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Dentists Who Invest

Podcast Episode

Full Transcript

James: 0:46

I’m very good. Thanks, mate. Very good, isn’t it? It is a bit deja vu. Although I’ve changed location, I’m at home today rather than the office.

Jon: 1:03

It looks a bit bright. The sun is shining today. It’s looking lovely. It’s a bit of a day off.

James: 1:12

It’s a bit of a day off. It looks a bit bright. The sun is shining. Today it’s looking lovely. That’s also changed.

Jon: 1:22

It’s the one day of the year we get sun in the north of England.

James: 1:25

It was a Friday this year. There we go, John. Asset allocation. Let’s hit the ground running. What the heck is asset allocation.

Jon: 1:35

Last week we talked about diversification the big rule in investments and managing risk in investments. Asset allocation is like the blend that we put together with all the different options of investments we might have. The classic ones we think of are stocks or equities, so owning companies and bonds, which is where we’re lending money to a company or a government, but there’s lots of other different asset classes that people think about. Classic ones will be property, both commercial and buy-to-let real estate, residential that’s the word I’m looking for on a Friday afternoon. You’ve then also got things like commodities, gold, and you’ll have investments in wheat and in grains, and then you get alternatives as well that can get thrown out there. There’s investments in aeroplane leasing or in weather-based funds that trade off reinsurance All sorts of weird and wonderful things people try to throw in there In the name of asset allocation.

James: 2:41

Yeah, I was going to say that’s news to me about the weather one, by the way, even before I learned of that within the last minute. It’s obviously this huge subject. You could probably write a flipping book on it, so I suppose it might be helpful to have some focus today and state from the outset that when we talk about asset allocation throughout the duration of this podcast, what we’re really referring to are traditional assets. I suppose you could call them or paper assets. What would be your label for those? Because I would call traditional assets stocks and bonds. I would call it that, and then anything outside of that is non-traditional, I suppose, even though it’s not that they’re new or anything Traditional in the sense that they’re most used in financial planning and they’re the thing that is most recommended by IFAs whenever they have that conversation with their clients.

Jon: 3:36

So if you came to a Juniper portfolio, you’re going to see stocks, you’re going to see bonds and you’ll also will see some commercial property, so things like warehousing and offices and that sort of thing, because they’re very traditional assets, they’re very well researched. We’ve got a lot of data on how they perform in certain circumstances Very liquid, very tradable so they’re very reliable in how they’re going to behave. When you look at the alternatives and other sort of things, there’s a little bit more questionable as to the value they bring to a portfolio. I think sometimes they just put in there to make it sound sexy.

James: 4:23

Yeah, well, I wouldn’t be surprised. There’s different labels for different categories of allocation, different categories of assets. But yeah, I suppose, for clarity, today what we’re focusing on are stocks and bonds, right.

Jon: 4:37

Primarily, we will just talk stocks, and bonds, absolutely.

James: 4:40

Lovely stuff. Okay, let’s go one tier down. We’ve talked about asset allocation. Now we’re focusing on stocks and bonds. Naturally, part of the decision process in deciding how you allocate your wealth within a portfolio is related to how much exposure that you want to volatility, for example, how much you want your assets to appreciate with time, or indeed just not be volatile, in which instance you might go for bonds, right? So what is that? Maybe decision making process when you’re thinking to yourself okay, I’ve decided that I’m going to focus on stocks and bonds, now I’m deciding how do I allocate my wealth into that portfolio?

Jon: 5:25

So you would typically think about the amount of risk you’re willing to take the amount of risk you’re financially able to take, and then the amount of risk you need to take in order to achieve the outcomes you’re looking for. And the real tricky thing with this is when you’re younger and you’re building your assets. You need to take more risk, but you maybe can’t afford to take more risk. So we have to think carefully about this, and as you get older and you build your wealth, you maybe need to take less risk but can afford to take more risk. So it’s a bit of a balancing act, and really the biggest driver that we have in the decision that we make with clients is about how we feel their behavior might be affected by volatility in the markets, because that’s going to have the biggest effect on our success when it comes to investing is how we manage our emotions through market volatility. Okay, so if you’re someone who freaks out when you see your £100,000 portfolio drop to £99,999, then we’re going to have issues and we might dilute some of this down for you. If you’re someone who really can live with it, you understand the process, you trust the process, you believe in the method of investing that you’re looking at, then absolutely you’d look to dial the equities up and the most return you’re going to get over a longer time horizon is with a 100% equity portfolio. We don’t necessarily want to dive straight in there when we’ve not done anything else.

James: 7:14

I got it, I totally got it. Okay, cool. And then let’s go one level deeper. Let’s say, okay, let’s use the 100% equity portfolio as a benchmark Audit and Audit Capital Appreciation. We’ve decided that we can stomach the volatility or the inverted commas risk. We’re equating volatility for risk for the purposes of this.

Jon: 7:37

Yeah, there are other risks, but that’s the one that is commonly used for this, indeed, indeed.

James: 7:45

So let’s say, we can stomach the volatility. And, by the way, actually, just before we do this, 100% equity portfolio, right? S&p 500, 2007 to 2008, 50% of its value right, that was people’s life savings, right? So you’re watching your million not go down by $1, but literally half, okay, right, yeah. And here’s the thing. That’s what you have to be prepared for as a 100% equity investor with a long time horizon, right, yeah, Now that sounds in theory that you can manage it, and I’m sure people might hear that and be like, yeah, we can do it, right. But you know, whenever you’re watching your portfolio, do that and you’ve got that sell button hanging right in front of you on your ISA app okay, it’s potentially a different story unless you understand the overall narrative and you trust the process, right? So that was just to give everybody a little bit of a flavor of how much that volatility can understand. Quite B, yeah. But here’s the thing, right, it all depends on perspective, because you might also say, oh, everything’s half price, fire, sale, okay. But again, again, you have to understand financial markets to be able to perceive things like that.

Jon: 8:56

Yeah, 100%, it’s the the journey. It’s so easy to look at a graph and see the volatility and be like, oh yeah, that’s not a problem. I completely understand. Then you can be two or three years into an investment process and still be where you were when you started, regardless of what investments you’ve picked. Sometimes that’s just the way markets are. They go sideways for a bit and you have to stick to the course. You have to understand the process you’ve picked and believe and trust in the process and then know it’s going to come out the other side. As an advisor, I’ve been doing this 15 years now and I’ve been through this process a few times. In 2008-09, my first period as a financial planner, financial advisor with clients when you’ve been through it a few times, you know the rules for the road because you’ve rehearsed it, you’ve planned it, you’ve lived it several times and you’re talking about it all day. But as a client or as an investor, it’s a very, very different experience. This might be if you’re a dentist who just sold their practice in 2008,. You pop it into the markets and then you’ve lost half your life’s work. We’re talking a very different feeling in that moment than maybe someone who’s put a few quid into it just as they’re getting started. So circumstance really matters and it’s about emotions and all that kind of stuff.

James: 10:32

Totally Okay. So that 100% equities portfolio how do we allocate our wealth into equities is basically what is the next level to that.

Jon: 10:47

So this guy called Harry Markowitz won a Nobel Prize for his work on modern portfolio theory. In this it talks about having what’s called a strategic asset allocation. So you look back over the course of history and you go to achieve the kind of volatility I’m comfortable with. So the investment journey based on the last 20 or 30 years, whatever your time period is, these are the asset classes I should have been in. When we’re talking equities, you’re talking maybe US large cap, us small cap. You might be talking Asian equities, excluding Japan. You’ll be talking about Japanese equities, uk equities, european equities and maybe then even some more obscure stock markets like in Brazil, or not Russia maybe today, but those sorts of markets traditionally have been pulled into these portfolios and you’re allocating towards them. So for our clients, we tend to do this based on market cap. So the biggest allocation would be to the US and then you allocate your equity portions accordingly. Different portfolio managers, different investment managers, have a different take on it. One would include what’s called a home bias. They’d allocate more to the UK because we are UK investors and so maybe say, oh, we want to invest in sterling, so we’ll have a UK exposure. But that piece of deciding where I want to invest my equities across these different markets would be the strategic asset allocation. Some portfolio managers and advisors believe, then, that they can make a prediction about what’s coming to come in the next two to three years and might then make a tactical decision or active decision in the asset allocation process. So we’ll go short on the US and long on the UK, because we think that’s what’s going to play out for the benefit over the next few years, and they might do that with an index fund, so you can use these passive vehicles or index funds to make active decisions in your asset allocation. So that’s kind of a little bit of a hard-art into asset allocation. Typically, you might start with a global market cap approach. You start with, say, 60% in US equities, 4% in UK, et cetera, et cetera, and then start to tweak it or dial it from there, depending on your approach and theory on it. Where do you stand in all of that? We very much. I used to use a lot of tactical asset allocation previous firm. I really believed in it as a process, but what we did, what I did, was tracked the added value that these decisions were making and generally found that they weren’t adding a lot of value but were adding cost to the portfolio. So it ended up pretty neutral, even when they got it right that the additional cost probably wasn’t worth it. And I think it’s very, very difficult today to predict what’s going to happen. We have global themes that you look in. You go rise of China, the demise of the dollar, ray Dalio’s work on that you go, yeah, I can see that story happening, but I don’t know when and if you can predict when you’ll be a very rich man, and so what we tend to then do is look at a global market cap and have it on a systematic review so that, in a very processed and methodical way, we’re reviewing this market cap and then we’ll rebalance the portfolio ordingly as we move forward. Now I described asset allocation to clients and a bit like putting a slide under a microscope. We’ve started with stocks and bonds and how we might allocate. You can then most manuscripts have three or four lenses on them right now I mean, it’s a long time since I was in the science lab, but you might we spin it around and we look then at the asset allocation to countries. We can spin it around again and we can take, say, the US equity market and then you can look at different factors or different characteristics of companies within that market again. Okay, and so there’s a few different characteristics that may get looked at within a portfolio. One of the most common ones is large cap versus small cap. So we’re talking there about the cap just means capitalization, like how much capital this company is worth. Large cap would be S&P 500. Small cap will be a lot of those companies that are not on there on the junior markets. There’s still big companies. We’re not talking about investing in mom and pop owner shop type stuff, as the Americans would call it. It’s still very large companies. One of the best known small caps in the UK would be like ASOS. It sits on the aim market, or certainly did up to recent. I’ve not looked at ASOS for a while, but from memory, sits on the aim market and there’s been quite a lot of research into what tends to outperform, and so, for example, smaller companies have tended to outperform larger companies in most market cycles this last six years. Not so because of the fangs and their rise to prominence on the S&P, but typically we look back over 100 years of data. These smaller caps, smaller companies, have outperformed larger companies, and so as a portfolio manager, you might say well, we’ve got our 60% of US entities. How are we going to allocate this now to smaller companies versus larger companies? And then also there’ll be other factors, other factors such as quality. So is this a really highly profitable company or is it a growth company? Is it a company that just spits out cash or is it quite capital intensive? So that’s the quality area. You’ve got momentum as well. Is this company on a real drive somewhere? Are we seeing its share price? Do certain things on trading tables that you look at and charts that go right? Have you really got some momentum to it? And so there’s quite a few different factors that can be looked at. Now, some of these factors have an awful lot of academic research gone into them, but then there are other factors that sometimes people will look at that maybe don’t have the same rigorous levels of academic research going into them. Because you can you could almost make a story of any sort of data point and bring a story out of it and call it a factor. Companies beginning with F or with founders called Dave.

James: 18:44

That’s the thing, though. Right, because there’s so many variables in there and it’s easy just to pick one off them and say, oh, will that happen because of this? Right? Well, if you’re so good at predicting stuff, tell us what will happen, right? Well, it’s better than what it has, right? Especially in markets, because you can’t predict this stuff. And to give you a quick anecdote on that, I was reading a book once, and the book was by a journalist, and he commented on financial markets, right, and his boss used to come in and say, hey, the markets are down today. Why the heck has that happened? And he’d be like, I don’t know, they just are right. And he was like well, you better find a reason then, because we need a headline. Okay, yeah, we could just make it up, yeah, but the reality is, no one knows.

Jon: 19:28

And I’ll tell you what one fact. It’s just kind of the mind of it. Have you heard of Jim Cramer? I’ve heard of him. Yes, he does a show on I think it’s like CNBC or one of these sort of American things and he’s a stock picker and he is notoriously bad at it. And have you watched? Last week tonight with John Oliver, he did a big montage of Cramer’s bad goals. You know, one of the most famous ones is him telling everyone that Bear Stearns was a buy two weeks before they went bust. He did the same with Silicon Valley Bank. There was a great one with Facebook where he, at the peak of Facebook share price 12 months ago, he was calling it a buy. It’s brilliant. They’re geniuses. This meta thing is all what it’s about the metaverse. And obviously then the share price tanked to the point where, two weeks after he recommended it as a sell, the share price inverted and it’s since been on a rally and some guy created an ETF called the inverse Cramer. So all it did is placed a trade opposite to whatever Jim Cramer picked and I think it’s got a Twitter account and everything like the inverse Cramer and it really worked for a while. But it’s now started to not work so well, because what happens is everyone bows money into the inverse Cramer and suddenly it’s twisted, the logical, the theory behind that as a factor, but for a while.

James: 21:03

But I think, but here’s my high level, here’s the high level Jim Cramer play Okay.

Jon: 21:08

Jim.

James: 21:09

Cramer is saying he’s going to do one thing. It’s saying he’s going to go up and he’s flipping, selling. You know what I mean? He’s not buying, he’s doing. Cramer is the real mastermind.

Jon: 21:19

That’s what’s happening. He’s playing 4D chess with. The rest of us are playing drafts.

James: 21:23

Yeah, 110. He is playing us. At least that could be what’s going on.

Jon: 21:27

That could be possible, anyway you never know, you never know. So you know different portfolio managers, different people will have different takes on the factors that could be at play. But that’s the kind of the next level of asset allocation. We tend to focus on small cap, on growth, on quality, and then you might look at throwing something like momentum in there as well as a possibility. So you then allocate to these to try and produce a rounded portfolio. And I’ve described these factors to people was like taking that tin of heroes or quality street and which one do you tend to get Christmas heroes or quality streets, heroes, heroes and what’s always left at the end.

James: 22:22

Oh, do you know what? I always get heroes and flipping celebrations mixed up. What’s left at the end? Of the heroes? The heroes of the Cadbury’s ones.

Jon: 22:30

All the celebrations, whichever one you’re thinking of, I can’t tell the difference between the two.

James: 22:35

Yeah, the issue is I don’t actually know which ones, but anyway, I’m pretty sure heroes of the Cadbury’s ones, in which case it’s those caramel ones. They’re always left.

Jon: 22:44

Yeah, the ones that are left, yeah, they’re horrible. I probably think celebration and it’s always the bounty in our house.

James: 22:51

Oh what? Yeah, they’re the first to go.

Jon: 22:57

Oh, I see, Okay, that’s great, but the one in the tin of roses or quality streets? The Toffee coin, right? No one goes to these. No one goes Right exactly. And using these factors is like taking an approach to these sweets for chocolateyness and sweetness and crispiness and softness and you just end up all you’re excluding is all the Toffee coins at the end. Right, because you just get rid of the ones that actually no one wanted in the first place. There are a lot of zombie companies that just move on. So by blending these factors together, you can kind of dice up the market and end up with a much better investment experience, tilt it in your advantage, and that’s just one way of kind of taking stocks and bonds then into global asset allocation and where we’re allocating around the world, and then onto the factors that might be at play within a portfolio.

James: 24:01

You know, the sign of an effective analogy is one that everyone can relate to and totally understands and that actually really works. But anyway, I love analogies.

Jon: 24:13

It’s like my favourite.

James: 24:15

It’s a really good one. Anyway. Stocks okay. So we’ve investigated stocks under a magnifying glass. What if we want to do the same for bonds?

Jon: 24:24

Yeah again. So there’s a few things with bonds. I’ve got some slides to my left if people are watching this on anything, because some of this stuff is so detailed I can’t do it from memory, especially on a Friday night but when it comes to bonds, there’s a few things that really impact it. Again, you would make a decision about what global asset allocation you’re going to take with your bonds and also the allocation between company debt and government debt, because they have different characteristics. So, for example, with Juniper, we focus on UK debt because we don’t want any credit risk or not any credit risk, any currency risk in this part. Our view on bonds is it’s there like the tonic in a Jun and tonic Sole job is just to take the kick out of your equities. Nobody wants it on its own, apart from my 12-year-old who will drink tonic on her own.

James: 25:34

Oh see, see right, that analogy mightn’t quite work because the Jun is the fun part of the tonic John.

Jon: 25:41

Yeah, that’s the equity. Oh right, oh sorry, oh sorry yeah yeah, yeah, I’m completely misunderstood. No, no, no, I’m sorry, it’s the fun part, and the tonic just takes the kick off right, right, right, right, right right. You don’t want to get drunk too quickly, so you have a bit of a tonic. You might have a single instead of a double or a double.

James: 26:01

Oh okay, but you have to have some fun, right, and therefore there usually is a little bit of gin in there right, because nobody drinks tonic on its own. Okay, I’m getting way too sucked into this. Sorry, I’m misunderstood but I’m going to check off the gin and tonic analogy Don’t worry, don’t worry, it’s fine, it’s fine.

Jon: 26:25

So, anyway, you can look at the global allocation. You might look at some US bonds. If you’re wanting a higher yield on it, you might push into sort of a high yield debt or some countries that have much higher yields on their bonds. There was a point in 2013, I think, when the yield on a Greek bond reached 110% because nobody believed that they would be there in 12 months to pay back that debt. Not the kind of play that I would go for, because I don’t think our excitement should come in from the bonds. So that’s that. First decision is what bonds do I want and what countries are we going to go to for that? And this is where that decision of actually what parts. What is the purpose of bonds in your portfolio? Are you looking for income? Are you someone who’s investing in bonds to get natural income to pay for stuff, or are they a diluter to your big equity portfolio? And then we have term, so there’s a length of the bond, so you can get these long dated bonds. Some governments have issued bonds that are 100 years long and you get really short dated, so you can buy bonds that are just in the last one to three years of their term, and that term is a really big, important part of the return of a bond. And then credit. So how credit worthy is the country or company that you’re lending money to? The US, very, very credit worthy. Argentina, not so credit worthy got a bit of a history of defaulting on debt and this will then play into the risk profile of the volatility that you could expect and the returns that you’d expect from a bond portfolio. Give you an example. All right, now I’m gonna use an analogy that’s a bit visual but hopefully people can picture it in their mind. Is this term and yield are like two ends of a seesaw. All right and sorry. The capital value and the interest rate on a bond are like two ends of the seesaw, and term is like the distance you’re sat from the fulcrum or from the middle of that seesaw. So if you’ve got a really long dated bond, the capital value is gonna go up and down quite significantly as the yield changes, because a hundred pound bond paying four pounds a year is a 4% yield. But if everyone suddenly wants 8% for their bond, your bond’s now only worth 50 quid. And that’s what happened when Liz trust took over. Interest rates went from a half a percent to three or four percent and suddenly bond yields dropped significantly. But if you’re short dated, if you’re sitting really near to that middle of your bond with the term, in middle of the seesaw, you’re not gonna experience as much volatility because you know you’re gonna get your principal, your hundred quid, back. Yes, one to three years, that makes sense. Yeah so it makes a really big difference to your experience as an investor and this last 12 months. Bonds are supposed to be the tonic right. They’re supposed to be the boring bit low volatility, take risk off the table, all that kind of stuff but there’s a whole swathe of investors over this last 12 months who’ve been sat in long dated bonds Some of them put there automatically by their pension funds or by their advisors who have been sitting on 30%, 40% losses because they were in long dated bonds and it’s been catastrophic. So bonds like the term, the credit worthiness really important things to think about with your bonds. And are you looking just for something to take risk off the table, in which case, like we do at Juniper, we just stick to short dated UK bonds or are we looking for something that’s gonna add a bit more spice in there and get some interest, some yield from our bonds and maybe even some currency risk by having Japanese bonds or US bonds, et cetera?

James: 31:12

Okay, cool. So there’s a little bit of a part in 20. We got heavy there. It’s good because it’s proper media stuff that is full of well. It’s interesting, isn’t it? We can dig our teeth into it. So, when it comes to bonds, it’s a little bit more calculated. Is it the decision to buy bonds versus equities? There’s a little bit more few more things you have to consider. Is that a good way of putting it?

Jon: 31:38

Yeah, yeah. Well, also, like bonds, could be a lot more scientific. They’re very predictable because you know what your yield is and you know what your term is when you buy the thing, so they can be quite predictable and you can model what will happen in certain environments. So you really want to be buying bond funds that are gonna do what you expect them to do if you want to be in bonds, I like it.

James: 32:09

So, when it comes to when it comes to, let’s say, purchasing an ETF which will give us exposure to the global economy and which is some people’s entire portfolio, if there- are 100% equities and that’s fine and on a level that works, when your time horizon is extremely long and you can handle the volatility. The second we start to put bonds in there because it’s a more involved process. Let’s say, people are thinking about divesting, okay, and they’re getting to that realm where we’re thinking okay, because traditionally the logic would be if you’re 10 years, and tell me if you agree with this. But traditionally the logic would be, when you’re outside of 10 years of having to touch your principal, as in your assets, then the traditional logic would be that where volatility is not a consideration and emotional factor not a consideration, we’re 100% equities, right, yeah, so as soon as we get within that 10 years and we’re thinking, okay, divesting is on the horizon, okay, now what we need to do is smoothly, smoothly start to withdraw some of the value of this portfolio and turn it into cash. Right, so we’re gonna use bonds as like a halfway house, okay, yeah. So the second that we start to purchase bonds right, because there’s a few more intricacies to it. Is that something that realistically, a retail investor could do, or would you advise getting some help from a professional at that point?

Jon: 33:49

I mean, I’m a financial provider. Most people, I think, would benefit from taking actual financial advice on these things, I think, interestingly, on a total market cap fund, whether it’s an ETA, you’re still only getting although it’s called a total market cap, you’re still only going to get 35, 40 percent of the global companies in something like that, because often they can still get enough tracking error of the global market without touching some of the smaller, more illiquid companies that they can’t get involved in. So you can improve your output by taking a more siloed approach to investing in different markets. So it’s a good starting place to be, but then there’s more nuanced ways to go about doing it. But then, when you’re looking at bringing some risk off the table into bonds, there are ways to go about doing it as a DIY investor. But I think the bigger thing with this is the cost of mistakes gets much bigger to recover from. If you’re in your 20s or 30s and you put 10 grand into a total market cap fund and it drops 50 percent, you’ve got 30, 40 years, whatever to recover from that and it’s only five grand. You’re coming into land at retirement the cost of a mistake one. You’re going to be talking hopefully more significant numbers and, like your million pound example, at the beginning we dropped 50 percent on a million pound portfolio. If you lost half your portfolio, how do you recover from that? It’s very, very difficult. You don’t have the same earning capacity. Interestingly, time Horizon probably hasn’t changed too much. Go. So that’s really interesting and I think obviously, as an advisor, I’d suggest that everybody would gain value from talking to a professional advisor at any point through their journey, because even a total market cap fund isn’t going to capture the whole of the market. They’ll sort of batch us, say, like 40 percent of global companies and it does enough of a job to manage without a tracking error. But certainly as you’re coming in towards retirement, things start to get real because the cost of a mistake and your ability to recover from a mistake becomes much harder. The cost is bigger and it becomes harder to recover. If you’re sort of 25, 30 years old or whatever and you lose 50 percent of your portfolio in global equities or you’re stuck in long dated bonds when there’s trust took over and you lost 50 percent, it’s not a problem. You’ve got 30 years to recover and it probably was a relatively small amount of money in the scheme of your life’s earnings. But if you’re 55, 60, just sold your practice, you’ve got your lifetime of pension savings and stocks and shares, isa savings and we’re sitting on a seven figure sum and we get it wrong. That’s your years worth of work gone and years that you don’t have ahead of you to work and earn back that mistake. So it gets really important to manage that. And, although you can go out and DIY bond investments, I think the process of really thinking through the risks you’re willing to take not willing to take where you feel exposed, thinking about what you want to achieve over the next 20, 30, 40 years of your life, that’s where the power of financial planning and advice will come in, because you can then slot your portfolio into this and take risks that are appropriate for what you’re trying to achieve over the course of that and I think that the old wisdom is now out of date on this. The old wisdom was that you would drastically reduce risk at 60 and maybe even buy an annuity. Now annuities are dead. Even now that interest rates are high, I think the interest, the yield you get on annuities about 3.5% on an index linked annuity. So why would you hand over 100 grand to get 3.5 grand a year? You can be 88 before you get your money back. So the wisdom is different. But also longevity is really starting to impact this. There’s a really interesting stat. I use JP Morgan’s Guide to Markets quite a lot for some of this research. It’s a free app on iPhone and iPad really useful to download. In their most recent slide they’ve got one on life expectancy in the UK and if you’re 65, I’m going to ask you to guess this right If you’re 65 and you’re a man, what percentage chance do you think you’ve got of living to 80?

James: 39:41

Well, I mean, I’m actually roughly O’Faith with average life expectancy figures, so that would be 82 for men-ish. So let’s work off that, if it’s roughly that. So if you’ve already made it to 65, your chances of making it to 82 would presumably be higher, because there’s probably a lot of people who die from memory. There’s a lot of people who die young and then people tend to survive and then they, you know, as life expectancy comes up, that death rate increases again. So I suppose the answer, if that’s the average, if 50% is the average, then you’d say 50% would make it there. Okay, right, by logic, and it would be slightly higher because they’re already. 62 is my logic, so I’m going to guess 55. It’s 67%. Oh, the logic was there, though. The logic was there though.

Jon: 40:41

The logic was there, though, but women it’s 76. Okay, but when you look at it for a couple, one member of that couple to live with age 80, what do you think the percentage is?

James: 40:56

One member of the couple to live with age 80. Yeah, so was there a qualifying factor there? Were they already 65? Yeah, yeah. So I’m not even going to try to logic this one, I’m just going to pull an answer out of the air. I’m going to say 70.

Jon: 41:14

No, it’s 92%. Oh, okay, which is? Crazy Now let’s push this out to 90. All right, what percentage of men who are 65 will live to 90?

James: 41:26

65 will live to 90. Well, it’ll definitely be lower than whatever we said a minute ago. 64, was it? 90, I’m going to guess 43. Nice, 24%. 43 is a bit high, really, isn’t it? Yeah, I should have thought about that, yeah.

Jon: 41:42

So one in four men who are 65 will live to age of 90. What about women?

James: 41:49

Well, women live longer than men, so one in three.

Jon: 41:53

Yeah, so it’s 35%. That’s very good guess. And a couple. Final one, a couple. What percentage of a couple will have one person live to the age of 90?

James: 42:07

So presumably it’ll be somewhere between one third and a quarter right think about what happened in the last one. Yeah, oh yeah, it went. It went crazy high, didn’t it? Okay, 55. 51%, yeah, oh yeah, because of course it wouldn’t. It wouldn’t be between them, it would be. We’ve got two people.

Jon: 42:28

It’s the weird way, things just do ahead. But if you think like 65 year old couple, most, most people marry someone within sort of five years I say 65 and you’re retiring there’s a 50-50 chance one of you is gonna live to 90. That’s 25 years. Wow, why would you invest over the short term?

James: 42:59

And people are living longer. Yeah, people who watch this podcast average age 25 to 35.

Jon: 43:08

So the stats say and and what you also then will add into this is you know, I live in the North West. Blackpool is just down the road. City centre Blackpool. Life expectancy is 55 for men.

James: 43:19

No way.

Jon: 43:21

Because because of it has this whole thing of like, a lot of a lot of people very difficult backgrounds went on holiday to Blackpool in the 70s when they were kids. So you get a lot of drug addicts migrating there to live up there their days. So their life expectancy is atrocious. It’s just true. Most of the people living to this, listening to this podcast, will be above average health, above average wealth, living in above average areas. They’re above average people, so they’re gonna live typically longer than the average person. So it becomes really important that we don’t de-risk too much in those early years but also we don’t try and have this static income. So that’s where, like asset allocation comes really important in this the way we want to so live our life through what could be a hundred years of living.

James: 44:19

Food for thought, john, thank you so much for all your wisdom today. Coming up to the 40-ish minute mark, I’d like to keep things around about then, for conciseness, any words of wisdom just to round off.

Jon: 44:33

No, not at all. If this is sparking in your interest, you know we’ve got some more stuff that we can send to people. So if you’ve got any questions or want to dive deeper into this, you can reach out to me. Juniper John, on Instagram and Twitter, at Juniper Wealth UK, I think on most social media, and JuniperWealthcouk is our website. So yeah, just here to serve.

James: 44:57

That’s stuff. Thanks so much, john. Hope you have a lovely Friday and a lovely weekend. We’ll speak to each other very soon.

Jon: 45:02

Also my catch in bed.