Do you work for cash or does cash work for you?

enjoy life save 10% 20 Sep

Do you work for cash or does cash work for you?

“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” Robert Kiyosaki Author of Rich Dad Poor Dad

Ever hear of a poor banker? No nor have we!

Bankers use cash and make it work for themselves. Their bricks and mortar banks offering accounts, loans and small interest are what savvy business describe as a ‘loss leader,’ it is true the banks themselves do not make much money. It is what happens each evening when the doors close and then the real action starts.

Your cash is being put to work in massive arbitrage deals and forex investments earning the banks Billions each month, this is why it takes a week to cash a check, that £10 check or bank transaction you sent to your nephew in another country, that we all  know it can be done instantly it is merely pressing a button on a computer and its done, but the banks need your cash to stay where it is for as long as it can, because your £10 can turn into £5-10,000 for them in a matter of days!

Because Bankers understand liquidity

Liquidity is a term used in finance to explain the availability of cash.

Liquidity might be your emergency savings account or the cash lying with you that you can access in case of any unforeseen happening or any financial setback. Liquidity also plays an important role as it allows you to seize opportunities.

If you have cash and easy access to fund and a great deal comes along, then it’s easier for you to cease that opportunity. Cash, savings account, current accounts are liquid assets because they can be easily converted into cash as and when required.

cash fundamentals
Cash fundamentals

Sometimes magazines refer to the Queen as being super rich but most of her cash is tied up in land and property. I remember reading a news report about how a poor chap won an expensive sports car in a raffle, and he had to borrow some cash to put petrol in it to get it home. It took him over a year to sell it and the report had a picture of him walking past his car every day on the way to work as a hod carrier on construction sites.

Liquid cash is a vital component of anyone’s portfolio. I remember learning about how much liquid cash you should have in your financial strategy.

A common-sense strategy may be to allocate no less than 5% of your portfolio to cash, and many prudent professionals may prefer to keep between 10% and 20% on hand at a minimum. It really depends on your individual circumstances. Evidence indicates that the maximum risk/return trade-off occurs somewhere around this level of cash allocation. If you combine cash with fixed income securities, the maximum risk/reward level is slightly higher, somewhere along the lines of 30%.

You should always try to keep at least 3-6 month’s living expenses in cash to avoid running out of money if something happens. Easier said than done for all too many Brits.

A third (33%) of Brits say they do not regularly save any money, according to new research by Lloyds Bank. Part of Lloyds Bank’s ‘How Britain Lives’ study, the UK-wide analysis conducted in partnership with YouGov, also found that 7% of UK adults have no savings whatsoever to fall back on if they lost their job. A further one in five (18%) wouldn’t survive more than a month if they were to suddenly lose their job, and 30% would only be able to live off their current savings for up to six months. Yet, despite knowing they could be caught short on cash, almost one in five (17%) admit to not planning their personal finances at all.

If you are like me who laments that it took so long to educate myself about money and how money is the most ardent worker for itself, and is still stunned every day to learn how some investment vehicles are making massive returns each day and how money grows and grows without having to carry bricks up and down buildings all day or win a car in a raffle.

We all want to have a good time when we are young and we leave education and can’t wait to get a job to become independent, but very few if any young people are educated in how money works and we are all somewhat guilty of living for today.


Monthly contributions really begin to make sense when you understand the concept of compounding. Compound returns act like a snowball rolling downhill; it begins small and slowly at first, but picks up size and momentum as time moves on.

The two key elements of compound returns are reinvestment of earnings and time. Stocks generate dividends that can be reinvested, and over time this acts as a self-feeding source of financial growth. At its core, compound investing is all about letting your interest generate more interest, which ends up generating even more interest down the road.

Suppose, for example, that a 20-year-old individual has £5,000 invested in equities earning 8% a year, which is a little below the historical average of 10%, as of January 2020. At the end of the first year, the investor’s portfolio earned £400 in interest (£5,000 x 1.08). If the investor re-invests the interest, the same 8% growth will yield £432 in year two (£5,400 x 1.08). Year three will generate £466.56, year four generates £503.88 and so on. At age 25, the re-invested portfolio is worth £7,346.64, all without any additional non-interest contributions by the investor.

Follow this pattern for another 25 years, and the investment reaches £50,313.28. This represents more than a 10-fold increase, despite a lack of additional contributions. Adding just 100 pounds a month is a stunning return and one for a later post.

Money growth

Where is your Pension?

Only 1 in 25 people consider telling their pension provider when they move home. Notifying your bank is viewed as essential but pension providers are often forgotten about.

Research commissioned by the Association of British Insurers (ABI) has found people rarely contact their pension provider when they move house. It has been estimated that there are around 1.6 million pension pots worth £19.4 billion unclaimed – the equivalent of nearly £13,000 per pension pot which if they are 55 years older can access as cash TODAY!!

Insurers are trying to reunite people with their lost pensions, life insurance and investments. This is usually done by sending a letter to their new address.

The research was used to produce guidance for insurance and pension providers that aims to help identify, track down, verify and reconnect people with lost savings through improving reconnection communications.

Typically, people move house 8 times in their life. As part of the study, people were asked about their ‘to-do’ lists when they move – things they would do automatically and things they would do when prompted.

Up to you!

Each person is responsible for themselves and getting financial advice. You do not have to go out and get a PhD in finance to be able to make cash work for you instead of you working for cash. Reading a few articles online and speaking to some really good advisors can reap massive rewards for you.

We go to a Doctors for a regular health checks but rarely do we think to have a financial checkup, and ask yourself how much would your health improve if your finances improved?

kiyosaki on qROPS FOR LIFE

Right now if you have a QROPS or a SIPP and would like to get a much better return for your pension pot speak to us, we can help and we can help you manage your pot more effectively and also get your hands on some of your pot as cash if you are 55 years old or more and if the banks can make thousands of a few pounds liquidity then maybe you can learn to as well. It just takes 1 minute to get free advice: