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Dentists Who Invest

Podcast Episode

Full Transcript

Dr James : 0:41

Fans of the Dentists who Invest podcast. If you feel like there was one particular episode in the back catalog 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. What is up, everybody? How are you today? Welcome to another episode of the Dentists who Invest podcast, where we welcome, we welcome someone very special who is going to talk to us today on the merits of financial planning from the perspective of a CFA a CFA who works specifically with dentists and others within the medical profession and I’m so intrigued to learn an absolute ton today and who is sat in front of me right now, who we are welcoming specifically. His name is Rohit Wahella, and he is sat here with me today to elaborate on the things that we just talked about. How are you today, rohit?

Rohit: 2:02

Hello James, I’m very well. Thank you for asking and it’s great to be here, yeah.

Dr James : 2:06

Tremendous, my friend. Tremendous, my friend. Welcome and good to have you. So, rohit, I’ve already said one thing which we were talking just a little bit about this off camera, and I think it could do with being elaborated on and explained in greater detail, because it’s not something that dentists necessarily know, and that is the difference between your job title, which is a CFA versus an IFA, and a traditional FA, and we were just explaining to each other, weren’t we, why this might be useful for dentists to know, because I don’t think this distinction is widely acknowledged or widely made clear, and I would love for you to put it in your own words.

Rohit: 2:44

Absolutely so, as per the FCA definition. So FCA is the regulator, the financial contact authority that regulates financial advice. In the UK. There are different categories of investment advisors. So the first category is called restricted. That category means the advisors can only talk about the products offered by their company, so they’re effectively restricted to a very narrow set of investments. The next step up is independent financial advisors, which in theory can access products from the whole of market, but because they tend to be one man band type operations in the main they will look at centralized investment propositions. So effectively it’s again narrow, but compared to a restricted advisor it’s a bit broader. And then you have whole of market chartered financial advisors who have to do a much higher degree of qualifications and have a lot of expertise and access to investment research to construct tailored bespoke portfolios. And within that you’ve got chartered financial planners who don’t just construct portfolios based on an assessment of your risk profile but actually talk you through your life’s journey so they help you make a master plan of your financial future. So if I take an example of a dentist, they start with being an associate and then they might want to own their practice in their own personal lives. They might go from being single to having a family, having a partner, and from there looking at the next 30 to 40 years of life, putting in the milestones on that journey and then setting up plan which is tailored for that journey. That is essentially what somebody like me, a chartered financial planner, does.

Dr James : 4:23

Awesome, thank you for that. When you referred to the IFAs just a minute ago and you said that they tend to utilise centralised financial information, is that how you phrased it? Yeah, what does that mean?

Rohit: 4:36

Right. So what the term I used is the centralised investment proposition. So if, let’s say, I was a one man maned IFA on the high street, there is no way that I could research 4,000 investment funds or so that are available in the UK. So what I would do is I would choose a fund manager or a portfolio manager. There are so many out there to do the investment research, so I would outsource that element. So, in effect, I would be relying on that firm to do the research, and a lot of these firms tend to be skewed towards using in-house products. So whilst that is better than using just a restricted advisor who talks about one company, it’s still not as good as someone who can really do it themselves, who has the capability in-house to carry out that kind of research.

Dr James : 5:24

I see Interesting. And how does a CFA? How is it that they have the means to do that, versus our traditional IFAs, these one man bands, so to speak? Is that because you work as a team, there are other CFAs around you and you somehow aggregate your knowledge? Is that the case?

Rohit: 5:41

Yeah. So the first thing is that you have to do a lot more exams about investment, research, analysis, taxation and so on, which gives you a high level of expertise. But then it’s also useful to have the research capability in the form of a much bigger organization behind you. So, for example, the organization I’m associated with has got in-house investment research capabilities and they’ve got access to research from Financial Express, which is the biggest research firm in the UK. So the advantage is, when you’re talking to a firm which doesn’t have any in-house products at all, no in-house funds then there is no conflict of interest and the fund selection will be based on a true assessment of the market.

Dr James : 6:22

That’s where the difference lies. I’m so glad I asked you about that, because I can’t be the only one out there who must have heard these terms before and maybe necessarily there wasn’t clarity on them. So thank you for clearing that up and that’s absolutely brilliant. So, cfas, in your view, you’d be the gold standard and there is no successive level above that, and we should be all seeking CFAs for our advice, in your opinion.

Rohit: 6:48

I would say CFP, which is Chartered Financial Planner, is the gold standard, because just advice in isolation doesn’t mean much until you are able to connect it to your own life plans. So my plans could be very different to yours, James, and everybody has their own journey. So someone might do retire at 50 and somebody else might want to retire at 60. Other people may have plans to buy a holiday home, children’s education. So all of these are goals which have milestones and sitting here today, one might be thinking I have some vague ideas in my mind, but I really don’t know what they would cost me. So, for example, James, let me ask you a question when do you want to?

Dr James : 7:32

retire as soon as possible. That would be lovely, that would be great, wouldn’t it?

Rohit: 7:37

But, realistically speaking, do you have any idea when you might be able to?

Dr James : 7:41

Okay, let’s say I’ll just go with what I feel is a fairly standard answer.

Rohit: 7:46

I’ll go late 50s, early 60s, something like that, and how would you feel if I could show you a way of retiring earlier with proper planning and forecasting? Absolutely, I’d be all ears. Absolutely, and that is really the crux of what I do. So I help you work out, through a budget planning exercise, what your lifestyle requirements will be in, for example, retirement, or how much your children’s education is likely to cost you in today’s terms. Build that forward with inflation. So do some forecasting and projecting and, based on that, tell you what growth rate you need on your investments, based on what you’ll be contributing regularly lump sums, whatever it might be and that plan, once it’s in place, gives you a lot of reassurance in knowing that you’ll be able to achieve exactly what we’ve set out to achieve. We touch base once every six months because your goals change, circumstances change, investment markets change. So it’s important to realign and rebalance the planning with reality, with how the portfolios are actually doing, and that puts you in charge, that gives you a very high probability of achieving what you’ve set out to achieve 20, 30, 40 years down the line.

Dr James : 8:57

I see that’s interesting. So it’s like a tailor made journey, so to speak, and one that you keep on top of as an individual goes through life. It makes sense Awesome. And what would you say the key things that you, that we should all consider as part of our financial planning journey? What are the first questions that you ask? What are the most important things to that process?

Rohit: 9:18

Yeah, that’s a very, very important question, james. I’m glad you asked that. So I have a very simple model to describe what we do, and that is called the prison model. The P stands for protection. So think of a house, right? If you start building house, then you need to have a strong foundation. If the house is brilliant but the foundation is weak and they have, everything could come collapsing down, couldn’t it? So the foundation is protecting yourself against the Uncertainties life can bring. So I’m talking about the death of the main breadwinner in the family, loss of income due to sickness or Disability. So the first thing is protect your income and make provisions if something happens to you, for your dependence and family. So, on, another element to it may be business protection. So if you have partners in the dental practice, for example, who rely on you being there, what would happen to the business continuity if you’re gone? So it’s that that kind of thing which needs to be covered first. Does it make sense?

Dr James : 10:20

Totally yeah, totally, absolutely. What yeah, great. So once you’ve covered that.

Rohit: 10:24

Then you start thinking about your future goals. That’s the kind of thing we really like to think about. So Everybody loves talking about where their own favorite investments Somebody says bitcoins, somebody says property. The reality is that the best investment strategy is a combination of all of these or some of these, and that can only be Accident once we know what are the goals that you’ve got. So within the investment strategy comes the attitude to risk the return that you need to achieve your goals, which we do based on what I said earlier the budget planning exercise and goal setting. And then we talk about tax right. Nobody loves tax right and there are three types of tax which we help clients mitigate, not by doing anything dodgy, but by using allowances and tools the government gives us. So I’ll expand on that in our discussion later, but that’s a very important part of things as well tax planning, so reducing tax that you pay by careful planning. So the P is protection. Are is retirement planning. I is investing for your other future goals, such as students, education by the property, whatever it might be. S is savings, to making sure that you’ve got immersive enough emergency funds set aside To make sure that you can invest the other capital long-term, and M stands for more widgets. So making sure that you have your own home and if you want to have property as an investment plus, then you do Right to let the commercial investments along the side. Real quick, guys.

Dr James : 11:50

I put together a special report for dentists entitled the seven costing potentially disastrous mistakes the dentist may come 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 wwwdentistuneinvestcom forward slash podcast Report or, alternatively, you can download it using the link in the description. This report details the seven most common issues. However, most importantly, it also shows you how to fix them. Really looking forwards to hearing your thoughts. Great stuff, and what would you say? I think you’re going to be able to do that. I think you’re going to be able to do that. Great stuff, and what would you say? Out of those things that you mentioned, what are the unique challenges that face dentists that you see most commonly versus other professions?

Rohit: 12:51

So for dentists, the biggest challenge is Continuity in the profession. So, because it’s a much more Intensive and manual job as opposed to sitting on a desk, dentists have in mind that at a certain point of time they want to reduce their hours or they might want to just retire completely. So they want to be looking at other ways of generating income and investment returns, for example, buying new practices or investing their surplus capital in a way that they’re able to achieve Fire or financial independence earlier in life. They’re also concerned about the impact of illness or disability, because you have to have a lot of precision right with those tools that you use to do your implants or fillings or whatever. If that hand doesn’t work properly, then that’s it. You can’t make that earning anymore. So it’s making sure that your protective grace, all that that is also top of their concern. But other than that, it’s concerns which everybody shares, which is especially being self-employed, understanding how to draw your income in the most tax efficient way. What is the best way of structuring it? Do I go self-employed? Do I go a limited company route, llp what do I do? Pensions NHS pension is the big one I come across. They don’t make it easy to get your head around, and we are experts in unraveling the complexity, so we can make sure you understand what the benefits that the pension will give you. It’s a gold plated pension Fantastic. But what other provisions do you need to make? We do the gap analysis for that too.

Dr James : 14:33

Interesting stuff. Yeah, when you were talking there a second ago about health and wellness being a big concern of dentists and just how much our job relies on us being fit and able to work, that is a massive thing, okay. And here’s the thing about being a dentist you can earn as much as you like, but eventually, unless you have planned to save that money that you’re accruing or invested, you’re always going to have to go back to work because of inflation, unless you find a way to make your money work for you, even if you earn 300 grand, 400 grand a year, anything like that. And here’s the thing about dentistry it is the ultimate job, which is an exchange of time for money For most of us, because you have to go to work. You physically have to go to work to earn some money, because most associates are, of course, self-employed. What do you normally say to those dentists who say to you Rohit, I need to think about making my money work for me. Do you say invest? Do you say get a side business? Do you say I don’t know what? Do you say I’m interested.

Rohit: 15:38

Yeah absolutely. That’s a very good question and it’s a combination of the things you mentioned. So first of all, it depends on how much time and effort one is willing to put in and second, it depends on one’s aspirations for the future, the kind of lifestyle they desire. So before we go into that, let me just talk to you about the financial independence point you mentioned. So if you go back in time to the 70s, the average life expectancy was in the region of 74-75 years. So you could retire at 65 and expect to live for 10 years, which means that attaining financial independence was very easy. Your company, your employer, would typically give you a guaranteed income, or if you were self-employed, you could take out a pension and 10 years not that long. But now the life expectancy is already 82 for men, 84 for women, and if you’re talking about the dentists in their 40s or 50s, they could realistically aim to live beyond 90. Anybody younger will probably live even longer. So that’s 30 to 40 to 50 years in retirement. And if you don’t do proper planning, then the risk is running out of money in later life and having to come back to work. There could be nothing worse, especially in a profession like dentistry. Therefore, having a clear plan is very, very important. Now, coming back to your question If you can invest, as a dentist, into building value, so you already understand what is involved in terms of the regulation, in terms of structuring the business side of the practice. If you’ve come to that stage and your aspiration is then to get your own practice and maybe build a network of practices, by all means do that. It brings a level of responsibility, it brings a level of challenge, and some people really thrive on that. So for them I would say go for it. And any surplus capital that you’re accruing, we can advise you on the structure. So the limited company structure, we can have a separate investment company, for example. We can help you draw the income tax efficiently. So we can work alongside you in terms of being your financial partners and advisors, making the most of your tax situation and investment capital. For the other type, which is people who just want relatively chilled lifestyle, they say, be happy being associates or employees of the corporate. Again, the thing is, let’s build an investment strategy, and what’s common across both of those is basics. So people ask me do you give anything for free? I say yes. There’s only one free lunch in investing, and that is the art of regular investing. So it’s a very simple exercise and I would encourage everybody to do this, whether you seek advice or not, professionally. And that’s working out how much you earn, so what’s your income every month and how much do you spend. Doing that sort of budget planning exercise gives you your disposable income and that allows you to save and invest on a disciplined, regular basis. That is really really powerful and can go a long way. They say that the ocean fills up drop by drop, and that’s not true when it comes to investing.

Dr James : 18:45

Yeah, absolutely. And you know what? I fully empathize with dentists as well, because lots of us go through our careers and our bandwidth is so saturated by clinical dentistry Because there is just an insane amount to learn. It’s very easy just to not even devote a small amount of time to this sort of stuff, which can pay dividends later in life. And that’s the message of dentistry and invests and that’s why I wanted to create this page and that’s why I have got people like yourself on is to allow us dentists to see that actually, in doing so, we’re actually restricting ourselves in the long run, in my opinion, and what it can also mean is that we have no proper plans in place when we reach retirement age. So it’s so important to have these conversations, and would I be right in saying that there is no such time as too early to have these sorts of conversations during a career, or is there a perfect time to wait?

Rohit: 19:35

There is no perfect time. The time is now, I would say. There are clients I’ve worked with in their fifties who’ve got five to 10 years to retirement and we’ve made a real difference. Obviously, if you start at, say, 30 or 25, you will have a massive advantage over someone who starts at 40, say, but it’s never too late. Talking to someone who is a trusted partner, who can look at your life’s journey in a very objective way, can take away that element of emotion and can really focus on. It really helped me focus on what lies ahead. So my job when I do lifetime cash flow planning is taking you through a journey of what the next 30, 40 years look like coming back to the present quantifying all those milestones that you want to achieve and then putting in a strategy to achieve that. It is as simple as that. So it needs to be dynamic, it needs to be tailored and it needs to be disciplined, and all that can be brought in by talking to a trusted advisor like me.

Dr James : 20:38

You mentioned something off camera. That was the concept of human capital. Yeah, and I was so intrigued to learn more about that. Can you talk a little bit more about that, for the benefits of the audience and for myself as well, of course?

Rohit: 20:49

Yeah, absolutely so, james. You’re doing fantastic work in financial education, for example, right. So you’re putting in a lot of effort, talking to me and other experts, other great people that are out there to teach various skills, and so on. In a similar way, dentists work day in, day out to make a difference to help their patients, but ultimately we are all in it for the money, right? Eventually? Because what we do, we exchange our time, that is, human capital, for financial reward. And there are two ways of looking at life. One not so nice way would be to keep working till you drop that, right. So you work X amount of time and yet you get paid Y, and that Y hopefully goes up as you build up your skills and knowledge. Or you are smart and you put your surplus investment capital that you’re generating so working X, earning Y. So put a small amount Z out of Y. We talked about regular investing and lump sum investing so put that away so that it grows ahead of inflation. So you’ve worked hard to earn that capital and now it’s working hard for you. And then you reach a stage in life by doing that where you say I don’t need to work anymore, so I’ve accumulated my investment capital, and that investment capital now is enough to keep working for me. How nice it would be, james, for example, if I was to tell you you can have the income you want to live your lifestyle, to travel around the world, play the games you want to play, go out to restaurants you want to go to, and you don’t have to work. Right, a person like you would probably still want to work for your own satisfaction. That’s very important, but the key thing is there would be no need or compulsion to meet your standard of living requirements, and that’s really what this transition from human capital to investment capital is all about. It’s financial freedom.

Dr James : 22:45

I love that. Yeah, and you know what? As you said, I think you just said something really important there, because for a lot of people, I think that there is a huge onus on the privilege or the right to not work, but actually that’s maybe even something that wouldn’t necessarily be satisfying for a lot of people, because some people just have that innate drive or want to be able to contribute towards something and even when you reach that point of retirement it still manifests somehow. It just means that you don’t turn up to the workplace every day and maybe that means you join an organization or whatever you do. But here’s the thing it’s not about that. It’s about giving yourself the option okay, the option, the safety net and a fallback, without being the right way of explaining it.

Rohit: 23:28

Absolutely that. Absolutely. It gives you the freedom that’s why I prefer financial freedom to retirement in describing that stage so it gives you the freedom to do what you want to do. So you might want to take up something which doesn’t give you financial reward but gives you a lot of satisfaction, sense of fulfillment. So, just by the example, I was talking to a dentist who I advised and he’s now in a position where his investments will meet his lifestyle needs and he has taken up a new profession as a teacher. So he says I trained as a teacher and I’m now teaching secondary children medicine and sorry, not medicine biology and science. The reason for that is it gives me a lot of satisfaction in terms of creating the next generation of doctors, dentists, whatever it might be. So that’s probably paying him very little and he’s not in it for the money, but now that he doesn’t need to work for meeting his lifestyle needs gives him that freedom, that choice, and it’s all about of that.

Dr James : 24:34

That’s great. Good on that guy, whoever he is. You said it was a chap, wasn’t it? That’s what you said? Absolutely, he was an analyst. That’s awesome. Fair play to him, whoever he is Awesome. So what do you think, having said all these things, let’s use so you juxtapose the two terms there retirement and financial freedom. Yeah, that’s what you said a second ago, I’m sure. So, retirement versus financial freedom. What do you think is a feasible age that should we, as dentists, leave dental school and immediately start taking our future into our own hands? Or financial freedom or, sorry, our financial future and financial planning? We immediately begin to start thinking about that. What is a feasible age for most to attain a salary and what they could live on? What is a feasible age that they might reach for most people that we might aspire towards, and how soon can that happen, realistically, right?

Rohit: 25:31

So very good question. And the answer to that is it depends. It’s individual to each person, but there are some common trends. So, for example, when you start out, you pass out of dental school and you do your internship or training for a year before you get your regular normal status, during that stage you’re probably going to focus on just building your emergency funds, getting a deposit together to buy a house. So at that stage probably the priority is towards using the allowances you get, like lifetime ICERS and stuff, to invest into those and build up a deposit. You’ve done that. Then you can really start to think about long-term goals. So for some people that might be looking at having a family or others it might be just looking to travel a little bit more and save for that. So goals might be different. But the earlier you start on that journey, the better it will be, because it gives you longer to A invest. So your capital is going to be a lot greater. And bear in mind, you don’t have to invest lump sums necessarily. Regular investing is very, very powerful. Even if you can afford to save a couple of hundred pounds a month, do it because over time that builds up a huge value if you’re doing it at a very young age.

Dr James : 26:49

Awesome. So, yeah, it’s going to be unique to all of us. I suppose another way of saying it is what is the earliest that you’ve seen someone attain that level, that point in your career, someone that you’ve helped? Perhaps Financial freedom? Yeah, the point where they don’t have to work anymore. 35.

Rohit: 27:07

35. Wow, fair play.

Dr James : 27:08

That’s pretty good.

Rohit: 27:13

Absolutely. I have dealt with many clients who are Isa millionaires, for example, the humble Isa. A lot of people say that any good. Actually, it gives you 20,000 pounds per year to put into anything you want investment-wise and it gives you tax-free capital gains, tax-free and tax-free returns. So just by doing that for, let’s say, we’re talking about a husband and wife or two partners or whatever it might be 40,000 pounds a year in a tax-efficient wrapper. You do that over 10 years and with the growth, if you’re in luck, then it could touch a million pounds over 10 years and that’s the kind of power we’re talking about in investing.

Dr James : 27:52

And that particular individual. Did they invest much in individual shares, or was that very much? Your buy indexes buy and hold and gradually average your way in, or was it a little bit of both? Maybe you can’t go into those specifics, I’m just curious as to how they did that. Yeah.

Rohit: 28:09

That’s a very, very. You bring us to a very important aspect of investing strategy the debate between passive investing and active investing and going directly into shares versus other things. And we can touch upon other avenues like property and Bitcoin and so on. Right, these are all great investments in their own right. It’s about understanding how they interplay with each other and how they relate back to your goals and your attitude to risk. So if you’re investing directly into stocks, the question you’ve got to ask yourself is how well do you understand the market? Do you have to know how to evaluate volatility, the future return expectations? Do you have that know how, or are you just taking a punt based on what you’re reading in financial newspapers? I have a very interesting full form for the acronym news, and that’s negative events were a service. So one thing which I can say to everybody straight away is never make any decisions based on what the media is telling you. Because it’s a pretty sad habit I’ve got, but I tend to collect articles from the FD. You must have read the FD and the times, then these sections personal money, mentor and so on. So the flavor of one month may be gold, the next month may be property, the following month may be I don’t know value stocks. The other will be growth stocks or go into IT stocks. All this right is just because they want to sell the news. In reality, nobody knows what is going to be the best performing asset class. Last year small companies took a real beating. This year small companies were up 40%. Defensive stocks last year held up quite well. This year the growth has been pretty moderate on that. So it’s about having a diversified portfolio. If you don’t understand the investment you’re going into, then seek professional advice and get it managed. That will give you a better outcome than just taking a punt in the dark. And when it comes to other asset classes, like property, you’ve got to understand that having buy to let property is a good way of building your assets. But you have to ask yourself is it going to meet my liquidity needs? Yes, I have got that asset on paper, but unless I sell it, can I get the 10 or 20K I need from that? So, considering all of these, my own view is that a fund-based approach, where you have a portfolio constructed for you, either by going online to one of these fund supermarkets if you’re doing small amounts or if you’re really serious about building substantial assets, then paying somebody like me to do it for you so that it’s exactly tailored for your life’s journey, it’s tax efficient and there are regular periodic checks every three to six months on how you’re progressing against those loans. So hopefully that gives you a flavor.

Dr James : 31:07

Definitely. Well, that’s maybe something that I wasn’t aware that FAs would ever go to the depths or go to the level of investing in individual companies, because it becomes that much more complex at that point. Did I understand that correctly? So maybe is that something that a CFA is more likely to do versus an IFA or an FA, or was that what you were getting at, or?

Rohit: 31:33

Right. So going directly into stocks is something that would be done by a stock broker, typically not by an advisor. An advisor would help you select investment funds, where the decisions on which stocks to pick up are made by a fund management team. So that typically gives you global diversification. So I’ll give you an example. I’ll give you an overview of how we construct portfolios. So we would look at your preferences. So someone might prefer emerging markets, others might prefer Europe, america and all that. So for most people, though, it’s having a truly globally diversified portfolio. So the process starts with working out what is the optimal asset allocation. So how much can we allocate to Germany, france, italy, how much do we put in Canada, us, to create a global asset allocation index and then, based on that, choose the best funds in those markets? That, historically speaking, from our analysis shows, is responsible for 70% of your investment returns. It’s not the stocks you pick, not the companies you invest in. 70% of your return is asset allocation with sectors and which countries you go into, and that needs to be revised and rebalanced on an ongoing basis to really take the lowest amount of risk and achieve a more consistent return. So that is certainly the strategy preferred by most advisors, whether it’s IFAs on the high street or chartered financial advisors. There are some people who prefer investing in stocks directly, but you’ve got to be aware of the pitfalls that if you do it yourself, you may get it wrong and lose a lot of money. If you’re doing it through a stock broker, typically it’s execution only and you can only do UK stocks, so you’re restricted to the UK economy, which is 7%, just 7% of the world’s stock market capitalization. So these are some of the limitations I would say. However, some people enjoy. There’s another side to investing, which is people enjoy researching and choosing their stocks. So there’s always a rule of 80-20. I say to clients 80% of your investment capital, get it invested in a responsible way. The other 20%, by all means, take a point with it For Bitcoin. You might become a Bitcoin billionaire. Right, at least you’re learning about it. The technology has a lot of potential and it could give strong returns. On the other hand, everybody’s aware of the volatility it exhibits, so increase your knowledge, get some exposure. The same thing goes to direct stocks, but those kinds of assets should form 20% of the capital you’re prepared to lose and the other 80% should be invested, in my view, more responsible.

Dr James : 34:16

I hear you. Yeah, I think that’s a completely reasonable thing to say, and I feel as well that if we are someone, let’s say we are someone and we take all of our portfolio and we allocate it to something which is totally risk averse. In effect, that is preserving our capital, but will we ever see capital growth to the point, realistically, over a period of years, that might attain us financial freedom? It’s going to take us a hell of a lot longer than it would do otherwise. Like people who are totally risk averse and they’re saying, okay, well, I want to put all my money in like 10 year bonds. The yields on US 10 year is like 1.5% at the minute. It’s not even going to be inflation. So I guess what I’m saying is we need to be aware that risk can be utilized to be our friend, and not always something that we’re totally averse to, and that’s why I’m pleased to hear you say that it’s a reasonable thing in your opinion to do to take 80% of your money and put it in things that are seen to be reliable in the long run in terms of producing returns, and then taking the 20%, another 20% and maybe investing in something slightly more speculative, because this is where the real magic can happen over here with the 20%. But then of course everybody’s going to be different horses for courses and that 20% it may work out for some people and it may not work out for others. It depends on the individual. But I’m pleased to hear you say that you’re acknowledging that in the first place, because in my experience a lot of FAs would actually say let’s stay away from even taking that 20% and doing something a little bit more speculative with it, because that 20% could be contributing towards our long term portfolio. But then in effect, the thing that I suppose frustrates me slightly when I hear that is I say to myself, I say I would say to those people but you’re as good as saying to that person you have to work for the next 30, 40 years of your life realistically until you get a pot that is sufficient to achieve your goals and that may work for some people. But some people may hit their jobs, some people may want another option and for those people, offering them that tailored advice that to hear you say that has allowed me to understand that, even from someone who’s a professional in the industry, that that is something that’s viable and that’s something that you may suggest to your clients.

Rohit: 36:35

Yeah, by all means, absolutely, and that’s really. That goes back to financial planner versus a financial advisor. So if you go back on how the industry operated before 2012, it operated on commissions and part of this thinking the old fashioned thinking comes from there. So I’m not saying that advisors were necessarily driven by commission, but that may have led to a bias in how solutions were recommended or funds were recommended in the past and that still lingers on, unfortunately, with some people. But people who are financial planners like me not advisors alone will do their advice or give you advice based on what’s right for you. So if you have that attitude to risk, which means that you’re comfortable and you understand what you’re getting into, then I would encourage you to do that with the 20%. Also expanding on the other 80%. You talked about investing in things like government bonds, like you, the Treasury bonds and things like that. This 80% doesn’t go into those assets necessarily. It goes into equities too. So equities, which are the great companies of the world, so the Teslas, amazons of the world, tescos, gsk, all of these large companies all around the world which can be volatile. So volatility is different from risk. You can have periods where the stock market goes up and down, but if you look at any period of time longer than five years, going back 130 years of stock market history, you will not find a period where an investor has lost money by investing in good quality funds, and that really goes a long way in explaining this. So, really, what it’s about is dividing your capital and goals into three categories Short term, which is 0 to 3 years, medium term, which is 3 to 10, and long term, which is 10 years plus. So goals that are within three years. That money you should keep in cash, of course, because you don’t want it taking a last minute, no style. For the medium to long-term goals, you can follow the 80-20 rule. For the 80%, if you are at least 10 years away from your goal, then you could go majority equity, 80-90% equity, because these are all the great companies of the world. No matter what happens crises like the World Stock Market Crash and the dot-com bubble in 2001 and 2008,. We all know what happened in COVID. All these things will come and go, but overall, the valuations of stock markets have gone up massively. They have been the single best asset class across property bonds, everything. Over the long term, the companies of the world will innovate and they will work around challenges like climate change, like artificial intelligence, genetics and all these things will develop into propositions which we don’t know. The next Google and Amazon of the world would be in these fields climate change and artificial intelligence, robotics, for example. Medical science is another one of that. So think of a dentist being able to use a robotic arm to do their work halfway across the world. These things could become reality soon enough. So it’s that kind of thing we are talking about. So half that as the investment class in the 80% that we talked about 20% do what interests you. You have to enjoy investing For some people again, it’s also, of course, as you said, some people don’t want to do it. They say my time is valuable. I want to spend time with my family, play golf, whatever is it I love doing. I would rather pay somebody to do 100% of it. That’s great, no problem with that. But if you enjoy doing it and you take the effort to learn, learning and understanding what you’re getting into is important, and if you can do that, then absolutely do that, because life is not about just money and returns. It’s also about enjoyment, isn’t it?

Dr James : 40:34

There you go, I like that and you know what Horses for courses. Just like you said and I’m interested in you say that because maybe it was wrong, right or wrong my presumption of an FA and their role and their remit was to share the advice on these things that were seen to be more safe, like how you were saying earlier about indexes like the S&P, or having a certain allocation of your portfolio and bonds. And whilst you are saying that that is something that we should do, you’re also saying that realistically, in the short term, you’re accommodating to that 20% of cash as well, which can be a little bit more speculative, but is also where the magic can happen, and I actually didn’t know that FAs were permitted to do that, or well, I just didn’t really know that that wasn’t within the remit. So I suppose that’s the thing that she needed to buy it being a CEFA.

Rohit: 41:29

Yeah, absolutely. Financial planner is the key word. I keep going back to that. So any advice that you talk to when you’re evaluating who you want to work with, just ask them A are they independent? B do they do the investment research in-house? And C do they use cash flow planning that is done with you, like with the client? If the answer to any of these questions is no, it’s probably not worth doing business with. And the other thing to look at is who do you relate with? It’s going to be your trusted friend, your philosopher and guide on the financial front for the rest of your life. So just make sure that you can build that bond and that trust. That is the most important thing. So people have different approaches, they have different personalities and it’s important to have that connection.

Dr James : 42:19

Brilliant and you know what? On that note, what a lovely place to just ronde off, because I think that drew a line under everything. So thank you so much for coming on the podcast today, rohit. Some real gems in there. I hope you’ve enjoyed yourself. I’m sure you have.

Rohit: 42:33

Really, I very much enjoyed myself today. It’s always great to talk to you, james, and the work that you’re doing in terms of financial, education and bringing lots of expertise to dentists is really commendable. So well done and keep the good work on the side.

Dr James : 42:48

Thanks man. Thanks man. Do you know the podcast just turned a week. It just turned a year old, sorry, a week ago, so that is really exciting because that makes me think we’re just getting started as well. Awesome, Rohit. Thank you so much for your time and we will catch up very soon.

Rohit: 43:04

Thank you, my pleasure.

Dr James : 43:06

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