Day One - Inflation

You're here.

I'm so excited you're doing this Five day one course.

So many people have been through it and loved it.

Thousands of women at this point.

we're talking about inflation, which is a big one.

When you understand inflation, it's going to just unlock so much of this investing, savings, personal finance journey for you.

But first of all, quick introduction to me I'm Hannah.

I am, a qualified financial advisor, although everything I do here is financial education.

I didn't want to manage people's money.

I wanted to give them information and the knowledge that they can just manage things themselves, which is, I think, very effective and much more cost effective.

So this is to give you the confidence that you understand investing so you could then go away and do it by yourself.

I haven't always cared about finance.

I did a big career pivot about three years ago now, moving from the fashion industry into finance.

And that's because my life story just kind of gave me this path.

I had grown up with a single mom, and then I lost my dad when I was 22 and I received some money and I just had no idea what people did with money.

So it was this very long journey to figure out, very complicated as you've probably found.

These things just, just don't seem to be made easy.

So I figured it out, started my investment portfolio in 2018.

That money has now doubled seven years later.

I, started teaching my friends during 2020.

Their money started growing really quickly.

And I was just like, this is so unfair that if you don't have someone that you happen to know who can tell you about this stuff, you might just completely miss out.

So that is where I kind of founded what is wealth and has stepped in for that.

So, very quick intro.

Now let's get back to inflation.

So bas, inflation is the main reason that we might care about investing because inflation is the reason that savings do not work in the long run.

And by long run, I mean kind of like definitely over decades.

And there's a rule of thumb that, anything, any cash maybe you don't need for the next five years is what you could consider investing and kind of letting it Grow for you for the future.

The idea is that five years plus is, should just be long enough that even if we have some dips or some kind of bad economic environments, it kind of like even drops a bit.

It should grow again and it should give you that longer time horizon, like five year time horizon for your money to grow and so that it's worth it basically, because we're going to just talk about this in a later day.

But the kind of price of admission investing is that it goes up and down, which is why it's a long term play.

This is not about picking winners and losers and things going up and down.

This is about a long term, steady, stable wealth strategy that yes, we'll go up and down, but we can be quite confident in and that's hopefully we'll come away by the end of these five days.

So inflation is what I call like the stick of why we should invest.

There's the carrot which is like we can make good money and make our money make money.

And the stick is that like actually if we keep our money in savings over the long run, it's losing value, it's losing purchasing power and it's kind of sneaky because if you look at the, if you look at your savings account, it looks like the same number.

It might even be growing if you've got, you know, a bit of an interest rate on that savings account.

But the amount that it's going to be buying you in the real world is less and less and less over time.

It's getting less and less powerful, it's buying you less and less stuff.

So your purchasing power of that money is going down over time.

And if we put this in some really tangible examples, in 1975 in the UK, the average house price was £10,000.

Fast forward to now, 50 years later, we're in 2025.

Well, I'm recording this down.

2025.

And 2025 The average house price is £270,000.

So you can imagine that if I was in 1975 and I just kept that £10,000 in a savings account, I was like, cool, I'll be able to buy a house with it in 50 years.

I don't need one yet, I'll get one in the future.

I'll buy one for my kids in 50 years time.

That person would have a big shock if they were just suddenly transported in 2025.

They'd be like, what?

My £10,000 doesn't even get me a deposit on the average house.

So you can See there, like, yeah, maybe savings aren't great in the long run.

And this is also incidentally why our pensions are invested.

And this was a big light bulb moment for me because pensions are very like this sensible financial thing.

The government really want you to do it.

They give you extra tax top ups when you put your money in a pension because they want you to do it.

So that never felt risky.

That feels sensible.

But then investing always felt like risky to me and scary.

but pensions are essentially just putting your money into investments for the long run, because in the long run, savings don't work.

And that is why pensions exist for that long term growth.

So we also want to be utilizing that for our own personal finances.

Inflation's become a lot more relevant in the last three years, particularly so in 2022, around that time, we started to have this big spike in inflation where things get more and more expensive, more and more expensive.

And, you know, interest rates went up as well.

So your savings account, you know, if you put into a good one, maybe you were getting 3, 4, even 5% on it.

in some of those years, kind of rate at which things were getting more expensive was 9%, 10% even.

So, okay, it looks good, I've got 5% of my savings, great.

But things are getting 10% more expensive.

So you're not keeping up.

And that is the issue.

We need to be keeping up with how expensive things are getting.

And that is what investing can do for us.

So have a think about.

yeah, actually, if I think about how much I spending on maybe a food shop in 2020 versus now how much I was spending on my mortgage or rent, like, you would have felt this as well.

You would have felt the impact of inflation.

That's also impacting your cash savings because they're just not going to be able to keep up in the same way that they used to.

So hopefully that's giving you a good intro to inflation.

next one, Day two is going to be about compounding.