How To Retire With A £1 Million Pension At Age 50

In previous articles we’ve looked at retiring really young, and there were two themes that were evident:

1) You had to save and invest an enormous amount of money; and

2) Pensions were of little use because they cannot be accessed until your mid to late 50s.

However, if you are willing to retire a little later, such as in your 50s, pensions are an incredibly powerful tool for building up a huge investment pot that can provide you an income for the rest of your life. What’s more, if you’re aware of smart strategies – the kind that we’ll introduce you to today – then you can in effect access your pension pot early.

In this post we’re looking at how you can retire with a £1 million pension at age 50, in today’s value of money. We’ll cover how much you need to save, the benefits of starting as early as possible, some strategies at your disposal, and more. Let’s check it out…

If you’re going to do the following strategy properly, at some point you’re likely going to need to use a SIPP. We’ve compared them all and handpicked our favourites. Check out the Best SIPPs page for guidance.

Alternatively Watch The YouTube Video > > >

Do You Really Need A £1 Million Pension?

How much retirement pot you really need is dictated by your desired income. The more income you want, the bigger the pot required! spoke to thousands of their members and they published some really interesting figures on how much money you need in retirement, whether you’re living alone or in a couple.

Couples would need just £18,000 for the essentials, £26,000 for a comfortable income and £41,000 for a luxury lifestyle. The comfortable lifestyle covers all the basic areas of expenditure and some luxuries, such as European holidays, hobbies and eating out. The luxury lifestyle includes all this plus more, such as long-haul trips and a new car every five years.

If you don’t mind popping your clogs and having nothing left to leave to your family, friends or favourite charity, then you’ll be able to drawdown on that pension much faster than someone who doesn’t want to deplete the pension pot. If your goal is to retire at 50, as per the title of this article, you might want to consider trying to maintain the value of your pension for as long as possible.

A good rule of thumb is to use the 4% safe withdrawal rate. We won’t cover it today because we’ve covered it a lot previously but in theory you would need a pension pot of £1,025,000 to achieve that £41,000 per year luxury lifestyle for a couple.

The pension lifetime allowance for most people is £1,073,100 in the tax year 2021/22. Up until the allowance limit, pensions are a very tax-efficient way to save for retirement. Past this mark, they start to become inefficient as the government start hitting you with hefty tax charges.

If you’re hoping to hit that £1m pension and you’re in a couple, you should definitely consider splitting it across the pair of you so you’re less likely to fall foul of the lifetime allowance from further growth, but at the same time you also need to consider the most tax efficient way to save.

How Much Do You Need To Save To Get To The £1 Million Mark?

For all the following figures, we’ve used a 5% real rate of return. We always assume that market returns will be 8% based on history and then deduct 3% for estimated annual inflation and investment fees.

Let’s first look at what you need to save, assuming that you’re going to save into a pension until you hit state retirement age at 68.

The amount you need to save per month depends on your age. As you can see in this chart the younger you are your required savings per month are far lower than if you start later in life. If you’re 25 you will only need to save today’s equivalent of £555 per month. But if you start at 40 you will need to save almost triple at £1,359.

We’d say that for anyone under 30 who wants to be a millionaire it is absolutely within their reach. 30-year-olds only need to save £737 per month. In fact, we’d even say that if you’re 40 you can still quite easily become a pension millionaire despite the seemingly higher savings rates required.

You can access your private pension before the state pension age, so let’s recalculate as if you want to access as early as possible. The current minimum pension age for taking benefits from a private pension is age 55. This is expected to increase over time. For this example, we’ll go with 58, which is probably most likely for those currently in their 30s and younger.

The required savings per month is noticeably higher than when the target date was 68. We have 10 years less to contribute and 10 years less of compounding returns. The later you start the harder it gets, like before, but every year later is so much harder. This is based on 58. Doing it by 50 is probably going to be a Herculean task. Let’s take a look…

This chart looks different to the other charts because you can’t actually access the money in the pension at 50. So, although you will stop contributing at 50, the pension pot will continue to grow until 58, hence why all the lines come together at 50.

What might surprise you is that the savings per month for the younger ages are not that different to those required for retiring at 58. At that point growth is far more important for compounding than the relatively low contributions.

Let’s look at all the figures together to more easily see how they compare. The later you start investing would make getting to £1m a very difficult task indeed. But for those who are currently 30, retiring by 50 looks very doable as you only need to save £1,625 per month.

I imagine that some of you are screaming expletives at us right now because unless you’re on the younger end of that scale some of those numbers are beginning to appear ridiculous. Well let’s take a look at how those numbers can be drastically cut down.

Taking An Axe To The Required Savings

All the numbers we’ve seen so far are the total contributions. The beauty of pensions is that thankfully you don’t need to pay all this yourself. You will get employer contributions and tax-relief, which can be enormous.

There’s also a smart hack that some companies use to avoid National Insurance (NI) called ‘salary sacrifice’, which saves you a bucket load of money. You can then make further contributions to your pension with the tax saved.

Better still, some companies who operate a salary sacrifice scheme will also pass on their employers NI savings of 13.8% to your pension pot too.

All in, this will be an effective boost of 83.8% for higher-rate taxpayers on top of whatever you put in. For lower-rate taxpayers it works out at a still impressive 53.8%.

If that wasn’t enough, if you have outstanding student debt, using salary sacrifice to increase pension contributions lowers the amount you need to pay back each month. This would further increase those figures to 98.8% for higher-rate taxpayers and 65.1% for lower-rate taxpayers.

For the purpose of the rest of the article we’ll assume you have no student debt and so don’t benefit from avoiding that.

Also, some companies don’t offer a salary sacrifice scheme simply because they’ve never heard of it. There’s no harm in asking and perhaps educating them why they should introduce salary sacrifice.

How Much Do You Really Need To Save To Get To The £1 Million Mark?

This is what both a higher-rate taxpayer and their employer will contribute to their pension, plus the tax relief they will receive, in order to hit that £1m pension. In this first example shown we’ve assumed a salary of £75,000 and 10% matched employer contributions.

Most companies will pay less than 10% but there are also many who do respect their employees and pay this or even more. If you’re serious about building a £1m pension, then it might be in your interest to seek a good employer out.

That 10% matched limit is why the company contributions are frozen at £625 for some of the ages. It means that you will have to pay in more yourself to compensate for lower company contributions. Hence at 35, to retire at 50, you will pay in £1,014 per month but only receive £625 from your company. Of course, if you earn more or have higher matched contributions your company will pay more than this, meaning you yourself can pay less.

Let’s look at what a lower-rate taxpayer earning £45,000 would have to save. As you can see the lower salary means the employer contributions are capped at £375 per month causing you to have to contribute more yourself. At 30 you would only have to save £812 a month to retire at 50 with a pot that would soon grow to £1m. For those age 40, the required monthly savings are a tall order, requiring £2,533 per month. This can be slashed for those willing to work until 58 and later.

How To Access Your Pension at 50?

As we mentioned earlier you cannot access a private pension until probably 58 in normal circumstances.

Our first lifehack is to take out debt at your chosen retirement age of 50, most likely mortgage debt as it’s very cheap, to fund your lifestyle until you reach the pension age of 58. When you can finally access the pension, you can take a 25% tax-free lump sum, which you could use to pay down the debt should you wish. If you did manage to build a £1m pension that’s a tax-free lump sum of £250,000.

If you had remortgaged your property and extracted £250,000 at age 50, that would give you £31,250 each year to live on. This could be supplemented with any other savings or investments that you hold outside of a pension, such as an ISA.

Our second lifehack also involves using debt smartly, but in the early years of pension building.

The irony of investing is that it’s far preferable to inject lots of money in the early years rather than later, in order to produce better compounding. But inevitably, your salary will be lower in the early years and your pension pot will be small, meaning it’s only in the later years that your pot grows to a size that the compounding starts making an impact.

Why not flip that on its head? By taking on a large amount of low interest debt in your twenties or thirties and investing it into your pension, you can then watch as your pension snowballs over the years from strong compounding returns.

Preferably the debt will be long term, cheap mortgage borrowings like the first hack, so you can defer paying it back for 2 or 3 decades, as before.

Other Key Tips

#1 – Consolidate Old Pensions

Most people will have several jobs or more during their lifetime and accumulate multiple pensions. This not only makes them a pain in the butt to manage but also many of them will be expensive and underperforming.

In many cases it’s worth consolidating them into one easy to manage, low-cost SIPP. Before doing this do your research and perhaps speak to a financial advisor if you’re unsure.

#2 – Partial Transfer Your Existing Workplace Pension

Following on from the last point, it might be worthwhile partially transferring your existing workplace pension into a SIPP if your existing pension is costly or badly run. Many workplace pensions have poor investment options and are likely to not be invested according to your risk profile and goals.

We’re suggesting a partial transfer because otherwise your employer will likely stop contributing, which you want to avoid. Before doing a partial transfer make sure your existing pension provider allows this.

#3 – Ramp Up The Risk

Generally, the higher the risk, the higher the potential reward. To build a £1m pension is no mean feat and will require great returns. In this video we think we’ve been quite conservative using just 5% real returns, and if you increase risk, we think there is a good possibility that you will get returns exceeding this.

#4 – Use Your Spouse’s Pension Too

If you’re fortunate enough to have a spouse who has a good workplace pension too, then take full advantage of this. You’ll get even more employer contributions and will now have two salaries to make quick work of those required savings rates.

Also, on your own you will likely eventually breach your pension lifetime allowance if you have a pot already worth £1m at age 58 as it will continue to grow. If that was spread across two people’s allowances, that is much better.

#5 – Don’t Neglect Your ISA

Pensions are incredible, but Stocks & Shares ISAs are also extremely powerful in their own right. Together they can be used to balance tax efficiency and accessibility. Check out this article and video next to learn how they can be strategically used together to retire early.

Were you surprised by just how little of your own money is required to become a pension millionaire? What’s your retirement strategy? Join the conversation in the comments below.

Written by Andy


Featured image credit:  Rus Limon/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

InvestEngine Is A Game-Changer! | Completely Free ETF Investing Platform Reviewed

InvestEngine is a game changing new investment platform that lets you trade ETFs for free, beating the popular commission-free trading apps which all have at least some fees.

The opinions and insights in this review are our own and are unbiased. We only do reviews if we think there’s a service that you really need to hear about, and this is one of those times.

InvestEngine is a hybrid investment platform in that it is really two platforms under the same name: one is a totally free ETF investing platform whose main competitors are free trading apps like Trading 212 and Freetrade; and the other is a super low-fee robo investing platform, comparable to the likes of Nutmeg.

So, if you are either a “do-it-yourself” index investor or a hands-off “manage-it-for-me” investor, InvestEngine has you covered, but with significantly lower fees than can be found elsewhere on the market.

And as our regular viewers will know… fees are everything. Fees are the ONE thing you can control with certainty over a portfolio’s life. Get the fees right, and it could make the difference between a 6-figure and a 7-figure portfolio.

Well, InvestEngine have got the fees right. Should InvestEngine now be the new place to store and grow your wealth? Let’s check it out!

If you want to give InvestEngine a try and see what all the fuss is about for yourself, they currently have a sign-up offer where you get a £50 bonus added to your portfolio balance if you deposit £100 or more. Find the sign-up offer here or on the Money Unshackled Offers Page.

Alternatively Watch The YouTube Video > > >

Hi guys, an update (28th July 2021): DIY ISAs are now live!! 😎 You can also now have multiple DIY portfolios. To set these up, use the website version of InvestEngine, but the app should have this functionality also in the coming days.

Read the full review of InvestEngine by clicking here or on the image below ↓

Full written written review here

Written by Ben


Featured image credit: McLittle Stock/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

Do Index Funds & ETFs REALLY Beat Actively Managed Funds?

S&P Global, the index provider behind the S&P 500 and other stock indexes, provide some great insight into the markets which help everyday investors like us to understand the investment world better.

One of these insights is the SPIVA report, SPIVA being an acronym for S&P Indices Versus Active. It’s a comparison between actively managed funds and the passive indexes that they are benchmarked against.

With this report we can see exactly how stock market indexes, and hence index tracking funds and ETFs, are actually performing versus actively managed funds.

From this we can better answer questions like: “if I want my wealth to grow, should I invest in a managed fund with a famous reputation like the Cathie Wood funds, or in an index like the S&P 500?”; “Can fund managers help you avoid the worst impact of a market crash?”; and “are top performing fund managers skilful, or just lucky?”.

In this article we’ve got the answers to all these questions and more. We’re going to try to put to bed once and for all the argument between active and passive funds. Let’s check it out!

Commission-free trading app Freetrade has over 300 index-tracking ETFs available, including the FTSE 100, S&P 500, and commodities like gold and silver. There’s even niche areas like cybersecurity and green energy ETFs too.

Sign up using the special link here with as little as £2 and you’ll be given a free share worth up to £200!

Alternatively Watch The YouTube Video > > >

The Active vs Passive Debate: Why It Matters

The reason why actively managed funds still exist is the lingering belief that with enough skill, a fund manager can consistently beat the market, or technically speaking, outperform their index benchmark.

When Vanguard founder Jack Bogle challenged this view decades ago with his low-fee index funds, it began a performance war between the managers and the indexers over which approach is best.

Should you pack your portfolio with actively managed funds chosen for their managers’ reputations, kooky strategies, and past performance? Or with index funds and ETFs chosen for their geographic coverage and low fees?

The Main Finding

The main takeaway from the report is that whatever geographical region you look at, indexes have outperformed managed funds the vast majority of the time.

US Breakdown (amounts over 50 = a win for Index Funds)

If we drill into the US, we can see the detail. These numbers are the percentage success rate of indexes vs active funds, with better success rates for the indexes in darker shades of red.

We see that over 5 years, active funds have a terrible success rate overall, but might see a better performance over a 1-year period.

Even over just 1 year, it is still a less than half-chance that your actively managed fund will beat the market. As investing is a long-term game, the 5-year figures are pretty damning for managed funds.

It’s not just Equity funds that fail to beat their index benchmarks – active bond funds also fail to beat ETF and index fund equivalents the vast majority of the time.

It’s worth noting that there were certain market niches that fund managers were able to beat the market consistently over 1, 3 and 5 years.

These were mid-cap and small-cap growth stocks.

There are good reasons to think that at the small-cap end of the market, fund managers have a better chance to beat their benchmark, because there is less information than at the large-cap end of the market.

There is almost no chance that a fund manager can trade Apple or Amazon at a market beating discount, because these companies are so well known that everyone else has the same information.

But maybe by focusing on tiny companies they can eke out an advantage.

The data here certainly holds open that possibility anyway. But when we zoomed out to a 20-year horizon, a paltry 4%, 10%, and 6% of large-, mid-, and small-cap growth funds beat their benchmarks, respectively. So maybe not!

Europe Breakdown

If we look at Europe, it’s the same story. The S&P Europe 350 index, which includes the UK as some of its largest holdings, outperforms actively managed funds 75% of the time over 5 years. But short-term punts have paid off most of the time.

Can Active Fund Managers Steer You Through A Downturn?

Surely the benefit of having a human at the helm is that when a major storm hits, you have a captain to steer you through the chaos. That’s a nice thought, but what does the data say?

Large Cap performance

This chart shows the percentage of actively managed US large-cap funds that beat the S&P 500 index in any 1-year period going back to 2006.

One obvious point to note is that only in 2 years were the active funds more likely to outperform the S&P 500.

One of those years though was 2009, a terrible year for the stock market which was during the global financial meltdown, which started in 2008.

Active funds were slightly more likely to outperform their index in this year. Funds failed to outperform in 2008 though. Or in 2020, with the Covid Crash.

So it seems that active managers are not especially well placed to steer you through a downturn, at least for large-cap stocks.

A separate point to note is that the trend of active funds’ success rate is falling  the trend line is down by 10% over the 14-year period.

Small Cap performance

If we look at small-caps, the area where fund-managers should excel, we again see a fall in the success rate trend, but 2009 was an incredible year for actively managed small-cap funds.

This did however come after one of the worst performance years in 2008. And 2020’s performance was mediocre.

So, can active managers better steer you through a downturn? The data says… there’s no reason to think so!

The Winning Managed Funds: Was It Skill, Or Luck?

Maybe we’ve been a bit unfair to actively managed funds. Yes, most of them fail to perform, but there ARE STILL a load of winning fund managers that you can put your trust in, right?

After all, 25% of American and European managed funds WERE able to beat the market over 5 years. But did their investment results come from skill, or luck?

That distinction is important, because genuine skill is likely to persist into the future (which is all that matters to an investor), while luck is random, and those results are unlikely to continue.

One way to measure a fund manager’s skill is to look at how long that good performance hangs around relative to its peers.

SPIVA’s Persistence Scorecard attempts to distinguish luck from skill by seeing what happened to top performing funds from 2015 over the next 5-years.

US Persistence

This chart shows that active management outperformance is typically short-lived in the US market. Just 39% of top performers stayed in the top half of the league table after 5 years, with 20% being relegated to the bottom half, and 13% were gone altogether.

A further 28% were the same fund in name only. Funds often have to drastically change their approach to survive, and an investor in such funds might find they are no longer invested in the sectors they initially chose.

Europe Persistence

If we look at the Europe market, which for this purpose includes the UK, some analysis has been done into how many funds stayed in the top quartile of the league tables after 2, 3, 4 and 5 years. The top quartile is the best performing 25% of funds in any 1 year.

Of the Europe Equity funds based in Europe, after 2 years, only 33% of the top performers could still be called top performers.

Most of the other equity categories were much worse even than this. And look at what happens in years 3, 4 and 5. In year 3, only 3% of top performers from year 1 were still in that top quartile.

If you think that investing should be done for the long-term, why would you want to trust your money to a top performing managed fund, when data like this proves beyond a reasonable doubt that most of their performance is down to luck?

After 5 years, less than 1% of European Equity managed funds were able to maintain their performance.

Other Key Findings Of The SPIVA Report

#1 – Fees Really Matter

The report confirmed what we already knew; that fees have an important impact on fund performance. Actively managed funds typically have FAR higher fees than passive index funds, and this massively hinders them from beating or even matching their benchmarks.

An active fund must cover the high costs of its analysts’ salaries. Even if picking the right stocks were simply a flip of a coin, the fund managers would still be worse off most of the time due to having to over-perform simply to cover the costs of their own high fees.

The complexity of the investment strategy in some managed funds can also raise the fees, as the fund is perceived to be doing something clever.

In our view, it seems that overly-complex investments mostly exist to profit those who create and sell them, rather than their investors.

#2 – Active Funds Who Invest In Foreign Markets Do It Poorly

Think, for instance, of a London based actively managed fund which invests in US stocks. On average, it will perform worse than a New York based fund which invested in US stocks.

Part of this might be to do with foreign dividend withholding taxes, which shaves a slice of returns off the top for the US taxman.

But part of the reason is surely also to do with local knowledge. A US investment firm may know a little more about the American companies that its fund managers shop at, or that they see every day in the newspapers, than a UK investment firm would.

We can take from this that if you want to invest in the US market from the UK, or any other foreign market for that matter, you’re even more likely to do better with an ETF than by using an actively managed fund.

#3 – Fund Size Matters

The data shows that generally, larger funds were more likely to be able to beat their benchmarks than smaller funds were.

So if you ARE going to use an actively managed fund, a fund with Assets Under Management in the BILLIONS of pounds should perform better than one with only millions.

So When SHOULD You Use Managed Funds?

As it stands, there seems to be little reason to invest in actively managed funds, based on this report. Sure, there may be some niche areas of the market that are not adequately covered by index funds and ETFs. But even then, can you be sure that you’re particular niche will be the one that beats the market?

We subscribe to the school of thought that believes we should all be investing broadly into a globally diversified pool of equities, with many countries, market sectors and asset classes covered – or at least into a major index like the S&P 500, which can be tracked cheaply and includes companies that operate globally.

The “Owning The World” approach is very likely to provide you with solid market average returns.

There’s nothing wrong with market average. Don’t mistake market average for an average return.

If you’re able to score the market average, you’re very likely to be beating the vast majority of investors who try in vain to beat the market, and end up losing out.

In league table rankings, index funds are unlikely to ever be amongst the highest flyers – but nor are they likely to be at the bottom.

There will always be actively managed funds who luck their way to the top, to crash out the next year and be replaced with another lucky fund. Meanwhile, the investors riding the index will be coasting their way to a comfortable retirement.

Which funds form the core of your portfolio? Are they actively managed or tracking an index? Join the conversation in the comments below!

Written by Ben


Featured image credit: leolintang/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

All offer links here.

Don’t Do This… Our 5 Biggest Money Regrets

“It’s good to learn from your mistakes. It’s better to learn from other people’s mistakes.” – Warren Buffett.

In today’s post we’re looking at our 5 biggest money regrets. Hopefully, you’ll find this article entertaining but more importantly we hope you find it useful.

Some of these regrets are in direct opposition to popular opinion, which in some cases is why it has taken us so long to identify the bad practice in the first place. We like to think that we’re quite knowledgeable when it comes to financial matters, but even now we’re still perfecting our financial strategies, making mistakes along the way, and sharing it all with you. Let’s check it out…

If you’re looking to get a boost to your investments head over to the Money Unshackled Offers page where platforms like Freetrade, Trading 212, Stake and others are giving away free stocks and welcome bonuses when you sign up.

Alternatively Watch The YouTube Video > > >

What This Article Is Not About

If you’ve ever read or watched anything before on the topic of money regrets, you might be expecting us to reel off a list of predictable mistakes that any self-respecting financial blogger should not be making in the first place.

Things like racking up a huge amount of consumer credit card debt is the obvious one or blowing their life savings on a brand-new car. We’ve always been sensible with money and never squandered it, so we don’t have any major spending regrets as we’re too damn tight!

Sure, back in my student days I was living in my overdraft just like everyone else seemed to be doing, but it was interest free, and the debt was small enough to easily be paid back with a summer job.

Our financial regrets are stuff we would actually go back and change if we could.

Regret #1 – Focussed On UK Stocks And Dividends

This one must have cost me tens of thousands of pounds since I started investing properly in 2010. All we ever heard back then was the FTSE this and the FTSE that. The financial news would come on and tell you how many points the FTSE 100 had moved that day but there was never any mention of the performance of a world index.

Investment platforms would actively discourage investing in foreign markets like the US by charging extortionate trading fees on non-UK investments. Popular investing website The Motley Fool would run seemingly daily articles of 5 UK dividend stocks that every investor needed in their portfolio.

Dividends were spoken about as if they were the only way to make money in the stock market. You’d hear facts like 40 or 50% of overall long-term returns come from dividend reinvesting.

With all this potentially misleading information it’s easy to see why a new investor might be led down the wrong path.

Over the last decade or so the returns on UK stocks have been lacklustre at best, while US stocks have powered ahead. With hindsight it’s always easy to say you should have done this or should have done that. It’s not the past returns though that make me regret going heavy with UK exposure. It’s the fact that UK stocks only make up around 4% of the world’s market capitalisation.

Also, with my human capital (that being my ability to work and live) limited to the UK, it makes no sense to invest with home bias. Exposure to the whole world – or at least mostly US stocks which make up about 55% of the world’s market cap – would be a far more sensible allocation.

As for dividends, there’s nothing wrong with them per se, but by only targeting high yield stocks meant better growth stocks like Amazon, Google and Facebook were ignored. You don’t need to be an investor to know these stocks have left most others in their wake.

Regret #2 – Wasting Our Early Years

This regret is two-fold. Firstly, we both wish we had started investing earlier. Growing up, my parents saved up a small amount of money in a building society for me and I remember how cool it was to see money making money – back then of course interest rates were something like 5% so passive income and the magic of compound interest was clear for all to see.

However, you have to wonder what would have happened to my small pot had it been invested instead. Moreover, later in my early twenties when I did start investing, I was so slow to shift what cash I had into equity, that much of my cash was sitting idle as the stock market went on a bull run.

For Ben (MU Co-founder), he sat in cash even longer. But rather than gradually moving from cash to equity as I had, he had an epiphany after reading Rich Dad Poor Dad at age 27, which was six years ago.

From that moment on he was all in. He went on a buy-to-let shopping spree, buying as many as he could as fast as he could. This even included extracting equity from his own home to jumpstart his asset purchases.

The second part of this regret is about wasting our early years when we had so much time on our hands.

Ben and I lived together at Uni with a bunch of other likeminded people, all of whom had big dreams like we did. Looking back, we had so much time on our hands but did nothing productive with it. We drank, watched Lost, and became rock gods on guitar hero. Could that time have been used to build a business empire like Mark Zuckerberg did?

Most people who don’t start a business use the excuse that they have no time, but we know from having lived it and squandered the opportunity, that students have an abundance of time. We literally must have only spent around 15 to 20 hours a week doing Uni work, spending the rest of the week chilling. If only we had that time back now!

Regret #3 – Pigeonholing Ourselves In An Unscalable Career

A lot of people’s careers start when they’re around 17 and they choose a university degree with little understanding of where that leads to in terms of career. That decision in many cases dictates what they will likely do for the rest of their life. A frightening proposition for any 17-year-old, if only they understood the impact of their decision.

At best, a clued-up youngster might consider the earnings potential of different careers and choose one of the best paid.

Back then, we had no idea about the difference between trading time for money, owning passive income streams, or scalable income. We ended up learning accounting which does lead to a relatively highly paid job, but the work doesn’t lend itself well to scaling.

The best paid work is scalable, which means it can be rolled out to multiple customers with little to no additional work. For instance, if you provide online training courses, then you can create a course once and sell it to an unlimited number of customers.

The same can be said for software engineers who are able to code computer programs, apps and games that have endless reach. Do you remember the game Flappy Bird? Its developer said that it was earning $50,000 a day during its peak popularity. Incredible. That’s the difference between scalable income and trading time for money.

Generally, once you’ve learnt a skill, you become pigeonholed, but we think anyone that has something between their ears can apply themselves to any profession.

While basic accounting is an absolutely vital skill for any business owner to possess, it probably isn’t necessary to study for 6 years of combined university and professional level qualifications in the subject. Better we think, to learn a scalable set of skills.

Regret #4 – Lack Of Leverage

Leverage is the use of debt to amplify potential returns. So, if the stock market rose by, say 8% and you were using 3x leverage, you would get 24% returns, less any financing costs. High returns like this make an enormous impact when compounded over time.

Our regret of not using enough leverage runs contrary to what most people feel about borrowing money to invest. Most people believe that debt and therefore leveraging is inherently risky and so won’t ever touch it. They may regret using debt, while we regret not using enough of it.

Leverage is a useful tool that can enhance returns when used appropriately. For us, the biggest money risk is having to spend a lifetime working and not having the time left at the end of a career to live the life of our dreams. Leverage can be used to more easily achieve that dream life!

In fact, we’ve recently been swotting up on the use of leverage and came across some really interesting theories. One put forward in the book Lifecycle Investing, argues that we should all be using leverage in our early years to diversify across time, and the book makes a compelling case that this actually reduces risk. Can you believe it? Leverage being used to reduce risk!

We’ll probably do a full video on this soon because the theory is so eye-opening and deserves a full explanation, but to summarise, the theory says that because you have so little wealth at the beginning of your life, the movements of the stock market make almost no difference relative to the impact it has later in your life when your pot is large.

From a temporal diversification perspective, it’s as though your 20s and 30s didn’t even exist.

Another use of leverage that we’re only just beginning to use ourselves is a risk parity strategy. Again, this needs a dedicated video as we can’t give it the credit it deserves here.

In brief the asset allocation in a portfolio is adjusted, so that the assets have the same risk level, but then leverage is used to obtain the desired return. This risk parity strategy should have the same return as a stock dominated portfolio but crucially with less risk.

For example, a traditional portfolio might be 60% stocks and 40% bonds, but stocks contribute 90% of the volatility. A risk parity strategy might allocate 20% stocks and 80% bonds but then leverage the portfolio to obtain the desired returns.

Regret #5 – Trapped In A Fixed-Term Mortgage

Fool me once, shame on you; fool me twice, shame on me. Well, it looks like Ben’s a fool (his own words) as he’s made this mistake twice and regretted it both times.

Fixed-term mortgages look appealing. You can lock-in a low interest rate for a number of years and he’s done this with a 5-year fixed term mortgage twice.

Fixed-term mortgages have their uses, such as giving you certainty over repayments – you won’t ever get any nasty surprises from your bank telling you your monthly repayment is going up. But the downside is that they’re very inflexible, and life is bound to throw up many surprises during a 5-year timeframe.

The first time he wanted to release some equity from his house to invest in Buy-To-Let property, he was forced to pay an early repayment charge of a few grand. He then somewhat sensibly chose a 2-year fix, which allowed him to extract more equity just 2 years later.

At the end of the two years, he convinced himself that he wouldn’t ever want to extract equity again, so foolishly (his words again) opted once more for a 5-year fixed term.

Surprise, surprise, he changed his mind and wants to extract some further equity now that the property market is sky high – only to be facing another hefty early repayment charge. The moral is, think twice before locking yourself into a mortgage term… and if thinking twice doesn’t work, definitely don’t get it wrong a third time!

What financial regrets do you have and why? Join the conversation in the comments below.

Written by Andy


Featured image credit:  Golubovy/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

The Ugly Side Of Being Self-Employed

In previous posts we’ve mostly talked highly of turning your back on wage slavery and setting up shop for yourself, but we thought it would be interesting for today’s video to share the ugly side of working for yourself. It’s not all roses, you know.

Speaking from our own experience, we originally started our business on a part-time basis while we were each working full-time jobs. We sacrificed our evenings and weekends for two and half years before we got to the point where we were ready to go all in. Most of that time we were scratching around in the dirt and making little to no money.

Since then, we’ve committed to self-employment and entrepreneurship and have been hustling away full-time for about a year now.

Knowing the downsides of self-employment means that you can prepare for them in advance, so we hope this post is of use to aspiring entrepreneurs. Without further ado, let’s check it out…

Be sure to check out the Investments & Pensions area for guidance on which investment platforms to use, our guides to Matched Betting where you can make around £500 a month from home, and incredible offers like a £50 bonus when you invest with InvestEngine.

Alternatively Watch The YouTube Video > > >

Second-Class Citizen

During the first few years of being self-employed you won’t be able to prove your income. You’ll need to prove your income with mortgage providers, landlords, any provider of credit, for life insurance, and probably for many other reasons.

Instead of being asked to provide employment payslips (because you don’t have any), anyone that you deal with will demand at least 2 years of self-assessment tax returns. That’s 2 years where you’re out in the wilderness, a second-class citizen, unable to prove your income to take advantage of services that most people take for granted.

Worse still, in the first few years of self-employment your income might be low, so it could be several years before you can prove a decent income. This means you are effectively blacklisted from a bunch of essential services.

At the beginning of 2020 there were 5 million people in the UK who are self-employed, so that’s a lot of people who are potentially suffering with these problems.

Credit Lines Are Severed

The inability to borrow might not sound like a big deal but it’s absolutely essential for buying a house. Without a provable income to secure credit you will have no choice but to rent, but even that has huge barriers for the newly self-employed, which we’ll get to in a moment.

If you already own a home and are newly self-employed you won’t be able to remortgage with an alternative lender. You’ll be stuck with whatever rates your existing lender offers, which could be massively uncompetitive.

Most lenders reel you in with attractive initial periods and then stick you on their overpriced standard variable rate (SVR) after two years. For most people this isn’t a problem because you are freely available to go to the market and get the latest best offer. However, if you now find yourself self-employed you will have very few options.

How costly could falling onto the SVR be? With a £360,000 mortgage over 30 years at 1.5% you’ll pay around £1,240 a month. If you got stuck on their SVR – which could be 4.5% – you would have to pay around £1,820 per month. That’s almost an additional £600!

Also, for the newly self-employed who also own buy-to-let property, you will be oppressed even more. Most clued up buy-to-let investors wait for property values to increase, then extract equity out of them to fuel further purchases but this is out of the question with no “provable income”.

Ben’s (MU co-founder) property business is being held back as a result, which isn’t helping him with his early retirement plans, but it’s a trade-off he’s made to escape wage slavery by going self-employed.

Can’t Get A Mortgage – Can’t Rent Either

The inability to buy surely isn’t a big deal because you can easily rent, right? Well, no! Landlords are investors just like any other, and investors don’t like taking on additional risk, especially if there’s no increase in potential return.

If a landlord can rent their property out to a couple – say with one being a teacher and the other a doctor – who have reliable income streams, why would the landlord take on unnecessary risk of renting the property out to someone who is self-employed? The answer is they probably wouldn’t.

We know that someone who can create their own wealth from nothing and has chosen willingly to leave their steady employment is a much safer bet than an employee with one skillset who could lose their job at any time. Unfortunately, in the real-world current employment status seems to trump qualities like a high net-worth, or the ability to make money outside of a job.

This is precisely the problem I am dealing with right now. At time of filming, I am selling my house and can’t buy another due to the self-employed mortgage issue, and can’t prove my income to a landlord, so am left in no man’s land.

Fortunately, having been obsessed with freedom my entire adult life I have access to cash that will at least allow me to pay a lump sum of rent upfront. Most landlords will expect 6-12 months’ rent upfront in this situation – for me that could be an outlay of around £12,000. Not many people could afford that and therefore would run the serious risk of being made homeless.

The standard advice of saving 3 months’ salary for a rainy day doesn’t apply to the self-employed. You potentially need to cover a year or more of living expenses from your emergency fund.

Safety Net Removed

In the window between being newly self-employed and being able to prove your income you will have the safety net of accessible credit completely removed. It’s ironic, that when you don’t need credit, you have credit and store cards thrown at you to entice you into consumer spending, but the newly self-employed who do need it are denied essential credit lines.

If you have any existing debt that you would normally balance transfer to a 0% deal you may not be able to do this and could be forced on to the expensive standard credit card rate.

Abandoned By The Government

The newly self-employed are the potential job creators of the future. But during the Covid lockdowns the government completely abandoned them when they needed help the most.

If they had been set up as a sole trader for some time already and could prove their income then they could be entitled to the Self-Employment Income Support Scheme, which was similar to Furlough. However, it’s the same problem all over again – the newly self-employed couldn’t prove their income.

As for directors of their own limited companies who are paid in dividends, which is likely to be all of them – they got an even worse deal. There was no government support available at all to cover the loss of this type of income. This is another example of entrepreneurs and the self-employed being treated as second-class citizens.

Most directors are not wealthy – most are small business owners, many of whos’ families lost everything when the government took away their livelihoods.

No More Staring Into Space

Possibly the greatest aspect of being an employee is the guaranteed paycheck every month. In the medium to long-term this income is far from secure as you can quite easily be made redundant or sacked, but in the short-term a job can normally be relied upon for at least a few months’ income.

Not only that but you will normally be paid the same amount irrespective of performance. No matter if some report you’re working on takes one day or one week to produce you will be paid the same.

So, what does this mean? It means you can stare into space and not lift a finger for huge chunks of time, and you will still be paid. I know people (cough cough – not me) that have on the odd occasion literally not done a thing in an entire workday and still got paid.

We’re not saying you can get away with murder in every job, but in most jobs we’ve had there has been ample opportunity to avoid work as long as you do just enough to get by.

The bar is so low because practically everyone is doing this. This unproductive time is even expected – the only clause is that you cannot be seen to be unproductive. Dodging work is so widespread that being unproductive could be considered a work benefit.

Unfortunately, the self-employed don’t get paid if they don’t deliver. So, where an employee might put in, say, 20 productive hours in a 40-hour work week, if the self-employed person did that, they might not be able to pay the bills that month.

No Employment Benefits

Some employers are more generous than others, but all have a minimum level of benefits. At the very least employees will receive a certain number of days off in a year and matched pension contributions.

Better employers will also provide health and life insurance, additional holidays, study contracts, bonuses, share schemes, company cars, paid-for entertainment, and other benefits. The self-employed get zilch!

Jack Of All Trades

When you work for yourself you will likely need to do everything yourself at first. Outsourcing is the way to turn a small business into a large business but in the beginning the self-employed usually don’t have the resources to outsource tasks.

In 1913 Henry Ford developed the assembly line technique of mass production. Ford broke the Model T’s assembly into 84 discrete steps, and trained each of his workers to do just one. Today, even office jobs are treated like a production line, with employees typically only having a very narrow remit.

Employees are generally expected to specialize in individual tasks so that the workers become highly proficient in their specialized area. It would be highly irregular for an employee to be preparing the financial accounts one day, shifting boxes in the warehouse on another, and then sending out marketing emails and dealing with customer service the next day. But for the self-employed this is a typical description of their work week as they have no one else to turn to. 

Prior to setting up Money Unshackled as a business we both worked in the fields of accounting and financial analysis. As business owners though we have had to put our hands to content writing, videography, video editing, photo editing, website design, website analytics, SEO, email marketing, social media marketing, liaising with business partners, navigating the law, accounting, tax and payroll, and probably a tonne of other things that have since slipped our minds.

Having such a wide responsibility can be fun but it’s also very frustrating when you come up against a brick wall. At times the self-employed will be completely out of their depth but it’s sink or swim! On more than one occasion I have wanted to smash my laptop to smithereens! And it’s a miracle that I’ve managed to resist this temptation so far.

On Your Lonesome

Working as a solopreneur can be very lonely as you don’t have the interactions that you would have as an employee. There’s no meetings, no bumping into people in the kitchen, and no general banter. With most of the country having experienced working from home over the last year for the first time, a lot of people will know what we’re talking about. No doubt some people might even prefer this.

Even if you go on to build a larger business with its own employees, they say its lonely at the top. Most of the people around you are not your friends. They’re just ‘yes men’ who are trying to climb the greasy corporate ladder. Don’t believe us? When was the last time you told your boss what you really think?

Still A Slave To Money (At First)

Wage slavery could well be the worst element of employment. You know you have to turn up because you need the wage to pay bills. Being self-employed DOES eliminate many of the downsides but you are still a slave to money – at least in the beginning.

A Trade-Off For Something Better

Rant over! While everything we’ve mentioned are genuine drawbacks, they pale into insignificance to the benefits:

  • Potential for extreme profit.
  • Fast pay rises, rather than an insulting measly 2% annually.
  • A path to freedom – you can grow the business to the point that your input is no longer needed.
  • Work when it’s convenient for you.
  • Time moves in days and weeks, instead of years and decades.
  • Don’t need to ask permission to leave the building to go the doctors or anything else.
  • Continual learning and development.
  • The dignity and self-respect of being your own master.
  • Passion for what you do.
  • And, no pointless tasks. Only money generating stuff is done.

Are you dreaming of working for yourself? What are you doing about it? Join the conversation in the comments below.

Written by Andy


Featured image credit: fizkes/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

5 Ways To Invest In The Stock Market Using Leverage In The UK

Using debt to invest really does divide opinion. Personally, we think using other people’s money is a great tool at your deposal to grow your own wealth at a far faster pace than what otherwise would be possible.

In previous videos we’ve talked about some of the more easily understood ways you can use leverage to invest, such as extracting mortgage equity. In today’s post we will of course be briefly looking at this but we’re also going to introduce you to a few different ways to invest using leverage in the UK that I don’t think we’ve covered much before.

How to invest in the stock market using leverage in the UK! Let’s check it out…

If you’re looking to get a boost to your investments head over to the Money Unshackled Offers page where platforms like Freetrade, Trading 212, Stake and others are giving away free stocks and welcome bonuses when you sign up.

Alternatively Watch The YouTube Video > > >

Investing Is A Marathon – Not A Sprint

One of the biggest problems with investing is that for the average person who is able to make contributions of just a few hundred pounds each month, it takes a really long time for their investments to grow to a size where their assets can financially support their lifestyle.

In fact, for a typical person saving for retirement it might take 30-40 years from when they start contributing to when their investment pot becomes big enough to retire on. Waiting 40 years to become financially free is not acceptable to us. What about you?

So, why does it take so long? There are 3 things that dictate how much investments grow by: the amount invested, the time invested, and of course the investment returns.

Most of our amazing readers will be investing as much as they can, and they want financial freedom as soon as possible.  That leaves us with one choice. We must increase our rate of return and therein lies the problem.

All the evidence shows that most people cannot beat the market, so picking the next 100 bagger stock is unlikely. Most people are more likely to pick a stinker.

Therefore, we primarily invest in index funds and ETFs that aim to track the market instead. We would expect this to return around 8% per year, or 5% after inflation. The answer to our problem is that we need to supercharge that index return, and leverage is a very useful tool that might just help us do this.

What Is Leverage?

To quote Investopedia, “Leverage is the use of debt (borrowed capital) in order to undertake an investment or project. The result is to multiply the potential returns from a project. At the same time, leverage will also multiply the potential downside risk in case the investment does not pan out.”

That means if you invested say £1,000 of your own hard-earned money and earned 8%, you would make profit of £80. But had you invested £3,000 – with £2k coming from leverage, and only £1k of your own money, that 8% return would turn into 24%.

You’ve earned £240 profit on your investment of just £1,000. Amazing!

In practice using leverage would incur some small amount of interest payable to the lender, which would reduce that return ever so slightly, but you get the point!


We can’t stress this enough – don’t use leverage unless you have lots of investing knowledge.

Even then, start slowly. We all have a tendency to be overconfident in our investing abilities. Lots of people can be great investors but when leverage is thrown into the mix, they start breaking their own rules and end up investing very poorly.

Remember, that all the benefits of leverage we just mentioned also work the opposite way. So, if we relook at that previous example of a 3x leveraged instrument, had the market fallen by 8% instead of risen, you would lose £240, which is a 24% loss.

The stock market is very volatile and can fall by more than 50% as it did between 2007 and 2009. If you were using the amount of leverage in our example you would have lost all of your own money.

5 Way To Invest In The Stock Market With Leverage

#1 – Leveraged ETFs

The popularity of Leveraged ETF’s has really ballooned in recent years. We now regularly see some in the top traded tables of UK platforms. In Q1 2021 the WisdomTree FTSE 100 3x Daily ETP (3UKL) was the 6th most popular buy on the Interactive Investor platform.

Leveraged ETFs are collective investment funds where lots of investor’s money is pooled together into one investment. They have been developed for short-term trading and therefore are said not to be suitable for long-term investors. They’re designed to multiply the short-term performance of an index or commodity. If we take the WisdomTree FTSE 100 3x Daily ETP as an example – this one is meant to provide three times the daily performance of the FTSE 100.

For example, if the FTSE 100 rises by 1% over a day, then the ETP will rise by 3%, excluding fees. However, if the FTSE 100 falls by 1% over a day, then the ETP will fall by 3%, excluding fees.

At first glance, leveraged ETFs look great. We know that in the long-term stock market indexes should go up, but when you delve a little deeper into leveraged ETFs, the numbers paint a very different picture.

What this financial instrument is not designed to do is to track the performance of the FTSE 100 over an extended period of time. That’s because leveraged ETFs reset daily to maintain the same leverage ratio – in this case 3x daily.

Hargreaves Lansdown had an interesting article on the subject and demonstrated the impact on returns for investors who hold leveraged ETFs for any longer than one day.

Fig.1: Example of a 3x leveraged ETF underperforming

On day one the normal ETF returns 10%, so the leveraged ETF returns 30%. Then the normal ETF drops by 10% the next day, so the leveraged ETF drops by 30%. As the days go on the leveraged ETF completely strays away from the benchmark index. In this example, the leveraged ETF has lost 17% but the normal ETF has barely moved.

If you’re trying to take advantage of short-term market movements these might be worth it.

#2 – Extract Equity From Your Mortgage

In the short-term the stock market is just as likely to be down as it is up, so short-term debt is very dangerous for use as leverage. Conversely, mortgages are one of the best ways to leverage stocks-based investments because a mortgage is a long-term source of debt. Your investments have 20, 30, or even 40 years to recover from any temporary setback. It’s very unlikely for the stock market to be down for such a long time.

How can you buy stocks with a mortgage, which are in fact loans intended for property purchases? Well, once you’ve paid down some of the outstanding mortgage on your home, or the property has gone up in value, you will be able to renegotiate your mortgage terms and extract equity in the form of extra mortgage debt.

This can then be used to buy and hold stocks, or preferably index funds, over the long-term.

A while back we calculated the optimal LTV at around 85%. Say your property was valued at £200k and your equity was worth £100k, you could take out £70k of additional long-term mortgage debt, which would leave £30k in equity and put you back on an 85% LTV.

You can now invest that £70k as you see fit (just don’t tell the bank). In effect you are using a mortgage to invest in the stock market. Just because society tells you to pay down your mortgage quickly, why should you? Better, we think, to grow your wealth with investments, and use the investment gains to pay off the mortgage later.

Another key benefit of using mortgages as your leverage source is that mortgages tend to be for a fixed term, so even if the stock market crashed (as long as you are meeting the monthly mortgage payments) the loan cannot be called in.

This is unlike most short-term debt offered on stock trading platforms, which could call in debts just when you’re at your lowest point.

#3 – Margin Loans

Margin loans are a form of secured lending offered by stockbroking platforms. The stockbroker uses the stocks & shares in the portfolio as security. The main drawback compared to a mortgage is that they are callable.

This means that if the value of the portfolio falls below a certain level, the broker will eventually sell some of your positions. They do this because the value of your collateral may have dropped to a level where the lender hasn’t got enough cover to protect them from you not repaying the loan.

Before selling your positions, the stockbroker should first serve you a margin call, which is essentially a demand for you to deposit more money. The problem is you are probably using margin because you don’t have the money or deliberately stretched yourself. If you did have the cash set aside to cover you for a margin call, there’s probably little point in paying to access the margin in the first place.

In the UK none of the major investing platforms offer margin accounts. In this respect, the UK is very different from the USA – where most reputable stockbrokers would offer margin.

Interactive Brokers seems to be the leading broker offering margin loans in the UK and are offering margin rates in GBP of around 1.5%. If you guys want us to review this service, let us know down in the comments. We’ll jump right on it if there’s enough demand.

Degiro is another broker that offers margin loans in the UK but the only others we’re aware of are private banks, which require hundreds of thousands or even millions of pounds to access.

#4 – Spread Betting / CFDs

Spread Betting and CFDs are similar, and both are definitely not for beginners. The main difference between the two is that Spread Betting is tax-free. Spread betting is illegal in many countries, so we are very fortunate in the UK as it’s legal here.

If you are an experienced investor, don’t let the term ‘betting’ put you off. It’s only considered betting because you are technically placing a ‘bet’ with a broker that the market will move one way or another, but it can be done in such a way that it’s very similar to normal investing if you understand it. You don’t actually own the underlying investment!

We have a big video planned on Spread Betting, where we’ll show you how we’re making big returns, so make sure you subscribe so you don’t miss it when we release it.

With Spread Betting you place a bet per point. Say you bet £10 per point on the S&P 500. If the S&P 500 moved from 4000 to 4200 you would have made £2,000 profit (200 points x £10).

Most spread betting firms will allow you to deposit just 5% (20 x leverage) of the overall exposure on indexes like the S&P 500, so in this example you could have made a 100% return on just a 5% gain in the index value.

Although this scenario is possible, we would encourage you to limit the amount of leverage you use at the beginning because if the financial instrument swings the wrong way you’ll lose a lot of money, very fast.

Spread Betting and CFDs get a bad rep because too many people try it without understanding how leverage works, and so naturally lose a boat load of cash. We’ll be going into a lot of detail in the soon to be released Spread Betting video, including what we’re investing in and what strategies we’re using, so keep an eye out for that.

#5 – 0% Credit Cards

0% credit cards can be used for a small amount of leverage, and they have a medium-term time horizon of around 2 years. I have used 0% purchase credit cards to spend on my normal day-to-day expenditure. But rather than paying down the full balance each month I would invest it instead. However, you must always make the minimum payment, or the credit card company will remove the 0% offer.

At the end of the 0% term, you can pay down the debt or use a 0% balance transfer credit card to move the debt to another card. We consider 0% credit cards to be a small, short-term advance, rather than a permanent leverage tool.

Should You Use Leverage?

If you have to ask this question, it’s probably best not to use leverage. It’s a high-risk strategy and should only be done by those who understand the risks and those who have the knowledge. Having said this, you learn to drive by driving, you learn to swim by swimming, and you learn to leverage… you get the point.

Where do you stand on using leverage to invest in the stock market? Join the conversation in the comments below.

Written by Andy

Featured image credit:  Andrey_Popov/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

10 Tips For Supercharged Matched Betting Profits (Easy £500+ A Month)

Do you want to make easy money, sitting on your backside, with a beer in one hand and a pizza in the other, and the football playing on the big screen in the background? This doesn’t sound like the sort of environment to make money but with matched betting you can make a few hundred extra quid a month tax-free from home – You don’t even need to like sport or gambling!

You can make good money in just half an hour a day but the serious matched bettors who are either prepared to put in more time or streamline their approach can make several hundred quid a month or more.

In today’s post we’re sharing our top 10 tips to supercharge your matched betting profits, so you can make more money, faster!

One of the main players in the matched betting market is Oddsmonkey. Oddsmonkey provide the tools and guides that will allow you to supercharge your matched betting profits. We have free trials and discounts when you sign-up to OddsMonkey through our offers in the Matched Betting area.

Alternatively Watch The YouTube Video > > >

What Is Matched Betting?

For a detailed explanation feel free to go back and check out our introductory matched betting guide. In brief, matched betting is a technique to unlock the free bets offered by the bookies, turning them into cash that you can bank.

For most of the offers (and if done correctly) it is risk-free but human error doesn’t make it fool-proof.

Gambling sites love to entice their customers and potential new customers to gamble, and they regularly chuck free bets to keep ‘em gambling. Don’t be a sucker and fall for this. Instead, beat them at their own game. At first you want to rinse them for their new customer offers like “bet £10 and get £30 in free bets”.

At any one time there could be between 50 and 100 such offers, with several hundred quid up for grabs. As they say in Pokémon, “Gotta Catch ‘Em All”.

The reason we can say it’s practically risk-free is because you never have to risk your money. For example, you place a bet for say Man United to beat Arsenal, and then you place another bet for Man United not to beat Arsenal. The technical jargon for this is that we placed a back bet on Man United to win and also a lay bet on Man United.

You have covered all potential outcomes. The end result is you lose a few pence, which is the bookmaker’s profit margin, but you unlock the free bet.

You repeat the process using the free bet, and you typically earn around 70% of the value of the free bet as profit – turning a £30 free bet into £21 easy profit. It’s that simple. Now repeat something similar for about 40 or 50 bookies!

Once you’ve raked in all that easy money, you then need to move on to what’s known as the ‘reload’ offers, which is just a cool name for existing customer offers. Don’t be tempted to quit at this point: for those who are prepared to learn and use the tips and tricks like those we’re about to share, ‘reload’ offers can be way more lucrative, and in a way it’s also less effort because you don’t have to open new accounts.

Some matched bettors even make £1,000+ a month using ‘reload’ offers. Now that we’ve covered the basics, let’s jump into the tips that will supercharge your matched betting profits.

Tip #1 – Use Matched Betting Software

There are a few sites to choose from but one of our favourites and today’s sponsor is OddsMonkey. We say this sincerely that you absolutely must use software if you are doing matched betting.

OddsMonkey will collate all the best available offers, so you don’t waste time sourcing them yourself. And they create excellent written and video guides that walk you through each and every offer step-by-step. Their support teams are active 7 days a week if you need help!

But the most vital tool of all is the ‘oddsmatching’ tool. This is where the magic happens and is worth its weight in gold. They fetch all the live betting odds from all the bookies and allow you to filter on a multitude of different options to find the best matched bet for you.

Within this tool you select an event, and it will tell you exactly what you need to bet to maximise your profits. A typical example would be that you lose 14 pence and presumably you would be doing this to unlock a free bet.

Then there’s the forum, where OddsMonkey and other Matched Bettors are active. You might want to join some of the threads to find offers that might not be listed elsewhere on the site. New offers are added daily, so check those out!

Tip #2 – Integrate The Betting Exchange

If you’ve done matched betting before, you’ll know time is the key factor that determines how profitable it is. Having to place a bet on the bookies website and then place the opposite bet on the Exchange is time consuming and a potential weak spot where human error may occur.

Amazingly, the two biggest and best betting exchanges – Betfair and Smarkets – are integrated into the ‘Oddsmatching’ tool. You will be able to place your Lay bet without ever leaving OddsMonkey.

Fig.1: Exchange Integration with Betfair

If you hit the ‘Lay The Bet’ button your lay bet is instantly placed with the Exchange. You will still have to visit the bookmaker’s site to place the back bet, but half the work is now done for you. This was a game changer when we discovered this integration!

Tip #3 – Use 0% Exchange Commission Offer

Betting exchanges make money by charging a commission on players’ net winnings. At time of writing there are 0% commission offers for both Matchbook and Smarkets for OddsMonkey customers. This alone could more or less make the OddsMonkey membership pay for itself. Betfair’s standard commission is 5%, so gradually you can have quite a large slice of your profits eaten up.

Let’s say you’re making £500 each month and hypothetically you’re winning half of that at the betting exchange. After a year’s worth of winning £250 each month at the exchange, you would have made an extra £150 in profit just by using the 0% offer at Smarkets over Betfair.

Tip #4 – Use A Password Manager

Typing your login details in manually each time is a costly waste of time for Matched Bettors with multiple betting sites on the go, when they could be placing bets instead of keying in passwords.

You should always have different passwords at different sites for security in case one should be hacked. That’s a good life-rule whether you’re matched betting or not. But having different passwords across your betting sites could be time consuming and will be impossible to remember.

We recommend a password manager that manages and encrypts your passwords, so you can safely log in to any site at the click of a button. There are a few different password vaults to choose from, but our favourite is LastPass. It’s free to use and if you’re only using it for matched betting, then this is all you need.

If you plan to use it for all your non-matched betting stuff and across devices – which we think you will once you’ve trialled it – you can upgrade to the Premium plan. Check LastPass out here.

Tip #5 – Use A Dedicated Bank Account

Money will be coming at you from all angles when you’re raking it in from multiple bookmakers but this can be messy. But an easy way to keep your main bank account tidy is to set up a dedicated bank account for your matched betting transactions.

This will also really help you to keep track of your matched betting profits, and there’s no way you can miscalculate when it’s all there in a dedicated bank account and as clear as day.

Tip #6 – Set-Up A Matched Betting Email Address

I never did this, and I wish I had. Just as your bank account will be full of matched betting transactions, your inbox will soon be collecting multiple offers for free bets and other promotions – but you could be getting up to 50 emails per day, so you can imagine the mess this will cause.

If you were thinking you could just opt out of these emails – hold your horses. Excuse the pun. It’s vitally important that you opt in to all their email marketing because they will send you personal offers, which are often some of the most lucrative.

To maximise profits matched betting is all about speed, so you want all your matched betting emails together.  The majority of bookie emails are useless newsletters, so with time you’ll need to learn to separate the wheat from the chaff. You can often do this by scanning the email subject line and you’ll have it down to a fine art in no time!

Tip #7 – Mug Bet Regularly

The biggest complaint from those that quit and say that matched betting cannot be done forever is that the bookies can eventually ban you from their free bets – what’s known as gubbing.

But don’t worry – there are easy ways around this. It should come as no surprise that the bookies don’t like matched bettors because they are in effect abusing the system – they’re beating the bookies. Bookies want you to lose more than you win.

The bookies have sophisticated systems in place to detect those who are matched betting but there are steps you can take to minimise the chances of your accounts being gubbed. If you only ever place bets that earn you a free bet or you only ever bet the minimum to qualify for free bets, then your matched betting career may be over before it’s even begun.

To avoid this, you need to place mug bets on a semi-regular basis. Mug betting is the process of placing matched bets which do not qualify for a free bet or promotion. These bets are designed to hide your matched bets and keep your bookie accounts open.

Tip #8 – Use A Big Bankroll

A matched betting bankroll (also referred to as a cash float by some) is a set amount of money you use for placing your bets at the bookmakers and exchanges when matched betting. If you’re new to matched betting take your time and don’t have several bets open at once. Doing this makes it possible to start with a relatively small bankroll of, say £50, but we recommend having around £200 to begin with.

A larger bankroll will allow you to bet faster as you can have more money tied up in bets and allow you to place bets with higher odds. For example, if you place a £10 lay bet at the exchange with odds of 8 the exchange will temporarily lock £70 as a liability in case the bet loses.

Once you’re up and running and doing matched betting regularly we suggest using a bankroll of around £500 or more. Don’t fret if you don’t have that amount yet. As you win you can retain some for use as an increased bankroll.

A business would refer to this money as working capital. It is the money needed to keep the cogs turning. As you’ll be moving money between bookmakers and your bank account and back to other bookmakers, money can get tied up in the ether. A larger bankroll means you can continue to bet while the money is flying through space.

And on that note, it’s a good idea to leave some money in the bookies that you use most frequently rather than constantly withdrawing because having to deposit for every bet is more time lost, when instead you could be betting and moving on to the next offer.

Tip #9 – Go Big During The Big Events

Some free bets can be so small that you might think it’s not worth your time. We get that. Rather than doing matched betting continually you might prefer to have breaks and then go heavy during big events like the Euros or the World Cup, The Super Bowl, The Grand National, Wimbledon, and so on.

We’re writing this during the Euros and right now the bookies are giving away free bets like there’s no tomorrow to both new and existing customers.

Tip #10 – Don’t Bet Last Minute

Sooner or later, you will make a mistake. This is okay as long as you minimise the frequency of these mistakes and take action to reduce the size of the loss when they happen.

The best way to avoid problems in the first place is not to bet last minute, especially on the horses. The odds can change rapidly and drastically in the moments before a race. And always double check that the odds at the betting site match those stated on OddsMonkey.

Sometimes the odds will change in between the time you place your first bet and the second, but as long as you are doing it well in advance you will have plenty of time to recalculate and fix the error. Tools like the Unwanted Lay Calculator can help you neutralise erroneous bets.

Just the other day I was foolishly betting last minute chasing the best rating and I accidently placed my lay bet first as I was rushing. The Back bet odds suddenly changed also, and I was looking at a potentially sizable loss. I frantically placed a back bet with no time to think in an attempt to minimise my potential losses.

The lesson to be learnt is don’t bet last minute, and bonus tip: always place your back bet at the bookies first before the lay bet at the exchange.

Have you given matched betting a try yet and if not, why not? Join the conversation in the comments below.

Don’t forget to check out the latest Matched Betting offers here, which include fee trials and discounts.

Written By Andy


Featured image credit:   Eugene Onischenko/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday:

Should You Just Live In A Caravan? | Extreme Financial Freedom Now?

When you’re several years or even decades away from your financial freedom goals, your mind turns to crazy ideas to speed up the process. Could you just sell up the house, ditch the mortgage, buy a caravan, and declare yourself financially free? Thoughts like this have surely crossed your mind if you’re pursuing financial independence but are still years away from retirement.

After all, a holiday home at a beautiful caravan park by the sea might cost £60,000 to buy – that’s a damn sight cheaper than any house made of bricks, other than in the most deprived of areas.

You wouldn’t want to live in a cheap, run-down 1-bed flat in a horrible area for the rest of your days. But maybe a static caravan in a gated community wouldn’t be such a bad way to live, for the same upfront price.

Or maybe you’d like to tour the world in a mobile home? Is that much cheaper than owning a house?

If you could drive down the most significant cost of living – housing – while still enjoying life, that would be a great way to reach retirement earlier.

In this article we’re looking at the real costs of doing exactly this; whether it’s a feasible early-retirement solution; and how many years it can knock off your working career. By the end you’ll know whether this early-retirement strategy lifestyle is right for you.

Alternatively Watch The YouTube Video > > >

The Dream

The dream for many in the financial independence community is to retire young, or at the least, earlier than the state pension age.

The dream will usually involve travel, or spending your days on the beach, or just escaping the hustle and bustle of city life. Why not do that right now by buying a cliff-top static caravan overlooking the sea, or a motor home to drive around Europe in?

If it means you’re not having to pay a big mortgage each month and you get to see more of the world, it sounds on paper like an exciting (if radical) route to financial freedom.

Stated in financial independence language, it feels like it should allow you to reduce your required retirement pot size, and hence the number of years until you can retire – perhaps right down to today.

Retiring Earlier

We’ve built a handy early retirement, or FIRE calculator, here, that you can use to work out how many years away you are from retirement; and crucially, how big your investments need to be to get you there.

That’s how big in £s your retirement portfolio needs to be to allow you to live fully off the income that those investments provide.

To kick start your own investment journey, check out the deals on the Offers page which include a free £50 cash bonus when you open an investment account with InvestEngine or Loanpad, or free stocks when you open accounts with Freetrade or Trading212, plus a bunch of other stuff. Our investment guides will help you to choose the right platform or pension provider for you.

As an example, the required portfolio size for my family to retire early is £900,000, which should allow us to withdraw an income of £36,000 a year using a 4% withdrawal rate.

But that’s based on the assumption that we’ll continue to live in a house worth £300k at today’s value of money in our early retirement. If we could make a trade-off of living space for a reduction in living cost, maybe that retirement pot size could be a lot smaller, and we could start living our best lives sooner.

Static Caravans

Let’s kick off with the actual costs involved in rebooting your life in a static caravan overlooking the sea in the UK. This involves living at a holiday park in a holiday home like this one, with on-site facilities typically including a shop, a pub and kids’ clubs, in a community of like-minded people.

Is it cheaper than running the average UK home? You’d better hope so, since you’ve got just a tiny fraction of the floorspace!

Yes, it IS cheaper, but not by as much as you might expect:

Let’s kick off with the actual costs involved in rebooting your life in a static caravan overlooking the sea in the UK. This involves living at a holiday park in a holiday home like this one, with on-site facilities typically including a shop, a pub and kids’ clubs, in a community of like-minded people.

Is it cheaper than running the average UK home? You’d better hope so, since you’ve got just a tiny fraction of the floorspace!

Yes, it IS cheaper, but not by as much as you might expect:

Fig.1: Static Caravan Annual Costs vs Average House

The standalone costs of running a £250k average house are around £8,400 a year by our estimates – this excludes ever-present costs like internet, which you’ll be buying regardless of where you’re based. The saving you’d make by moving to a static caravan might just be a couple of grand a year.

If you look at the split of the costs, the big ones are caravan depreciation, and site fees. A big problem is that caravans have a life of around 20 years, before they depreciate down to nothing.

They are made of plastic, wood and sheet-metal, and are not built to last forever like a house is.

Surprisingly, there’s not a great deal of difference between buying new or buying second hand – an average second hand one might cost £30k and last you 10 years, while an average new one might cost £60k and last you 20 years – either way, it costs you about the same, as a yearly average.

The site fees really sting you, with even a mid-range site costing £2,500 a year. You could cut these fees to £1,000 a year if you were happy to pretty much live in a field with no facilities other than your gas, electricity, and water.

If you went down the static caravan route to retire faster, you might shave up to £83k off your required portfolio size.

Not exactly life-changing, but – (a) you do get to retire a little sooner, and (b) if you wanted to live like you were on a permanent holiday now, this ticks that box.

The Max and Paddy Option

Statics are expensive, no doubt. But motor homes and campervans ought to be a lot cheaper, as they’re smaller and your standard of living is far less luxurious.

But as this is a life on the road, it may only appeal to a certain brand of financial freedom fighter who pictures their early retirement being one of travel and exploring the world.

Here’s a couple of options – a decent 4-Berth tourer, and a little 2-Berth campervan, both making use of campsites around Europe:

Fig.2: Campervan Annual Costs vs Average House

This lifestyle would fit someone who was able to work remotely from their laptop.

The tourer works out as a more expensive lifestyle than the static caravans, and just a little cheaper than owning an average house. The little campervan saves you the most money, reducing your required retirement pot size by £92k.

What’s obvious from these numbers so far is that taking the radical step of selling your home to live a cheap life in a caravan isn’t all that realistic financially.

It’s not the extreme early retirement shortcut that we had hoped it would be.

It CAN Be Done Cheaper

The site fees are the real killer, and could be avoided if you really wanted to make this lifestyle change work.

In the UK, campervans are allowed to park at the side of most roads overnight, and you’re allowed to sleep in them. If you’re travelling in England and Wales, there are still places that you can go wild camping, such as the Lake District and parts of Dartmoor. You’d have to source your own gas, and presumably use public washrooms.

But this could shave nearly £150k off your required retirement pot size (3rd column):

Fig.3: Doing It Cheap

If this was the lifestyle you wanted to live in retirement, you might only need £300k or less in total to draw a very basic income, so this saving is significant.

You could also go really cheap and live in a knackered old caravan in the wilderness or even on an old canal boat for just a couple of grand upfront cost, with no site fees.

For the static caravan enthusiasts, make sure you pick a site that allows you to rent your caravan out to tourists. You could make back a few grand a year by renting it out while you go on your holidays elsewhere.

Other Things To Consider

While you own a house, you’re on the property ladder, and your property is likely going up in value. Not only that, but if you have a mortgage, you’re getting leveraged growth on your equity due to the mortgage debt.

If you have a 10% deposit in the house and a 90% mortgage, and if property prices go up by 10% one year, your equity just went up 100% (which is the 10% rise in house prices divided by the 10% deposit).

If you own a caravan instead, your money has likely been either (a) used to buy the caravan, (b) sat pointlessly in a bank account, or (c) invested without leverage in somewhere like the stock market.

You could of course keep your property and rent it out to someone else to cover all the bills, while you move into a caravan. This could be the best of both worlds.

You should also consider that the cost of saving up to buy replacement caravans never stops, while at some point the mortgage interest payments would stop on a house, once your mortgage is paid off.

These advantages of property are difficult to quantify and depend on your own circumstances. But this next point is pretty universal: UK winters suck!

If you really wanted to go down the caravan route, just remember how cold it can get in January, sat in a glorified shed on a cliff top.

A Nice Holiday… But A Retirement Hack?

Having a second home at a caravan park is a nice way to spend the summer if you can afford it – but it’s probably not worth having one as your main residence as an early-retirement hack.

That said, if you’re up for this lifestyle one day in the future when you’re actually retired, it’s good to know that it is a slightly cheaper way to live and you can still factor this annual living expense reduction into your retirement plans.

Or if you’re at the point now that you could declare yourself financially free with a caravan, then the benefits of staying on the property ladder might no longer interest you – you’re free, so it’s mission accomplished.

Alternative Early-Retirement Living Arrangements

Let’s face it, the reason you might be even considering living in a caravan is because housing is so damn expensive in the UK! Here’s a few other ways we can think of that get a similar result in terms of speeding up your early retirement date:

#1 – Move Abroad

If you’re willing to live in a caravan, then you’re probably willing to do just about anything to retire early. So why not move abroad to somewhere super cheap?

Places like Thailand and Spain are great places to stretch your money to the max. Obvious hurdles to overcome are the language barrier, and being far away from family and friends.

This lifestyle is suited to someone who can work remotely from anywhere, which as this last year or two has shown, is perfectly possible for most office jobs.

If you can work for your company from your bedroom during lockdown whilst getting paid in British pounds, you can also do the same work from a cocktail bar in Thailand and be paid in British pounds. With the cost-of-living difference, you could live like a king.

#2 – Co-Habit

This one is all about getting someone else to pay towards your mortgage, or splitting the cost of a place that you rent with friends. You could rent out a room in a house you own, or you could group together with friends to buy or rent a house together.

You could even convert a house that you buy into a duplex – two entirely separated homes within one building. This should add enormous value to the property, and means you can rent out half the building to a tenant for a regular income.

#3– Just Downsize A Little

It doesn’t have to be all-or-nothing. You could downsize your home a little, or maybe move to a cheaper city.

If you can save even a few hundred extra pounds a month on your mortgage and bills, that could go a long way towards reaching your early retirement goals faster.

Is downsizing to a nice static caravan or mobile home something you’d ever consider, or something you’ve already thought about? Join the conversation in the comments below!

Written by Ben


Featured image credit: Duncan Cuthbertson/

Static Caravan image credit: gbellphotos/

Campervan image credit: Andrey Armyagov/

Also check out the MoneyUnshackled YouTube channel, with new videos released every Wednesday and Saturday: