Transforming personal finance since 2011
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The Plain English Finance story

“I started Plain English Finance in January 2011 with one over-arching goal:
To improve the financial affairs of as many people as possible.
Below I explain why...”

Reading time: ~ 10 minutes

Andrew Craig
Founder, Editor & Investment Manager

The Premise

Plain English Finance exists because of one simple truth: Understanding finance is the single most important factor for your financial success.

1) The reason so many people struggle financially is, very simply, because they have never learnt enough about money or financial markets.

2) People on low incomes who do understand financial markets, can realistically expect to become millionaires – and very often do.

Evidence:

The millionaire next door

3) People on huge incomes who never learn about finance often end up bankrupt.

Evidence:

Boris Becker
Karen Millen
70% of lottery winners end up bankrupt
150 ex premiership footballers are in prison, many more of them are bankrupt

Conclusion:

Wealth is less about income than it is about knowledge.

  • To a great extent, the richest 1% of people in the world are, quite simply, the most financially literate 1% of people in the world…
  • We created Plain English Finance on a mission to solve this problem for the other 99%…
  • We are all about bringing you the knowledge you need to make a huge difference to your finances and, by extension, to your life.
“No one cares more about your money than you do. With a basic understanding of the investment process and a bit of discipline, you’re perfectly capable of managing your own money… By managing your own money, you’ll be able to earn higher returns and save many thousands ... in investment costs over your lifetime…”
Alex Green
Top US investor — “retired” at 43

The Story

Plain English Finance was established in 2011 by Andrew Craig.

Andrew started his career in the late nineties at a leading investment bank in the city of London. One of the things he realised very early in his career was how few people understand investment in any real sense.

To some extent this might seem like a statement of the glaringly obvious. Andrew’s contention, however, is that - although we all intuitively “get” the idea that most people don’t really understand finance - the sheer scale and reach of this problem and what it means for our society is far worse than nearly anyone realises.

  • Even highly paid staff at top investment banks very often have a no understanding of the nuts and bolts of personal finance – what to do with their pension or how to use ISAs for example. If they don’t understand this, what chance does the ordinary person have?
  • The same can be said of the vast majority of politicians and a great number of journalists.
  • A significant proportion of our financial advisers have big gaps in their understanding of finance and investment as a whole and give sub-optimal financial advice as a result. This is perhaps unsurprising when you think that someone can qualify as a financial adviser in half a year as compared to how long it takes to become an accountant, lawyer, doctor or rocket scientist.

This matters!

Why? Because this is the reason that:

  • So many people struggle financially and there is significant inequality in the world.
  • The government runs massive deficits and are short of money everywhere (the NHS, pensions, you name it).
  • The economy isn’t nearly as productive as it could be.
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This is truly the greatest of societal blind spots.

That's the bad news.
The good news is that understanding finance is truly a kind of silver bullet. This bears repeating.
The reason so many people struggle financially is, quite simply, because they don't understand finance and / or they get bad financial advice.

This has created a real problem in the last few decades:

  • The average British salary today is about £27,000.
  • To generate this level of income when you retire you will need to have saved as much as £700,000.
  • The average British person actually has £50,000 (Men have an average of £73,000 and women only £25,000)(Source: Aegon UK)
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But that's OK - the government will pay for me in retirement, no?

NO! The UK state pension was introduced in 1909 for over seventies when hardly anyone lived past fifty!

  • Most people born today will live to 90 or even 100. You are likely to want to fund forty years or more after you stop working.
  • Unless you are very near retirement already, you are very unlikely to get anything like enough to live on from the government to cover a possible four decades of 'retirement' - they simply can't afford it.

The good news, however, is that we can all do something about this if we learn a little about investment. Even someone on a relatively modest income can aspire to saving a million pounds IF THEY LEARN A LITTLE ABOUT FINANCE!

“Compound interest is the Eighth Wonder of the World...”
Albert Einstein
Early 1900
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How is this possible?

Evidence 1 — Because of the power of compound interest.

What follows is for the purpose of illustration…

  • Imagine the day a child is born, a wealthy relative puts £5,000 in an investment account.
  • Now imagine that this account achieves a 10% return p. annum (we will come on to how this might actually be possible - bear with us for the moment)…
  • Not many people realise that this account would be worth nearly one million pounds by the time that child can legally retire WITH NO FURTHER INVESTMENT.

You can see this graphically below.

This chart shows how a one-off investment of £5,000 grows at 10% a year for 55 years
YES! £5,000 has become almost £1m — with no further investment whatsoever.
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Evidence 2 — Because the world is growing more than you realise.

  • The global economy grew from $32 trillion in 2000 to $85 trillion in 2015.
  • That is more than 165% in fifteen years.
  • If you can 'own the world', you can achieve these sorts of rates of return.

  • You can do this by owning all major assets in all major geographical regions. We call it 'owning the world'.
    • Oxford and Cambridge have done this for centuries.
    • The Rothschilds have done this since the 1800s.
    • Harvard and Yale have done it since the 1950s.
  • Today anyone can do it with as little as £25 a month to invest. Too few people understand this reality - including a fair number of finance professionals. This is why we believe that high single digit to low double digit growth is entirely possible through the economic cycle (i.e. regardless of what financial markets are doing). Too few people are telling this story and far too few people are learning about it.
  • We created Plain English Finance to show you how.
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In conclusion:

  • The wealthiest people in the world have invested like this for centuries - one of the main reason they have become the wealthiest people in the world.
  • One of the best things about being alive in our era is that nowadays - anyone can invest like this these days - not just the global elite.
  • Andrew got such a bee in his bonnet about all of this that he took two years off work to create Plain English Finance and explain all of the above in a good deal more detail in his book: How to Own the World.
  • Happily, the message seemed to resonate with people — several thousand people have purchased the book since it was published and it now enjoys more than more than 4,000 reviews across Amazon, Goodreads and Audible.
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