Kids are a pain. One minute you’re funding their entire lifestyle. The next minute they’re off to university or buying their first flat – and you’re still funding their entire lifestyle.
But perhaps you want to do even more for the young people in your life?
Maybe you want to help give your little ones (another) leg up?
Maybe your genes are forcing your hand!
You’re not alone. Almost £10bn has been socked away in Junior ISAs (JISAs) for the benefit of children, for example, according to AJ Bell.
That’s equivalent to 1.25 million JISA accounts – or roughly one for every ten kids in Britain. Although in reality some lucky children will have multiple accounts, like mine.
Do my kids appreciate this foresight and generosity? Well one thinks everything costs £20 and the other prefers eating coins to using them. So we aren’t quite there yet.
And this hints at the crux of the issue – children are, well, children. They don’t think in the same way as hardbitten Monevator-reading adults.
Which is charming enough when you’re on a trip to Disneyland and they still think Mickey Mouse is real.
But it could be somewhat less heartwarming if they blow half the money you saved for them on a bender in Ibiza the day they turn 18.
We’re spoilt for choice when investing for kids
The first thing to say is that parents have many options when saving for their children.
Easy does it: standard cash and investing accounts
Obviously you can put cash straight into a child’s bank account. Depending on their age and the bank in question, you can then control withdrawals. 1
Children can also hold shares and funds via designated or bare trust accounts.
In all these cases, by the time the child turns 18 they typically gain control and with it the ability to withdraw all of the cash and shares.
But just shoving money into a standard account like this isn’t ideal, because once a child earns over £100 in interest from parental gifts, their interest is taxed as if it was earned by the parent. The same thing applies if you buy shares for them, too.
Not surprising really, given what an easy tax-dodge little Junior would otherwise be.
If it’s not your child, though – perhaps a grandchild – crack on!
I’m sure some of you have spotted some potential loopholes in these rules. But the spicy boundary between tax avoidance, mitigation, and evasion isn’t on my agenda today.
The tax-efficient route: JISAs, JSIPPs, and Premium Bonds
Want your kids to invest more tax efficiently without the risk of only seeing a parent during whatever visiting hours His Majesty’s Prison Service finds convenient?
Fortunately you have several options.
Junior ISAs
The aforementioned Junior ISA (JISA) is the most common way to save for kids. JISAs enable a child to save or invest up to £9,000 per year shielded from income tax and capital gains tax – so just like an adult’s ISA, only with lower contribution limits.
Junior SIPPs
Alternatively, an option that seems to be growing in popularity are Junior SIPPs (JSIPPs).
A JSIPP lets you get a child’s pension rolling, decades before most of their peers will ever hear the word. A child is allowed contributions of up to £3,600 gross (£2,880 net) per year. A 20-year head start on a pension will certainly turbocharge the compounding process.
Premium Bonds
Finally, you could buy them some Premium Bonds like everyone’s granny used to do. Winnings are tax-free, and so Premium Bonds are one of the easiest ways to put aside tens of thousands in cash for your children in a tax-efficient manner.
Also, unlike with a JISA or JSIPP, if your family wants to use some of the child’s money before they turn 18, Premium Bonds give you that option.
The complicated route: trusts
To retain a degree of control you could consider a discretionary trust.
Trusts enable you to define how the assets should be used, even after the children turn 18. They are often used for large legal settlements, or where relatives pass away leaving six-figure amounts that need careful management.
Beware though that trusts come in various shapes and sizes. The tax rules are complicated, and you will need expert advice to get the most out of them. If you’re a typical saver who just wants to save a few thousand pounds for a child – or even a few tens of thousands – then the complexity and cost will probably outweigh the benefits.
Keeping hold of the cash or assets yourself – rather than giving it to the kids – is the simplest option.
But I know it possibly sounds like the stupidest option, too.
Why waste the £9,000 per year tax-free allowance of a JISA? Or spurn the £3,600 per year JSIPP allowance – which could compound for 70 or 80 years to deliver a healthy pension? (Assuming the government in the 22nd Century allows your kids to retire before they’re 100.)
Why indeed?
Well, I think there are some advantages that I’ll get on to in a minute. But first a recap.
Investing for future generations: your options at-a-glance
Strategy
Age child gains control
Tax benefits
Cost of administration
Put cash into a child’s bank account
18, though many banks will give partial control earlier
If cash didn’t come from a parent, child can use standard £12,570 Income Tax allowance
None
Buy shares in a child’s name via a bare trust
18 (16 in Scotland)
If cash didn’t come from a parent, child can use standard Income Tax and CGT allowances
Set-up can exceed £1,000. Expect to pay annual management fees
Hold assets in your own name
Adult retains control
None, unless you use your own ISA allowance
Negligible, assuming you have existing accounts
It’s about psychology, not money
The real issue isn’t tax efficiency though – it’s psychology.
I was fortunate to start university with a few thousand pounds which my grandparents had invested into a cautious investment trust.
I’d also worked part-time since turning 17 and I’d saved some of my earnings there, too.
Moreover even at that age I was enamoured with compounding my money. (Perhaps excessively, but that’s a story for another day.)
So you can imagine the shock I had on seeing my fellow students gleefully burning through the free £500 overdrafts being doled out by the High Street banks.
This difference in our mindsets was driven home when I found myself lending £100 to one friend – a recent graduate from a particularly posh boarding school – who was unable to afford a train ticket home for Christmas. He’d squandered his allowance!
I can only imagine the carnage if everyone had hit Uni with six-figures in savings to burn.
More recently, I was consoling a somewhat glum colleague about his son’s JISA.
Oh, the investments he’d made were doing well. The snag was that his son had recently observed that the JISA balance could buy a brand new BMW i8…
The Ins but not the Outs of JISAs
You can manage a JISA for a child and make any number of astute decisions on their behalf. But the only way the money can leave the JISA is after the child turns 18.
And at that point, in an instant, the child (now adult) has full control.
True, you might have a mature and financially-astute child who continues to manage the pot carefully and industriously.
But then again, you might not.
What if you twig when they’re 16 that getting access to all this money is going to be a disaster? Well, you’re out of luck. It’s going to them whether you like it or not.
If I pointed out that a young person might blow the lot on alcohol and a sports car and find themselves wrapped around a tree at 3am, I might be over-egging the case.
But you cannot expect the average 18-year-old to spend in the way you’d like them to.
Nor can you tell when they are three, eight or eleven-years-old whether your have a child that’s out of the ordinary in this respect.
Is a pension the answer?
I’m equally sceptical of JSIPPs – although for a different reason.
If we consider the big challenges facing young people today, student loans and high house prices loom large.
Scraping together the deposit on my first home was a goal I’d worked at from the age of 17. It took a lot of hard work and, ahem, frugalism.
And I’m not sure as I was striving away how much I’d have appreciated knowing my grandparents had put money away for me… to access in the year 2065.
I don’t think that I’d have been ungracious!
But given that the start of someone’s financial life is typically when things are toughest, you might be doing a child a disservice by ring-fencing money for some far-off future when they’ll be grey-haired, or maybe not even alive anymore to spend it.
Why I would choose the suboptimal option
Personally, if either parent has space in their own ISA allowances, I would encourage hiving off a segment of that for your children before you open a JISA.
You can pay them lump sums from this allocated money as needed in their future.
By retaining the money in your own accounts, you have full control of it. And you don’t burden your kids with needing to make good decisions when they’ve only just become old enough to legally drink.
Now, you may be gnashing your teeth here. And I too usually prefer financial arguments to psychological ones.
If investing typically results in a higher return than paying down a mortgage, say, then investing is what I’ll prioritise.
But when you’re making money decisions for other people, you need to think broadly.
It’s like how some debt specialists advise people to pay off small quantity debts before high-interest ones. They know that psychologically the person with debt may be more motivated by seeing small debt balances disappear completely – even if financially it’s nonsensical to pay down anything but the debts with the highest interest rates first.
Getting people in debt to keep getting out of it will always beat the strategy they give up on.
Taxes might sting
If you do feel able to allocate some of your ISA allowance to your children, all good.
However what if both parents are already making full use of their ISA allowances?
Well, investing outside of tax wrappers brings with it the potential for dividend tax at up to 39.35% and capital gains tax at up to 24%.
And that’s clearly the main disadvantage of foregoing the JISA or JSIPP route.
There are a few ways you can try to minimise the tax drag:
Use your ISAs for your equity holdings and hold your tax-advantaged gilts outside
Encouraging relatives to keep money in their own name rather than handing it over to you immediately. (Though this comes with obvious issues, too. And don’t forget inheritance tax!)
There’s no way around it for some parents though – they will inevitably have to choose between going with JISAs and JSIPPs or else paying taxes.
As I say, I’m sceptical JISAs and JSIPPs are the no-brainer many people seem to think. So I’d be prepared to pay some tax to keep control.
But if you specialise in risk quantification and you want to have a stab at telling me whether my kids will be a decent bet by the time they turn 18, let me know in the comments.
Am I a hypocrite?
The observant of you may have noted in the introduction that I mentioned holding multiple JISAs for my children.
And that’s true. You see, I’ve decided it’s reasonable for my children to access modest four-figure sums when they turn 18.
If they choose to blow that money when they get access that’s their prerogative – and potentially a clue as to how I should disburse their remaining money.
I’ve only invested a small amount upfront in these JISAs, and have made some rough projections based on historical data. I’ll top-up the accounts in the future if necessary.
For example I’ll want to roughly equalise what each child gets, after sequence of returns boosts or depresses their final totals. (This may seem tantamount to communism, but it feels fair to me…)
The rest of the money earmarked for them will sit with us as parents and grandparents. Then when the time is right – perhaps for a house or a car – we’ll be able to support them.
But until then they need never know that this money is even there.
I should stress the kids’ assets will be clearly delineated in my accounting from my own investments and retirement funds. And as I said, I’m an addict for saving for the long-term.
However if this approach would present too tempting a pot for either adult to dip into from time to time, then clearly JISAs or JSIPPs might be a better option.
There will always be risks
Who knows what world our children will inherit as adults?
Should we consider the risk that they start adulthood with a period of unemployment? Or suffering from health issues that prevent them from working?
Under the current rules, having just £16,000 of savings would make them ineligible for means-tested benefits like Universal Credit.
We can debate the politics of that endlessly. My point is even a well-managed portfolio could be soon burned through for very little benefit.
Similarly, what if your child meets a malicious lover who systematically extracts their cash before moving on? You might regret having put a six-figure target on their backs.
I once spoke to a guy at a firm who specialised in inter-generational wealth for ultra high-net-worth families. I asked him what his customers valued that might surprise me?
“Teaching their little [bleeps] how not to piss away the family fortune,” he replied.
Maybe that’s too cynical. The whole point of saving money this way for the future is to help our children – or other young people we dote on – to achieve their dreams.
We can’t protect them from everything. But we can make their path a little easier.
Are you putting money aside for your kids or grandkids? Did your elders do the same for you? Let us know how and why in the comments below!
Thanks for reading! Monevator is a spiffing blog about making, saving, and investing money. Please do sign-up to get our latest posts by email for free. Find us on Twitter and Facebook. Or peruse a few of our best articles.
The rules here can be very complicated. For example Santander’s 123 Mini can be managed by a trustee until the child is 18, but not if the child is 13 or older when the account is opened.[↩]
For MAVENS and MOGULS byThe AccumulatoronFebruary 10, 2026
Buffer ETFs you say? Sounds interesting, what are they all about? Stock market upside with limited downside? VERY INTERESTING! Tell me more!
Oh, there’s quite a lot of jargon isn’t there? [Flips through brochure.] I see. I see. I like this diagram, here. I see what you did there. [Notices funny smell.]
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I suppose it’s an occupational hazard of writing a weekly column that you become prone to thinking you’re living in particularly excitable times.
So for the record I agree that a 1930s Monevator would have been plenty preoccupied with the Great Depression and the backdrop to war.
Similarly, students dropping out of the rat race and Neil Armstrong popping onto the Moon would have provided plenty of food for thought in the 1960s.
Just since this blog started, we’ve had a financial crisis, riots in the capital and beyond, an economically witless rupture with Europe, and a global pandemic.
Even so, in 2026 the historical tumble dryer really does seem to have gone into a fast-spin mode.
And I’m not even talking about the latest grim Epstein revelations.
Top Trumped
Tellingly, the two factors driving this year’s tumult are tracked here in Weekend Reading by special link sections I introduced on account of their potential to cause mayhem.
The first is the ongoing disintegration of political norms in the United States under Trump.
As an independent floating voter, I happily ignored politics on this website for the first decade of Monevator’s existence.
The reason Brexit eventually loomed large on Monevator was, firstly, that it fell outside the normal political programming; secondly, that I was sure it would hit both our national and personal finances (see the chart below); and thirdly, because of what it represented – to me, a tech-enabled rekindling of an ugly old populism.
That was also why I began tracking US politics after Trump’s re-election.
That this man could be President after what happened in the 6 January Capitol attack was already beyond the pale. It pointed to those same populist forces growing stronger.
True, both Republicans and Democrats had been polarising into more extreme positions for years. But Trump represented a new and anarchistic impulse that boded even worse.
It seemed to me very likely that his taking office would have consequences for the whole world. And that, of course, is exactly what we’ve seen.
You needn’t be woke to wake up
I’m not talking here about whether you like Trump’s persona or not. (There’s no denying he’s charismatic.)
Indeed perhaps you can live with the President of the United States telling female journalists they should smile more – rather than answering questions about child abuser Epstein – or posting a video depicting the Obamas as apes.
For my part, it makes me feel angry and ill.
But all of us should be concerned by Trump’s kicking over the global order he inherited on entering the White House.
Trump’s domestic extremism is no exaggeration, as the Financial Timesnotes:
The speed, scale, flagrance and persistence of the Trump administration’s deviations from established legal and constitutional norms during his second term have been so dramatic that it bears stepping back and taking stock.
Within hours of his January 2025 inauguration, Donald Trump had pardoned hundreds of people convicted of political violence — a hallmark of aspiring autocratic regimes — and shown tacit support for violent resistance to electoral setbacks.
Days later he removed legal protections from civil servants and fired 17 oversight officials charged with tackling fraud and corruption.
By March the administration was in open conflict with the courts, summer saw police firing rubber bullets at protesters and the removal of the labour statistics agency chief in the wake of weak jobs numbers, and this month brought the criminal investigation into Fed chair Jay Powell and the shootings of Renée Nicole Good and Alex Pretti by Immigration and Customs Enforcement agents.
While US history is hardly free from political violence or maltreatment of disfavoured groups, this blitz on America’s citizens, institutions and — by many estimations — the constitution itself ranks as arguably the most rapid episode of democratic and civil erosion in the recent history of the developed world.
But to my mind Trump is not just an American problem. And not only because the way he runs his office can only embolden similar characters elsewhere. (See Trump’s Profiteering Hits $4bn in The New Yorker for a recap of his business as unusual).
It’s more because, from a selfish perspective, the end of the global rules-based order that Trump is undoing – to no benefit for the US, incidentally – enabled countries like the UK to earn more from trade, spend less on defence, and enjoy higher living standards.
Noah Smith describes what we’re getting in exchange for that system as ‘international financial anarchy’, arguing it’s why gold has been on a tear for the past year.
Smith warns:
Goldbugs are thus right about gold’s durable safe-haven status, but they’re not right that this is a good thing.
Gold isn’t a superior system — it’s a desperate fallback for a world in which the people who were in charge of the superior system abdicated their duties.
Which sort of takes the shine off the rally, eh?
AI is eating the software that ate the world (maybe)
The other big tumult in 2026 is being driven by – shock horror – artificial intelligence.
Huge market dislocations have hit both legacy software companies threatened by AI insurgents, and also the listed behemoths who are deploying oceans of capital into supporting all this AI that nobody else is really yet paying for.
Here’s just a sampler of the week’s news:
Software stocks hit by Anthropic wake-up call on AI disruption – Reuters via Yahoo
How the AI trade has changed (for the worst) in 2026… – Sherwood
Big tech loses $1.35 trillion as AI spending fears spark sell-off
It’s emblematic of the times when shares can sell off both because they are being disrupted by AI – and because investors are nervous about those same disruptors.
Though that’s not necessarily illogical.
Maybe cheaper AI models are going to crush margins for nearly all software companies, while delivering merely commodity profits to the big AI companies and the hyperscalers like Microsoft and Amazon?
An everyone-loses scenario, in other words. It’s enough to give a stock picker heartburn.
Disruptors disrupted
Passive investors may wonder, as some did before 2022’s rout, whether I’m crying wolf.
The markets are still near all-time highs, after all.
However, turnover beneath the surface has been pretty wild.
Multi-trillion-dollar Amazon began Friday down 10%, for example. Meanwhile a whole host of former ‘software as a service’ darlings are 30–50% below their peaks.
Even the UK market has not been immune, as some of the rare few companies in London that seemed to have a nodding acquaintance with the 21st century were overnight cast as losers on the arrival of a new plug-in for Claude AI:
The question: is AI going to destroy ‘old economy’ (guffaw!) tech stocks, or does the re-emergence of investor nervousness about the lavish spending plans of the likes of Microsoft and Amazon suggest more of a dotcom bubble-bursting type moment?
And if there is a dotcom crash parallel, will it still only be a matter of time, anyway – like how the Internet eventually did remake everything from music and movies to taxi cabs?
Or conversely, will AI run out of puff like, say, the metaverse or 3D printing or NFTs?
Pick your knows
For my part, I’ve rarely been more uncertain about how things will go.
How ironic! The potential dispersal among the winners and losers seems extreme, which in theory means lots of opportunities for portfolio outperformance, and yet the existential-level uncertainty is enough to make even a veteran active investor want to pause stock picking, buy the whole market, and let them fight it out for a decade.
I’m probably not going to do that. But that doesn’t mean it’s not a good idea.
Value conscious
On the other hand, perhaps it’s all just the age-old cyclical ups and downs dressed up with new buzzwords and fears?
Welcome, grab a stool for our latest interview with a Monevator reader who has achieved FIRE (Financial Independence Retire Early). Okay, so this month’s interviewee ‘Cheap and Cheerful’ has actually moved the goalposts late in the game and hasn’t yet pulled the ripcord on the daily grind. But fear not! This isn’t simply another case of One More Year syndrome. It’s more the potential for one more cost centre…
A place by the FIRE
Hello! How do you feel about taking stock of your financial life today?
Pretty pretty good! I had a big birthday recently and by most metrics I’m financially independent. I’m weighing up whether to retire. I’m still just about in one year more mode which perhaps I shouldn’t be. I’m a bit of a pessimist so there is always going to be a part of me that never thinks that I have enough. I think I might also struggle with no longer ‘accumulating’ in the event that I did hand in my notice.
How old are you?
41. I’m married and have been for nearly eight years. (We were courting eight years before our marriage).
Do you have any dependents?
No. Tongue firmly in cheek: we do have a cat which forms a disproportionate part of our discretionary expenditure.
My wife and I have recently decided that we would like to have one child. Given our relatively old ages on this front, conceiving might be tricky, and we don’t want to go down the IVF route. Clearly, if we do have a child this will impact upon our finances and we are budgeting accordingly.
Whereabouts do you live and what’s it like there?
East London. We’ve lived here since 2017.
There are great aspects: we’re walking distance from the City, and near great restaurants, cinemas, museums, and galleries. Another attractive aspect is the relatively cheap running costs of the flat.
Less good is the low level crime and anti-social behaviour, which has probably got worse in recent years. Life is about trade-offs!
If we have a child then we will look to move after the first few years but still stay in London. We don’t really want to move somewhere that involves driving and prefer city living.
When do you consider you achieved Financial Independence and why?
I’m not entirely sure. It’s complicated slightly by our recent decision to have a child. Before we made that decision I would say I probably achieved financial independence at 37.
My new aim is to build savings and investments that will allow withdrawals of c.£50,000 per annum, excluding my wife’s salary, covering my wife and I for the rest of our life, which I think our current finances just about allow.
My finances and my wife’s finances are quite separate currently and she does not want to retire early. If we have a child she will carry on working after maternity leave and I will be the stay at home Dad.
Any qualms?
Well, I worry about prospective equity market returns from broad indices over the next decade, particularly the US. We are well overdue a prolonged bear market and I’ve been ‘de-risking’ my portfolio over the last few years.
Assets: productivity over property
What is your current net worth?
My net worth is £1.96m and my wife’s is around £640,000.
What are the main assets that make up your net worth?
My assets are as follows:
Half share of our flat c.£250,000. (No mortgage.)
Investments
GIA – £665,875
ISA – £452,220
SIPP – £559,258
Defined contribution workplace pension – £18,246
Cash – £14,524
What’s your main residence like? Do you own or rent it?
It’s a two-bedroom flat with quite high ceilings which doesn’t get too hot in the summer. We own it outright with no mortgage. We purchased a share in the freehold not long after buying it, which thankfully avoids the problems of leasehold. We like living in flats and don’t really want to move to a bigger property, which invariably eats into your money and time.
Having said that if we have a child we would look to move at or around primary school age. We would still live in a flat or small property that is slightly bigger than where we live now.
The reason for moving would be more about moving to a slightly better area. Whitechapel has a fair amount of squalor, although Cambridge Heath Road has become somewhat gentrified which has been pleasant. (I’m all in favour of gentrification!)
Do you consider your home an asset, an investment, or something else?
Although I’ve listed my share of the flat as an asset, I don’t really regard it as such. Though I suppose I regard it as an asset in that I am not exposed to the uncertainties of the rental market, and rent does not form part of my annual expenditure.
Unlike many of my peers – and Britain in general – I do not think property is a very attractive investment. My Grandad thought property was a bad investment, which made sense given that he was born in 1918 and had a very different experience of property to my parents’ generation.
Most people don’t really monitor their annual running costs properly and certainly don’t quantity the cost of filling up extra rooms with more and more stuff!
If you want to FIRE then keeping property costs low is very important.
Earning: on the run from the law
What’s your profession?
Ignoring jobs before graduating from university, I’ve had two main jobs: a solicitor until I was 32 and an investment manager since then.
I did a history degree before going to law school for two years to do a law conversion course. I managed to get a training contract at a law firm before going to law school and they paid my fees and gave me an allowance. That basically paid my costs for the two years. I don’t think I would have gone to law school without this.
I found law quite dull. The area that interested me the most was private client work – wills, trusts, estate planning, tax, domicile and residency – which I specialised in. This was helpful in giving me a degree of expertise in tax, which is obviously quite important in one’s overall personal finances.
I can do my own will, tax return, and Lasting Power of Attorney. That saves considerably on professional fees.
And the switch?
I changed careers at 32, as I thought it was time to do a job where the subject matter naturally interested me – investment.
I’ve enjoyed being an investment manager more than a solicitor (although perhaps not as much as I hoped). The introduction of working from home improved my working experience too. I’m very introverted and find a busy office environment quite frankly a bit exhausting. And I really dislike committees and meetings, which seem to me often exercises in self-promotion.
I like the Japanese concept (hopefully it is still practiced) of only having meetings when there is a new point of business to discuss.
Performance reviews and interviews are all pretty grim too.
Can you tell me a little more about your job? For instance, are you running a fund? (Not that I’m an investing groupie with my nose pressed up against the sheer glass walls of the financial service industries’ skyscrapers or anything…)
My role involves managing a client’s investment portfolio by selecting investments and tailoring it to their requirements. Sometimes we work alongside financial planners who give tax, pension, and cashflow planning advice. It does not involve running a fund but I suppose the roles are not too dissimilar.
The job is client facing. We have internal analysts who provide investment recommendations, which we can follow. We have annual meetings – sometimes more frequent – with clients to explain investment performance, portfolio activity, and outlook.
What is your annual income?
My current annual employment income plus bonus and pension contributions is approximately £90,000.
My investment income (dividends and interest) is around £45,000 a year.
I don’t invest to generate dividends per se – I invest where I see value.
How did your career and salary progress over the years – and was pursuing financial independence part of the plan?
My initial salary as a trainee solicitor (two years) was £25,000. It then doubled to £50,000.
When I left the law I was earning around £80,000. Changing careers adversely impacted my salary in the short-term as I started at the bottom again as an investment manager. My salary progressed very quickly after passing my investment exams. And my investment knowledge was very high compared to most other people at my level.
I suppose I began thinking about early retirement as a concept when I began to read about equity investment in my early 20s. I had the grim realisation that to have the option of not being an employee I’d have to save like billy-o and invest well.
If I had substantially less money saved by 32 I would have not have switched careers. In some ways I’m quite risk-averse.
Did you learn anything about building your career and growing income that you wished you’d known earlier?
Not a huge amount. I suppose I would have liked to have entered the investment world earlier as I didn’t really like law. But then again, private client law gave me some very useful skills.
Do you have any sources of income besides your main job?
Yes. The largest part of my wealth accumulation has been through investing. As I’ve said, my investment income stream is currently c.£45,000 a year.
Did pursuing FIRE get in the way of your career?
I wouldn’t say in a direct sense but possibly indirectly in impacting my mindset.
I knew from an early stage that I didn’t want to be a partner having to spend much of my time managing people and clients. Additionally, I didn’t want the stress that comes from being a partner.
Many of them well and truly have the ‘golden handcuffs’ on with massive mortgages and expensive lifestyles and are often seriously stressed. I guess that attaining high status conquers all for some.
You seem to like your job and you clearly like investing. Do you really need to retire? Have you considered something more part-time or ad hoc instead?
My job is okay. I’m not sure that I have ever particularly liked being an employee. I find being around other people all day tiring. There are parts of the job – business development, marketing, committees, client admin – that I don’t like. But I have a good relationship with my boss who shields me from some of this.
Perhaps I don’t need to retire. Knowing I have enough money to retire has made me somewhat pampered as I know I don’t really have to do things that I don’t want to do!
Working from home has been a godsend. I have hinted at working part-time but I’m not sure how well this would work in practice.
Saving: a genetic inheritance
What is your annual spending? How has this changed over time?
My annual expenditure has always been very low. This is somewhat a family tradition.
My grandparents – tenant farmers – were ultra-frugal. My Dad said that they employed an accountant once (not sure for what exactly – some sort of farming thing) and he couldn’t believe how anyone could spend so little money. The accountant actually thought that they were on the fiddle!
My grandparents almost seemed to forget that rationing no longer existed. They saved bread bags, never bought new clothes, and so on.
My Dad was and is very frugal too. He retired at 45 so perhaps frugality is somewhat hereditary?
A pension adviser came to his workplace once and said in terms of saving he was in the top 1% of his workplace. Had he not been so frugal then my life would have been considerably worse, as sadly my Mum was diagnosed with Pick’s Disease when I was 14 – she was 45 at the time – now more commonly known as frontotemporal dementia. She died when I was 16.
Clearly, this event has shaped me and my attitude to money considerably. I view money to some extent as a shield as a result.
During my Mum’s illness I didn’t see many friends as I had to help look after her, which I didn’t regard as a hardship at the time. The hardship was watching her deteriorate knowing that she was going to die.
I learnt to make my own entertainment and read a lot which is my favourite thing to do. Even before my Mum’s illness I always enjoyed my own company. I didn’t actually look forward to the ‘play dates’ that she used to arrange when she was well!
One thing that I enjoyed doing which other people would probably find odd was writing out what I thought should have been the starting XI’s of all the Premier League and football league starting XIs. My memory for facts and figures at that age was pretty good!
Anyway, I got sidetracked…
Not at all, early childhood adversity often shapes the adult. And it’s easy to agree that your mum’s unfortunate early illness could have led to you developing a more cautious mindset.
Well, to get back on track I remember that when I earned my first year’s salary as a trainee solicitor – £25,000 – I saved £8,000. That’s excluding investment income or gains, so just from salary. My rent inclusive of bills was pretty cheap though at £300 a month. I wasn’t living in London then!
My saving rate stayed very high. In fact that was probably my lowest savings rate, at 32%.
My current annual expenditure now is around £17,000 a year, which includes £2,000 a year commuting. I separate my general expenditure and commuting costs as the latter will fall away should I stop working.
My current savings rate including investment income is roughly 85% on a pre-tax basis.
So you’re still spending like you did in your early 20s?
My spending has gradually increased over time, but my wife and I haven’t succumbed to lifestyle inflation. We go on holiday, have spent money on improving the flat, got a cat, go to the cinema sometimes, and eat out or meet up with friends periodically.
Some areas of lifestyle inflation have been no longer walking 35 mins to go to Lidl, spending more on holidays, and even buying some art!
Thankfully, my wife is also frugal. Clearly, if she wasn’t our marriage would not have worked.
My wife’s parents are Indian immigrants who came to Britain in the early noughties, having lived in India, the US, and Australia. She jokes that my family have an immigrant spending mentality.
If we have a child then our spending will increase a fair bit. But if I am indeed the stay at home dad, we will save a lot on nursery fees, thankfully.
Our joint spending is currently around £35,000 annually. I’m budgeting for this to increase to £50,000 over the long-term.
My wife plans to carry on working, as I mentioned, and this gives our budget more ‘flex’. Her current salary is £45,000, working four days a week.
That £2,000 seems a lot to spend on commuting costs, given you live quite centrally and you like to walk. Though I guess it does rain…
My commuting situation is a bit odd as I don’t currently work in London. This is because I wanted to work with my boss who I get on with very well. I have worked with other people previously who I really did not like. This is more important to me than location.
Will you leave London if/when you retire, or do you see your flat as your long-term home, despite what sounds a bit like a growing dissatisfaction with the area?
My wife works in London and walks to work. We’re both happy in London for now. We may look to move out but this wouldn’t be for at least ten years in all likelihood.
I think we would always live in a city as we don’t like cars.
Do you stick to a budget or otherwise structure your spending?
I don’t have a fixed budget. I do track my spending. My aim is to spend £15,000 per annum excluding commuting costs. But this is not a hard budget.
I’d probably be a bit peeved if my spending went above £20,000 per annum.
Regarding food, a friend at law school mentioned that for his main meal of the day if he was doing the cooking he would not want to spend more than £2. I hadn’t really thought about this before but I liked the simplicity of it and I still broadly stick to this today!
What percentage of your gross income did you save over the years?
I can’t be precise but I’ve always saved a very large percentage of my gross income. As we’ve already covered, my lowest savings rate was when I began full time work at 32%. It is now 85%.
What’s the secret to saving more money?
The main secret is to be content with very little. My idea of a perfect day is a day with no appointments that includes reading, going for a long walk, and possibly playing The Legend of Zelda: Breath of the Wild.
I don’t find frugality a hardship. It’s just a consequence of how I like to live. Many people would probably find my life very boring.
I don’t think FIRE is necessarily right for most people. There is no point in making yourself miserable if that is how saving excessively makes you feel.
I believe people who like routine and who are introverted are naturally better-equipped to be savers.
Do you have any hints about spending less?
None of my saving tips are particularly revelatory. The big ticket items are: buying a home that is well below what you can afford; not having children or pets (we now have a cat and trying to have a child!); and not having a car.
I live quite centrally in London so will walk wherever possible without getting the Tube, even if this results in a one-hour walk. Clearly, this isn’t always practical. But walking is fantastic all round and people don’t do enough of it.
Other smaller tips include meal prepping for the week and bringing your own lunch to work. We also divide our clothes into ‘slob clothes’ which are only for home and ‘normalising clothes’ for public. This reduces the wear and tear of the ‘normalising clothes’, making them last much longer. We have a few T-shirts that are 25 years old.
Also, we only buy household appliances when they break. Our TV is 12 years old and our microwave 15 years old.
You’re clearly comfortable in your own skin…
You really can do what you want in life. Don’t do things to impress other people who by and large don’t care. Avoid having friends where meeting up is going to cost you £100 every time you see them.
A lot of people fall into the trap of ‘spending money they don’t have to do things that they don’t want to do to impress people they don’t like’.
Our wedding, unsurprisingly, was very cheap – in a registry office with seven people. The thought of a big wedding filled me absolute dread. I know that I disappointed some people by having the wedding that I did but you can’t live your life trying to please other people if it makes you miserable.
People seem to forget that they have agency and often go through life sleep walking. You are allowed to do what you want – within reason!
Do you have any passions or hobbies or vices that eat up your income?
Not really. Our spending on our cat would be high relative to our overall expenditure. Our spending on food and holidays have also increased over the years.
I enjoy lower league football and county cricket, but I am not a regular in-person spectator these days.
When you ask for an image and your interviewee gives a personal snap of Edward Hopper’s Nighthawks, you know you’re in the company of a fellow introvert, as much as a fellow FIRE-ee…
Investing: on the defensive
What kind of investor are you?
Active. I’ve been ‘de-risking’ my portfolio in recent years to give me additional ballast should I FIRE. I’m also bearish generally looking ahead. US large-cap equities are well overdue a prolonged bear market.
I think people with no real knowledge, expertise, or interest in the stock market should probably go passive, although I think that passive might very well encounter problems.
I agree with Mike Green of Simplify’s Asset Management and Russell Napier’s views on passive. At some point I think a combination of de-accumulation from retired boomers alongside protectionism will start adversely impacting passive flows, which have principally been directed to US large cap. If this does transpire then things are going to look very different.
I’ve moved large chunks of my portfolio into defensive investment trusts like Capital Gearing and Personal Assets. Additionally, I initiated a reasonably large position in RIT Capital Partners, largely because of the discount. (For clarity, I don’t regard RIT as defensive).
Mentally, I currently break my portfolio into five parts:
I was very fortunate in that I started investing in 2008, right at the very bottom. I inherited £20,000 when my grandmother died and invested it in a concentrated fashion in some small-mid cap UK equities.
The most profitable was Avon Rubber (now Avon Technologies). The returns were spectacular, enabling me to get to a net worth of six-figures very quickly.
I was very lucky!
Did you make any big mistakes on your investing journey?
Not really. I missed out on all the FAANG stocks as I felt I couldn’t take a differentiated view on large-cap US tech. I’m also broadly a value investor, so tech is an area that I normally shy away from.
My worst ‘investment’ by far has been my London flat, which is static in nominal terms since our purchase in 2017. Of course, I’ve lost money on some investments but I’ve managed to avoid big drawdowns.
What has been your overall return, as best you can tell?
I don’t know what my overall return has been as I have only kept records for the last four years. The period from 2008 to 2015 was very good. From 2015 it has been average to slightly ahead of the ACWI (All-Country World Index).
My worst relative year was probably 2024. My portfolio was only up 5.5% versus 19.6% for the ACWI – but I did have around 25% cash. Last year I was up 14.2% which was a very good return considering that only 40% or so of my assets were in equities. My direct equities performed very strongly.
I’ve also had a strong start to this year with my commodity equities performing well. My exposure to US large cap is quite low, too. But I said previously, I expect my investment performance to be lower in the future, as I’ve shifted more to a wealth preservation mode.
I don’t keep precise records compared to a lot of investors. At the start of the year I write down my net worth and details of the investment portfolio. I then do a line for each security outlining why I hold it and what I think the market is missing. I also write down my macro views for the year. This is all on one page.
I like simplicity and think lots of investors like complexity for its own sake to a degree. My Dad details his own investment performance every day, which is really a form of meditation or therapy for him. I don’t want to do that!
How much have you been able to fill your ISA and pension contributions?
I’m fortunate in that I’ve been able to do full ISA and pension contributions for the last few years. I missed out on having a potentially massive ISA as my best early investments were in my GIA. So I’ve had to pay a fair amount of CGT.
Whilst working I will continue to ‘max out’ my pension contributions, assuming the higher-rate relief doesn’t get cut at the next budget.
To what extent did tax incentives and shelters influence your strategy?
Tax is certainly an important consideration. Currently, I have all of my equity type investments in my ISA and SIPP. My defensive investment trusts and low-coupon short-duration gilts are in my GIA.
I don’t do EIS or VCT schemes and the like. Perhaps if my income was above £100,000 I might consider it.
How often do you check or tweak your portfolio or other investments?
First thing in the morning I do a review of any RNS’s for the securities that I hold. I also check the portfolio at the end of each day. I quite like this routine and don’t regard it as work.
I don’t trade very much. I can go for months without doing anything. Though sometimes the activity is more frequent.
I’m certainly not a trader and don’t get any pleasure from it. I like to buy and hold. As Buffett put it: “lethargy bordering on sloth”.
Wealth: two is the new one million
Which is more important, saving or investing, and why?
I think saving for most people is probably more important than investing although both are very important in building wealth. If you can’t save then you can’t really invest.
Unfortunately, the economy in the West is very anti-saving. You’re forced to invest to build wealth and to get on the property ladder. My grandparents didn’t invest and just saved money, which you were able to do pre-zero interest rates.
I think zero interest rates and QE have been absolutely disastrous in exacerbating wealth inequality and inflating asset prices in general, although given the eye-watering levels of government debt I guess there is no going back on that front.
I think some sort of overt financial repression will take place in the West in the not too distant future. Maybe even next year if Trump replaces Powell with a lackey and goes full on Erdogan.
When did you think you’d achieve financial freedom – and was it a goal with a timeline?
It could have been three years ago per the 4% rule, but I wanted to be in a financially stronger situation where my safe withdrawal rate was lower than 4%, and to work until I was at least 40.
Did anything unexpected get in your way?
No. I’ve been very fortunate in my FIRE journey. I should stress I inherited £300,000 unexpectedly when my stepmother died. I was 32 at the time. This helped considerably and obviously gave me a big leg-up. I massively admire those who have FIRE-ed without any inheritances or gifts.
And you’re still growing your pot?
Yes, my pot is still growing and the snowball is gathering momentum – 2025 was a very good year for me. It is growing through a combination of employment and investment income and gains.
Do you have any further financial goals?
My goal is to protect my wealth and beat inflation in the future. I quite like the idea of attaining a net worth of £2m before retiring.
I think I do have a problem with no longer accumulating wealth, which probably does not reflect particularly well on me. I also view wealth as a shield to protect oneself against the bad things that can happen in life. I probably over do that.
What would you say to Monevator readers pursuing financial freedom?
Be honest with yourself and focus on the things that truly matter to you.
Understand that wealth does not move in a linear fashion. You can have months or years when it feels like you’re wading through treacle and then – bam – you accelerate rapidly.
Also, focus on processes rather than outcomes, particularly in investing.
Given elevated valuations in much of the market, focus on the downside rather than the upside.
Assume that your investment thesis might very well be wrong, incorporate a ‘margin of safety’, and avoid first-order thinking, which is the norm in much of the investment world.
If saving money really makes you miserable and deferring gratification does not come naturally, then FIRE isn’t for you.
In the weeds: Buffett is still the best
When did you first start thinking seriously about money and investing?
Before investing I really enjoyed betting on horse racing and sports. I loved the analytical process involved. I also admired Arsene Wenger’s initial recruitment at Arsenal – consistently buying massively undervalued players.
My Dad began talking to me about companies when I was about 21, which I found interesting. I then read The Snowball – Alice Schroeder’s biography on Warren Buffett – which was the catalyst for my investing.
A lot of Buffett’s personal character traits – shyness, fear of public speaking, contrarianism, a desire for independence, and frugality – resonated with me. Most people in business on TV had seemed quite loud and extroverted, which I couldn’t relate to.
I read The Snowball every few years. It’s still the best investing/FIRE type book that I’ve read.
Investing appeals to me on an intellectual level as it is a combination of many different disciplines. I found law incredibly dull in comparison.
Did any particular individuals inspire you to become financially free?
My Dad would be my main influence as he retired at 45. I’ve since discovered that his ambition had been to retire at 40. He passed on his frugality to me and his belief that the best thing about money is that it gives you independence.
None of my friends are interested in FIRE or investing.
Of course, I have read many FIRE stories online and thoroughly enjoy the FIRE-side chats on Monevator! The FIRE stories I particularly like are those people whose employment income has been relatively low. The janitor who became a millionaire, for example.
What about your dad? He was influential on the FIRE side, but what about the investing aspect?
My dad never explicitly encouraged me to invest – and as I say I hadn’t thought about investing as a concept really until I was 21. Once my dad saw that I had an interest in investing, he began to speak to me about it. He then gave me advice and helped me open my first investment account.
Before 21 our main topics of conversation were sport and history. And my dad’s parents had no interest in investing whatsoever – they thought it was spivvy! They were, however, prodigious savers just like my dad.
Can you recommend your favourite resources for anyone chasing the FIRE dream?
Monevator of course! On the investment front I’d read Margin of Safety by Seth Klarman and The Snowball by Alice Schroeder.
Margin of Safety emphasises the importance of looking at investment as a risk assessor and focusing on the downside. Many younger investors – WallStreetBets types – don’t seem to do that now. But a lot of building wealth and investing is about avoiding the big drawdowns.
The Snowball highlights the character traits that I think are helpful in achieving FIRE: discipline, focus, independence, contrarianism, and frugality.
A lot of the FIRE stuff on YouTube is crap. I haven’t learnt many ‘life hacks’ from YouTube videos on the FIRE front.
I listen to quite a few investment podcasts. I quite like listening to John Lee on Investors’ Chronicle given his preference for UK Small Caps. I think lots of investors are a bit snooty towards him because of his preference for dividends and because of an age bias.
The Acquired podcast does some excellent in-depth episodes on the history of companies like Nintendo, Microsoft, Google, and so on that I’d recommend.
What is your attitude towards charity and inheritance?
If we can’t have a child I will start giving more to charity as I age. I’ll probably leave most of my money to charity on the death of both my wife and me. Of course, this would be different if we manage to have a child.
As I’ve inherited money, I don’t really have a problem with it otherwise I wouldn’t have accepted it! I think it’s natural that people want to provide and look after their families.
My Dad is giving most of his money to charity when he dies, which doesn’t bother me. Given the complexity of Inheritance Tax and the time it takes HMRC to administer it – and the amount of tax legislation devoted to it (see the massive Tolley’s Yellow Booktax manuals) – it would be better to abolish it and replace it with a Land Value Tax.
The tax system in the UK is a mess and getting worse.
What will your finances ideally look like towards the end of your life?
I haven’t really thought about it, but I think I would struggle to Die with Zero. Psychologically, wealth is a bit of a shield or comfort blanket for me. Hopefully I will learn to shake this off.
I don’t mind thinking about death and end of life – I have already done my Will, and put a Lasting Power of Attorney in place. That’s quite unusual for someone of my age.
It’s important to put your affairs in order for those you leave behind. Probate really isn’t very fun. I speak from personal experience.
I enjoy investing too much to get an annuity!
My thanks to Cheep and Cheerful for a great interview, which combines the best of two genres – a frugal mindset and a high income combined with a high savings rate. Thoughts and feedback are welcome, but remember that Cheep and Cheerful is not a hardened blogger like me so please keep it constructive! I’ll delete anything I deem mean or uncivil. Finally, I’d like to wish him and his wife all the best with their hopes for their family.
