Ask Faleskini
Modern life and business from a skeptic's perspective. AskFaleskini helps you distinguish what is sustainable and what is not. Not everything that shines is gold and not all mud is dirty.
Peter Faleskini and his guests provide no-nonsense advice on what works and what does not in business and life.
Ask Faleskini
Is the gold on the way up? Second interview Simon Popple
Simon started off on the normal path to success….
After completing my MBA at Birmingham University, he worked in the Corporate Finance team at Singer & Friedlander. He was then headhunted to join the Senior Banker group at ABN Amro and after several years he became one of the founding members of their Financial Sponsors team within the Corporate Finance Franchise. From there he went on to become Head of Investment Management at Strutt & Parker Real Estate Financial Services and then he joined Topland (one of the World’s largest private property companies) as a Director.
That was considered “successful”
He had a Porsche a nice house, a good job…..
Thought he was pretty successful. "All that and a cup of tea”.
Turns out - he wasn’t.
He was a director of one of the World’s largest private companies in my 30’s. Anyone "looking in"….would be impressed.
But they didn’t see his pension statement. he kept that to himself.
On the face of it…..it didn’t look too bad. But there were an awful lot of “assumptions”.
One was about INFLATION. Let’s just say it was LOW.
He didn’t care. Inflation WAS low.
Retiring was a long way away.
Fortunately, 12 years ago, he did a bit of maths.
The question was really simple. What happens to his pension if we get inflation?
He crunched a few numbers (He can be a bit of a nerd).
Now it gets depressing…..
If you assume an inflation rate of 8% over the next 10 years - The present value factor is 0.463
Let’s say your pension pot is worth £1,000,000.
Bear with me, this is a bit boring. If you multiply that pot by the present value factor, that means if we get 8% inflation for 10 years, in today’s money, it’s worth about £463,000
Scary eh!
It gets worse.
If you apply an annuity rate of 4.5% that gives you an income of less than £21,000 a year - I assumed I'd retire at 60.
When he would crunched the numbers annuity rates were A LOT HIGHER. But it still didn’t look very good.
He just stared at the screen - Unbelievable.
Back to TODAY. Things have got a lot worse.
£21,000 a year…..seriously? What about AFTER 10 years? He is hoping to live longer than that!
He did this simple math in my early 40s.
He had a choice. Do nothing or something.
He chose SOMETHING.
He packed his well-paid job (he was raking in well over £100,000 a year) and started researching commodities. He was convinced they were the future. People thought he was mad.
Come to think of it. That does sound a little bonkers.
His investments went well.
Simon was asked to write
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