The BIG Pension Mistake Doctors Make (and How to Avoid It)

If you can put in like four hours to learn how to invest. Four hours? Four hours. Four hours over four weeks or thereabout. It's a skill you can use for your whole life.

When we get a SIP I have to open, do we need to. Do we manage the investment on that sip, or is just a money that you put there and that gets self managed?

If you've done the right investments, if you leave it alone, you're going to be better off than someone who is buying and selling every day. Buying and selling every day.

One of my investments, they're charging me a remarkable amount to percentage and didn't really bother about too much. How about till now? I just, I just understood it just now when you said it, because I look like, I'm like, okay, it's not too much, but if I look at the grand scheme of things and over time it's actually going to be lost.

Right, okay. So someone asked here, how do I maximize my NHS pension? Yeah. Who are you here? Who's asked the question?

I did. My name is Ali. I asked.

Hi. Okay. Yeah. Okay. So how to maximize your NHS pension, basically? Do you mean how to pay the most you can into it?

I think overall, in terms of looking at the NHS pension and even other sort of private avenues, to maximize totally how much one is earning through a pension or saving through a pension.

Lovely. Yeah, that makes sense now. Thank you for the question. So basically that's part of what I've explained to you. You can get up to that 60k is what you're allowed in a year, how, how to optimize it, how to maximize it. First of all, if you're in the NHS pension, you want to make sure you are paying the most you can afford to pay into the NHS pension, the most they would allow you to pay in. And if you are a regular doctor, let's say a regular consultant, then there's a fixed percentage that's already been deducted. Okay, do we know what that fixed percentage is?

Pay slip?

Yeah, for your. Have you got your pay sleep?

No, I don't have it right now, but I think I usually say about 9.8% or something.

9.8%. So 9.8% is basically for. I'm going to say you're not yet a consultant or Jeep, is that correct?

A training.

Yeah, a training. Okay, that's good. So 9.8%. What's your specialty? What are you training for?

GP.

Oh, fantastic. Okay, that's great. I can't think of many other better specialties to Train for so welcome. Yeah. So 9.8 is what is being deducted while you are sort of like a trainee when you are a consultant for the consultants here. Can you tell me what the percentage that's been deducted into your pension? 12.5%. Yep. Now there's something different. Thank you, Stephanie. There's something different for GPs and GP partners is different because you pay as an employer. If you're a GP partner, you pay us an employee, you pay a 12.5%. But you also contribute to your attention as an employer. So you can pay both ways. Consultants don't have that flexibility. So you're red, Klan is a red and that's 12.5%. Yeah. That means you're earning quite a bit of money. Did you get, did you get the trs? So some people got trs, you've got some extra money. So it all based on how much you're earning as well. Okay, so basically how to optimize your NHS pension? Ali, if you've seen my video on the NHS pension, you know the NHS pension provides you a guaranteed salary for life, so it's not affected by inflation. It also provides things like disability allowance and they can pay you if for instance you the debt and service. I mean nobody hopes for that. But if there's debt in service, then the NHS pension has a payout as well. But the most important thing to note about the NHS pension is that ceiling. The 9.8% you do pay into your pension, you could actually really ring up your pension and administration and ask them if you can pay a bit more. It's not going to be that much, but then they can give you the opportunity to pay a bit more into that. That way there's less of your money coming to you, but more, there's also less of your money going to hmrc. Does that make sense, Ali?

Yes.

Okay. But that's not the end of it. Now if you really, really want to make use of the full pension allowance, you don't really have to make use of the whole 60, 60, 60,000. But let's say you want to make use of it as much as you can manage. The option there is to open a private pension. So if you've got a private pension like a SIP account, so SIP is self invested personal pension, then you can contribute more to that sip. If you've got extra money you want to pay into your pension, can contribute to that sip. You can invest it. Either you invest it through an already made basket or if you know how to invest already, you can choose your own investment. We tend to suggest a well diversified broad index fund. I mean don't invest unless you know what you're doing, but then you can have a separate private account, private pension that you pay into. And if you pay into it with your money that you've been paid as a salary doctor, you can claim back the money through your self assessment. Does that make sense or. Yes. Here's something quick and useful. If you ever wonder what your actual take home pay is after taxes, ni pension deductions or you just not sure how paying more into your pension will affect your take home pay, our free NHS salary calculator will give you a clear instant breakdown. It's perfect for planning your finances, checking deductions or even spotting overpayments and helping you determine how any changes in your pension contributions can affect your take home pay. You want to make sure you're taking enough home now. It's easy to use and it's stellar for NHS professionals like you. You can try it now for free on nhsssalarycalculator.com so it's NHS salary calculator dot com. The link is in the description. Now let's dive right back into the episode.

Yeah, is that last bit the private part that I'm not sure exactly how that works different from investments, you know, like a SIP one. So I had just heard about the sip one hour, I had gone around opening one recently, but I don't know about this other private one you just mentioned.

So a seat is a private pension. So if you've got a seat, it's different from your workplace pension, it's self invested personal pension. So it's a type of private pension. So basically if you, if you open the sip, you've got a private pension now. So it's not controlled by the government, it's not controlled by your workplace. So that's a seat. Does that make sense now?

Yes, it does, it does.

Right, so I'm looking at. Yeah. So you have some questions you want to ask for.

Yeah, thank you so much for this. So, yeah, basically I'm just a little bit confused about SIP because you know, I haven't gotten into that yet. But I'm thinking because this year I will go, I will go above, above 100k even though I haven't done anything, but I don't want it. I just wanted to get below 100k because I don't want to do locking, I don't want to do anything. I just want to be at home, you know, relax.

I understand Your frustration because it makes some doctors who are really willing and ready to work. I think why would I be working some more to pay more tax?

So yeah. So basically and then my curiosity just because I'm not good when it comes to managing stock and shares and things. Like three years ago I left my. Just to give you an example, I put some money on trading 212 on Apple and I delete the trading 212 and after three years I realized that that money went up and I didn't realize how that happened but it's just crazy because I don't know how to manage this. But then now I realize oh gosh, this work without putting mine on that. So this is like the sort of money that think about basically. So my question with SIP coming back is that when we get a SIP with I have to open do we need to. Do we manage the investment on that SIP or is just the money that you put there and that gets self managed? I don't know if I'm making sense.

You're making a lot of sense and that's a very useful question. And you've just taught us something which I'm going to share here. Thank you. Where are you based? Nigdalia.

Well, I know base. I was in London before. So when you were mentioning and London was killing me with 6060 trap and London was. And then I said I need to. So I just now moved to Scotland.

Yeah, all right. Were you the one who sent me a message? You said you found my stuff on chat GPT.

Yeah, yeah, yeah. Oh, you are on chat GPT.

Lovely to have you. I saw Scott. Dr. Scott. All right. Right. So you've left only Sonia in London. Okay then don't worry. Sorry, I'll meet you when I come to London. Right, but that was a very useful question. Thank you. First thing I want to share from what Dr. Scott Oja has shared. She left an investment and then came back and it's gone up. Some people come back and the money has also gone down. So there was a very lucky, lucky, lucky situation there. And also if you've done the right investment, if you leave it alone, you're going to be better off than someone who is buying and selling every day. Buying and selling every day. Because when they are buying and selling they could make psychological mistakes. Sometimes they make errors. I've got like stocks I've owned for almost 20 years. So if they, if you bought a solid stock. But the only thing I would suggest if you want to go a step further is to learn how to invest. I mean we've got like a master class. That is four weeks. You finish that and that will be your skill. You've learned in 2025. You can become a confident investor. Some of them that attended the last master class, they are, they're here, maybe some of them will share their experience. It's very intense. You're not going to come out from it and not know how to invest. You come out from it, you know how to invest. But let's deal with your question. See, it is called self invested personal pension. As against NHS pension, NHS pension, we want to believe, we have the faith and hope that somebody sensible is managing it and the money is going to be there when we turn 68. Because in my last master class, a consultant, I think it was a cardiothoracic surgeon, asked me, how am I sure I'm going to live to 68. Am I even sure that I'm going to get any money? I'm like, this is a fair question. I don't know the answer to whether you live to 68. But NHS pension, you have zero control. The only control you have is to leave or stay. Someone is managing, we hope they know what they are doing. We often they are going to pay you assisted. But in SIP is different. It's self invested personal pension, you manage it by yourself. Now, there are three ways you can manage SIPs. One is that you can if you're like me or any one of the people that have attended investment masterclass, you, you can choose your investment. You can decide, oh, I want to buy this investment. Now that might be individual stocks for those who are comfortable and very safe to invest individual stocks or for most doctors are really busy. That could be broad, well diversified index fund and I will explain index fund here. It could be like an etf. An index fund basically are not buying one company, they are buying a company combined or a basket of stocks. Okay, now just for anyone who doesn't understand index fund, this would be an opportunity to understand it clearly. Imagine football clubs. Let's say you've got a favorite football club. I don't know. Ruben, are you a football fan? Are you a big football fan? Or have you, have you got a club you like?

No, I'm not.

I'm glad I'm not the only one. Okay, who, who here has a club that they love? Like football club love? Yeah, Cass said real madri. Of course, man. You okay, right, let's just assume I'm going to go with my United. Anthony said, my United. Yeah, Anthony is A faithful Man United fan. Let's say you want to predict which club is going to win next year, Championship, European Championship. You can say, I'm just going to invest in Man United because that's the one that is going to win, you know. Or look at the Chelsea fans right here. You can say Man United is going to win. Or you can say, well, I'm not sure if my United is going to win. I'm probably just going to assume that a club in the Premiership. For you football fans, you know, the Premiership is the top league in, in England. Basically the top league in England. So you can either say, I'm going to invest in one club to win, or you can say, I'm going to just buy the top club. Now, buying individual stocks is like assuming that the Man United is going to win. You don't know, maybe something might go wrong, they might get a crazy coach, somebody might have an injury, but if they win, you're likely to make more money basically because you've chosen the winning horse or you've chosen the winning team. Index fund, on the other hand is like, I don't know who wins. So I'm just going to buy this group. I'm thinking, oh, I'm either going to just buy La Liga as an index, I'm going to buy Premiership. So La Liga is basically the Spanish league. Or you can buy like Premiership league, or you can say, I'm going to buy Serie A. So basically what you are doing is like, rather than taking a risk with one stock, you are buying a group of stock. Now let's bring it back to investment. S&P 500. Whenever you hear those jargon, S&P 500 is just standard and poor. 500 is the top 500 companies in the US based on their size. So if you say, unlike me, you don't want to invest in Google or you don't want to invest in Nvidia, you just want to buy the top 5, 500 companies. The advantage of that is that if it crashes, if one company has a problem, then it doesn't affect all your investment because you spread the investment. The risk is well diversified. Okay, Obviously S&P 500 is just the top 500 companies in the US. You'll be thinking companies like Apple, Coca Cola, Tesla, they're all in the S. P500. Now just remember that the S&P500 is just companies in the US. So you are diversified, but you're not diversified across countries. So. But some people will say, well, I don't care because those top 500 companies are in all the countries Apple is operating in, all the countries that matter, Coca Cola and all the countries that matter. But yes, some people also buy a global index fund that's sort of like the top 1,000 or 2,000 companies. We're not going into specific products. I just want you to understand the concept. Is that making sense, Migdalia?

Yeah. Yeah.

So that's, that's step one. If you're investing by yourself, you can either invest in Index Fund ETFs, you can buy bonds with your SIP. You can even invest in property, commercial property, if you know what you're doing. I know some of the doctors in our mastermind who actually invested in commercial property, you know, because they already experienced in that area. So that's SEEP number one. Number two, you can say, I don't want to do any of those investment. I'm going to buy what they call a target date fund. Okay. Let's just say your retirement, your retirement goal is to retire in 20 years. So you might see that in year one you might invest all your money in talks. So what do you know about stocks? G. You are in the master class. So talks in terms of risk and return versus bonds. Can you just call us a little bit of stocks and bonds, risk and reward.

So in terms of risk and rewards.

With stock, make me proud.

The rewards with stocks, the potential to have very high returns is there as well as the risk of maybe losing your money. Whereas, and it can be fast, you understand, like if your company does well, the shares can just rise quickly and then you can make some money. Whereas with bonds, it's just a steady and almost, you know, maybe it's the safest type of investment. If you want to say, obviously there's Nothing that is 100% safety investment, but bonds is a slower way of investing your money. The returns are not as high, but the risk is much lower and it's quite steady.

Right. That's brilliant explanation. I'm already beaming with pride, basically. So stocks has a higher risk and also higher returns. Obviously your risk, you start, you start cutting down your risk. If you are doing things like investing in broad, well diversified index fund, because now you're investing in a broad group rather than individual stocks. Okay, Right. So that's that. Now while this plan, if you buy a target date fund, it takes away the decision from you. I mean, you can always come back and change it. But what the target date fund is like, the goal is to make sure that at 60 years, when you want to retire You've got your money sitting there for you, most of it at least. So knowing that bonds, bonds, there's little or no risk of loss of your capital except the lender is unable to pay pay you. So if that phone is buying bonds, more of the bonds are just going to be paying you returns. But they are less likely to go down in value compared to stocks. So you might see what will happen. Make Dalia, when you're 40, is buying more stocks, it might allocate it based on 70, 30, 70 in stocks and 30 bonds. Now when you're 40, when you're 50, maybe it goes the other way. It increases the allocation to bonds and reduces the allocation to stocks. Maybe by the time you hit 60 years, you might end up having just 20% in stocks and 80% in bonds. Again, I'm giving you rough numbers, but those target date funds, they are set up in that way to reduce your risk so that by the time you're nearing retirement, you're taking less risk and you're likely to have more money in your pocket. So that might work for someone who doesn't want any hands on approach. They don't want any investment. They don't. Sorry, they don't want any time to put in any time in it. The downside is that sometimes when you're about to retire, you might have some extra cash and you might prefer to keep investing. But if he's making an automatic decision, it doesn't know that. It just knows that McDonald is retiring and he wants to put more of your money in bonds. Okay, does that make sense now?

Yeah, it makes sense now.

So my. I thought, I think I understand, but what I want to clarify, I think understand what you said, what I want to clarify is that the person that is making these automatic decisions is the basket that you've bought and is the age you set by yourself. Okay, cool. That's it. I understand.

That's correct.

Thank you.

Excellent. So just, just to make sure we are all still on the same page, there are two things I've said. One is you can invest by yourself, make the decision by yourself. That's the goal. That's the point. If you've done investment master class, you should know what you're doing. You'll be able to set your investment. You don't need to be checking. I don't go and check my investment every day. I might check every quarter, but it's not something you have to be checking every day. That's number one. Number two, you can just buy a basket for Instance, you can get like, let's say a basket, basically, which will just, you know, the point of the basket would be to help you to make those automatic decisions without you having to think about it. There's a third option which I'm not a big fan of basically because that third option is like you pay somebody and they manage your money for you. So that could be an option. You could pay somebody and they manage your money for you. Most of the platform provide that option as well and they charge you more money for that. Basically. When it comes to investment, if you are doing a well diversified broadcast index fund, you're not doing anything special. Basically you're just investing your money. You're just hoping for the market to carry your money and grow it so you are taking less risk. You're going to end up with the same returns as everyone else. You're going to be average. And average is very good because 99 of full time expert professional investors don't even beat the average returns. I've written an article on that. Okay, so these are the three options. Number one, you can invest by yourself. This applies to both SIP and stock and shares. Isa, you can invest by yourself. You can invest through like an already made basket. That's the target deed fund. Number three, you can pay the platform to get people to manage your funds for you. Number three, I think is the worst. And that's where people like financial advisors and all the rest of them, they charge you money and they charge you 1%, 2%, which I think is a bit of a scam because if you, if you charge me 1%, it's not a scam anyway because it didn't cost anybody. But if you charge me 1%, then check what that 1% would be compounded over 20 years. For today it looks like 1%, but I thought you put in 100. Sonia doesn't like it at all. I can see the way she's shaking her head. So there's a lot of compounding that happens. You don't know over time. There's a calculator probably I'll build another calculator for us to use it to calculate how much those fees will cost you. It might actually cost you one extra year of work because you're just paying somebody 1%. You might think it's 1% of 100,000, but next is 1% of 120,000. Let's say it's 1% of 140,000 that you eventually pay quite a lot. I've seen some that charge 3% and it's very funny because some of our big medical organizations are recommending them. A lot of times they are restricted advisors as well. All right, let me not go into all of that, but basically you understand the three options to invest Migdalia. Does it make sense?

Yes. More clear. More clear. Now with, with a seed, I just.

Realized that one of my investments with Hardwick Lansdowne, they're charging me a remarkable amount. Percentage. I didn't really bother about it too much. How about till now? I just, I just understood it just now when you said it. If I, because I looked like, I'm like, okay, it's not too much, but if I look at the grand scheme of things and over time it's actually going to be lost.

Yeah, it's massive. You're in the community. I'll share the calculator. Maybe I'll email it out as well so you guys can calculate for yourself. Now here is the kind of deal some adana, some advisors, financial advisors, because that's what they are paid to do. You can now tell that I'm not a big. I don't have big fans in the financial advisor community, but I don't write my content for them. I write productive. Some financial advisors who say, but the person might get a better return for you. My investment. So the question is, are they really getting a better return? Because if we check it. All right, so last year I got 78 return. But I manage my own money, so I'm not taking it. Any risk I take is for myself. But I'm not like a massive pension investor. And I also don't take people's money to manage for them. The average financial advisor, if you go and check, I've done an article on it, but don't take my article. Look at the data. 99 of active investors perform worse than the S&P 500 over time. So if you check it, what are they doing in addition that makes them to be able to charge that money. It's just. The difference is just what you know and what you don't know. And sometimes that's why I say if you can put in like four hours to learn how to invest. If you can put in 24 hours is too small. But if you put in 20 hours, four hours, four hours, four hours over four weeks, thereabout. Learn how to invest is a skill you can use for your whole life, basically. And that saves you quite a bit of money. And even if you annoy, you don't have to be like an investment like you don't need to be any good or anything even just knowing how to Click here, click there Put my money in Index Fund as long as you understand asset allocation, risk management, how much you do put in your stocks, how much should you put in bonds? Well I like, I like that, I like that the way the penny dropped and you like you didn't want to wait. Like what? Who's taking my money? I'm sure that Hagrid's lamps down, whatever, they're not going to be happy when they see this, but. Well, you deserve to know is your money right? I'm just going to crack on because we've gone from SIP and entered investing, but there are a few more questions. I'll take a couple more questions, then I'll go to the parking lot and answer some questions. 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 full masterclass. If you'd like me to drop more of these clips, just let me know 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.