Investing for beginners |NHS Doctor explains

How do you invest your hard saved earned money as a medic? And the second question Will you have enough money to retire on if you don't invest? I mean, a lot of medics approach investing from a point of fear. And in a recent Moneywise Doctor survey of over 300 medics, 62% of the respondents admitted that they don't invest in stocks, bonds or any funds at all. And over half of the respondents also expressed concerns that investing was too risky or complex. But is this holding you back from securing your your financial future? Is it a costly mistake? In the next few minutes, we'll address that. By the end of this episode, you'll have a clear step by step guide to start investing. If you're a complete beginner, this will be useful. You'll learn how to make your money work for you. Just like I've been fortunate to do for almost two decades as an investor and as a doctor. Now we'll cover why investing is crucial, especially for doctors and healthcare professionals, how to get started, the different types of investment, and the best strategies to grow your wealth while taking fewer risk. Plus, I'll share my personal investment journey and the lessons I've learned along the way from investing for almost 20 years. Stick around and you discover one investment strategy that even you as a complete beginner can apply consistently over the years to outperform seasoned professionals. Let's dive in. All right, I'm going to let you in. We've got a quick update. We've got some seriously powerful financial insights coming your way regularly every week, and trust me, you don't want to miss out. But here's the kicker. Only 25% of you watching this are certain to get this golden nuggets when we drop them on the podcast. Why? Because 75% of you have not subscribed yet. So if you're in the 25% club, thank you. You're the real MVP and we appreciate you. What to the 75 who are watching regularly but not subscribing. Let's change that quickly. Or tell me in the comments why haven't you subscribed? Come on, let's do it quickly. Hit the subscribe button to make sure you don't miss out on the content. That way you're doing yourself and even me a favor because then it lets YouTube know they were doing something right. All right, so join the club and never miss another episode filled with financial wisdom, tips and fun. Hit the subscribe button. Let's make sure you're always in the know. Alright, let's jump right back into the video. Thank you. Now. Welcome back to the Money Wise Doctor podcast. Of course, I'm your host, Dr. Andy Egwim, former Salaried GP, founder of MoneyWiseDoctor.com, entrepreneur, investor and portfolio GP. Our mission here is to help doctors and healthcare professionals make smarter financial decisions and take charge of their future. Now, if you haven't already, head over to moneywisedoctor.com there are lots of valuable resources there to support your financial journey. And also subscribe to our free weekly newsletter where you can get up to date information and tips, as well as insights from my experience and from other experts. Now a bit about my own investing journey. If you've been following my channel, you know I quit my job as a salary GP two years ago. So earlier this year I attended the Warren Buffett Berkshire Hathaway Shareholders meeting in Omaha, Nebraska, and it was a gathering of some of the world's best and brilliant investors. However, my journey from investing began much early in my late teens with very small investment. I think my first investment was a tiny less than $50 investment in a company called Vitaform. Because the amount was so small in those days, my capital, a lot of it went to the stockbroker's commission for the younger folks. I'm sure you've invested through Robinhood and all sorts of apps, but you might not know that back in the days you had to make a call to the stockbroker or visit the office to buy stocks, and in my case it sometimes took days or even weeks before my stocks were purchased or before I even knew they were available. And because this, the impact of the broker's fee also affected my returns. But that's where I started, but that's not where I stopped. I've continued learning and studying and investing extra money from my side hustles and businesses, which I launched on campus and later after I finished medical school and as I even as I was working as a doctor, I continued investing. Of course, we've been through three crashes in my I've experienced three crashes which I've been very fortunate to be have taken advantage of the most recent one, which was Covid 2020, a very fantastic buying opportunity for value investors. So this is sort of a bit of my own journey. But beyond the stock market, I've also invested in real estate and startups of other people's businesses. However, my longest and most consistent investment have been in the stock market. While I haven't ended up as a billionaire and I don't own a Ferrari or Lamborghini or even a garage full of books. That was never the goal. My true aspiration was to achieve something I found quite valuable, which is time freedom. Two years ago, I left my Saiya JP job and found myself in a position that I had dreamt of for years. Total control of my time. I got a level of financial freedom that allowed me to choose my shadow. Of course, I still reserved my license and the right to work as a doctor. But this newfound freedom and time gave me that opportunity to research stuff and also make videos like this. So that's enough about me. How about you? What's your investing plan? Are you investing as a doctor or professional? As medics? Doctors, we often face long hours and stress sometimes can lead to burnout. So investing is something you should be thinking of from day one to be able to buy back your time and even be in a position to decide to retire earlier if you want. But why is investing so crucial? One key factor to consider is inflation. Now, in case you don't know what inflation is, look at our previous videos, A clean example. If you've had £1,000 in the past, what you could buy several years ago, it's no longer what you can buy today. There are many measures that the Consumer Price index and other things that can be used to measure inflation. But the simple thing is that inflation is at the value of the money you have. So you look at the money over time. If you just save it and put it, let's say, in a piggy bank and just leave it there, the value continues to go down. A very typical example is, I think it's an extreme example is Zimbabwe. A few years ago, Zimbabwe got to the point that the, the value, the value of the money was dropping almost every few weeks and months. And get to the point. I needed almost a few billions to buy even a loaf of bread. So investing can help your money to beat inflation. If you just save your money in the bank, the value actually just goes down and down over time. So that's why it's really quite important for doctors and healthcare professionals to start investing. Also, if you just save, how much can you really save to cover it for retirement? I mean, it's really quite important. Rather than avoid it, learn how to invest and start investing. But before we go any further, what is investing? I mean, we all banded these terms around and people talk about it. It's important to understand what it is. First of all, it's not day trading, it's not gambling, it's not random Internet schemes. These Activities are speculatives and high risk. They're not sort of like following foundation investment principles. When you think about investing, the stock market often comes to mind. But investing is much more than just buying and selling stocks. It includes various asset classes like properties, commodities, and of course, stocks. Now, the stock market acts as a marketplace for buying into companies. However, the real investment lies in the companies behind the stock market, not just the tickets. You see a good way to think about investing like a farmer. You're sort of like the farmer has to select seeds carefully, not random seeds. Plant in the right soil, cultivate it, or at least observe it, and then harvest. They have to wait with patience and, and a lot of times you might get a bountiful harvest, but there are also times when you might have a crop failure and that could happen. Investing could also come with risk. So it's important to remember that just like a farmer, you could end up with a bad habit sometimes. And there's also potential for loss in investing. But that is why I think that an average doctor should follow an investment approach that reduces unnecessary risk and sees to it that over the long term they're going to be fine. And I'll share a simple strategy that can help in that regard. Investing is about making informed decisions and committing to that long term growth of your financial resources. It's about building a diversified portfolio that can withstand market fluctuations and provide you steady returns. Now, the way you can achieve your financial goal, whether that's securing comfortable retirement or reducing your work hours, or you want to retire a bit earlier, you just want to have a bit more retirement. I think investing is a big part of it. But before you jump into investing, there are seven things I do recommend that you need to do. Those seven things are really quite key. They are really important. And number one out of it is invest in yourself. So you need to enhance your knowledge and your skills, improve your earning potential and financial literacy as much as possible. Invest in yourself first. Number two, do a personal financial audit. Assess your financial situation. Have you got debt? Have you got assets? What's your net worth? You can use that to, you know, check the link in the description. You can use a scorecard right there to check your financial score. Now number three is build an emergency fund. We talk about this a lot. Three to six months of your expenses. Save it up as an emergency fund so you don't have to sell your investment. Of course, number four will be your financial protection, income protection, insurance. And of course we've got a book on that. Again, link in the description Number five, I'll say eliminate high debts, there's no need. You're owing the credit card company 22% and you're going to invest. You're looking for returns of 15%. Pay that down first. Of course number six is invest in a very tax efficient way. Understand things like ISAs. Do you use a limited company? Can you put your property in a trust? Understand that. And of course, number seven, seek a professional guidance. If you need an investment advisor. Not everyone needs this. But if you need an investment advisor, a professional advisor, get one and get some advice from them. Right? So before you go on to invest, these are the seven things I think you should look at. Consider very carefully. Sort this out before you go ahead and invest. Now, if you're about to start investing, the first thing is to think about your investment strategy. If you sort out those first things, those seven things look at investment strategy. So if you talk about investment strategy, what am I referring to is what is your plan here? Even if you are planning to buy broad based index from whatever, you still need to have a goal. Determine your goals and set up your strategy. How are you going to approach the market? Now, if you think about your goal, why are you investing? Is it for retirement, for your children's school fees? Or is that basically to buy a house? Just understand that. So if you understand your goal, make it a smart goal. You know about smart, specific, measurable, achievable, realistic, time bound. If you're earning 100,000 as a GP, don't say you want to end up as a billionaire in the next five years. Just make a clear plan. And of course, if you check the links in the description or if you sign up for our newsletters, we'll send out clear plans that you can use and then adapt it to your current situation. Of course, also think about your risk. What's your risk appetite? Are you going to have oh shit moment anytime that the market drops or are you going to be able to just plot it through? So it's very important to develop your investment strategy. Don't just start investing without a clear strategy. Even if you intend to only buy a broad based index like the S&P 500, you still need a strategy, no matter how simple. So build on your goals and your risk tolerance. You can create a strategy that outlines how you will allocate your investment options. Now this strategy could be. It should be flexible enough to adjust because circumstances do change and financial goals evolve. Now, no matter what strategy you decide on, consider three maintenance. This should form any part of Strategy you're doing. One is your asset allocation, two is your diversification and three is time horizon. Let's look at each of them. Now when I talk about asset allocation, it means what goes where. So when it comes to asset allocation, investors can diversify their portfolios across various assets. You can go for classes of assets like stocks and bonds or real estate, that's property and also cash equivalent. Obviously different assets provide different benefits and I will talk about them a bit. So for instance, stocks historically have provided superior long term returns compared to other asset classes. They are ideal for growth and can significantly increase the value of your portfolio over time. Now real estate on the other hand is also good returns and I also own property, but it really has the best tax advantages. That's one area where real estate shines. On the other hand, if you look at bonds, especially government backed bonds in particular, it offers low risk returns. I mean a lot of bonds are fixed assets, they're low risk. But bonds are plagued by inflation. The returns from bonds are plagued by inflation and they're not that great. But they also receive return risk, most times low risk. So for example, a strategy someone for. For me I'm. I'm less than 40 and I'm quite long on stocks and bonds, sorry stocks mainly rather than bonds. However, as I approach, when I'm approaching my 40th, I'm going to start thinking about reducing some of my investment in stocks and start looking at bonds. A common rule of the thumb for asset allocation for some people is the 100 minus your age. So this method suggests that you subtract your age from 100. For instance if you were like 40 years, so it'll be 100 minus 40 and you hold 40% in bonds and 60% in stocks. But obviously you need to understand your risk appetite, understand what is really important for yourself. Again, personal finance is personal. I know 60, 70 year old holding a lot of their portfolio in stocks. Remember, the best asset allocation strategy is the one that aligns with your personal financial goals, risk tolerance and time horizon. Lets look at the other aspects of a strategy for investment diversification. Now you may consider diversifying within each asset class. So you might buy different stocks. For someone like me that does my own personal financial analysis, you can buy different companies if you want to hold a few or several of them. Or could just buy an index fund that is already diversified for you. I will talk about index fund a bit more. Now number three is your time horizon. So think about how far are you looking to invest if you are 30, are you going to be investing to your 70. So think about if you are about to retire your pension age, should you be buying more bonds rather than stocks? So think about what time horizon are you looking at now let's look at investment strategy for busy doctors as busy doctors, healthcare professionals, nurses, doctors, dentists, basically a lot of people wouldn't have the time to do this sort of analysis. I do attend calls and investors call calls and attend shareholders meetings. So most times what we tend to recommend, of course this is not financial advice is to buy index funds in ETFs, exchange traded funds. This phone sort of like they just expose you to the market. S&P 500 is a good example. It buys the top 500 companies in the US by market capitalization. That's by size. Of course we can go into the nitty gritty of buying a good global index fund and all of that. These are sort of like discussions you should have either about yourself making your own studies or using a financial advisor. And again, if you want to use a specialist financial advisor that is experience dealing with doctors, obviously head over to moneywisedoctor.com and you can find one. Other than that you can do the research by yourself and invest in a broad based index fund. You can set up a target date. Target date could be a strategy people use. This is when I want to retire. So you could choose a target date fund with a retirement date. For instance, let's say I retired in 2045. The fund will gradually shift you from more stocks to bonds as you're nearing retirement. But what's really important here is that no matter what you do have a strategy, have a plan and follow it. The most thing we tend to suggest is invest automatically. You can set up a standing order and make sure that this is something money is going out 20%, 15% of income. You're doing it on a regular basis. If you need to get some more advice, I tend to suggest that rather than just run around and pick any investment advisor you see, financial advisor is always best to go with a financial advisor that's being used by other doctors and has been reviewed by other doctors. That way you're going to get it. Someone who understands the unique challenges that Dr. Do experience. Well, that's a bit of a nutshell, how to start investing. And that's it for this segment. In the next segment we'll go through the process of opening an ISA account how to start investing. And it will be a step by step process. So if you're watching on any other platform other than YouTube. Head over to the YouTube channel for the next episode to make sure that you can subscribe. See me go through the process on the screen and help you to open your investment account and start investing. All right, thank you for coming along on this journey. And if you've got any questions, pop them in the comments below and I'll come back and answer every single one of them. All right then. Bye bye.