Welcome to Good Money Vibes, the podcast for millennial women in a UK wanting to transform from being bad with money to becoming financial rockstars. Are you tired of feeling lost in the world of personal finance? Do you ever think I’m just not good with money? Well fear not. You’re in the right place. Every Thursday we dive into the heart of Money Matters curated just for you. Good Money Vibes isn’t your typical financial podcast. It’s a friendly and conversational journey into the world of money, mindset, intentional spending, behavioural finance and all things money education.
I believe that being smart with money doesn’t have to be dull. It’s about understanding your financial behaviours, making purposeful decisions, and most importantly, feeling good about where your money is going. The episodes are packed with practical tips, expert insights and relatable stories, all designed to empower you to take charge of your financial life with confidence and joy. Whether you’re sorting out your savings, tackling debt, or just curious about how to make your money work for you, Good Money Vibes is your go to guide. We’re not just a podcast, we’re a community. After tuning in, don’t forget to join our Money Confidence Club on Facebook. It’s a space filled with supportive women just like you all on their journey to financial freedom. So grab a cuppa, hit play, and let’s turn those money woes into money wins. Welcome to Good Money Vibes, where good money management makes great life choices.
Welcome to another episode of Good Money Vibes. This week I want to talk to you all about investing, but specifically why investing is important to us as women. Why is everyone talking about investing? Why should we actually do it? So not all the complicated jargon and all of that. I’m not going to bore you with that today. I am going to be hosting a masterclass in the next month or so, all about how to actually get started with investing. But for today, I want to tell me why it is actually so important, why everyone’s talking about it, and why it’s something that you should consider doing. I say SHOULD in capital letters. Like it should absolutely, 100% be part of your financial plan, your financial landscape, part of your every day or every day, every month, every pay cycle. You are doing something for investing. Let’s get into it.
Obviously, I want to do this coming from the viewpoint of a woman for the viewpoint of other women. And referencing back to a previous episode, episode four, where I talked about how money is a feminist issue. Obviously investing relates to that directly. There are so many gender gaps when it comes to money and things like the gender pay gap, the gender wealth gap, the gender pension gap, the gender investing gap, all of those can be improved through more women investing more money. And I talked about in that episode that a lot of what comes down to how those gaps exist is how we’re socialised as women. And I think I talked about this in an recent Instagram post as well, which is about how we are socialised to the point where pictures in media showcase women with scrimping, saving, putting pennies into money box like piggy banks. It’s very like childish, not taking seriously, basically. But men are very much taught about investing, building wealth, increasing income. When you see pictures of men in the media, when it’s talking about money, you know there’s a white man in a suit with like a wad of cash that he’s putting into his, like, suit pocket or something. That is how men are seen with money and how women are seen with money. So you can see the difference almost immediately. And why investing probably wouldn’t be on our radar as women until we kind of come into like adult life.
Maybe we start socialising with others who are investing… I feel like a lot of us don’t grow up with it. It’s definitely nothing that my parents ever did. I don’t think if I asked my dad, I mean, my mum’s no longer with us, but she definitely did not invest. I don’t think she’s ever, ever mentioned investing to me. I think if she did, it was more kind of like investing as gambling, that kind of narrative. I think if I spoke to my dad, I, I’m pretty sure I can say he doesn’t have any investments. So it’s just not something in my household that was talked about. I think that goes the same for a lot of people. And actually, even in my own family now. So the family I’ve created, me and my partner and our little boy. Investing wasn’t something that was talked about until I learned more about personal finance. And I was talking to my partner about how we should probably start investing or that I started investing, but you should probably start investing. And he actually had the narrative as well as kind of like investing is like gambling. And that’s because and this is actually quite a funny story.
So Rob’s parents are very good with money. I don’t know the highs and I don’t know the ins and outs of it, but I know that they have a financial advisor, very clever decisions being made. But in those decisions, there’s always going to be the ultimate stake. And the reason why Rob didn’t want to invest and why he had this narrative of maybe investing, paying like gambling, and obviously the fear of making a wrong decision goes back to I really hope he doesn’t mind me talking about this. Rob’s dad back in the day, probably say 20 years ago. Saw that the the share price for Woolworths was really low. And he thought to himself, well, everyone loves a Woolworths. Woolworth’s not going anywhere. I’m going to invest in Woolworths because that seems massively undervalued as a share price. And I trust that Woolworths is going to be here. Well, we all know what happened. R.I.P. to the British high street. The giant, the god of the high street.
Woolworths was very soon after that did disappear. Hence why the share price was so low. And obviously Rob has taken this memory on. Rob has taken his narrative being like it is risky. I don’t know how to make investing decisions. I’m not going to do it. And also this narrative of, well, I don’t have enough money to get a financial advisor, blah, blah, blah. I guess in my examples. The way I’m talking about it is like men also don’t invest, but men do invest. I’m kind of coming at it from very much in my bubble. My dad didn’t invest and Rob wasn’t too confident of the idea until I explained to him low cost index funds, diversification and all that. We now invest. And Rob’s dad has no longer made any investment plans without consulting his financial advisor. So generally, what I’m saying is a lot of us haven’t grown up with investing being talked about, and we may be then become adults. We start learning about it, we start hearing about it, and we’re like, oh, okay, that sounds interesting. Like investing, growing a wealth. Yeah. But we don’t actually learn to do it all. We start to learn to do it. Maybe we get a bit interested and there’s a jargon. It is literally a whole other language. So don’t bother. Get overwhelmed. That’s typically why women don’t invest. We have been socialised to believe it’s like gambling. We’ve been socialised to believe that, you know, the men need to look after that because women, it’s all about scrimping, saving pennies in piggy banks, that kind of thing. But it is the number one tool that is going to work towards closing those gaps. Because when more more money is in the hands of women, we can do more good in the world, okay. And the more wealth we have, the more we invest, the more we can put in our pension, the more income we can generate, the quicker we can close those gender gaps.
The next point I really want to emphasise is and again, I talked about this in the episode about gender gaps. But a new study has actually come out. So I can give you some updated figures about this. I talked about the gender pension gap and how on average, men retire with £205K worth in in their pension and women, the new study has come out that the average woman retires with £69,000. £69,000 versus £205,000. That’s the difference between men and women. And I looked more into kind of like why that is. What do the studies suggest? And it kind of it obviously comes down to the motherhood penalty and this idea that obviously women are the ones that stay and look after the children and therefore take time off work to do so, or go part time or choose jobs that are more family friendly and flexible, which tend to be kind of lower paid retail jobs. So that is contributing massively to this gender pension gap. And obviously things are changing and I’ve talked about them the end of their changing, but they are changing more slower than we would like. So yes, nowadays more women go back to work full time once their child is, you know, nine months, 12 months. But then there’s obviously the price of nursery and that is that’s pricing a lot of families out where the decision is being made that the women will look after the children. However, I know that’s not always the case.
I just I can’t stop thinking about this one thing that even my partner said to me, which is like, yeah, but you choose to do that. Oh, it literally boils my blood being like, well, you as a woman, you’re you’ve chosen to do that. And I’m like, well, it kind of makes sense because when we look at the data, we can see there’s a gender pay gap. We can see that most of the time you as a man are going to be earning more than me. So in our family, it just makes sense that I’m the one that works less. No, actually. In my previous job and when I was on maternity leave, I actually earned more per hour than my partner. But I admit, yes, I did want to stay home and look after my baby. I don’t think there’s anything wrong with that. I also don’t see why we should be penalised for. And I know that the government, governments, you know, over time have.. there is an effort to.. I don’t want to say the wrong thing because I don’t necessarily agree with the current government, nor do I want to say that they’ve done good things. But there have been there have been amazing campaigners. That’s the word I want to use. There have been amazing campaigners that have gotten things through government that mean that things are in place so that women can go back to work. The, you know, there’s the flexible reform bill that is coming, that’s going to come into place in April, where there should be kind of slightly better rules around a flexible working requests. There are things that are being put in place slowly, but there are also things that the government aren’t doing that could easily close this gap.
Without waffling on about gender gaps and gender gap, because I’ve already done on another episode the reason why I want to break the gender pension gap to your attention, in terms of why investing is important, is because women live longer than men. Yet we have a pension pot a size of one third of a man’s. That needs to change because that is hugely disadvantaging us. That is putting us in a really difficult situation. Now you might be lucky that when you hit retirement age, let’s say you’re in your 80s and your partner does pass away, you might be lucky enough that you are still in a relationship. Not everyone will be, because not all relationships are great. And also, people change, life happens. You might not be in a relationship at that point. So you have to guarantee if you want your retirement plan based on a man and using a man’s wealth, you have to guarantee that you are in a relationship with a man where either you’re married or a will is put in place to make sure that some of his wealth goes to you. Or you need to make sure that there’s kind of life insurance involved and that sort of thing. Obviously, we don’t want our partners to die, but if we look at the statistics in front of us, women live longer than men. So we need to make sure that the right things are in place to make sure that we’re not disadvantaging ourselves.
Now, yes, number one, we can ensure that we are married to a man come retirement age. But you might not be into men, or you just want to build your own, or you never got married. How do you protect yourself? How do you look after your future wealth to ensure that you can enjoy retirement without financial stresses? Because I’m telling you now, and this is the the only point I’ll mention on it. Do not plan your retirement relying on the state pension because, I feel like I can almost guarantee it’s not going to be there when we hit retirement, you know, when we are wanting to retire at 60, 70, 80, there isn’t going to be a state pension. There might be, if there is it’s a bonus, happy days, bit of extra pocket money, because that’s essentially all it is. We need to plan a retirement as if that’s not going to be there. We also need to plan our retirement as if a man’s wealth is not going to be there. So, what can we do? Investing.
That is why investing is so, so important for us as women. Okay. We live longer and we can’t guarantee that we’re going to have access to a man’s wealth, who hasn’t had the years of motherhood penalty. Now, also, you might not become a mother that might not be in your game plan or not something you want to do or just unfortunately, that’s something that not doesn’t happen for you. In that case, you will have those extra years of paying into your pension. Maybe you will have pursued a career. There’s a chance that, that kind of big gap is is lessened. But if we look at the gender pay gaps and gender wealth gaps and other things like that, there is still going to be a gap. Okay. That might be the man next to you actually has less in his pension. That’s one example. But in average talking, and in general terms. Men are going to have a higher pension pot, whether or not the motherhood penalty affects you. But one of the massive contributors to that huge gap in averages, again, it’s all just averages between £69K and £205K for a man, is that motherhood penalty. So if you are a mother or you plan to be a mother, investing should be one of the key parts of your financial plan.
Although I’ve talked about pensions, I’m talking about investing. Just to clarify. A pension is a form of investing so you can invest for yourself by yourself, separately to your pension. And the benefit to that is that you don’t have to follow the pension rules, such as getting access to your money ten years before state pension age, which at the moment is 65. So at the moment you can’t access your pension until 55, whereas your investments don’t kind of have those rules attached. So you could access them whenever you want, depending on the account you have. Again, these are all things I will be teaching in the masterclass, because I don’t have time today to go into the nitty gritty of all of that.
So when I talk about investing, I’m talking about pensions as well as kind of just having your own investing account separately. How you invest is going to be completely personal to you, your circumstances, your feelings around retirement, whether you want to retire later, you actually don’t mind working, whether you do want to retire earlier. There are lots of different things that are going to come into it. So pensions and investing kind of coming under the same bubble in this episode.
The third point is about income. So investing is a fantastic way of growing an additional income stream. And you might have heard of people living off their investments. So let’s talk about what that means and about why that’s important. I think it’s pretty obvious why it’s important we want more money. We want to make passive income, right? We want to not have to work so hard for our money. And that’s why investing is great for retiring. Whether you retire at state pension age all along before that. Because remember, retirement is not an age. Retirement is just a number, okay? Retirement is the number in your bank account or investments. That means that you can live off it and it’s not going to run out. Or it’s going to run out within the specified timeframe. You know, you think you’re going to live another 40, 50, 60 years. You have a plan with the money in your bank account so that it doesn’t run out in that time. State pension age is literally just the age that you start getting a state pension is not the age that you have to retire. I just I realised that this is such an important point, because a lot of us don’t realise that. I definitely went through my childhood, teenage hood, early 20s, believing that like, wow, okay, state, you know, pension age is 65, soon to be 67. And then after that, now it’s been revealed that it might have to go up 71 and so that is just the age that the government say the state pension is available. Again, all of that can change, but it’s not a guarantee. And I can’t remember who it was so recently. I think it’s Conversations Of Money, did a fantastic video where they talked about how the state pension is actually a benefit, like it’s a welfare benefit, so it’s not to be expected. And I think a lot of people. Not took it the wrong way. I think it just shocked a lot of people. Like, what do you know? What do you mean? It’s a benefit? Like it’s guaranteed. It’s not. It depends on whether the government can fund it based on taxes and things like that. It is a state benefit. So again, like I said, not to rely on it.
Let’s say we want to retire early. Let’s say we’re like, do you know what? I’ve had it when I retire at 50, 45. How can I do that? We need to generate some passive income. How do we do that? Through investing. So when we invest our money, we are doing it with the kind of notion that we’re putting our money into something with the hope that it will grow. It will be worth more in the future. What that future timeframe is, like I said, completely personal. Usually you want to aim for a good ten years or so for your money to really have a chance at growing and riding out any waves with any kind of like political, financial events like we’ve seen many of in the last few years. It can take a while for things to recover, but generally, looking at any type of economic cycle, whenever there’s a recession or a down, there’s usually an up and up is usually higher than the previous, but that’s a very brief explanation of economic cycles.
So over time, our money will earn money and when it does, there’s two ways that you can take that money out and earn an income from it. Number one is through the growth. So that’s where there’s the capital gain. So let’s say you invest £1,000 and you take out £10,000. The capital gain the growth is that £9,000. That’s one way you can do it. You can withdraw the growth. The other way of doing it is through something called dividends. Dividends are what a company pay you when you invest in them. Not all of them give dividends. But some do. And it’s basically their way of thanking people for investing in them, for giving that money. And when you invest in a company, you become a shareholder that gives you certain rights to decision making. Again, not always, but it does give you some rights. And part of that rights is that if a company does give out dividends, you will get some dividends. One way of earning passive income is something called dividend investing, which is you look at the companies, or the funds that pay out high dividend yields. And you invest in those so that over time your dividends grow. It might be the first ten, 15 years or so you reinvest all those dividends. So that in 20 odd years you can live off them. You know, you can be earning a thousand or so a month from dividends that you’re able to live off. Those are the two ways of generating passive income through investing. And again, the nitty gritty of it will be discussed in the masterclass set of time to talk about that today.
Income generating and more money in the hands of women is so, so important. Therefore generating income through investing again very very important. Now let’s get into this. So really when we talk about why investing is important, this is going to be the number one reason. You might have heard, and I think it’s been on the news quite a lot in the past year or so. Which is inflation, right. Inflation rates, interest rates. No doubt you’ve heard all about them. If you’ve had to remortgage or get a mortgage in the last year or so, you definitely know about them, so let’s talk about it.
The base rate is the interest rate that banks and lenders pay when they borrow from the Bank of England. That was the biggest realisation when I started studying finance was that banks like NatWest, HSBC don’t just have all this money, they’re just constantly borrowing money off each other and from the Bank of England in order to fund, when you withdraw a tenner. When you put in a tenner into your bank, that doesn’t just sit in your little safe, that goes into the bank. And the bank promises that they’ll have £10 there for you when you want to withdraw it. That’s how it works. It means that they’re all borrowing money from each other all the time, and the Bank of England. So the base rate is the interest rate that the Bank of England sets. It’s kind of like the core interest rate. And it influences pretty much all the other interest rates. Right. Because that’s where the banks are getting their money from. Therefore that’s what they kind of use as what will they then transfer to you.
The current base rate is about five point is 5.25% at the time of recording and the current rate of inflation has just gone up to 4%. So what does that mean? Typically, let me I mean have a look at one of my savings accounts right now for this example. So let’s look on Chase and see if I wanted to open a savings account right now, what would the interest rate be that I get, knowing that the base rate that the Bank of England set is 5.25%.1s Let me have a look. Okay. Chase are offering 4.1%. What I wanted to demonstrate to you there was that just because the base rate is 5.25%, does not mean you’re going to get that in interest from your bank account or from a savings account. I would say on average, at the moment, 4% is pretty good going. You do get bank accounts that have higher interest rates. They do typically tend to be things like regular savers, because you’re promising the bank that you’re regularly going to be putting money or giving money to them. As well as things like fixed notice accounts where you’re promising not to touch the money for a while. Again, knowing that the banks use your money to do their activities. It all makes sense when you think about it. You are essentially just giving your money to them, and the reason why they give you a higher interest rate is because you’re either saying, oh, I don’t need that money back for a while in a fixed notice account, or you’re saying, oh, I’m going to keep paying you this amount. I promise to keep paying you this amount in a regular saver. Yes, you do have access to that money. But they have to find that money and give it to you when you want it back. That’s that’s how it works. And that’s how the interest rates are created. But what that also means is if we know the current inflation rate is 4% and I’m going to get 4% from my bank account, we’re scraping by.
Why inflation is important is because it’s the rate in which goods and services change in price year on year. So with inflation being 4%, it means that prices on average are 4% higher than they were this time last year. So for example, if a loaf of bread costs £1 a year ago, it costs £1.04 today. Now obviously it cost more than that… actually don’t know the price of bread. But as an example. So what we want to do is when we’re saving our money, when we’re putting our money somewhere where we want it to grow, we need to make sure that we’re putting it somewhere where the interest or the earnings, the growth is going to be higher than the rate of inflation. And that is why investing is so much more important than saving. Now, if you’re saving for a holiday, for a house or something that you know you’re going to achieve within the next five or so years. A savings account with a semi good interest rate is going to be the best option for you. You know, you need to have that money within the next five years. You know you can save that amount of money with your earnings. Any interest you earn on it is kind of a bonus.
When we’re talking about investing and growing our money, that’s when we need to put it in an investment account or somewhere where we can outpace the rate of inflation. How we can do that and how I talk about doing investing in the safest way is investing in index funds. That is essentially a huge collection of companies put into one fund for you. You can simply buy that fund and bada bing, bada boom, you’re diversified. The example that you’ll see everywhere, and it’s the example I’m going to be using right now is the S&P 500. That is a fund of 500 of the top US companies. If we look at the average rate of return of the S&P 500 over a ten year lifespan, is around 8%. It kind of goes from 7 to 10%. So let’s say I’ve got £10,000 and I don’t really have a use for it right now, but I might want it in the future or it’s for retirement, I can put it in there and let it do its thing. Okay? If I put it into a savings account with 4% interest. Again, that’s that variable. So that could move if the base rate goes up or down. Like that’s going to go down with it. You probably remember a few years ago when the base rate was like 0.25%, and the interest rates we were getting on savings accounts was like 1%, if that. It can go low, to the point where your money is essentially not even growing, but inflation can guarantee that the prices are going up and up and up. So we need our money to go up and up and up in value. If I’m putting that money in the same account, it’s not going to go very far. I’m gonna get to it in ten years time and actually realise that now it’s worth less than it was worth at the time, because it’s not grown with the rate of inflation. It’s not going to buy me as much now. It doesn’t have as much purchasing power. However, if I invested that £10,000 instead in an index fund like the S&P 500, with that rate of return of 8%, it should have grown at exceeding the rate of inflation, outpacing the rate of inflation, meaning that now it is worth more than when it started, not just in value, but in terms of purchasing power as well. And that is the key point to investing. I hope that’s not too complicated.
Lastly, and this will be this will be the point that I finish on right now. We have the ability to invest in a tax advantaged ways. We obviously have pension vehicles. So where you can put your money into a pension. They invest the money for you and you can access it ten years before state pension age, whatever that age is at the time we get there. Or you can use a self invested personal pension, which is where you choose the investments. But again, the same pension rules apply. Without going into huge amount of details about how pensions work in the tax an advantageous way.. Essentially, when you put £100 in, the government will top it up by 20% (depending on income tax rate). There is a tax boost essentially, because you’ve already been taxed on that money. You get the tax back essentially. That’s how it works, in short. And you can also invest in something called a Stocks and Shares ISA. Now ISAs are these tax advantaged accounts in the UK. It’s essentially is like a wrapper that goes around your investments to say any investments, any income and anything gained from this, you don’t have to pay tax on. Normally you would have to pay tax on capital gains. Remember I talked about putting in that £1,000 coming out with £10,000. Normally that £9,000 gain you would have to pay tax on if you were investing inside a general investment account. However, if you put it inside the stocks and shares ISA that is protected within that tax wrapper, you do not need to pay tax on that income earned or the money generated.
The other thing is dividends. I talked about how you can earn money through the dividends paid from companies. Again, if you invested in a general investment account, you would have to pay tax on those dividends though there are allowances are not going into detail about it right now, but there are allowances and how you’re taxed can be slightly different, but you will be liable for paying tax on it again unless you put it inside a stocks and shares isa, your dividends will be paid to you free of tax. You will not need to pay tax on that. So when you invest through pensions, through stocks and shares Isa, that kind of means that you are protected. There are some tax advantages to doing so and having access to those accounts right now, because again, the government can change things all the time. They can, you know, go ‘we’re not going to do certain ISAs anymore’ and you’ve lost out on tax free investing. So open a stock and shares Isa. If you plan to start investing. Do come to the masterclass, I’ll I will announce it shortly. So keep an eye on my Instagram and join the email list. But I will talk about paying tax, what to actually invest in, how to actually invest, how to start investing in the masterclass. So do keep an eye out for that.
I hope you found this episode interesting. I have very much enjoyed talking about investing because you know me, I could talk about money all day. To summarise my key points:
One: There are huge gender gaps in pay, wage, pension and investing. Women we need to work to close that. How do we do that? Well, actually investing answers a lot of those.
Two: Women live longer but we’re we are retiring with a pension pot a third of the size of an average man’s. Therefore we need to make sure we are protecting our future, not relying on a man. A man is not a financial plan.
Three: Income generated for early or general retirement. You can earn income through investing, through taking out the growth or through dividend investing.
Four: Interest rates, inflation saving and investing. You need to make sure that your money is growing at a rate that is outpacing the rate of inflation. Otherwise it loses purchasing power.
Five: Right now we have the ability to invest in a tax advantageous way. So why not take advantage of that and start today.
Thank you for listening. I’m sorry that this is a day late. I actually think I will change the podcast day to Friday, so it gives me a chance to record, edit, and maybe even rerecord like I did this week. If I don’t like what I recorded on a Monday and get it ready out for Friday. Next week, we let me just have a quick look about what we are doing… Next week we are talking all about swapping those skills for money. So how to generate more income or how to go freelance, how to start business, that kind of thing. I will see you then again, if you listen to this, if you found this really interesting, please do pop me a message on Instagram or tag me on Instagram. I would love love to hear your thoughts. If you enjoyed, please leave a rating or wherever you listen to this. It means so much. Somebody already left a five star review on Spotify and honestly, I think I cried. Which makes me very happy. If there’s anything you want me to cover, anything you want to learn more about, please just slide into my DMs or pop me an email. I’ll be more than happy to to talk about them. You know, I could talk about money all day, so I will see you soon.
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