid crypto coin probably would be irrational. But that tends to be not what people do. Yeah. And there's something there about the asymmetric bet. So, if you can afford to lose a £1,000,£10,000 even, but the potential gain on one of these crypto meme coins is 10X or 100X, then maybe you think it might come to nothing, but heck, it's worth taking the bet. Exactly. But that's the kind of thing that, I think, is really important to acknowledge within yourself. Because no financial advisor, no personal finance, nothing will ever tell you that that's okay, will ever acknowledge it, except there'll be some kind of passing mention of like, with 10% of your portfolio, you could do this if you really want to, but that's where it ends. Again, for most people, that's sensible advice. But it's worth recognising, if you really do have that drive to significantly improve on where you are now, then it's worth acknowledging that, as long as you recognise the trade-offs and the risks that come with that. But if you do have that desire, and then someone just tells you to invest in index funds, you're either going to ignore them, or you're not going to be particularly happy. But I understand why it's ignored. Because it does come with risks. You can never guarantee improving your financial situation, and there's always a risk that you'll end off worse as a result of trying. But I still think you've got to acknowledge the motivation. Yeah. And I feel like the traditional index funds approach, leaving aside whether they are still fit for purpose, but it's more about preservation against inflation. So, you save for 40 years into your pension pot, and you put it in these funds not really necessarily with the expectation that they are going to grow significantly, but that they will keep pace with inflation, because that's the way you do it, and cash isn't going to work. That's it. And that takes us into a couple of the other myths, actually, around compounding. Because, again, I'm not taking pot-shots at this idea that by just saving sensibly into index funds for long enough, you'll end up in this wonderful situation. And Warren Buffett is always held up as the example of this. But Warren Buffett did far more than just invest in index funds. But the point that's made is, he made something like 95% of his wealth after the age of 65, and this is a wonderful thing. And, yeah, it is, but it's because he lived for so long, there's been 60-odd years for compounding to work its magic. And over that kind of time, exponential growth, it really does add up to something. But the point that I make is that over even 20 years, it doesn't do much for you. It's a savings plan, and it's a savings plan that might keep up with inflation and then a little bit more. But it's going to do far less for you than you probably think. You're really looking at 30 years at least before it starts to make a difference. Which means, if you're picking up some of this typical advice in your early twenties, that's great. But what if you're not? If you're not, then it doesn't really have much to offer. Because if you're thinking about this for the first time age 40, well, you need to build a time machine then, because otherwise, even by the time you're 60, it just won't have made much difference. Which means you need either be prepared for that, or you need to do something a bit different. So, you mentioned that leads into two myths. Compounding was one of them. What's the other one? So, the other one is the diversification myth. And this is another important one, I think, because we were talking about index funds. And the one thing that really annoys me when index funds get spoken about is, people will say,'Yeah, well, you know, if you just invest in an index fund, then it grows at 10% per year, then blah blah blah.' Woah, woah, woah, woah! 10% per year? That's a big assumption. And the thing that's always used to justify this is that if you had invested in the US stock market over the last 100 years, then the average annual growth rate would have been like high 9-point-something percent. So, it's true. But that rather assumes that you've got the ability to predict in advance what the big global winner for the rest of your investing lifespan is going to be. Which I would suggest that most people probably can't do. You can't say that it's going to be the US, because history would tell us that it's very unusual for the big global winner for one century to continue being that way in the next century. So, I think, if you're doing your models based on 10% growth, then you're taking a far bigger risk than you think, because you need to go out there and pick your winner. If you're not doing that, then you need to diversify. And if you diversify, your returns are going to be lower, because you're deliberately saying, 'I can't pick a winner, so I'm going to combine a few things.' They're not all going to be the biggest winner. Therefore, on average, your return is lower. But then, even if you take your typical 60-40 stocks and bonds portfolio, I make the argument that that is far less diversified than people believe it is, for reasons probably a bit too boring to go into. But I think you're still taking quite a lot of risk just with stocks and bonds. So, then, I sketch out different ways that you can go beyond that and bring other asset classes into the mix, including gold, property, even crypto, things like that. But the argument I'm making is that to truly, truly have this magical world where everything just gradually grows a little bit every year, you need to be diversifying further than you probably think you do. And when you do that, that's naturally going to pull down your returns. So, I don't see any world where you get this 10% a year for 20-plus years without taking quite a lot of risk. So, you need to be diversifying pretty broadly, which means that, if you do any better than 5% above inflation as a result by being broadly diversified, I'd be astonished. And I think it's actually probably going to be lower than that. So, I think everyone's calculations are probably a little bit punchy. I'm going to go down a rabbit hole there, just because you talked about inflation, and this is something that, obviously, comes up as very important, but it's the measures of inflation, CPI being the typical one. Whereas I've heard people say CPI is nonsense, what you should actually be looking at is something which, I think, is called M2, and I don't really know much about it, but it's something like increases in the money supply, and that should be your measure of inflation. Curious to know what you think about that. Yeah. I'm very sympathetic to that. So, there is a school of thought known as monetarism, which is basically that inflation, its original meaning is inflation of the money supply. And so, the more money you print, prices basically go up to match the money supply. It's the simple way of putting it. So, if you've got a money supply which is going up at 10% a year, and inflation at 2% a year, that 2% figure is probably getting fiddled, or the money supply is going to catch up, and you're going to see a spike of inflation in the long run. I tried to not put too much in the book because lots of economists violently disagree with this notion, but I think if you go back and look at the long term, it's quite hard to argue with. But yes, I think if you look at the typical inflation rate, the inflation rate target is 2%. The average, since 2% was the target, has always been higher than 2%. So, I think it's like 3.6, something like that, in the UK. And even that is going by the official figures. If you work out your personal inflation rate, it could be significantly higher than that. So, I'll allow myself to get a bit side-tracked there, and I've slightly lost track of where we are on the myths. So, we've got savings, we've got early retirement, we've got risk minimization, we've talked about compounding and diversification. So, I think that leaves two. Correct. So, maybe we should leave homeownership for last, because that's probably the slight outlier. But we could talk about the too risky myth. And so, this is the bit where we get into trying to improve and actually do things that are going to either allow you to end up in a far better financial position, or get to where you want to go faster. And this is the bit that, I argue, is just conveniently skipped, missed out of most advice that you read on this subject. And the reason for that is because, like I said, there's always risk. And as a financial advisor, you don't want to be telling anyone to do anything where there's a strong chance that they could lose some money. But also, it's almost impossible to give any generalised advice about it, because if you want to make market beating returns, you want to do better than this 5% above inflation, or whatever we agree can be realistically achieved by just diversifying and waiting, then you need to be applying your own effort and skill. You need to be doing something where you are putting in some effort and making some active choices, and therefore you have a chance, but not a guarantee, of achieving better returns. That's why I harp on earlier in the book about earning more, because earning more, there is no risk to that. If you go and get another qualification and get a pay rise, you can't make less. Whereas there's always a chance that when you try and go and pick stocks or start a business or invest in property or whatever, there's always a risk that that will end up not going very well. But the fact remains that if you want to retire early, quit your job, or end up leaving a fantastic inheritance, or whatever else you want to do, you need to be taking on some risk. And I talk in this chapter about the different types of investment you can make and the characteristics that they have. And then, the final one, the outlier, homeownership. So, this is the one where I'm very much not saying, 'Don't buy your home', but what I'm saying is, don't buy your home by default. So, I talked about how there are three motivations. Right? So, there's protection, there's maintaining, and then there's improvement. And each investment that you can make, I argue, can only fit into one of those three buckets. So, when you're making any investment, you should know what it's for. For example, if you're investing in a global index fund, that's all about maintenance. It's not going to protect you, because there will be years when it has a 20-plus percent drawdown, that it just will happen. And it's not going to improve your financial standing. There's absolutely zero chance that it's going to 10X next year. Not going to happen. So, it's all about maintenance. Any asset that you choose is only going to fit one of those motivations. And your home, I argue, is all about protection. So, the point of owning your home is that by the time you paid off your mortgage, you've got your home, no one can take that away from you. Everyone needs to have a roof over their head, so that's the ultimate protection. And I'm not arguing with that at all. I think the problem, as I see it, is that people seem to believe that their home is some kind of magic wealth creation vehicle that's going to significantly improve where they are in their life. Which I just don't think it is. Because the thing is, at the absolute core, if you buy a house for£100,000, and then it ends up being worth £1,000,000, that's great. In theory, you've made a load of money. But you want to live in that house still. So, that house is doing no more for you at £1,000,000 than it was doing at £100,000. And if you decide that you want to move, you probably want to move to somewhere else similar, in the same area, same size or whatever, which is going to cost you now£1,000,000. So, it has protected you for the time that you've lived there, but it's not improving. So, your home isn't doing anything magical for you. And that means that buying a home is not always the right thing for people to do. There's a belief that you have to get on the property ladder as early as you possibly can. But I know so many people who got on the ladder in their mid-twenties, because they were told that's what you should do. They bought a small flat because it's all they could afford. And then, they met a partner. They wanted to start a family. And so, they needed to try and sell that, which is hard to do, and then move somewhere else. Or they wanted to move for work. They got a job offer abroad. They said, 'Oh, what am I going to do with my house?' So, the argument I make in the book is, yeah, owning a home can be the right thing to do, but there's nothing magical about it. If instead of investing in a home, you took an equivalent amount of money and invested it in something else, you'd probably end up in pretty much the same place. There's things around leverage, which we can come to. But that aside, you'd probably end up in the same place. So, whether you buy a home at any given point in your life should at least be a consideration, it should be a question, it should be a debate you have with yourself, rather than just locking on to this default myth that you just have to own your own home, otherwise, you're falling further behind. So, the argument isn't against necessarily buying your own home, but it's about that being a choice of investment. And that doesn't necessarily have to be the investment, the default investment. It could be something else depending on whether you're looking at protection, maintenance or improvement. That's right. And also, the desire for stability versus flexibility. So, for some people, in their mid-twenties, they're ready to settle down, stability is important. Great. But for some people, having the opportunity to move for work opportunities or to just see more of the world, or they don't know what kind of house they're going to want in 10 years. I think you need to buy a house with a view of holding it for 10 years, just to make all the upfront costs worth it. If you don't know what you're going to be doing for that time, maybe buying a home isn't the right thing to do. But obviously, if instead of buying a home, you just spent everything you earned, then you would end up in a worse position. And the good thing about buying a home, having a mortgage, is basically a forced savings plan. But if you took the equivalent amount and invested it into something else, even investment property, which is what I did, I don't own my home, but I own other properties, then you end up in the same place. So, the narrative about how people just can't afford to buy their own home, which is absolutely true at the moment, it is very, very difficult, but perhaps it's almost like that's the wrong question to ask. It doesn't really matter. I mean, yes, okay, that might be the case, and yes, maybe you need to spend a lot on rent, but that doesn't necessarily have to be the ultimate goal. That's not necessarily the thing which everyone should be aspiring to. Yeah. And definitely not at every point in your life. So, I think it would be a completely reasonable thing to do to not own a home, but then let's say you get to your early forties, and you go, 'Right, I know where I want to be for the future. My kids are in school. I know what the size of my family is going to be', at that point, it makes sense. And you'd only be disadvantaged compared to doing that earlier if you had spent what you would otherwise have put into a mortgage, or if house prices had run away far beyond the returns of any other asset class. And people, I think, have the belief that property goes up in value more than any other asset, but it doesn't. And it wouldn't make any sense if it did. There was a brief blip in the early 2000s when property prices did go nuts, but that was a blip. And if you go back and look over the long term, it doesn't tend to happen. Again, I think for most people, most of the time, it will be the right thing to do. But just because there are so many sound bites around this and so much received wisdom, I've come across countless people who just feel almost pushed into it or don't feel like it's something you should even think about. But I think it is something you should think about. So, someone who is living in the pre-Rob-Dix-myth-busting world, someone who believes all these things which you say are myths, what is the effect that that's having on them? What's the damage it's doing? I think the damage is that, the traditional advice is very much around safety and predictability, and you'll, hopefully, get to a point of retiring at a normal age with enough to get by. And if that's not what you want, then I think that that is damaging. Because you're either just going to do that unquestioningly, and therefore not end up where you want to be, or you're going to deviate from that in some random way like taking a silly bet on something, and therefore end off worse off. Remember it comes back to motivation. If you don't feel motivated about the goal, and you don't really believe in what you're doing to get there, it's highly unlikely that you're going to stay the course with this plan for the 40 years that you need to stick to the plan. So, best case is, you stick to the plan, and you're disappointed with the outcome. Worst case is, you don't stick to the plan because you don't really see the point of it, and you end up taking non calculated risks or doing things that just don't align with your motivations. So, I think that that's the risk. And I think there's also a real risk of wasted potential and just not being fulfilled in what you're doing. Because, like I say, earning more is the answer to most things. And I think so many people, you'll know this better than I do because of what you're in, but just from what I see around me, so many people around me just feel like their career is something that happens to them. And I just think, if you take control of that process and the whole message of this book really is, take control of your money and your finances, and think about it, and make decisions based on your own opinions, rather than what you've heard someone say. If you take control of your career, then you could end up earning so much more and being so much more fulfilled that you don't have to worry about any of this boring investment stuff you don't really care about. You can just do the normal thing and diversify in pension and blah blah blah, and everything's fine. So, it sounds like what you're saying is that, essentially, everyone needs their own bespoke plan, and that all the advice that has come up over the past few years is a bit square peg, round hole, where they're trying to bash everyone into the same round hole. Which is all well and good, but I can also say that that could be quite intimidating for people. Because it does require an awful lot of thinking, an awful lot of self reflection, an awful lot of, well, I can see people thinking, you mean I've got to make a decision now, but what happens if I change my mind or that kind of thing. So, someone who's listening to this and who's starting to feel a bit overwhelmed and actually just defaulting traditional advices, the path of least resistance and takes the less mental headspace, I mean, how can someone do this but without getting overwhelmed by the whole thing? There's a couple of things I'd say to that. One is that, yes, having to think about this stuff is hard. But if you think about this stuff, and you know what you want, which is really, really hard, and what you want will change, totally acknowledge that, but if you know that, then it means that you can stop worrying about a load of boring detail that doesn't matter. So, again, if you get the overall thrust of the balance of your investments right, then you don't have to know really what an expense ratio or a Sharpe ratio or any of this stuff is when it comes to funds. It doesn't matter which funds you pick if you should be investing in funds at all. You don't need to go and learn about all these really wacky investments. If you get this right, and you don't care about investing at all, then it means that you can just basically set it up in the way that I described in the books or put it on autopilot and never think about it again, and focus on something that you find more interesting. But the other thing that I would say is that it's so much mentally more comfortable to feel like you're in control of your life. And, yes, that means taking responsibility. But the way that I feel like you're taught to think, and the way that many people do think is that you need to hope that the financial markets perform in a certain way, and you need to hope that the clever person who's telling you what to do was right. You need to hope that your boss keeps you around. You need to hope that you get the promotion. You need to hope that the government doesn't change the retirement age or some other policy. Having that external locus of control, coming back to psychology, feeling hopeless is really bad for you. Where if you actually start to take steps towards realising everything that you control about your money, it leaves you in so much of a better place. And you don't have to get to the end of that journey before you see the results. If you just start to take some of these steps, you'll start to feel better straight away. I think there's a whole interesting debate there about whether people really do want control, or whether we've almost, I don't know, become accustomed to, infantile is probably too strong a word, but we've got to a place where we're just expecting to be spoon fed everything. But I don't think I want to get into that debate now because I'm conscious of time. Where does someone start? So, it sounds like, once you have your plan and your direction, then it doesn't really matter what you put in those three buckets, as long as those buckets match the plan. So, how do you nail down that plan? The process that I run through at the end of the book gives an order of operations for this whole thing. But the short version is, the first thing to do is to optimise your spending. Which doesn't mean cut your spending to the bone. There's a whole separate conversation we had about that. But it means just optimise your spending. Get it to the point where good is happening on autopilot, and then don't think about it anymore. Because, again, so many people spend all their time thinking about budgeting or whatever, when there's far higher leverage things to be doing. So, the first thing to do is to get that right. Next thing to do is to think about the balance of your motivations, what matters to you, especially with regard to the big decisions. Do I want to be working towards buying a home or not, if I don't have one already? And then, start to think about how much do you really want to improve. Obviously, if you could click your fingers and have homes all around the world and a luxury jet to fly between them, most people would probably say, 'Yes, I want that.' But it comes with trade-offs, and it comes with conscious effort and risks and all these kind of things. So, how much do you really want that? And that's the ultra quick version. But if you go through the whole process, it guides you towards getting the split between these buckets right. Once you've done that, then you can basically take the middle chunk, which is the typical retirement investments, the diversified index funds, et cetera, take that and put it on autopilot. Because the more you think about it, the more you'll probably do something stupid. Whereas what you should really do is just to set it up and leave it alone for as long as possible. And then, once you've done that, the big decision, I think, for most people to make is, do I want to improve my situation primarily by investing, by taking the capital I've got and trying to do things with it to get above market returns, or do I actually not care about any of that at all and just want to make improvements by earning more, focusing on my career, focusing on finding ways to earn money in a flexible, enjoyable way for longer? Rob, there's a lot more I want to ask you, but I think I had better leave it there. Most importantly, where can people go and get the book? All good bookshops, of course. If you want to go to robdix.com/myths, you can grab a sample chapter there to see if it's up your street before you make the commitment of purchasing. Brilliant. Link's, as always, in the show notes. Rob, thank you so much for coming on yet again. It's flown by. Thank you. Okay. Hope you enjoyed that interview with Rob Dix. Now, obviously, none of what Rob and I were talking about constituted financial advice, but I do think that it's helpful to challenge your assumptions and maybe apply a different framework to how you think about your own, personal financial situation. And one of the really important pieces here is looking at your own motivations. What are the aspects of your life that you want to protect? What are those you want to maintain? And what are those you want to improve? And it's this improving piece which is often missed from traditional financial advice. What in your life would you like to be different, and what are the financial decisions you need to take in order to affect that? I guess the goal here is, you end up with this virtuous circle where the financial decisions you take enable you to live the life that you want, which creates for yourself the financial situation that enables you to live the life that you want. If you can get the two to feed each other, then you create this almost perfect flywheel. I'm not saying that that's going to be easy, but the first step is to step back and think about it. What is it that you really want? I do sometimes feel like, as a society, we've almost become accustomed to not believing that we can take decisions for ourselves. We do the work that we're expected to, we live within these social constructs that, for whatever reason, seem to be the norm. But as Rob pointed out, we really do have far more control than we give ourselves credit for. It's a cliche, but New Years really are a great time to stand back and take stock of some of this stuff. So, if you found that your New Year's resolutions are already starting to fall by the wayside, maybe do that. Maybe just take some time, stand back, take stock. What would you like to be different? And what needs to happen to achieve that? And I recognise that these are some pretty big questions, so maybe get some help asking and answering them. Maybe now is the time to work with a coach who can really help you to nail down some of these points into practical actions. In the meantime, you'll find show notes for this episode at changeworklife.com/197, that's changeworklife.com/197. And I'll put in their links to both the books that we mentioned, both of Rob's books, The Price of Money which is an excellent read, and his new book 7 Myths About Money. In two weeks' time, we're revisiting a subject which I started to explore last year, and that's neurodiversity. Job interviews can be hard enough, but what about if you're neurodiverse? And to be honest, even if you don't identify as having a neurodiversity, you're going to get a lot out of this interview in two weeks' time. So, make sure you're subscribed to the show, if you haven't already, and I can't wait to see you then. Cheers. Bye and Happy New Year.