Esmeralda Gómez, a financial expert determined that you live like a queen when you retire (and not as the State wants)

She responds so confidently to everything you ask her that you are about to tell her about your life, or ask her to marry you. Already the title of his book, ‘Do you want to collect your pension?’ (ed. Alienta), so direct, it puts you on tension. You want to answer “no!”, And what she wants, Esmeralda Gomez Lopez, Degree in Mathematics with a specialty in Astrophysics, Master in Quantitative Finance and, how could it be otherwise, Master in Business Administration, is that you stop worrying about whether the Spanish pension system collapses and you run out of retirement and start to become an investor who knows how to cultivate his money. In this interview he gives many of the keys to achieve it.

The title of your book is haunting. A question like ‘Do you want to collect your pension?’ implies that there is a possibility that the answer is ‘no’. How difficult are we going to have those that we are working on today?

The possibility of not charging the pension exists, but it is unlikely that this reality will happen. I start the book with the chapter that security is an illusion, like many of the systems that move our world today. The pensions were valid and fulfilled their function when they were born in the different countries just 150 years ago; There are countries that have known how to adapt and change the system for the good of the State and its citizens, but here in Spain we have a serious problem. That is why the book deals with the two points: the context and how the system could change based on what neighboring countries have done in the same situation in the past, and you, as an individual, what should you do to maximize that economic well-being in your life? withdrawal, regardless of what happens in the context.

What is the biggest mistake that Spaniards make when planning our retirement? Perhaps not foreseeing it?

Indeed, that is the biggest mistake, not foreseeing it. Without planning and without questioning what happens in the retirement of Spaniards depends exclusively on a third party: the State. This is very dangerous, since 25% of the country’s voting force is retired, at this point there is a conflict of interest since the political system needs votes to govern. At this point, who guarantees that what politicians do and say is for the benefit of the entire population over time, even if it involves a loss of votes? The truth is that almost 40% of the state budget is used to pay pensions, that what is paid to pensioners compared to what is received from taxpayers has not stopped growing in recent years, the deficit. Currently pensions are not actuarially equitable. In addition, the long-term projection indicates that if nothing is done in 2050 there will be one pensioner for each contributor, when today there are two people working to pay a pensioner (because remember that pensions are solidarity, and already today are not sustainable). The context is difficult, and action must be taken to reform the system now. But at the point where we are, the world has outgrown politics, and it will not be long before the system itself receives the reform it deserves.

At what ideal age should we begin to put into practice what you propose in your book?

As soon as the first payment is received as a teenager. Other countries have financial education included in the educational system. Here in Spain money is never talked about, nor how to manage it, maintain it, invest it and make it grow. It is unfortunate but it is real. A population with zero financial education is subject to what third parties do with it as a whole. If, on the other hand, if you form and inform financial management from a young age, people internalize that prices rise, and that implies an acquisitive loss over time: that if you save 100,000 over a lifetime and the The country’s inflation is 2%, after 30 years those 100,000 are equivalent to 50,000 because prices will have doubled after that time. Emotional management is fundamental, and that fear of losing when investing is relativized when you discover that if you do not invest you are losing money every day, because now money is created out of nothing, and central banks can print money and create inflation if they want to. Through my space La GuÃa de la Vida I train the population in personal economics.

Your book is ambitious, also in practice …

In it I illustrate with a wide range of scenarios what can be achieved thanks to investing in a responsible and diversified way, in well-known and understood products, and not all of them have to be financial, there are other actors. For example, investing 100 over a lifetime every month, in equities, and obtaining an average of 6% net after subtracting inflation, after 30 years there are 100,000 available. Some years you would earn more and others you can lose money, the important thing is the trend and the constancy. If instead of investing it you just save it, you will have 36,000 somewhere, but That money will be worth half because of inflation.

How is it going to really affect us if the calculation of the pension from 25 to 35 years of contributions changes? How much are we going to lose with the joke?

Pensions would be reduced on average by 5.5%, but this reduction would affect the high pensions much more, and the low ones would hardly change. The State would save 16,000 million euros. To put it in perspective, in 2019 budget spending on debt interest amounted to almost 9% of all public spending, almost € 32 billion. When spending on pensions was almost 40%.

Many self-employed people make a mistake by not paying the maximum monthly contribution and they find themselves at retirement with a ridiculous pension. When do you have to make that decision, to quote the maximum?

I personally am not in favor of the self-employed contributing to the maximum. This is a decision based on the erroneous premise that the State is the only actor in the collection of pensions. My position is to create a multipillar system, minimizing State intervention and completing other pillars such as voluntary contributions to business plans and individual investment. In fact, if the self-employed instead of maximizing the payment of their monthly contribution, what they did was to keep it to a minimum but invest the surplus, they would be much more successful, they would diversify their sources of income. The key is not to give more power to a state that today is inefficient and too large, but to educate the population so that we are more self-sufficient and free. This process is slow, it takes about 10 years to establish itself in a society, but the conversation should start now.

His book is an invitation to take charge of your financial future, something that seems to be difficult for us to assume. Perhaps because the desire for ‘security’ can. But as he writes, “security is an illusion and the uncertainty about absolutely everything is there. Embrace it and assume the ignorance of not knowing what the markets will do.” Isn’t that surrendering to suffering?

As they say, pain is inevitable, but suffering is optional. As I mentioned, doing nothing financially is a sure loss, but people don’t know it, just like many are unaware that when they rescue that pension plan they have today they will pay taxes in full, And not just because of the plan’s earnings, if it does. Knowledge makes us grow bigger than what scares us.

One of the ‘healthy habits’ you talk about in your book is ‘invest everything you save’. Isn’t it too risky a proposition for someone not used to investing?

In this book I summarized in one sentence what your goal should be, since in ‘Do you want to collect your pension?’ my goal was to fully encompass what your plan can be throughout a lifetime. In my previous book ‘Your key to financial freedom’ (Alienta), I explained what the process of any person should be until reaching that statement of “invest everything you save.” Actually at the beginning you have to develop the habit of saving, since most people do not have it. Activate the lever to reduce expenses and increase income. Until the person has come to have a financial cushion of 30% of the net annual income, your savings and investment distribution should be 5% investment and 25% savings of what you enter at home, and you live with the remaining 70%. Of course, these percentages already depend on the casuistry and condition of each family, and it is totally flexible, it is an ideal. Once that financial savings cushion has been reached, the pesos are invested, and all or almost all of that 30% must be invested. Hence the phrase “invest everything you can save.”

Every time someone from my bank calls me, it is to insist that I put more money in my pension plan … But today is not the best time to say for these plans, which even lose money …

Many people who work offering financial products have a family to feed, and many times their final interest is not your financial well-being, but the commission that will be charged at the end of the month for the sale of products. My job is to educate the population so that it is the people who really choose an investment portfolio based on knowledge, on reading contracts, on controlling losses. As you said, a job in itself. Pension plans are not the best product on the market, it is not liquid, you pay taxes for everything you contribute (formerly you deferred taxes when there was a tax benefit, with the recent reform with which the State saves 580 million euros euros and not even that), in addition to the fact that the historical returns of the pension plans in Spain are very far from those achieved on average with mutual funds, for example.

The fixed income gives negative interest, and the variable is risky. What can a person with a very conservative profile do to save for retirement today?

I have a very conservative profile. The answer is to train in financial education. When you build up enough, diversify, and invest the long-term surplus, risk is assumed as part of the equation, loss is part of gain, trend matters. It is not worth investing all my savings in that company that my cousin says is going to rise like foam. Anything that is too sweet to eat, such as food, can have negative consequences on your financial health.

For decades, brick was the lifeline for savers with a conservative profile. Does it make any sense today?

Yes, but it is not mandatory to buy a house if the numbers do not appear in full. Once again, buying a home should be a thoughtful and well-thought-out activity. I wrote the book ‘How to Buy a Home’ after spending hundreds of hours buying my first home. Buying a home in Spain is cultural, and investing in brick can be a good option when the numbers are done well, in the end it is like investing in gold, you have something physical, yours. But nothing happens if you live in rent for a lifetime, it is not a waste of money as they say.

Another one of your ‘healthy habits’, number 7, is ‘Watch your diet’. I was surprised to find it there. Without a good diet you do not have enough energy to do everything you need to ensure a good retirement?

In reality, economics is managing resources just like food. All facets of a life that we often see as disjoint are actually related, and food throughout a lifetime plays an important role in reaching old age in good health, in addition to ensuring the necessary energy when carrying out any project. Poor economic management can lead to all kinds of diseases, starting from stress or insomnia, but it can also lead to imbalances that, in the long run, negatively affect your health. We are a whole in which everything is related.