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Dentists Who Invest

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, welcome to the Dentists who Invest podcast. Hello everyone, welcome back. Good evening, welcome to another episode of Dentists who Invest. We’re on the third episode of the podcast already. So you know we’re not messing about, we’re getting stuck in. I mean, I only started this thing about a week ago and here we are, we’re on three episodes. I’m hoping to make this a weekly thing at well, that’s the plan going forward. I just thought it would be nice to just get to, just to set us off, just to get us off to a flying start. We’re going to settle into a little bit more of a routine now. So this is episode three and it’s going to become a weekly thing going forward. So I hope everyone’s been well since our last episode.

Dr. James: 

We’ve covered houses so far. We’ve covered growing a social media presence so far. It’s all related to the broader theme of finance. But what we haven’t done, we haven’t done the very bread and butter of investing. We haven’t really covered the fundamentals or the basics of building a portfolio and therefore making something sustainable that we can draw profits from in the long run and diversifying ourselves, your stocks, your portfolio, your things of that nature, things in your stocks and shares. I said that’s very much your bread and butter. Well, I mean, it depends on the individual, of course, but generally speaking, that is what most people would call their bread and butter, and that’s why I thought that this would be a very pertinent podcast or a very informative podcast for the members of the group.

Dr. James: 

We’ve got a very special guest with us tonight. You may have seen him on the group. He’s contributed a few times. He’s quite active on the group. He is a dentist. He resides in Cheshire. He has a master’s in business administration, would you believe, and he’s also got a postgraduate degree in endo. I don’t know where he’s squeezed in all the time to do this. He also, on top of that, runs a investing blog called Hedgebox. He does that. He runs that because he wants to educate others about the merits of safe investing to protect your wealth in the long run. And that’s why I really wanted to get him on, because his ethos marries up with our ethos on the group, which I thought was wonderful. His name, in case you haven’t heard of him, his name is Veselin Bakturov, or Vez to his friends. How are you tonight, vez?

Dr. Vesselin: 

Good. Thank you, James. How are you?

Dr. James: 

Smashing. I’m absolutely tremendous, vez. Thanks for asking. I’m always good. I’m stuck up here in sunny Leeds, but it’s a bit cold and wet today, but never mind. I’m indoors, so it’s all good. What’s the weather like in Cheshire?

Dr. Vesselin: 

it’s like raining buckets as usual. Yeah, so not only today. It was quite nice up until today.

Dr. James: 

Yeah oh, I see right, fair enough then. Well, no surprises on the rain front, I suppose. So, as I say, I’ve got Vez on because he really knows his stuff when it comes to investing and he’s a dentist too, so he’ll be able to give us this information, give it to us from the slant of a dentist, which I think is novel and interesting and very pertinent and relevant to us. Because we’ve all heard the financial advisors kind of slant on things. They just want us to offload all our money onto them and take a handsome little slice for themselves. But if we have someone like Vez on here, who is a dentist and invests successfully on his own, then he’ll be able to tailor the information of how to undertake that journey towards other people in the profession with a lot more skill, expertise and relevant insight than I think a lot of people can, and that’s why I wanted to get vez on.

Dr. James: 

Anyway, vez, I’ve done absolutely loads of talking. The show is supposed to be about you, so I want to hear a little bit more about you, vez. I just want to know about your journey, what, uh, where you, where you’ve come from originally. I noticed you have a little bit of an accent, so I’m going to presume that you weren’t originally from the UK. As well as that, I’d like to know as well just about your journey into dentistry and your journey into investing as well. If that’s cool, over to you, my friend.

Dr. Vesselin: 

Yeah, no problem, James. So I’ll first start off by saying that if someone came back to me about 10 years ago and told me I’d be talking to you about investing now, I’d love them out of the room. I’d be like no way, no way, I know that feeling.

Dr. Vesselin: 

Although I’ve been interested in it for quite some time. But I’ll start with the beginning. Okay, so I qualified as a dentist in 2016 in Bulgaria and I worked there for a few years and then moved to the UK in 2010. Started at mixed practice, Then I did that endodontics diploma and I started doing the root canal referral service and I really enjoyed the marketing aspect of it and I found out that I like marketing and I thought, okay, I want to do that, but maybe in a bit of a different way, because I like other things like technology and the internet you know social media platforms and I was thinking maybe I can start something there, but I wasn’t sure exactly where to start. And then, as I was reading about it, I came across the MBA and I thought, okay, I like that’s marketing, economics, finance you know it sounded like pretty robust. So I thought, okay, I’ll go finance. You know it sounded like pretty robust. So I thought, OK, I’ll go with that and see where it leads me. And I did have some ideas in the real economy. But then COVID struck and I started trading more. So now I trade a lot of options, Although, like most of the things that I write on Hedgebox.

Dr. Vesselin: 

They’re about sort of like buy and hold type of investing, because I feel that options may be a bit more complicated for a lot of people and the access to them is somewhat limited. Like you may start, you may open an account and you may get declined clearance. I I normally get cleared because I tick the box. Do you have any like qualifications in finance? So I tick it as a yes and they approve me. Right, but otherwise you may struggle. So I don’t think it’s like a product that’s accessible to a lot of people. I wish it was, because it’s an absolutely brilliant product. So that’s why I write more about stocks and shares and bonds and things like that. I normally gather intelligence online from social media about what people are buying, what people are selling, and there’s a lot of trading education going on. Some is free, some is paid, but either way, quite often it doesn’t have any kind of structure.

Dr. Vesselin: 

It starts. People start like throwing terms and don’t explain them that well, sometimes start like throwing terms and don’t explain them that well sometimes. Or someone may be reading a book but they didn’t read the book, that they should have read before to understand the second one, and so on. So sometimes it’s not structured in the right way. Let’s put it this way, and I think that a lot of investors on the retail side not just dentists are left thinking, okay, I can’t understand the market, or I’m not good at it, or maybe I can’t do it myself, and I don’t think that’s true. So one of the things I want is to give people confidence that they can do it, whether it’s you, me or the next guy. No one knows any secrets about the market that other people don’t. So if someone wants to start investing, they can do so. There’s nothing scary about it, really.

Dr. James: 

Yeah, I love that, vez. So that’s actually one of the reasons why I wanted to get you on, because I read a little bit of your blog and I thought, wow, vez’s insight or his kind of ethos on this subject is very much aligned with ours could invest in. They maybe kind of tend to throw everything in the whole field together and overly complicate it. There are parts that are relatively simple that anybody can learn. There’s minimal jargon, minimal lingo that allow you to protect your wealth going forwards, and you don’t have to be the person who’s actively trading every day.

Dr. James: 

I think personally that over the next year or two, there’s going to be an inflation tidal wave which is going to rob us of a lot of our savings, and I’m just a little bit concerned about that and hence why it’s drove me to sort of explore ways that I can protect my wealth. But that’s just my opinion personally. I think, regardless of whether you agree with that or not, it’s definitely always a sensible thing to do, and that’s why I thought it would be brilliant if we could have Vez on tonight and he can explain everything like this from a dental point of view. Does that sound reasonable, vez? Yeah.

Dr. Vesselin: 

Since you mentioned inflation, I don’t usually share that about me, but like when I was a kid, I lived through a hyperinflation cycle, right, oh my goodness. It went up to something like um three thousand percent or like. I don’t remember what the figure was. I just remember that I was like seven, seven years old and my grandmother sent me with something like 20 pm. She was like okay, go and bread. And I went to buy bread and they were like oh, but like you know, it’s 50 today. You know it was 20 yesterday. And I came back and I was like grandma, it’s like more expensive, you know. And she’s like, oh, okay, and she gave me more money. And the next day I went with 50 pm. They were like well, you know, today’s bread is bound. Sorry, buddy, no, you’re kidding. Wow. And the country’s GDP was something like 44 billion. The next year it was 1.6.

Dr. James: 

Real quick guys. I’ve put together a special report for dentists entitled the 7 Costing 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. I’m really looking forward to hearing your thoughts. Oh my god. Well, that’s an economic crash.

Dr. Vesselin: 

So that was like a proper. It went absolutely down the ground and then some, it was terrible years. So yeah, you’re absolutely right to not be worried about inflation. I can tell you, if you find yourself in that sort of situation, like hyperinflation situation, there’s nothing other than like land that’s going to save you from it.

Dr. James: 

Yeah.

Dr. Vesselin: 

Well, yeah.

Dr. James: 

Yeah, it’s an interesting one. It’s definitely something that I’m looking at protecting myself against, and if you have your finger in various different pies, the more diversified you are, then the more able you are to protect yourself. And for well, I think just the most important thing is to not have all your money in cash and to just think about other ways that you can invest and protect yourself. And again, this is another thing that I elaborate on on the group quite a lot, because when I learned it for the first time, I definitely rocked my world 100% smashing. Well, thanks so much for that, vez.

Dr. James: 

So we’ve talked a little bit about your history, talked a little bit about your well, yeah, just where you came from, your journey, your path into dentistry, things of that nature. I just wanted to ask you this is a relevant question because this happened to me and I don’t know if this has also happened to you Was there a light bulb moment, that a specific point in time that you thought to yourself, wow, I really need there’s like a call to action here that made you think I really need to invest some of my money? The call to action for me was when I learned about inflation and how much the government meddle with figures to to well, to well. They try to make out it’s lower than it actually is, and that’s what made me realize just how much money I lose in the bank every year. Was there a specific moment that you thought to yourself wow, I really need to be conscious of this stuff.

Dr. Vesselin: 

I really need to diversify my holdings uh well, like ever since I was a kid or like back home, you know, money could quickly turn into paper like overnight, and so I see, so, ever since a young age, like my dad told me, son, you know, uh, that’s just paper. If it’s worthless, you you know you can’t do anything with it. You need to kind of put it somewhere right, otherwise it’s just as good as yesterday’s newspaper. So I’ve always been, you know, like brought up with that. And my mom, before she retired, she worked as an accountant as well. So you know, I grew up with like interest rates, tax and that kind of thing as well. So ever since I was a kid I kind of like I’ve been brought up with this, but I think the first time I because my family has been in property for ages but the first time I got interested in like stock was around 2000.

Dr. Vesselin: 

So I watched the movie, funnily enough, and there was a guy trading stock and I was thinking, oh, that’s interesting, I want to try some of that. And then I looked into kind of stock. But in Bulgaria there was no like real market for that kind of thing at all, that kind of thing at all. Then when I came to the UK, I started looking into things like derivatives. So that’s how I got interested in options and that got me interested in finance as well. But my real aha moment was when I blew up my CFD account. I was trading a small bit of CFD with like real money. I was thinking, oh, that’s great, like leverage, to make a whole bunch of money out of that, like I know that stuff. And then I blew it up.

Dr. James: 

Oh dear. By blow it up, do you mean you blew the account or the account went up a lot in value?

Dr. Vesselin: 

No, I mean I went down 75% or something like that.

Dr. James: 

Oh well, people say, you learn more from your mistakes than your wins.

Dr. Vesselin: 

I suppose, oh, yeah, yeah, definitely yeah.

Dr. James: 

But I hope it wasn’t too much money. But I’m sorry to hear that.

Dr. Vesselin: 

No, no, but I learned that I don’t know. I know as much about the market as the next guy right, so I learned from it.

Dr. James: 

Leverage works both ways. It’s a double-edged sword, isn’t it? It’s very unforgiving, but never mind, cool Right. Well, thanks so much for that, ves. I think at this point, just before we go any further, I’d just like to make this extra clear, as I do on every single podcast that I host, on every single podcast that I host, it’s that, vez and I, we’re investors. We do it for fun. On the side, we have a little bit of knowledge that we believe is important to share with others, but we’re by no means financial experts, so there’s no financial advice offered on this. I just have to mention, from this point going forwards, the next thing I wanted to ask, vez, now that we’ve got that out of the way, we’ve touched upon your MBA, your wanted to ask, vez, now that we’ve got that out of the way, we’ve touched upon your MBA, your master’s in business administration, what was the, what was the? You know, uh, the reason that you sort of decided to pursue this, or what? What was the thing that instigated you to go down this path?

Dr. Vesselin: 

uh, I want to try something different. Um, there’s, uh, it’s the 21st century, right? So dentistry is generally like a job that’s resistant to automation. So it’s unlikely that it’s going to disappear over the next maybe 20 years at least. I would say more. I give it about 50 as a minimum in terms of automation, but because things change quickly. I give it about 50 as a minimum in terms of automation, but because things change quickly and you can see now, with the coronavirus pandemic, whatever kind of job you’re doing or work or business, something like that can render you bankrupt pretty quickly.

Dr. Vesselin: 

So it seems that it’s always a good idea to um, mix a couple of different things so that if something happens to one, then you’ve got like, yeah, like a fallback, yeah, exactly the the same thing. And also, um, I’ve always felt that, um, if you were involved in dentistry like as a business, it lacks scale. Uh, in the sense, in the sense of um, like a platform, right. So dentistry is very much a brick and mortar sort of venture. It’s very capital intensive. You’ve got your buildings, chairs and so on. So think about something like, uh, facebook or pinterest or google. I mean these guys they can start in a garage or at home or in their grandmother’s living room, and they can still do work from there, and then the way they the, basically their profit potential is unlimited, pretty much yeah I hear you, so more scope more scale, yeah, and it’s just kind of a different business model, uh, from the point of view of economics.

Dr. Vesselin: 

Because, like, say, if you’ve got dental practice, you’re what we call economists of scale. They’re on the supply side. So for if you automate your business process and kind of shorten consultation times and things like that, or negotiate with your suppliers for cheaper supplies, you’d make more money, right, whereas with the internet the economies of scale are on the demand side. There the economies of scale are on the demand side, so then you need to collect more audience or more users to your platform. Uh, like, for example, if you think about facebook or youtube, if you’ve got like channel on youtube or if you start something like facebook, the more people are using that product, then the more popular it becomes and gets bigger and bigger and bigger and at some point it just goes exponential, it goes like viral. So they’re kind of from.

Dr. James: 

From the point of view of economics, they’re completely two completely different things that is something that I’ve never thought about before in those terms, but it is completely true. Yeah, that’s really interesting. So, basically, what is? Yeah, I, I hear you there’s like two different economies of skill there and uh, yeah, wow, I’ve just never heard of putting those terms it’s, it’s uh.

Dr. Vesselin: 

Man, I’ll explain it in a really wheezy way. Okay, uh, that’s what my teacher used to say. He went in the classroom one day and he was like what’s the difference between a banana and the fax machine? Okay, okay, what was the difference? Yeah, think about it. Okay, we’ve got a banana and we’ve got fax machine, so kind of like, which one’s better? Yeah, yeah no idea. Yeah, go on, try, give it a try.

Dr. James: 

Come on, man oh, I’m gonna say I, so I’m going to say a banana today.

Dr. Vesselin: 

Yeah, that’s right. So with the banana, you can take the banana, you can eat it, you won’t be hungry, right? But, like, if you’re hungry you can’t do anything with the fax machine. Maybe you can send a fax to someone to tell them okay, can you bring me a banana? But it would only work if there is at least one person in the world who also has a fax machine. So let’s call the network effect, right? So it only has value if someone else is using it.

Dr. Vesselin: 

If you’re the only person that has the single fax machine in the world, it would be absolutely useless. You can’t do anything with it. But if another person has it, then the two of you can send faxes to each other. Or it’s the same with phones, right? If I’m the only one who’s got the phone, it would be worthless. But if I can call you, then it’s got some value and then you can call like your friend or like someone. And the more people use it, then it becomes more and more valuable. And that’s how things like, say, the App Store, apple Work, google, android and things like that, it’s got to be.

Dr. James: 

Yeah, good analogy, and I think what you’re saying as well is that if you’re only one person, there is more. When you hit that sort of exponential growth level on the internet, if you have your finger in that pie as well, there’s way more scope, whereas for dentistry you have to actually build the practices first and that’s your kind of limiting factor, and as one person, to achieve that, it takes a hell of a lot more capital to do to build the practices than it does to potentially achieve this level of exponential growth on the internet. So it’s more fluid and it’s more readily available to lots of us and maybe if we just focus purely on the dental aspect of our lives, we’re almost, in a way, inhibiting ourselves or holding ourselves back, especially in this digital age. Is that sort of what you meant?

Dr. Vesselin: 

as well. Yeah, but also you kind of have to level it because, like the, for example, if you start a career in dentistry, the chance of um getting, like, say, a decent lifestyle outfit is pretty significant, right. So there’s a very good chance. You know you you’d have roof over your head, you you’d have food on the table, you know you’d be happy, right. Uh, if you uh start something like a social network or anything that’s got that exponential potential for growth.

Dr. Vesselin: 

Um, that tends to create uh industries which, uh, we call oligopolies, where you’ve got like two or three companies that have 95% of the market share, like, say, for example, computer operating systems, mobile phone operating systems, serial manufacturers, airlines, things like that are industries where you’ve got concentration of all the market share in like two or three companies and it’s very difficult to get in there. So it’s what they call the winner takes all. So you, there may be, say, for example, 10 000 companies making computer operating systems or software, but only like two or three of them would make it big. The others will just either linger along or they’ll go bankrupt. But either way, I think it’s always good to kind of combine different things, because you never know which one is going to work out in the end.

Dr. James: 

Yeah, yeah, I like you thinking, fez. I like you thinking, and that would be my school of thought, I suppose, in those matters as well. Anyway, right, nice one, nice one, fez. So that’s a really thorough answer. We actually slightly went off on a tangent there. So, please, to anybody who’s listening, I just wanted to ask as well, vez, uh, we’ll try to keep this short and succinct, I suppose, so that we can get on to the actual meat and potatoes of this podcast. I just wanted to know has it helped really, uh, and would you recommend undertaking an mba to perhaps others, or others in general, or others in the dental field, or both, or?

Dr. Vesselin: 

it kind of depends, it varies. Uh like, when I went there I was a bit apprehensive because I’m a dentist and I was thinking I’ll go there and these guys, they just kick me out. They’ll be like, just go leave the doors there, you know well. And but uh, they’re, they’re like oh, they were all absolutely lovely people. And uh, the first day there were two gps in my class and I thought, okay, I’m not the only one.

Dr. Vesselin: 

okay. Then it turned out there was another dentist in the kind of previous year, so that kind of made me feel a bit more comfortable. But I would say, if you’re a dentist, unless you’ve got some kind of interest in economics, marketing or finance or strategy or something like that, probably it won’t do you much good. But if you have something like 5 million of assets under management in terms of practices or property or whatever, if you’ve got 5-10 million, then I think it may give you some fresh ideas on how you can squeeze more money out there, because one thing that we don’t understand well as dentists is that money itself it’s a bit like a product, right? So it’s not like, for example, when we say you know how we say we buy stock, we sell stock, we short sell stock, right? Have you ever told that whenever you buy a share of stock, you’re short selling your cash?

Dr. James: 

No, no, I’ve never thought of it in those terms.

Dr. Vesselin: 

Okay, yeah, so like I’ve got £5 in my pocket and I buy one share of stock XYZ, so I’m short selling my cash because I just sold it. I don’t have it anymore to receive that one share, so I’m making a bet that that share is going to cost more than £5 in the future. Right, okay, and I can either be right or wrong, it doesn’t matter. I’ll either make some money on it or I’ll lose some money, but either way, if I just short-sold my cash, it’s gone. Or like if you’re, say, trading on leverage, then again you’re shorting cash essentially.

Dr. Vesselin: 

So in the finance industry, money it’s like a product. Like, for example, people think about stuff like okay, now james just took a mortgage from our bank and now that’s that mortgage stuck on our balance sheet. What can we do with it? And that’s how they come up with things like mortgage-backed securities. We kind of like repackage it, sell it to a pension fund, then that pension fund sends it, sells it to retail investors. They earn the money from the interest.

Dr. Vesselin: 

And so also, it’s uh, it’s a bit of a product really. It’s not, um, kind of uh, you can look at it from different angles, but you can look at it as a product. You can look at it as a commodity. You can look at it from different angles, but you can look at it as a product, you can look at it as a commodity. You can look at it like any way you want. So it’s not just like an investment vehicle. You can actually do different things with money. So I think that if someone has something like 5, 10 million, if they learn more about what they can do with money, then that would help them definitely.

Dr. James: 

I just wanted to know your long term philosophy and your philosophy in investing. Now, mine would be that I want to invest in certain things and draw profit in the very far future when I know that they went up in value. So the other alternative to that is short-term investing, which you’re actively buying and selling and trading, you know, over the course of a few days or a few weeks or months or something like that. Do you do? What’s your philosophy? Do you do both those things or do you do one, or do you purely do your?

Dr. Vesselin: 

I do both and yeah, well, in terms of like stock, yeah, I do both, uh, but, um, I think most of it is, uh, I don’t think that’s kind of like um relevant for uh, most people, because there are different ways to invest and oftentimes you need to just find a way that’s good for you, that works for you, and it also depends on the products you’re using as well. So I do have short-term positions and they’re within the range of zero to 40 days, right, yeah, fair enough. I’ve got some longer ones, which are up to like 120 to 200 days, and I’ve got some that are like indefinite. I just leave them there and I don’t do anything with them.

Dr. James: 

I think what I get a lot of is, or what I see a lot, is, people who they buy something and then they maybe don’t necessarily have an idea of how long they’re intending to hold that for, and then, because they don’t, they have that lack of structure, they panic because when something goes up in value or down in value, they think, oh, should I sell this? Should I jump out? Should I take some profit? Things like that. It’s always very important to go into an investment and have an idea over what period of time you’re planning to hold something. So if it’s going to be the very long run, that’s fine, come back to it. If it’s going to be something more short term, then at least you’ll have a better idea of when to take profits and things of that nature. So it’s always a good idea. Vez, I know that you mentioned to me earlier that you’d been on a. Well, sorry, I think I read it on your blog actually, that you’d been to see an IFA. What was it? It was a.

Dr. Vesselin: 

No, I was on. I had that, like when I, um, as part of the business degree, I had that, uh, I did that module and, uh, I thought it was going to be about stock, but it turned out that, um, it was about wealth management so, just to confirm this, this, this module that you had, this was exactly the sort of information that an IFA might expect to invest in, so you’ll be able to tell us exactly what they do.

Dr. James: 

That’s what I’m interested in hearing.

Dr. Vesselin: 

Yeah, we even had that mock-up interview with a client. Me and another guy went on to the client and started promising stuff what are we going to do with the money? How much money are we going to make? And it was also a good laugh. It sounds like do you know? Vest promised them like 140% return and someone else was like oh yeah, I’ll sign up. Where are you starting.

Dr. Vesselin: 

Anyway, yeah, they talked a lot about what is essentially the job of the wealth manager and it’s more of like I think that we had a question on the group. I think what I’m going to say next will cover that, like how to choose an IFA. Wealth management is like it’s a relationship job, right? So if you go to an IFA, clearly you won’t get 1,000% return on your investment over two years. That can’t happen with stock. But it’s about talking to someone who’s got all that knowledge and experience and they will explain to you what they’ve seen in terms of, like how to prevent people from losing money, what kind of average return you can expect, what’s happened in the past years and which funds work better than which one work better than the other. And they also advise on the fees and one of the most important things basically half of the content was about how to tell the clients that they can actually lose money, because unfortunately, you can.

Dr. Vesselin: 

I mean, like the US and the UK stock market have been relatively stable, but if you go over to Japan the Nikkei I think it was around 1990 something it went down from 30,000 to about 12 and never recovered. It’s not recovered yet and we don’t have any guarantee that such an event won’t happen somewhere else, whether it’s the UK, the States or Hong Kong. We were not guaranteed that the market will keep going up. We just don’t know if that’s going to happen or not. It’s cyclical and currently, uh, I think here in the uk it’s kind of like okay, but if you look at the us market, the s&p, it’s gone exponential, it’s gone parabolic, and that’s a bit of a red flag because, like, if you look at the financial cycle, the amplitude of the cycle becomes bigger and bigger and if we’re unfortunate enough to have a hyper cycle at some point it’s going to wipe us out.

Dr. Vesselin: 

Hopefully not, but you know, there’s always the risk that something could happen, or there could be a war, or even like an alien attack. Who knows? You know, something can happen, like the coronavirus. If you asked me last year, oh this, how the stock market going to be next year? And uh, we have told you, oh, we’ll have the coronavirus. You know it’s going to crash. No, of course not. No, no one, no one knew that. So, uh, things like that happen.

Dr. James: 

You can’t predict it I mean, yeah, yeah, that’s true. I mean, I think for me it’s the important thing is to not have a stock portfolio that’s too centric on one country, because then that way you spread your risk at least. And my sort of philosophy on that one is that if we accept two things one, that the that the inflation is real, which it is, and two, that the global economy is going to keep on growing, it’s very unlikely that that will stop happening. It’s grown 2%, I think, ever since the late 1800s, something like that that I’ve read.

Dr. James: 

So if you can have an investment portfolio that has a little bit in this country, a little bit in the UK, a little bit in the US, a little bit in the developing world, a little bit in this country, a little bit in the UK, a little bit in the US, a little bit in the developing world, a little bit in the East, something like that, a little bit in China, whatever, then that way, even if there is one of these unprecedented events which completely crashed the stock market of one country, then you don’t have all your money or your eggs in one basket, I suppose. But anyway, again, that was a little bit of a tangent. I just wanted to know from this course what would your opinion be on the matter of hiring an independent financial advisor versus doing it yourself, diy? Do you think that there are any inherent advantages to getting an IFA versus doing it yourself, or can you equip yourself with enough knowledge to do just as good a job?

Dr. Vesselin: 

uh, I think actually both have merit. Uh, it depends on, um, the kind of person you are, and that’s something we discussed on the wealth management course, right? So like say, for example, I’m a wealth manager and I meet you and you came into like 5 million and I’m like, ok, james, you know, like, have you invested before? And you’re like, oh, yeah, I’ve been trading Bitcoin for like five years, I love math, you know math’s like my best friend. Then, yeah, we’ll definitely get you engaged in the market, right, you’ll have your own kind of portfolio that you’d be. We’ll leave it to you for you to manage it any way you want, right? So it depends on the client. If the client wants to be engaged, then they will be engaged. If they’ve got some kind of background in mathematics, then yeah, we can say, okay, we can start off with you not being engaged and then, as you’re looking at your portfolio, if it becomes interesting, then we can kind of engage you a bit more. Someone else might say, look, okay, I’ve got this money and I don’t want to hear anything about it. You guys just do your thing. Then, obviously, these people will just get a report every quarter or year, depending on what the service is so I think it depends on everyone’s individual circumstances and like knowledge and desire for market engagement. I certainly wouldn’t recommend if, like if I’ve never bought share in my life and if I’ve got my retirement pot, I won’t say okay, I’m kicking my financial advisor, I’ll start on my own tomorrow. You need to gather a bit of experience. So I think a lot of people really benefit from it from the point of view that if someone’s busy with their work and family and other commitments, if they don’t have the time to develop that knowledge of the market, it makes more sense for them to concentrate on their full-time job, maybe earn a bit of money out of that and then just pay the financial advisor to manage their portfolio. I think that that’s a great service for people who are busy and they’ve got some savings. They want to grow them. It works.

Dr. Vesselin: 

The only thing you can’t expect is to get the above average return, because a lot of it is about preserving people’s money, and I actually met a gentleman who was the head of Aberdeen Capital. They had about something like 50 or 60 billion pounds of assets under management and that’s what he said. He said you know, because we asked him. Okay, so, were you like selling options or something or like speculating on grain futures? And he was like no, he said we can’t do that sort of thing because, like, we’ve got all these clients and it’s their life savings. He said we, we can’t do that sort of thing because we’ve got all these clients and it’s their life savings. He said we just can’t. He said they have a target return per year that’s meant to outperform, to preserve the time value of money, and they stick to that. The only thing that they were doing that was, I won’t say, unusual.

Dr. Vesselin: 

I would say a lot of pension funds do that they were making their shares available for shorting. When you make them available for shorting you get premium because the short seller pays interest for borrowing the shares. It can be pretty high. There was that stock beyond meat in the US At some point. The fee for that was 150% per year. So if you had a pension fund and these shares, I’d lend them for shorting. I’d get like 100% per year why not?

Dr. Vesselin: 

And he said that that was like the most that they’ve done in terms of something a bit more advanced. And there’s no risk with that because even if the short seller can’t cover the short, they’ll get margin code and if they don’t cover the margin code, the position will get closed. So there’s no way the pension fund can lose the customer’s shares. Right, and it was really interesting because he said that they never engage in any speculative activity or anything risky. They don’t invest in venture capital firms or anything like that. That could bring stellar return but at the same time it could be a loss.

Dr. Vesselin: 

So I think that the service itself is uh sound because it’s all based on preserving your money and growing it a bit. It just, um, won’t make you rich. If you’re starting with something like a thousand pound per year or you know like 500 per month, you you won’t get rich from that. But if you were investing in for retirement, yeah, it will work, most likely unless you catch a bad period of history when the market’s crushing down.

Dr. Vesselin: 

Yeah, one one thing I think everyone should be aware of is that probably if you put in like £100 in the market now, eventually you’ll make money out of it the wedding, the children, retirement so you’ve got like a fixed period and you’ve got no guarantee how the market is going to perform during that particular period. So let’s say, for example, my pension kind of performs really badly, but I don’t need it and I say, okay, I’ll leave it to the kids. When the kids turn 50, it will probably be worth a lot more than that time when I invested the money, but I’ll be long dead by then, so you know. So it just depends on what kind of timeframe you have. If it’s something that’s for, like, generations to come, then it wouldn’t matter. If it’s for retirement, then it’s not losing money matters.

Dr. James: 

Yes, of course. Yeah, fair enough.

Dr. Vesselin: 

So those are the pros and cons, I guess really 100, 20% S&P 500, 20% UK bonds, assuming you’re aged, say, between 20 and 40, something like that. You just leave it, chances are at least 50% is going to be worth more in years to come. The only thing that they do that’s slightly different is you can actually model the anticipated return. It’s called financial modeling. So we take the stocks the individual stock or the ETF and we kind of start modeling the historical returns and we can figure out what would be the optimal combination of each fund.

Dr. Vesselin: 

Because sometimes what you may find out is that if you add on 1% of something, it can dramatically change the risk profile and the return of an investment. Like, say, for example, if you know how there was the coronavirus crash right when the FTSE and the S&P 500 crashed, right, if you had a portfolio of FTSE and the S&P 500, if you had something like 3 or 4% of VIX futures to hedge it, you would have ended up flat most likely, or the losses would be a lot smaller. It would reduce the losses by at least like 20-30%. So that’s the only thing that retail investors don’t really have access to. But I think in a lot of cases it’s not a major issue because you can learn how to do that. It’s not that complicated.

Dr. James: 

Plus, as well as that, what we have to take into account is the fact that these people will charge fees as well to manage your money. So, on balance, from what I’m gathering from what you’re saying, is that really, once we’ve probably taken into account that what you can do yourself with a little bit of education isn’t too far off what these guys can do? Would you say that that’s accurate vez?

Dr. Vesselin: 

I would say, if you knock off the fees, maybe you won’t need to model that much in excel. Let’s put it that way. Yeah, but there will always be fees. It’s not free, you know. In investing they say, okay, we don’t know how much return we’re going to make, but we know there’s going to be fees. That’s why everyone wants to go into asset management, where there are the people that collect the fees, right. So if you ask someone with background in finance I mean, if you ask me before the coronavirus, would you prefer to trade options or would you prefer to go and work in a private equity firm, I’d say I’d go and work in a private equity firm because these are the guys that you know like they’re the buy side, right. So it’s a bit different. They don’t maybe not private equity, but asset management. They definitely collect the fees, the funds.

Dr. Vesselin: 

But I think it’s an interesting question because, like retail investing in ETFs, it becomes more popular and a lot more people do it and, as anything else, it kind of starts to go in a direction which could influence us all in a bit of a negative way, because, like you buy ETFs, I buy ETFs, everyone on the group buys ETFs and in the end what happens? These ZTFs actually own a lot of stock. Now, for example, if you take the S&P 500, it’s got a market cap of something like 20-ish I don’t remember what it was like a billion or a trillion or something trillion. And if you take all the active funds that have S&P 500 shares, they probably own at least something like 10% of it or more. So eventually we may end up in a situation where a lot of shares won’t be held by index funds and then that would make the majors of the companies more kind of relaxed about what they’re doing in the company, because there won’t be so much shareholder control.

Dr. Vesselin: 

Let’s say, for example, if me and you are majority shareholders in name any company, it doesn’t matter like, say, google, we’ve got 50% of the shares. Do you think if we go to the office they’re going to listen to what we’ve got to say, right, percent of the shares. Do you think if we go to the office they’re going to listen to what we’ve got to say, right. But if you’ve got one billion shareholders and every one of them has like five shares of an etf, then there there’s no one for the management team to be accountable to, and management teams.

Dr. Vesselin: 

They hate two things activist investors and short sellers, and they don’t like these people because they’re the ones that meddle in their affairs. As an activist investor, you can get a seat on the board of directors and you can say I don’t like where that company is going. I think you should do that a different way and it may actually be good for the company. They don’t like short sellers because it’s capital market and they want share price to go up. So if you start shorting their stock, you know no one likes that. That’s why the French want to ban it at some point. So I think that we may be creating at some point we may end up creating some kind of a new problem with these ETFs, but for the time being being, they seem to be working quite well, so I don’t see a reason why we can’t keep using them until you know something happens and my point is that eventually we may need to change the strategy right.

Dr. James: 

Eventually it may stop working independent investors like us and the big companies. We’re both doing the same thing, so it wouldn’t matter whether you went with these guys or you bought it yourself. Absolutely, you’re both going to be caught out. So basically, what you’re saying is that if that happens, the whole market’s going to go down anyway. So it doesn’t really.

Dr. Vesselin: 

Absolutely. I think if you’re retail, you have a slight bit of an edge because, for example, I can close all of my positions within not the blink of an eye, but it will take me less than five minutes and I’ll be 100% cash right. I’ll be done. Whereas if I’m an asset management fund, if I’ve got, say, like 30 billion worth of assets under management, if I’ve got 200 million positioning no, that would be maybe too much, but let’s say I’ve got 200 million position in Apple. It’s a $2 trillion company, so it’s not that big. If I have to clear that I won’t be able to get a very good price, I may need to sell it in batches, and that’s some of the things that pension funds struggle with. Sometimes it takes them six months to close the share position because it’s so big. It drives the share price down, whereas if you retail, you can do that anytime you want. And actually there was some research on the coronavirus crash and it turned out that retail investors outperformed the fund, strangely enough. Interesting. Well, that was very interesting.

Dr. James: 

Food for thought. Food for thought, vez, that was an extremely detailed answer. I’m sure lots of people listening will be. You know they’ll find that super interesting. Went into so much detail there, which is great, and certainly exposed some of the reasons why maybe putting your money away in these big funds or these big independent financial advisors can not always be the best thing to do. There’s inherent disadvantages to it and maybe there are some pros to doing it yourself anyway, which is one of the things that I tend to talk about too and tend to promote a little bit, and it’s certainly something that I’ve read a lot about a lot of advocates in the books that I’ve read. I just wanted to know, vez, what is your personal investment strategy? Is it like 80 stocks, 20 bonds, or maybe there’s a little bit of gold in there, or what do you do, or is it very complex?

Dr. Vesselin: 

uh no, it’s nothing complex really like. Obviously, kind of like do the options trading, which is completely different.

Dr. James: 

Sorry, I should have made that clear. So yeah, we’ve got your trading over here, which is your stocks. Maybe I’m talking about purely your long-term investment strategy. Sorry if I didn’t make that clear.

Dr. Vesselin: 

I just have ETFs. I can actually tell you what I’ve got in percentages yeah, percentage would be great.

Dr. James: 

Yeah, that’s really interesting.

Dr. Vesselin: 

I actually cleaned up now because I can lean slightly contrarian sometimes. So I cleaned some of my ISA because I wanted to leave a bit for war chest, because I personally think that this rally that we’re in right now will run out of steam eventually. So I want to have some cash for when that happens. But I don’t know if it’s going to stop or when, so I’ll just wait a couple of weeks and see. But yeah, I don’t have anything exciting, I don’t think? Uh. So I’ve got the footsie um 100, which is about like 30 percent. I’ve got 16% bonds, about 11% in small caps, the FTSE 250. I’ve got about 9% in China and I probably shouldn’t say that, but I’ve got 5% in some Russian oil companies.

Dr. James: 

Yeah, that’s fine, it’s fine.

Dr. Vesselin: 

And the rest are just minor things. I’ve got a tiny bit of very small bit of the NASDAQ because I think it’s like too expensive at the moment, but I still have a bit. I bought the Russian oil companies because they were like way too cheap in my opinion and I think they’re like slightly strategic and BP is a shareholder in one of them, funnily enough. So yeah, but I think that any kind of portfolio allocation needs to fit the person’s individual requirements. There’s no one sizesize-fits-all, and that’s one thing I love about investing it has to be something that fits you, right. If it doesn’t fit you, then it’s not right. And I hate to see people kind of like chasing returns because you read on the internet that guy made 3,000%, the other made 500%. That doesn’t matter, as long as you’re not losing money, you absolutely fine. That’s all I have to say.

Dr. James: 

Yeah, yeah, I mean definitely. I mean. I think that investing is one of those things where it’s completely fine just to be okay at. You don’t have to be the best in the world. As long as you’re with them, you’re aligned with the market, you’re generating those returns and you’re not losing all your money, you’re not losing a lot of your wealth through inflation every year, then isn’t that better than just having all your money in cash and being susceptible to that? So again, that’s another thing that I like to talk about as well. You don’t have to be the best at it, you just have to be okay and you can still benefit from it. But that’s interesting to hear your breakdown of your portfolio. So you’re quite heavily leveraged in the UK market, which is fine. Yeah, I think a lot of people at this point think that, because of Brexit, that UK stocks and shares are quite cheap. Am I right in saying that?

Dr. Vesselin: 

Yeah, like I said, I lean sometimes slightly contrarian. Yeah, like I said, I lean sometimes slightly contrarian. But when I set what I’ve got at the moment, I would take that as a pinch of salt Because tomorrow I may change my mind and shut it down and start off with something completely different, because that’s something I inherited from the options trading to buy stock when it goes down. So you know, it doesn’t necessarily work because I bought what was it? I bought Cineworld and that went down on me 50% after they announced they’re closing all their cinemas and, like, when the rally came around I was so happy to get rid of that. I just I got rid of it immediately, still made profit on it. But you know it’s hard to buy stock and to see it go down as much. I think now at the moment it’s hard for a lot of people because it kind of plays tricks on your mind, doesn’t it?

Dr. James: 

There’s a little bit of active management in there, off your stocks and shares, isa, as well, because, as you’ve just said, you’re actively. You’re kind of monitoring the market and actively buying oil, things like that, whereas a lot of people just tend to they have their preset portfolio. They just put some money into their set list of stock or set list of index funds and then they just let it passively, just flow and they mightn’t even change those for their whole life. You know, balance it out every once in a while if one gets ahead of the other, if one goes up in value. So they sell it when it’s expensive effectively, and they buy the other ones when they’re cheap. So it’s two sides of the coin. So what Vez does? Not everybody has to do, it’s just his personal management strategy.

Dr. Vesselin: 

I’m glad you mentioned that because I think it’s an example of what we were talking before about market engagement. My market engagement is like up there right, so I can’t just sit and watch paint dry. It’s not happening, and that that doesn’t mean that that’s a good way of doing it. It means that that’s the way that’s right for me. Someone else that may be like a completely wrong way of doing it, and that’s absolutely fine. That doesn’t mean that I’m right, the other person’s wrong or the other way around. We’re just different. So I think that I’m glad you brought up excellent example, yeah.

Dr. James: 

Yeah, yeah. So yeah, the only reason I wanted to mention that was I think that it’s possible to maybe get the wrong end of the stick when you’re listening and think that you have to actively do it. No, maybe get the wrong end of the stick when you’re listening and think that you have to actively do it.

Dr. James: 

You know, no, you can do that as well. That’s totally fine, as vez says, but there are other methods. But anyway, just thought I’d bring that up. Cool right. So thanks very much for that. I just wanted to ask a question just more broadly about investing, then what’s your opinion on sip self-invested personal pensions versus ISAs? Do you have both? Do you have one and not the other, or do you have a?

Dr. Vesselin: 

preference. I’ve got one, not the other. I don’t have any preference. I think it depends on the person’s individual circumstances. Like, I’ve got the NHS pension scheme right and a lot of people have told me I’m stupid, that I keep my money there. Maybe I am, but I’ll give you my take on it. So have you heard how, whenever someone says, oh, should I opt out of the NHS pension, and they often get the reply, oh, I went to an IFA and the IFA told me to keep it.

Dr. James: 

I have heard people yeah, but some other IFAs will tell you not to keep it. Is that right? Am I right in saying that?

Dr. Vesselin: 

It depends. Like, for example, if you’re an associate, if you get employer contributions, are you going to get these employee contributions if you’re invested in a SIP? If the answer is no, then because obviously, both with the NHS pension and the SIPP, in both cases you benefit from a tax shield, right, Because they both, the money doesn’t get taxed on the way in the pension, they get taxed when you get older, yeah, on the way out, on the way out. And, for example, if you’ve got the same amount of money in each say like £1,000 in SIPA and £1,000 in the NHS pension, we could argue how the market is going to work out, whether it’s better to bet on the UK government. Essentially, you’re betting either on the market or on the UK government and it’s a matter of personal choice. There’s no right or wrong way. But basically, if you’re getting employer contributions onto your NHS pot, if you put in £1,000, we got £1,000 in SIP, £1,000 in the NHS pension, but then the NHS pops in another £1,000 and all of a sudden the NHS pension pot is like £2,000. So how much money can you make from shares in that SIP? You need to make like 100% more. That’s every year. That’s a lot. It’s difficult, yeah, if you’re like a practice owner. I’t know if practice owners um get any contributions towards their pension from the nhs, and it also depends on what kind of percentage bond you are, because that makes a huge difference. So that’s why, when it comes to things like pensions, it’s always good to either calculate it yourself or use the services of a professional, because there would be a lot of people where it would make a lot of sense for them to use the NHS pension scheme and there would be a lot of people where it wouldn’t make any sense for them to use the NHS pension scheme. They would be, say, better off with a SIP or something else. So it’s always best, if you’re not sure, to seek professional advice from an IFA. They’ll definitely help out with that. So I personally, because I’ve got the NHS pension, so I’ve made a bet on the UK government there. I think that you know, I think the UK is a stable country and I’ll make a bet on the government that it’s going to be around when I retire and I’m going to get my money from there.

Dr. Vesselin: 

I do have an ISA as well, and one of the things I find about ISAs is that there’s that element that people say, ok, like it’s tax free, yes, but always, guys, remember, depending on like your income and your assets and so on, especially for young dentists if it’s someone who’s just started, they don’t have a lot of capital or assets. Don’t forget to check your capital gains allowance. It’s about $12,500 or something, so there’s a good chance that you can trade from any kind of account and still not pay tax, depending on the amount of assets you have. Got income in terms of capital gains over $12,500, then obviously the ICE is absolutely amazing. No arguments there.

Dr. Vesselin: 

But whenever it comes to accounts, it always depends on the individual’s circumstances. It’s never like a clear-cut answer. I think that both the ISA and the SIP are good accounts. Basically, in the ISA, your money gets taxed and then your gains don’t get taxed, which, if you’re like 20 years old, it’s a bit questionable whether you benefit from that or not. But if you’re older, you’ve got like more capital gains from elsewhere, then yeah, that would be absolutely fantastic, yeah okay, so fair enough.

Dr. James: 

So there’s a lot of nuance to it really, and yeah, definitely okay, it’s not black and white.

Dr. James: 

Fair enough. Good answer, cool. So, really, if you want to get into the nitty-gritty of that, it’s about your personal circumstances and maybe seeking the advice of someone who’s clued up on that matter. So possibly an independent financial advisor, as Vez says, cool. And we’ve heard all this wonderful information about portfolios, the pros and cons of doing it yourself, the pros and cons of the various accounts a lot of information. If someone was listening to this and they were a total newbie, they had only ever heard of a stock for the first time in this podcast. I don’t know things along those lines. They were complete greenhorn, no experience on the matter. What would you say to them? Fez is a really, really good place to start um, okay, I’ll tell them where not to start.

Dr. Vesselin: 

Is that? Is that okay, that helps, it all helps. So, uh, don’t don’t start with derivatives, okay, uh, because, um, uh, derivative is uh, like, uh, it’s complicated financial instrument. If you don’t know what the share is, it would be difficult for you to understand what derivative is right. So sometimes when I trade options, sometimes I discuss my positions with my wife and she hates finance and she can’t understand whether I’m short or long. She said, so, do you need the stock to go up or to go down? And she hates finance and she can’t understand whether I’m short or long. She said, so, do you need the stock to go up or to go down? And then you know they’re just more complicated.

Dr. Vesselin: 

So if you’re just starting, start with something simple. Start with an ETF. An exchange-traded index fund is a fairly safe thing to buy. So I am against people losing money. So pick like a hundred pounds. If you can lose a hundred pounds, just pick up one hundred pounds.

Dr. Vesselin: 

Make a free buy account somewhere. There are like various ones. You can try Buy one FTSE fund, one S&P fund and one bond fund. Find something for like £20 or leave them there for a few months. See what happens. It would be very unlikely to lose all of your £100.

Dr. Vesselin: 

And I think that would be a good way of starting, because one thing that I feel is important for people who are new is to win basically when they win and that gives them more confidence, whereas when they start trading like forex or cfd, a lot of people lose money or blow up their accounts. Like I said, I blew up my account and it could happen to me in the future. No one knows what’s standing behind the corner. So try in a safe and responsible way, with small amounts of money. Leave it for a few months. Don’t rush. There’s always time. The market is going to be there tomorrow. You won’t miss out on anything. There will always be companies that go up and it’s always interesting. You don’t need to become an expert out on anything. There will always be companies that go up and it’s always interesting. Um, you don’t need to become an expert overnight. It takes time. So you gather experience. Just give yourself a chance to win.

Dr. James: 

That’s that’s what’s important I think education is the key as well. Maybe just reading around, pick up a few books um, by all means, don’t do what I did and just jump in head first. It’s a bad idea. It never. And if I, I only learned that I should educate myself through being so poor at it at the very beginning, when I started, and I really wish that I would have took the time to educate myself like what I have done now before I I, you know, I began going down that path.

Dr. James: 

It is worth it and, excuse me, there are a lot of benefits to be reaped, but the difference between someone who loses money and this and someone who gains money is just education and knowledge effectively. So if you’re going to do it, do it right. Basically, cool for someone who is specifically a dentist and who is new to it. Is there anything else you would throw on top of that? There’s a young vez who was just starting out. He was a dentist and they didn’t know anything about finance. If you could go back and tell yourself that, what would it be? Specifically to dentists, or is there anything at all?

Dr. Vesselin: 

or not, not really uh, yeah, I go and I say vest, just because you’re a dentist and you may have gotten that like fancy dentistry degree, you don’t know anything about the market. Like it’s completely different kettle of fish, right, it’s, it’s got nothing to do with it. Uh, one thing I think is important to mention to dentists, young or old, is that finance is not like dentistry. You always have to remember that the guys that are on the other side of your trades or the guys that are doing the funds and so on, in the finance industry everyone is ruthless. It’s all about money, right, they’ll take your shirt off and they won’t even blink. Dentistry is a fairly ethical profession. It’s always about making people comfortable and helping them live a healthy life and not worry about their teeth. We take pain away, make their teeth healthy and we want them to be happy and, you know, to prosper in their own life. In finance it’s not like that. People are only out there to make money. There’s no higher purpose to it. Articles or any kind of analysis bear in mind that the people who write these things they may have some kind of interest, right? So, for example, if you’re reading a report by Goldman Sachs, you have to remember that Goldman Sachs is a sell-side institutional investment bank. They make money from selling financial products to funds and and so on. Right, so they sell things. So it’s normal that their report won’t have one kind of bias or another, which would be they were towards their products.

Dr. Vesselin: 

But I was looking, for example, at the company that was had gone public. I was looking, for example, at the company that had gone public. I was thinking of shorting it, but I wasn’t sure that it would work, so I wanted to use something slightly bit more synthetic to cover my upside, so that I don’t send the blackout. But anyway, this thing didn’t happen. But I read the analyst ratings, and all the analyst ratings were written by people who were actually working for the banks that were involved in the process of that company going public.

Dr. Vesselin: 

And these banks, they’ve got shares in that company and if they recommend it to you and you buy it, the share price goes up and they make money, right, when they make the money, then they sell their shares. It goes down and you buy it, the share price goes up and they make money, right, when they make the money, then they sell their shares. It goes down and you lose yours, that’s, and they won’t even blink. That happens all the time. Uh, it’s not even funny, uh. So just bear in mind, it’s a different industry, the rules are different, so be careful.

Dr. James: 

It’s a really good point. Yeah, I like that actually. So we’re playing two different ball games almost, and definitely, yeah, maybe, coming from a dental world where everyone does their their utmost to be ethical at all times, it’s maybe made us all a little bit casually naive and maybe we yeah, that’s that’s really helpful to know that actually just to be wary. I suppose that’s a good example. Cool thanks. So much, fez, right.

Dr. James: 

So this is my favorite part of the podcast. This is where we delve into the group and see what everybody’s come up for us with, come up, come up with, uh, in terms of questions for us for the podcast and freestyle a little bit at this stage, which is cool. On to the questions from the group so the first one that I can see here is by Sheila Lai. So Sheila has asked what is the most efficient way to draw money from a limited company to invest. That’s a really good question. Thanks a lot, sheila. I think what I’d like to say, just as a full disclaimer from this point, is that obviously, vez and I are not financial advisors and we don’t know all the relevant facts about this specific company that we’re talking about. So I’d hate to give anybody any unsolicited financial advice, but what we can talk about is some broad methods of doing that, which, hopefully, vez will be able to enlighten us on.

Dr. Vesselin: 

I don’t do tax. It’s just basically, whenever I did something tax-related, I just say we’ll call the tax people and you know they’ll sort it out right. But obviously it kind of comes into play a lot. So I do know like small bits of it. So I’ll just cover what I want.

Dr. Vesselin: 

But I think that Sheila, and also I think it was Ahmed Jiaziri who had the same question, I think that both of you guys really need to see a tax advisor. Yeah, yeah, definitely. But we’ll give you our two cents on kind of like what we think. Yeah, shall we? Okay?

Dr. Vesselin: 

So the first one is like, what is the most efficient way to draw money from a limited company to invest? If you mean like, say, in terms of like profits, it depends on your turnover, so it could be either as income, salary or dividends, and you’d need to check with your accountant which way you’d pay the least tax accountant, which way you’d pay the lease tax. And then the next one is uh, uh, so that she was she’s trying to plan the most efficient way to invest with money in my limited company. Uh, so if you’re, if it’s your own cash, you’ve got from somewhere else and you want to put it into the company. I think that there’s something called director’s loan that you can use to do that. If you want to put it into the company, I think that there’s something called director’s loan that you can use to do that. If you want to invest the money that are in the company somewhere, there are a few different ways to do it. I think that goes on to Ahmed’s question as well. So I think that we have to think of it in terms of cash flow, right? So when is the tax being paid? So if the money is in the company, obviously it will get paid on the way out. So when they’re withdrawn, the LTD is liquidated or sold on or it’s paid as a dividend or net income. Alternatively, you can put it in a SIP in the name of the director. Then you get the tax shield from the SIP, but you give away your liquidity because you can’t withdraw the money until you’re like 55, 58 or whatever the age is at the time.

Dr. Vesselin: 

In terms of the brokerage account itself, I don’t think there would be much trouble to open a brokerage account in the name of a limited company. That should be perfectly fine with most brokers. If they don’t have such a section on the website. Just email them, they’ll set you up. If they don’t have such section on the website, just email them, they’ll set you up. But I think that the main issue with things like that is the legal bit. That’s why you need the tax advisor.

Dr. Vesselin: 

And then I think she was saying about opening a separate limited company to trade. People recommend that. They recommend it because this way the two things are split. So, for example, if your main business fails to pay debts, people just go bankrupt, but you still keep your trading income in the other limited company and that’s perfectly fine, right? Either way, no one wants you to get bankrupt. We want you to be successful and you’re happy and to make loads and loads of money from investing. But we, we have to think about the worst case scenario and that’s why, uh, some people would say, split the two. And then there was the question about holding company. Now, if you make a holding company, an investment company and your main business, uh, that thing starts to look more and more like the structure of a bank, for example, which is fine. But you have to think about the servicing costs.

Dr. Vesselin: 

A friend of mine was offered by an accountant to make like an offshore company in Cyprus or something. And he said, all right, you offered me that account, that company in Cyprus or something. And he said, all right, you offered me that account, that company in Cyprus and I was like, yeah, okay, that’s great, but what’s the servicing cost of that company? And he was like like 3000 pounds per year. And I said, are you going to save more than 3000 pounds per year on tax if you use that? And what’s the chance of you getting fined by the HMRC? Because the last thing you want is to get fined by the HMRC, of course. And he said, well, I’ll save like £1,000 on tax. And I said, then you’re down like £2,000, you’re minus £2,000 from that transaction.

Dr. Vesselin: 

So whenever you think of things like that, you need to think about the costs of setting up the structure and the costs of maintaining it, because the accounting for a limited company, of setting up the structure and the costs of maintaining it, because the accounting for a limited company is somewhat more complicated. If you make a holding company with two limited ones, chances are your accountants will charge you more sort of like for each company and then holding they may need to set up some legal documents and things, which will also cost you. So that’s kind of on the legal and fees bit. You also have capital gains tax to consider, because as far as I’m aware, the capital gains of a limited company, in terms of trading profits, are slightly different than an individual. So I think that an individual but you have to check that. I’m not sure if that’s true, but I think that an individual had about four years to offset any losses. So like, if you’re investing and if you make a loss, you can then offset it. You have a longer time to offset it through tax. So that’s slightly bit different. You need to look into that. And the last but not the, it’s not a problem, but you may need to get a MIFID II license as well. Even though you’re not managing other people’s money, you need to check the MIFI to its European Union regulation for banking. It’s simply because it’s a limited company. They don’t know what you’re going to do in the future with it. So if you’re trading through it, I think it costs something like £100 per year, so it’s not expensive. It’s only a formality, but when it comes to regulation, you need to satisfy things like that.

Dr. Vesselin: 

I think she also asked how to look out for a financial advisor. I think we covered the relationship aspect of it, but because we went into holding companies and things, I think that’s something that may be important for some people, especially the ones that have more assets. If you’ve got like a lot of assets, then you may need to hire a full service firm, because what can happen is that you may need you obviously need an accountant anyway, but it may turn out that you need a tax advisor and the wealth manager at the same time more frequently than you imagine. So if you find yourself in a situation where you’re phoning one than the other and they have to talk between themselves and it’s really a struggle, that’s when you may want to look into a full service firm that does all of these things for you under one roof, because it will be easier in terms of communication. But it also has to be someone you’ve got a good relationship with, so it’s a bit of a difficult one.

Dr. James: 

I think Sheila will be very grateful for that really thorough answer. So thank you so much, Fez. And then did we also answer Ahmed’s question in that as well? I think we did, didn’t we?

Dr. Vesselin: 

I think it had to do with the SIP and the ISA. Let’s see.

Dr. James: 

It’s the SIP and the ISA with relevance to a limited company, isn’t it really?

Dr. Vesselin: 

Yeah, I think that for the SIP because it’s in the name, I think we bought it in the name One is the individual savings account and the SIP was self-invested personal pension. So when you’ve got the individual and personal, that implies that it’s in your own name, in your own name. Obviously, you need to check if you can. The SIP will definitely be in your name. It won’t be in the name of a company. But for the ISA, you need to check if you can open an ISA in a company’s name.

Dr. James: 

I’m not sure if that would be the case like I said, because of the name individual.

Dr. Vesselin: 

Okay, so we’re not sure. But we’re not sure, yeah, we don’t know.

Dr. James: 

Sorry, All right, fair enough, I’ve never come across that.

Dr. James: 

Wow, guys. Well, I think that was absolutely tremendous. Fez clearly really knows his stuff. He knows so much about finance. I think that even you know anybody who listened tonight must have learned a lot. I certainly did. I’m blown away so much value that we’ve created on this podcast and certainly lots of food for thought and definitely a lot more nuance to a lot of things that I thought were maybe quite black and white in my previous, before I spoke to Vez as I, as I did, you know, during the course of this podcast and certainly a lot more nuanced and kind of more in-depth detail to those facts and pieces of information, which is absolutely wonderful. It’s vez’s very first podcast, would you believe. I don’t think anybody could have told from how I delivered the information. He really was able to enunciate it in a clear and concise way and, as I say, bring much use and knowledge to the table. So I just want to say thanks very much, vez. I hope you’ve enjoyed yourself. How’s it been?

Dr. Vesselin: 

Oh, it was great. Yeah, I’ve done PowerPoint presentations in the past, so that’s like completely different, because when you are doing PowerPoint you can actually see the audience, and if they’re starting to fall asleep you can kind of like change it a bit to wake them up. So let’s be new. I’m sure we’re fine. At least people are not in front of you, so if someone’s not happy they can’t throw things. So there’s a positive point.

Dr. James: 

They can only complain behind your back, which is, you know, I’m not really sure that’s better, but anyway.

Dr. Vesselin: 

No, it’s acceptable. Yeah, why not?

Dr. Vesselin: 

But, either way, you know, like one thing that me and James were talking previously is that, while in dentistry we’re used to kind of clear answers, when it comes to finance, economics, tax, personal finance, investing that sort of thing there are no clear answers. When it comes to finance, economics, tax, personal finance, investing that sort of thing there are no clear answers. So I think, like, if any of you guys are want to know more about something always like post on the group or if you have some kind of a case, either message me or go to hedgebox, email me uh, might be happy to cover anything. The whole purpose of that website is to be relevant to other people. So, yeah, if there’s anything, just post it on the group and we’ll try to help you out as best we can, right?

Dr. James: 

Yeah, by all means. So Vez’s blog that he runs on finance is called Hedgebox, which we mentioned at the start. Lots of useful information on there. If anybody wants to go into more detail what we were talking about. For anybody out there who may not necessarily know what the group is, they’ve just found the podcast on Apple or the internet, I don’t know somewhere else. The group we’re talking about is on Facebook. It’s called Dentists who Invest. It’s the same name as the podcast, dentists who Invest, a community group for dentists who enjoy trading All sorts of finance information on there. The idea is to help empower dentists so that they can be more clever with their money. They can protect their wealth and hopefully generate a nice nest egg or pension pot that they can use later in life to just enjoy themselves, because the point of having money is to buy back your time and be able to live your life to the fullest anyway I just want to say a huge thanks to vez.

Dr. James: 

It’s been an absolute pleasure. Thank you so much for coming on the show, vez it was.

Dr. Vesselin: 

So you’re welcome. It was absolutely fantastic. Yeah, it was great. Yeah, thanks for inviting me it. It was lots of fun, oh no problem.

Dr. James: 

This is exactly what I wanted tonight. I wanted a podcast that could give everybody the sort of bare bones, bread and butter information on investing, and you’ve done a wonderful job with that. So thanks once again, Fez. We’ve been chatting for two hours, would you believe? I’m going to edit some of this out. It’s been a long one. I don’t want to keep Vez too much longer. He’s been very generous with his time. Vez, I hope you have a smashing evening and we’ll speak again soon.

Dr. Vesselin: 

And you’ll speak to you soon, James.

Dr. James: 

Nice one Vez In a bit. See you later. See you 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 Dentistry Invest podcast. If you feel like there was one particular episode in the back catalogue in the anthology of Dentistry 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, welcome to the Dentists who Invest podcast. Hello everyone, welcome back. Good evening, welcome to another episode of Dentists who Invest. We’re on the third episode of the podcast already. So you know we’re not messing about, we’re getting stuck in. I mean, I only started this thing about a week ago and here we are, we’re on three episodes. I’m hoping to make this a weekly thing at well, that’s the plan going forward. I just thought it would be nice to just get to, just to set us off, just to get us off to a flying start. We’re going to settle into a little bit more of a routine now. So this is episode three and it’s going to become a weekly thing going forward. So I hope everyone’s been well since our last episode.

Dr. James: 

We’ve covered houses so far. We’ve covered growing a social media presence so far. It’s all related to the broader theme of finance. But what we haven’t done, we haven’t done the very bread and butter of investing. We haven’t really covered the fundamentals or the basics of building a portfolio and therefore making something sustainable that we can draw profits from in the long run and diversifying ourselves, your stocks, your portfolio, your things of that nature, things in your stocks and shares. I said that’s very much your bread and butter. Well, I mean, it depends on the individual, of course, but generally speaking, that is what most people would call their bread and butter, and that’s why I thought that this would be a very pertinent podcast or a very informative podcast for the members of the group.

Dr. James: 

We’ve got a very special guest with us tonight. You may have seen him on the group. He’s contributed a few times. He’s quite active on the group. He is a dentist. He resides in Cheshire. He has a master’s in business administration, would you believe, and he’s also got a postgraduate degree in endo. I don’t know where he’s squeezed in all the time to do this. He also, on top of that, runs a investing blog called Hedgebox. He does that. He runs that because he wants to educate others about the merits of safe investing to protect your wealth in the long run. And that’s why I really wanted to get him on, because his ethos marries up with our ethos on the group, which I thought was wonderful. His name, in case you haven’t heard of him, his name is Veselin Bakturov, or Vez to his friends. How are you tonight, vez?

Dr. Vesselin: 

Good. Thank you, James. How are you?

Dr. James: 

Smashing. I’m absolutely tremendous, vez. Thanks for asking. I’m always good. I’m stuck up here in sunny Leeds, but it’s a bit cold and wet today, but never mind. I’m indoors, so it’s all good. What’s the weather like in Cheshire?

Dr. Vesselin: 

it’s like raining buckets as usual. Yeah, so not only today. It was quite nice up until today.

Dr. James: 

Yeah oh, I see right, fair enough then. Well, no surprises on the rain front, I suppose. So, as I say, I’ve got Vez on because he really knows his stuff when it comes to investing and he’s a dentist too, so he’ll be able to give us this information, give it to us from the slant of a dentist, which I think is novel and interesting and very pertinent and relevant to us. Because we’ve all heard the financial advisors kind of slant on things. They just want us to offload all our money onto them and take a handsome little slice for themselves. But if we have someone like Vez on here, who is a dentist and invests successfully on his own, then he’ll be able to tailor the information of how to undertake that journey towards other people in the profession with a lot more skill, expertise and relevant insight than I think a lot of people can, and that’s why I wanted to get vez on.

Dr. James: 

Anyway, vez, I’ve done absolutely loads of talking. The show is supposed to be about you, so I want to hear a little bit more about you, vez. I just want to know about your journey, what, uh, where you, where you’ve come from originally. I noticed you have a little bit of an accent, so I’m going to presume that you weren’t originally from the UK. As well as that, I’d like to know as well just about your journey into dentistry and your journey into investing as well. If that’s cool, over to you, my friend.

Dr. Vesselin: 

Yeah, no problem, James. So I’ll first start off by saying that if someone came back to me about 10 years ago and told me I’d be talking to you about investing now, I’d love them out of the room. I’d be like no way, no way, I know that feeling.

Dr. Vesselin: 

Although I’ve been interested in it for quite some time. But I’ll start with the beginning. Okay, so I qualified as a dentist in 2016 in Bulgaria and I worked there for a few years and then moved to the UK in 2010. Started at mixed practice, Then I did that endodontics diploma and I started doing the root canal referral service and I really enjoyed the marketing aspect of it and I found out that I like marketing and I thought, okay, I want to do that, but maybe in a bit of a different way, because I like other things like technology and the internet you know social media platforms and I was thinking maybe I can start something there, but I wasn’t sure exactly where to start. And then, as I was reading about it, I came across the MBA and I thought, okay, I like that’s marketing, economics, finance you know it sounded like pretty robust. So I thought, okay, I’ll go finance. You know it sounded like pretty robust. So I thought, OK, I’ll go with that and see where it leads me. And I did have some ideas in the real economy. But then COVID struck and I started trading more. So now I trade a lot of options, Although, like most of the things that I write on Hedgebox.

Dr. Vesselin: 

They’re about sort of like buy and hold type of investing, because I feel that options may be a bit more complicated for a lot of people and the access to them is somewhat limited. Like you may start, you may open an account and you may get declined clearance. I I normally get cleared because I tick the box. Do you have any like qualifications in finance? So I tick it as a yes and they approve me. Right, but otherwise you may struggle. So I don’t think it’s like a product that’s accessible to a lot of people. I wish it was, because it’s an absolutely brilliant product. So that’s why I write more about stocks and shares and bonds and things like that. I normally gather intelligence online from social media about what people are buying, what people are selling, and there’s a lot of trading education going on. Some is free, some is paid, but either way, quite often it doesn’t have any kind of structure.

Dr. Vesselin: 

It starts. People start like throwing terms and don’t explain them that well, sometimes start like throwing terms and don’t explain them that well sometimes. Or someone may be reading a book but they didn’t read the book, that they should have read before to understand the second one, and so on. So sometimes it’s not structured in the right way. Let’s put it this way, and I think that a lot of investors on the retail side not just dentists are left thinking, okay, I can’t understand the market, or I’m not good at it, or maybe I can’t do it myself, and I don’t think that’s true. So one of the things I want is to give people confidence that they can do it, whether it’s you, me or the next guy. No one knows any secrets about the market that other people don’t. So if someone wants to start investing, they can do so. There’s nothing scary about it, really.

Dr. James: 

Yeah, I love that, vez. So that’s actually one of the reasons why I wanted to get you on, because I read a little bit of your blog and I thought, wow, vez’s insight or his kind of ethos on this subject is very much aligned with ours could invest in. They maybe kind of tend to throw everything in the whole field together and overly complicate it. There are parts that are relatively simple that anybody can learn. There’s minimal jargon, minimal lingo that allow you to protect your wealth going forwards, and you don’t have to be the person who’s actively trading every day.

Dr. James: 

I think personally that over the next year or two, there’s going to be an inflation tidal wave which is going to rob us of a lot of our savings, and I’m just a little bit concerned about that and hence why it’s drove me to sort of explore ways that I can protect my wealth. But that’s just my opinion personally. I think, regardless of whether you agree with that or not, it’s definitely always a sensible thing to do, and that’s why I thought it would be brilliant if we could have Vez on tonight and he can explain everything like this from a dental point of view. Does that sound reasonable, vez? Yeah.

Dr. Vesselin: 

Since you mentioned inflation, I don’t usually share that about me, but like when I was a kid, I lived through a hyperinflation cycle, right, oh my goodness. It went up to something like um three thousand percent or like. I don’t remember what the figure was. I just remember that I was like seven, seven years old and my grandmother sent me with something like 20 pm. She was like okay, go and bread. And I went to buy bread and they were like oh, but like you know, it’s 50 today. You know it was 20 yesterday. And I came back and I was like grandma, it’s like more expensive, you know. And she’s like, oh, okay, and she gave me more money. And the next day I went with 50 pm. They were like well, you know, today’s bread is bound. Sorry, buddy, no, you’re kidding. Wow. And the country’s GDP was something like 44 billion. The next year it was 1.6.

Dr. James: 

Real quick guys. I’ve put together a special report for dentists entitled the 7 Costing 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. I’m really looking forward to hearing your thoughts. Oh my god. Well, that’s an economic crash.

Dr. Vesselin: 

So that was like a proper. It went absolutely down the ground and then some, it was terrible years. So yeah, you’re absolutely right to not be worried about inflation. I can tell you, if you find yourself in that sort of situation, like hyperinflation situation, there’s nothing other than like land that’s going to save you from it.

Dr. James: 

Yeah.

Dr. Vesselin: 

Well, yeah.

Dr. James: 

Yeah, it’s an interesting one. It’s definitely something that I’m looking at protecting myself against, and if you have your finger in various different pies, the more diversified you are, then the more able you are to protect yourself. And for well, I think just the most important thing is to not have all your money in cash and to just think about other ways that you can invest and protect yourself. And again, this is another thing that I elaborate on on the group quite a lot, because when I learned it for the first time, I definitely rocked my world 100% smashing. Well, thanks so much for that, vez.

Dr. James: 

So we’ve talked a little bit about your history, talked a little bit about your well, yeah, just where you came from, your journey, your path into dentistry, things of that nature. I just wanted to ask you this is a relevant question because this happened to me and I don’t know if this has also happened to you Was there a light bulb moment, that a specific point in time that you thought to yourself, wow, I really need there’s like a call to action here that made you think I really need to invest some of my money? The call to action for me was when I learned about inflation and how much the government meddle with figures to to well, to well. They try to make out it’s lower than it actually is, and that’s what made me realize just how much money I lose in the bank every year. Was there a specific moment that you thought to yourself wow, I really need to be conscious of this stuff.

Dr. Vesselin: 

I really need to diversify my holdings uh well, like ever since I was a kid or like back home, you know, money could quickly turn into paper like overnight, and so I see, so, ever since a young age, like my dad told me, son, you know, uh, that’s just paper. If it’s worthless, you you know you can’t do anything with it. You need to kind of put it somewhere right, otherwise it’s just as good as yesterday’s newspaper. So I’ve always been, you know, like brought up with that. And my mom, before she retired, she worked as an accountant as well. So you know, I grew up with like interest rates, tax and that kind of thing as well. So ever since I was a kid I kind of like I’ve been brought up with this, but I think the first time I because my family has been in property for ages but the first time I got interested in like stock was around 2000.

Dr. Vesselin: 

So I watched the movie, funnily enough, and there was a guy trading stock and I was thinking, oh, that’s interesting, I want to try some of that. And then I looked into kind of stock. But in Bulgaria there was no like real market for that kind of thing at all, that kind of thing at all. Then when I came to the UK, I started looking into things like derivatives. So that’s how I got interested in options and that got me interested in finance as well. But my real aha moment was when I blew up my CFD account. I was trading a small bit of CFD with like real money. I was thinking, oh, that’s great, like leverage, to make a whole bunch of money out of that, like I know that stuff. And then I blew it up.

Dr. James: 

Oh dear. By blow it up, do you mean you blew the account or the account went up a lot in value?

Dr. Vesselin: 

No, I mean I went down 75% or something like that.

Dr. James: 

Oh well, people say, you learn more from your mistakes than your wins.

Dr. Vesselin: 

I suppose, oh, yeah, yeah, definitely yeah.

Dr. James: 

But I hope it wasn’t too much money. But I’m sorry to hear that.

Dr. Vesselin: 

No, no, but I learned that I don’t know. I know as much about the market as the next guy right, so I learned from it.

Dr. James: 

Leverage works both ways. It’s a double-edged sword, isn’t it? It’s very unforgiving, but never mind, cool Right. Well, thanks so much for that, ves. I think at this point, just before we go any further, I’d just like to make this extra clear, as I do on every single podcast that I host, on every single podcast that I host, it’s that, vez and I, we’re investors. We do it for fun. On the side, we have a little bit of knowledge that we believe is important to share with others, but we’re by no means financial experts, so there’s no financial advice offered on this. I just have to mention, from this point going forwards, the next thing I wanted to ask, vez, now that we’ve got that out of the way, we’ve touched upon your MBA, your wanted to ask, vez, now that we’ve got that out of the way, we’ve touched upon your MBA, your master’s in business administration, what was the, what was the? You know, uh, the reason that you sort of decided to pursue this, or what? What was the thing that instigated you to go down this path?

Dr. Vesselin: 

uh, I want to try something different. Um, there’s, uh, it’s the 21st century, right? So dentistry is generally like a job that’s resistant to automation. So it’s unlikely that it’s going to disappear over the next maybe 20 years at least. I would say more. I give it about 50 as a minimum in terms of automation, but because things change quickly. I give it about 50 as a minimum in terms of automation, but because things change quickly and you can see now, with the coronavirus pandemic, whatever kind of job you’re doing or work or business, something like that can render you bankrupt pretty quickly.

Dr. Vesselin: 

So it seems that it’s always a good idea to um, mix a couple of different things so that if something happens to one, then you’ve got like, yeah, like a fallback, yeah, exactly the the same thing. And also, um, I’ve always felt that, um, if you were involved in dentistry like as a business, it lacks scale. Uh, in the sense, in the sense of um, like a platform, right. So dentistry is very much a brick and mortar sort of venture. It’s very capital intensive. You’ve got your buildings, chairs and so on. So think about something like, uh, facebook or pinterest or google. I mean these guys they can start in a garage or at home or in their grandmother’s living room, and they can still do work from there, and then the way they the, basically their profit potential is unlimited, pretty much yeah I hear you, so more scope more scale, yeah, and it’s just kind of a different business model, uh, from the point of view of economics.

Dr. Vesselin: 

Because, like, say, if you’ve got dental practice, you’re what we call economists of scale. They’re on the supply side. So for if you automate your business process and kind of shorten consultation times and things like that, or negotiate with your suppliers for cheaper supplies, you’d make more money, right, whereas with the internet the economies of scale are on the demand side. There the economies of scale are on the demand side, so then you need to collect more audience or more users to your platform. Uh, like, for example, if you think about facebook or youtube, if you’ve got like channel on youtube or if you start something like facebook, the more people are using that product, then the more popular it becomes and gets bigger and bigger and bigger and at some point it just goes exponential, it goes like viral. So they’re kind of from.

Dr. James: 

From the point of view of economics, they’re completely two completely different things that is something that I’ve never thought about before in those terms, but it is completely true. Yeah, that’s really interesting. So, basically, what is? Yeah, I, I hear you there’s like two different economies of skill there and uh, yeah, wow, I’ve just never heard of putting those terms it’s, it’s uh.

Dr. Vesselin: 

Man, I’ll explain it in a really wheezy way. Okay, uh, that’s what my teacher used to say. He went in the classroom one day and he was like what’s the difference between a banana and the fax machine? Okay, okay, what was the difference? Yeah, think about it. Okay, we’ve got a banana and we’ve got fax machine, so kind of like, which one’s better? Yeah, yeah no idea. Yeah, go on, try, give it a try.

Dr. James: 

Come on, man oh, I’m gonna say I, so I’m going to say a banana today.

Dr. Vesselin: 

Yeah, that’s right. So with the banana, you can take the banana, you can eat it, you won’t be hungry, right? But, like, if you’re hungry you can’t do anything with the fax machine. Maybe you can send a fax to someone to tell them okay, can you bring me a banana? But it would only work if there is at least one person in the world who also has a fax machine. So let’s call the network effect, right? So it only has value if someone else is using it.

Dr. Vesselin: 

If you’re the only person that has the single fax machine in the world, it would be absolutely useless. You can’t do anything with it. But if another person has it, then the two of you can send faxes to each other. Or it’s the same with phones, right? If I’m the only one who’s got the phone, it would be worthless. But if I can call you, then it’s got some value and then you can call like your friend or like someone. And the more people use it, then it becomes more and more valuable. And that’s how things like, say, the App Store, apple Work, google, android and things like that, it’s got to be.

Dr. James: 

Yeah, good analogy, and I think what you’re saying as well is that if you’re only one person, there is more. When you hit that sort of exponential growth level on the internet, if you have your finger in that pie as well, there’s way more scope, whereas for dentistry you have to actually build the practices first and that’s your kind of limiting factor, and as one person, to achieve that, it takes a hell of a lot more capital to do to build the practices than it does to potentially achieve this level of exponential growth on the internet. So it’s more fluid and it’s more readily available to lots of us and maybe if we just focus purely on the dental aspect of our lives, we’re almost, in a way, inhibiting ourselves or holding ourselves back, especially in this digital age. Is that sort of what you meant?

Dr. Vesselin: 

as well. Yeah, but also you kind of have to level it because, like the, for example, if you start a career in dentistry, the chance of um getting, like, say, a decent lifestyle outfit is pretty significant, right. So there’s a very good chance. You know you you’d have roof over your head, you you’d have food on the table, you know you’d be happy, right. Uh, if you uh start something like a social network or anything that’s got that exponential potential for growth.

Dr. Vesselin: 

Um, that tends to create uh industries which, uh, we call oligopolies, where you’ve got like two or three companies that have 95% of the market share, like, say, for example, computer operating systems, mobile phone operating systems, serial manufacturers, airlines, things like that are industries where you’ve got concentration of all the market share in like two or three companies and it’s very difficult to get in there. So it’s what they call the winner takes all. So you, there may be, say, for example, 10 000 companies making computer operating systems or software, but only like two or three of them would make it big. The others will just either linger along or they’ll go bankrupt. But either way, I think it’s always good to kind of combine different things, because you never know which one is going to work out in the end.

Dr. James: 

Yeah, yeah, I like you thinking, fez. I like you thinking, and that would be my school of thought, I suppose, in those matters as well. Anyway, right, nice one, nice one, fez. So that’s a really thorough answer. We actually slightly went off on a tangent there. So, please, to anybody who’s listening, I just wanted to ask as well, vez, uh, we’ll try to keep this short and succinct, I suppose, so that we can get on to the actual meat and potatoes of this podcast. I just wanted to know has it helped really, uh, and would you recommend undertaking an mba to perhaps others, or others in general, or others in the dental field, or both, or?

Dr. Vesselin: 

it kind of depends, it varies. Uh like, when I went there I was a bit apprehensive because I’m a dentist and I was thinking I’ll go there and these guys, they just kick me out. They’ll be like, just go leave the doors there, you know well. And but uh, they’re, they’re like oh, they were all absolutely lovely people. And uh, the first day there were two gps in my class and I thought, okay, I’m not the only one.

Dr. Vesselin: 

okay. Then it turned out there was another dentist in the kind of previous year, so that kind of made me feel a bit more comfortable. But I would say, if you’re a dentist, unless you’ve got some kind of interest in economics, marketing or finance or strategy or something like that, probably it won’t do you much good. But if you have something like 5 million of assets under management in terms of practices or property or whatever, if you’ve got 5-10 million, then I think it may give you some fresh ideas on how you can squeeze more money out there, because one thing that we don’t understand well as dentists is that money itself it’s a bit like a product, right? So it’s not like, for example, when we say you know how we say we buy stock, we sell stock, we short sell stock, right? Have you ever told that whenever you buy a share of stock, you’re short selling your cash?

Dr. James: 

No, no, I’ve never thought of it in those terms.

Dr. Vesselin: 

Okay, yeah, so like I’ve got £5 in my pocket and I buy one share of stock XYZ, so I’m short selling my cash because I just sold it. I don’t have it anymore to receive that one share, so I’m making a bet that that share is going to cost more than £5 in the future. Right, okay, and I can either be right or wrong, it doesn’t matter. I’ll either make some money on it or I’ll lose some money, but either way, if I just short-sold my cash, it’s gone. Or like if you’re, say, trading on leverage, then again you’re shorting cash essentially.

Dr. Vesselin: 

So in the finance industry, money it’s like a product. Like, for example, people think about stuff like okay, now james just took a mortgage from our bank and now that’s that mortgage stuck on our balance sheet. What can we do with it? And that’s how they come up with things like mortgage-backed securities. We kind of like repackage it, sell it to a pension fund, then that pension fund sends it, sells it to retail investors. They earn the money from the interest.

Dr. Vesselin: 

And so also, it’s uh, it’s a bit of a product really. It’s not, um, kind of uh, you can look at it from different angles, but you can look at it as a product. You can look at it as a commodity. You can look at it from different angles, but you can look at it as a product, you can look at it as a commodity. You can look at it like any way you want. So it’s not just like an investment vehicle. You can actually do different things with money. So I think that if someone has something like 5, 10 million, if they learn more about what they can do with money, then that would help them definitely.

Dr. James: 

I just wanted to know your long term philosophy and your philosophy in investing. Now, mine would be that I want to invest in certain things and draw profit in the very far future when I know that they went up in value. So the other alternative to that is short-term investing, which you’re actively buying and selling and trading, you know, over the course of a few days or a few weeks or months or something like that. Do you do? What’s your philosophy? Do you do both those things or do you do one, or do you purely do your?

Dr. Vesselin: 

I do both and yeah, well, in terms of like stock, yeah, I do both, uh, but, um, I think most of it is, uh, I don’t think that’s kind of like um relevant for uh, most people, because there are different ways to invest and oftentimes you need to just find a way that’s good for you, that works for you, and it also depends on the products you’re using as well. So I do have short-term positions and they’re within the range of zero to 40 days, right, yeah, fair enough. I’ve got some longer ones, which are up to like 120 to 200 days, and I’ve got some that are like indefinite. I just leave them there and I don’t do anything with them.

Dr. James: 

I think what I get a lot of is, or what I see a lot, is, people who they buy something and then they maybe don’t necessarily have an idea of how long they’re intending to hold that for, and then, because they don’t, they have that lack of structure, they panic because when something goes up in value or down in value, they think, oh, should I sell this? Should I jump out? Should I take some profit? Things like that. It’s always very important to go into an investment and have an idea over what period of time you’re planning to hold something. So if it’s going to be the very long run, that’s fine, come back to it. If it’s going to be something more short term, then at least you’ll have a better idea of when to take profits and things of that nature. So it’s always a good idea. Vez, I know that you mentioned to me earlier that you’d been on a. Well, sorry, I think I read it on your blog actually, that you’d been to see an IFA. What was it? It was a.

Dr. Vesselin: 

No, I was on. I had that, like when I, um, as part of the business degree, I had that, uh, I did that module and, uh, I thought it was going to be about stock, but it turned out that, um, it was about wealth management so, just to confirm this, this, this module that you had, this was exactly the sort of information that an IFA might expect to invest in, so you’ll be able to tell us exactly what they do.

Dr. James: 

That’s what I’m interested in hearing.

Dr. Vesselin: 

Yeah, we even had that mock-up interview with a client. Me and another guy went on to the client and started promising stuff what are we going to do with the money? How much money are we going to make? And it was also a good laugh. It sounds like do you know? Vest promised them like 140% return and someone else was like oh yeah, I’ll sign up. Where are you starting.

Dr. Vesselin: 

Anyway, yeah, they talked a lot about what is essentially the job of the wealth manager and it’s more of like I think that we had a question on the group. I think what I’m going to say next will cover that, like how to choose an IFA. Wealth management is like it’s a relationship job, right? So if you go to an IFA, clearly you won’t get 1,000% return on your investment over two years. That can’t happen with stock. But it’s about talking to someone who’s got all that knowledge and experience and they will explain to you what they’ve seen in terms of, like how to prevent people from losing money, what kind of average return you can expect, what’s happened in the past years and which funds work better than which one work better than the other. And they also advise on the fees and one of the most important things basically half of the content was about how to tell the clients that they can actually lose money, because unfortunately, you can.

Dr. Vesselin: 

I mean, like the US and the UK stock market have been relatively stable, but if you go over to Japan the Nikkei I think it was around 1990 something it went down from 30,000 to about 12 and never recovered. It’s not recovered yet and we don’t have any guarantee that such an event won’t happen somewhere else, whether it’s the UK, the States or Hong Kong. We were not guaranteed that the market will keep going up. We just don’t know if that’s going to happen or not. It’s cyclical and currently, uh, I think here in the uk it’s kind of like okay, but if you look at the us market, the s&p, it’s gone exponential, it’s gone parabolic, and that’s a bit of a red flag because, like, if you look at the financial cycle, the amplitude of the cycle becomes bigger and bigger and if we’re unfortunate enough to have a hyper cycle at some point it’s going to wipe us out.

Dr. Vesselin: 

Hopefully not, but you know, there’s always the risk that something could happen, or there could be a war, or even like an alien attack. Who knows? You know, something can happen, like the coronavirus. If you asked me last year, oh this, how the stock market going to be next year? And uh, we have told you, oh, we’ll have the coronavirus. You know it’s going to crash. No, of course not. No, no one, no one knew that. So, uh, things like that happen.

Dr. James: 

You can’t predict it I mean, yeah, yeah, that’s true. I mean, I think for me it’s the important thing is to not have a stock portfolio that’s too centric on one country, because then that way you spread your risk at least. And my sort of philosophy on that one is that if we accept two things one, that the that the inflation is real, which it is, and two, that the global economy is going to keep on growing, it’s very unlikely that that will stop happening. It’s grown 2%, I think, ever since the late 1800s, something like that that I’ve read.

Dr. James: 

So if you can have an investment portfolio that has a little bit in this country, a little bit in the UK, a little bit in the US, a little bit in the developing world, a little bit in this country, a little bit in the UK, a little bit in the US, a little bit in the developing world, a little bit in the East, something like that, a little bit in China, whatever, then that way, even if there is one of these unprecedented events which completely crashed the stock market of one country, then you don’t have all your money or your eggs in one basket, I suppose. But anyway, again, that was a little bit of a tangent. I just wanted to know from this course what would your opinion be on the matter of hiring an independent financial advisor versus doing it yourself, diy? Do you think that there are any inherent advantages to getting an IFA versus doing it yourself, or can you equip yourself with enough knowledge to do just as good a job?

Dr. Vesselin: 

uh, I think actually both have merit. Uh, it depends on, um, the kind of person you are, and that’s something we discussed on the wealth management course, right? So like say, for example, I’m a wealth manager and I meet you and you came into like 5 million and I’m like, ok, james, you know, like, have you invested before? And you’re like, oh, yeah, I’ve been trading Bitcoin for like five years, I love math, you know math’s like my best friend. Then, yeah, we’ll definitely get you engaged in the market, right, you’ll have your own kind of portfolio that you’d be. We’ll leave it to you for you to manage it any way you want, right? So it depends on the client. If the client wants to be engaged, then they will be engaged. If they’ve got some kind of background in mathematics, then yeah, we can say, okay, we can start off with you not being engaged and then, as you’re looking at your portfolio, if it becomes interesting, then we can kind of engage you a bit more. Someone else might say, look, okay, I’ve got this money and I don’t want to hear anything about it. You guys just do your thing. Then, obviously, these people will just get a report every quarter or year, depending on what the service is so I think it depends on everyone’s individual circumstances and like knowledge and desire for market engagement. I certainly wouldn’t recommend if, like if I’ve never bought share in my life and if I’ve got my retirement pot, I won’t say okay, I’m kicking my financial advisor, I’ll start on my own tomorrow. You need to gather a bit of experience. So I think a lot of people really benefit from it from the point of view that if someone’s busy with their work and family and other commitments, if they don’t have the time to develop that knowledge of the market, it makes more sense for them to concentrate on their full-time job, maybe earn a bit of money out of that and then just pay the financial advisor to manage their portfolio. I think that that’s a great service for people who are busy and they’ve got some savings. They want to grow them. It works.

Dr. Vesselin: 

The only thing you can’t expect is to get the above average return, because a lot of it is about preserving people’s money, and I actually met a gentleman who was the head of Aberdeen Capital. They had about something like 50 or 60 billion pounds of assets under management and that’s what he said. He said you know, because we asked him. Okay, so, were you like selling options or something or like speculating on grain futures? And he was like no, he said we can’t do that sort of thing because, like, we’ve got all these clients and it’s their life savings. He said we, we can’t do that sort of thing because we’ve got all these clients and it’s their life savings. He said we just can’t. He said they have a target return per year that’s meant to outperform, to preserve the time value of money, and they stick to that. The only thing that they were doing that was, I won’t say, unusual.

Dr. Vesselin: 

I would say a lot of pension funds do that they were making their shares available for shorting. When you make them available for shorting you get premium because the short seller pays interest for borrowing the shares. It can be pretty high. There was that stock beyond meat in the US At some point. The fee for that was 150% per year. So if you had a pension fund and these shares, I’d lend them for shorting. I’d get like 100% per year why not?

Dr. Vesselin: 

And he said that that was like the most that they’ve done in terms of something a bit more advanced. And there’s no risk with that because even if the short seller can’t cover the short, they’ll get margin code and if they don’t cover the margin code, the position will get closed. So there’s no way the pension fund can lose the customer’s shares. Right, and it was really interesting because he said that they never engage in any speculative activity or anything risky. They don’t invest in venture capital firms or anything like that. That could bring stellar return but at the same time it could be a loss.

Dr. Vesselin: 

So I think that the service itself is uh sound because it’s all based on preserving your money and growing it a bit. It just, um, won’t make you rich. If you’re starting with something like a thousand pound per year or you know like 500 per month, you you won’t get rich from that. But if you were investing in for retirement, yeah, it will work, most likely unless you catch a bad period of history when the market’s crushing down.

Dr. Vesselin: 

Yeah, one one thing I think everyone should be aware of is that probably if you put in like £100 in the market now, eventually you’ll make money out of it the wedding, the children, retirement so you’ve got like a fixed period and you’ve got no guarantee how the market is going to perform during that particular period. So let’s say, for example, my pension kind of performs really badly, but I don’t need it and I say, okay, I’ll leave it to the kids. When the kids turn 50, it will probably be worth a lot more than that time when I invested the money, but I’ll be long dead by then, so you know. So it just depends on what kind of timeframe you have. If it’s something that’s for, like, generations to come, then it wouldn’t matter. If it’s for retirement, then it’s not losing money matters.

Dr. James: 

Yes, of course. Yeah, fair enough.

Dr. Vesselin: 

So those are the pros and cons, I guess really 100, 20% S&P 500, 20% UK bonds, assuming you’re aged, say, between 20 and 40, something like that. You just leave it, chances are at least 50% is going to be worth more in years to come. The only thing that they do that’s slightly different is you can actually model the anticipated return. It’s called financial modeling. So we take the stocks the individual stock or the ETF and we kind of start modeling the historical returns and we can figure out what would be the optimal combination of each fund.

Dr. Vesselin: 

Because sometimes what you may find out is that if you add on 1% of something, it can dramatically change the risk profile and the return of an investment. Like, say, for example, if you know how there was the coronavirus crash right when the FTSE and the S&P 500 crashed, right, if you had a portfolio of FTSE and the S&P 500, if you had something like 3 or 4% of VIX futures to hedge it, you would have ended up flat most likely, or the losses would be a lot smaller. It would reduce the losses by at least like 20-30%. So that’s the only thing that retail investors don’t really have access to. But I think in a lot of cases it’s not a major issue because you can learn how to do that. It’s not that complicated.

Dr. James: 

Plus, as well as that, what we have to take into account is the fact that these people will charge fees as well to manage your money. So, on balance, from what I’m gathering from what you’re saying, is that really, once we’ve probably taken into account that what you can do yourself with a little bit of education isn’t too far off what these guys can do? Would you say that that’s accurate vez?

Dr. Vesselin: 

I would say, if you knock off the fees, maybe you won’t need to model that much in excel. Let’s put it that way. Yeah, but there will always be fees. It’s not free, you know. In investing they say, okay, we don’t know how much return we’re going to make, but we know there’s going to be fees. That’s why everyone wants to go into asset management, where there are the people that collect the fees, right. So if you ask someone with background in finance I mean, if you ask me before the coronavirus, would you prefer to trade options or would you prefer to go and work in a private equity firm, I’d say I’d go and work in a private equity firm because these are the guys that you know like they’re the buy side, right. So it’s a bit different. They don’t maybe not private equity, but asset management. They definitely collect the fees, the funds.

Dr. Vesselin: 

But I think it’s an interesting question because, like retail investing in ETFs, it becomes more popular and a lot more people do it and, as anything else, it kind of starts to go in a direction which could influence us all in a bit of a negative way, because, like you buy ETFs, I buy ETFs, everyone on the group buys ETFs and in the end what happens? These ZTFs actually own a lot of stock. Now, for example, if you take the S&P 500, it’s got a market cap of something like 20-ish I don’t remember what it was like a billion or a trillion or something trillion. And if you take all the active funds that have S&P 500 shares, they probably own at least something like 10% of it or more. So eventually we may end up in a situation where a lot of shares won’t be held by index funds and then that would make the majors of the companies more kind of relaxed about what they’re doing in the company, because there won’t be so much shareholder control.

Dr. Vesselin: 

Let’s say, for example, if me and you are majority shareholders in name any company, it doesn’t matter like, say, google, we’ve got 50% of the shares. Do you think if we go to the office they’re going to listen to what we’ve got to say, right, percent of the shares. Do you think if we go to the office they’re going to listen to what we’ve got to say, right. But if you’ve got one billion shareholders and every one of them has like five shares of an etf, then there there’s no one for the management team to be accountable to, and management teams.

Dr. Vesselin: 

They hate two things activist investors and short sellers, and they don’t like these people because they’re the ones that meddle in their affairs. As an activist investor, you can get a seat on the board of directors and you can say I don’t like where that company is going. I think you should do that a different way and it may actually be good for the company. They don’t like short sellers because it’s capital market and they want share price to go up. So if you start shorting their stock, you know no one likes that. That’s why the French want to ban it at some point. So I think that we may be creating at some point we may end up creating some kind of a new problem with these ETFs, but for the time being being, they seem to be working quite well, so I don’t see a reason why we can’t keep using them until you know something happens and my point is that eventually we may need to change the strategy right.

Dr. James: 

Eventually it may stop working independent investors like us and the big companies. We’re both doing the same thing, so it wouldn’t matter whether you went with these guys or you bought it yourself. Absolutely, you’re both going to be caught out. So basically, what you’re saying is that if that happens, the whole market’s going to go down anyway. So it doesn’t really.

Dr. Vesselin: 

Absolutely. I think if you’re retail, you have a slight bit of an edge because, for example, I can close all of my positions within not the blink of an eye, but it will take me less than five minutes and I’ll be 100% cash right. I’ll be done. Whereas if I’m an asset management fund, if I’ve got, say, like 30 billion worth of assets under management, if I’ve got 200 million positioning no, that would be maybe too much, but let’s say I’ve got 200 million position in Apple. It’s a $2 trillion company, so it’s not that big. If I have to clear that I won’t be able to get a very good price, I may need to sell it in batches, and that’s some of the things that pension funds struggle with. Sometimes it takes them six months to close the share position because it’s so big. It drives the share price down, whereas if you retail, you can do that anytime you want. And actually there was some research on the coronavirus crash and it turned out that retail investors outperformed the fund, strangely enough. Interesting. Well, that was very interesting.

Dr. James: 

Food for thought. Food for thought, vez, that was an extremely detailed answer. I’m sure lots of people listening will be. You know they’ll find that super interesting. Went into so much detail there, which is great, and certainly exposed some of the reasons why maybe putting your money away in these big funds or these big independent financial advisors can not always be the best thing to do. There’s inherent disadvantages to it and maybe there are some pros to doing it yourself anyway, which is one of the things that I tend to talk about too and tend to promote a little bit, and it’s certainly something that I’ve read a lot about a lot of advocates in the books that I’ve read. I just wanted to know, vez, what is your personal investment strategy? Is it like 80 stocks, 20 bonds, or maybe there’s a little bit of gold in there, or what do you do, or is it very complex?

Dr. Vesselin: 

uh no, it’s nothing complex really like. Obviously, kind of like do the options trading, which is completely different.

Dr. James: 

Sorry, I should have made that clear. So yeah, we’ve got your trading over here, which is your stocks. Maybe I’m talking about purely your long-term investment strategy. Sorry if I didn’t make that clear.

Dr. Vesselin: 

I just have ETFs. I can actually tell you what I’ve got in percentages yeah, percentage would be great.

Dr. James: 

Yeah, that’s really interesting.

Dr. Vesselin: 

I actually cleaned up now because I can lean slightly contrarian sometimes. So I cleaned some of my ISA because I wanted to leave a bit for war chest, because I personally think that this rally that we’re in right now will run out of steam eventually. So I want to have some cash for when that happens. But I don’t know if it’s going to stop or when, so I’ll just wait a couple of weeks and see. But yeah, I don’t have anything exciting, I don’t think? Uh. So I’ve got the footsie um 100, which is about like 30 percent. I’ve got 16% bonds, about 11% in small caps, the FTSE 250. I’ve got about 9% in China and I probably shouldn’t say that, but I’ve got 5% in some Russian oil companies.

Dr. James: 

Yeah, that’s fine, it’s fine.

Dr. Vesselin: 

And the rest are just minor things. I’ve got a tiny bit of very small bit of the NASDAQ because I think it’s like too expensive at the moment, but I still have a bit. I bought the Russian oil companies because they were like way too cheap in my opinion and I think they’re like slightly strategic and BP is a shareholder in one of them, funnily enough. So yeah, but I think that any kind of portfolio allocation needs to fit the person’s individual requirements. There’s no one sizesize-fits-all, and that’s one thing I love about investing it has to be something that fits you, right. If it doesn’t fit you, then it’s not right. And I hate to see people kind of like chasing returns because you read on the internet that guy made 3,000%, the other made 500%. That doesn’t matter, as long as you’re not losing money, you absolutely fine. That’s all I have to say.

Dr. James: 

Yeah, yeah, I mean definitely. I mean. I think that investing is one of those things where it’s completely fine just to be okay at. You don’t have to be the best in the world. As long as you’re with them, you’re aligned with the market, you’re generating those returns and you’re not losing all your money, you’re not losing a lot of your wealth through inflation every year, then isn’t that better than just having all your money in cash and being susceptible to that? So again, that’s another thing that I like to talk about as well. You don’t have to be the best at it, you just have to be okay and you can still benefit from it. But that’s interesting to hear your breakdown of your portfolio. So you’re quite heavily leveraged in the UK market, which is fine. Yeah, I think a lot of people at this point think that, because of Brexit, that UK stocks and shares are quite cheap. Am I right in saying that?

Dr. Vesselin: 

Yeah, like I said, I lean sometimes slightly contrarian. Yeah, like I said, I lean sometimes slightly contrarian. But when I set what I’ve got at the moment, I would take that as a pinch of salt Because tomorrow I may change my mind and shut it down and start off with something completely different, because that’s something I inherited from the options trading to buy stock when it goes down. So you know, it doesn’t necessarily work because I bought what was it? I bought Cineworld and that went down on me 50% after they announced they’re closing all their cinemas and, like, when the rally came around I was so happy to get rid of that. I just I got rid of it immediately, still made profit on it. But you know it’s hard to buy stock and to see it go down as much. I think now at the moment it’s hard for a lot of people because it kind of plays tricks on your mind, doesn’t it?

Dr. James: 

There’s a little bit of active management in there, off your stocks and shares, isa, as well, because, as you’ve just said, you’re actively. You’re kind of monitoring the market and actively buying oil, things like that, whereas a lot of people just tend to they have their preset portfolio. They just put some money into their set list of stock or set list of index funds and then they just let it passively, just flow and they mightn’t even change those for their whole life. You know, balance it out every once in a while if one gets ahead of the other, if one goes up in value. So they sell it when it’s expensive effectively, and they buy the other ones when they’re cheap. So it’s two sides of the coin. So what Vez does? Not everybody has to do, it’s just his personal management strategy.

Dr. Vesselin: 

I’m glad you mentioned that because I think it’s an example of what we were talking before about market engagement. My market engagement is like up there right, so I can’t just sit and watch paint dry. It’s not happening, and that that doesn’t mean that that’s a good way of doing it. It means that that’s the way that’s right for me. Someone else that may be like a completely wrong way of doing it, and that’s absolutely fine. That doesn’t mean that I’m right, the other person’s wrong or the other way around. We’re just different. So I think that I’m glad you brought up excellent example, yeah.

Dr. James: 

Yeah, yeah. So yeah, the only reason I wanted to mention that was I think that it’s possible to maybe get the wrong end of the stick when you’re listening and think that you have to actively do it. No, maybe get the wrong end of the stick when you’re listening and think that you have to actively do it.

Dr. James: 

You know, no, you can do that as well. That’s totally fine, as vez says, but there are other methods. But anyway, just thought I’d bring that up. Cool right. So thanks very much for that. I just wanted to ask a question just more broadly about investing, then what’s your opinion on sip self-invested personal pensions versus ISAs? Do you have both? Do you have one and not the other, or do you have a?

Dr. Vesselin: 

preference. I’ve got one, not the other. I don’t have any preference. I think it depends on the person’s individual circumstances. Like, I’ve got the NHS pension scheme right and a lot of people have told me I’m stupid, that I keep my money there. Maybe I am, but I’ll give you my take on it. So have you heard how, whenever someone says, oh, should I opt out of the NHS pension, and they often get the reply, oh, I went to an IFA and the IFA told me to keep it.

Dr. James: 

I have heard people yeah, but some other IFAs will tell you not to keep it. Is that right? Am I right in saying that?

Dr. Vesselin: 

It depends. Like, for example, if you’re an associate, if you get employer contributions, are you going to get these employee contributions if you’re invested in a SIP? If the answer is no, then because obviously, both with the NHS pension and the SIPP, in both cases you benefit from a tax shield, right, Because they both, the money doesn’t get taxed on the way in the pension, they get taxed when you get older, yeah, on the way out, on the way out. And, for example, if you’ve got the same amount of money in each say like £1,000 in SIPA and £1,000 in the NHS pension, we could argue how the market is going to work out, whether it’s better to bet on the UK government. Essentially, you’re betting either on the market or on the UK government and it’s a matter of personal choice. There’s no right or wrong way. But basically, if you’re getting employer contributions onto your NHS pot, if you put in £1,000, we got £1,000 in SIP, £1,000 in the NHS pension, but then the NHS pops in another £1,000 and all of a sudden the NHS pension pot is like £2,000. So how much money can you make from shares in that SIP? You need to make like 100% more. That’s every year. That’s a lot. It’s difficult, yeah, if you’re like a practice owner. I’t know if practice owners um get any contributions towards their pension from the nhs, and it also depends on what kind of percentage bond you are, because that makes a huge difference. So that’s why, when it comes to things like pensions, it’s always good to either calculate it yourself or use the services of a professional, because there would be a lot of people where it would make a lot of sense for them to use the NHS pension scheme and there would be a lot of people where it wouldn’t make any sense for them to use the NHS pension scheme. They would be, say, better off with a SIP or something else. So it’s always best, if you’re not sure, to seek professional advice from an IFA. They’ll definitely help out with that. So I personally, because I’ve got the NHS pension, so I’ve made a bet on the UK government there. I think that you know, I think the UK is a stable country and I’ll make a bet on the government that it’s going to be around when I retire and I’m going to get my money from there.

Dr. Vesselin: 

I do have an ISA as well, and one of the things I find about ISAs is that there’s that element that people say, ok, like it’s tax free, yes, but always, guys, remember, depending on like your income and your assets and so on, especially for young dentists if it’s someone who’s just started, they don’t have a lot of capital or assets. Don’t forget to check your capital gains allowance. It’s about $12,500 or something, so there’s a good chance that you can trade from any kind of account and still not pay tax, depending on the amount of assets you have. Got income in terms of capital gains over $12,500, then obviously the ICE is absolutely amazing. No arguments there.

Dr. Vesselin: 

But whenever it comes to accounts, it always depends on the individual’s circumstances. It’s never like a clear-cut answer. I think that both the ISA and the SIP are good accounts. Basically, in the ISA, your money gets taxed and then your gains don’t get taxed, which, if you’re like 20 years old, it’s a bit questionable whether you benefit from that or not. But if you’re older, you’ve got like more capital gains from elsewhere, then yeah, that would be absolutely fantastic, yeah okay, so fair enough.

Dr. James: 

So there’s a lot of nuance to it really, and yeah, definitely okay, it’s not black and white.

Dr. James: 

Fair enough. Good answer, cool. So, really, if you want to get into the nitty-gritty of that, it’s about your personal circumstances and maybe seeking the advice of someone who’s clued up on that matter. So possibly an independent financial advisor, as Vez says, cool. And we’ve heard all this wonderful information about portfolios, the pros and cons of doing it yourself, the pros and cons of the various accounts a lot of information. If someone was listening to this and they were a total newbie, they had only ever heard of a stock for the first time in this podcast. I don’t know things along those lines. They were complete greenhorn, no experience on the matter. What would you say to them? Fez is a really, really good place to start um, okay, I’ll tell them where not to start.

Dr. Vesselin: 

Is that? Is that okay, that helps, it all helps. So, uh, don’t don’t start with derivatives, okay, uh, because, um, uh, derivative is uh, like, uh, it’s complicated financial instrument. If you don’t know what the share is, it would be difficult for you to understand what derivative is right. So sometimes when I trade options, sometimes I discuss my positions with my wife and she hates finance and she can’t understand whether I’m short or long. She said, so, do you need the stock to go up or to go down? And she hates finance and she can’t understand whether I’m short or long. She said, so, do you need the stock to go up or to go down? And then you know they’re just more complicated.

Dr. Vesselin: 

So if you’re just starting, start with something simple. Start with an ETF. An exchange-traded index fund is a fairly safe thing to buy. So I am against people losing money. So pick like a hundred pounds. If you can lose a hundred pounds, just pick up one hundred pounds.

Dr. Vesselin: 

Make a free buy account somewhere. There are like various ones. You can try Buy one FTSE fund, one S&P fund and one bond fund. Find something for like £20 or leave them there for a few months. See what happens. It would be very unlikely to lose all of your £100.

Dr. Vesselin: 

And I think that would be a good way of starting, because one thing that I feel is important for people who are new is to win basically when they win and that gives them more confidence, whereas when they start trading like forex or cfd, a lot of people lose money or blow up their accounts. Like I said, I blew up my account and it could happen to me in the future. No one knows what’s standing behind the corner. So try in a safe and responsible way, with small amounts of money. Leave it for a few months. Don’t rush. There’s always time. The market is going to be there tomorrow. You won’t miss out on anything. There will always be companies that go up and it’s always interesting. You don’t need to become an expert out on anything. There will always be companies that go up and it’s always interesting. Um, you don’t need to become an expert overnight. It takes time. So you gather experience. Just give yourself a chance to win.

Dr. James: 

That’s that’s what’s important I think education is the key as well. Maybe just reading around, pick up a few books um, by all means, don’t do what I did and just jump in head first. It’s a bad idea. It never. And if I, I only learned that I should educate myself through being so poor at it at the very beginning, when I started, and I really wish that I would have took the time to educate myself like what I have done now before I I, you know, I began going down that path.

Dr. James: 

It is worth it and, excuse me, there are a lot of benefits to be reaped, but the difference between someone who loses money and this and someone who gains money is just education and knowledge effectively. So if you’re going to do it, do it right. Basically, cool for someone who is specifically a dentist and who is new to it. Is there anything else you would throw on top of that? There’s a young vez who was just starting out. He was a dentist and they didn’t know anything about finance. If you could go back and tell yourself that, what would it be? Specifically to dentists, or is there anything at all?

Dr. Vesselin: 

or not, not really uh, yeah, I go and I say vest, just because you’re a dentist and you may have gotten that like fancy dentistry degree, you don’t know anything about the market. Like it’s completely different kettle of fish, right, it’s, it’s got nothing to do with it. Uh, one thing I think is important to mention to dentists, young or old, is that finance is not like dentistry. You always have to remember that the guys that are on the other side of your trades or the guys that are doing the funds and so on, in the finance industry everyone is ruthless. It’s all about money, right, they’ll take your shirt off and they won’t even blink. Dentistry is a fairly ethical profession. It’s always about making people comfortable and helping them live a healthy life and not worry about their teeth. We take pain away, make their teeth healthy and we want them to be happy and, you know, to prosper in their own life. In finance it’s not like that. People are only out there to make money. There’s no higher purpose to it. Articles or any kind of analysis bear in mind that the people who write these things they may have some kind of interest, right? So, for example, if you’re reading a report by Goldman Sachs, you have to remember that Goldman Sachs is a sell-side institutional investment bank. They make money from selling financial products to funds and and so on. Right, so they sell things. So it’s normal that their report won’t have one kind of bias or another, which would be they were towards their products.

Dr. Vesselin: 

But I was looking, for example, at the company that was had gone public. I was looking, for example, at the company that had gone public. I was thinking of shorting it, but I wasn’t sure that it would work, so I wanted to use something slightly bit more synthetic to cover my upside, so that I don’t send the blackout. But anyway, this thing didn’t happen. But I read the analyst ratings, and all the analyst ratings were written by people who were actually working for the banks that were involved in the process of that company going public.

Dr. Vesselin: 

And these banks, they’ve got shares in that company and if they recommend it to you and you buy it, the share price goes up and they make money, right, when they make the money, then they sell their shares. It goes down and you buy it, the share price goes up and they make money, right, when they make the money, then they sell their shares. It goes down and you lose yours, that’s, and they won’t even blink. That happens all the time. Uh, it’s not even funny, uh. So just bear in mind, it’s a different industry, the rules are different, so be careful.

Dr. James: 

It’s a really good point. Yeah, I like that actually. So we’re playing two different ball games almost, and definitely, yeah, maybe, coming from a dental world where everyone does their their utmost to be ethical at all times, it’s maybe made us all a little bit casually naive and maybe we yeah, that’s that’s really helpful to know that actually just to be wary. I suppose that’s a good example. Cool thanks. So much, fez, right.

Dr. James: 

So this is my favorite part of the podcast. This is where we delve into the group and see what everybody’s come up for us with, come up, come up with, uh, in terms of questions for us for the podcast and freestyle a little bit at this stage, which is cool. On to the questions from the group so the first one that I can see here is by Sheila Lai. So Sheila has asked what is the most efficient way to draw money from a limited company to invest. That’s a really good question. Thanks a lot, sheila. I think what I’d like to say, just as a full disclaimer from this point, is that obviously, vez and I are not financial advisors and we don’t know all the relevant facts about this specific company that we’re talking about. So I’d hate to give anybody any unsolicited financial advice, but what we can talk about is some broad methods of doing that, which, hopefully, vez will be able to enlighten us on.

Dr. Vesselin: 

I don’t do tax. It’s just basically, whenever I did something tax-related, I just say we’ll call the tax people and you know they’ll sort it out right. But obviously it kind of comes into play a lot. So I do know like small bits of it. So I’ll just cover what I want.

Dr. Vesselin: 

But I think that Sheila, and also I think it was Ahmed Jiaziri who had the same question, I think that both of you guys really need to see a tax advisor. Yeah, yeah, definitely. But we’ll give you our two cents on kind of like what we think. Yeah, shall we? Okay?

Dr. Vesselin: 

So the first one is like, what is the most efficient way to draw money from a limited company to invest? If you mean like, say, in terms of like profits, it depends on your turnover, so it could be either as income, salary or dividends, and you’d need to check with your accountant which way you’d pay the least tax accountant, which way you’d pay the lease tax. And then the next one is uh, uh, so that she was she’s trying to plan the most efficient way to invest with money in my limited company. Uh, so if you’re, if it’s your own cash, you’ve got from somewhere else and you want to put it into the company. I think that there’s something called director’s loan that you can use to do that. If you want to put it into the company, I think that there’s something called director’s loan that you can use to do that. If you want to invest the money that are in the company somewhere, there are a few different ways to do it. I think that goes on to Ahmed’s question as well. So I think that we have to think of it in terms of cash flow, right? So when is the tax being paid? So if the money is in the company, obviously it will get paid on the way out. So when they’re withdrawn, the LTD is liquidated or sold on or it’s paid as a dividend or net income. Alternatively, you can put it in a SIP in the name of the director. Then you get the tax shield from the SIP, but you give away your liquidity because you can’t withdraw the money until you’re like 55, 58 or whatever the age is at the time.

Dr. Vesselin: 

In terms of the brokerage account itself, I don’t think there would be much trouble to open a brokerage account in the name of a limited company. That should be perfectly fine with most brokers. If they don’t have such a section on the website. Just email them, they’ll set you up. If they don’t have such section on the website, just email them, they’ll set you up. But I think that the main issue with things like that is the legal bit. That’s why you need the tax advisor.

Dr. Vesselin: 

And then I think she was saying about opening a separate limited company to trade. People recommend that. They recommend it because this way the two things are split. So, for example, if your main business fails to pay debts, people just go bankrupt, but you still keep your trading income in the other limited company and that’s perfectly fine, right? Either way, no one wants you to get bankrupt. We want you to be successful and you’re happy and to make loads and loads of money from investing. But we, we have to think about the worst case scenario and that’s why, uh, some people would say, split the two. And then there was the question about holding company. Now, if you make a holding company, an investment company and your main business, uh, that thing starts to look more and more like the structure of a bank, for example, which is fine. But you have to think about the servicing costs.

Dr. Vesselin: 

A friend of mine was offered by an accountant to make like an offshore company in Cyprus or something. And he said, all right, you offered me that account, that company in Cyprus or something. And he said, all right, you offered me that account, that company in Cyprus and I was like, yeah, okay, that’s great, but what’s the servicing cost of that company? And he was like like 3000 pounds per year. And I said, are you going to save more than 3000 pounds per year on tax if you use that? And what’s the chance of you getting fined by the HMRC? Because the last thing you want is to get fined by the HMRC, of course. And he said, well, I’ll save like £1,000 on tax. And I said, then you’re down like £2,000, you’re minus £2,000 from that transaction.

Dr. Vesselin: 

So whenever you think of things like that, you need to think about the costs of setting up the structure and the costs of maintaining it, because the accounting for a limited company, of setting up the structure and the costs of maintaining it, because the accounting for a limited company is somewhat more complicated. If you make a holding company with two limited ones, chances are your accountants will charge you more sort of like for each company and then holding they may need to set up some legal documents and things, which will also cost you. So that’s kind of on the legal and fees bit. You also have capital gains tax to consider, because as far as I’m aware, the capital gains of a limited company, in terms of trading profits, are slightly different than an individual. So I think that an individual but you have to check that. I’m not sure if that’s true, but I think that an individual had about four years to offset any losses. So like, if you’re investing and if you make a loss, you can then offset it. You have a longer time to offset it through tax. So that’s slightly bit different. You need to look into that. And the last but not the, it’s not a problem, but you may need to get a MIFID II license as well. Even though you’re not managing other people’s money, you need to check the MIFI to its European Union regulation for banking. It’s simply because it’s a limited company. They don’t know what you’re going to do in the future with it. So if you’re trading through it, I think it costs something like £100 per year, so it’s not expensive. It’s only a formality, but when it comes to regulation, you need to satisfy things like that.

Dr. Vesselin: 

I think she also asked how to look out for a financial advisor. I think we covered the relationship aspect of it, but because we went into holding companies and things, I think that’s something that may be important for some people, especially the ones that have more assets. If you’ve got like a lot of assets, then you may need to hire a full service firm, because what can happen is that you may need you obviously need an accountant anyway, but it may turn out that you need a tax advisor and the wealth manager at the same time more frequently than you imagine. So if you find yourself in a situation where you’re phoning one than the other and they have to talk between themselves and it’s really a struggle, that’s when you may want to look into a full service firm that does all of these things for you under one roof, because it will be easier in terms of communication. But it also has to be someone you’ve got a good relationship with, so it’s a bit of a difficult one.

Dr. James: 

I think Sheila will be very grateful for that really thorough answer. So thank you so much, Fez. And then did we also answer Ahmed’s question in that as well? I think we did, didn’t we?

Dr. Vesselin: 

I think it had to do with the SIP and the ISA. Let’s see.

Dr. James: 

It’s the SIP and the ISA with relevance to a limited company, isn’t it really?

Dr. Vesselin: 

Yeah, I think that for the SIP because it’s in the name, I think we bought it in the name One is the individual savings account and the SIP was self-invested personal pension. So when you’ve got the individual and personal, that implies that it’s in your own name, in your own name. Obviously, you need to check if you can. The SIP will definitely be in your name. It won’t be in the name of a company. But for the ISA, you need to check if you can open an ISA in a company’s name.

Dr. James: 

I’m not sure if that would be the case like I said, because of the name individual.

Dr. Vesselin: 

Okay, so we’re not sure. But we’re not sure, yeah, we don’t know.

Dr. James: 

Sorry, All right, fair enough, I’ve never come across that.

Dr. James: 

Wow, guys. Well, I think that was absolutely tremendous. Fez clearly really knows his stuff. He knows so much about finance. I think that even you know anybody who listened tonight must have learned a lot. I certainly did. I’m blown away so much value that we’ve created on this podcast and certainly lots of food for thought and definitely a lot more nuance to a lot of things that I thought were maybe quite black and white in my previous, before I spoke to Vez as I, as I did, you know, during the course of this podcast and certainly a lot more nuanced and kind of more in-depth detail to those facts and pieces of information, which is absolutely wonderful. It’s vez’s very first podcast, would you believe. I don’t think anybody could have told from how I delivered the information. He really was able to enunciate it in a clear and concise way and, as I say, bring much use and knowledge to the table. So I just want to say thanks very much, vez. I hope you’ve enjoyed yourself. How’s it been?

Dr. Vesselin: 

Oh, it was great. Yeah, I’ve done PowerPoint presentations in the past, so that’s like completely different, because when you are doing PowerPoint you can actually see the audience, and if they’re starting to fall asleep you can kind of like change it a bit to wake them up. So let’s be new. I’m sure we’re fine. At least people are not in front of you, so if someone’s not happy they can’t throw things. So there’s a positive point.

Dr. James: 

They can only complain behind your back, which is, you know, I’m not really sure that’s better, but anyway.

Dr. Vesselin: 

No, it’s acceptable. Yeah, why not?

Dr. Vesselin: 

But, either way, you know, like one thing that me and James were talking previously is that, while in dentistry we’re used to kind of clear answers, when it comes to finance, economics, tax, personal finance, investing that sort of thing there are no clear answers. When it comes to finance, economics, tax, personal finance, investing that sort of thing there are no clear answers. So I think, like, if any of you guys are want to know more about something always like post on the group or if you have some kind of a case, either message me or go to hedgebox, email me uh, might be happy to cover anything. The whole purpose of that website is to be relevant to other people. So, yeah, if there’s anything, just post it on the group and we’ll try to help you out as best we can, right?

Dr. James: 

Yeah, by all means. So Vez’s blog that he runs on finance is called Hedgebox, which we mentioned at the start. Lots of useful information on there. If anybody wants to go into more detail what we were talking about. For anybody out there who may not necessarily know what the group is, they’ve just found the podcast on Apple or the internet, I don’t know somewhere else. The group we’re talking about is on Facebook. It’s called Dentists who Invest. It’s the same name as the podcast, dentists who Invest, a community group for dentists who enjoy trading All sorts of finance information on there. The idea is to help empower dentists so that they can be more clever with their money. They can protect their wealth and hopefully generate a nice nest egg or pension pot that they can use later in life to just enjoy themselves, because the point of having money is to buy back your time and be able to live your life to the fullest anyway I just want to say a huge thanks to vez.

Dr. James: 

It’s been an absolute pleasure. Thank you so much for coming on the show, vez it was.

Dr. Vesselin: 

So you’re welcome. It was absolutely fantastic. Yeah, it was great. Yeah, thanks for inviting me it. It was lots of fun, oh no problem.

Dr. James: 

This is exactly what I wanted tonight. I wanted a podcast that could give everybody the sort of bare bones, bread and butter information on investing, and you’ve done a wonderful job with that. So thanks once again, Fez. We’ve been chatting for two hours, would you believe? I’m going to edit some of this out. It’s been a long one. I don’t want to keep Vez too much longer. He’s been very generous with his time. Vez, I hope you have a smashing evening and we’ll speak again soon.

Dr. Vesselin: 

And you’ll speak to you soon, James.

Dr. James: 

Nice one Vez In a bit. See you later. See you 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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