#17 - Finance Fridays - Learn The Boring Stuff, Lump-Sum Investing, Giving Up on Pensions

*This is not financial advice, just me brainstorming about things related to money. Stocks are extremely volatile - value can go down as well as up. All investments and income streams may be subject to tax.

Contents:

• 🧐 Question of the Week - Why are Millennials and Gen Zers giving up on Pensions?

• 🥗Side Hustle of the Week - Food Delivery Driver

• 🎒Useful Resource - Boost Your Career By Learning Something Boring

• 💹 Investing - Is Lump-sum Investing better than Dollar Cost Averaging?

🎒 Boost Your Career By Learning Something Boring

Being a valuable team member is key to career progression but it's easier said than done. You need to bring something to the table that no one else can and that can take many forms. Including being really good at something, especially something that everyone else ain't.

It’s not sexy or flashy and might be considered boring but most people have limited skill with spreadsheets. This would be an opportunity for you to learn how to either create Dashboards, automate admin tasks or anything else that might make life easier for your colleagues. And in return you become a valuable member of the team.

It's a bit like the IT guy - everyone needs him. They can't live without him and if he woke up one day and said I'm leaving, the business will do everything they can to keep him because who's going to replace him?

So consider being the spreadsheet guy/gal. Create the spreadsheet that everyone uses to automate their work with this 10 day Challenge. It's free.

💹 Is Lump-sum Investing better than Dollar Cost Averaging?

Inspired by: How to Invest New Cash: Dollar Cost Averaging vs. Lump Sum Investing

Dollar cost averaging is always recommended as the preferred way to invest but it’s not because it makes you more money.

Lump-sum investing outperforms dollar cost averaging almost 75% of the time, according to data from Northwestern Mutual, regardless of asset allocation.

Disadvantages go further, every time you invest you’re charged a fee by your investment platform so you’re incurring fees every month versus once a year for example. 

All the evidence shows that lump-sum investing is better over the long term so why isn't it recommended?

The psychology of investing means that you are more likely to make rash decisions when you have put large amounts in at once. Also the reality is we rarely receive a lump sum of money, most of us get paid a salary on a monthly basis.

For example, if you put £10,000 in one go into the stock market and it goes down 20% in 6 months, you'll probably feel compelled to take the money out thinking you'll come back later and time the market.

Attempting to time the market would mean statistically you'll be more likely to miss out on gains in the long term.

On the other hand, putting the same money every month means that you don't feel you've overcommitted at all and are more likely to stick to your original strategy. That is staying for the long term no matter the volatility.

🧐 Why are Millennials and Gen Zers giving up on Pensions?

The number of financially vulnerable 30-somethings who are failing to set aside money for their retirement has increased by more than 5%, or 72,000, according to data science firm Outra.

More young people than ever are giving up on pensions. This is not surprising given the general pessimism creeping into this generation of young people. Why plan for retirement when you feel the world is going to end?

I totally understand optimising for your golden years instead of planning for an uncertain future. I wouldn’t recommend it but I’m simply more optimistic in my own future than most people.

If governments want people to invest in their pension they need to show us a brighter future.

Personally, the amount of money that I sacrifice into my pension isn't significant enough for me to risk jeopardising my retirement. You have to consider that pensions are taken from your pay cheque pre-tax.

So you're not gaining an extra £100 from your pension pot directly into your wallet. IF you gave up your pension, you’ll lose out on: (£100 + your employer's contribution) 40 years *compounded annually versus £100 - taxes (NI + Income + Student Loan). 

I would only opt out of my pension if the amount felt life changing. If I'm just going to spend it on more partying, nice clothes and dinners then I might as well hold off. If you’re going to opt out of your pension, just have a clear idea on what you will spend it on.

🥗Side Hustle of the Week 🚥 (Food Delivery Driver)

🔴 - Potential dealbreaker

🟡 - It depends

🟢 - Very Ideal

1. Hours per week 🟢 - Completely dependent on you. There’s a direct linear relationship between hours worked and income

2. Skill required 🟢 - None

3. Up front cost 🟢 - Your mode of transportation

4. Market saturation 🔴 - Depending on your area but it’s more competitive than ever nowadays

5. Timeline to reach success 🔴 - There can only be success if you have realistic expectations

6. Income potential 🔴 - It’s less than minimum wage regardless of what the official websites say.

Earning £5.28 per hour in 2024 should be illegal but it’s not when it comes to the gig economy. But I won’t knock the hustle because some people only want to make an extra few 00s every month to cover expenses which is entirely possible with these types of gig jobs with minimal hassle.

If you want an insight into delivering in London, I tend to enjoy watching these videos by London Eats. I can’t explain why I do, it’s kinda calming. Like background music.

✍🏿Quote of the Week 

“Booking travel the same day? You must be a business traveller, please – bend over. ”

― Scott Galloway