Millionaire Interview 300

Here’s our latest interview with a millionaire as we seek to learn from those who have grown their wealth to high heights.

If you’d like to be considered for an interview, drop me a note and we can chat about specifics.

This interview took place in October.

This is a significant one as it marks 300 millionaires who have been interviewed on this site. Who would have thought that we’d ever get this far when I started ESI Money? I certainly didn’t!

For each of the milestone interviews, I have had someone special as the interviewee.

For Millionaire Interview 100, I did the interview myself.

For Millionaire Interview 200, I had long-time reader and friend Apex do one.

For this one, I put out a notice that I was getting close to 300 and asked those who were interested to send me their interviews by a specific date.

From that group I selected one and this is it.

I liked this one best for several reasons…it’s from an international reader, the net worth is very high, and there are lots of interesting and unique answers in this interview. I hope you enjoy it.

With that said, as usual, my questions are in bold italics and their responses follow in black.

Let’s get started…

OVERVIEW

How old are you (and spouse if applicable, plus how long you’ve been married)?

I am 55 and my wife is 53.

We have been married for 28 years.

Do you have kids/family (if so, how old are they)?

We have 3 wonderful children.

The eldest is our 27 year old son, then we have two girls aged 25 and 20.

What area of the country do you live in (and urban or rural)?

We live in a suburb about 20 miles north of London in the UK.

We have lots of beautiful countryside around us but are only 40 minutes by train into the centre of London.

What is your current net worth?

Our total net worth (at current $/£ exchange rates) is $11.15 million.

What are the main assets that make up your net worth (stocks, real estate, business, home, retirement accounts, etc.) and any debt that offsets part of these?

• Property – total value $5m. Our main UK home is worth $3m and we have a second home in the South of France that is worth approximately $1.8m. We also own a small apartment in Bath (South West UK) that is a rental investment worth $200k.
• Investment accounts – total value $1.35m. My wife and I each have investment accounts with different stockbrokers (hers is through her bank, mine through a low-cost online provider). We hold a mix of investments – approximately 15% is in individual company stocks, 20% corporate or government bonds, 5% property funds and the balance of 60% in a diversified mix of global, US and UK equity funds.
• Individual Savings Accounts (ISAs) – total value $1.9m. ISAs are in my view the most wonderful financial vehicle ever provided by the UK government (next to pensions). Essentially you are currently allowed to invest up to $28k per person each tax year and, once protected in the ISA ‘wrapper’, we pay no income or Capital Gains Tax on this money. My wife and I have been contributing the maximum into these religiously for around 30 years. Our investments in these follow a similar mix to the investment accounts above.
• Pensions – total value $1.6m. My wife gave up work shortly after we started our family so her pension fund is much lower at $200k, and my pension is worth $1.4m. We manage both of these ourselves within what is known in the UK as a Self Invested Personal Pension (SIPP) through a low-cost online provider. We have a slightly lower risk profile in these with bonds/gold/cash/property funds probably making up around 45% of the total with the remaining 55% in mixed equity funds.
• Cash – total value $905k. Split between $740k in the UK and $165k in France.
• Venture Capital Trusts (VCTs) – total value $450k. These are held in my name and split equally across 3 main VCT providers. VCTs are investment companies that are listed on the London Stock Exchange and set up to invest in small UK businesses that meet certain criteria. To encourage support for these businesses the Government offers generous tax benefits for VCT investing – primarily a 30% income tax credit on your initial investment (up to $275k per year) hence the investments being all in my name. They also provide tax free dividends and no Capital Gains Tax. This clearly reflects the higher-risk nature of the companies they invest in, but they have delivered superbly for me (averaging around 7% tax free income) over the last 7 years.
• Miscellaneous – total value $220k. I have lumped everything else in here of any significant value. The main ‘investment’ within this is our private wine cellar which is worth around $100k. This started as a bit of a hobby but has grown and grown and we clearly need to start drinking faster! haha!
• Mortgage – $260k. This is the only debt we have and is the remaining borrowing outstanding on our main UK home. With interest rates so low I figure it is good debt to have. In any case, we have what is known as an ‘offset’ mortgage where the debt is linked to a savings account (where we always keep more than the outstanding mortgage sum). In this way, the monthly payments simply go towards reducing the capital amount on the mortgage – so I see it as a kind of enhanced savings account.

EARN

What is your job?

After graduation, I worked in sales for a large blue-chip company before quickly moving into marketing where I worked on the launch of a number of brands across different categories.

I gained some great experience but soon realised that the most interesting part of marketing for me was advertising and communications. So I moved onto the agency side for a few years and subsequently became a minority owner of a new agency.

We grew this agency significantly, during which time I became CEO and through a management buy-out eventually became an equal majority shareholder of the business. We sold the business at its peak to a major communications agency group in 2007.

I remained with the business during a 4-year earn-out and for a few years afterwards during which my role was expanded to include managing other similar businesses across Europe within the Group, and also involvement in new acquisitions.

Having enjoyed a successful and fun, but fairly stressful, career in the agency world I decided to bow out gracefully and retired five years ago aged 49.

What is your annual income?

My final salary was $320,000 plus 5% pension contribution, private healthcare and bonus.

Tell us about your income performance over time. What was the starting salary of your first job, how did it grow from there (and what you did to make it grow), and where are you now?

My first salary as a salesman in the mid-1980s was $10k plus the all-important company car.

My salary grew over the next few years and when I moved into marketing it peaked at around $60k.

When I initially joined the new agency we tried to keep overheads low and my salary plus dividends were around $100k. We then won a few major clients, our reputation became established, and the business started growing like crazy. That’s the point, at around the turn of the century, when my income really started to soar.

As a business owner, basic salary becomes almost irrelevant when you can afford to pay yourself big dividends. I always remember the year when we really broke into the big time with a number of high profile brand launches getting a bonus cheque at the end of the year for $250k. At our peak, which was in the couple of years just before we sold the business, I was earning a total of around $800k a year as a mix of salary and dividends.

What tips do you have for others who want to grow their career-related income?

Get a stake in the business.

If you can, start your own company or manage to get hold of a piece of the action in a private company.

If you work for a large corporation, get as high up as you can and make your money through accumulating as much stock as possible through incentive schemes and bonuses.

What’s your work-life balance look like?

About as good as it can to be honest!

Work 0%, Life 100%.

Do you have any sources of income besides your career? If so, can you list them, give us a feel for how much you earn with each, and offer some insight into how you developed them?

Aside from the income I achieve from my investments, I occasionally help out friends and family with a little consultancy and marketing for various projects or businesses they are involved in.

However, I don’t like to be paid for this as it would seem too much like ‘work’ if I did. In this way I find it much more enjoyable and can remain doing it entirely on my own terms.

I have had a number of enquiries and offers from ex-clients and colleagues in my industry over the years, but I let them know politely that I have well and truly hung up my guns!

SAVE

What is your annual spending?

We currently give ourselves an annual ‘allowance’ of $180,000.

I plan to reduce this to $160,000 next year as our youngest daughter will be finished with her education and we will no longer have this cost.

What are the main categories (expenses) this spending breaks into?

• $50k – Household expenses UK & France (Bills, mortgage repayments, maintenance etc.)
• $15k – Groceries
• $20k – Education (University fees, accommodation, living expenses)
• $25k – Entertainment (Eating out, activities, club memberships etc.)
• $10k – Health (Allowance for private medical care only if needed – God bless the NHS!)
• $10k – Cars (Tax, insurance, petrol & servicing for 3 cars)
• $35k – Travel (Travel to France plus $20k allowance for one ‘special’ annual trip further afield)
• $10k – Miscellaneous

Do you have a budget? If so, how do you implement it?

Yes – as above, I set a rough annual budget and we try and stick to it.

I monitor this as my wife is very happy not to get involved in financial matters!

What percentage of your gross income do you save and how has that changed over time?

We don’t save now as we are living off our investments, although I guess any excess income or capital growth we make above our annual spending could be considered as savings.

What’s your best tip for saving (accumulating) money?

Start as early as possible and diversify your investments.

Then sit back and watch the miracle of compound growth!

What’s your best tip for spending less money?

Enjoy the best things in life which really are free – family, friendship, good humour, nature, exercise, pets (ah okay – I do spend way too much on my dog…)

What is your favorite thing to spend money on/your secret splurge?

I couldn’t deny being a little excessive when it comes to bikes and cycling gear!

INVEST

What is your investment philosophy/plan?

I very much subscribe to the Warren Buffet philosophy of buying good quality and holding ‘forever’. I very rarely sell except in exceptional circumstances.

If you have a diversified mix of sensible investments then you will achieve good growth over the long term.

What has been your best investment?

Firstly, my fantastic wife. I wouldn’t have been able to achieve the business success that I did without her unwavering love and support. She always has my back and keeps everything running smoothly ‘behind the scenes’ and with the family.

Property has served us very well also. Our generation has really benefited from house price inflation over the last 30 years in a way that our kids will never be able to. I estimate from our main UK residences we have made $2m over the years – and it’s all tax free!

On the investment side, buying into the Vanguard US Equity Index around 9 years ago was a pretty nice move – 330% growth so far.

What has been your worst investment?

I lost money in funds here in the UK run by Neil Woodford, a former star manager at Invesco Perpetual.

He set up his own funds which gained huge support, but he overstretched himself and it all came crashing down.

Still, it wasn’t a hugely significant amount and you can’t win them all!

What’s been your overall return?

It’s hard to answer this historically, but currently I achieve around 6-7% annually.

How often do you monitor/review your portfolio?

At a macro level, every quarter.

However at the start of January every year I do a detailed analysis of every single stock, fund and holding.

I am a bit ‘old school’ on this and enter all the prices manually into a huge spreadsheet I have created. This allows me to keep a double-check on all the different providers we use, and also to track growth using my own bespoke formulae.

NET WORTH

How did you accumulate your net worth?

It’s really a combination of diligently saving and investing well over the early years (25-40) combined with achieving a significant lump sum (circa $4.5m) when we sold the business.

What would you say is your greatest strength in the ESI wealth-building model (Earn, Save or Invest) and why would you say it’s tops?

I guess it has to be EARN based on the fact that I helped build a valuable business that allowed me to exit with a multi-million pound lump sum.

What road bumps did you face along the way to becoming a millionaire and how did you handle them?

I guess there were two points in my career where I had to make really tough decisions that came with significant risk.

Firstly, deciding to leave the safety of corporate life to join what was effectively a start-up with only 3 employees.

Secondly, grasping the opportunity of a management reshuffle to invest significantly to build a larger equity stake.

Fortunately, they both worked out well in the end, but it was pretty nerve-wracking at times!

What are you currently doing to maintain/grow your net worth?

Keeping up the same investment strategy and drip feeding some cash into good funds each year.

As you can see, we keep a significant amount in cash (3-4 years’ living expenses) in order to be able to relax and ride out the inevitable market corrections without having to sell.

In fact, we have a bit of a surplus which I will use to invest in equities when the markets take a dive. I did this to quite good effect just after the pandemic crash in March 2020.

Do you have a target net worth you are trying to attain?

Not really – I am happy with where we are.

I guess it would nice at age 60 to enter my seventh decade with a similar net worth to now.

How old were you when you made your first million and have you had any significant behavior shifts since then?

Around 35 years old. It then escalated quickly from there.

Once I could see that we were actually creating something with huge potential value, I doubled up my efforts at work and put everything I had into growing a leading business in our sector.

What money mistakes have you made along the way that others can learn from?

Around 15 years ago I received terrible advice from the stockbroker at my bank, who at that time handled a significant part of my wealth. I promptly fired them and moved my money out.

I haven’t used an adviser since and honestly think my portfolio has performed better. No-one cares more about your money than you!

What advice do you have for ESI Money readers on how to become wealthy?

Have a clear vision of where you want to get to, work hard, and be really good at what you do.

FUTURE

What are your retirement plans?

Like ESI Money, I haven’t looked back since retiring early and wake up every day feeling like a winner in life.

Financially I guess it’s really a case of keeping an eye on spending versus investment income but I have no great desire or need to increase my wealth.

On the activities front, we are keeping very busy doing everything we couldn’t find time to do when we were working and raising the family, namely; travel, cycling, golf, hiking, tennis, book clubs, photography, home improvements, and much more socialising.

The list goes on and I’m sure will expand in the years to come!

Are there any issues in retirement that concern you? If so, how are you planning to address them?

Not really.

Except of course that we both feel it is important to look after our health.

Like ESI Money, I feel fitter than I have ever been in my life and am trying hard to keep the wine: exercise ratio in favour of the latter!

MISCELLANEOUS

How did you learn about finances and at what age did it “click”?

I have always instinctively been interested in finances and making money. Even from an early age I was saving my pennies and looking at ways to sell stuff to make money.

It actually was a bit of a running joke in my family. Neither of my parents was financially savvy at all so I’m not sure where it came from. All I know is that from an early age (20s) I wanted to make enough money to retire before I was 50. So I set myself this goal and it never entered my mind that I wouldn’t get there.

It all came together in my 30s. This was the golden decade when I could see it was possible – everything came together and I worked my backside off to make the most of the opportunity I saw to turn the business into something really valuable.

Who inspired you to excel in life? Who are your heroes?

I was inspired by a friend’s Dad who had worked his way up and ran his own very successful design business in the 70s and 80s.

Also by my Uncle, who likewise made himself wealthy through his own accountancy practice.

Both were charming and savvy self-made men, and I liked the look of their lives.

Do you have any favorite money books you like/recommend? If so, can you share with us your top three and why you like them?

I am not a great reader of finance books, although I did read ‘The Millionaire Next Door’ many years ago which certainly had an impact on me.

I learn most of what I know through regularly reading the financial press and the personal finance sections of quality newspapers.

Do you give to charity? Why or why not? If you do, what percent of time/money do you give?

We do donate to charities on an ad-hoc basis, largely based on personal connections to the cause.

For example, at present we are donating to ALS having lost a close friend to this awful disease.

Do you plan to leave an inheritance for your heirs (how do you plan to distribute your wealth at your death)? What are your reasons behind this plan?

We have given each of our children the best possible education and plan to help each of them to get onto the housing ladder.

As life moves on, we will support them where possible as we feel they will benefit more from help during their early family years, rather than receiving a large inheritance in their 50s or 60s.

Having said this, the bottom line is that we hope to leave at least the properties in our estate – the rest we will endeavour to spend drinking fine wine in the sun!