How Smart Doctors Build Wealth (Not by Saving!)
Dr Andy Egwim explains why doctors need to invest beyond saving, covering UK tax traps like the 60% effective rate above £100k income and how stocks outperform inflation long-term. He walks through tax-efficient strategies, pension moves, and platform fees that eat returns.
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Many of us, you didn't start investing at all till you were in your 20s, some people in their 30s, and some people have gotten to their 40s and 50s. They've not started investing. You were in medical school, you were studying. Meanwhile, maybe your body who worked in the bank or worked in an insurance company and started working at 24 might have also started investing. So it's a bit like we are playing catch up most times when most doctors start investing, doctors and healthcare professionals in general, even though you've started late, you've got a little bit of an advantage. You might not be the highest earnings earner in the community, but you're in the top 10% and the top 5%, even if your income was not a million or whatever. But for the fact that you have a decent income. I mean, we used to say guaranteed. It's not always guaranteed these days, but if you're a doctor, you are willing to work because of that, you've got some relatively sensible income so you can actually weaponize it to build assets to invest. Andy Agreement, the founder of Money Wise Doctor. A Money Wise doctor is a platform that helps doctors and healthcare professionals make smarter financial decisions. Right. So what's my background? As from the name, when I say Dr. Andy, it's not like Dr. Dre. I actually went to medical school like a proper doctor and did all that. And up till three years ago I was working as a salary GP. But prior to that I started investing around 18, late 18, more like 19 years of age. It got me to the point that by the time I turned roughly my mid-30s, I had achieved that level of financial freedom that allowed me to sort of decide to walk away from my salary job. And it gave me that flexibility, a bit of my background, a money Wise doctor. I started it after I left my salary job. I thought, oh, should I go into AI and do this stuff? ChatGptDoctor AI. But I always enjoy teaching. I was that guy back in med school who teach my consultants investing and run all those classes and all that stuff was on tv. So yeah, so I started blogging about Money wise doctor, some financial mistakes. I was seeing colleagues making things that they usually call me and ask me about, especially those that have known me right back from med school. And the blog blew up two years later, got a podcast, got a blog and a channel and all that. I would do master classes like this. But yeah, so feel free. I want you to learn as much as possible in this master class because one thing we all understand as doctors now, we all Know you wouldn't be here if you didn't know that just walking and working and saving money is not enough anymore. It's not enough for financial freedom. It's not enough for financial independence. It's not enough to get you to where you need to go. And some people say they will get NHS pension. NHS pension is great. I don't have it because I don't work for the NHS anymore. But also many of us now know that many people don't want to wait till they are 68 or 71 or whatever the age might be. So that's why more people are trying to learn about investing, understand their options, understand how to manage money. I think that's wonderful. I think that's great. That's something we should all be focusing on taking charge of our financial future, not just leaving it to chance or leaving it to, you know, to the government to take care of us. Right. Okay, so that's a bit about me. So I'm just going to. Chris, not to put you on the spot but I'm going to ask. You've attended a master class previously. Could you share something? If there was something that you learned, could you share with us even if it's one point or something you are hoping to learn? I told you guys so it's going to be an interactive session. I'm not sure Chris can hear me. Why? Okay, is any, anyone here who has like why are you hoping to learn? Anyone who is feeling up to it? It's not going to be a one way discussion anyway. If you've joined the class and you are hoping to learn something, can you share what you are hoping to learn? Can you type it in the chat? Tax efficiency when doing locum GP jobs, isn't it? Okay, that's a good one. Okay, let's see who else. Tax efficiency is a big part of it because when you start investing without tax efficiency, like putting money in a leaking pocket. So tax efficiency is very crucial. Okay, there's a ML that said more about investing. Seis eis. Okay. Paper said making better returns on investment. We're all about that. How to invest alternatives to NHS pension, investment opportunities, pension options, emergency funds. I love that. So we've got quite a. Okay, someone said seed. So everything you mentioned is actually core. Is core in what we sort of look at in the master class, we don't just talk about investing, we also look at investing from a tax efficient point. How do you make sure that you don't just make one, you know, you make a pound but the Government ends up taking like 40% of it. And most of us, no ISAs. But ISAs are only like, like the beginning. There are ISAs, there's SCIs, there's EIs. Obviously there are things like investment bonds and, and trust and the rest of it. But we're going to start, basically I'm going to teach from this class and then listen to your questions and we're going to address whatever questions you have at the end. So I'm going to crack on now and like I usually do, as I've done in previous classes, I'll ask. When you think about investing, can you tell me in one word what comes to your mind when you think about investing? What's the one, one word that comes to your mind when you think about investing? I've had people say different things. I've had people give different, you know, ideas. But when you think about investing, what's the one word that comes to your mind? What does it make you feel? How does that make you feel anything about investing? Okay, right. Turner said good and Mina said wealth. Damn said, well, you said money. People are quite generally positive in this one. I've had people in seminars where people say terror verifying and all that. So if you think about investing, I, I love, I love that you're speaking language that means you're not afraid. You know, it's a positive thing. At the same time, it's like fire. Fire is a good servant, but it's a bad master. So knowing how to manage your risk, that's, that's very good. Let me see. Roi, I like that back. Becca said, roi, that return on investment. When we said putting money to work. But Toby said something I really enjoy. He said risk and returns and prayer said profit. Lovely. Right. So at least we have some general thinking or feeling around it. And it's quite surprisingly very positive in the past to get people think, oh, loss, fear, losing money and all of that, that could also happen as part of investing. But what we are doing today is sort of like removing the jargon when it comes to investing. Like I told you, I've done this for 20 years now. I know there are people who say, like I was speaking to someone from London Institute of Banking and Finance and they said, oh, I don't think if, if you're not, if you're not a doctor, you shouldn't be removing your moles. So if you're not a professional, you shouldn't be investing, should give it to the professional. Like, that's absolute rubbish, you know, because 20 plus years I've been investing, managing my own money, learning about it, growing, you know, my finances and got to that point. Point of some people call it FU money basically. But we don't want to be vulgar, do we? It basically like you can walk away from not needing to work and you're covered. I mean that's, that's one step. That's even before you get financial independence or financial independence at that point where, look, even if you don't work for the rest of your life, if you maintain your lifestyle at the current lifestyle, you're going to be fine. Right? Okay, so that's a little bit about, that's your feelings about investing. I'm just going to share a few things from the slide. Don't worry, we're not going to be stuck to the slide. It's not going to be debt by multiple PowerPoints. Right. So this is a little about me. I already talked about this. So we're not going to spend too much time on it. But you can follow me on social media. Money Wise Doctor on Facebook on X, that's me. And on Instagram we have interesting daily, you know, like stuff content on Instagram as well as the channel. Every Sunday by 6pm Sometimes it goes to 6:15. We publish a newsletter and also a podcast. So the newsletter and the podcast usually will teach you something new because basically I know for doctors we are all very busy so nobody has time to be hanging around and just reading all the financial piece and everything. But if you have snippets, five minutes giving you what you need to know, then that's usually quite helpful, isn't it? This is how to get financially smarter in just five minutes. Sometimes the difference between making smarter financial decisions and costly, horrible financial mistakes is having the right information at the right time for the right person. So every week I write the Moneywise Doctor weekly newsletter. It's an email newsletter packed full with valuable financial insights and updates to help you make smarter financial decisions and avoid costly mistakes. Some of the areas I've been covering over the last 70 weeks include actionable tips on tax strategies, pensions, investing side hustles and several other financial areas. Now join thousands of medics who subscribe to the Money Wise Doctor weekly newsletter to receive it straight to your inbox. And it's totally free. Don't miss out. Subscribe now using the link in the description. And now let's jump right back to the episode. Right, so that's what we do. We write this newsletter that is read by thousands of doctors and go like a podcast on the YouTube channel. And the goal there is helping doctors and healthcare professionals become financially smarter without having to get overwhelmed or confused or spend too much of their time chasing after charts and numbers and reading everything. So that's what money wise doctor does. So the goal for the master class is basically to help you learn how to become a tax efficient investor. And you can do it fast or actively depending on your bandwidth. So I don't think we need to go too much into no housekeeping. I know we're all doctors, healthcare professionals, we know the basics. Like obviously you want to keep your mic mute except when you're speaking. And obviously if you want your camera on, I really appreciate seeing your faces. And also if I start speaking any jargon, if you look a bit confused and I'm looking at your face and I need to change my language or explain it a little bit better. Yeah, because basically the language of finance and language of medicine, they're a little bit different. For instance, if I say pe, what comes to your mind as doctors is the different thing? When I'm with the finance guys and it's the difference when I'm with doctors, if I say pe, can you write in the chat box what comes to your mind, what you think about? If I say pe, I just want to see just a little bit. We're just going to do a little bit of an exercise. I'll say some things. Confidence says pulmonary embolism. So yeah, I have the right people in the group. That means Mary said pulmonary embolism. So yeah. And okay, Joyce said physical exam. Someone that has a very, a slightly different but still the medical line and Jameson's physical exam. Yes. So but in finance and in stocks, and basically in the stock market, PE price to any ratio is a very basic, very common. I mean, last week, last weekend, on Saturday, in our four weeks. So we have a four weeks investing academy for doctors, which is currently full. And I talked about PE and everyone talked about pulmonary embolism. And I thought, really? But it's price to any ratio, which is a multiple that you use to look at a stock to see whether it's overvalued or undervalued to start screening it. Okay. Okay, I'm going to give you another one and I'd like to see what you say for others that have not participated in the chat, try to participate this time. Psa. Psa. Tell me the full meaning of psa. This one is something very relevant to every one of us here, especially if you have money. I'm not going to say much because I might give away the answer. PSA confidence again says process specific antigen. A real medic there. Okay, Damage is posted. Process continent. Okay, that's good. And Emmanuel has been to a seminar before. Be honest. Said personal saving allowance. Well done. And Mary said. So everyone says prostate specific antigen except Emmanuel. Who says Emmanuel? And Jimmy and Becca. All right, who said personal saving allowance. Okay, so Emmanuel has never been to Assembler. I think I recognize your name. Do you read our emails? Our weekly news letters? Do you get it? Yes. You do? Okay. Either way. Yeah. So that's what I'm trying to say. You see the language of doctors, we're like, for us, PS is process antigen. I was in a group with some sort of like financial advisors. Because in Moneywise, Doctor, we screen financial advisors and also get them on our platform if we need to recommend them if they meet our criteria. And they said psa. And I said that PSA means something different to me and to most doctors, like what is personal savings allowance? But to them it's something different. So I'm sitting in the middle bridging that gap. We're just going to do one last one before we then jump into, you know, the rest of the seminar. Hrot, hrot, hrot. So what does that suggest to you? I know some of you might get this one, but hrt, give it a go. If you think as a doctor, you wake up and someone says hrt, you know what, what do you think about Amelda said higher returns. Okay, Damien. It's true, Doctor. Hormone replacement therapy and confidence. Hormone replacement therapy, hormone replacement, higher return turnover. I appreciate some people trying to, to do different things. Now if I give you a little clue, it's related to your taxes. So just like there's BRT basic rate tax and there's hrt. I like it, mother. Trying to think outside the box. But it's higher rate tax. That's what you are on. That's what many senior doctors, they're gp, they're a senior registrar, sometimes just even, sorry, a trainee, a junior trainee. But is making a bit of money from property income or from dividends. So higher rate tax. Yes, Mary, higher rate tax. So basically, you know, in the UK there's 20, there's 0% tax from any income between any income from 0 to 12,570 is 0% tax. Well, if you are between 12, 570 to 50, 271 pounds, let's just say 50k, you're on 20. So you are BRT basic rate tax. But now when you cross from 50,271 up and you get to 150k now, so you're on higher rate tax. Okay. And that in itself is 40% of course 125. Sorry. And of course there's the additional rate tax which is 45%. Now it seems like that's the end of taxation, but there's still a lot more that comes with it. So basically this is just to highlight how you're a doctor, you're a specialist here, you've been trained or even you're still in training and all your life you've been in medicine all this while, but there's, you have a second job which you didn't know about, which is being the chief financial officer of your life, managing your finances is not something you can delegate, I'm afraid. Even if you want to get a financial advisor, accountant and all that, those are all good. I also have advisors, I have accountants, I have like, I don't buy my insurance by myself or my mortgage. But at the end of the day you're still the one ultimately responsible for the financial well being of yourself and your family is not something you can delegate. It seems a bit unfair. But that's life, isn't it at the end of the day something that even if you give it a little bit of attention can give you a lot more return. Because I've come across doctors who just didn't realize that they were overpaying tax for 20 years, 30 years. I've come across doctors who fell into the 60% tax trap. They just knew that they were working hard and they were getting this income and HMS was writing to them that they were owing them. They didn't realize they've lost their personal tax allowance. And then there are other people who knew, but they didn't know what to do. And some of the painful one I've seen is senior doctors, hard working doctors. I've spoken in conferences where people walk up to me and say I've got £100,000, it's just in my account, I don't know what to do. And they're earning interest on it and guess what, when their interest they end crosses the psa. Remember psa, personal savings allowance, they then have to pay the tax. Yeah. She said they're in the same dilemma. That is very common. It's very common. So a lot of times doctors are there and they're thinking what do I do now? And there's no credible. You might see somebody on YouTube saying random stuff a lot of those things don't apply to you as a doctor and sometimes doesn't ever apply to you as a dentist or healthcare professional. More so when you're in the UK and you're thinking about getting credible financial education, it's really something that even if you spend 10 minutes per week, or even 5 to 10 minutes per week on, you would be in a much better position. All right, so that's a little bit more about the goal of the masterclass. Now, what makes this different? I think we've already elucidated a lot of that. What makes this different from any other master class apart from being a doctor, being in the system, I've been able to sort of get to that point of basically walking away. I haven't walked away from medicine because obviously I love practicing medicine, but I also pick which 20 days in a year I can decide to practice the medicine to keep my license. But also that's not what makes it different alone. What makes it different that I understand from the angle of doctors and I understand from the angle of finance. So this is tailored for healthcare professionals. I'll give you a practical example. For many of us, you didn't start investing at all till you were in your 20s, some people in their 30s, and some people have gotten to their 40s and 50s, they've not started investing. You are medical school, you are studying. Meanwhile, maybe your body who worked in the bank or worked in an insurance company and started working at 24 might have also started investing. So it's a bit like we are playing catch up most times when most doctors start investing, doctors and healthcare professionals in general, because you spend a lot of time in your training and you've not really had time to think about that aspect. Okay, so that's one thing to consider. Number two thing to consider is that even though you started late, you've got a little bit of an advantage. Why? Because you might not be the highest earner in the. In the community, basically. If you come to uk, doctors are not the highest earners, but you're in the top 10% and the top 5%. It might not feel like it, but that's what the data says. If you earn 65k and above, you're in the top 10%. If I want, you're earning about 100k, you're moving up towards the 2 percentage. So either way, even if your income was not a million or whatever, but for the fact that you have a decent income, I mean, we used to say guaranteed, it's not always guaranteed these days. But if you're a doctor, you're willing to work. There are still doctors who can find work for many reasons, but they are in the minority compared to, let's say, people who studied finance that can't find work, or lawyers that can't find work as lawyers. Right. So you, because of that, you've got some relatively sensible income, so you can actually weaponize it to build assets, to invest so that you can actually go from more of end income to more of asset income. Because unfortunately, I'm going to tell you and see, I have to re, I have to be frank with you, the tax code, which I've studied quite a bit, in fact, I've looked into the UK task quite a bit, it seems to favor, if you get your income from things like capital, like dividends or that type of income, it tends to have a lot of advantage and a lot of tax flexibility compared to just end income. But if you're, if you're working, you have to earn money. What can you do at this point? You have to start from somewhere, but you have to start that journey and do it efficiently and consistently to move your income not just from end to start getting things like dividends and income from other sources, basically. So these are the second thing to think about as a doctor or healthcare professional. One, you've started a little bit late too. Even though you've started a bit late, but you've got like decent income, you have life experience, you can actually accelerate. And what that means is that if other people are investing 10%, you should be thinking about 20%. If generic financial advice saves 15% of your annual income, should go into investment, you should be thinking, should I do 20 or 25? Basically, because you want to accelerate the journey and you want to make it an option that by the time you are hitting 55 or 60, is an option if you want to stay on and work till 68. And for those of you who even want to do it much earlier, that means you might have to do a little bit more aggressive in your asset allocation, which we are going to look at subsequently. Right. And again, the third thing I'll say that makes this seminar a little bit different. Apart from my background and the father for doctors is, is quite specific to doctors that the financial industry doesn't play by the same rules as medicine plays. So if Imelda, I know Imelda is jp. If Imelda has handed me over like a patient and whatever she says I probably have, I'll lean more towards trusting what she says about the patient, if she writes me a referral letter, I'll lean more towards believing that in the financial industry is the other way around is trust but verify. Because the same level of ethics is not the same. So unfortunately, when doctors go off and say, oh, I have this financial advisor and they said this and that, I'm like, who has used that financial advisor before? What are their very, what are their qualifications and what are the reviews? Basically we tend to have a little bit more stringent when we look at advice or anything coming from the financial industry because yes, there have been rules. And, and for the last couple of weeks I've been studying so many times the financial industry ripped people off. And you know, then the rule came into being and I had a maybe former banker saying how they will put off the ATM machine so that people have to come into the banking hall and then they'll try to sell them products. So the financial industry has always had those problems. Not everyone who works in the financial industry is a crook. But unfortunately the standard of ethics is not quite the same. So doctors, when you're dealing with the financial industry, you need a little bit more late to, to, to work out, okay, who am I dealing with here? That's part of what we do in Money Wise doctor It's sort of like screening those advisors and then saying, okay, we verified this person. I think they are all right for live mortgage, life insurance and advice and all that. So the financial industry, it, it, it seems to play by a certain different rule. I know someone saying to me that when he started out in mortgages, they used to have something they call doctor mortgages and doctor finance deals that it was deals that other people spot and said they weren't going to take. But most doctors, they are too seem to notice. I thought that was a horrendous way to treat people who were actually out there trying to, you know, make other people feel better. And that's part of the motivation for money wise Dr. All right, enough of that. I'm sure you understand now what makes this different. Before I crack on, before we go into sort of like looking at things like tax optimization, because I think you should think about tax optimization before you start investing. Can I check in this place right now? In the group? Is there anyone here who has actually done any sort of investing at all? I know some people have mentioned that they want to get better returns, invest better. Better returns is good. I mean we got 87% last year. But remember, you can either eat well or sleep well. So if you could tell me in the chat box. What have you invested in? This could save you several thousands of pounds. Not just in your taxes and pensions. Have you fallen into the 60% tax trap as a doctor, healthcare professional without even knowing? It's crazy. I know you think the highest tax you can pay is 45%, but here how it works. If your income exceeds 100,000, you start to lose your personal tax allowance. And by the time you hit about 125,000, you've lost your entire tax allowance. This means you're paying an effective tax rate of 60%. That's not good. You lose a lot of other benefits with it. Now if you. If it's something you've never thought about or you're worried, you're not sure how to navigate it, you're in luck because I've written a very clear guide with a 10 point checklist that you can use to avoid the 60% tax drop. One of the biggest one is obviously paying more into your pension. But there are nine other steps you can take. Check the link in the description and download it for free. Let me know if it helps as jump right back into the episode. You tell me in the chat box, what have you invested in? I want to understand so we know exactly what direction to go. Because if you guys have all maxed out your ISA and you want to go into things like SEIs, EIS, sort of those kind of stuff. Let's see, we've got S P500. Someone said okay, who else? Oh, is that only Emmanuel that is actually investing here? Let's see. Okay, I saw energy expansion, vtca. Okay, so Jimmy said vtc. Did you mean vct? Okay, so I said I have minimal invest in your money portfolio. Okay. I've got an opinion about managed portfolios anyway. But we'll get into that stocks and shares blessing. Okay, stocks and shares. Okay, that's good. So Vanguard HL. Okay. Agriculture. Okay, that's good. S P 500, Amanda, stock and shares, pension. Don't know if you can call that investor not saving. Okay, I. I think we'll get into it. I want us to get into the nitty gritty. I wanted to walk away remembering exactly at least one useful thing that I can help you. Okay, then someone said different. Olu said different. SMP 500, Netflix and others in trading 212. Okay. I'm invested in my money psychology. I love that. I think that's really important. Most people don't understand. We've had people. I think I had an investment banker, a former investment banker who is now a doctor who when she joined money wise Dr. Mastermind, so she joined our private group and she attends. She had one on one coaching with me and she said she was an investment banker for many years. But a lot of things she learned basically from our coaching was more about the money psychology and tax efficiency. It was not just about, you know, just the money. And sometimes she just wants to chat to discuss things, to discuss different options. It's not just about investing itself. So that's a good one. I'm investing in my money psychology. Actually I think this year I shipped 30 copies of the Psychology of Money, a book to people in our money wise Dr. Mastermind to 30 people to get a copy of that book because I thought it's very important. And yeah, Jimmy said vct. So that venture capital trust, the one you can put up to 200k in a venture capital trust and get up to 30% tax back as long as you hold it for five years. And that means said stocks and shares, not Meg, Angela. So basically understanding the difference between the investment itself and the platform is really important. Cash isa. Okay. Cash ISA is saving, but that's okay, that's, you have to start from somewhere. Becca says stocks and shares and James says money box. Again, Money Boss is just a platform for investing. And the mother said eis but only once. Okay, that's really good actually. So EIS is a enterprise investment scheme is like UK allows you to invest in UK startups. They give you some, you know about cash back. This, this instance is tax back. So they give you like you can get up to 30% tax back on your investment as long as you keep it there for a good, you have to leave it there for a good three years for it to qualify. The maximum you can put in an EIS is a million pounds. So you can put 20k in an ISA but you can put up to a million pounds. You can even go as high as £2 million in an EIS if it's a knowledge based sort of like company, like a research company or something like that. So good. And I see Lisa. Okay, yeah, Lysa actually can actually use your lice either for saving or investing. And Angela said ready made investment with bank Moneybox. Again I'm not a big fan of ready made investments but I'm sure obviously you're going to pick what works for you and I'll explain why in this seminar. Why I think you may be better off doing it yourself but passively. Basically if you learn enough, even if you, if you take out like Four weeks or, or thereabout and learn enough how to do it is a skill you take for life. And you can do what they are doing without paying the fees because basically they are not taking more risk they are going to be taking. Okay, so isa, pensions, nhs. Lovely. So we've got like a bit of a spread. I didn't see any real estate here actually. So real estate, not bad as an investment. I think you had agriculture, which was interesting. But in the last 20 years, in the last, even if you go back 50 years looking at the data, but I looked at the last 20 years recently, there has never been any five years that any asset class beats inflation except one. Only one asset class has beat inflation. You know about inflation? I've talked about it a little bit. Inflation, basically whatever is saving your cash now is not going to be worth it to be worth in 10 years time. Look, I gave an example that when I came to the UK I had this 50 pound notes and that 50 pound note what it can buy or what you could buy in 2015 you're going to require £68.05 5p to buy the same thing. So the value of, let's say £100 then you now need like about £137 to buy the same thing. This is not something that you require an economist or an accountant to tell. You probably have felt it yourself. You know the value of things, what it was a few years ago. So having money just in cash, it exposes it to inflation. Now the point I was making about asset class is that when you look at asset classes, when you look at cash, you looked at fixed income assets like bonds and treasury bills and debt, all those type of things. Then you look at stocks and shares, which, which includes individual stocks, index funds, ETFs. And then you look at alternative like real estate, you can even look at gold. There's been only one class of assets that has consistently over the last 20 years. If you look at any five year period, only one class has beat inflation all the time. I mean if you look at one one year, none of the classes beat it because things go up and down. But if you look at any snapshot of any five year period, there has just been one asset class that has beat inflation consistently. Can someone tell me in the chat box again which asset class those are that, that I'm referring to? Okay, someone said property close. Someone said real estate close. Lesson said real estate clothes. It's quite surprising. I'm getting like gold. Real estate, stocks and shares. Okay, ETFs okay, reads okay. So REITS is real estate investment trust. It's like real estate package obviously like in form of shares. Okay, right, very good attempts. I'll tell you the answer and you can check it up as well. There's a quilt I shared in our group stocks and shares equity over the last 20 years. If you. Even if you extend it back 30 years, if you look at any five year period. If you look at the average market indexes like S P500. Yeah, okay. S&P500. If you look at average market indexes like the FTSC All Shares Index shares have beat the inflation. If you look at any five year period. Look as an investor, one thing I've learned in the past 20 years has helped me is to not be sentimental about it. Look at the data, look at the numbers. It feels very warm. I would like to think, oh, if I buy a house and I'm just going to. I know like someone that was in our master class last year, the four weeks academy investment academy and he had this property, I had like 5, 6 property. But at this point he was trying to now move from property to stocks because there's all these government rules, government changes, taxes, management issue. He's dealing with the treaties, tenants, termites and what's the thought T basically toilets. So that's a job that's not like an investment. But even when you consider real estate as an investment and consider stocks, consider cash, consider fixed income like bonds and treasury bills, stocks and shares beat inflation and then beat all these other classes if you consider them over a period of time. So when you are thinking about long term investment, it seems like a no brainer to me. Not just because that was the asset class that got me to where I am, but because I've looked at the numbers. So is anyone, is anyone shocked or surprised that stocks are not real estate? Because I saw a lot of real estate and gold and basically I'll give you a quick, a quick number. S P500. So the top 500 companies in the U. Yeah, James is surprised. The top 500 companies in the U.S. s&P 500 that you all know about the index returned 25 last year. 25. If you're a passive investor, you just put your money in the S P 500 and did nothing. You weren't studying the market, you weren't following the news. S&P 500 returned 25%. Okay. Now that doesn't happen every year, but if you check the average over the last 40, 50, 60 years, you'll be seeing return like 9010 and 90 10. Compounding. Compounding. Look, that, that, that is. Most times our mind cannot figure out what compounding can do because by the time you go like a few years, it doubles and all this while you're not taking that much risk. So the issue is that most times we are going by sentiment and emotion and what someone said about something. But if you look at the data, you realize that at the end of the day, stocks and shares outperforms many classes. And now this is very different when you look at individual stocks. For instance, if you look at individual stocks, I'll give you an example with like Meta, that's one of our flagship individual stock in my portfolio. I think we've got more than 200% return from meta in the last couple of years and that is one stock. Now if you look at some other stock like Coinbase, we've gotten like more than 100%. But the issue here is not about individual stocks because before I take those positions, individual stuff, obviously I know what I'm doing and I've done a bit of research. But if you're an average doctor, you're busy and you can't be bothered to go into the kind of like analysis and all that learning even the basics of how to do passive investing to buy index funds, whether you want to go wide and buy global FTSE all shares, which is basically the top 7,000 companies in the world in terms of size, or you want to go a bit narrow and buy S&P 500, which limits you a little bit to the top 500 companies in the USA by capitalization, that's by size, or basically either way, you are buying into the market average, you are doing it passively. Therefore you're not paying someone 1% or 2% management fee, which actually compounds and eats into your returns. And at the end of the day you're going to come out much better than 90% of professional active investors working on in the finance industry. You know, like finance industry guys who have studied all sorts of neuroscience, studied like rocket science, they studied finance and they're working with computers. You're going to beat 90% of them because you're not going to be paying some crazy fees and you're being tax efficient, you're not selling and buying all the time. So you actually find out that the data shows that when you go back even eight years, the S&P 500 has outperformed 90% of professional money managers. Right. So at this point I'm just going to pause before we go into a little bit more technical stuff, especially related to the UK setting in terms of tax. And I'm going to take a couple of questions, maybe take three questions and then we'll go into tax efficiency as an investment strategy. We'll go and look at those seven steps you need to take before you start investing. So I'll take a few questions now and then we'll crack on. It seems we are stunned to realize that stocks actually do that well. Right. So I, I saw someone said, does this apply to Nigerians? Actually I found that because I started investing in Nigeria before I moved to the UK and I've invested in about three or four countries now. I found that my Nigeria portfolio was giving me really, really returns. I can't imagine usually in the UK setting, but I had an issue with basically the currency, investing in local currency. I remember in 2020, thereabout returned 73%. I mean we are picking off like at very low valuations, very low PE ratios. There were things like uba, I think we got like a million units. Then there was like UCAP and quite a few of them. Obviously any stocks I'm mentioning here is not for you to buy. This was like five years ago. So I don't know what they are doing now. I don't know your current situation. And we're getting like returns like 70 something percent without any stress, even after adjusting for inflation and for the currency change. So it's not so much about where you invest in, about your education as an investor. I'll give you an example. Favor. I don't know. What's your specialty? Favor. I confess. Gp Right. So excellent. So your specialty is family medicine. Thank you. Favor. Now imagine what happens if I bring a medical student and bring them to city or consulting room for one day to run your claim clinic. What do you think is going to happen? Well, that may be chaos. So, so chaos is actually really nice. I think it's going to be disastrous, basically because it might look like, especially in the GP land where it looks like, oh, this guy is fine, nothing is happening, oh, you can go home three months later, it's got bowel cancer, nobody picked it up. Yeah. So the same thing applies to investing. Right. If you haven't got the skill, there's a chance you could think, oh, the market is going really well and you just find out that, oh, suddenly when the market goes down, you find yourself in a very disastrous position. So Warren Buffett, who I look up to and some of you know, I'm, I'm a fan of Warren Buffett, even up to the point that I'm a shadow, that is company. Even up to the point of great. To shareholder meeting in Omaha. He says that when the tide goes out, you know who is swimming naked. And I don't know if you live in Cornwall. I train in Cornwall. If you live in Devon, like where I live, there are lots of beaches. I can go and swim. Or you might be surfing. It might be in the sea and there's a tide, so nobody knows what's happening. But when the tide goes out, the water goes away. You see who has been swimming naked. So many people. When the market is bullish. So when the market is going up and it's going high, everyone says, oh, I must be a genius. I just put my money in the market and it's going up. But sadly, if the market turns down like I experienced in 2008, we saw a lot of people swear off investing, which was a good time to be investing, basically because market crashed and you could buy some really good companies at discount to their net asset value. You could actually get some really good bargains on the value. But most people who didn't have the skill couldn't work out. Was this a good idea or not? And even people who didn't have the skill but could have actually just bought the S P500 or Global Index didn't do it at that point. And so the skill is really important. And sometimes you don't need to become a professor of investing. Understanding the basics. And these things are not that difficult. It's really important. All right, so I've got some questions coming to the chat, but I don't know, can the moderator. Could you just let them. Let them let me know who's going next? Maybe if you have got a question, just raise your hand in the queue so that I can join the queue so we don't have to be reading everything in the charts. Okay. Right. Okay. It's a question that so many people make mistake about, especially when you are investing in S P and you know, it's a Group so of 500 top companies in America. And some of those companies are also listed individually and you can buy their own stocks and shares as well. So he's asking me a very important question. So I just want. Okay, should we get him to ask then a little bit? What was the question? Okay, the question is, is it wise to buy the S P500 and at the same time hold these individual stocks, which are also included in the S and piece? That's an excellent question. Thank you, doctor. Thank you. I, I, why I'm smiling is because just on Saturday in the third week of Investing Academy, someone asked exactly this question and they were doing it and they didn't realize. Now, if you buy the S&P 500, so the question Ali is asking is that is it wise to, you know, you already have S&P 500, which contains the top 500 companies in US by capitalization. So the top 500 just by size, not necessarily by profit, not necessarily by performance, but by size. Okay, so you have Tesla, you have Apple, you have Netflix, you have like, like so many Coca Cola. And she's asking, is it wise to, after I bought S&P 500, buy those individual stocks? Now you could do that, but would that be advisable? What would you be trying to achieve? Because basically the point of buying a global index fund was for diversification. To diversify to reduce your risk is one of the top risk management approaches we teach in the Academy. So that was the point of buying the S&P 500. So now going to buy individual stocks, you could do that because you could decide, okay, even though I've diversified my investment, but I still have like build on the research you've done, or because you use this product, I've decided you want to take an extra concentration in Apple, for instance, then one could actually do that as long as they understand that that means that they are reducing their diversification. And I've seen people do this approach where they do 80% of their stocks or 90% of their stocks ins and P500 and then they have 10% which they just allocate to doing those type of investments. As long as you have a clear understanding of what you're doing and you understand that, okay, this is my risk management approach, then that's fine. But it's not something you should do randomly because I've also seen doctors lose money because they heard that, oh, this stock is going up and then they put in like maybe half of their investment portfolio in it and then they lost money on it in the when the market goes down. So yes, you can decide to do that. But as long as is your investment plan, like in the fourth week of the Investment Academy, what we are doing is everyone writes out the investing plan because last week, which will be on Saturday, everyone writes out their investing plan and then that will be the plan they look at if they're making investment. It cannot be random, it cannot be by emotion, but it has to be go driven. You don't take more risk than you have to take. And at the same time you don't take too little risk. Because if you take too little risk you just have your money sitting in the bank account. Did I help Dr. Lubumi? Yes, it does. Thanks. Lovely. Right doctor people, should we take the second one? Who's coming next? So I've just summarized. Two people are asking similar questions. Prayer and blessing. Lovely. So I think they're asking about what brokerage you you advise because someone asked about Moneybox Zero and asked about Trading 212. Because these are all platforms you can use for investment. So if you just want to throw light on that, there's also Vanguard and all of that. So I know you'll talk about that. Thank you. Thank you so much. That's a good summary. I am going to say this. I have a rule about platforms. I'm sure someone from my team will share a few links. I have a room about platforms. I am not devoted to any platform. I mean I've used different platforms. I've used about four or five platforms irrespective of whichever platform you want to use and I'm going to mention some. You want any platform that has the least fees. Number one, that's the number one thing you want to check and a platform that's easy to use. Okay, how's the list? Fees easy to use as least fees easy to use. I did a, I did a video last year comparing the SIPs self invested personal pension. One of the SIPs was charging 0.45% which seemed harmless. 0.45%. Until you think about your pension port which is supposed to be growing and accumulating your pension port that is supposed to go in. Maybe it's getting to 1 million pounds. Somebody's charging 0.45% of that. Even 1% of okay, if you want to work it out, say 1% of 1 million. So if you think about a hundred thousand, so 10,000 pounds, I think that's it, 1% of 1 million. So you're paying 10,000 pounds. So 0.5% will be about 5,000 pounds. But this is money that can actually go into compounding to help your investments to grow. So when it comes to platforms the big question to always ask is what are their fees? Why am I paying more on this platform? So if someone is managing your phone, a lot of times they're not going to take the type of risk, calculated risk that I would take. Basically if someone is managing your phone and they would usually ask you what is your risk appetite and you Say a medium. All the doctors, everyone else always says moderate. And so what was going to happen that you're going to have like maybe a good 30, 40% of your stocks of your, of your money in bonds, depending on your age, and then maybe 60, 70 in stocks. And then they will buy safe investments. Basically they'll try to buy S&P 500. At the end of the day, you're paying the management fee and they are not outperforming. So if you're paying any extra fees, the question should always be minus my fees, how much are you beating the market? Okay, because they're not doing. Because you love them. I want to make sure that they make some money and wear nice suits. Okay, Someone said medium. Yeah, every, every. Everybody you ask says their risk is moderate. I think in the group, in the, in the investment group we shared like how to check your risk tolerance. And most people found out that this was, actually tolerance was a little higher. Some people found they were medium. Unfortunately, the financial industry, most times they will treat you as a doctor, healthcare professional, the same way they'll treat other people. Remember I told you your case is a little bit different because they are starting a bit later. So what they will do is that they will think, okay, moderate risk. And they will not apply the rule they call 100 minus age. So if you are, let's say 40 years, it'll be 100 minus 40. So 60 of your money will be in stocks and 40 will be in bonds. So that means your why stocks are growing. Unless The S&P 500 was returning 25 bonds are returning 3%. Are you thinking, Look, I've got another 30 years to invest. What am I doing with these bonds? That way you would usually do if you manage your money. So that's why it's really important to understand how to manage your own finances, your own investment. And even when you decide to pay extra fees, figure out what you're paying for if it's worth it. But coming back to the platform, I'll say look for a platform that provides you the services that you get elsewhere, but at little or no price. Okay, if you can get it zero, fine. If it's easy to use better. And if you don't necessarily need a platform you can log into every day, you need something that you can set up automatically and send there, basically direct debit, especially if you're a passive investor. Well, I hope you found that helpful and more importantly, I hope it helped you to see investing in a new light. This is just a small section of what we cover in the Flow masterclass. If you like me to drop more of these clips, just let me in the comments. Comment, invest and share this video as well with friends who may need to hear this. And if you are ready to stop winging it and guessing, guesswork is not good for investing if you want to learn how to become a confident investor. To learn how to invest properly, check out our Investing Readiness Scorecard with the links in the description. It will help you determine whether you're really ready to start investing and what you need to do before you even start thinking about investing to reduce the chances of you losing money. And until then, see you soon. Bye Bye.
