Four years ago after I left university and before I got into working as an advocate in commercial and civil law I seriously considered becoming a criminal barrister. At that time, much like now the profession was plagued by financial problems and the possibility that as salaries failed to keep pace with the wider industry the criminal bar would suffer.
Back then, I considered the possibilities and reached a conclusion that has worked for me ever since, although perhaps not many criminal barristers know this secret to success and financial freedom, that is the potential of investing. Now, before you label me a fake guru or worse, lets explore the point. Most criminal barristers now dabble in fraud or side hustles as public speakers in order to generate a second or third revenue stream this is because their core salary is not sufficient.
For myself, I was in the same position of low personal finance when I left university. My first work in the legal sector was not the best paying and I found the work I put in did not necessarily translate to greater output. I knew this to be a reality having read the secret barristers posts before the book was released. So I began to explore how outside of working one generates wealth and stumbled on a few suggestions:
- Start a business;
- Own assets like a house;
- Get pensions or ISA to protect from tax;
- Go into investments;
- Get a second job;
- Have children.
Number 6 is half a joke as indeed many families see them as an investment in future care, but for me being still quite young children might not help keep my earning up in the next few years. As for owning a house whilst that was plausible times have changed greatly, one houses were 4 times a persons earnings and as such mortgages did not take long to pay off, especially when working with a partner. Yet, now with shared ownership, big house prices, it seemed as much a drag on earnings as student debt and given the size of that debt I was not encouraged to garner more.
That leaves 3, 4 and 5, now here we have some head way. 3 is certainly something all criminal barristers can make better use of, utilising tax exemptions, accountants and tax protections all low earning workers can stretch there income further. This actually relates to 1, so I will address that now. Starting a business is a big commitment when it detracts from your work and you have to handle all the paper work. However, where we are self employed lawyers mostly barristers should take the que from solicitors and learn more about setting themself up as limited liabilities and what benefits that brings. This is not financial advice so I will not delve more into setting up a business here.
Where this becomes relevant is to pensions contributions, now it should be quite clear to most self employed the concern that we do not recieve a private pension or paid holiday because we work for ourselves. Yet, being self employed does not mean you are unemployed, referring back to setting up the Ltd HMRC has highlighted before that you can work for your company as a director and be the owner. What this means is you are a salaried worker for your company since Ltd are a separate entity. As such, without going too deep you could most likely set up within the ltd a system of sick pay and pension contributions for yourself. This might actually be able to safe you money in the long term.
Now, moving back to 4 and 5, it is pretty clear how a side hustle could help barristers, the matter on investing will help barristers to generate a separate income from passively stored money. To give an example at the writing of this article a company called Elm Tree Capital – which is a monthly dividend stock is trading on the New York Stock Exchange. Dividends are a portion of money paid to a share holder who holds shares in a company which are the ultimate I.O.Us.
Now, Elm Tree Capital current dividend is 2-3% a month. Not per year, but per month. Keep in mind most banks interest rates are 0.25% a year. So for that barrister saving for a house who do you believe will get it first, the one who puts 80% of earnings in the bank or the one who puts 70% of earnings into shares. To save the thinking it is the investor, the reason is that what the money passively generates will accumulate over time and if the business does better then the dividend may also increase and the share price. To give a more clearer example say you have £100,000 you could leave that in the bank and allow inflation to make it worth £97,000 next year. You could also leave it there and if negative interest rates come in what as its real value drops due to inflation and its chipped away by negative interest rates. Or, you could buy a house on a mortgage with it as a deposit and then have to pay the mortgage and bills with the mortgage at a high interest rate and hope the house goes up in value so you can cash in on the difference or do a buy to let where the house is rented, in which case hope the tenants are good and money is paid in full. You might get £15,600 a year on the rent if it was at £1300 a month. Yet that still does not beat the stock.
Comparatively, you could put the £100,000 in the dividend stock, that would result in you gaining per month £2,000 – £3,000 with no worries about thinking anything that breaks. No concerns about when to sell the house or getting rid of tenants. It also means you could have a dry spell and due to money coming in regularly you would be alright, If your lucky the shares might double or triple leaving you with the added option of getting rid of your shares and gaining £300,000. The means to buy a house outright.
If that’s too much for you there’s also the option of getting a professional to manage the shares which on average will not get the same high returns as you could – over 20% but might be the only option if you are not the best money manager. I discuss all this because stock investing is partly how I funded my bar course when I did not secure the scholarship. Unfortunely my forrays into investing where tkaen by my panel as a sign I would move away from the bar rather then the truth. I had done it knowing that given my background and how much criminal barristers made if I did not know how to make money then I would be living hand to mouth for most of my career. The lessons were to ensure as a barrister I did not suffer from burnout, nor financial difficulties but instead would be able to keep working for many years to come and have a bright future ahead.
Now, its my take that if the criminal bar continues its decline chambers will have to adapt to save the industry either taking a hand out from the inns of court/government or develop more nuanced approaches such as investing which I have suggested. If you think this is an impossibility, then look at most investment firms and look at university debentures. Most universities now have a stock market portfolio, most banks, most pension funds and yes many business thrive by buying into other smaller industries. Its just an idea I wish to bring to life but chambers could have a internal investment pool. Say an extra 5-10% of chambers fees which could go towards such investments. Doing so could well shore up chambers in the long term and make sure they have assets which can help in dire times.
So to conclude, it is my opinion that potentially in future wise barristers will become involved in traditional investment and use it as a means to protect their long term career as well as to ensure their mental fortitude. I also believe if any chanmbers inituiate it then they too will benefit. I will say this so, if a chambers choses to high an ‘expert’ to assist in the process they should be very selective and conduct a thorough background check on the performance of the expert, not on their charisma or paper/real life awards. That is because superficial awards have no practical value, experience and a proven track record will show whether a person is worth taking on for the job.
It should come as no surprise that given my forays into investing and the help it has given me to pursue my future that I have written a book on my anecdotal experiences. The book is aimed at non professionals starting out and deals with common trading terms, styles of investing and even how to trade in company debt (bonds) as well as crypto currency. My current book available on amazon for £1.99 digitally and £3.99 paperback. The second edition is planned for release later this year and deals with what I learned over trading in a crisis as well as a greater look at the historically best investors of all time to see what tips they can pass on. The general language has also been improved on and some new sections added.
Here’s a link if you are interested, I am afraid I am not famous enough for you to find free copies:
Now be sure to buy the softback in the UK as its listed for £3.99 here but costs more on international amazons and on other book sites that sell copies of the book. I have been working on an audiobook but the process for that has been delayed. The book is free on amazon unlimited.
If you are interested in other articles by becomeabarrister, both radical and mainstream you can look through our posts for more.