Dr. James:
Fans of the Dentists Who Invest podcast. If you feel like there was one particular episode in the back catalogue in the anthology of Dentists Who Investpodcast episodes that really, really really was massively valuable to you, 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. Also, as well as that, if you could take two seconds to rate and review this podcast, 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, welcome to the Dentists who Invest podcast. Hey everyone, what’s up? Welcome back to the Dentistry Invest podcast. I’m unsure if this podcast has come pre-100th episode or post-100th episode, but either way, that is quite a cool landmark and milestone.
Dr. James:
I have sat opposite me a particularly interesting individual today. His name is Mark McClellan. Mark has a really unique background. I’ve never come across anybody in this particular situation before, because he is first a dentist, second a financial advisor, and third, a financial advisor who is an advocate of crypto and actually recommends products of a crypto nature to his. How can we say the people that you work with your customers effectively, mark? How are you?
Dr. Mart:
I’m fantastic there, James. Good to be with you.
Dr. James:
Nice one. Did I pretty much nail the intro there, or was there more to it?
Dr. Mart:
I like that triple play. That’s true, and it’s an unusual thing, it’s good.
Dr. James:
That’s awesome, man. No, this is why I wanted to get you on the podcast, because I was like holy moly, that is unique. I actually to get you on the podcast because I was like holy moly, that is unique. I actually think if you stopped after the second one, you’d be really unique, never mind the third one, and there’s can’t be very many people in the world in that position. So I thought I’ve got to get Mark on a podcast. Mark, there’ll be lots of people listening who will be interested to hear more. Maybe you can give us a little bit of background, sure sure.
Dr. Mart:
so, james, as you said, I’m a dentist actually I’m an orthodontist and uh started practicing back in the 90s and uh had some financial advisors work with me. And then I came across this one gentleman who just really helped me out tremendously. I said, hey, you know, you need to get your information out to the dental world because in dentistry we’re really not trained on this stuff. That’s why forums like you’re doing, james, is fantastic to educate our fellow colleagues to figure all this stuff out. And so when the dot-com crash occurred back in early 2000s, we went through that episode just quite well and I said, hey, tim, my partner and I said we need to get this information out.
Dr. Mart:
So then 2004, we started our company, macro Wealth, and we’ve been partners, financial advisor partners, since that time.
Dr. Mart:
I still practice orthodontics and I still enjoy that thoroughly. But we really felt that the trust factor of having a dentist as an advisor is essential in the world of finance, because there’s a lot of folks out there that take people down the wrong path. And then, probably in the later teen years, I was exposed to some crypto and I just really enjoyed sort of the underlying message of what it does and what it can do in the future and I felt that it’d be very important for dentists to have this as part of their portfolios, and we can talk about a little bit later. There’s a research paper that was done by Bitwise a number of years ago a couple years ago that proved evidence based that there is some significant advantages to having crypto in one’s portfolio, and so we seeked out some folks folks here in the states and to sort of provide that service for our clients, and I think we are the first dental firm in the states to uh to offer crypto to our uh, to our clientele that is cool as hell.
Dr. James:
There’s about 50 things to unpack there, let’s talk.
Dr. James:
And then the financial advice advisor, because I totally agree, like dentists are so not well serviced by financial advisors and, like my heart goes out to the financial advisors, they’re not dentists, no, and we’re not financial advisors, so there has to be some. It’s finding the middle ground, it’s the part in between, and I would honestly I would say that out of all the financial advisors I’ve met, there’s probably about three that actually understand the NHS pension. So the NHS pension is something that us Brits are concerned about, mark, given that that’s where NHS dentists and doctors put a lot of their wealth in order that they receive a recurring income when they hit retirement age, which is really cool. It’s quite unique in that way. So there’s a name for that type of pension which just escapes me right now, but it’s an interesting one. But very few financial advisors themselves even understand it and I’m like, come on, this is the bread and butter of the retirement package of dentists or financial freedom package. In America. It’ll be a little bit different, but what?
Dr. Mart:
did you notice?
Dr. James:
What was it that inspired you to make that leap from being a dentist to a financial advisor? I know you covered it from a high level, but was there a story? There’s quite often stories behind these things.
Dr. Mart:
Yeah. So my biggest thing was when I had advisors prior to meeting. My present. Partner in advisor at that time was nothing was really working as I thought it was going to work. Partner and advisor at that time was nothing was really working as I thought it was going to work. And one of my dental school classmates called me up on the phone one day as treating patients and he said hey, you may want to meet with this guy. He’s really helped me out personally and he’ll change my life. And I was like, well, anytime I get a warm referral from a friend, no matter what business it may be, I said I’ll be more than happy to sit down and chat with him maybe. I said I’ll be more than happy to sit down and chat with him and that happened in 1996. And he has this model. That’s very unique. It’s like a, it’s like a game board of finance where you can actually make financial decisions on an evidence-based nature and dentistry. You know we all believe in medicine too. We all believe in evidence-based dentistry, evidence-based medicine.
Dr. James:
Hell yeah, we love that stuff.
Dr. Mart:
Yeah for sure. But yet almost nobody believes in evidence-based financial information. It’s just a lot of opinion, a lot of sales hype and a lot of these other things. And so I had a unique situation. I didn’t really know how to answer the question because I was a dentist and I asked Tim I go, tim, with this model. You have tell me the answers and prove to me that this is which way I should go.
Dr. Mart:
And so he did, and it was something to do with real estate and I decided to take action on his recommendation and that really catapulted me into sort of the real estate space at that time. And then he positioned us up in some equities and such in the dot-com crash, and we did fine, and not that we didn’t lose money like everybody, but it wasn’t quite as devastating as my colleagues. And so what happened was and the story essentially was the proof is in the pudding what he presented actually worked and I said, all right, this is something that we’re not exposed to, and so we just thought we’d get out, start doing some lectures and write in some articles and some magazines and ended up becoming a partnership. So that that’s sort of how it all that was a genesis of of our relationship and how we got this really to the dentist in the United States.
Dr. James:
What’s the qualification process like in the States to become accredited over here? It’s six months. Six months of exams, Not that much.
Dr. Mart:
No, it’s, it’s similar. That’s probably about right. You need to get an insurance exam If you’re going to be doing insurance products like disability, life, long-term care, um, annuities, and then if you’re going to be in the investment world um, you can go a number of different ways. We, we went down the uh, the RIA, the registered investment advisor path, because that’s fiduciary. There are very few fiduciaries, the percentages are lower. I don’t know what they are over in England and UK, but there aren’t as many fiduciaries as other types of investment advisors. So we went down the path of that and so there’s another test for that. So we sort of will do a little bit of both. We’ll do both the investment side and the insurance side to do it. But yeah, about six months is probably about right.
Dr. James:
You know what, mark, you’re probably pretty uniquely placed to answer what I’m about to say. Next, you know, what I often see with people when it comes to finances is they’re kind of daydreaming in the catastrophe because they potentially have a load of cash but they just it looks so pretty in the bank account but they just don’t do anything with it. Is this like illusion of safety? What would you say is the biggest thing? If you could grab a load of dentists by the shoulders and shake them and say fix this or you’re in trouble, what would you say?
Dr. Mart:
Yeah, I think the number one concept is something called the velocity of money. There’s something where you have you know, in the traditional world of personal finance they’ll talk about accumulating assets. They say, take a pile of cash and put it over here and just let it set a roll and just move in one place and just sit there and get eroded by the wealth hoarding factors of life like inflation and taxation, and I just don’t think that’s an efficient way to build wealth. I think you need to velocitize the money or accelerate the asset, and so we don’t believe that you should really never keep any one asset in one place for too long because it goes stale or goes rotten, and so we like to peel off assets and move them to different places to develop as many different income streams as possible.
Dr. Mart:
Here in the States, the majority of dentists typically will have really just one big bucket of money, and that’s typically their retirement plan, the 401k, maybe some IRA money, maybe a cash balance plan, but they really don’t have a whole lot moving outside. That I mean maybe a little real estate here or there, but there aren’t many moving parts. And so when you have markets like we’re in now, or even markets in 2008, when the proverbial you know what hits the fan, there are very many outlets to sort of insulate yourself from some of the problems that are current economy. We all know they always happen. You’ve been around long enough, like myself. You sort of see the different gyrations of the economy and they definitely they will always occur. As you know, we were one of the longest bull market in the history of the market these last number of years, and so now we’re starting to feel some of the effects of this sort of working its way through.
Dr. James:
Yes, very true. And you know another thing that’s really poorly serviced in the UK when it comes to financial advisors. They have the traditional assets Well, I almost said they have them on lockdown, but not always. But they put all their energy into the traditional assets. But let’s say non-traditional assets, like real estate and business financial advisors just never talk about them over here. But really realistically, business is the only real way, one of the main ways that you can get rich quick. It’s a formidable beast on your wealth generation journey, but financial advisors will never talk about it. And because that goes overlooked or omitted, what it means is everybody’s walking around thinking that they have to spend 30, 40 years in a career that they mightn’t always like to achieve financial freedom, and that’s one of the things that I’d like to fix. So what I want to know is that, given that you’re someone who is presumably a principal, it sounds like you run your own dental practice.
Dr. Mart:
Hmm, is it? Yes, yeah, so I did on. Yes, I did on my practice. Yes, I don’t own it any longer, but I still work there ah, yes, brilliant, right.
Dr. James:
So from your perspective, being able to factor that into the financial planning equation must be so flipping helpful for your customers, because that, honestly right, financial advisors will never talk about it. They rarely understand dentistry, they rarely understand running a business, and then they rarely understand dentistry. They rarely understand running a business and then they specifically rarely understand dentistry within that, and I just wanted to say that, ask you, is that the case? And that must be a huge advantage.
Dr. Mart:
No, it is. I’m in the trenches like all my fellow colleagues, and so I’ve sort of walked the walk and I’ve sort of lived that whole life, for 25 years of ownership, being a small business owner. And I totally agree with you on the business side Owning businesses is one of the most powerful ways to build wealth, as well as some real estate. I think the essential thing is we look at it from a macro standpoint, it’s not just some micro decisions. How do these different puzzle pieces fit together to sort of amplify your know, amplify your wealth in a much quicker way? And business is one of our most powerful boxes in our model, as well as real estate, but business is probably number one and so. But then of course there’s other things out there, like you know stocks and bonds and all the other sort of traditional or Bitcoin.
Dr. Mart:
Bitcoin’s is 100% in there, absolutely. It’s hard to argue not to have at least some of that asset in your portfolio. It’s difficult to argue that point.
Dr. James:
Here’s my take. So let’s say you’ve got stocks and bonds, let’s call that your traditional portfolio and let’s call everything outside of that non-traditional. All right. So that businesses, real estate, crypto Okay, now there’ll be others.
Dr. James:
I get that that’s not a clean cut description. Let’s not think about that for too long, but let’s use that for the purposes of this discussion just for the moment. Right. So what I find is okay, you go to a financial advisor and they’ll say, right, okay, you need this amount of equities and you need this amount of bonds right now. However, they decide that I don’t know what the process is like in the states, but basically they’ll give you an allocation to. They’ll ask they’ll give you this questionnaire, you’ll be given a predetermined risk profile and then they’ll use that to calculate those proportions in your portfolio, which is a little bit of a flawed methodology. We’re not going to get into that today, but that’s basically how it’s done over here.
Dr. James:
And then people have like balanced portfolio inverted commas, low risk portfolio in four to come inverted commas, high risk portfolio, whatever. Right? So those are the only two things that will your financial advisor will ever really say to you this is what you should have in your portfolio and we’re ignoring all these other things that are outside. And don’t get me wrong If you have those two paper assets stocks and bonds you can become wealthy with time. I never argue that right, it’s better to have some investments than none at all. 1,000% right, because, yes, everyone will agree on that. Anybody who knows a little bit about finance would agree on that. Because the alternative is that, basically, you’re giving back your wealth every year via inflation, the wealth that you spent hours earning. You’re effectively going up to the chalkboard and scratching big Xs through the days that you worked okay, as if they never happened, right, unless you stole it. The better way, right, right right.
Dr. James:
Okay. So in the UK, financial advisors will talk about stocks and bonds. They’ll never talk about these other things outside of that. Now here’s my issue with that system, right, here is my issue.
Dr. James:
Right, lots of dentists in the UK and take it from me because I talk to them and I see them, we spend time on zoom together, just like you and I are doing right now there’s some of them who love dentistry. They do it for free. Now that’s maybe like 10, 20, right. You’ve got maybe the 30 40 who would honestly gladly jump ship if they could get a job that was exactly the same pay, or even they probably will be willing to compromise there. They’d jump ship if they could, okay. And then you kind of got these people in between, right.
Dr. James:
So the saddest thing that I see is that you have those people who think like that they don’t want to be dentists, or at least they’d like to do last less dentistry, but they think that their only path to escape that is to spend 30 years doing it so they can build up this portfolio to their magic number, whatever that is, and then use that to sustain them for the rest of the days.
Dr. James:
That’s the only narrative that they understand, to obtain wealth right, and my simple point is that, actually, if we let’s look at it from the point of view of risk, your financial advisor will tell you that that’s the not risky way to do it. But isn’t that the riskiest way? Because you’re going to sacrifice happiness for your whole life to get to a point where you’re retired, but by that stage you’ve already lived most of your life. Isn’t it less risky to take a step outside of that and to think about inverted commas, non-traditional assets Right? No, I love that. One of those to accelerate your journey. And that’s where the crypto fits in and the businesses and the other stuff.
Dr. Mart:
No, I’m 100 percent. The problem is as good as stocks and bonds are. It’s. It could be considered slow money and so in reality it can be proven to one of the. There’s a couple of problems here Dentists by our nature we tend to get started later and start in life, and so we’re just trying to build our practice, start a family, buy a home, all of these things.
Dr. Mart:
It takes time and unfortunately, in the world of finance, this is a concept that people can’t really wrap their head around. But you cannot accumulate your way to wealth. It is a very. You can be, you become wealthy, but you just can’t come. Maybe rich. You know there’s a between you know rich and wealthy and all these other things.
Dr. Mart:
But so the issue there is that you know dentists, they have to sort of, you have to blend in some other things to provide some additional value to, to, to sort of how they say, turbocharge it.
Dr. Mart:
You know we call it the turbocharger because what happens is is that if you just go down the, the, the our, one of our sweet spots in our, in our, in our planning business is you know how do we develop income streams in retirement to have more income in retirement so that when you get the retirement you don’t take a pay cut, because in the America and dentists as well every dentist we meet for the most part when we talk about distribution strategies and retirement when we take their X amount of dollars they’re making in today’s world, they will take about a 40% to 60% pay cut when they get to retirement and we say that’s an unnecessary thing. And it gets to the point we just discussed about stocks and bonds and accumulating money and it’s very difficult to sort of replace your income and retirement if you don’t have many other things working for you.
Dr. James:
Real quick, guys. I’ve put together a special report for dentists, entitled the Seven costly and potentially disastrous mistakes that dentists make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize 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 wwwdentistoinvestcom 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.
Dr. James:
I’m really looking forward to hearing your thoughts. I like that. I like that a lot. So, yeah, I like that concept of the way that you described it. Slow money and all. My simple message is that, seriously, inertia and complacency is actually your biggest risk, because you have no idea what’s going to happen tomorrow. And people say that as soon as you step outside of those two assets assets we talked about stocks and bonds that actually it’s risky. The riskiest thing of all is to live your whole life in a position where you know that you could be happier because you’ve got one shot on this earth to be happy. So for me, all day long, it’s worth stepping outside the comfort zone into that realm, and I hope that you agree with me on that philosophy. That’s the the thing I see. That’s again. We were talking about things that you want to change. I’d love to change that perception. Yeah.
Dr. Mart:
Oh, 100% it’s, you know it’s. I say you know, dennis, you know we work, we’re very, we work very hard, hold on here, one second. Can you give me one second? Yeah, sure.
Dr. James:
Hey, we’re back. Sorry about that everybody. Mark just had to attend to his dog super briefly, but anyway, mark back to what we were talking about just then, which was how much we feel passionate about changing that perception to your point on.
Dr. Mart:
You know many dentists are not that happy and you know you hate to hear that, and so it’s one of these things that if you can make your money happier or work better for you, then you’ll be happier in the end and maybe make your money work harder for you so that you can maybe pivot and maybe do something different. Maybe teach, maybe give to a charity or do a community work or whatever. It doesn’t matter. But just whatever is your own personal passion, you know, if you position money in the in the proper way, it gives you those options. You know, and I do believe in in in life and personal finance it comes down to options and flexibility.
Dr. Mart:
You know it’s. You know you go to work because you want to go to work, not because you have to go to work, and it’s just. It’s just. It’s something that not a lot of people have the opportunity to do, just because we never really been, you know, maybe shown a different way of doing things, and I think you know what you’re doing with your podcast and what we’re trying to do here with with our, our company, is is we. I think we have similar goals in that respect yeah, we do, man.
Dr. James:
You know that is. That is quite literally the reason why I started dentistry. Invest was to change these perceptions and also allow dentists to understand these things so that they’re empowered and not being fed half a narrative or one third a narrative which doesn’t act, which isn’t actually necessarily true when you scratch the surface for two seconds, just because the information is not there. I learned all this stuff just flipping, reading books yeah, absolutely plowing through. You know dozens of books when I was younger and I always. It’s so interesting because it’s so funny, because you kind of forget what you’ve learned in a way, and you just tend to think everybody knows this stuff. And then, when I started the page, I was like, wow, there really is an appetite for that, and that is. That is one of the biggest things that I’d like to change, which leads into crypto, because that is one of the ways that you can turbocharge your portfolio.
Dr. James:
But here’s our simple message for anybody who’s listening I would never, ever put my house on it, never, ever, ever. That’s not what we’re here to do, but what we are saying is that there is a likelihood or a chance that you can turbocharge your portfolio should you have a small allocation, an allocation which won’t let’s say it goes to zero worst case scenario, right, very, very, very outside chance worst case scenario. Let’s say that happens right. Then, realistically, you’re still going to be able to retire around roughly the same time. You haven’t really lost out on that much because it’s such a small allocation of your portfolio. However, the potential upside is massive and you can take that retirement debt.
Dr. James:
We’re going to use the term retirement today, but there’s a few holes we can poke in that philosophy, but that is the common term that we can relate to, so let’s use that for the moment. The idea is that you can pull that retirement or financial freedom debt further towards you. Yes, how do you typically suggest that your customers embed some crypto or get some exposure to crypto in their portfolios? How does that normally look? I’m so interested to hear this yeah, yeah.
Dr. Mart:
So you hit it right in the head in terms of you know the allocation amounts. You don’t really need to take a large exposure to crypto to really enhance your portfolio. This research paper that was done by Bitwise recently showed that if you even put 1% or 2% into Bitcoin alone, that your rate of return in this particular study, doubled, but your standard deviation or your volatility was the same, and that’s huge. And so what it means is your risk is the same, but your standard deviation or your volatility was the same, and that’s huge. And so what it means is your risk is the same, but your rate of return goes up significantly, which, in the end, tells you that to not have some crypto in your portfolio is actually hurting you, because there’s no reason not if it’s not going to increase your risk and it’s going to increase your rate of return, then everybody should have a very small piece of the pie in there, and so typically, with our clients, we’ll start out in that range, you know, one or 2%, and once people start going down that rabbit hole and understanding a little bit about Bitcoin, ethereum and all the others, then they start maybe doing a deeper dive into, maybe adding some, and we have different levels of interest.
Dr. Mart:
The particular firm we use you have to be an accredited advisor or investor, I’m sorry and so they have certain minimums in order to get engaged in crypto, because crypto can be very complicated and a lot of dentists don’t have to go through all the nuances of all the different things that has to be done from a privacy standpoint, protection standpoint, security standpoint, and so they’ll just go to this, they’ll run through us to use this one particular firm to have sort of a turnkey option to say, listen, I just want to invest, like open up a brokerage account somewhere, and then they just let it roll.
Dr. Mart:
It’s almost like a mutual fund of crypto funds. But then others folks say, hey, you know, I really want to sort of do this myself. So they’ll set up a Coinbase account or go to Kraken or do whatever, and we sort of help handhold them through that process so that they get comfortable doing it, so that they’re not scared, and so we’ve become kind of the mentors, teachers, to sort of just dip their toes into an entirely new, really you know, life-changing, uh asset class in my opinion that’s cool as hell.
Dr. James:
So you actually help them in both regards, whether you want to actually invest on their behalf or enable them to invest themselves. Yes, which is kind of what I do actually really through density invest and the crypto program that I have as well.
Dr. Mart:
Yeah, that’s really cool so, yeah, the key is adoption adoption, right. So the more people who you know can sort of embrace the technology, the more people who will adopt it and the more it’ll sort of grow and be more part of our society, and I think you and I are on the same page. I think it’s going to definitely be a bigger part as the years go on, and so the faster we can onboard our fellow colleagues in this space, I think we’re going to be doing them a great service 100%.
Dr. James:
That’s so cool. So let’s say they start out on the rabbit hole. They’re at the very top maybe 1%, 2% into Bitcoin. Then, when they see the power and how it works and they become more of an officiato of crypto space, Maybe they delve into the, maybe they get some Ethereum in their portfolio, maybe they get some altcoins and you guys facilitate all of those things.
Dr. Mart:
Yes, yeah, so we help them. And it’s very common for some of our clients and text me, hey, what do you think about this? And we’ll have a conversation on that particular altcoin. But usually the big boys are Bitcoin and Ethereum. So that’s always our starting point for people to say, listen, just doing that alone is going to really help the situation for the most part, and so just get that part in your portfolio and then ease into it.
Dr. James:
Well, this is what I always tend to advise. I say listen, if you’re a buy and hold which the majority of people, that suits the fact that they are generally time scarce, particularly dentists that style of method, that methodology of investing is probably the best one from the point of view of how much time it takes and two from the point of view of sheer returns because of the time investment you’d have to undertake in order to do the more complex stuff. So I usually say listen, buy and hold bitcoin and ethereum. The second you get into altcoins, be prepared to trade them a little bit. And just I’m not saying don’t do it. Some people are like invest in good, trade in bad. I’m not one of those people. You can make money when you’re trading, but it just takes a lot of practice time, skill, practice, mindset, psychology there’s a lot of factors that come into it. So all I say is I say listen, just be prepared. That’s what you’ve got to do yeah, yeah, 100.
Dr. Mart:
And it’s because the volatility of these, of these particular investments, you have to have the stomach for them, and we’ve certainly gone through I went through the one in 2018 where, when it dropped similar amounts as it dropped today, and so it happens, you just have to understand that. You just need to stay in your seat, since it’s to your point, since it’s not a large piece of your puzzle, it’s not gonna devastate your portfolio, but when it comes back, then you’re going to be very happy that you did what you did. And there’s no asset class. It’s certainly Bitcoin. It’s up over 100 percent, like per year for 10 years, so it’s an insane amount of return for that, for that, that particular investment. So you just have to be able to stomach the volatility. That’s why you don’t want to overexpose yourself.
Dr. James:
You know what? Here’s one question I’ve been isking. Hang on, I can’t get my words out. Itching to ask, itching to ask. Yeah, you have obviously no doubt heard about the safe withdrawal rate and how that’s generally 4% and all the stats and numbers behind that, and I know that that’s only really a rule of thumb, but it’s a stake in the ground right For how much we can withdraw from our portfolio when we hit retirement age. And again, there’s so many things we could probably do a podcast all on that on itself, oh yeah 100%, 1,000% things we could.
Dr. James:
we could probably do a podcast all on that. On itself, oh yeah, 100%, 1000%. And all of you know the concept of retirement is something I really need to talk about on the podcast, at some point I might do a solo episode on that, uh, but anyway. So yes, safe withdrawal rate four percent. Stocks and bonds portfolio 50 50. I believe the tr Trinity study from memory.
Dr. Mart:
Yeah, yeah, 30 years.
Dr. James:
Yeah.
Dr. Mart:
Yeah.
Dr. James:
So, for anybody who doesn’t know what that is, I’ll definitely do a podcast on it at some point. But in summary, it’s how much you are said to be able to withdraw from your portfolio over a number of years. That will mean that you don’t run out of money and you can have a happy retirement. If we call that average retirement 30 years, it is said that of the total value of your portfolio, you can withdraw 4% every year to sustain yourself. So let’s put that into numbers. If you’ve got a million pounds in your portfolio, you can live off 40,000 pounds. You can use 40,000 pounds of that every year safely and you won’t run out of money within 30 years, 100% of the time.
Dr. James:
There’s a little bit more to it than that, but the reason that I’m fleshing that out and spending so much time explaining that is I want to take that knowledge of traditional finance paper assets, stocks and bonds and ask you, mark, as someone who is an individual who does this every single day does that data yet exist when we apply that concept to the world of Bitcoin? Because at the minute, all we’re thinking about is pure capital appreciation. What about when we actually come to realize that into cash that we can use. How does that work?
Dr. Mart:
Yeah. So that’s a great question and the 4% rule has been one that’s been around for a long time. That number is actually creeping down a little bit, and the reason it’s creeping down a bit just because of longevity. We’re living longer, so this longevity risk is actually our greatest risk and it’s one of the reasons why so many folks the greatest fear in retirement is running out of money. They’re more scared of that than death, so it’s a huge problem.
Dr. James:
It is. You’re in no position to go and earn some more at that point, and you don’t want to be sitting around hoping that you pass away before your money runs out. Oh my goodness, no way.
Dr. Mart:
Oh yeah, well. And two, what runs that equation is sequence of returns, right? So when you retire will dictate a lot of times, like those first five years of your retirement will dictate a lot of times the back 25 years. And so if the market’s doing great, you’re probably going to be okay. If the market does what it’s doing now, you may not be all that happy.
Dr. Mart:
So that is a very problematic thing and that is why to your question is that when we get to that point of retirement, we want those distribution rates to go up to 6%, 7%, 8%, 9%, and not just the 3% to 4%. But in order to do some of those things, what you need to do is you need to have different assets working for you so you’re not just pulling from one bucket. So there’s something called like a volatility buffer where, if, let’s assume, you have a 60-40 portfolio over here, but you have Bitcoin over here or maybe some real estate or a business that’s throwing off passive income Well, if the market’s up, you can draw from your stocks and bonds and just pull it out of there and just be fine. But if the market’s down, well, you don’t want to pull your assets from the stocks and bonds in the down market. So what you do is you’ll pull from another, maybe non-correlated, asset from there to sort of offset to replace the income from that point.
Dr. Mart:
And then next year you look at your portfolio, see how it did, the income from that point. And then next year you look at your portfolio, see how it did and if you say, well, it’s still down a little bit, well, then you’ll say, well, maybe I’ll do, maybe a blend of both type of thing. So it’s a we all say a perfect financial plan is a series of one-year perfect plans, right? So every year it’s just, it’s something that you don’t, you know, just do once and just let it ride. You have to continually tweak it and play with it so that you’re being the most efficient. You wait, you’re being as efficient as you possibly can be when you make financial decisions. That is cool as hell.
Dr. James:
I really like that, mark. We are coming towards the end of proceedings today. It’s close to all. We have time for Anything that you’d like to say in conclusion, and thank you first of all for being so generous with your time today.
Dr. Mart:
Well, it’s my pleasure.
Dr. Mart:
I get very juiced when I have the opportunity to spread the word through these types of forums, because you’re just one person, I’m just one person, but you have a wonderful place to sort of help people with their information, and I feel the same way.
Dr. Mart:
The more we can get our information out as fellow dentists here, right, I think it’s gonna be not only better for our families but maybe community and society in general. There’s some wonderful charitable strategies and humanitarian things that can be done. You know, one thing I really love about good financial planning is that, if it’s done right, you can be charitable and not disinherit your family or not disinherit your wife or your spouse, and so that’s a huge part of what we love to do, too, is let’s give back. But a lot of people don’t want to give because they’re kind of scared that I’m not going to have enough to sort of create plans for enhanced wealth, just as I said before, gives us more options and flexibility to give to great causes and spoil grandkids and travel and do all the things we all love to do. I love that mate.
Dr. James:
Thank you so much for your time today, Mike. That was awesome. That was probably one of my favorite podcasts. I really enjoyed it.
Dr. James:
Oh, james, thank you 100%, even with the dog interruption, even with the dog interruption, even with the dog interruption. That was so much fun. Thank you so much, buddy. I’m looking forward to publish this on Dentist who Invests very soon. Mark, you’ve been so generous with your time today, my friend. We shall catch up super soon. I’ll see you later. I look forward to it. James, see you later In a bit. Bye-bye. If you enjoyed this podcast, please hit, follow or subscribe so you can stay up to date with information on new podcasts which are released weekly. Please also feel free to leave a positive review so others can learn about this podcast and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search Dentists who Invest on Facebook and hit join to become part of a community of thousands of other dentists interested in improving their finances, well-being and investing knowledge. Looking forward to seeing you on there.
Dr. James:
Fans of the Dentists Who Invest podcast. If you feel like there was one particular episode in the back catalogue in the anthology of Dentists Who Invest podcast episodes that really, really really was massively valuable to you, 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. Also, as well as that, if you could take two seconds to rate and review this podcast, 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, welcome to the Dentists who Invest podcast. Hey everyone, what’s up? Welcome back to the Dentistry Invest podcast. I’m unsure if this podcast has come pre-100th episode or post-100th episode, but either way, that is quite a cool landmark and milestone.
Dr. James:
I have sat opposite me a particularly interesting individual today. His name is Mark McClellan. Mark has a really unique background. I’ve never come across anybody in this particular situation before, because he is first a dentist, second a financial advisor, and third, a financial advisor who is an advocate of crypto and actually recommends products of a crypto nature to his. How can we say the people that you work with your customers effectively, mark? How are you?
Dr. Mart:
I’m fantastic there, James. Good to be with you.
Dr. James:
Nice one. Did I pretty much nail the intro there, or was there more to it?
Dr. Mart:
I like that triple play. That’s true, and it’s an unusual thing, it’s good.
Dr. James:
That’s awesome, man. No, this is why I wanted to get you on the podcast, because I was like holy moly, that is unique. I actually to get you on the podcast because I was like holy moly, that is unique. I actually think if you stopped after the second one, you’d be really unique, never mind the third one, and there’s can’t be very many people in the world in that position. So I thought I’ve got to get Mark on a podcast. Mark, there’ll be lots of people listening who will be interested to hear more. Maybe you can give us a little bit of background, sure sure.
Dr. Mart:
so, james, as you said, I’m a dentist actually I’m an orthodontist and uh started practicing back in the 90s and uh had some financial advisors work with me. And then I came across this one gentleman who just really helped me out tremendously. I said, hey, you know, you need to get your information out to the dental world because in dentistry we’re really not trained on this stuff. That’s why forums like you’re doing, james, is fantastic to educate our fellow colleagues to figure all this stuff out. And so when the dot-com crash occurred back in early 2000s, we went through that episode just quite well and I said, hey, tim, my partner and I said we need to get this information out.
Dr. Mart:
So then 2004, we started our company, macro Wealth, and we’ve been partners, financial advisor partners, since that time.
Dr. Mart:
I still practice orthodontics and I still enjoy that thoroughly. But we really felt that the trust factor of having a dentist as an advisor is essential in the world of finance, because there’s a lot of folks out there that take people down the wrong path. And then, probably in the later teen years, I was exposed to some crypto and I just really enjoyed sort of the underlying message of what it does and what it can do in the future and I felt that it’d be very important for dentists to have this as part of their portfolios, and we can talk about a little bit later. There’s a research paper that was done by Bitwise a number of years ago a couple years ago that proved evidence based that there is some significant advantages to having crypto in one’s portfolio, and so we seeked out some folks folks here in the states and to sort of provide that service for our clients, and I think we are the first dental firm in the states to uh to offer crypto to our uh, to our clientele that is cool as hell.
Dr. James:
There’s about 50 things to unpack there, let’s talk.
Dr. James:
And then the financial advice advisor, because I totally agree, like dentists are so not well serviced by financial advisors and, like my heart goes out to the financial advisors, they’re not dentists, no, and we’re not financial advisors, so there has to be some. It’s finding the middle ground, it’s the part in between, and I would honestly I would say that out of all the financial advisors I’ve met, there’s probably about three that actually understand the NHS pension. So the NHS pension is something that us Brits are concerned about, mark, given that that’s where NHS dentists and doctors put a lot of their wealth in order that they receive a recurring income when they hit retirement age, which is really cool. It’s quite unique in that way. So there’s a name for that type of pension which just escapes me right now, but it’s an interesting one. But very few financial advisors themselves even understand it and I’m like, come on, this is the bread and butter of the retirement package of dentists or financial freedom package. In America. It’ll be a little bit different, but what?
Dr. Mart:
did you notice?
Dr. James:
What was it that inspired you to make that leap from being a dentist to a financial advisor? I know you covered it from a high level, but was there a story? There’s quite often stories behind these things.
Dr. Mart:
Yeah. So my biggest thing was when I had advisors prior to meeting. My present. Partner in advisor at that time was nothing was really working as I thought it was going to work. Partner and advisor at that time was nothing was really working as I thought it was going to work. And one of my dental school classmates called me up on the phone one day as treating patients and he said hey, you may want to meet with this guy. He’s really helped me out personally and he’ll change my life. And I was like, well, anytime I get a warm referral from a friend, no matter what business it may be, I said I’ll be more than happy to sit down and chat with him maybe. I said I’ll be more than happy to sit down and chat with him and that happened in 1996. And he has this model. That’s very unique. It’s like a, it’s like a game board of finance where you can actually make financial decisions on an evidence-based nature and dentistry. You know we all believe in medicine too. We all believe in evidence-based dentistry, evidence-based medicine.
Dr. James:
Hell yeah, we love that stuff.
Dr. Mart:
Yeah for sure. But yet almost nobody believes in evidence-based financial information. It’s just a lot of opinion, a lot of sales hype and a lot of these other things. And so I had a unique situation. I didn’t really know how to answer the question because I was a dentist and I asked Tim I go, tim, with this model. You have tell me the answers and prove to me that this is which way I should go.
Dr. Mart:
And so he did, and it was something to do with real estate and I decided to take action on his recommendation and that really catapulted me into sort of the real estate space at that time. And then he positioned us up in some equities and such in the dot-com crash, and we did fine, and not that we didn’t lose money like everybody, but it wasn’t quite as devastating as my colleagues. And so what happened was and the story essentially was the proof is in the pudding what he presented actually worked and I said, all right, this is something that we’re not exposed to, and so we just thought we’d get out, start doing some lectures and write in some articles and some magazines and ended up becoming a partnership. So that that’s sort of how it all that was a genesis of of our relationship and how we got this really to the dentist in the United States.
Dr. James:
What’s the qualification process like in the States to become accredited over here? It’s six months. Six months of exams, Not that much.
Dr. Mart:
No, it’s, it’s similar. That’s probably about right. You need to get an insurance exam If you’re going to be doing insurance products like disability, life, long-term care, um, annuities, and then if you’re going to be in the investment world um, you can go a number of different ways. We, we went down the uh, the RIA, the registered investment advisor path, because that’s fiduciary. There are very few fiduciaries, the percentages are lower. I don’t know what they are over in England and UK, but there aren’t as many fiduciaries as other types of investment advisors. So we went down the path of that and so there’s another test for that. So we sort of will do a little bit of both. We’ll do both the investment side and the insurance side to do it. But yeah, about six months is probably about right.
Dr. James:
You know what, mark, you’re probably pretty uniquely placed to answer what I’m about to say. Next, you know, what I often see with people when it comes to finances is they’re kind of daydreaming in the catastrophe because they potentially have a load of cash but they just it looks so pretty in the bank account but they just don’t do anything with it. Is this like illusion of safety? What would you say is the biggest thing? If you could grab a load of dentists by the shoulders and shake them and say fix this or you’re in trouble, what would you say?
Dr. Mart:
Yeah, I think the number one concept is something called the velocity of money. There’s something where you have you know, in the traditional world of personal finance they’ll talk about accumulating assets. They say, take a pile of cash and put it over here and just let it set a roll and just move in one place and just sit there and get eroded by the wealth hoarding factors of life like inflation and taxation, and I just don’t think that’s an efficient way to build wealth. I think you need to velocitize the money or accelerate the asset, and so we don’t believe that you should really never keep any one asset in one place for too long because it goes stale or goes rotten, and so we like to peel off assets and move them to different places to develop as many different income streams as possible.
Dr. Mart:
Here in the States, the majority of dentists typically will have really just one big bucket of money, and that’s typically their retirement plan, the 401k, maybe some IRA money, maybe a cash balance plan, but they really don’t have a whole lot moving outside. That I mean maybe a little real estate here or there, but there aren’t many moving parts. And so when you have markets like we’re in now, or even markets in 2008, when the proverbial you know what hits the fan, there are very many outlets to sort of insulate yourself from some of the problems that are current economy. We all know they always happen. You’ve been around long enough, like myself. You sort of see the different gyrations of the economy and they definitely they will always occur. As you know, we were one of the longest bull market in the history of the market these last number of years, and so now we’re starting to feel some of the effects of this sort of working its way through.
Dr. James:
Yes, very true. And you know another thing that’s really poorly serviced in the UK when it comes to financial advisors. They have the traditional assets Well, I almost said they have them on lockdown, but not always. But they put all their energy into the traditional assets. But let’s say non-traditional assets, like real estate and business financial advisors just never talk about them over here. But really realistically, business is the only real way, one of the main ways that you can get rich quick. It’s a formidable beast on your wealth generation journey, but financial advisors will never talk about it. And because that goes overlooked or omitted, what it means is everybody’s walking around thinking that they have to spend 30, 40 years in a career that they mightn’t always like to achieve financial freedom, and that’s one of the things that I’d like to fix. So what I want to know is that, given that you’re someone who is presumably a principal, it sounds like you run your own dental practice.
Dr. Mart:
Hmm, is it? Yes, yeah, so I did on. Yes, I did on my practice. Yes, I don’t own it any longer, but I still work there ah, yes, brilliant, right.
Dr. James:
So from your perspective, being able to factor that into the financial planning equation must be so flipping helpful for your customers, because that, honestly right, financial advisors will never talk about it. They rarely understand dentistry, they rarely understand running a business, and then they rarely understand dentistry. They rarely understand running a business and then they specifically rarely understand dentistry within that, and I just wanted to say that, ask you, is that the case? And that must be a huge advantage.
Dr. Mart:
No, it is. I’m in the trenches like all my fellow colleagues, and so I’ve sort of walked the walk and I’ve sort of lived that whole life, for 25 years of ownership, being a small business owner. And I totally agree with you on the business side Owning businesses is one of the most powerful ways to build wealth, as well as some real estate. I think the essential thing is we look at it from a macro standpoint, it’s not just some micro decisions. How do these different puzzle pieces fit together to sort of amplify your know, amplify your wealth in a much quicker way? And business is one of our most powerful boxes in our model, as well as real estate, but business is probably number one and so. But then of course there’s other things out there, like you know stocks and bonds and all the other sort of traditional or Bitcoin.
Dr. Mart:
Bitcoin’s is 100% in there, absolutely. It’s hard to argue not to have at least some of that asset in your portfolio. It’s difficult to argue that point.
Dr. James:
Here’s my take. So let’s say you’ve got stocks and bonds, let’s call that your traditional portfolio and let’s call everything outside of that non-traditional. All right. So that businesses, real estate, crypto Okay, now there’ll be others.
Dr. James:
I get that that’s not a clean cut description. Let’s not think about that for too long, but let’s use that for the purposes of this discussion just for the moment. Right. So what I find is okay, you go to a financial advisor and they’ll say, right, okay, you need this amount of equities and you need this amount of bonds right now. However, they decide that I don’t know what the process is like in the states, but basically they’ll give you an allocation to. They’ll ask they’ll give you this questionnaire, you’ll be given a predetermined risk profile and then they’ll use that to calculate those proportions in your portfolio, which is a little bit of a flawed methodology. We’re not going to get into that today, but that’s basically how it’s done over here.
Dr. James:
And then people have like balanced portfolio inverted commas, low risk portfolio in four to come inverted commas, high risk portfolio, whatever. Right? So those are the only two things that will your financial advisor will ever really say to you this is what you should have in your portfolio and we’re ignoring all these other things that are outside. And don’t get me wrong If you have those two paper assets stocks and bonds you can become wealthy with time. I never argue that right, it’s better to have some investments than none at all. 1,000% right, because, yes, everyone will agree on that. Anybody who knows a little bit about finance would agree on that. Because the alternative is that, basically, you’re giving back your wealth every year via inflation, the wealth that you spent hours earning. You’re effectively going up to the chalkboard and scratching big Xs through the days that you worked okay, as if they never happened, right, unless you stole it. The better way, right, right right.
Dr. James:
Okay. So in the UK, financial advisors will talk about stocks and bonds. They’ll never talk about these other things outside of that. Now here’s my issue with that system, right, here is my issue.
Dr. James:
Right, lots of dentists in the UK and take it from me because I talk to them and I see them, we spend time on zoom together, just like you and I are doing right now there’s some of them who love dentistry. They do it for free. Now that’s maybe like 10, 20, right. You’ve got maybe the 30 40 who would honestly gladly jump ship if they could get a job that was exactly the same pay, or even they probably will be willing to compromise there. They’d jump ship if they could, okay. And then you kind of got these people in between, right.
Dr. James:
So the saddest thing that I see is that you have those people who think like that they don’t want to be dentists, or at least they’d like to do last less dentistry, but they think that their only path to escape that is to spend 30 years doing it so they can build up this portfolio to their magic number, whatever that is, and then use that to sustain them for the rest of the days.
Dr. James:
That’s the only narrative that they understand, to obtain wealth right, and my simple point is that, actually, if we let’s look at it from the point of view of risk, your financial advisor will tell you that that’s the not risky way to do it. But isn’t that the riskiest way? Because you’re going to sacrifice happiness for your whole life to get to a point where you’re retired, but by that stage you’ve already lived most of your life. Isn’t it less risky to take a step outside of that and to think about inverted commas, non-traditional assets Right? No, I love that. One of those to accelerate your journey. And that’s where the crypto fits in and the businesses and the other stuff.
Dr. Mart:
No, I’m 100 percent. The problem is as good as stocks and bonds are. It’s. It could be considered slow money and so in reality it can be proven to one of the. There’s a couple of problems here Dentists by our nature we tend to get started later and start in life, and so we’re just trying to build our practice, start a family, buy a home, all of these things.
Dr. Mart:
It takes time and unfortunately, in the world of finance, this is a concept that people can’t really wrap their head around. But you cannot accumulate your way to wealth. It is a very. You can be, you become wealthy, but you just can’t come. Maybe rich. You know there’s a between you know rich and wealthy and all these other things.
Dr. Mart:
But so the issue there is that you know dentists, they have to sort of, you have to blend in some other things to provide some additional value to, to, to sort of how they say, turbocharge it.
Dr. Mart:
You know we call it the turbocharger because what happens is is that if you just go down the, the, the our, one of our sweet spots in our, in our, in our planning business is you know how do we develop income streams in retirement to have more income in retirement so that when you get the retirement you don’t take a pay cut, because in the America and dentists as well every dentist we meet for the most part when we talk about distribution strategies and retirement when we take their X amount of dollars they’re making in today’s world, they will take about a 40% to 60% pay cut when they get to retirement and we say that’s an unnecessary thing. And it gets to the point we just discussed about stocks and bonds and accumulating money and it’s very difficult to sort of replace your income and retirement if you don’t have many other things working for you.
Dr. James:
Real quick, guys. I’ve put together a special report for dentists, entitled the Seven costly and potentially disastrous mistakes that dentists make whenever it comes to their finances. Most of the time, dentists are going through these issues and they don’t even necessarily realize 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 wwwdentistoinvestcom 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.
Dr. James:
I’m really looking forward to hearing your thoughts. I like that. I like that a lot. So, yeah, I like that concept of the way that you described it. Slow money and all. My simple message is that, seriously, inertia and complacency is actually your biggest risk, because you have no idea what’s going to happen tomorrow. And people say that as soon as you step outside of those two assets assets we talked about stocks and bonds that actually it’s risky. The riskiest thing of all is to live your whole life in a position where you know that you could be happier because you’ve got one shot on this earth to be happy. So for me, all day long, it’s worth stepping outside the comfort zone into that realm, and I hope that you agree with me on that philosophy. That’s the the thing I see. That’s again. We were talking about things that you want to change. I’d love to change that perception. Yeah.
Dr. Mart:
Oh, 100% it’s, you know it’s. I say you know, dennis, you know we work, we’re very, we work very hard, hold on here, one second. Can you give me one second? Yeah, sure.
Dr. James:
Hey, we’re back. Sorry about that everybody. Mark just had to attend to his dog super briefly, but anyway, mark back to what we were talking about just then, which was how much we feel passionate about changing that perception to your point on.
Dr. Mart:
You know many dentists are not that happy and you know you hate to hear that, and so it’s one of these things that if you can make your money happier or work better for you, then you’ll be happier in the end and maybe make your money work harder for you so that you can maybe pivot and maybe do something different. Maybe teach, maybe give to a charity or do a community work or whatever. It doesn’t matter. But just whatever is your own personal passion, you know, if you position money in the in the proper way, it gives you those options. You know, and I do believe in in in life and personal finance it comes down to options and flexibility.
Dr. Mart:
You know it’s. You know you go to work because you want to go to work, not because you have to go to work, and it’s just. It’s just. It’s something that not a lot of people have the opportunity to do, just because we never really been, you know, maybe shown a different way of doing things, and I think you know what you’re doing with your podcast and what we’re trying to do here with with our, our company, is is we. I think we have similar goals in that respect yeah, we do, man.
Dr. James:
You know that is. That is quite literally the reason why I started dentistry. Invest was to change these perceptions and also allow dentists to understand these things so that they’re empowered and not being fed half a narrative or one third a narrative which doesn’t act, which isn’t actually necessarily true when you scratch the surface for two seconds, just because the information is not there. I learned all this stuff just flipping, reading books yeah, absolutely plowing through. You know dozens of books when I was younger and I always. It’s so interesting because it’s so funny, because you kind of forget what you’ve learned in a way, and you just tend to think everybody knows this stuff. And then, when I started the page, I was like, wow, there really is an appetite for that, and that is. That is one of the biggest things that I’d like to change, which leads into crypto, because that is one of the ways that you can turbocharge your portfolio.
Dr. James:
But here’s our simple message for anybody who’s listening I would never, ever put my house on it, never, ever, ever. That’s not what we’re here to do, but what we are saying is that there is a likelihood or a chance that you can turbocharge your portfolio should you have a small allocation, an allocation which won’t let’s say it goes to zero worst case scenario, right, very, very, very outside chance worst case scenario. Let’s say that happens right. Then, realistically, you’re still going to be able to retire around roughly the same time. You haven’t really lost out on that much because it’s such a small allocation of your portfolio. However, the potential upside is massive and you can take that retirement debt.
Dr. James:
We’re going to use the term retirement today, but there’s a few holes we can poke in that philosophy, but that is the common term that we can relate to, so let’s use that for the moment. The idea is that you can pull that retirement or financial freedom debt further towards you. Yes, how do you typically suggest that your customers embed some crypto or get some exposure to crypto in their portfolios? How does that normally look? I’m so interested to hear this yeah, yeah.
Dr. Mart:
So you hit it right in the head in terms of you know the allocation amounts. You don’t really need to take a large exposure to crypto to really enhance your portfolio. This research paper that was done by Bitwise recently showed that if you even put 1% or 2% into Bitcoin alone, that your rate of return in this particular study, doubled, but your standard deviation or your volatility was the same, and that’s huge. And so what it means is your risk is the same, but your standard deviation or your volatility was the same, and that’s huge. And so what it means is your risk is the same, but your rate of return goes up significantly, which, in the end, tells you that to not have some crypto in your portfolio is actually hurting you, because there’s no reason not if it’s not going to increase your risk and it’s going to increase your rate of return, then everybody should have a very small piece of the pie in there, and so typically, with our clients, we’ll start out in that range, you know, one or 2%, and once people start going down that rabbit hole and understanding a little bit about Bitcoin, ethereum and all the others, then they start maybe doing a deeper dive into, maybe adding some, and we have different levels of interest.
Dr. Mart:
The particular firm we use you have to be an accredited advisor or investor, I’m sorry and so they have certain minimums in order to get engaged in crypto, because crypto can be very complicated and a lot of dentists don’t have to go through all the nuances of all the different things that has to be done from a privacy standpoint, protection standpoint, security standpoint, and so they’ll just go to this, they’ll run through us to use this one particular firm to have sort of a turnkey option to say, listen, I just want to invest, like open up a brokerage account somewhere, and then they just let it roll.
Dr. Mart:
It’s almost like a mutual fund of crypto funds. But then others folks say, hey, you know, I really want to sort of do this myself. So they’ll set up a Coinbase account or go to Kraken or do whatever, and we sort of help handhold them through that process so that they get comfortable doing it, so that they’re not scared, and so we’ve become kind of the mentors, teachers, to sort of just dip their toes into an entirely new, really you know, life-changing, uh asset class in my opinion that’s cool as hell.
Dr. James:
So you actually help them in both regards, whether you want to actually invest on their behalf or enable them to invest themselves. Yes, which is kind of what I do actually really through density invest and the crypto program that I have as well.
Dr. Mart:
Yeah, that’s really cool so, yeah, the key is adoption adoption, right. So the more people who you know can sort of embrace the technology, the more people who will adopt it and the more it’ll sort of grow and be more part of our society, and I think you and I are on the same page. I think it’s going to definitely be a bigger part as the years go on, and so the faster we can onboard our fellow colleagues in this space, I think we’re going to be doing them a great service 100%.
Dr. James:
That’s so cool. So let’s say they start out on the rabbit hole. They’re at the very top maybe 1%, 2% into Bitcoin. Then, when they see the power and how it works and they become more of an officiato of crypto space, Maybe they delve into the, maybe they get some Ethereum in their portfolio, maybe they get some altcoins and you guys facilitate all of those things.
Dr. Mart:
Yes, yeah, so we help them. And it’s very common for some of our clients and text me, hey, what do you think about this? And we’ll have a conversation on that particular altcoin. But usually the big boys are Bitcoin and Ethereum. So that’s always our starting point for people to say, listen, just doing that alone is going to really help the situation for the most part, and so just get that part in your portfolio and then ease into it.
Dr. James:
Well, this is what I always tend to advise. I say listen, if you’re a buy and hold which the majority of people, that suits the fact that they are generally time scarce, particularly dentists that style of method, that methodology of investing is probably the best one from the point of view of how much time it takes and two from the point of view of sheer returns because of the time investment you’d have to undertake in order to do the more complex stuff. So I usually say listen, buy and hold bitcoin and ethereum. The second you get into altcoins, be prepared to trade them a little bit. And just I’m not saying don’t do it. Some people are like invest in good, trade in bad. I’m not one of those people. You can make money when you’re trading, but it just takes a lot of practice time, skill, practice, mindset, psychology there’s a lot of factors that come into it. So all I say is I say listen, just be prepared. That’s what you’ve got to do yeah, yeah, 100.
Dr. Mart:
And it’s because the volatility of these, of these particular investments, you have to have the stomach for them, and we’ve certainly gone through I went through the one in 2018 where, when it dropped similar amounts as it dropped today, and so it happens, you just have to understand that. You just need to stay in your seat, since it’s to your point, since it’s not a large piece of your puzzle, it’s not gonna devastate your portfolio, but when it comes back, then you’re going to be very happy that you did what you did. And there’s no asset class. It’s certainly Bitcoin. It’s up over 100 percent, like per year for 10 years, so it’s an insane amount of return for that, for that, that particular investment. So you just have to be able to stomach the volatility. That’s why you don’t want to overexpose yourself.
Dr. James:
You know what? Here’s one question I’ve been isking. Hang on, I can’t get my words out. Itching to ask, itching to ask. Yeah, you have obviously no doubt heard about the safe withdrawal rate and how that’s generally 4% and all the stats and numbers behind that, and I know that that’s only really a rule of thumb, but it’s a stake in the ground right For how much we can withdraw from our portfolio when we hit retirement age. And again, there’s so many things we could probably do a podcast all on that on itself, oh yeah 100%, 1,000% things we could.
Dr. James:
we could probably do a podcast all on that. On itself, oh yeah, 100%, 1000%. And all of you know the concept of retirement is something I really need to talk about on the podcast, at some point I might do a solo episode on that, uh, but anyway. So yes, safe withdrawal rate four percent. Stocks and bonds portfolio 50 50. I believe the tr Trinity study from memory.
Dr. Mart:
Yeah, yeah, 30 years.
Dr. James:
Yeah.
Dr. Mart:
Yeah.
Dr. James:
So, for anybody who doesn’t know what that is, I’ll definitely do a podcast on it at some point. But in summary, it’s how much you are said to be able to withdraw from your portfolio over a number of years. That will mean that you don’t run out of money and you can have a happy retirement. If we call that average retirement 30 years, it is said that of the total value of your portfolio, you can withdraw 4% every year to sustain yourself. So let’s put that into numbers. If you’ve got a million pounds in your portfolio, you can live off 40,000 pounds. You can use 40,000 pounds of that every year safely and you won’t run out of money within 30 years, 100% of the time.
Dr. James:
There’s a little bit more to it than that, but the reason that I’m fleshing that out and spending so much time explaining that is I want to take that knowledge of traditional finance paper assets, stocks and bonds and ask you, mark, as someone who is an individual who does this every single day does that data yet exist when we apply that concept to the world of Bitcoin? Because at the minute, all we’re thinking about is pure capital appreciation. What about when we actually come to realize that into cash that we can use. How does that work?
Dr. Mart:
Yeah. So that’s a great question and the 4% rule has been one that’s been around for a long time. That number is actually creeping down a little bit, and the reason it’s creeping down a bit just because of longevity. We’re living longer, so this longevity risk is actually our greatest risk and it’s one of the reasons why so many folks the greatest fear in retirement is running out of money. They’re more scared of that than death, so it’s a huge problem.
Dr. James:
It is. You’re in no position to go and earn some more at that point, and you don’t want to be sitting around hoping that you pass away before your money runs out. Oh my goodness, no way.
Dr. Mart:
Oh yeah, well. And two, what runs that equation is sequence of returns, right? So when you retire will dictate a lot of times, like those first five years of your retirement will dictate a lot of times the back 25 years. And so if the market’s doing great, you’re probably going to be okay. If the market does what it’s doing now, you may not be all that happy.
Dr. Mart:
So that is a very problematic thing and that is why to your question is that when we get to that point of retirement, we want those distribution rates to go up to 6%, 7%, 8%, 9%, and not just the 3% to 4%. But in order to do some of those things, what you need to do is you need to have different assets working for you so you’re not just pulling from one bucket. So there’s something called like a volatility buffer where, if, let’s assume, you have a 60-40 portfolio over here, but you have Bitcoin over here or maybe some real estate or a business that’s throwing off passive income Well, if the market’s up, you can draw from your stocks and bonds and just pull it out of there and just be fine. But if the market’s down, well, you don’t want to pull your assets from the stocks and bonds in the down market. So what you do is you’ll pull from another, maybe non-correlated, asset from there to sort of offset to replace the income from that point.
Dr. Mart:
And then next year you look at your portfolio, see how it did, the income from that point. And then next year you look at your portfolio, see how it did and if you say, well, it’s still down a little bit, well, then you’ll say, well, maybe I’ll do, maybe a blend of both type of thing. So it’s a we all say a perfect financial plan is a series of one-year perfect plans, right? So every year it’s just, it’s something that you don’t, you know, just do once and just let it ride. You have to continually tweak it and play with it so that you’re being the most efficient. You wait, you’re being as efficient as you possibly can be when you make financial decisions. That is cool as hell.
Dr. James:
I really like that, mark. We are coming towards the end of proceedings today. It’s close to all. We have time for Anything that you’d like to say in conclusion, and thank you first of all for being so generous with your time today.
Dr. Mart:
Well, it’s my pleasure.
Dr. Mart:
I get very juiced when I have the opportunity to spread the word through these types of forums, because you’re just one person, I’m just one person, but you have a wonderful place to sort of help people with their information, and I feel the same way.
Dr. Mart:
The more we can get our information out as fellow dentists here, right, I think it’s gonna be not only better for our families but maybe community and society in general. There’s some wonderful charitable strategies and humanitarian things that can be done. You know, one thing I really love about good financial planning is that, if it’s done right, you can be charitable and not disinherit your family or not disinherit your wife or your spouse, and so that’s a huge part of what we love to do, too, is let’s give back. But a lot of people don’t want to give because they’re kind of scared that I’m not going to have enough to sort of create plans for enhanced wealth, just as I said before, gives us more options and flexibility to give to great causes and spoil grandkids and travel and do all the things we all love to do. I love that mate.
Dr. James:
Thank you so much for your time today, Mike. That was awesome. That was probably one of my favorite podcasts. I really enjoyed it.
Dr. James:
Oh, james, thank you 100%, even with the dog interruption, even with the dog interruption, even with the dog interruption. That was so much fun. Thank you so much, buddy. I’m looking forward to publish this on Dentist who Invests very soon. Mark, you’ve been so generous with your time today, my friend. We shall catch up super soon. I’ll see you later. I look forward to it. James, see you later In a bit. Bye-bye. If you enjoyed this podcast, please hit, follow or subscribe so you can stay up to date with information on new podcasts which are released weekly. Please also feel free to leave a positive review so others can learn about this podcast and benefit from it. I would also encourage any fans of the podcast to sign up to the free Facebook community from which the podcast originated. Please search Dentists who Invest on Facebook and hit join to become part of a community of thousands of other dentists interested in improving their finances, well-being and investing knowledge. Looking forward to seeing you on there.
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