This 1% Fee Could Cost You £500,000—Avoid It!

You can call it the Investing master class.

I've been an Investor for about 19 years now, been through three different market crashes including 2008, 2010 flash crash and of course COVID 19. What we can say is that we have beat the S and P quite well over 20 years. Last year was. It doesn't mean that every pick we made has been a winner. We've had some that didn't win. Our wins are better than our losses. The most annoying loss so far is I have a rule, it's doing like 180% return on Meta.

It is not a loss until you sell.

A decision not to sell is a decision to buy in a way because there's something called opportunity cost. When I said I don't hold more than six to ten at a time.

Are we, are we in a bubble?

When, when is this video going to come out?

For those that are new here I have with me money wise Dr. Dr. Egwene and we are going to be having a very interesting chat and today is all about investing. You can call it the investing Master class. So if you've not binged our playlist, this is one episode that you also want to watch or listen to if you are listening on podcast. And before we would continue, just want Dr. Games to just quickly introduce himself and just talk about basically how he got into investing.

Well, thank you for inviting me back. I think it's my second time here on the channel and yes, we've had many interesting discussions. I thought maybe we should have recorded. This was a nice one. Yeah. So basically I'm Dr. BC Andy Grim. I'm the founder of moneywisedoctor.com It's a platform that helps doctors make smarter financial decisions. My background I've been an investor for about 19 years now. I think I started investing at about roughly 19 and started not knowing what I was doing along the line started figuring out how to analyze stocks, individual stocks been through three different market crashes including 2008, 2010 flash crash and of course COVID 19. And there's been many other market ups and downs since then. And yeah, we've had a really quite decent return. So what Benjamin Graham will call a satisfactory. What we can see is that we have BDS and P quite well over 20 years with a very, very, very, very good returns.

But why I'm not give us a range.

Okay. I could give you for the last year. Last year was 87% returns so. But we've had years that was better.

I should give you my money.

No, but Here is, here's the thing. Once you start managing more money, your returns go down. It happens to Buffett, it happens to everybody because then you take fewer risk and yeah, you obviously have other things that you have to deal with. Yeah. So I would say in the last, probably if we look at annualized returns for the past four years, we'll hovering around 61%, roughly analyzed. And if we go back all the way to 90 years, sorry, 19 years, it's because it's investing across different countries. I think we might work it out around 52%. But again, this number depend on how you look at them. But if you're calculating and you're factoring in the dividend in the returns and if you're factoring it across different currencies, because we always want to adjust, adjust it to the currencies and, and you know, use the US Dollar as the baseline.

Yeah, that makes sense. That makes sense. And I know recently you did a program where a lot of people in your community, they go, go involved and you. I think it's still on, right. Where you taught people about the basics of investing. Yeah, all other things, how to pick stocks, everything about investing. Why is investing important? Why do you think it's important? Why are you teaching doctors and a lot of people about investing?

Yeah, I mean, basically this master class is previously I had people one on one discuss individual stuff, but they were. I just couldn't handle the number of people who wanted to learn about investing. But like, you know, you very, you very studied in this area. There's not very much you can teach in 30 minutes or one hour. So that's part of why we put on that masterclass. I would look your best bet as a doctor or healthcare professional, your best bet is probably to buy index funds. Because if you're not ready to have the time to dedicate, to analyze companies, look at businesses, understand their underlying numbers and the underlying business then make a decision which may or may not be right. Because if I say I get this type of returns I'm mentioning here, it doesn't mean that every pick we made has been a winner. We've had some that didn't win. Our wins are better than our losses. Now, for an average doctor or healthcare professional who is really busy might say, you're too busy. Maybe think about an index fund. But there are people who say, no, you're doing it. You don't have two heads. There are other people who are doing it. And I'll say, okay, in that case, you need to be properly trained. Just like you said to somebody, you want to learn about health, just watch a few YouTube. But you want to become a doctor, you want to be a professional. I want to become, you know, this is like DIY investing but you still have to do your homework. You see me like last, earlier this year, not even last year I was in Omaha, I was in Nebraska for Warren Buffett show. I mean like why, why do I have to join investment calls, read 10Ks and reports. If you buy index fund, you don't have to do any of that. Despite all that discouragement, I had people who said I want to learn how to do fundamental analysis. And that's why we put on that class and that's why it's so long. It's a four week program but so far it's been fantastic and I, I enjoyed the energy from the people in the room. They're very enthusiastic. But you know what they say, those who pay pay attention.

That's true. There are two things I just wanted you to. If you can't share with. I said you've had some wins, you've had some losses. Which stock have been your most memorable loss and which one has been your most memorable win?

Easy. The most memorable loss is easy to remember. They're usually the most painful ones. I would say it's Alibaba. So it's still not a permanent loss. Right. Because I haven't sold it. But yeah, it's the one that has performed worse than I thought it would. But I've held this for I think two years now, going to three. And I have a rule. If I've done my homework, I've done my research, I don't tend to sell a stock in less than two or three years. If I've done a proper analysis, looked at the company. Obviously the Alibaba has some risk, government risk and all that stuff.

Yeah.

To consider. But it's also a travelers business. Their next quarterly report will come out in November. So the last quarter they did all right. They beat their forecast 2/4 before then they missed their forecast but it's generally quite a good business. They just have some issues going on and I'm very reluctant to let go of it. But currently I think it's about 18 down from when we got in. Okay. But again that's, that's when you look at other things. When you look at something like you asked me about my biggest win so far, you look at something recently, we look at them something like Meta. Meta within like 180% return on Meta and we've held it for about two and a half years now. Look at something like Alphabet. We've had held it for about a year and a half. I've done like 34 on it. And look at something like Coinbase, which we thought was absolutely not going to do too well. And we're very careful. Our sizing was not that high and it's done 22 so far. So. So that's why basically you. You have to do the work and then you have to do your asset allocation and risk management so that even if you are wrong, you know, that might. You also have to have that margin of safety so that if you are wrong, it's not a disaster. You can still, you know, you're right, but that doesn't mean you don't have to do the actual homework. And may I mention, none of the stocks I mentioned here is not a recommendation to buy anything.

Yeah, and that's very true. This is not a recommendation. This is just two guys or two friends talking on the Internet.

So I was going to say. Yeah, so these are like more recent ones. I remember during COVID there were like, companies like banks in Nigeria. Like, I remember uba at some point we held, like, was it a million units then? And basically some of them just tripled or quadrupled within, like, after Kobe, the economy recovered. And I remember one called United Capital UCAP, which my friend got in there at 50 kobo, which is basically Nigerian currency. I think UCAP is about 18 naira now. Thereabout.

Wow.

When I got in, it was 2. Narrator 50 Cuba. But when I analyzed, it was still a good buy. So the thing is, like, before you go buy individual stock, you don't buy because it's going up or going down. You're buying it because what is the company doing? What's their free cash flow? What's their debt to asset ratio? What is the story about this company? Why do you think it's going to be a good company in the future? Can you hold it 20 years? If the stock market was short for the next five years, will you still be happy to hold it? These are. These are some things. So. But you realize that most people who are buying individual stuff, they don't even know about these numbers. And that's something in my class, people like, why is that. How is that what multiples means, that what PE ratio means? Because in the past, people just like, oh, this one sounds like a good one. They're going to space. Let's buy it.

Yeah, yeah, yeah. There was something that you mentioned with your Alibaba stock, you said that you've not crystallized that loss. Yes, and I, for me that's something that I've seen a lot of people that that is a big mistake or misconception that a lot of people have been investing. You've invested your money and right there on the app or the investment platform, you can see the big red negative that the thing is down by. So, so and you just feel like the, the stock or the ETF or whatever it is is already a loss. But that point that you made is something that I really tell people like it is not a loss until you sell. Is there any other misconception that you would that you. From your interaction with people that people have about investing?

Yeah, actually there are lots. I mean after 19 years of doing this and now because I run money wise doctor, I'm communicating with thousands of doctors weekly, you hear all sorts of strange things and I don't know, batshit crazy things people think and say that don't sound rational. But you understand human beings are not just rational. We all say emotional red thing is red for a purpose. And your mind even like for instance, I've gave you, I've given you clear examples of where we've done like 180, 34. But the 18 one is more painful because we have loss of version. Is that what psychologists call it when we, when we lose a bit of money is more painful. So people are likely to feel more, you know, they might feel worse about a negative situation despite the fact that they're outweighing positive outcomes. But yeah, so most time people say, no, I've lost money, but till you sell it, you've not actually, you know, you've not, you've not actually have vested. You've not taken that loss basically until. That being said, there's something I. Obviously for a sophisticated investor, there's something you have to acknowledge as well. A decision not to sell is a decision to buy in a way because there's something called opportunity cost. If you've got like let's say 10,000 or 20,000, let's just use 10,000 in a stock and you're deciding to hold it, that means you're believing that this company is good. They're either going to pay a dividend or they're going to do better in the future. If, if you don't sell it, the opportunity costs that you could have, that money could have been somewhere else. You could have actually been buying a bond or treasury bill or, or just another investment or just spend it on yourself. So if you decide not to sell and you say, well, I haven't sold so it's not a permanent loss, that is true and that is psychologically nice. But just realize that there's a true cost. When I'm selling, I don't hold this thought because I think, oh, it's nice. I'm going to wait is because I'm thinking, okay, there's still some light basically from the company. They're doing quite well. Look at the economic activity inside the company, their numbers and all that. Again, I think sometimes you have heuristics like you make up rules that you use that to guide you. And for me one of it is that I don't buy something and then sell it within two or three years. I have to wait to prove out that theory. Except something happens, there's a case of fraud or things come out. As long as the company is still doing what I thought it would do is increasing its market share, it's increasing its profit, is it reducing its operating cost? Or even if it's increasing operating cost, it's probably investing in plants or doing stuff. Maybe sometimes the dividend is growing or maybe they don't pay dividend but their earning per share is still growing. So I tend to think, well, I'm going to wait it out. That also means that I don't just buy randomly because I know that this is a bit of a marriage now. It's not like a one night fling. So I'm, I'm very likely to be very, very careful in my assessment. And that's why when we move in, somebody has seen some of, I think someone in our group saw our position size. I was like, really? You really invested that amount? You asked me once why I'm holding not more than six to 10 stocks at a time. I'm like, well, because before we go in, we actually do quite a bit of work to go in there. And if you look at other examples, see people like Warren Buffett, they're not holding 500 stocks at the time. No, they're holding a number of stocks, but not like they're not buying the whole market. But if you want to buy the whole market, just buy an index fund and just know that you're going for the maximum diversification.

Give me an example of what you would see in a stock that would make you break your two year rule, for example, like, because you've mentioned that quite a lot and I'm just thinking in my head, has it happened before? And did you See something or if not, what is that scenario that you have in your head that would make you.

I don't think I've had. I think there was a company once that I started entering, started buying and it turned out that, okay, they had this merger coming up and then the merger fell through. I didn't lose money on that one. But on the long term, I can't really think of any other company that I've held for less than two years. In fact, when I said I started Investing at about 19, the stock I bought then, I still have it.

Wow.

Yeah. Each stock is that Vitaphone? Yeah. I'll tell you how long ago it was and it wasn't a lot of money. It's about less than a thousand naira then. So it tells you. That was like my first journey. Then I kept investing more. They got it. But you go from a thousand to 100,000 and then you go from 100,000.

To, you know, an interesting question. Why Vita foam instead of mocha foam.

You will not believe was the cheapest thing my little money could buy. As a broke teenager, I was like, well, if I buy for four naira, whatever it is back then I'll be able to buy maybe 250 shares. What are the account for exam I stockbroker was going to take one of my kidneys basically because half, half of the money went to stop broker.

Wow.

You know, I see a lot of people these days buying stuff with trading to want to invest in gin or whatever platform. This is so easy now because they don't pay fees. So people are more likely to lose money because they don't have to think too much about the stock market. Stock brokers fee in those they want to invest. They have to think, will I make enough money to cover this for the frictional cost fees and tax and all that.

Awesome. Awesome. So one thing that you spoke about briefly, and I know it's something we've discussed off camera, but you mentioned it, is that you don't hold. You hold. You don't hold more than 10 stocks or between six to eight, something like that. And that speaks to asset allocation, how you think about it, what your percentages look like between each of those companies. Can you just explain to people that will be watching or listening what asset allocation is and how do you think about it and how do you think people should think about it?

Yes, that's very intelligent question, obviously. And I think it comes down to the key to the root of risk management. Obviously for myself, when I said I don't hold more than six to ten at a time. It wasn't on purpose. It's me looking back now realizing that, oh, throughout this whole period I've always just held like less than 6 to 10. And I realized that it's just in line with the principles of, you know, Warren Buffett. It's no secret that I really look up to Warren Buffett and Charlie Munger and I see they're sort of like approaches to put all your eggs in one basket or six baskets and watch it. They're kind of like concentrated. And they will tell you that diversification is for someone who doesn't know what they are doing. So if you are buying individual stocks and you're buying 40, maybe you should just buy an index. And Warren Buffett has a joke that if you have like this say 20 wives or 30 wives, you probably not know any of them really well or something like that. I can't remember. He has a lot of this type of sayings. Yeah, but basically what it is is that if you can research a good number of stocks, let's say six to ten or hold it. That's great. That's my own style. I'm not able to research 50 stocks. I don't have like stuff and I don't do it all day long. You have people like some of the great guys. Again, I can't remember. Who is this guy that, that wrote Beats Beat the, Beat the street or something? Peter Lynch. Yeah, Peter Lynch. Okay, so he was a mutual fund guy. He buys like lots of stocks and that's his style because he, this was his full time job, the fund manager. You can follow all of them. But my thinking that you shouldn't just buy things because everyone is buying it. But when it comes to asset allocation, basically what it means is that you want to just remove allocation and put sharing. You want to share your investment port, investment portfolio in such a way that a disaster in one does not mean like a disaster in the whole thing. So basically you're trying to either you position yourself in a way that one investment does not correlate with the other one. For instance, when the property market is going down, sometimes stock market is going up. When the stock market is going up, sometimes property market is not doing too well. When buying stocks are great idea, bonds might not be paying that well. And when bonds have fantastic returns, stocks might actually not be doing great. Because when there's a market crash or market is not doing well, investors flee and go for fixed income assets like bonds and treasury bills. Or guilt. Guilt is Basically bonds, that's what we call it in the uk. So that's guilt. If you want to know why they are called guilt. We'll go into a bit of history, but that's a long story. But basically asset allocation is trying to put out your investment in a way that if one thing or one of the things you thought would go well, doesn't go well, that will not.

Asset sharing.

Exactly. That will not. That will not spell disaster for you. That will not mean it blow up for you. For instance, let's just use a round number. Again, I don't know which number your audience is familiar with, whether I should use 100,000 or 1 million, but let's just say use 100,000, a nice round number. So if you, if you're going to do asset allocation, 100,000, let's say you had like maybe 50k in property, because most people tend to put down quite a bit of money, or let's just say 20k in property as part of the asset, then you have 80k, a good 20k for in cash because the emergency fund, which is basically three to six months worth of your living expense, that's not money for investing. You put it aside for emergency. I'm sure that your channel, you must have a lot of emergency fund then what you've got is 60, 60000 now because you put 20 in housing, put 20 in emergency fund. So you have 60, 000. You decide, okay, out of this 60 000, this is the money that I'm going to invest. Or maybe you have another 10,000 you put towards wanting else or, and then you have 50k. That 50k is your investment. It's part of the money you want to invest in stocks. You've already got an investment in property, you now want to invest this 50k in stocks. So even if you decide that, oh, I want to Invest in only 10 stocks now, you might decide, okay, the maximum I'm going to put in any of these 10 stocks will be 5,000. It doesn't have to be five, it doesn't have to be equally. But basically, if you have that rule again, it's rules that help you to avoid disaster. You say, I'm not going to. And that's basically financial discipline. I'm not going to invest more than 5K. Oh, they say this talk is going to blow up. Like I have some people in my class, I keep teasing them, I call them Nvidia millionaires because some of them bought Nvidia like three, four years ago. But, but Basically they didn't know how to analyze companies and all that. They were lucky they bought it. So now they are learning and they're like, oh, wow, this is what happened. I teased them, I got them video millionaires. Basically, even if that stock you think is going to go to 1 million or 100 million, you decide, I'm not going to expose my portfolio to more than 10% of that amount. So remember, here is that 50k now you're investing into the stock and I don't want to exceed 10% of it. So that's one way to allocate assets or share assets. You might also consider the whole portfolio, the whole hundred thousand and think, okay, I'm not going to put more than 10%. So 10k becomes the maximum you can put in any individual stocks. If you are buying individual stocks, one thing can happen. Sometimes the price keeps going down. And if you don't know what you're doing, some people tell you buy the deep. You keep going deeper and deeper and deeper till you are at the bottom of the ocean. Sometimes you are catching a falling knife. You don't know what you're doing. You're buying. Like when we are buying a meta, it was falling. We are buying, we are looking at the number you're buying. They're still making profit. Buying. Facebook was growing. They bought WhatsApp, they had Instagram, they not even monetize all these things. The market was still selling it because they lost money in that metaverse. They lost like 10. Not even lost. They spent 10 billion. Like they spent 10 billion. But what was the people.

No, people just didn't understand the guy's vision with leaving your successful social media to go into one.

They thought he was going crazy. Okay, let's assume that they didn't know what they're doing. They lost 10 billion. But what of the rest of the company? How much did they make in their Facebook? Where's the number one place people go to still, you know, do pay per click? It's still meta and all that stuff. Yeah. So that's why when it was going down, we look at the numbers at some point. Are you, are you sure? I mean, I like, I've usually think, okay, as long as you're sure. I just buy. So but sometimes people are just buying because they think, oh, is it. I think after, after dark it becomes. After darkness comes light. That's the same. But sometimes the darkness, it becomes pitch black.

When it's in the darkest, it becomes.

Very dark, it becomes even darker, very dark. So again, the Other aspect is going up, pointings are going up. Some people tend to just keep buying, keep buying, keep buying.

Yeah.

So that's why you need that discipline of asset allocation. If you have that discipline in place, like, okay, I know I'm buying the deep, but once it hits, once I've bought my allocation, that 10%, that's it. We've filled up our pot for that one. We've got to look elsewhere. If you don't do that, you might make money, you might get great returns. But when you become a more mature investor, when people make returns is not interesting. What you want to know is the amount of risk they took to make their returns. You know, because you know that things can go either way.

Yeah. So at the. I want to. The question I want to ask is regarding asset allocation. And it has to do with when, for example, one of the stocks that you've bought decides to do very well and it's in as unbalanced your portfolio that your asset allocation is not true. To know what your thought is. Are you talking about asset allocation strictly based on the amounts your purchase amount, the amount you invested, or are you talking about it in terms of your portfolio as a whole? Because you've bought five or 10 stocks, for example, today, in one year time, Merata could account for 40% of your portfolio because they've done so well, while Alibaba for example, can drop to just 1%. But you all. If you invested the same amount in. I don't know if my question makes. How do you look at it? Is it just for the price, purchase price, or the whole portfolio? Even factoring in growth and all of.

That, Your question makes absolute sense. That's such a brilliant question. I mean, some of these questions make all of us to think, right, because now. Yeah, of course, but there are different approaches and there are different ways. What is important, you should have a rule that you follow. Portfolio, have your own way. In my own case, I don't. I don't try too hard to rebalance my portfolio. I try to focus more on exposure when I'm going in. Obviously, if I find that something has grown and gotten to become half of my portfolio, I might decide to look at it again. I'll look at it again. But you don't sell your winners just because you want to trans a portfolio. Maybe if you need to pay a big bill, like Warren Buffett recently sold some apples. I said it was to pay tax. We don't know if it's paid tax because the market's valid. But. But Basically he did sell something, but it's not where we focus. We focus on going in. Yeah, long time.

Okay, that makes sense. And, and it makes it very simple to be honest. It just simplifies the whole thing. Do you think the market is in a bubble? Are we, are we in a bubble?

When, when is this video going to come out?

Well, okay, we can put a disclaimer. We are shooting this video in September 2020 24.

Yeah, that's really important to say. But, but basically I'll, I'm going to answer it this way. Before you can say that a market is involved in a bubble, you have to say, say what indicators you're using. What have you seen that made it into the bubble? Now price for apart from the price of individual stock, some of it I'm multiples that are like ludicrous and fantastic. When you hear some. Okay, well now you went there so let's go there. Really can't tsle. I know there are a lot of like Tesla Tesla disciples. There are people that you know Tesla millionaires hopefully. So I have nothing against Tesla as a company and I love a Tesla car. I'll drive a Tesla car. That's beautiful. But their PE ratio which is the Multiple currently is 72. What that means basically that okay, the market is valuing their earnings 72 times basically to if, if for instance Tesla was a house, you own the house, the house, the rental income would take 72 years for you to get your money back, the money you put into buying the house. And most time people say well it's a growth company is growing and all that. But most time people overpay for growth. You see that's what happened during the tech bubbles. A lot of people bought like company, they just like sky high valuation. They thought that these principles don't apply anymore. But some of those companies never recovered 20 years later. So there are many companies like that, not just Tesla. But you know, Tesla is a very well followed stock. So my indicator I tend to look at is what we call the buffet indicator. So the buffet indicator is usually just sort of like a back of napkin calculation. To help you see is the market generally overvalued? Because normally when there's a bubble there are multiple companies or multiple investments are overvalued. Now before going to bubble, I just want to give an example. Recently I shared, I sent out a resource, a fantastic tool to my mailing list called investment Jargon Buster. And one of the things we defined there was bubble a lot of times. What was bubble? Basically when you are looking at bubble. There is the speculative bubble and there's asset bubble. The speculative bubble is a spike in asset value within a particular industry, commodity or asset class to unsubstantiated levels fueled by irrational speculative activity that is not supported by fundamentals. So basically, if you want to interpret it in a very simple way, just means that people are willing to pay so so far, much, so much for assets that cannot be sold. Supported by numbers on ground. When we say fundamentals, we are looking at how much is this company making? What is their profit in the next 10 years? Are they going to make this type of money? Will this company be that valuable as much as the market is ready to pay for it? Because the market basically is a. If I might quote Buffett, they say the market is basically a voting machine rather than a weighing machine. So the market might. Oh, this company is the best. And we all know everyone's voting. Yeah, voting don't mean much. Most time people vote based on the emotions and what they think, greed and fear. Even in real life voting for elections. So it doesn't. Not many people actually going to do like what is a fair value for this company. So bubbles did not start today. We know about was this 16th century. You know about the tulip bubble where people were buying flowers.

Yeah, yeah.

Up to the point I flower a tulip flower. I think it was this center Gostis or something flower. One of them was which had like a genetic problem that made it to become special and rare was selling for far more than the value of a house. So that was a proper bubble. And there have been many bubbles. There's been.com bubble, there's been different bubbles. Yeah, crypto bubble. Yeah. So currently what I tend to look at is what we call the Buffet indicator. So the Buffet indicator is sort of like one of the things that Warren Buffett sort of like proposed. So what it does Buffett indicator, it looks at the stock market as a whole, looks at how much stocks are selling and then compares it to, you know, the US gdp basically looking at the U. S Stock market. Basically, yeah. And it's comparing to the USD gdp, the economy that is underlying, you know, that market. The same way that if you come to a company, you're looking at their price, the valuation, what is being sold in the market versus the company's economy, which is things like their, you know, what are their earnings, what's their free cash flow, you know, what are their debt to asset ratio and all that. So if you look at Buffett indicator, it's Basically looking at, I think it looks at the total market capitalization. So if you take the numerator is basically the total market capitalization I divided by the GDP and currently Buffett indicator is at about 199.7% as at today. By today I mean like yesterday as at the time of closing of the market. So let's just call it 200%. So basically that means that the market is significantly overvalued. So based on, on that alone you see that that's quite high. And even if you go and look at market capitalization divided by GDP and then you add like total assets of Federal Reserve banks, that's to look at cash that is being held, it's still about 159, let's just call it 160. So basically nothing is unbagging here. Nothing is cheap here. You might still be able, yeah, you might be able to spot companies that are mispriced because the market hits them. Part of why we are fortunate enough to do so well with Meta was that we came at the time when the market hated it. So you might be lucky to buy some funeral home so. Or buy, buy some, you know, buy some companies somewhere that people are not interested in. I told you once when we discuss about funeral home groups that yeah, I'm making quite a bit of money, very profitable. But there are not a lot of 21 year olds or 24 year olds in Silicon Valley living us and thinking I'm going to disrupt the funeral home industry. But they don't have competition and when there's no competition, people can make a supernormal profits.

Yeah, yeah.

And people, people kind of keep dying so they still have like that's a constant, right.

Coffins will continue to be sold. I think one question that has been on my mind is the fact that you're teaching this investing stuff, right, how to pick stocks and all of that and that's very good. But there are some people that are not interested in learning and some people are taking the route of paying a, an a financial advisor, somebody to help them in this aspect. What's your take on that? Is it worth it to go through those guys or should you just. I, I have my idea and my answer in my head but I also want to hear what all your thoughts are you. And I think the other part to that question is if your answer is no, what scenario is it likely for people to go for? Financial advisor?

Yeah, that's a very interesting question. And the answer is it depends. I would hope that majority of people would actually not be doing active investing because 99% of active investors, including professional fund managers who do it daily for work, underperform the S&P 500, which is basically an index fund that, you know, a cat can pick. Yeah. And just pick it and not do anything about it. Obviously when you hear, okay, individual investors like us and people that overperform The S&P 500 were just like a drop in the water compared to, you know, those managing big pension funds and all that stuff. So basically, for instance, if I want to invest for my little ones now, they're quite young, obviously I'll go for an index because they have a longer horizon of investment. And the time I started investing, I didn't know what an index was. I just bought in the individual stocks. Plus, you know, as you accumulate a bit of capital, you know, you know, you start thinking about risk management more. And also they might not be ready to learn and analyze stocks like me. And I don't want to keep doing it by the time I'm 18 or thereabouts, which is not too far away. Now the idea of financial advisor, it depends what is the advisor doing for you? If the advice is the type that wants to predict the future, that tells you that if you buy this stock it will do this. To do that you need to run as far as your legs can carry you because nobody knows anything about anything. Nobody can really reliably. I've not seen anyone that reliably.

But the, the, the financial advisor has done some sort of analysis. Just maybe not like the way you are doing it, but that is what he will claim that he has done. Oh, we've done our analysis.

This is good. Don't worry, we'll get to all that scenario. So let's say your financial advisor is perfectly reasonable and they, they can help you based on your risk appetite. They help you to select stocks because they already have a packet of investments most times most financial advisors already have like, oh they might call it a fancy name but basically it might be like some index fund, some corporate bonds and maybe government or different things because someone, someone two days ago tried to do, to do an investment and then contacted me. I asked them to look at there's a document called key invest investors document first and he opened it and what he saw there, he will see there's corporate bond in one country. So don't bother about the names because most time when what financial advisor will ask you is what's your risk appetite? You say yes, high, medium, low, most People say medium. Yeah, but you don't even know what your risk appetite is. Part of my class will spend like, almost like an hour on risk because there's risk appetite, which is psychological. Like me, I don't mind. My stock goes like 50 down. It's different for different people because I, I'm not worried. So that's risk appetite. Some people also maybe, yeah, if their Stock goes down 10, they get really worried, they sell it. So this is all psychological. But then there's risk bearing capacity, let's call it risk capacity. So if I'm 75 years old, pensioner, and I have all my stock in a company like Nvidia or Tesla and if things don't go well, damn, I can't go back to work, I need to go and find a job in testing. Exactly. Gary is not cheap now I need to go. Yeah, we're in the uk. Do you think you have to buy the Gary, it's not cheap.

You might not even be able to drink.

Gary, you need to go and work in Tesco and you'll be competing with a 19 year old for work and they will be your supervisor. So that's a risk called risk capacity. But if you are, let's say you are, I'm not stigmatizing 75 years old. Obviously if you're 75 and you have like bonds, you have stocks, you have other sorts of. Okay, good. But if you're like, let's say 35, you're actively working, you have income, you might even have some other investment. I might have enterprise and all that. Your risk bearing capacity might be a bit more, you know, so you might be able to take a bit more risk. So when financial advisors talk about risk sometimes maybe the next question should be for you to ask them which is it? Is it my risk capacity or my risk tolerance? Now most people tend to think that they are in the middle, so they will say medium risk. They will not. Nobody wants to say load. If you say loads, they'll just buy bonds for you, like buy that just fixed. I will not beat inflation. If you say high risk, okay, they might. You'll be worried that you don't know what they're going to do. Now maybe they might buy junk bonds for you. I'm assuming that financial advisors don't do that. Maybe the good ones anyway. Now if you come down to medium, the question is not whether you're medium. My medium is not your medium. It's not stick. It's not stick that you can say medium rare and well done. My medium you now your medium you, you might look at what they select in the medium. There will be s and P500 and then there might be like some corporate bonds and there will be, and there.

Will be cash, there will be maybe some commodities.

Yeah. And this is not for you basically so and that's not the main concern here. The main concern is like what extra benefit is the financial advisor bringing? If there are extra benefits that they are going to do better than the market then we know from the number that most time is not true. Most financial advice, yeah. You don't even know what happens with your money. A lot of time there's a wealth manager, there's somebody that is doing the trading manager advisor advises you, sells you into the plan. A lot of financial advice is actually financial sales people. True. I'm not saying they are all bad. They are really good, great financial advisors and I will show you what they can help you do. Now if all you are looking for a financial advisor is to be able to pick the right stocks, you might as well just go and open an account with one of these stock market. Anyone that provides index fund ETF and buy an index fund. Buy a well diversified, broad, low cost. Low cost is worth repeating. Low cost index fund. Why? Because the fees matter. If you're paying a financial advice for 1%. I've seen financial advisors or all these platforms, they're going all around doing financial education and all stuff and they're charging 3% to doctors. I'm like, isn't this criminal? And a lot of those doctors, when you ask them how much are you paying, they don't know. Some charge 2%, sometimes 3%. If you're above a million, maybe they charge you like 2%. If you have those doctors, how much.

They are really, that is more than what many pension providers charging providers.

Now they're not telling you that they're actively moving things around. They're just like pension is supposed to be dull and unexciting.

So yeah, but they have the opportunity to charge more. But they are not even charging. Like when I did the research, I think the highest I saw was around 2% or 2 point something which is still very high.

Now if you come, if you come and compound it, if you compound it over time. I don't want us to do public maths. But if you go in and plug this into a compound company interest calculator, you might realize that the fees you pay over your 30, 40 years working life might be substantial. You might be paying like enough money that could have could have sponsored the expense for a year or two, which means you could have even had a bit earlier. Understand? So if your financial advice is going to charge you such fees, you need to be negotiating with them the fees. You know, if you absolutely decide that you need the financial advice, I will look at some instances where you might need the financial advisor. If you absolutely decide I need a financial advisor, then the best option, usually I want one that can charge me a flat fee. This is what we want to do. What is the flat fee? And when you tell us that flat fee, we can negotiate it. I cannot negotiate it based on my portfolio. You cannot say My portfolio is 3 million, 10 million. We negotiated based on market rate. What will another financial advisor charge me to do this work? You know, so that way it might look like it's higher. Because financial advisors are the good ones. They're experts, they're professionals. They need to be paid. You can't just pay them. But if you go in for. Especially when it's free, free is the most expensive. And they're charging 1%, 2%. That's why we've turned down so many financial advisors and money wise the doctor because they usually want to, you know, because we have a lot of people asking financial advice. I'm not getting advice on Shara. We have people approaching us all the time. We even had one approach us today that we're going to interview later. So without 1%, 2%, 3%, if you compound it over time is a lot. So that's one of the reasons to flee from financial advisors that don't know what they're doing now. The other reason I'll say is that a lot of financial advisors compared to doctors, A lot of people in my audience are doctors. They have a different background. Some of them have got sales background, some of them have got business background compared to the doctor or nurse who's got like medical background. A high trust profession where trust basically if nobody can trust you anymore, you are kicked out. If they think that you lied once you're kicked out. And most doctors sometimes don't know anything about money or what is happening. They know obviously they make, they pay their bills, all that. But they might not know things like you inflation returns, they might do like fine, fine charts and show them their returns without checking what the underlying assets. Yeah, this I've had these people I've given up to come and talk to me because they didn't know what I knew then. This was years ago. And I'll listen to that like, okay, I asked A few questions, they rescheduled the meeting that they will talk to their boss and get back to me. And I had like three meetings like that. I was just like, so Basically this is Dr. High Income, High Trust, this is financial advisor. Sometimes I'm not saying they are low trust, but basically if you think of the most trustworthy person in the world, the first person that comes to your mind is not a financial advisor. Okay, yeah, so it's not a banker, he's not a financial advisor, it's not a headphone. Those are not the first words that come to your mind and they meet together. Dr. Low information about finance, finances, high information, you don't know about trust here there's a very high incentive for, you know, obviously they said when money meets experience, the experience get the money and the money gets the experience. There's the high interest, there's a very high chance for you to lose quite a bit of money. And that money ends up on the other side if you don't know what you're doing. That's part of why a money wise doctor, we kind of like vet financial advisors, we vet them based on their qualification, based on their previous reviews and how many doctors they work with in the past and what have people said and all that kind of stuff. So that's a little bit about financial. I'm sure financial advisors probably will not be thanking me for this segment, but again the people I'm looking after basically doctors and healthcare professionals. But financial advisors can do a lot for you. They can save you a lot of headaches. There are products that you can't really like go and buy by yourself. It's like life insurance, income protection. I really, really found it very useful the financial advice I use for my life insurance and income protection. He was an excellent financial advisor, sat down, explained everything to me, I already knew it. I've already written books and blogs and guides on these things. But when it's you, it's nice to have someone explain it to you. Yeah, AI will never replace some human things. So look at scenarios, look at, okay, what if I do this, what if I do that? So financial advisors can play that role. If you've got a complex situation, let's say you have a job and then you have this income and you're moving to another country and then you have like a child who you know probably you need to provide for or maybe a dean school and you're trying to forecast how much you need another. The financial advisor or wealth plan or financial planner could help in that kind of situation. Let's see an older person beginning to think, how much do I really need? How much can I spend without running out of money if I, you know, retire? And they're like financial advice is that their job is to give reassurance. Because one of them I interviewed said they were trying to come on board money wise doctor. And one of their last clients, he had kept reassuring the person that he can stop working now. This guy was a private surgeon and the guy was, was still very worried. So basically financial advisors could do some of those rules. These are just some rules. Working together with your tax accountant can look at how to position your money so that you're not paying more than usual in tax. So these are all different things that a financial advisor could do. It's important to understand.

Makes sense.

Before you get financial advisor, which one it is that you want them to do for you?

What problem do you want them to help you solve? Yeah, yeah, that, that makes sense. I want us to switch conversations a little bit and you mean, you mean.

You mean we should leave financial advisors alone?

Yes, let's leave them, let's leave them with them. I'm not sure they would like the last part.

They can good ones, the qualified ones, those are doing a good job.

You see a lot of people talking about, oh, s P500 versus global index. I know you're not an index funds guy, but from what your experience, what you know, which of the two would be your preference? I don't know if you invested in index funds, but if you are, which one are you invested in out of the two of them?

And then yeah, basically for, like I said, for my, my children, basically going forward, everything is index directed rather than individual stocks for really good reasons. But if you're looking at S P 500 versus global stocks, there are a couple of things to consider. I had this discussion three days ago with somebody. S&P 500 is the top 500 companies in the US based on market capitalization. So it is one of the most followed index. And when we say index fund beats professional managers is S and P500 we're talking about. Okay, now there's the risk with S&P 500 is that the 500 companies are based in the US so there's country risk there. So I think what if the whole US economy goes down and you know, somehow the US economy just goes down and the world is thriving, but the US Economy goes down? Yes, because that's as possible at the moment with the current setup. So, so SMB 500 those top 500 coming before, before we just gloss over it, let's remember that we're talking about Apple, we're talking about Meta, we're talking.

About global companies, about you know, Tesla.

You'Re talking about Coca Cola, we're talking.

About this Many of them don't even have their headquarters registered in the US in the first place.

Exactly. Some of them are over here in Ireland, you know, for tax purposes or maybe just for logistics, probably not for.

That.

But, but as you can see these are already global companies. So that argument that is a US based I don't quite buy it. But for peace of mind if somebody wants to go a bit global, yeah one can buy a global index. I don't think it matters too much. The most important thing that you're diversifying and yeah you decided to diversify with the index fund like SRB 500 you might see 500 companies or with the global funds basically I think you probably know global index is a bit better than me that some of them have a thousand five hundred stocks in them.

Two thousand at the minimum, even up to six thousand.

Exactly. And some of them might be those are buying in western countries and some are buying in, in sort of what you call emerging countries like Africa and all that stuff. Yeah, so, so basically it all depends on how much diversification. From my point of view I feel like S&P 500 has enough diversification because diversification is quite okay. Some people, you can argue this point, it depends.

Yeah, I, I, I, I think, I think the, the argument a lot of people give towards global index is the fact that is in recent years that the US has so outperformed the rest of the world and people will say oh if you look back some time ago it was this country that was outperforming. There was a time Japan was outperforming, there was a time Europe was outperforming that this is just us turn or this is their time that we don't know which country would that perform next. So in order to mitigate that risk, let's just buy global whichever one comes. Actually people that are looking at investing for the long term, you know someone in your twenties, yeah you are thinking of you keep buying stocks till maybe you're 50, that's a good 30 years investing every month. You know the argument makes sense. But you are right this US companies that we are talking about are also global companies, business in their sense and but yeah, as long as you are making one of those investments I think you are in safe hands.

I, I Feel like whether you buy S&P 500 or buy a global index fund, it really doesn't make a massive difference. Because when you go to the global funds, what do you see? Like you see the Same S&P 500, maybe the top 20%, 30%, 40%.

The next thing I want us to discuss is bonds. I've never bought bonds. I think the only time I've bought bonds would be when I just register in a pension and then you pick a fund and then you now after two weeks you decide, okay, let me even go and look inside this fund that I ticked on the form when I was filling out my employment details. And I just look at it and I'll see 10, 15 when I'm like 50. I, I, I told you guys to invest in the highest, the riskiest investment possible. How, why am I seeing 15 bond here? For Christ's sake, I'm still 30.

You see these are, these are the issues like when they would you think, you think people say, imagine you are going for high. Resides this sort of 15.

Yeah. Now in all the companies I've walked.

In, I think some pensions have some regulation foundations. Some pensions are required by law to hold a level of fixed income assets. So they must hold bonds. So they must hold bonds. Which creates some sort of like opportunity basically for individual investors. Some companies are doing well but, but they are too small for pension fund to invest in or the government might not allow them to invest more than some fund. Mutual funds cannot invest more than 5% of their funds in one particular company because they are by law they cannot do that. So you might find a good company but they can't go and buy it up and increase the price. So that's why that's where there's mispriced opportunities and that's why people like Warren Buffett them got so widely wealthy. And that's why there's an opportunity to invest in individual companies. But now looking at bonds, it's very funny brought this thing up because most people say I don't invest in this, I don't invest in that. But they're buying one phone, they don't know what's in the phone. Basically bonds are just like borrowing money. If you lend money to a government, it's called sovereign bond or a more fancy name in the US is in the UK's guilt. So it was based on the paper, the gold golden rim of the paper and all that guilt. So basically you lend money to the government, the government pays you an interest on your loan and at the end of that period they give you back your money.

Your money.

Yeah, that's born can lend money to a company. That's corporate bond. Some of the companies are high grade and all company bonds are not the same. You lend money to Apple, you think okay, well their debt to asset ratio is really low. They have nice free cash flow. The fantastic company, they'll be able to pay me back. So Apple say we can only give you 2% or 1% or maybe obviously they won't give you 2% because US government bond is a bit higher. They might say we'll give you 6%. That's if they even want to sell bonds.

Yeah.

Now you see another company, they're operating out of a garage or somewhere and they're selling bonds and you're not really sure. Maybe they are operating in a big company but you know they have shaky financials and then they'll be willing to offer you 10, 11. That's what we call junk bonds, basically high yield interest bonds because they're thinking they're really quite high risk that they don't have a really good credit rating because bonds also have credit rating. Yeah, they don't have really that great credit rating. So you should be demanding a higher return. Anytime you're taking more risk you should. This is how things should happen rationally, this is not how things happen in real life. A lot of time people are investing in things with a higher risk and are willing to accept the less return because they don't know any better. So now when you look at bonds, there's government bonds, which is the sovereign bonds, there's corporate bonds which I've divided into basically investment grade bonds and then the one we call junk bond. So that's the way to look at bonds. But now even when you come to that government bonds, all governments are not equal. Recently I was giving a presentation where I was talking about how let's say in 1900 or let's say in 1890, if he had bought bonds of the Russian kingdom, I don't know what this was called, whether the kingdom of Russia or whatever could have bought the bonds of the kingdom of Great Britain at the same time and they might not have been too far in terms of their future forecast and you may not have been able to see that in 1914 there was going to be a revolution in Russia. There's a war and everything and then USSR and your bond have would have been not much better than a wallpaper. Might as well just use it and do like a, a nice quality wallpaper just put it up there. Compared to the UK bond, I might have to be viable. So this is one thing, bonds, the value depends on the ability of the person to pay. Now bring it to the current, not to. In the last 60 years or thereabout, I think there has been 151 countries have defaulted on bonds. So I laugh. Wow. I laugh, I laugh. I love when people say, I've had. People say bonds are the safest investment. And I've had people who are like, they say, I've been investing for 30 years and now a pensioner. And I'm just praying for them that the boss they've invested in, there's no issue. So that they don't have to come out of their retirement and come and pick up a job maybe.

Wow.

In Tesco or somewhere packing grocery. So bonds, basically, if you go and look at the history of bonds, there are some very popular defaulters. Argentina has defaulted quite a few times. Uncle Russia. Russia defaults every now and then. Mexico has gotten a lot of bond traders to leave their job and become used car salesmen because basically they think that, oh, this bond is undervalued. They're buying, they're buying. Then things blows up if the government does not pay. I think recently, was it Nigeria that the government said they were.

I will, I was praying you will not mention Nigeria.

Nigeria has technically never defaulted on a bond. Nigeria has technically never defaulted in the bond. But if you look at it practically, there has been times when they had all but defaulted. Then there will be things like structural adjustment program where the World bank will come and say, okay, so that you not default. You have to tighten economic this, do this, do that, do that. Yeah. And recently there's been a bond, I think they were supposed to pay last week. I've forgotten whether they said they were technical issues. So I didn't quite follow up to know what happened. So the main thing to know about bond that you're lending somebody money, you want to know that they can pay you back. And it is that the more the ability of a person to pay back or their perceived ability of the entity to pay back, the less likely you'll be getting a higher return. If, for instance, the gold standard is U.S. treasury, U.S. government bonds, they tend to, you know, so you might be able to get them 5% or 4% or 1%, sometimes it's less. So basically like last week the Fed came out with the interest rate. So they come out, yeah, the same thing in uk. So basically you need to understand what is the Current environment. If U S government Treasury Bond or UK Guild can give you 5% then that means that any other investment you are doing you should be comparing it to that center asking for a better return. So if I'm going to invest in, let's say someone say I want to build, I'm building an estate, I'm raising money, can you give me 200 or whatever? Then I'm going to check, okay, you're going to give me 5%. Why, why don't I just give the money to the US Government? I think if US government is unable to pay me, they just print some more money. All of us will have our currency diluted, but I get my money back somehow. You know, I'm not saying that their printing money is great, but quantitative vision is not fantastic. But they have somehow they can pay and if they can't pay, they can increase taxes. There are so many things they can.

Do, they can do.

And sadly some people have said in the past some people would even invade another country and get money to pay them. I'm not saying that that's what US government does, but I'm just saying that they have many, they have many ways they can pay you back compared to your, your friend that is building an estate. And if they are never U S Government. I'm just playing.

So, so I hear you but a lot of popular advice out there and what you said really makes sense, right? They say that when you're going towards retirement, switch from stocks which is high risk to bond so that you'll be able to sleep well at night in return. Are you saying that that thinking is wrong? Or if you want to do that, just buy the Shaw bonds like the US and the UK and all of that. Even the UK if you remember what happened, was it early this year or last year and just before the tourists went when they were buying back a lot of, a lot of their bonds just so that the whole market doesn't turn on his head or something like that. So I, I, I, I want to just get the rationale. Like when people say those things are they, do they mean oh just buy the U.S. treasury bond or at that retirement fees? Because that's usually the advice that I love people people give and I'm not close to retirement, I don't, I'm still at the building phase. Everything I'm doing is still stocks. But right now we might thinking I'm still thinking like even at retirement do I really want to buy bonds? That's why I'm asking like what is exactly is the place of bond and maybe how, how do you do it?

Well, yeah, I mean basically it goes down again to personal finances. Personal. Yeah, you might see like a 75 year old who is still like 90 in equities and 10 in bonds. But the general rule of thumb, there's a rule of thumb that financial advisors used to use, you use called the 100 minus age. So if you are, if you are 30 years, they will do 100 minus 30. So they will suggest you to put 30% of your portfolio in bonds and then 70%.

I reject it.

I, I think it's just, it just sounds very safe. Financial advisors, most mainstream advice would be things that nobody can fault them for and like if anything goes wrong, it's sensible advice, right? They say it's sensible. But will you really get ahead with that compared to the fact that you're working this long term period? So if you, if you're 100 minus X life ages, if your age is.

40, so 60, unless, unless if you have like 20 million and what you need to leave is less than maybe 1 or 2%, then that advice makes sense. Yeah, on a yearly basis.

I mean that's why personal finance is personal. If you're just working and you're getting like 30 UK 40, 50 or maybe less than 100, it might not be the advice for you. But let's say you founded a company at 25, sold it at 32 and you have like maybe 50 million in the bank and you're really, really worried because you come from a really poor background, you have a morbid fear of ever becoming broke. So you might just buy bonds with let's say 30% and that way you are sure, sure that okay, if that bond, even if you have bond, let's say you have like you have 10 million in bonds and if those bonds can give you 5% every year. So 10 million, not to do public math again, but 10 million, if you divide it, I think that's about 100,000 times five. Yeah, 500,000 which you can live on, most people can live on and be fine. So that might be it. And then you know that you secure that bit and you, then you can do whatever you want with the rest of your money. Go and do some venture capital, do whatever you like. But for most people I think it doesn't sound unreasonable to start reducing your stocks and going into bonds when you are nearing retirement. Because the thing with the stock market is that if your ultimate goal is that when you're near retirement you sell some or you sell mushroom.

Yeah.

The market could go down. Market can go down and stay down for years. If you look at the market crashes that happened, if you look at, for instance 2008, I think started recovering around 20, 2009, 2000.

In fact, there was a chart that I saw that people that stay investing in 2007, 2008, I think even up to 2009 didn't see any, I mean people that were investing every month didn't see any positive return on their investment until like after four, five years. Yeah, that was when they saw like the average return for the whole time they've been investing became a positive.

Exactly. Markets moving cycles. And if you invest in stocks and then when you're retiring, sadly is when the stock market crashes. Yeah, it might be quite a difficult.

A big blue.

Yeah, yeah. You might need to push your retirement a bit further. But if you are closing to retirement, the idea is that you can start reducing your exposure to equities and start moving to fixed income assets. But there's a popular saying that you can either eat well or sleep well. So if you, you can't have both, you can have both. If you want to eat well, well, then you get exposed to higher risk equities and all that stuff. And maybe you might eat well, but you will, you sleep well. I've been, I remember when at some point I was actually trading derivatives. This was after I finished my GP training many years ago and it was popular and I was sort of like shutting, shutting the crypto market because basically I wasn't like investing massively in crypto. But I like, okay, like there is an opportunity here because people really believe that this is, this coin that I think is worth less. I don't mean bitcoin. I mean like some random nonsense and people are buying it. I'm like, this is a big opportunity. So I started short selling it. So I'll borrow it and celebrate and celebrate and said make quite a bit of money. I wasn't sleeping, you know, I wasn't sleeping. So I was eating well, but I wasn't sleeping well. I'm like, this is not good for long term, you know, and people might say they will do trade, they'll put on stop, loss, loss and all that nonsense. Yeah, but you, you still, when you wake up in the morning, why are you going to do it? Compared to me now, like, if I make an investment, I may not look at it, I may look at it quarterly or quarterly. The same thing. If you come to bonds, you say you want to invest in stock market. That is great. That's beautiful. Even if you're just buying index fund people don't just remember that index fund is still stocks. If you decide to keep investing in stocks, then you might eat well. But if you decide I want to sleep well, maybe I don't, I may not get that good returns. Maybe bonds will give me 30. But you know, I want to reduce my. This and basically that's, that's where if a good financial advisor could Financial.

I was, I was about to say that exactly.

Because sometimes financial advice might also include some sort of like therapy. Not therapy, not therapy per se. But you know, basically walk through. What is it really that is important to you? Because what is important to you? Maybe I don't want to run out of money or it might be that I want to be able to live a nice sum of money for my family. But at the same time I don't want them to be whacked by inheritance tax. So they might guide you through what you need. They might suggest. So you want to sell the house and share the money to your family now and you know there is a gift amount you can give out while you're still alive. So basically these are the areas where the mechanics the northern bowls as a financial advisor and help you at a reasonable fee.

Yes. Yeah, you are spot on there. I think for me, when I think of financial advisors, that's where I see them coming to play that 10 years to retirement for most people, that is when you should start thinking of considering one. Or maybe you have an unusual situation like maybe someone in your family just died and give you 10 million. $10 million and then you have a big problem. To think about it.

I maybe got properties in a different company.

Thank you. Yeah, yeah.

So yeah.

But these scenarios, 70, 80, 90% of the people watching will not be in this scenario. So that's why we give that advice. I think another area that a lot of people watching will be in that scenario would be the issue of pensions and isa, for example. Of course, you know, I'm married to a doctor, you are also a doctor. So I'm going to use a lot, the medical, the, the edicts as an example. Okay. See a medic working as maybe a GP, a salary GP or something earning, let's say for example, 50,000, 50,000 pounds in a year.

Okay.

And then the GP is also doing locum, for example. Now that salary is tied to NHS pension that I don't even know. And when, when do they have access to it? I think it's like 68. 68, right, yeah.

So 64. 65 is for the 2008. 2000 session. Yeah. For the 2015 session is 68.

Exactly.

Or it could be state pension age. Anyone that is later.

So. Which is quite a long way off because you can't expect a doctor to keep working up to then who says it won't be pushed further again? Well, if the life expectancies go up, which, yeah, it most likely will be the case.

So there's a poll I put on my LinkedIn for my. You know, some people in my audience says, will the NHS pension age keep rising? So the NHS pension scheme has changed over time. 1995 session pension age was 60 or 55. For special class 2008 section pension age was 65. 2015 scheme pension age matches the state pension age or 65, whichever is later. So with talks of further changes, NHS staff are curious. Last year, 75,000 NHS staff left the scheme and since then we've seen a huge spike in our visits to our website. Basically, people. Moneywisedoctor.com Obviously, we also own Dr. Pension.com a few other sites that are still in the works. So people have visited and they've been asking questions. So in the poll, the answer, the options are one, yes, it's inevitable, B is no, they wouldn't dare, and C is I don't care, not a member. Now, there has been 53 votes so far. Can you guess the percentage that voted yes? It's inevitable. Just a wild guess.

91.

Very close. 94%.

Wow.

94 of medics voted yes, it's inevitable. 94% and nobody voted that they wouldn't dare. 0 voted. They wouldn't there. And maybe 6% said, I don't care, not a member.

Is it. Is it. Is it a case that. I think I would like you to push out this survey to more doctors because it might just be a case that the doctors that read your post are more financially savvy than the average doctor out there and they know that.

It's quite possible. It's quite possible, yeah. I mean, this poll will end in eight hours, so I'm imagining that by the time I sleep, I wake up, I'll publish the results and I might be able to get a few more people to. To take the poll.

But yeah, I think, I think if you can think of how to push it to maybe one of your other doctor groups. So these are just general white doctors. I don't know what the name of some of them, but we've spoken about Some of them before. If you can publish the post there.

Yeah.

You just have a more.

Can I even tell you that. Yes, we have published in one of those groups and we've got a few more feedbacks that. Still following it along those lines.

Those lines. Okay.

You know, the, the sample, let's say if you, if you try to get a wider sample, you might. Maybe there might be a change. But basically the results are basically quite the same. I think maybe those following me on LinkedIn probably voted a bit more. Or let's see, 82% voted yes is inevitable.

Wow.

1% voted no, they wouldn't dare. And 0% voted I don't care, not a member. And then somebody added an option to the poll called maybe. And 17% voted maybe. So basically it tells you that the average. I'll say this, 17, if I take that 70%, I add it to the 82% roughly, it's like 90, 99, basically. So, yeah, either way you look at it, it shows you that at least 90% of doctors think that possibility, even if they are not sure. They. If someone says maybe, that means they know that there's a probability.

Yeah.

May I ask, a high probability, actually, it would happen.

So if it doesn't happen, I'll be surprised.

So if you are saying, if you're thinking that 68 is high, just remember at some point it was 60, that people were taking that pain.

Yeah. At some point it was 55. I didn't even know that.

Yeah. So it's probably going to get to 75, I think at some point.

Yeah.

Yeah. So, yeah, is what it's. So.

Yeah. But I. I think the question for those that indefined benefits, how can they structure their retirement planning and things like that? I know that's where ISA comes into place. Private pension and all of that. What are your thoughts around that?

I suppose the first place will start with this. I wouldn't rely entirely on NHS pension or any government pension at all. They are nice to have and I'll take full advantage of them if you have them. Obviously, as you know, I no longer work as a salary doctor or anything like that, so I don't know, I'm not part of that pension anymore. But basically, if I was the NHS pension, I think it's quite a fantastic pension, defined benefit and all that. In terms of. Apart from the money you get, there's debts in service, ill health and all that thing in NHS pension. But in addition to that, we tend to suggest the doctors might start thinking about things like your private pension. Like self invested personal pension, like sip. There are lots of good ones around, I think I've done a video comparing all of, like the ones that have the lowest fees. So this is really quite important. SIP is one option, but there are other tools you can use for your retirement planning, like the lifetime isa. So lifetime isa, you can actually use it for buying your first house or for investing for your retirement saving or investing for retirement. And with the lifestyle myself, obviously you can open it above 40, so say life does not start at 40, so lifetime is not at 40.

I think your contribution stops at 50 something.

Your contributions stop at 50, so you can't, you can't join after 40 and even after you've joined, you can't contribute after 50. But you're eligible to pull it at 60 before the NHS pension. So this is one thing, that's why it makes sense to use a multi pronged approach. You know, if you have a lifetime ISA, you're putting up to the maximum 4,000 per year, you're getting the extra government bonus of 1K. And let's say you started doing it at 30 or 35, so you've got 15 years. If you're not using it to buy your first house, you've got 15 years. And in that 15 years you're putting like £4,000 every, every year. So that should work out to around. Is it like 60k or thereabout? Fees are important. Always check the fees. One could also sell. Say that if you felt that lifetime wasn't very reasonable, you could actually use it just as a saving tool. You can just save in the lifetime myself. If you decide that your cash position, you want to build up a healthy cash position towards your retirement.

Retirement, which is also a very good plan. So something you should factor in.

Yeah, cash is part of the the game. So if you have like £4,000 going into a lifetime, Isaac, and the government is giving you an extra £1,000 per year and you started at 35, so you're getting like 5,000 times 15 years. So you're talking a nice 75,000pounds cash position. So that in itself might help you retire a bit earlier. Actually, if you think I have this cash position and it's not your only investment, you still have your isa allowance of 15k, you can then decide, well, since I'm doing this with cash, I'll go aggressive on stocks on the other side. So you can take the 15k. Of course. This is not financial advice. We are just starting. For anyone watching, it's not personal Financial advice, you have to think about your own situation.

Yeah, your situation.

But this is a combination of the self invested personal pension. Of course there's tax benefit with it. The government can allow you to put up to £60,000 for tax here.

Yeah, 100 of your income, whichever is lower.

So there's SIP, there's ISA, and of course there's NHS pension and state pension too.

That's, I'm. I'm very sure will be cancelled.

Why, why is so sure? Well, there's a state pension, but why, why, why would it be cancelled?

Looking at the data, looking at is not, is not sustainable. That's, that's the first problem. It's not sustainable, but we'll see.

What is worrisome is when, you know, if the government keeps collecting tax for something and then suddenly say they can't.

Pay, for example, that is, that is the dilemma.

Will the pension go away with the tax go away, or what about some.

Sort of, Some sort of refund.

Exactly. So it's just, it's just funny. We'll see, we'll see how it plays out.

Definitely. We'll see, we'll see. Any last words?

Yes, I'll say, basically, when it comes to planning your financial future, you can't leave anything to a chance. It doesn't mean you have to become a financial nerd or guru, but you need to know the basic stuff. So you cannot just give up your future or give up control for your future to a random financial plan or somebody somewhere. You need to take an active participation, ask the right questions and obviously, if you need to read book, read a book. If you need to attend a seminar, attend a seminar. If you want to follow a podcast like the Wealthy Post, follow a podcast is weekly thereabouts so that you can increase your financial iq, because at the end of the day, you are the one in charge of your financial feature.

Yeah, thank you so much. And then for those that are looking, oh, I want to be a part of Dr. Grim's course that we mentioned earlier at the beginning of the podcast. And I think, if I'm not mistaken, the, this current cohorts, if I'll call it that, is closed. Right. But you should, you should go and subscribe to his YouTube channel or his newsletter. I think if another opportunity will be opened up, you definitely send out an email. So we'll put the link to the newsletter in the description for anyone interested to subscribe and wait for that opportunity. But it's been a very wonderful conversation as usual. I hope you've learned one or two things from this conversation. And until next time, see you.

Alright, thank you for having me. Bye. Bye.