The Young Entrepreneur

Kayleigh and Jordan came to us when they were in their early 30’s. They were (and still are) married with two young children and were successfully progressing in their respective roles as a software engineer and game designer.

At this point in time, both were earning in excess of £100,000 per year and had recently bought a sizeable family home, secured by an equally sizeable mortgage. The mortgage was affordable at their current incomes and they were managing to pay into a cash ISA each month to provide some level of financial cushion, but they felt there was little leeway to entertain a drop in income if either wanted to change careers (or worse, if either were to become incapacitated or pass away).

They approached us for financial advice after Kayleigh received a large pay rise that took her earnings from £100,000 to £120,000 per year. Kayleigh didn’t understand why this £20,000 increase only resulted in an additional ~£550 per month and wanted an explanation.

To accommodate their busy schedules, our first meeting took place via an online video conference. We asked a number of targeted questions to understand their current circumstances and goals. Given their ages, neither were looking too closely at retirement and neither were sure about risking their savings in case a future recession resulted in either being made redundant. They wanted to at least maintain their current lifestyles (in particular, Jordan made it abundantly clear that his Tottenham season ticket was non-negotiable). They did however want to understand the extent to which they were dependent on both earning over £100,000 and whether there were any further steps they could take to plan for future financial freedom.

To help them understand which advice would be most beneficial, we granted Kayleigh and Jordan access to our unique suite of educational videos and directed them to videos on the following subjects:

• What is investing and why would you do it?

• Weathering the storm of the inevitable downturns.

• Who gets what once the bank is paid off?

• How can I get some of my tax back?

• Why would I start paying into a pension now?

• Why bother with life insurance when I am not sick?

Once they were ready, we scheduled a follow-up call, by which time Kayleigh and Jordan were convinced that it would be prudent to invest at least a proportion of their savings. What they didn’t understand however was how much to invest, and where to invest it.

After watching the videos, and gaining an initial insight into the extent to which planning at the earliest stages can bring forward retirement by a surprising number of years, both wanted a little more clarity on when they might be able to achieve financial independence (i.e. never having to worry about money or work again). They proposed a budget for a detailed financial plan, and we created a plan of action that aligned with both their needs and budget.

Following this, we assessed and summarised the various options available to Kayleigh and Jordan, and explained what each would cost. This final plan consisted of:

• Evaluating and securing a combination of protection plans that would ensure both Kayleigh and Jordan would continue to receive their full income if either became incapacitated.

• Ensuring both had in place financial protection for the benefit of their family in the event that one passed away.

• Devising a more robust strategy - with far better growth potential - for their savings, taking into account efficient tax-planning and their desire for limited investment risk.

• Creating a longer-term investment plan that would result in significant income tax savings.

• Setting out the steps they could follow to enable them to pay off the mortgage early and potentially retire by the age of 55.

• Setting aside sufficient provision to ensure that both children had the option to go to private school.

We also helped them to better understand their current expenditure, their likely future expenditure in light of their goals, the value of their assets, and how much income they would need to maintain this all indefinitely if the worst should happen.

Kayleigh and Jordan were delighted with the result. Kayleigh told us that it has removed all their concerns about the future regarding their earnings, costs and lifestyle, and that it also meant they could look forward to spending time doing the things they love while they are still relatively young and healthy, rather than waiting until they are in our 60’s, when who knows what may happen…

Since this initial in-depth assessment, Kayleigh and Jordan get together with us once a year to revisit their plan, review their investments, adjust their strategy to reflect any changes in circumstances, and check that they’re still on track to achieve their goals.