Timing vs Time in the Market — The Rule Every Doctor Must Know

A fund manager will not take the type of risk I might take because they don't want to lose people's pension. And at the same time, they might also sell things because they think it's. Well, it's not popular anymore and people are actually disturbing them about it. Some of you followed me for a while. You know that whenever there's a stock market crash, I get very busy. That's when I buy a lot of my investments. If you are 65, you're about to retire 60, I wouldn't be suggesting that you take 80% of your investable assets and put it in stocks. No, no, no, no, no. Because then even if you have risk tolerance. What In Nigeria, where I come from, even if you have risk tolerance, you might not have the risk capacity.

My question now, it's about high risk and high return investment. How exactly do you pick your stock or whatever investment you choose to and how do you do your due diligence? Yeah. The second one is I know of some decide hustle. Yeah. The same way I registered like, are there other opportunities in terms of side hustles?

Yeah.

That you practically use which ones like you recommended. And the last one is, although this was something I've been contemplating exactly what to do, but have not been able to do it, about life insurance and critical illness cover. What exact provider do you use in terms of how you arrive at the choice?

All right. Okay. Yeah, that's. Those are really those questions tell me that you've been listening because they're also advanced and I like, I love them. We all learn from them. If I forget one of them, please remind me just basically because again, I haven't got my team here. One is investing. Lots of people are not investing at all. And I think it's a big mistake just because inflation alone will destroy your savings. Savings is important, but what do we save? We save our emergency fund. We save money, wanted to buy a house next year. We save for that holiday. You save for near projects, but for long term people keeping £20,000 in their cash. Isa, you might as well just get the money, have a big party and enjoy it rather than just do that. Yeah, get inflation. It's good to see. But you're already investing. Now your question is around risk management and asset allocation. That's the way I put it. So if you talk about, okay, you're already doing s and P500, you are buying a broad index. So that's basically you're buying the whole market. Your risk is lower because I don't see 500 top companies in the US all crashing in one day. And even if they all crash in one day, then you wouldn't be worried about your money because you'd be worried about have you got a zombie apocalypse or what's going on here. There's going to be a lot happening. But you're thinking, okay, can I do a bit more? I'll give you a practical example. In my case, when I started investing 20 years ago, index funds, I didn't know about them. I was buying individual stocks. So till now, most years I hold about six to 10 stocks maximum. And my approach is a bit older, old school as some people call it. For those of you that follow me, no, Warren Buffett is a big influence. So we use something called discounted cash flow analysis. So that's how I analyze companies. I'm not saying everybody needs to do this. It can be quite time consuming. In fact, we taught a whole class out of the four weeks investment master class last year of September. One of the classes was devoted to discounted cash flow analysis. And what that means is that you look at a company, you look at them, their cash flow, free cash flow, how much money are they are they making? Which you can get from their balance sheet. You can get it from their cash flow statement, their balance sheet, there's income statement a bit nuanced for this particular group, but basically is a whole class on his own. When we look at that company, we are looking at how much money are they making, what are their risk, what are their losses, was their management in place, how much are they spending? These things, you can find out a lot of them from publicly available information. Yahoo Finance. There's a lot of platforms you can get from their three main books, the income statement, the balance sheet and the cash flow statement. Now that's how I analyze individual stocks. Then there are other things I do. Some of you know, I was Nomaha earlier in the year for Warren Buffett's shareholders meeting attention with us meeting or listen to investors call. You don't really need to do all of that really. But if you're going to be buying individual stocks, you're increasing your risk. If you're going to be making significant investments, then you need to know enough not to make a mistake. Otherwise what I suggest for most people is to take a larger portion of their investment money. Especially if you're obviously 18, if you're a young guy, you're not anywhere near 50 or 60 or I can tell that you're young. So let's say you were planning to retire 60. Maybe earlier, but let's just use 60. You've got 25 years, it's a long horizon. So the way you can actually increase your upside is to invest more in the stock market, but at the same time you want to take less risk. But if you wanted to go into individual stocks then you needed to. You need to actually learn how to do some sort of analysis to learn how to invest. One of the books I recommend is.

Right, so I've read over 250 plus personal finance books, but not one of them explain issues that affect medics like the NHS pension. There's much more NHS pension, investing, taxes, financial anxiety, student loans and much more.

Hi, I'm Dr. Andy Egwim.

I'm the founder of moneywifedoctor.com for over 21 years I've been investing personally and studying personal finance. I mean I left my salary at NHS GP role three years ago after achieving what we call financial freedom. Since then, over 1,200 medics have joined our tax Efficient Investing master class. And More than that, 10,000 medics, doctors and healthcare professionals have used my content to make smarter financial decisions and avoid costly mistakes. That's why I wrote the Money Wise Doctor. So the Money Wise Doctor, a book that I've written to simplify, step by step the path from confusion to clarity for medics. To help you make smarter financial decisions and avoid costly mistakes with your financial future. So far we've helped over a thousand doctors to learn how to save smarter, invest tax efficiently and finally feel in control. If you are ready to gain clarity, confidence and control with your money, click.

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Let's jump right back to the episode. So you're not looking at stocks basically like chips. You're not looking at it like I'm going to buy this chip and die. You're valuing a business. So part of what we Learned in our 4 weeks investment master class was how to look at a business. I'll brought it down to actual practical things. Let's assume you have a hospital. What's your free cash flow? What are your expenses? Why, what we call liabilities. How many shareholders do you have? What are your projections? This is how you value a business. Before you say, this is what I think is a fair value for this company and then that's how you can tell whether you are underpaying or overpaying. And as some of you followed me for a while, you know that whenever there's a stock market crash, I Get very busy. That's when I buy a lot of my investments. Because then you start seeing people becoming irrationally afraid. Like Facebook stock, I've made almost 200% on doesn't a crash. There's a period of time people were worried, they had some issues. The market irrationally sold it. So if you can do the work and work out what could be the fair value, you're not going to be 100. Right? The goal here is not to be precisely wrong. You rather be vaguely right than precisely wrong. That's why we also introduce what we call margin of safety. So if you think the stock is worth like $50, you want to be buying, buying it at $20. And if you can't get at $20, you're not interested. You move on, you look at something else. That's why I don't own Nvidia. I don't own Tesla because I think they are overvalued. Because if more people want to buy it, what happens? The price goes up. If more people want to sell it, the price comes down. It doesn't matter if it's a good investment. Most people don't care about whether it's a good investment. They are not like you. They're not interested. They just want to know, is it popular? One sign that a stock is not may not be a good investment for me is if it's popular, if everybody knows about it. So a lot goes into individual stock picking. That's why we often say, look, if you want to. If you're really, really keen on doing individual stock picking, take out some time and learn it. It's an investment in your life. For someone like me, my knowledge of investing I've had and I keep learning is one of the best investments I have made in my life. Learning how to do it is not a skill that just disappears. Just like you becoming a doctor. You went to med school many years ago. You're using it to move to different countries. You're working. But if you want to keep things simple, index funds is the way to go. I'll say, because then you can buy. Rather than trying to find the needle in the haystack, you can just buy the whole haystack. But here is a solution I do recommend. Because no matter. Even after I finish saying this, many people still want to try out individual stocks. I say some sort of satellite. Take 10 to 20% of your investable funds. If you want to invest in individual stocks, you take 10 to 20% and use that for individual funds. You can take your maximum this is not obviously professional financial advice. This is what I'll do. If I was in your situation. I'll take like, let's say the bulk of my investment, maybe like 70%. I'll put it into maybe S&P 500 or a global index. And that 10 to 20% is what I'm going to play within the market. But you've got to be absolutely disciplined about it. I do the same thing. My main game is stock market, but I invest in startups. Recently I invested in a company that does AI for book publishing called Book Magic. So I'm one of their angel investors. But that would be like a small amount of my investable asset. Like 5 to 10% is what I'll put in it. Why? If it goes to zero, if I lose the money, it's fine, I've got the other 80 to 90%. But hey, what if those. What if those times 10, what if those times 20th? Startups can do the same thing. Individual stocks invest in it. Sometimes people here say, we made 78, and obviously there's an investment master class. We log into my account. You look at what, what I actually did when I said I did 78. Most people think, hmm, that must be nice. Or you did 100% of done 200% on Facebook. What they don't see is the risk. That could go the other way around. Yeah, that's the problem I've had. Alibaba lost 20%. That's my biggest loss in 20 years. But it's not a crystallized loss because I've not sold it. Okay. But the gains I've made from Facebook, Google, Coinbase, which are the other stocks. And so these top three stocks, those games far outstrip any loss from that. Individual stocks. But like having like, I have like six. I don't have six children, obviously. But if you have six children versus having 500 children or if you have two children, I know them. I know the character of the companies. I know what could cause them problems. I know they are CEOs, I know signs that things are not going well. Most people don't need to do this. Lots of people. If you invest in a stock market index like S&P 500, going by data from the last 40 years, you are going to outperform 90% of active fund managers. Not me, because I'm not an active fund manager. I'm just a guy investing my own money. It's hard to beat me because I'm investing my own money. A fund manager will not take type of risk. I might take because they don't want to lose people's pension. And at the same time, they might also sell things because they think it's. Well, it's not popular anymore and people are actually disturbing them about it. So you're taking me in depth now. This is a topic, you know, that I may want to discuss for a whole month and never stop. But if you check on my YouTube channel, go to investing. I've done a lot of investing discussion there. And also somebody has actually interviewed me on a podcast called Worldly Post where I sort of explained my investment journey. If you send me a message, you're already on the group. Send me a message, I'll send you the link. It's absolute mental. The first day was five and a half hours. But one thing you're sure of is after that class, it becomes demystified. You know, what is investing? You know how to, how to decide what stocks to invest. You learn asset allocation because now we've got people in our group who are 56 and they are cutting down on stocks and buying bonds. You work out, how much should I put on on in stocks, how much should be an index fund, how much should be in gold, Do I want to buy some property? This is all part of risk management asset allocation. That way, no one individual issue can actually just be trouble for you. Like if you are 65, you're about to retire 60, I wouldn't be suggesting that you take 80% of your investable assets and put it in stocks. No, no, no, no, no. Because then even if you have risk tolerance, what we call mind in Nigeria where I come from, even if you have risk tolerance, you might not have the risk capacity because here there's Chinese, 35 years old, healthy guy is a JP, and there is you. You're 60 years old, you're about to retire. Even if you have the risk tolerance, if you blow up, if there's a market crash, you might not have the opportunity to recover. But Chined has risk capacity, meaning that if the stock market goes down, he has another 20 years to wait for it, continue working, continue investing. And that's actually what has helped people like us to actually, you know, leave my salary job at two years ago. Part of it is because I was fortunate to be poor enough to learn to start early. I started at 19. I didn't have very much. I really needed to learn fast. Right, I'm sorry. If you're not interested in investing, you're going to have to blame Chine. Do he ask the question? And my job is to give the answers, but it's actually a very good question, and I think that answer might help you to think a bit about investing better.

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