Last week I said farewell to Virgin Money – my labour of love for nearly 22 years. I’m 55, an unfashionable age at which to retire these days, so when people ask me why and, more importantly, how, I say that there’s not much point in creating financial products without using them in the way you designed them, to help customers achieve their goals.
We launched Virgin Money back in 1995 with Personal Equity Plans, very much like today’s ISAs, a way of saving money without having to pay tax. We wanted to give our customers access to the stock market, something that at the time was difficult unless you were prepared to seek out an investment adviser.
How to break this? The solution proved to be looking at how fund managers performed against the stock market. The surprising truth was, not as well as one might expect. We created an investment fund that did exactly what the stock market did (in other words, tracked, or replicated its performance). No need for expensive fund managers trying to predict the unpredictable. Just follow the market, keep costs at a minimum (by getting rid of the fund managers!) and produce a better result over time than many funds with active fund managers could deliver.
The success of the Virgin Money PEP took our breath away. And that for me was when the magic started….
Now that we had created an investment product I could understand, I started saving. Even though money was tight because I had a young family, it just made sense. Forming a savings habit is hard as there’s always something else you can spend your money on, but this is what started it for me.
We turned our attention as a business, soon afterwards, to Personal Pensions. Pensions were even more mysterious than investments and so people avoided them. I was in exactly that place – I didn’t understand them and, with retirement seeming an awfully long way off, I ducked the issue.
As we built the Virgin Money Pension, I knew that I would need more than the State was likely to provide and so I resolved to be our first customer. I put 55 as my target retirement age on my application. It seemed a long way off, but ambitiously early. Looking back this was the magic moment, I was saving, I had a personal pension and I was starting to think about my financial future, not just the financial now.
The last important product in my retirement story is the mortgage – but not just any mortgage, something called the Virgin One account. The Virgin One account was the UK’s first current account mortgage – a single account designed to run all of your finances. It combined your mortgage with a bank account, meaning that you effectively ran a large overdraft to finance your home. It sounds odd, but the beauty of this simple approach was that your mortgage was no longer just a monthly payment to your bank, you saw, day-in and day-out, what your overall financial position was.
We built it, launched it and I took one out. For the first time in my life, instead of assuming I would pay my mortgage off over 25 years, I decided I wanted to pay it off quicker. The account made me see things differently and I reined my spending in, paying my mortgage off in 10 years – saving myself 15 years’ worth of mortgage payments to be channelled into saving for retirement.
With the mortgage gone, I concentrated on saving using my Virgin Pension and my Virgin PEPs/ISAs. Slowly, my savings grew and the prospect of having enough money to retire early became a real one – something that spurred me on. And, I eventually got there.
Not only was I involved in designing, launching and running all these products, I have been able to prove they can do exactly what we designed them to do. They don’t do it on their own of course, you need some financial discipline. But they do work.
So as I look back at what we have created together at Virgin Money, I’m proud that the building blocks we put in place – giving everyone the ability to save, invest, borrow and repay have been the foundation for the next phase in my life. I’m glad I learned the lessons I did and I hope through Virgin Money others can get to the happy place I find myself in today.
Now I’m off to the beach…
Please remember, this is Ant’s personal experience and you should consider your own individual circumstances before making an investment.
Investments can deliver good returns over the long term, but you also need to accept risk that you may not get back everything you invest.