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Dr James:
Fans of the Dennis who Invest podcast if you feel like there was one particular episode in the back catalog in the anthology of Dennis who Invest podcast episodes.
Roderick:
That really, really, really was massively valuable to you.
Dr James:
Feel free to share that with a fellow dental colleague who’s in a similar position, so their understanding of finance can be elevated and they can hit the next level of financial success in their life.
Roderick:
Also, as well as that, if you could take two seconds to rate and review this podcast.
Dr James:
It would mean the world. To me, what that would mean is that it drives this podcast further in terms of reach, so that more dentists across the world can be able to benefit from the knowledge contained therein. Welcome.
Speaker 3:
Welcome to the Dennis who Invest podcast.
Roderick:
Right, welcome everybody. Oh, we’ve got some likes. That’s the start. Welcome everyone. This is the much publicized on the group Q&A with Roderick Sam, who we’re very privileged to have joined us this evening. Roderick has donated some of his spare time, some of his Sunday spare time on a Sunday, some cherished time. So thank you very much. We’ve got a hello already. We’re off to the races. Excellent, Can you see that comment?
Speaker 3:
No, I can’t see anything All right.
Roderick:
Okay, you’ll have to take my word for it. We’ve got a hello. We’ve got some likes, we’ve got some things.
Speaker 3:
I’m on the bit blind at the moment. Well, I can see you.
Roderick:
All right, I’ll see you. Fair enough, cool, anyway. So, as I say, roderick has been very generous and given up some of his time for the group, which is excellent. We’re going to record this so that people who haven’t had the time to join us tonight will be able to see it later, and I think this is a really wonderful opportunity to ask anything you like to a qualified FA, which is remarkable, really. Anything, no hold card, anything you fancy. Obviously, we can’t give financial advice, but we can give broad information about investment points, things that you might like to do, things that you might find interesting. 50 people that’s absolutely amazing.
Speaker 3:
Anyway, over to you, Roderick.
Roderick:
Thank you so much for joining us. Roderick just wanted to do a quick intro for everybody so we could explain who he is, what we’re aiming to do tonight, and then we’ll jump straight in with some questions.
Speaker 3:
Yeah, no, no, it’s really good to be here. I’m not going to give too much of an intro because, to be honest, I’m probably not all that interesting anyway and I think I think you’re listening to me rather than asking a load of questions. But please be gentle. Yes, so essentially for me, I’ve been in the financial service industry probably for about eight years now and how I see it is helping people make good decisions with the money, putting in place a plan for the future. But the thing is, things change along the way. So rather than being a defender on outdated map, it’s been a guide in a changing landscape. So for my clients and I provide investment, pensions protection and also more advice for the whole, I guess, holistic financial planning suite. And really I think about six months ago I kind of changed the way in which I worked with clients and started trying to kind of work more with dentists as a profession. I think with the advent of technology the old days of geographical location is kind of less important. So kind of specializing in a profession is kind of how I saw me working going forwards and focusing on dentists is like a great group to work with. Why dentists? Is probably what some people might think. My wife is actually a dentist. She’s an NHS dentist or a preptist where we work. She’s always asking me at the start of the end, I guess, of the year when she gets her ARR is this right? Is my MPE right? Always I’m asking maybe, but give me more information. It’s yeah, I don’t think you guys kind of well, no, really, or kind of it’s the NHS pension is really complicated when we had look, when we had look early.
Roderick:
Speak on that. I just thought a pension was a pension, but wow, the level of debt. For that you need like a. You need a degree in itself to understand it. And that’s on top of all the other things we have to worry about. That was a brilliant.
Speaker 3:
I don’t think you need a degree or you need is just find someone. In simple terms yeah, that’s one advisor. Does you know explain things in simple terms so you can, you know, understand it and kind of see how it all fits into your plan.
Roderick:
Awesome, brilliant. Will you finish? I yeah yeah, yeah.
Speaker 3:
No, I don’t want to kind of talk too much. You know we’ve now or whatever, so let’s kind of get right into it. Let people grill me.
Roderick:
No, nothing of the sort, just gentle questions. Of course that goes for everybody. Gentle questions, everybody. Listen in Roderick is this. Is Roderick spare time? Of course we want to give his mind a bit of a well, just ease a lot of his Sunday. So we say, what was it going to say? Yeah, I’m actually going to struggle not to talk during this because I do a lot of that. So I’m going to be like this my lips are sealed, I’m going to let Roderick do 90% of the talking and I’m going to learn things as well. Just to let everybody know the questions, the feed. There’s a little bit of a delay between you guys typing the questions and them appearing on the feed. So when we will get to them, they take about a minute to reach us. So if you want, if you fancy throwing up your questions, no, they’ll be there in due course. We have had some anonymous questions from the group. Shout out to everybody who’s already said hello, actually, hello Jenny, hello Isherda, hello John, hello Joe. Joe’s got a question. Hello Anika and hello yeah, john. Again, we already have those questions. So those questions are great. Keep them coming in, just so that we can let those fill up. We’re going to answer some anonymous questions that we’ve received in the meantime. So, whilst we’re doing this, if everybody throws all the questions up, that’ll be great Cool. So, roderick, you said that you had an anonymous question from the group. Is that correct? Yeah, yeah.
Speaker 3:
So I had an anonymous question, so we might as well kick off with that one then. So, yes, someone asked me. Yeah, someone asked me they’ve just started kind of two jobs and they think they’re going to earn between 100 to 125k. I was kind of concerned about their tax and wanted to know if it was kind of best to make pension contributions. I think even we actually touched on this when we spoke the last time, james, that yeah, what happens is that kind of when you’re earning between 100 and 125k, you are heavily penalised on the tax and you tax something like 60%. What it is is so everyone has a personal allowance, an amount which you have tax free before you start paying tax. This year it’s 12,500. But once you’re earning to kind of exceed 100,000, you lose one pound of allowance for every two pounds of income over 100,000. So essentially, if you’ve got kind of income over 125k, you lose your allowance completely. So as a consequence of that, you essentially pay 60% tax. I mean, if we give an example or if I give an example, so if you’re earning, say in simplistic terms, if you’re earning 101,000, you pay 40% tax on that 1,000 pounds. We’ll just use that part for this example, if you pay 40% tax on that 1,000 pounds, that’s 400 pounds. But because you’re earning over that 100,000 pound threshold you’ve lost 500 pounds of your allowance. So, if you remember, you lose one pound for every two pounds over. That’s 500 pounds, which means you have to pay 0.1% on that additional 500 pounds, which is 200 pounds. So for every 1,000 pounds of earnings within that bracket you’ve paid 600 pounds worth of tax, which is effectively 60%. And the easiest way or kind of what we would normally suggest to mitigate that is making a pension contribution. So you know, with obviously the person that asked, that that would be the most obvious way to make a pension contribution to kind of reduce your taxable kind of earnings, to save, well, effectively 60%. So you know it’s not a bad way of doing things. Hopefully kind of that answers your question. I mean, if it doesn’t, I’m happy to pick it up with you afterwards because there’s some nuances that I kind of want to explore with you. Because if you’re kind of well, I’m a senior in NHS dentist, so you’re probably already paying into your pension. So you know, when you say you’re earning between that that band, you know you might already be paying contributions. That takes you out of that, 10 to 100, 125 banding. So yeah, you know. If it hasn’t fully answered it, I’ll pick it up with you separately.
Roderick:
Awesome, so it becomes way more efficient when you’re earning at that level. That’s definitely something you want you encourage people to think about when it gets to that point, if I gather that correctly. One more guys, amazing questions. Thanks very much. Keep throwing them up. We have one more anonymous one, and then I’m going to start answering ones from the feed. I can see them all here, so thank you so much for that. The second anonymous question we had. It reads if investing in buying shares through a limited company, what tax are you liable to pay? Is it just capital gains tax, and what are the pros and cons of investing through a limited company?
Speaker 3:
That’s probably a good question. It’s probably something to pick up slightly separately, but you know, I guess you can invest through a limited company. It’s not something that I know too much about. Yes, you will have to pay capital gains, but you don’t have to get corporation tax on anything that you do or any gains within the company that you invest in. Pros and cons. You obviously at some point you’re going to have to extract the money out of the business, so you will pay dividends or income tax at some point in time. But really it’s kind of with financial planning. It’s coming back to what’s your plans, what’s your goals, what are you trying to achieve? Is that the most efficient way of doing things for your circumstance?
Roderick:
Based by case basis. What level does a corporation tax kick in?
Speaker 3:
What level I’ve won. Business paid corporation tax at 19%.
Roderick:
No, I mean, is there a threshold before it kicks in? So you know the way you’ve got your base rate tax, your higher rate additional rate and you know that it kicks in at 12.5 grand. Does the base rate?
Speaker 3:
Right. As far as I’m aware, there’d be yet any kind of allowances in tax pay. But you know your accountant might be better, better poised to answer those kind of questions.
Roderick:
Cool, no problem whatsoever. Brilliant hope that was the answer that you were looking for the person who posted that anonymously. Right, let’s get on to some questions from the group. So Joe was asked. Joe would just like to know where your base. We’re all right.
Speaker 3:
I’m based in Evesham, for those that know where that is, for those that need a bit more of a geography lesson, well, it’s in Worcestershire, kind of on the edge of the Cotswolds. I mean, I’ve only been here three years, so even I’m still trying to find my way around, but kind of the. Worcestershire area is probably the easiest. Where did you live before? Bit of a nomad actually. I kind of spent five years in Liverpool beforehand. Wigan. My wife did her kind of second degree, so her dentistry degree in Preston, so that’s kind of where we moved. Why we moved up north to Preston. But I’m actually from Yorkshire originally.
Roderick:
Interesting stuff.
Speaker 3:
Not too far from where you are now, from Sheffield, so yeah, yeah, sheffield is what it’s.
Roderick:
I’ve actually never got a roundup date in that I’m actually in Leeds, but we’re still not too far from each other. Yeah, I lived in Leeds. I came to England 10 years ago, lived in Leeds for uni, I moved to Sheffield, I made it away from Leeds for one year and then I came straight back. So I’ve got friends here. So, yeah, I’ve not the most exciting. I like what I know. Basically, I like Leeds. It’s a good city, brilliant right. Annika has jumped in. Annika has just remarked that the stream is perfect. Thank you very much for your nice comments, annika. We’ll move on to the next one. John Mahoney would like to know what percentage of your income should you ideally be investing in your NHS or private pension? Am I right in saying that that might be a difficult one to answer, roderick?
Speaker 3:
It’s quite a difficult one. So I guess With your NHS pension you don’t really have a choice, you know, because depending on what you’re earning, you’re stuck into certain bans in which you have to pay contributions on. You know, then, if you would kind of look on the private pension side of things, it partly comes down to what you can afford as well. I don’t think there’s no hard and fast rule. But with the idea of saving I think you’ve mentioned it many times, james it’s just about the compounding effect. So you know, start saving what you can, have a regular direct debit or something like that, so the money goes straight out of your account. You get used to the idea and then it’s kind of building building from that part.
Roderick:
A really nice method of investing. I think a lot of people where the investing message becomes a bit aggressive or maybe a bit muddled or confused is that people think that it’s something that you have to put all your money into, I think, before you even start thinking about any investing. It might be nice to have six months to a year’s spare cash emergency fund. And then go from there.
Speaker 3:
No, definitely, when we kind of sit down and speak to clients, we always say you need at least three months to six months kind of emergency funds. So you know three, six months of expenditure. Because if we look back at, obviously, when we had lockdown one, you know dental practices, they were all shut down for how many months. So you know, you guys got no income and needed to draw on your emergency funds or whatever to kind of help you survive effectively 100%. And we always say, yeah, you know, minimum three months, six months. People might want more. You know we all have different attitudes to what we want as nice cash in the bank. So yeah, and I guess to add to that layer as well, we also say that you know if you’ve got a known fixed expenditure in the future at some point, you know then don’t use that money to invest because you know you need that money to pay for something. So I don’t know. A good example would be like a house deposit or something like that If you know you need to put 10% towards a house deposit, don’t invest that money because it’s a known fixed expenditure in the future.
Roderick:
Yeah, so once you obviously your six months, three years, spare cash is an amazing thing to have and that should be a priority for a lot of people, and definitely I dipped into that when I well over coronavirus. After that, a really nice investment portfolio is 20% cash. And then you, after, of your, of your spare capital, that is 20% cash, maybe at all times, just in case you well, cash is a hedge against, shall we say, you know, downturns in the market, so it’s always nice to have some of your portfolio in cash and then player on with the rest. It depends on using individual. In your age, people prefer to put a certain amount in stocks, certain amount in bonds, maybe in gold, maybe in crypto. Yeah, it really depends on your individual certain sense, I suppose.
Dr James:
So we’ll move on to the next question.
Roderick:
We’ve got Chaya has said hello, so hello, chaya. And wow, wacho has asked what stage do you decide to buy property as a limited company, eg if one property sold trader, but at what level do you then buy a limited company? Did that make sense, roderick? It’s just kind of a I’m trying to decipher this one a little bit. It kind of sorry.
Speaker 3:
I got the wrong one.
Roderick:
Let’s just say how about this what stage do you decide to buy property as a limited company?
Speaker 3:
I guess that would really depend on a few things, wouldn’t it, Roderick, I mean it’s a good question but it sounds like it’s individual to you. So you know, I think that one is how long the piece of string is. It’s difficult to save. I mean, I would need to know what your kind of circumstances are in order to kind of properly answer that question for yourself. For some people it could be that they want to start straight away. For others they may not even want to look at kind of property within a business. I mean, you know, be personally, if we talk about myself, I’m not really interested in kind of buy collects and that kind of thing. I just don’t really like the hassle of kind of having buy collects, you know, void periods, repairs.
Roderick:
It’s so heavily taxed, isn’t it? I mean, once you get past your first property, it’s so heavily taxed.
Speaker 3:
Yeah, yeah, no, there’s definitely tax elements and you know who knows as well what’s going to change in the future. You know, with what’s happened in with coronavirus, there’s been a lot of borrowing. At some point the government are going to have to repair the coffers a bit, shall we say. So it’s, you know, there are going to be probably some hits on various tax breaks. Talking about CGT or capital gains tax, there’s members that might be used from 12,000, 300 at the moment to possibly down to 3,000, 5,000. But you know who knows at this point in time.
Roderick:
Another reason to yeah we’ll see. Well, at the minute where nobody’s paying, what’s that? When you buy your house for the first time, you get an exemption on it. What’s that tax Stamp duty, holiday Stamp duty, yeah so they don’t have stamp duty at the minute, but they think that stamp duty is going to come back with a. I was speaking to Harry Singh on well, I think it was the very first podcast actually that was about two months ago and he reckons that stamp duty will be back any you know, when they review this. The chancellor reviews this imminently Because to me it’s a very obvious way that they’re going to claw back some of this corona money and, you’re quite right, the capital gains. One would be an obvious place to look.
Speaker 3:
Yeah, yeah, I know. So, yeah, that is, I think that you know, talking about stamp duty. I think that they may have to give some leeway for kind of first time buyers or those kind of house movers, but if you’ve got looking at investing and trying to take advantage of that, they’ll probably cut that one short because they need to recover some money somewhere.
Roderick:
Seems an obvious place to make some money. So, yeah, I think they’ll probably do that, to be honest. Right, brilliant, hope that helps. Wachill, you might want to get some more tailored, nuanced advice on that. One maybe sit down with an FA, kevin Kitt has said evening evening, kevin, very nice to have you here. Next we have Ashish Shah. Ashish would like to know would you recommend having a private pension as well as an NHS pension, as it reduces tax liability and helps bridge the gap along with isolances in latter years since the NHS pension age For withdrawals? It’s almost 68.9 for this for the 2015 NHS. I don’t think I don’t see any reason why that would be a bad idea in principle, yeah you get it, I suppose, to do both.
Speaker 3:
that. No, no, totally agree. I mean, in principle it’s not a bad idea. You know who wants pensions Just going to get some water, you know, pension or private pensions that offer a lot of benefits as well in terms of you know, iht planning. So again, it’s probably slightly dependent on your circumstances and largely down to affordability as well. But having both of them a bad thing? Yes, you know, with the NHS pension you can’t take it until kind of state of time and age. Private pension you can take your 25% tax free cash from 55, going up to 57 in a couple of years’ time. But yeah, no, if you can afford it and you know you like the idea, then it’s definitely not a bad thing to consider. Again, that’s just kind of on a general basis and you know you need something more specifically tailored to you. So happy to kind of talk a bit more about it. If you want to talk about your circumstances, yeah great questions guys.
Roderick:
I think, roderick, if I’m right in saying you’re trying to toe that line between given information but also not saying anything too tailored, because of course we need to, I suppose you need to know quite a lot about the exact situation there to be able to say exactly what you might do, I suppose Exactly.
Speaker 3:
Fair enough, there is a fine line to toe. But you know, I’m trying to help as much as I can at the same time, without giving, I guess, specific advice or whatever to an individual.
Roderick:
Got you Fair enough. Hope that helped a shish. We’ve got Annika Again. Annika says her financial advisor is keen on her distributing money into a SIP analysis stocks and shares and life cover. Do you think the 40k ceiling will be reduced in SIP due to a tighter alliance?
Dr James:
Real quick guys. I’ve put together a special report for.
Roderick:
Dentist entitled the seven costly and potentially disastrous mistakes that Dentist make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realise that they’re happening until they have their eyes opened, and that is the purpose of this report. You can go ahead and receive your free report by heading on over to wwwdentistinvestcom forward slash podcast report or, alternatively, you can download it using the link in the description. This report details these seven most common issues. However, most importantly, it also shows you how to fix them Really. Looking forward to hearing your thoughts.
Speaker 3:
Difficult to say. Again, it’s one of those tap breaks where they could target that. There has been murmurs to change the tap relief to a flat rate tap relief of 20% rather than getting higher rate relief as well. It may happen, but, like anything, nothing will happen retrospectively. They will give some advance warning At the end of the day. It’s also making sure you use all your available allowances. If you’ve got the capacity, make sure you use all your allowances. Someone told me but don’t quote me on this that there’s apparently about 2,000 allowances out there. Really, Wow. I couldn’t name half of them. I guess it’s just making sure you can try and use all those that are built. So yeah, your ISO allowance, your capital gains tax allowance or your other general well-known allowance, I guess dividend allowance as well.
Roderick:
I guess someone might say Annika, just to turn that question on its head that maybe, if you think that that’s going to happen, like Roderick says, it won’t happen retrospectively, so maybe now is a good time to capitalize on that 40K limit. I don’t know, obviously no one knows if it’s going to change and as well as that it would depend entirely on your circumstances. But you might just flip that logic on its head slightly and argue that just as another interesting way of looking at it. I think some of the investment vehicles in the UK investment accounts. They must be the envy of the world. Where else can you put in 20,000 pounds to your ISO? You know your 20,000-pound ISO limit and have tax-free on profits. I think that’s just insane really. I know America have a 401K, but I can’t imagine there’s too many. There’s a serious amount of revenue there that the government miss out on and they’re happy to do so to encourage people to save and invest for the pensions. Interestingly, you’ll know more about this than me, roderick, but not so long ago the ISO limit was only 3K. When was that?
Speaker 3:
Oh, you’re probably asking questions far, but that would have been quite a while back. I mean, it’s been 3K for a good number of years now. I mean when it first got out as testers or whatever they were called, the limits were a lot lower and it’s been 20K for a little while now. And I think in the group they’ve also talked about Gisro allowances or junior ISO allowances. That’s 9K at the moment, so that’s not a bad way to put aside a little nest egg for the children. But obviously caution on that side of things is that if you do set up an ISO, when the children become 18, they get access to that money. So depending on how good they are with the money, they could buy that nice car or whatever it is. But, yeah, something to be aware of.
Roderick:
I wouldn’t have trusted myself with 18. I’ll say that I hope that helps Annika and I hope you’re having a good evening weekend as well. Annika was on the podcast about art. It was actually Annika that I did it with. That was an interesting one. Really know just about art Smashing. David Hoy, we’ve got next. Good evening, david. Assuming good health, what is the chance of claiming on life insurance from the age of 40 to 65 and critical illness?
Speaker 3:
Funnily enough, you probably didn’t do the little quiz that I put together, but in that I think it said that the average age for a claim for income protection is about 40. And the average age for a claim on critical illness is about 47. So I guess take that how you want. I couldn’t say for exactly what it would be for was it 45,? Did you say 45 to 60?
Roderick:
David said yeah, 40 to 65.
Speaker 3:
40 to 65. So, yeah, the average age, as I say, for income protection is 40. So you could have possibly in that age band already, I guess. Just to add to that again, I was kind of was told, or seen some statistics, to say that the I think the reassures have to pay out something like 90 million pounds during the pandemic. So at some point you think that they’re going to look to recover costs and the most obvious place is obviously the consumer. So if you don’t have income protection or don’t have critical illness and are thinking about it, or even haven’t even reviewed it for a little while, now might be a good time to have a look at it before they start really increasing costs or whatever. I know, james, you’re not overly keen on the idea of income protection.
Roderick:
Yeah, I mean, income protection is maybe one that I would categorize generally speaking. I’m not really a huge insurance product person, but that’s just my belief system. That’s not to say that I’m right and everyone else is wrong. 100% Income protection. I think that it probably is useful for a lot of people, definitely. Yeah, income protection is unique, and you might argue we had Vinay chatting about income protection actually and he was saying, for 100 pounds a month or whatever it is that the insurance that it buys you, he believes, is really important. It’s all about getting a good one. But yeah, income protection is something that I’m for. I just wouldn’t buy it personally. Having said that, I could have done with it a few times when I you know what. I mean so I could very well be wrong.
Speaker 3:
The analogy that I always use is if you had a tree at the bottom of your garden that kind of grew money, would you insure it Through that?
Roderick:
Good point, I like that. Okay, you would, wouldn’t you? Yeah, very good point.
Speaker 3:
Okay.
Roderick:
Yeah, cool, david, thank you for that. We’ve got Louise McGillton next. Louise is said. Hi for a beginner looking to start simple and fairly low to moderate risk. What’s the recommended after the usual sit stocks and shares, I said, and utilizing mortgage offset? Well, you could, of course. You have got your 12,300 capital gains limit, so that’s, you can always take advantage of that with the general investment point. In addition to the things that you mentioned, anything else you like to throw in there, roderick?
Speaker 3:
Yeah, no, I mean, I think you’re right, though it’s, it’s the your general. If you’ve used up all your other rounds as then, then you next up. This one is You’re generally the best minute can. We’ve got your kind of 12,300 pounds CGT, and you know Not only that. You know if you’ve got a spouse you can actually transfer assets between each other freely. So if you’ve kind of used your allowance, then you know you could potentially transfer assets to your other half and use their allowance as well. They haven’t used it.
Roderick:
Yeah, the level of tax wizardry always blows me away when I talk to an accountant or a financial advisor. There’s so many ins and outs and things that you can do to save yourself money. It’s actually quite interesting, I think, despite the received wisdom, that tax is inherently boring. Anything else you’d like to add to Louisa’s?
Speaker 3:
No, no, no, no no anything else I can think of cool.
Roderick:
Awesome, so Hopefully that was useful. Louise, we’ve got John again. How are you supposed to plan when the government continually changed the goalpost regarding pensions NHS pension moving in line with stiff pensions, earliest draw down of private pensions moving from 57 to 55 Lifetime? Wow, there’s, this is all this. Yeah, I think I think we get the message.
Speaker 3:
What do?
Roderick:
you think on that one Roderick?
Speaker 3:
What do I think? Well, this is this is why I mean you know biased or not biased I’d say, you know, get an advisor, get an advisor, speak to them so you can, you know, find out what your goals are and and you know. Then you know what you’re working towards. Invariably, they say you know too, certainly life, you know death and taxes, but you know. The third one is change. So it’s yeah, it’s yeah, there’s always going to be change. So it’s just about navigating that change and tweaking that plan or whatever to get that ultimate desired outcome of Independence, financial freedom.
Roderick:
Well, whatever that may be, I like that actually have a plan, then just tweak it as you go along. I guess there’s a good response to that one, because A lot of these things are unforeseen. I don’t even think the government know what the government are going to do. They come the new tax year, come the new budget. You know they’re probably just making that one up as they go along themselves. So they’re probably gonna.
Speaker 3:
It’s like. It’s like investing though as well, isn’t it? You know? Yeah, you don’t see all these Kind of things happening, and nobody in the world saw coronavirus coming and and obviously that Markets quite heavily the star of 2020. Yeah, market recovered, but there’s there’s always these events that nobody sees, and but we just have to deal with this and and carry on and, yeah, maybe have a slight change of course.
Roderick:
It is good that you’re really thinking about those sorts of things, though, john, because that’s the first steps to having a plan. Uh, dan, hardy puny, I said hello. Hello, dan, I hope you’re very well. You’re having a great weekend. We have Elaine moe Next. Elaine would like to know, in your experience, what are the common mistakes or often missed knowledge, that dentists are not aware of with regards to financial planning. Really good question.
Speaker 3:
Um, common mistakes. Oh, I mean, you know, I guess, that the first common mistake is is not getting advice. So I think, yes, or education as well. First of all, you need to, you need to educate yourself on these things. But also, you know, why not educate yourself by by getting, by speaking to someone who knows a professional about it, like dentistry. You don’t go into dentistry Reading your own books or whatever you go. You get some learning, you get taught about it. So so, yeah, I think people I don’t know what it is maybe about advisors that the people don’t quite Like, whatever that that we may want to take your money, but at the end of the day, we we’re kind of there to help you as well.
Roderick:
And you know the common pitfalls that you see every day, uh like errors that dentists commit. I know that. So what you’ve done is you’ve given us a great idea of somewhere to go, but say, what is the most common, frequent mistakes that you think that you see dentists make? Uh, that you, you kind of almost have your head in your hands or you frequently have to sort them out. Um, this Is that one. You what?
Speaker 3:
I just said is it Taxes.
Roderick:
is taxes an example of one?
Speaker 3:
Yeah, I mean, you know Taxes would would always be an example, I guess, you know, not not using all your allowances, um, not not really saving. I guess there’s the whole myra of things. But you know, at the end of the day it’s there are lots of little things which which can be looked at. But, yeah, you need to start somewhere.
Roderick:
The, the taxes one. Um, I’m sure there’s a few out there who try to fill in their Uh, their self-assessment themselves. I’ve actually done it before myself but having talked to guys in tax, I just realized how many things I could have taken advantage of. There’s a list the length of your arm and from having conversations with people who are involved in tax, I probably won’t be doing that again. I’ll be honest with you, because there’s it’s actually. I actually believe that it’s worth it. Whatever you it is, you know when you’re out. Then a little bit for the tax man. If you look at it purely in terms of economics, you’ll actually probably save more if you get a good accountant. That would be my Uh sort of personal I don’t to add to that one.
Speaker 3:
I do view that that is, um a really good one there, because, yeah, yeah, an accountant will be able to save you Probably a lot more tax than um than you’re paying them.
Roderick:
Totally, totally I. I wish I would have Taken that into account. I wish I would have had more of an understanding of that before I did endeavored to do it myself. But yeah, the the education thing is amazing. Like when you start reading about money, um, it’s such, it really is a huge rabbit hole and you realize there’s. I mean, about three years ago I didn’t even know what a stocks and shares isa was. I’m sure there’ll be people In the group who will say the same thing as well. So the only reason I got from there to learn a little bit more about it was just education, uh, taking an interest in it, and, if anything, I just find it interesting. So, yeah, it’s an interesting one. That cool. Thank you, elaine. Um, we’ve got Nishal Senalo. Hello, nishal, I hope you’re very well what you all has just said. Thank you for answering the question earlier. Welcome what you’ll. Thank you for the question. It’s a good one. We’ve got Imran Ahmed Noi. Nhs pension. Imran asks or stick to isa’s property, etc. that you’re in control of? Uh, especially if you don’t want to work To anywhere near state retirement age. Hmm, what do you think about that, roderick?
Speaker 3:
Uh, you know, we always said the NHS pension is is a fantastic pension. You know it’s, it’s, it’s guaranteed. Um, it doesn’t matter how much you put into it, you know what you’re gonna get at the end of it, unlike, obviously, your private pensions where it’s all about kind of money you put in, the investment returns Is is what you get at the end. So it’s Generally I would say you know, stick with the NHS pension. There are obviously some circumstances or some some individuals where that you know it might not be appropriate to stay in the pension, but but again, it’s probably slightly personal. So you know I I would always, at first point of court generally say stay in the NHS.
Roderick:
So, yeah, I mean, all I know is the people that I talked to who seem to have a background in finance I haven’t found one yet who’s told me that they think that the NHS pension is not a good idea Because of how good of it is in the long run. There Look holy again flashes it out really nicely in the podcast that I did with them. Really interesting one was that I learned a ton about how that works. Hopefully that helps. Imran, we’ve got Sheila lie next. Sheila would like to know, after reaching your eyes for the lines, is it better to use your limited company to invest in stocks and shares Oops, it’s just jumped around or pay into a sip? Good question, sheila. Thank you.
Speaker 3:
SIP is a great place to pay money into because any employer contribution into a SIP is an allowable expense, so you save kind of corporation tax straight off there. Obviously the negatives of that is that you can’t access your SIP until you sit private pension or whatever you want to call it, until at least 55. So from a tax planning perspective generally I would say put money into a SIP rather than investing it. But again, people have different views on that, but that’s kind of my down view.
Roderick:
There’s also, just as we said earlier Sheila I don’t know if you caught it there’s also a well, your capital gains limit is 12,300, so you can always take advantage of that limit before you start thinking about SIPs and things like that. If you are into investing in your ISA, it totally depends on you. There’s no one shoe that fits everybody, but that might be something you want to consider too. So if you just open any old general investment account, like I say, capital gains doesn’t apply until you make 12,300 profit. I believe Roderick will confirm that. Awesome, anil has jumped in. Oh, this is good. Actually, this is a little bit of financial history. This is interesting. He said that ISAs were originally TESSAs. Tessas yeah, is that right? Max 3K investment. Then they became PEPs. Max 6K investment, then ISAs. The max investment for TESSA was 3K back in their very early 1990s. Thank you for that, anil. I didn’t know that. Anything else any more financial history you can add to that, roderick. I find stuff like that fascinating.
Speaker 3:
Probably not. I think he’s either very knowledgeable there or yeah. Yeah, that was good.
Roderick:
TESSAs and PEPs. That’s a new one for me. Thanks for that. Anil Louise has said thank you for answering your question earlier. You’re welcome, and we have Richard Lichman next who has said unfortunately, he’s able to. Yes, richard, richard would just like to know if you can watch on a later date. I’m recording this right now, so everything will be thrown up on the groups for your viewing and whoever else is interested just as soon as this is over. We’re hoping to wrap this up by 8 o’clock or just before, guys, depending on how many questions we get. Chan, david, welcome, chan David, nice to see you this evening. Chan would like to know what’s the most efficient way to take profits out of your Bitcoin. Good question.
Speaker 3:
Bitcoin. Well, I’m going to have to, kind of, you know, put my hand up and say I don’t know much about Bitcoin. So maybe, james, that’s more of a question for you.
Roderick:
I would say on that one that long story short, you would probably need to speak to an accountant, because what they can do is I believe in erotic will confirm we’ll start chatting to someone about this the other day they can. You pay your if you announce that your profits are, say, bitcoin is going to go up in value, okay, or it’s likely to before the next, before the end of the financial year, so before the end of March, so you can declare your profits on it now and pay some capital gains tax and then, if you believe that it is going to go up, then when you do eventually sell or you cash out, you’ll pay less tax, because it’s apparently they account for this in the tax system. Is that correct, roderick?
Speaker 3:
I think it sounds like it’s probably best to speak to an accountant.
Roderick:
Yeah, definitely.
Speaker 3:
One that specializes in crypto.
Roderick:
Yeah, you can. That’s obviously just a rule of thumb or it’s a possibility, so that’s not advisable for everybody and I definitely would double check that. But there is sorts of things that you can do. You know that sort of wizardry that you can do to make more tax efficient. As well as that, if you don’t sell your Bitcoin, you don’t pay taxes. So you might just like to hold, you might just like to hold it, hold it the whole way through, hold it to add infinite infinity. It’s a hard one when you’re trading because there comes a point where it might be considered income tax as well. So, again, definitely want to have a word we’re going to count with. I don’t know how frequently you’re buying and selling it, david, so that might be something you like to consider. I think most of what we’re hoping to do in the very near future is get a Bitcoin tax, cryptocurrency tax expert on the podcast, so watch this space for that one, chan, but I hope that helps. Therefore, want to have a word with an accountant, with you welcome. Chan’s just said thank you, you’re very welcome, chan Sheila Lai. Again thanks for the question, sheila. These are great. What is the most efficient way of taking money out of your limited company?
Speaker 3:
Again, that’s probably slightly more of an accountancy kind of question. But you know that they generally say it takes some salary and dividends because the dividend tax is slightly lower than income tax. But you know it depends also how much you need to extract from your company as well.
Roderick:
Yeah, the only real advantage of you correct me if I’m wrong, roderick the only real advantage of paying money into a limited company to invest is that you pay the corporation tax, but you do you get taxed twice if you do it. So it really depends how much you’re investing, how long you hold it, for there’s a lot of few variables in there, sheila, but that’s why people are so keen to do it if they’re a higher rate taxpayer. Is that understood it correctly?
Speaker 3:
yeah, roderick yeah yeah, no, you have.
Roderick:
Bang in. Okay, thanks, sheila. Sheila’s got another question. She said recapital gains tax you mentioned and using money to invest in the GIA. Would it be tax efficient to take a dividend and invest it in a GIA versus just directly using the limited company to invest in the GIA or throughout?
Dr James:
over.
Roderick:
Does that make sense? Sorry, I think I kind of lost myself there. Capital gains tax. So what Sheila’s, what Sheila would like to know, is is it more efficient to take your dividends and invest it in a GIA versus just directly using the limited company to invest in a GIA? Hard to answer, that one.
Speaker 3:
That’s probably quite a difficult one to answer, you know. It’s also are they going to be investing exactly the same things? It’s? Yeah, I’m not quite sure how to answer that one at this stage. You know, I’m quite happy to pick this one up separately with you, sheila. I think is probably the best way, great questions.
Roderick:
I think that, roderick, you might be struggling a little bit because you only have you don’t have enough information really to answer them fully and you wouldn’t want to give one solicited advice.
Speaker 3:
But let’s not say it’s not a good question, yeah, no no, it’s a really good question. Actually, I’m sure lots of people are probably in similar boats as well, but I think that’s kind of a bit more personal to you, to Sheila’s situation. So you know, happy to pick this up separately.
Roderick:
Fair enough, I hope that was all helpful. Sheila Pedro would like to know is it a good idea, if you don’t need the money that is, to invest in a SIP private pension the income you make per year above the high payer threshold, in order to minimise the tax that you pay on this?
Speaker 3:
So show that one again.
Roderick:
I’m seeing. The problem is I’m reading them out literally and some of the words, the word in the slightly a jar or slightly confusing what I think what Pedro means is that when you pay the, when you pay the higher rent of tax, is it a good idea to invest in a SIP. I think that’s what he means.
Speaker 3:
Seeing the higher rate. So is this, I guess is it from that.
Roderick:
It’s more additional really when you think about asset, really, isn’t it, Roderick? Yeah, I mean is that area.
Speaker 3:
I guess I need to know are we talking through a limited company or I guess We’ll go personally?
Roderick:
We’ll just go personally, personally.
Speaker 3:
Yeah, I do. I mean, obviously, paying into a pension is always advisable. There are great tax savings for paying into a pension, but again, it’s a lot of. It’s driven by affordability as well, so by the sounds that you probably don’t need that surplus cash. So yeah, use your allowances. But again, I think it seems a lot of these questions are quite personal to people.
Roderick:
No, of course. Yeah, Just do your best with what you have and I wouldn’t want you to feel like you want to say anything uncomfortable that you’re not asked to.
Speaker 3:
So you know, say, use your allowances. If you can afford to pay into your pension, then great. There’s huge benefits of paying into a pension Long term. Okay, yes, you have to pay kind of tax on the way out, but you do get you 25% tax free and there’s ways that you can be efficient with how you draw your money on the other end. Yeah, hopefully that’s kind of partly answered your question. Again, like with you, there’s happy to pick it up separately, you know. Just speak a bit more about your own situation.
Roderick:
Yeah, the reason. Obviously, as we were saying earlier, we can’t give advice. I suppose you need to your situation, pedro, but the reason that people generally tend to like SIPs is to reduce the tax bill. It usually becomes a lot more economical when you hit that, it’s just over 100K isn’t it, Roderick, where your personal allowance begins to be eroded, because for every I can’t remember the exact figure, but for every point you only earn like 20 pence at that point or something silly like that, Once you have.
Speaker 3:
So between the 100 and 125 bracket.
Roderick:
you kind of tax that 60%, so yeah, that’s what it is, yeah, and then that’s as well as that. You’ve got your national insurance on top of that too, I believe. Yeah, so it’s really. It becomes so uneconomical to earn over that threshold. That’s when a SIP is generally something that people consider again, in no way financial advice, but something that you might like to take up with an FA or kind of use to help make your decision on that one. Pedro, happy with that, roderick. Anything else you want to chuck?
Speaker 3:
in no, no, I think yeah. So if you want to put this up separately, you know more than happy to have a chat Go.
Roderick:
Awesome, we’ve got Depeche Coffari. Welcome, depeche. No worries on being late, because you’ve just apologised here, I see, so that’s no big deal. Depeche said did we discuss critical illness cover? We kind of did, didn’t we?
Speaker 3:
We touched on it. Yes, I mean, has he got a specific question around it?
Roderick:
It just says did we discuss critical illness cover? I guess I guess what Depeche, reading between the lines or analysing the question, he’d just like to know do you think it’s a good idea and do you think it’s worthwhile?
Speaker 3:
I think it’s a good idea. So critical illness is kind of a is totally separate, to like income protection, because you know, income protection pays you a regular income if you’re unable to work. Critical illness pays you a lump sum if you diagnose with a specified condition that the insurer sets out and survive normally around 30 days. So, yeah, no, there’s definitely a reason to have both. Again, it’s about looking at what you have and seeing what your own liabilities are in order to put something in place, and generally affordability as well. You can find that critical illness generally is about three times more expensive than life cover because you’re more than likely to fall with a critical illness than the knots. The little quiz I did. You know cancer’s kind of the biggest reason for critical illness and if we look at one in two people or whatever against you, you get cancer at some point in time. So you can see why insurers kind of put higher premium on critical illness than they like Is it sort of, then you don’t need it until you need it.
Roderick:
You know what I mean.
Speaker 3:
Yeah, yeah, but that’s the thing with any insurance, though, you know. That’s why people are slightly against it, because if you don’t need to pay out for it, you know you don’t get any benefit from it, but, on the other hand, those that need it and have a payout, they can definitely see the benefit.
Roderick:
Cool, awesome, right then. So, yeah, I think that’s it for the questions. Chan David has just said thanks. He really appreciates it. You’re very welcome, chan. Sheila has said thanks too. Jonathan, you said this is great stuff, guys. You’re very welcome, jonathan. I’m glad that you find this so useful. And Depeche has said thank you, and I think that’s it for the questions. You know, unless we get any within the next few seconds, we’ve actually really well, we in for it a clock, didn’t we? And we’ve just we’re just at two minutes to it, so I think now might be a good time to wrap up. Yeah, that’s okay with you. Roderick, thanks for coming on the show.
Speaker 3:
Perfect. You know the time’s gone quite quick, actually, to be fair, that flew by, I tell you what it was an hour.
Roderick:
Yeah, I feel like we just started. I’m sure there’s a million other things that we could flesh out, but I hope everybody is fun to see as well. I’m going to do more things like this on the group because this is a really amazing way that people can ask Q&As anything they like to somebody who is qualified in that field to give their answers there and then. So I think it’s a brilliant format.
Speaker 3:
I really do, but yeah, thank you so much for coming on the show Roderick. It’s been, it’s been great, it’s been, it’s been fun. I don’t know any better way to spend my Sunday, Sunday evening real.
Roderick:
I’m sure that was sincere. I’m sure that was sincere, right, cool. Well, if anybody wants to get in touch with Roderick, he’s on the group. Roderick Sam, feel free to drop a message of anything that you heard tonight. You’d like to think about it a little bit more. There’s probably a million things that we could flesh out. I hope everybody has found this very useful, and we’re going to sign off for the evening night every once in a while. So thanks for coming. See you later.
Dr James:
Let’s go.