Money Talks with Romain Lucas

00:00:04: Hey Luxembourg, let's talk about something that really matters.

00:00:07: Your money and your future!

00:00:10: Welcome to Money Talks the podcast that brings you honest chats with familiar faces from Luxemburg.

00:00:18: You'll hear stories of big decisions in life or personal finances.

00:00:22: No jargon no fluff just conversations which make sense And get you thinking on how to reach them.

00:00:29: This podcast is brought by Alfie.

00:00:34: Hello everyone, today on Money Talks we're discussing a topic that doesn't show up in the bank statements.

00:00:40: It's The Cost of Inaction.

00:00:42: My guest is Romain Lucas A finance professional who worked with large institutions like EYDWS or Waystone and then built his own independent practice at Luxembourg.

00:00:53: Today he runs smart money growth And has build fast-growing community focused on financial education and self sufficiency.

00:01:03: Romain, before we talk about money let's talk a bit about you.

00:01:07: What attracted you to finance and what kind of relationship with money did you grow up?

00:01:13: Yes so initially it didn't really come from my family because I came from the family of medical profession.

00:01:18: however initially when i was young naturally attracted to the economy So I thought maybe that I wanted an economist.

00:01:29: However, it became clear that this might not be the best career and I would be stuck in academia without doing things in a real world.

00:01:37: So instead i focused on finance as if was closest thing And early-on.

00:01:41: also with my studies I realized that finance is giving us tools to live good life.

00:01:49: This is what attracted me earlier.

00:01:52: To my knowledge your community counts today about six hundred people in Luxembourg.

00:01:57: Your focus is financial education, what do these people have in common?

00:02:01: Is it frustration or a desire for autonomy

00:02:05: ?

00:02:06: The committee has grown since then so we are now eight hundred members but its true that they all come from different backgrounds.

00:02:14: The thing that they have in common is all curious, looking for information on how to build their wealth themselves.

00:02:22: However I wouldn't say they are confused but do not trust easily and so thats why the format of a community is successful.

00:02:30: by having peer-to-peer exchange where you can share your knowledge and experience people can help more beginners.

00:02:38: then it just creates good trust environment.

00:02:41: So

00:02:41: you're only reaching junior?

00:02:43: professionals.

00:02:44: You have all ages together?

00:02:46: Yeah, it's mostly ages between thirty and fifty.

00:02:50: we've got a lot of students and with more older people who are looking for tips on their retirement.

00:02:55: so its really wide range of audience.

00:02:58: Okay you meet these people outside there working hours And help them exchange ideas learn about Investing?

00:03:05: Yeah, it's very much more about organizing a thoughtful discussion.

00:03:09: More so than my expertise.

00:03:11: of course I contribute but i think the community has become something bigger than myself and we typically share on a wide range of topic On which might not necessarily be The number one expert at the table And that actually is good thing because We can all learn from the exchanges.

00:03:26: You reject the idea Of outsourcing thinking when It comes to money.

00:03:30: Do you believe That education Is more powerful Than advice?

00:03:34: Yes, in a sense.

00:03:36: So the traditional way to think about managing money is you need do not have the expertise to assess how good they are.

00:03:54: And second, whenever there's a market crash you don't have discipline because yourself doesn't understand why in that plan is the first place and so it tends to be worse result – not for fees or professional experience but just as you're unable follow strategies built on your

00:04:14: own.

00:04:14: Coming back at the beginning let us talk about cost of inaction.

00:04:17: we've mentioned What does this mean?

00:04:20: Think of it like this.

00:04:21: Of course, there's inflation and everyone knows that their money is staying in a bank account loses to inflation.

00:04:28: however There are also all the costs which is your opportunity cost of not investing Which actually much larger than inflation And total.

00:04:36: if you add the inflation plus the cost of an action then together It could be seven or eight percent per year.

00:04:43: Many professionals have some savings.

00:04:46: we realize That that cost is far greater Than they can handle.

00:04:49: Okay, so even in difficult times such as these you think it's still better to be invested than stay on the sidelines and just observe?

00:04:57: Well.

00:04:58: It is always complicated.

00:04:59: right because of course if your not very experienced do not want to start investing all your money without a great strategy.

00:05:06: however for most people that I've seen when they start investing, generally still in a period where there are much more savings in front of them rather than what's up on their back account.

00:05:18: What I mean is that it will save the future and currently so if you're willing to have a leap of faith at this point to start investing even small amounts just together experience It would go along way into building knowledge and experiences necessary for all the future savings end up having to invest any case.

00:05:40: By delaying that start, it just makes the decision such more high stakes because by then you would have much more savings to invest and the problem will not have gone away.

00:05:50: Okay so in your experience what are most common reasons people delay investing even if they earn well?

00:05:56: I think so.

00:05:57: we talked about not having a strategy, not knowing.

00:06:00: So this is of course something that will try to solve with your community and my activities or giving the necessary education understand what you do.

00:06:08: And I would say there's also the fear of a market crash, something emotional but also very real.

00:06:16: It just comes to the fact that we are not... Especially as Europeans were not used taking risks because everything is sort-of covered like state takes care most risk in life And so by not taking risk in general, we do not want to take the first steps.

00:06:32: However for most goals it's actually riskier than to invest even if you have a market crash early on when you start investing.

00:06:40: Do see yourself more of an influencer or an advisor?

00:06:45: It is a bit complicated.

00:06:47: I wouldn't call myself really an influencer because I think that influencers are about entertainment about being popular and I don't think i'm trying to do this.

00:06:57: Instead, in my content is making educational posts.

00:07:00: that would be valuable at least for someone but not a trade popularity for something truthful.

00:07:09: This is what clients actually like when they are providing good information by being fully independent something that most influencers are not doing because they receive Most of their money from sponsorships.

00:07:24: you work with a lot of frameworks You have a good system in place and you think it's more important to have that than picking the right investing.

00:07:32: Can you tell us a bit about your systems?

00:07:35: And your frameworks.

00:07:36: Yeah, true.

00:07:37: So before building framework is good too know where those frameworks should come from I ground everything that I do in academic academic studies first and industry research because I think it stands as a good base of what should be done.

00:07:53: Then, after that you can adapt based on the different person's history or their tolerance.

00:08:00: if you stand from good foundations then afterwards we move forward.

00:08:04: The second thing is to build frameworks around something that could have been done by humans not just machines.

00:08:11: It would also be nice for us to tell exactly how to invest.

00:08:14: However, like most humans they will not feel comfortable with that and so it would work.

00:08:19: So I try to also ground some of the research that i read in finance about perfect allocation And I grounded in psychology With a good decision-making frameworks Something you can actually do as human and stick to it.

00:08:32: At what age did your start investing?

00:08:34: Are still faithful on your initial strategy or how often are you adapting?

00:08:39: So I started in two thousand seventeen investing my first savings when i was still In my studies at that time.

00:08:46: I had a strategy That was fully passive.

00:08:49: After that, I've evolved a little bit toward factor investing and I realized it's not the be all an end of Investing.

00:08:57: I would say there is always some optimization you can do around your portfolio.

00:09:02: It's important to follow the principle of road diversification low cost and tax efficiency as a mantra And after that, variations around them are not bad.

00:09:12: However now I try to not sell too much or buy anything new and tend to stick with what i have at the margin of making some changes.

00:09:19: but it will take five or six years for me make those changes.

00:09:22: Most people your age think first and most important investment they can make is buying a house.

00:09:29: It's true.

00:09:30: in Europe we're very focused on buying our houses because There's actually many studies that show that renting versus buying is not as much a clear-cut decision, as one would think.

00:09:43: Renting is very valuable even in Luxembourg because what you don't put into the mortgage can rent and then put aside an ETF for example.

00:09:53: We have great tax environment to invest in ETFs In Luxemburg.

00:09:57: Overall I'd expect someone doing one or another will end up with similar situation.

00:10:03: It's true that real estate in Luxembourg is quite expensive, but with the tax deduction it sort of makes up for it.

00:10:08: For me its not necessarily something I think about too much.

00:10:11: Buying a house should be more personal decision and not something you have to do by certain age.

00:10:16: What are your investing for?

00:10:17: This is i think most difficult question to answer because no one really knows what will happen in future.

00:10:23: And when we need an allocation We need goal.

00:10:26: based on this goal You need change the location.

00:10:29: So having an allocation without goals make sense.

00:10:33: I think over time, have really narrowed down that goal to something a bit more special than buying your house or retiring.

00:10:41: And am actually trying to build something called financial independence which is the goal of just enough.

00:10:47: so whenever i want change career and do something else I will be able to do so.

00:10:54: and support for you is built with flexibility in it.

00:10:57: To manage goals near future, also the long term.

00:11:03: It has a bit of two legs.

00:11:05: Freedom!

00:11:05: That should be your word right?

00:11:06: Yes

00:11:08: For someone listening now who feels they've already waited too much What's one step that could take this month to reverse the cost-of-inaction?

00:11:18: I would recommend that you come to one of our events at least once just to get some ideas and based on that, You might not have the full picture about what do want your savings.

00:11:28: However if you can decide in an amount that are comfortable losing even If make a lot mistakes And try something i think this is gonna be always better than doing nothing because Atleast you will learn.

00:11:40: So it's just getting foot into door This way.

00:11:43: feel more comfortable after having done research.

00:11:47: Where do you advertise your events?

00:11:49: So I'm using a platform called Meetup.

00:11:51: And so most of the people come from that platform initially, however now i am more active on social media and Instagram and LinkedIn.

00:11:59: Thank You!

00:11:59: The message I take in our conversation is that financial freedom rhythms with responsibility as well.

00:12:08: And the cost-of-enaction is usually quiet and compounds too.

00:12:12: By the time we notice it years may have passed.

00:12:15: Thank you, Romain for joining me on The Money Talks and to our listeners.

00:12:20: Time can be your ally just as it can be an enemy.

00:12:22: Prepare yourself enough to take that first step!

00:12:26: I'm Ihala see ya next time.