The Wealth Creation Machine

“Are you looking to build wealth?”

“Do you want to secure your financial future?”

“How about free money every month?!”

If you answered “YES” to any of the above questions…


Pensions are in somewhat of a marketing crisis. They are more important than ever, but chronically misunderstood.

‘Pensions’ are seen by many as a dirty word. The word isn’t sexy or alluring and tends to conjure up images of withering away in later life, too old to enjoy your money.

Continue reading “The Wealth Creation Machine”

Memento Mori: Carpe Diem’s Older Brother

The gods envy us. They envy us because we’re mortal, because any moment may be our last.

Everything is more beautiful because we’re doomed. You will never be lovelier than you are now.

We will never be here again.

Homer, The Iliad

Personal finance is much more than numbers and equations (if only it was that simple). It is also about behaviour and psychology. Habits, perspectives and your own thought processes. 

After all, we are only human. 

As such, there is a lot one can learn from philosophy to apply to personal finance and investing. 

Continue reading “Memento Mori: Carpe Diem’s Older Brother”

The Death of Alpha

One of the most profitable industries in the UK thrives on chronic under-performance.

In this post I dive headfirst into the ongoing war within the investment industry, Alpha vs Beta. Active vs Passive. Complexity vs Simplicity. Good vs Evil…

Before we get stuck in, here’s a quick overview of the key terms:

Alpha and Beta are two key measurements used within the investment industry.

Alpha measures the return of an investment against a particular benchmark or market index. An Alpha of 5 would mean the investment has outperformed it’s benchmark by 5%. Inversely, an Alpha of -5 would mean it has under-performed by -5%. When you invest in an active fund you are typically paying the fund manager to find Alpha.

Beta measures the volatility of an investment in relation to the market. The Beta of the market is shown as 1. If your investment has a Beta of 1.5, then your investment is 50% more volatile than the market. If the Beta was 0.5, then its 50% less volatile. When you invest in a passive fund you are typically paying to achieve Beta (less charges).

If that made no sense to you then hopefully this simplified example will:

If you are not familiar with funds (active or passive) you can find out more in my quick guide, what is a fund?.

If you are happy with the above, then let’s jump in.

The investment industry is set up around the promise of delivering Alpha to retail investors. For the last 70 years or so, achieving Alpha has been the promise from the institutions and the expectation from investors. You more regularly hear it referred to as ‘beating the market‘.

The titans of industry employ lots of clever people in an attempt to generate excess returns for their investors, allowing them to charge a premium for their service.

You may be asking yourself, what’s the problem with that?

Well, the issue is that no one can consistently beat the market. It is becoming increasingly difficult for Alpha to be found and there is a wealth of evidence to back this up (Rock Wealth have a great knowledge bank linking to studies).

The below info-graphic from SPIVA highlights how many active funds under-perform over a one, three and five year period:

The Financial Conduct Authority (FCA), who is the industry’s regulator, conducted a study in 2017 which found that where consistent performance exists within active management, it is only for consistent under-performance:

To address the issue of delivering Alpha we need to head back in time.

In the good ol’ days, there was no internet. Information did not spread around the globe at the speed of light. It was a time where information was scarce and the scarcity of information gave the investment houses their competitive advantage.

Seeking out advantageous investments through scarce information used to be the industry’s bread and butter. The industry was set up on beating the market, as it used to be a more feasible proposition.

Fast forward to the modern day and everyone has up to date information at their finger tips. There is a parity of information in the marketplace. Technology has removed the industry’s competitive advantage.

Due to the speed of technological innovation the investment industry is now a legacy operation.

It is yet to catch up with the speed of change in the new world. People are still being charged a premium for a pre-internet era service in the age of the internet.

A lot of investors in active funds are being overcharged for under-performance.

I call this the ‘Alpha Tax‘.

Now, it is worth highlighting that you will typically not achieve Beta with passive funds, due to the ongoing management fee (which is typically a lot lower than an active fund):

Even more worryingly, lots of active managers now just ‘hug the index‘.

What does ‘hugging the index’ mean? They are running a passive fund but charging active fund management fees.

They are effectively selling an expensive tracker fund that promises the world but doesn’t deliver.

The FCA highlighted this in the same 2017 study where they estimated about £109bn of investors’ money was tied up in such funds:

Whilst a lot of investors are unwittingly holding these hidden trackers, even more are exposed to the main risk of active management, human judgement and skill.

In a 2014 paper called “New Evidence on Mutual Fund Performance: A Comparison of Alternative Bootstrap Methods“, Blake, Caulfield & Ioannidis deliver a scathing verdict based on their research:

Whilst some fund managers may be genuinely talented, their performance mainly benefits them and it is unlikely they will perform well over a long time period.

By selecting an active fund you are choosing a team of individuals to predict the future and buy the right stocks ahead of time – which is unsurprisingly quite a challenge without a crystal ball.

The investment industry consistently overcharges for under-performance, and as there is a lack of competition they are not having to lower their prices.

The interests of the retail investors are second to that of the industry and their shareholders. 

The average investment firm makes 36% profit a year (2017 figure) – making the fund industry one of the most profitable in the UK.

Let that sink in…

One of the most profitable industries in the UK thrives on chronic under-performance.

So, what does the future hold for those seeking Alpha?

Whilst I do not have a crystal ball, judging by the current trend money will continue to flood out of active funds and into lower cost passive alternatives:

According to Morningstar, between January – November 2020 European passive funds received an additional $111 billion in new money.

The future does look bleak for active management companies. My personal view is they will either need to adapt or die.

I believe active funds will become the niche, not the norm.

Whilst I have spent this article bashing up the active management industry, I do in fact hold one active fund.

Active funds do perform well in some sectors, typically where information is scarce – such as smaller companies, illustrated by the below graph:

However, as the graph shows there is no guarantee that they will outperform. Smaller companies inherently pose higher risks, especially when you are paying a set of individuals to pick a portfolio for you.

I personally have a ‘thematic‘ active fund, which is where I feel active managers can offer value. A thematic fund is one that concentrates on a particular niche or theme.

I hold a ‘global energy transition’ fund, which invests throughout the supply chain of renewable energy (excluding nuclear).

I am happy to pay a higher charge for this fund, as I am interested in the sector and believe an active manager has an opportunity to outperform due to the scarcity of information.

Even if the fund does not outperform, I want to expose my capital to this sector as I believe it to be important for all our futures.

Therefore, I have invested in the fund for more than performance reasons, it aligns with my values and by allocating some of my capital to it I feel I am helping out.

I do believe active investing can still have a place in a portfolio. I do not believe it to be necessary, but if you enjoy it then why not.

I believe a thematic approach to active investing can add value. Utilising active funds to target a particular niche or sector allows you to expose some of your capital to your particular areas of interest.

If you find an active fund within a niche of interest and are aware of the additional risks, then you should feel free to crack on.

To clarify, the majority of my portfolio is within globally diversified passive funds, I only have a small allocation within an active fund.

To conclude:

  • The active management industry overcharges for under-performance
  • Alpha is hard to find and seemingly impossible to find consistently
  • Active funds are suffering large outflows and may become the niche, not the norm
  • Whilst active funds can still be used by investors, they should beware of the Alpha Tax

Thanks for reading.

Tom Redmayne

Financial Planner-in-waiting

“A Globally Diversified Basket of Equities”… WTF does that even mean?!

If you’ve followed me for any amount of time or spoken to me about investing, I have most likely pulled out this line: A globally diversified basket of equities Me (about every 5 minutes) But for those just starting out on their investment journey, I am aware it could lead to a WTF?! moment… ‘if … Continue reading “A Globally Diversified Basket of Equities”… WTF does that even mean?!

The most important finance book I’ve read.

I cannot stress enough the importance of the message delivered in Paul Armson’s book, ‘Enough? How much do you need for the rest of your life?’.

It may change your life!

I highly recommend reading the book, it is a short read that really packs a punch.

The below is my summary which highlights the two key points:

  1. Life is not a rehearsal, we only get one go at it. So do not spend it on things that don’t fulfil you.
  2. Everybody has a ‘bucket‘, this bucket is filled with your liquid assets and has to last your lifetime.

Enjoy 🙂

To reiterate, life is not a rehearsal, I am afraid none of us are getting out of here alive.

As such, money should be viewed as a tool to live your best life.

You cannot take it with you and it will be of no use when you arrive at the pearly gates.

Once you have come to terms with this fact, material wealth and status will slip to the wayside.

With that out of the way, lets move onto Paul’s bucket analogy – a concept I wish they taught at school!

Everybody has a bucket.

In this bucket are all your ‘liquid assets’, that is any money you have easy access to.

Such as, the cash in your current account, savings account, premium bonds, ISA’s and any investments you hold outside of a pension that can be easily liquidated (sold).

These liquid assets fund your lifestyle. Having a grasp of YOUR bucket is essential.

Outside of your bucket sits all your illiquid investments, these are assets that you do not have immediate or easy access to.

Such as, your house (if you own one), any other properties, your pension pot(s) and any businesses you may own.

These assets do not fund your current lifestyle, however they will hopefully grow over time and one day end up in your bucket to fund your future lifestyle in retirement.

When it comes to the buckets, there are only three types of people.

One of the main problems people have is not knowing which person they are. That means that the three types of people are all prone to anxiety and stress around their money.

Understanding your bucket can help take away those negative feelings.

Don’t worry if you are in the ‘not enough‘ camp, now you know and can take positive steps to become ‘just right‘ 🙂

If you are in the ‘too much‘ camp, you have a good problem on your hands – figuring out how to spend that excess money in a meaningful way!

If you are still young and only beginning to fill up your bucket, then the below can provide clarity and will help you meaningfully plan your future.

As well as the three types of people, there are three key life stages we go through.

The ‘current lifestyle‘ is right now, unless you are already retired (if so, feel free to skip ahead).

In this stage you will be busy filling up your bucket and hopefully building up some illiquid assets too.

Whilst filling up your bucket you still have to live, so there is a tap on the bucket to pay for your lifestyle.

The trick is to balance the inflows and outflows so that your bucket gets fuller over time, whilst still enjoying yourself.

Life is not a rehearsal, so do not make unnecessary sacrifices and ensure you still have some fun.

Tomorrow is not guaranteed.

Active retirement‘ is when you have filled up your bucket with enough assets to last you the rest of your life, so you can stop working and start spending.

During this time you may start accessing some of your illiquid assets to top up your bucket (e.g. drawing from your pension, selling your business or downsizing).

Ideally you are still young and healthy enough during this stage to have fun, so it should be the time that you spend the most money.

Go on adventures, give to charity, drive down Route 66, sail the seven seas – whatever tickles your pickle!

Life is not a rehearsal, if you’ve made it this far then make sure you enjoy it.

Late retirement‘ is the final stretch, when you’re too old to have as much fun. You will probably be tired from your ‘active retirement‘ and will just want to chill out.

Research has shown that whatever your level of affluence your household spending will diminish as you make your way into ‘late retirement‘.

Ensure you have enjoyed the first two life stages to the max, as you’ll be needing fond memories to look back on in.

And then, I’m afraid, it’s all over.

Your remaining assets become ‘your estate‘, which will be distributed according to your will (make sure you have one!).

If you do not have a plan in place prior to your demise, you may find a good chunk of your estate will end up in the chancellor’s pocket – which is not ideal!

So, work out what a good life means to you and use your money to live that life. If you want to help others, do so when you are alive, so you can enjoy the benefits.

The book goes into more detail on this and working with a financial planner may also be beneficial.

Being the wealthiest person in the graveyard is not a badge of honour, it shows that you did not live your life to its full potential.


  1. Life is not a rehearsal, so grab the bull by the horns and leave here with a smile on your face.
  2. Everyone has a bucket, think of this concept when you are planning your life and your money.
  3. Read the book, you won’t regret it.

I’ll leave you with the same quote Paul ends the book on, from Hunter S Thompson.

Thanks for reading.

Tom Redmayne

Financial Planner-in-waiting

The View from 30 🏔

I made it. 30 laps around the sun! My twenties were a full of highs and lows. Great experiences and friendships. Love and failure. Nights of excess and periods of reflection. Here is a list of thoughts on life and investing in no particular order from me at the big 3-0.

Volatility vs Risk

“Real returns are found on the other side of volatility” In the investing world volatility is used as a primary measure of risk. However, once you understand volatility, you’ll realise the real risk is not investing. Volatility makes for an excellent headline, but it is not a real risk over the long term – in … Continue reading Volatility vs Risk

The Mantaro Way: A Short Story

The below started out as a blog post to explain the name ‘Mantaro Money’.

The graphics I made for the post reminded me of a children’s book, so I developed the concept.

I hope you enjoy this style of storytelling, it was enjoyable to make and conveys the message as simply as possible.

Narrated by my friend, Christian H Miles.

If video isn’t your thing, please find the slides below.

Thanks for reading!

Tom Redmayne

Financial Planner-in-waiting

Latest from the Blog

11 Investing Commandments

Here are the investing commandments I try to live by. The first one came to me in a dream 😄 I woke up at 5:30am and wrote the rest down straight away. Almost as if I was a vessel for a higher power! I am now on the lookout for a burning bush… Speculating is … Continue reading 11 Investing Commandments

Are You Richer Than You Think?

A problem we have as humans is our tendency to compare upwards. Especially with the advent of social media, it is all too easy to compare our situation with someone who is better off than us. Unfortunately, you cannot avoid the fact that there will always be someone who is better off than you. But, … Continue reading Are You Richer Than You Think?

Owner > Consumer

Investing turns you from a mere consumer to an owner. When you invest in the stock market you are investing in a collection of great businesses, which provide products and services to real people. Ones you and I interact with everyday.  By investing in the stock market you are investing in our way of life. … Continue reading Owner > Consumer

What is a fund?

The purpose of this post is to try and distil complexity into a simple, digestible format. If done correctly a picture can say a thousand words, so please let me know if I managed to achieve this.

If you like my content please subscribe and follow me on Twitter and Instagram for similar posts.

I hope you enjoy it.

What is a fund?

A fund is a pooled investment vehicle. Investors put their money together and a professional fund manager invests on their behalf. 

A fund can give you access to lots of different assets, companies and countries – some of which you may not have access to as an individual investor. 

By pooling money together the fund can benefit from economies of scale when purchasing assets and allows for a more hands off approach for retail investors. 

What is an active fund?

This is when the fund manager’s job is to ‘beat the market’. You pick these when looking for superior returns and typically pay a higher annual charge for doing so. 

The evidence has shown that the majority of active funds actually underperform the market over the long term whilst draining fees from the investors (e.g. 1% per annum) – so tread carefully. 

The example shows a UK Smaller Companies fund. 

What is a passive fund?

Instead of trying to ‘beat the market’, the fund simply tracks it.

There is no fund manager looking for superior returns, which leads to typically lower fees for the investors (e.g. 0.3% per annum). 

The example shows a global tracker fund. 

Income or accumulation?

An income unit of a fund aims to generate and pay out a regular income (e.g. quarterly or bi-annually). You typically use these when looking to generate additional income (e.g. whilst in retirement). 

An accumulation unit of a fund reinvests the income generated back into the fund. You typically use these when you are looking for capital growth over income.

Thanks for reading!

Tom Redmayne

Financial Planner-in-waiting

Latest from the Blog

Picasso’s Bull

“It takes a lot of hard work to make something simple, to truly understand the underlying challenges and come up with elegant solutions.” Steve Jobs In 1945 Picasso created The Bull, a series of 11 lithographs showing The Bull in various levels of abstraction. Picasso’s goal was to simplify The Bull down to its essence, … Continue reading Picasso’s Bull

The Wealth Creation Machine

“Are you looking to build wealth?” “Do you want to secure your financial future?” “How about free money every month?!” If you answered “YES” to any of the above questions… YOU NEED A PENSION! Pensions are in somewhat of a marketing crisis. They are more important than ever, but chronically misunderstood. ‘Pensions’ are seen by … Continue reading The Wealth Creation Machine

Automation is king 🤖👑

Building wealth involves good habits being performed consistently over time.

We as humans are flawed, emotionally-driven creatures – which is great for some things and terrible for others.

Unfortunately good habits can easily be derailed by our emotional state.

When we are in the right frame of mind it is easier for us to perform positive habits. However, if we are in a bad frame of mind making good decisions becomes difficult, or seemingly unimportant.

James Clear, author of Atomic Habits, has worked out the formula for success. The key is to put fewer steps in place between ourselves and good behaviours and more steps between ourselves and the bad ones.

With automation we can take it one step further and remove ourselves from the equation entirely!

Once we have automated our savings, our wealth is free to grow to heights which otherwise may not have been possible with our continued input.

We are then free to go about our lives whilst good financial behaviours are happening automatically in the background – brilliant 🙂

So, how does one set up an automatic system for accumulating wealth?

Luckily, it is a straight forward process and you may already have some of the groundwork in place.

Once the system is in place it is low maintenance and will only require the occasional review (hopefully to increase the amount you save as you earn more).

The first thing to do is to put together a budget.

If you are adverse to budgeting, the rule of thumb to get you going is the 50/30/20 rule.

50% of your income will go on your needs, 30% on wants and 20% on savings. If you can reduce the first two and increase the savings percentage, happy days!

Once you have your budget, follow the below steps. I’ve used the 50/30/20 rule as the example:

  1. Set up a new current account (this will be your ‘spending account’).
  2. Create a standing order to send 30% of your income to the new account every payday.
  3. Have the other 20% go into a savings or investment account via direct debit.

The above system will leave your current account with the 50% needed to cover all of your fixed costs for the month. You are then free to spend the 30% as you wish, safe in the knowledge that 20% has been automatically saved.

Depending upon what your current set up looks like, the above may vary.

For example, I send my fixed costs to a joint account, which covers our expenses each month. If going down that route makes sense for you, then you just need to add an extra step of moving your direct debits to the new joint account.

In the name of transparency, I must confess that I still haven’t called the council to move the direct debit over to our joint account… so I move it across manually each month (I’m a flawed human, I hope you can forgive me 😄).

Consider this post a call to action.

I implore you to carve out some time one afternoon to automate your savings – it might just be the single most important thing you can do on your wealth building journey.

If, like me, you don’t enjoy budgeting, it will make your life so easy and before you know it you will have saved a fair bit of wedge, with no effort at all!

If you have any suggestions on other areas that can benefit from automation I would love to hear from you. You can reach me on Twitter or at

Thanks for reading.

Tom Redmayne

Financial Planner-in-waiting

If you enjoyed the article, you can subscribe to stay up-to-date with the blog:

Check out my other posts here:

The Fear.

You must learn to become comfortable with failure, otherwise you will have to become comfortable with regret.

Fear is a natural and primitive emotional response that has served humans well for most of our existence. It alerts us to potential physical and mental harm, real or otherwise.

A hunter-gatherer would not have made it far without fear. It is better to move away from the rustling bush than to ignore it and be mauled by a bear.

The fear of the unknown serves a purpose, however in modern society it often leads to anxiety – a form of persistent fear.

For me, it tends to rear its ugly head whilst I am studying a challenging topic or publishing content online.

The fear of not being good enough. The fear of falling below one’s own expectations. The fear of failure.

It drives negative mental loops and chips away at self confidence.

Dancing with the possibility of failure, which is an inherent part of the learning experience, is uncomfortable and runs in direct opposition to the mind’s want for ease, comfort and safety.

It is easier to lower your expectations and not put in the work.

Whilst avoiding failure is easy and comfortable, it is counterproductive in the long term. You become stagnant and do not give yourself the opportunity for growth.

Instead, you must learn to become comfortable with failure, otherwise you will have to become comfortable with regret.

Regret of the path not taken. Regret of not testing your limits. Never knowing if you could live up to, or exceed, your own expectations.

If I gave in to these feelings every time they arose, then I wouldn’t have passed any exams or had the courage to launch this blog.

Instead of packing it all in, I take a moment to acknowledge the feelings for what they are. A primitive, emotional response that thrives off comfort and hinders growth.

Acknowledging fear diminishes its power and replenishes the self confidence that it attempts to strip away.

Fear may win the occasional battle, but I have no doubt that it will not win the war.

Thanks for reading.

Tom Redmayne

Financial Planner-in-waiting

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Check out my other posts here:

Why Financial Planning.

He who has a why can bear almost any how – Nietzsche.

In February 2019 I made the decision to leave Fresh Eats Bristol, the business I had started with friends two years prior.

It was a difficult decision, one that had plagued me for some months. I had been the catalyst for the business, and then after two years I was hanging up my hat.

When I initially broke the news there was an instant wave of relief, letting go of the built up tension and stress from the months prior in which I had been rather unhappy. I knew that food was better placed as a hobby in my life, rather than being my career.

I left the business with no plans and spent some time feeling listless, deflated and, quite frankly, like a failure.

At some point I knew I needed to sort myself out and find a new path. I got a part time job at a local sausage restaurant and spent some time thinking about what I wanted out of life and out of a career.

One thing that became clear to me was that I wanted a life of meaning and of purpose.

Most of my working life has been in the services industry and helping others has always been where I derive the most satisfaction.

My friend Nick, who is an IFA, suggested following him into financial planning. At the time I was blissfully ignorant to the financial services industry and believed that investing was only for the Jordan Belfort’s of this world.

Nick opened my eyes to the profession and after some additional reading and devouring podcasts I felt I had found my new calling.

I was drawn to the meaningful impact one could have on peoples lives through proper planning and guidance.

It was the realisation that financial planning is much more than simply helping clients with their finances, it is helping them plan for their life. Money is an intrinsic part of all our lives and is the undercurrent which runs throughout our existence on this earth.

The idea of building multi-decade relationships with clients, helping them navigate through life and having their best interests at heart spoke to me.

I have been influenced by Muhammad Yunus, a Nobel Peace Prize winner and social entrepreneur, who has shown that business can have a positive impact on individuals and society as a whole.

Since reading Muhammad’s book at university I have always wanted to offer a service which helps people and has a positive impact.

Following those first conversations with Nick, I have managed to get my foot in the door of the financial services industry and have been studying for the Diploma in Financial Planning during my spare time.

There is a long way to go and I still have a lot to learn. However, I am truly excited and energised by the challenges that lie ahead.

Thanks for reading.

Tom Redmayne

Financial Planner-in-waiting

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Check out my other posts here: