🟣🟢 Are you thinking about money the right way?

Happy Saturday 👋

One of my favourite people in sport at the moment is the Slovenian cyclist Tadej Pogacar, three times winner of the Tour de France, as well as many many other big road races including the World Championship.

I love the Tour de France. I’m totally in awe of the fitness and determination it takes to compete over 21 day-long stages covering 2,200 miles many of which are up hills most of us would struggle to even walk!

Competitive sports like professional cycling require you to keep a calm head, make good decisions under pressure, and, more often than not, tackle the biggest competitor you’ll ever face - yourself.

And you could say that the journey to financial freedom is similar.

There’s a key difference: in investing, thinking is often more powerful than doing.

Some of the best results come from stepping back and letting time do the heavy lifting, not from constant tinkering.

That’s why mindset plays such a pivotal role in shaping your financial future.

I had an annual review meeting with a client recently – let’s call her Lisa - a business owner in her late 50s. Lisa built her business from scratch, raised her family, and worked hard long hours to keep everything running smoothly.

But her financial future?

That always seemed to be a “later” problem.

When we first met, a few years ago, Lisa admitted she felt stuck.

Overwhelmed by the idea of investing and regretful she hadn’t done earlier, she said something that really stayed with me: “I feel like I’ve worked so hard, but I’m still not where I want to be. It really worries me.”

But with some clear steps forward and a few mindset shifts, Lisa started to view her finances in a completely new way.

Here are three of those shifts - ones I’ve seen transform not just Lisa’s situation but many others as well.

1. Owning Things vs Owning Your Future

We’ve all done it - spent money on something shiny, comforting, or exciting. And there’s nothing wrong with that, as long as we realise that every pound we spend is a choice. Are we buying something we’ll just enjoy now, or are we buying a piece of our future?

For Lisa, this was a big moment of clarity.

She’d always been generous with her family, often prioritising treating them over saving for herself.

When we reframed saving as “buying options for the future,” it clicked for her.

By putting aside more now, she wasn’t giving anything up. She was giving herself the choice to retire earlier, travel more, or simply feel more secure.

As Morgan Housel says in The Psychology of Money, “Saving money is the gap between your ego and your income, and wealth is what you don’t see.”

2. Short-Term vs Long-Term Security

The second shift is about balancing today’s comforts with tomorrow’s stability. Many people feel safer with a healthy chunk of money in the bank, and Lisa was no different.

But over time, inflation was quietly chipping away at the value of her savings. By moving a portion of her money into growth-focused investments, she found a balance that worked for her - keeping enough cash to feel secure but also giving her investments a chance to grow and protect her long-term future.

It’s not always an easy trade-off, but understanding this balance is essential to building a secure retirement pot.

3. Focusing on External Events vs What You Can Control

Here’s a question: how often do you feel put off or worried by market news, political uncertainty, or general chatter about “what’s going on”?

Too many people check the markets daily, feeling a knot in their stomach every time they see red numbers.

It’s so much better if you step away from that noise and focus on what you can control – your plan, your contributions, and your long-term goals.

Once you do, you lose the worry that that you should be reacting to every headline.

A Simple Path Forward

These shifts won’t happen overnight, and that’s okay.

But bit by bit, they can give you the clarity and confidence to make decisions that truly serve your future.

For Lisa, coming back to these simple ideas each year when we sit down for her annual review makes all the difference - and keeps her on track.

So, what about you? Which of these mindsets feels like the biggest opportunity to improve your financial picture?

Employee Ownership Trusts.

I’ve had a number of conversations recently with business owners looking to pass on their companies without losing the essence they've built over the years.

They’re drawn to an Employee Ownership Trust, or EOT.

Essentially, it's a way to transfer ownership to your employees, ensuring the business stays true to its roots and continues to thrive.

If it works, it also means that you have an exit strategy that provides a financial reward for your time and effort you’ve invested in growing your business. Here is a very simple guide.

What is an Employee Ownership Trust?

An EOT is like setting up a trust fund, but instead of money, it holds the company's shares for the benefit of all employees.

This means the employees collectively own the business, which can lead to a more motivated and engaged workforce.

A well-known example of this model in action is the John Lewis Partnership.

Benefits of EOTs.

Opting for an EOT comes with several perks:

• Tax Breaks: If you sell a controlling stake to an EOT, you might not have to pay capital gains tax on the sale.

• Employee Motivation: When employees have a stake in the company, they're often more driven and productive.

• Smooth Transitions: EOTs can make succession planning easier, helping maintain the company's culture and ensuring a seamless handover.

Things to Consider.

Before jumping in, it's important to think about:

• Eligibility: To get the tax benefits, the EOT needs to own more than 50% of the company, and all employees should benefit equally, with a few exceptions.

• Setting It Up: Moving to an EOT involves steps like valuing the company, finding the money to buy the shares, and creating the trust. It's wise to get professional advice to navigate this process.

• Potential Challenges: It's crucial to have a motivated team ready to take on ownership. Also, if the business is sold or doesn't do well within a certain time frame, it could affect the tax benefits.

Is an EOT Right for You?

Deciding if an EOT fits your business depends on factors like your company's size, whether your employees are ready for this change, and your long-term goals.

Like any financial decisions, it’s easier to embrace if you’re also building financial independence and security outside of your business – think growing your pension fund, ISAs and other assets.

And of course, it's also worth looking into other options, such as management buyouts or selling to another company.

Chatting with financial and legal experts can help you figure out the best path forward.

In a nutshell, Employee Ownership Trusts offer a promising way for business owners to pass on their companies.

By giving employees ownership, you can keep the company's spirit alive and reward the team that's been instrumental in its success.

😎 THAT’S IT FOR THIS WEEK!

BUT if you need any help with your financial stuff or have any questions at all, do ping me a reply.

Hilary 😎

P.S Whenever you’re ready maybe I can help: Book a Discovery call and find out if we can help you

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