Get a free audit of your indemnity cover here >>> https://quote.allmedpro.co.uk/dental-indemnity-2025-new-proposal-dwi/
———————————————————————
Collect unlimited free verifiable CPD for UK Dentists here >>> https://www.dentistswhoinvest.com/videos/heres-how-to-design-a-portfolio-that-beats-99-of-other-investors-with-dr-james-martin
———————————————————————
Tired of investing advice that feels like navigating a labyrinth? This episode strips away the unnecessary complexity and reveals a refreshingly straightforward approach to building wealth.
We begin by challenging the conventional wisdom that dictates how most people structure their investments. Instead of starting with a platform and working backward, I outline a powerful framework that places asset selection at the foundation of your investment strategy. This simple reordering asset then fund then account then platform can dramatically accelerate your journey toward financial freedom.
The conversation tackles one of the most profound misunderstandings in personal finance the difference between risk and volatility. Most investors and even many advisors conflate these concepts leading to portfolios that feel safe but actually jeopardize long term financial goals. I explain why the supposedly low risk portfolios heavy on bonds and cash might ironically be the riskiest choice for achieving true financial independence.
Throughout the episode I unpack how your investment timeframe should drive your asset allocation decisions why passive funds typically outperform their actively managed counterparts and how to navigate the tradeoffs between tax efficiency and accessibility when choosing investment accounts. I also reveal why platforms advertising no fees warrant skepticism and how to identify genuine value in the investment platform landscape.
This episode provides both foundational knowledge for beginners and sophisticated insights for experienced investors. The four step framework I outline is not just theory it is a practical approach that could potentially shave five to ten years off your timeline to financial freedom. Whether you are just starting your investment journey or looking to optimize an existing portfolio these principles will help you build wealth with greater confidence and clarity.
Take a moment today to examine your current investment strategy. Does it follow this logical sequence or could a simple reorganization dramatically improve your outcomes?
———————————————————————
Disclaimer: All content on this channel is for education purposes only and does not constitute an investment recommendation or individual financial advice. For that, you should speak to a regulated, independent professional. The value of investments and the income from them can go down as well as up, so you may get back less than you invest. The views expressed on this channel may no longer be current. The information provided is not a personal recommendation for any particular investment. Tax treatment depends on individual circumstances and all tax rules may change in the future. If you are unsure about the suitability of an investment, you should speak to a regulated, independent professional. Investment figures quoted refer to simulated past performance and that past performance is not a reliable indicator of future results/performance.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Dr James (00:00):
I've heard people explain investing in lots of
different ways, but actually andif you ask me, people overly
complicate it a lot of the timeand that's why, today, I'm going
to break investing down intofour simple steps.
Whether you're a beginner, anintermediate or an expert, I
promise you probably neverthought about it in this way and
there's going to be little bitsof wisdom that you can pull out
(00:21):
.
Looking forward to this one,why do people overcomplicate
investing?
I think it happens a lot and Ithink that social media has a
big role to play in that,especially if you spend a lot of
time on Twitter and X forpeople, post charts and
everything along those lines.
And as someone who's been thatstyle of investor and kind of
(00:43):
saw the light a little bit andcome back to the more steady
eddy stuff, I can definitely sayI've seen both sides of the
fence.
Having said that, I'm a littlebit more open to those more
faster styles than maybe a lotof people that are out there.
Both have their place and bothhave their merits, but, if you
ask me, you've got to walkbefore you can run, and maybe
(01:05):
that's where I see people runafoul of the whole investing
side of things a lot more thanthey should do.
What do I mean by that?
Understand the basics which, bythe way, are amazing strategies
that will make peoplemillionaires with time and
probably beat 95% of what's outthere In fact, you know what I'm
going to say 99% of what's outthere versus people's standard
investment portfolios.
Even if you do the very steadyEddie index funds linked
(01:26):
investing strategies that areout there, you will still beat
the vast majority of people.
It is crazy Trading.
Whenever you start to go downthat route, really, it's like
0.0001% that you're better thanProvide and you can master it.
Of course, but anyway, let'srevert back to what I was saying
just a second ago.
Let's keep things simple wherewe can, because the simpler the
better.
You only really need to knowfour things in order to set up
(01:49):
an investment portfolio.
This is the most eloquent I'veever seen anybody articulate
investing before, and it's notmy concept.
It's not my idea, by the way, Ihave put my own flavor on it
with time, but, like I wassaying a second ago, I can't
take all the credit.
I really really, really can't,but I definitely have never seen
this articulated morebeautifully.
Here's the four things you needto know and here's the order
(02:10):
that you need to know them in aswell.
I'm going to cover them highlevel.
Then we're going to get intothe nitty gritty and the
specifics of each one, so thateverybody can make these
decisions and make the bestinvestment portfolio they can.
First thing you need to know isyour asset.
What blend of assets are goingto take you to where you need to
go and allow you to achieveyour goals?
As in financial freedom?
That is the whole point andprinciple behind investing.
(02:32):
Second thing you need to knowis the fund, as in.
How are those assets packagedtogether?
How can we make that asefficient as possible in terms
of fees and returns?
Third thing you need to know isyour account.
Will it be a pension?
Will it be an ISA?
Will it be a GIA, will it besomething else?
You've got to decide that.
Then the fourth thing you needto know is the platform and
(02:53):
actually, when it comes todeciding the platform, look
beyond the ones that are outthere that you see quoted an
awful lot on social media,because those are the ones that
tend to have a little bit morefees.
You pay for the brand.
If you ask me now, you'll noticethat I actually said at the
very beginning that you gottaunder.
You gotta make the decisions inthat order.
Notice what you decide first.
(03:14):
You actually decide on yourasset first.
You decide on your asset beforeeverything else, and I feel a
lot of people do this the wrongway around.
They'll pick a platform becausethey'll be like oh, this
platform sounds cool, I've heardsomeone say good things about
this and then they'll try tofind the assets that they like
in that platform.
Actually, your platformselection should be determined
by your asset first of all, andyour asset is mainly determined
(03:35):
by your timeframe, as in whenyou need the money.
Because if you need a certainasset that will take you towards
your goal, that will take youthe fastest towards your goal in
the most efficient way, thenactually, why are we trying to
pick a platform and then justshoehorn in the best asset that
we can?
Why are we picking from theselection of assets that are on
a platform that we think is cool, versus selecting the asset
(03:57):
first, which is going to be thegreatest determinant of how
efficiently we reach financialfreedom, and then letting that
determine the platforms that wefind that asset on, narrowing it
down our selection to thoseplatforms and then deciding
based off the decision as towhat asset we're going to select
in the first place is actuallyfar better to do it that way,
and that was a decision that Imade wrong at the start.
(04:18):
So, yeah, asset comes first,then fund, then account, then
platform, in that order.
So let's talk about assetsfirst of all.
What do I mean by that?
Well, really, your asset is whatyou invest your cash in, as in
an asset is something designedto retain value and appreciate
with time.
Therefore, by that definition,cash is not actually an asset.
In that instance, it doesretain value, but it doesn't
(04:41):
appreciate with time, itdepreciates.
And what I find really helpfulwas whenever someone said to me
back in the day.
They said, james, you got tothink about all these ways that
you can store value, all thesethings that you can invest in,
as just different forms of asset.
They're just different meansand they're just different
portals through which you caninvest your money into something
(05:03):
, and really, cash is just a wayof measuring their value.
It's a measure of value, that'sall it is.
So, therefore, by that token,really, whether you have your
money in a property or in astock or in bonds or anything
under the sun.
All cash does is just a way ofmeasuring how valuable it is
(05:24):
relative to something else.
That's all it is.
It's kind of arbitrary, itdoesn't actually really mean
anything.
It's all relative effectively.
And that's all cash is.
It's just a yardstick, it'sjust a meter stick.
It's just like the same.
We measure a house in terms ofmeters, in terms of its
dimensions.
We measure its value in termsof cash.
That's all we do.
That's all it is.
It's just a metric.
That's simply all it is.
So you know, when price goes upand down, let's say the price of
(05:46):
an asset goes up and down,everybody thinks the value of
cash is fixed.
But actually, would the valueof an asset not appear to go up
if the value of the cashdecreased?
Think about it.
That's also true.
So really, we think cash is thegiven and the constant.
We think money is safe in ourbank account and it just because
it has the appearance of beingstatic when we look on the bank
screen, that it's a fixed numberand it stays that way.
(06:08):
Actually, its value isfluctuation as well.
Check out the dxy the value ofthe dollar measured against a
basket of other currencies.
Measure, measure how itfluctuates with time.
Actually, that's why exchangerates go up and down as well,
because the value of the cash isfluctuating anyway.
We went on a small tangent there.
Your biggest determinant withregards to time frame, with
(06:30):
regards to your asset, is yourtime frame, as in when do you
need the money.
Now, what do I mean by that?
Really, you can break investingdown into three things Returns,
volatility and inflation.
It's only really those threethings you know when you look at
a chart returns, volatility andinflation.
It's only really those threethings you know when you look at
a chart.
You know when you look at aninvestment chart, really, you
can boil that chart down to oneof all the fluctuations and all
(06:51):
the movement on that chart isonly ever going to be one of
three things.
It's going to be appreciation,as in returns on your asset.
It's going to be the volatility, as in how it fluctuates in
terms of value.
And the other thing to beconscious of is inflation, as in
how that rises with time,because a return may not
necessarily be a true return ifit is lower than inflation or
around about the same rate.
(07:12):
So we have to actually beatinflation in order to get some
true returns in our investmentportfolio.
Now, that's interesting becausea lot of people equate risk and
volatility, but they're not thesame thing 1000%.
I see far too many peopleallocated low risk portfolios
and what those actually mean islow volatility portfolios.
We tend to equate risk.
What we tend to assume risk is,whenever we hear that term, is
(07:35):
total capital loss, theprinciple that we may lose all
of our money.
But if you ask me, awell-selected portfolio of bonds
versus stocks the two mostcommon assets that people will
invest in.
Whenever going through afinancial advisor or going
through a typical investmentaccount, really whenever it
comes to those assets, what wehave to remember and what we
(07:56):
have to bear in mind is thatactually, we need those to
outpace inflation by as much aspossible, and we also.
It's our portfolio, whetherit's in a low risk portfolio
with bonds, which is a standarddefinition, risk inverted commas
or high risk portfolio of fullof stocks.
Actually, if we look at itthrough the lens of which
portfolio is more likely to loseall of our money?
(08:17):
Neither of those portfolios ismore likely to lose all of your
money than the other.
You're either providing yourinvestment in the world bond
market or the world stock market.
I mean, obviously it depends onthe fund.
There's a few more variablesthere, of course, but actually
neither of those portfolios ismore risky than the other in
terms of the chances of losingour money.
It comes back to our definitionof risk Whereas what you might
(08:40):
conceivably argue is that thelow risk portfolio, which, say,
is comprised of a higherproportion of bonds, is more
likely to lose us money withtime, because the real returns
will never outpace inflation.
Therefore, in a weird way, thelowest risk portfolios people
are allocated those portfoliosas low risk all the time, but in
a weird way, they're actuallysome of the risky yes portfolios
(09:01):
, because we're never actuallygoing to achieve our goals and
attain financial freedom.
So this is the thing.
That's the crazy thing that'sout there and this is a standard
definition that if you go to alot of financial advisors, slash
financial planners up and downthe country.
They have to use this becauseit is a regulatory requirement
by the FCA to categorize yourinvestors in terms of risk.
But the weird paradox is thatwhen you put them in a low risk
portfolio, it's also therisky-ass portfolio sometimes,
(09:24):
and this is something that wehave to remember.
We have to get over this.
Risk does not equal volatility.
If you want to get reallyacademic for this, this is a
podcast for another day.
There's actually fourdefinitions.
There's four types of risk,four common ones at least.
Anyway, there's many more, butanyway, that is one of the
biggest belief shattering thingsthat is out there whenever it
comes to the investing side ofthings.
Now we got to understand onthat basis, really, if we're
(09:47):
deciding to ourselves okay, cool, once we've removed volatility
as a factor, once we understandthat that's actually part of the
journey, once we understandthat actually it's a good thing
to take on a little bit morevolatility when we've got the
right asset blend, thenimmediately, now we understand.
What we understand next is thatactually it can be your friend
and we want to take on a littlebit more of it, or at least we
(10:12):
understand that it is part ofthe journey in the process and
it doesn't emotionally unnerveus so much anymore and we can
achieve financial freedom muchsooner, which is a great thing,
which is a good thing.
So, therefore, if we removeemotional factors and volatility
as in from our decision makingwhenever it comes to our asset,
all we're really left with istime frame as in when do we need
the money?
Now, if you look at returns over10 years and above on any
(10:36):
conceivable period of history,from the beginning of the stock
market or when these things weremeasured, which is roughly the
1920s, you'll see that over a10-year time frame, a
well-selected, well-diversifiedportfolio of stocks has outpaced
a portfolio of bonds and it'scertainly outpaced a portfolio
of cash.
Of course, inflation on averageis about 3% to 4% percent every
(10:59):
year.
The world stock market hasreturned roughly 10 percent on
year, year on year.
So therefore you've got amargin, real returns, of seven
percent just there.
Now, seven percent margin orprofit margin compounds to quite
a lot with time.
We won't get into compoundingtoday, of course, but einstein
called it the eighth wonder ofthe world for a reason.
(11:20):
Let's just say that, whereasthe low risk portfolios that you
see out there are sometimesgetting like three, four percent
returns every year, and that'sbefore we factor in inflation
have we even got a profit marginthere?
It's actually bananas, and thishappens a lot.
I mean, the number of portfoliosthat I look into just through
having conversations with people, through running dentistry,
invest, and you see thatvirtually every single one has
(11:41):
got something to optimize onthis front is just bananas
sometimes.
You see, you look into people'sportfolios.
I had one lady the other dayand, uh, she had 20 cash in her
portfolio, even though shedidn't need the money for 10
years.
She was in her early 40s andshe wasn't able to access her
pension until she was 57.
Therefore, really, all of thatmoney should have been doing
something in her pension and,when queried, the professional
(12:05):
that was in charge of her moneyhad simply forgotten to allocate
it to some sort of asset otherthan cash, which is just
frigging bananas.
This is the sort of stuffthat's out there.
So really I implore anybody outthere to start looking into
your portfolio and questioningthings, because actually, in my
experience, it's very rare thatthere's not something to
optimize, and when we're talkingabout optimizing something,
(12:25):
we're literally talking aboutyour future.
We're literally talking aboutfinancial freedom here, so one
little tiny tweak can make ahuge difference or pull that
forward by about five to 10years.
Anyway, it's not just as simpleas selecting any old stock.
I'm just going to go ahead andthrow that out there.
You have to get the rightcombination.
You have to invest in a waythat diversifies you across the
(12:45):
whole of the global economy, butbefore you decide that you're
going to pick a fund with stocksin it, you have to know that
stocks are the right assetselection for you and therefore
you need to nail down yourtimeframe.
If you don't need the money for10 years, then stocks have at
least 10 years, then thevolatility is not so much of a
factor and you really areorientating your money towards
(13:07):
returns, whereas if you aregoing to retire in the next 10
years and you need that money,well, really that's where you
want to diversify into moredefensive assets such as cash
and such as bonds.
But really, at that stage, thatis probably where it's worth
having a conversation with agood financial planner.
At that point, food for thoughtand, by the way, please just
(13:27):
caveat, please bear in mind thatI'm caveating everything that
I'm saying right now with notfinancial advice.
There's a little bit more to it, but painting with broad
strokes.
This is the stuff that anybodycan use to set up their own
portfolio.
Anyway, we've dealt with assets.
Next move is funds.
Now, obviously, we talked aboutstocks just a second ago.
If you're investing inindividual companies, no matter
(13:48):
how big the company, there'salways a risk that that company
can go busted any one time.
So what you really want to dois have a collection of
companies.
Now, helpfully in the world ofETFs and online investing and
apps investing, somebody,somewhere, has compiled a lot of
these bonds and stocks intofunds that we can select as in
(14:08):
off the shelf, pre-madecombinations, pre-packaged
specific combinations ofcompanies sometimes as much as
tens of thousands all in oneplace that you can buy as one
product, or you can buy as onepre-packaged asset, or it's
there ready to go.
You just purchase the fundrather than having to purchase
(14:29):
all the individual companies.
It's going to be slightlytedious to get exposure to 8,000
, 10,000 companies, maybe evenmore.
You'd have to buy individuallythose 10,000 companies, so why
not just buy it via a fund,which is so much more convenient
?
Now, when it comes to fundselection, obviously, this is
determined by your assetselection.
If your timeframe is over 10years and volatility and
(14:49):
emotional factors are not aconsideration, then a 100%
stocks portfolio is somethingyou could feasibly argue as an
option.
Therefore, you want a fund thatis 100% stocks at that point,
but not just any one, awell-diversified one.
Now, the really cool thing isthat, because of how simplified
investing has been made thesedays, well, a lot of funds out
(15:12):
there.
Passive funds will simply mimiccommon indexes or indices.
Therefore, we really just haveto find one that mimics an index
that we like, and then we'reaway because it's done all of
the thinking for us.
What is an index?
I mean, an index is just ameasurement, it's just a.
It's just well.
We'll give the S&P 500 as anexample.
It's not quite this, but itpretty much is this the 500
(15:35):
biggest companies in America.
Basically, it's a selection,it's a collection of those
companies all amalgamatedtogether in terms of their
market cap.
So let's say, for example,apple is like now I don't know
these off the top of my head,but let's say, for example,
apple is 20% of the US's 500biggest companies.
(15:57):
Then therefore, because we'veselected 500 companies to go
into this fund, well then Appleis going to constitute 20% of
this fund.
Of course, it's just anarbitrary measurement.
Why does it have to be 500?
The answer is it doesn't.
The Dow Jones is 30.
Someone just made this up oneday and then they just decided
to measure it and it kind ofworked out and it went well.
There's no reason it has to bethat, but anyway, that's
(16:19):
certainly if you have somethingthat's been around since the
1950s, which the S&P 500 has.
Well then, you've got a lot ofdata to show that it's continued
to grow with time.
That's the only reason whypeople gravitate towards indexes
.
They're not a magic combinationof assets.
That's really not what they are.
It's just that they've beenaround for such a long time and
have a lot of data and have alot of credibility and belief.
That's all, anyway.
(16:41):
So the whole idea is is to getfunds that mimic indexes that
perform extremely well, or atleast that's certainly one
investing thesis anyway, notjust the S&P.
There's loads out there youmight want to check out.
The MSCI is another cool indexas well.
When it comes to fund selection,really, what you want to do is
a few things to look out for Now, the funds won't 100% mimic the
(17:04):
indexes.
That's an important thing toremember.
So say, for example, in the S&P500, of those 500 companies,
you might get like 10 thatconstitute like 0.0001% of the
market cap of the fund or themarket cap of the index, rather.
So, therefore, is it reallyworth the fund managers while to
purchase those funds and go outof the market cap of the fund,
therefore, or the market cap ofthe index, rather?
So, therefore, is it reallyworth the fund managers while to
purchase those funds and go outof the way to get it and
(17:26):
maintain them in terms of them,of rebalancing them in the
portfolio?
Probably not, so they probablyjust omit them to a degree,
which is an important thing toremember.
But anyway, this is a key tenetwhenever it comes to the
investing side of things,because not every fund will 100%
(17:49):
mimic the index that we talkedabout just a second ago, and you
can actually look up to whatdegree they mimic the index in
the key investor informationdocument of each fund.
It'll give you a percentagevariance in that index document
as regards to the performance ofthe index versus the
performance of the fundgenerally.
(18:09):
You want to keep it to within0.2 percent, if you can, because
then you know that the funddoes actually mimic the index
anyway.
Something interesting there's alot to be said for passive funds
as well.
The difference between apassive fund is it will just
blindly mimic an index, whereasan active fund will have a fund
manager who will actively buy in, dip in and out of the market
(18:32):
at opportune moments, what he orshe believes to be opportune
moments, in order to make profit.
Now, the vast majority of fundsthat are active do not
outperform passive funds, eventhough they might be able to eke
out a few percentage pointsextra off returns.
Once you factored in theadditional fees for funds,
typically you will find thatpassive funds outperform.
(18:54):
Now there's some data on that.
Apparently, in the UK, 75% ofactive funds do not beat the
market.
In the US, apparently, it's alittle higher.
It's more like 93% of activefunds do not beat the market,
where the benchmark we're usingis the S&P 500 in both those
examples.
But really what that serves tohighlight to me is you've got a
(19:14):
one in four chance of being ableto beat the market and you're
also in for a little bit of awhite knuckle ride because you
have no idea if your fund is the75% or the 25%.
To me, it might just be so muchless stressful to just go and
find a really good index thatyou know has performed for a
very long time.
Stressful to just go and find areally good index that you know
has performed for a very longtime.
If you're looking at fees interms of the funds, really what
(19:36):
I would expect to pay for a goodpassive fund is between 0.1 to
0.2% fund fee, whereas for anactive fund, what I would expect
to pay is maybe like 1% to 2%,something along those lines.
And remember, if your margin interms of profitability is 10%
basically if you have an activefund, sometimes you're giving
away one out of 10 is obviously10% of your profit, or two out
(19:58):
of 10 is 20% of your profit,where 2% is a fee and 10% is
potentially a return if it'scomparable to the market, well
then you're basically givingaway 10 to 20% of your profit,
profit which is actually quite alot whenever you frame it in
those terms.
So definitely, if you ask me,I'm of the school of thought
that passive is superior, buthorses for courses.
(20:18):
Once you've determined yourasset and then use that to
determine your fund and find agood fund, then the next move is
to find a good account which istax efficient, maintains a good
balance between tax efficiencyand ease of access, because
those are the two keydeterminants of what account you
might choose for what, whataccount you might go for.
Then you just got to decidewhat makes sense for you.
(20:39):
Where do we actually store thisfund?
In terms of a tax wrapper,there's only really three in the
uk.
If you're investing in apersonal name.
It's either going to be ageneral investment account,
sometimes called a fund andshares account, depending on the
platform that you choose An ISA, there's different tax files,
so there's five different types,or a self-invested personal
(21:01):
pension.
If it's inside a limitedcompany, obviously that is
another option that a lot ofdentists have.
However, it's not in yourpersonal name, it is, of course,
incorporated.
If it's in your personal name,you just got a way up which
makes sense for you.
Again, this podcast wouldprobably double or triple in
length if we were to go into thepros and cons of each and every
investing account, but it'salways.
(21:22):
It can literally only be one ofthose three generally broad
strokes here, absolutely broadstrokes here, absolutely broad
strokes.
If having access to your moneyat all times is a non-negotiable
for you, then you're going toprioritize the ISA and take the
tax hit, whereas if you're happyto Well, if it makes sense to
you from a point of view you'rehappy to put your money into a
(21:46):
pot and not have access to ituntil a certain age, then you
may wish to prioritize a pension, because we can't ignore the
tax benefits of pensions, ofcourse.
But it's always going to be atoss-up between those two things
ease of access, accessibility,slash, tax efficiency.
Those are the two main thingsthat you've got to decide.
It's a little bit like a like ascale or like a seesaw.
We've got a way up which ismore important to us.
(22:08):
Again, it makes more and moresense, the older you get, to
prioritize the pension as well,because obviously it's going to
be sooner, it's going to becloser and closer to when you
can actually access that moneyin terms of time.
So this is just something toconsider.
I see a lot of people out therewhenever it comes to received
wisdom, investing or parents.
I feel like everybody's had aparent wag their finger at them
(22:30):
once upon a time in their lifeand say that they should
contribute to their pension andmax that out.
Actually, if you ask me,there's such a thing as
contributing too soon to yourpension.
I know there is presently nolifetime allowance, but that
will come back.
Therefore, if you have too muchmoney in your pension pot, you
can't get that out.
You're almost beholden as towhat the government decides to
do if they decide to tax thatvery heavily.
(22:53):
If you wish, you can read up onwhen they brought the lifetime
allowance in I think it was 2012and how that actually went down
over the years in terms of whatthe allowance was, as in the
threshold at which you weretaxed heavily in your pension,
went down every year, eventhough you might expect to go up
.
Off the top of my head, I thinkit was 2 million, then it went
(23:14):
to 1.8, 1.6, and then maybe allthe way down to 1.2.
But anyway, something toresearch really counterintuitive
.
And then the Labour governmentjust completely got rid of it a
few years ago, which was alittle unexpected.
But if you ask me, it's amatter of time till they bring
that back, because they knowthat when the money's in there,
people can't get it out andthey're kind of you know they
(23:36):
can bring that back and there'snot a great deal people can do
about it.
It might be popular votes wise,but yeah, your money's kind of
stranded.
But of course listen, you knowwhat I mean they make sense for
a lot of people, definitely notbashing pensions.
I'm just saying it's a littlebit more of a decision than a
lot of people think.
It is Decision number four whatplatform do we go for?
Really, what you've got tofigure out.
There's a few things here interms of deciding what platform
(24:01):
is good for you, but you'llnotice how we haven't even spoke
about platform whatsoever upuntil now.
All we've talked about is asset, the combination of assets, the
blend of assets, rather as inyour fund, how the assets are
packaged, in other words, andthe account that they go into.
We haven't talked aboutplatform whatsoever, and that's
because, if you ask me, it's thefinal thing that you need to
decide, because actually, youneed to figure out what assets
you want and then decide andthen find a platform that has
(24:24):
them, rather than find aplatform and then try to find
the best assets on the platformto take you towards your goals
is not an efficient way of doingit.
All about these little tweaksthat make a huge difference
platform, if the biggest thingthat's important to decide
whenever it comes to yourplatform is is, is, is, is, is,
(24:46):
is, is the fees as well as thefunctionality.
So you want a nice slick app,you'd be surprised.
Even in 2025, some of thebiggest names do not have slick
act, slip, slip, big pardon.
Slick apps uh, they can be alittle clunky in terms of
usability.
Some of the biggest names, eventhe one that I use uh,
(25:08):
thankfully, it has somewhatdecent fees and a good selection
of assets on there.
So those are the real thingsthat you want to weigh up.
Basically, whenever it comes tothat, there's no one size fits
all.
You may be interested to know.
You may be interested to knowthat certain platforms will
charge you a fixed fee versus apercentage fee.
So that means, as yourportfolio grows, it works out to
(25:29):
be that much more economicalfor you because you're not
giving away a percentage.
You're giving away a flat feeand say that flat fee is like 20
, 30 pounds every month.
Obviously, if you have asignificant amount of money
invested, well then a percentageis going to scale with that.
There's going to be a crossoverpoint where the flat fee starts
to make more sense versus thepercentage.
Obviously, you just got toweigh that up on an individual
(25:49):
basis.
Worth mentioning because noteverybody knows that there are
certain platforms out there thatclaim themselves to be no fees
and they advertise themselves asthat.
I'd be extremely wary.
They've got to make their moneysomehow.
They can only make their moneythrough one of three things it's
either going to be trading fees, it's going to be holding fees
or it's going to be somethingthat's a little complicated that
we're going to see for anotherday, called the spread.
(26:11):
So, if a platform out there isadvertising itself as no fee, it
still has to make money somehow.
So therefore, if you ask me, itprobably means they're making
money in a little bit more of alow key way and taking advantage
of the spread that we talkedabout just a second ago.
Does it actually work out moreeconomical for you to use those
platforms versus a platformthat's up front with their fees?
(26:34):
Well, I'm dubious.
Put it like that.
Food for thought, something toconsider.
If you look at the fees on aplatform in terms of the ongoing
fees, the platform fees,usually I would expect those to
be around about the 0.1, 0.2%mark, if you ask me.
So that's in addition to thefund fee that we talked about
(26:54):
just a second ago.
So you might be paying 0.3,0.4%.
All in that, it's for theplatform fee and the fund fee.
If it's higher than that redflag right there, just have a
real look around at how youmight be able to get a better
deal.
I've heard people explain investing in lots of
different ways, but actually andif you ask me, people overly
complicate it a lot of the timeand that's why, today, I'm going
to break investing down intofour simple steps.
Whether you're a beginner, anintermediate or an expert, I
promise you probably neverthought about it in this way and
there's going to be little bitsof wisdom that you can pull out
(00:21):
.
Looking forward to this one,why do people overcomplicate
investing?
I think it happens a lot and Ithink that social media has a
big role to play in that,especially if you spend a lot of
time on Twitter and X forpeople, post charts and
everything along those lines.
And as someone who's been thatstyle of investor and kind of
(00:43):
saw the light a little bit andcome back to the more steady
eddy stuff, I can definitely sayI've seen both sides of the
fence.
Having said that, I'm a littlebit more open to those more
faster styles than maybe a lotof people that are out there.
Both have their place and bothhave their merits, but, if you
ask me, you've got to walkbefore you can run, and maybe
(01:05):
that's where I see people runafoul of the whole investing
side of things a lot more thanthey should do.
What do I mean by that?
Understand the basics which, bythe way, are amazing strategies
that will make peoplemillionaires with time and
probably beat 95% of what's outthere In fact, you know what I'm
going to say 99% of what's outthere versus people's standard
investment portfolios.
Even if you do the very steadyEddie index funds linked
(01:26):
investing strategies that areout there, you will still beat
the vast majority of people.
It is crazy Trading.
Whenever you start to go downthat route, really, it's like
0.0001% that you're better thanProvide and you can master it.
Of course, but anyway, let'srevert back to what I was saying
just a second ago.
Let's keep things simple wherewe can, because the simpler the
better.
You only really need to knowfour things in order to set up
(01:49):
an investment portfolio.
This is the most eloquent I'veever seen anybody articulate
investing before, and it's notmy concept.
It's not my idea, by the way, Ihave put my own flavor on it
with time, but, like I wassaying a second ago, I can't
take all the credit.
I really really, really can't,but I definitely have never seen
this articulated morebeautifully.
Here's the four things you needto know and here's the order
(02:10):
that you need to know them in aswell.
I'm going to cover them highlevel.
Then we're going to get intothe nitty gritty and the
specifics of each one, so thateverybody can make these
decisions and make the bestinvestment portfolio they can.
First thing you need to know isyour asset.
What blend of assets are goingto take you to where you need to
go and allow you to achieveyour goals?
As in financial freedom?
That is the whole point andprinciple behind investing.
(02:32):
Second thing you need to knowis the fund, as in.
How are those assets packagedtogether?
How can we make that asefficient as possible in terms
of fees and returns?
Third thing you need to know isyour account.
Will it be a pension?
Will it be an ISA?
Will it be a GIA, will it besomething else?
You've got to decide that.
Then the fourth thing you needto know is the platform and
(02:53):
actually, when it comes todeciding the platform, look
beyond the ones that are outthere that you see quoted an
awful lot on social media,because those are the ones that
tend to have a little bit morefees.
You pay for the brand.
If you ask me now, you'll noticethat I actually said at the
very beginning that you gottaunder.
You gotta make the decisions inthat order.
Notice what you decide first.
(03:14):
You actually decide on yourasset first.
You decide on your asset beforeeverything else, and I feel a
lot of people do this the wrongway around.
They'll pick a platform becausethey'll be like oh, this
platform sounds cool, I've heardsomeone say good things about
this and then they'll try tofind the assets that they like
in that platform.
Actually, your platformselection should be determined
by your asset first of all, andyour asset is mainly determined
(03:35):
by your timeframe, as in whenyou need the money.
Because if you need a certainasset that will take you towards
your goal, that will take youthe fastest towards your goal in
the most efficient way, thenactually, why are we trying to
pick a platform and then justshoehorn in the best asset that
we can?
Why are we picking from theselection of assets that are on
a platform that we think is cool, versus selecting the asset
(03:57):
first, which is going to be thegreatest determinant of how
efficiently we reach financialfreedom, and then letting that
determine the platforms that wefind that asset on, narrowing it
down our selection to thoseplatforms and then deciding
based off the decision as towhat asset we're going to select
in the first place is actuallyfar better to do it that way,
and that was a decision that Imade wrong at the start.
(04:18):
So, yeah, asset comes first,then fund, then account, then
platform, in that order.
So let's talk about assetsfirst of all.
What do I mean by that?
Well, really, your asset is whatyou invest your cash in, as in
an asset is something designedto retain value and appreciate
with time.
Therefore, by that definition,cash is not actually an asset.
In that instance, it doesretain value, but it doesn't
(04:41):
appreciate with time, itdepreciates.
And what I find really helpfulwas whenever someone said to me
back in the day.
They said, james, you got tothink about all these ways that
you can store value, all thesethings that you can invest in,
as just different forms of asset.
They're just different meansand they're just different
portals through which you caninvest your money into something
(05:03):
, and really, cash is just a wayof measuring their value.
It's a measure of value, that'sall it is.
So, therefore, by that token,really, whether you have your
money in a property or in astock or in bonds or anything
under the sun.
All cash does is just a way ofmeasuring how valuable it is
(05:24):
relative to something else.
That's all it is.
It's kind of arbitrary, itdoesn't actually really mean
anything.
It's all relative effectively.
And that's all cash is.
It's just a yardstick, it'sjust a meter stick.
It's just like the same.
We measure a house in terms ofmeters, in terms of its
dimensions.
We measure its value in termsof cash.
That's all we do.
That's all it is.
It's just a metric.
That's simply all it is.
So you know, when price goes upand down, let's say the price of
(05:46):
an asset goes up and down,everybody thinks the value of
cash is fixed.
But actually, would the valueof an asset not appear to go up
if the value of the cashdecreased?
Think about it.
That's also true.
So really, we think cash is thegiven and the constant.
We think money is safe in ourbank account and it just because
it has the appearance of beingstatic when we look on the bank
screen, that it's a fixed numberand it stays that way.
(06:08):
Actually, its value isfluctuation as well.
Check out the dxy the value ofthe dollar measured against a
basket of other currencies.
Measure, measure how itfluctuates with time.
Actually, that's why exchangerates go up and down as well,
because the value of the cash isfluctuating anyway.
We went on a small tangent there.
Your biggest determinant withregards to time frame, with
(06:30):
regards to your asset, is yourtime frame, as in when do you
need the money.
Now, what do I mean by that?
Really, you can break investingdown into three things Returns,
volatility and inflation.
It's only really those threethings you know when you look at
a chart returns, volatility andinflation.
It's only really those threethings you know when you look at
a chart.
You know when you look at aninvestment chart, really, you
can boil that chart down to oneof all the fluctuations and all
(06:51):
the movement on that chart isonly ever going to be one of
three things.
It's going to be appreciation,as in returns on your asset.
It's going to be the volatility, as in how it fluctuates in
terms of value.
And the other thing to beconscious of is inflation, as in
how that rises with time,because a return may not
necessarily be a true return ifit is lower than inflation or
around about the same rate.
(07:12):
So we have to actually beatinflation in order to get some
true returns in our investmentportfolio.
Now, that's interesting becausea lot of people equate risk and
volatility, but they're not thesame thing 1000%.
I see far too many peopleallocated low risk portfolios
and what those actually mean islow volatility portfolios.
We tend to equate risk.
What we tend to assume risk is,whenever we hear that term, is
(07:35):
total capital loss, theprinciple that we may lose all
of our money.
But if you ask me, awell-selected portfolio of bonds
versus stocks the two mostcommon assets that people will
invest in.
Whenever going through afinancial advisor or going
through a typical investmentaccount, really whenever it
comes to those assets, what wehave to remember and what we
(07:56):
have to bear in mind is thatactually, we need those to
outpace inflation by as much aspossible, and we also.
It's our portfolio, whetherit's in a low risk portfolio
with bonds, which is a standarddefinition, risk inverted commas
or high risk portfolio of fullof stocks.
Actually, if we look at itthrough the lens of which
portfolio is more likely to loseall of our money?
(08:17):
Neither of those portfolios ismore likely to lose all of your
money than the other.
You're either providing yourinvestment in the world bond
market or the world stock market.
I mean, obviously it depends onthe fund.
There's a few more variablesthere, of course, but actually
neither of those portfolios ismore risky than the other in
terms of the chances of losingour money.
It comes back to our definitionof risk Whereas what you might
(08:40):
conceivably argue is that thelow risk portfolio, which, say,
is comprised of a higherproportion of bonds, is more
likely to lose us money withtime, because the real returns
will never outpace inflation.
Therefore, in a weird way, thelowest risk portfolios people
are allocated those portfoliosas low risk all the time, but in
a weird way, they're actuallysome of the risky yes portfolios
(09:01):
, because we're never actuallygoing to achieve our goals and
attain financial freedom.
So this is the thing.
That's the crazy thing that'sout there and this is a standard
definition that if you go to alot of financial advisors, slash
financial planners up and downthe country.
They have to use this becauseit is a regulatory requirement
by the FCA to categorize yourinvestors in terms of risk.
But the weird paradox is thatwhen you put them in a low risk
portfolio, it's also therisky-ass portfolio sometimes,
(09:24):
and this is something that wehave to remember.
We have to get over this.
Risk does not equal volatility.
If you want to get reallyacademic for this, this is a
podcast for another day.
There's actually fourdefinitions.
There's four types of risk,four common ones at least.
Anyway, there's many more, butanyway, that is one of the
biggest belief shattering thingsthat is out there whenever it
comes to the investing side ofthings.
Now we got to understand onthat basis, really, if we're
(09:47):
deciding to ourselves okay, cool, once we've removed volatility
as a factor, once we understandthat that's actually part of the
journey, once we understandthat actually it's a good thing
to take on a little bit morevolatility when we've got the
right asset blend, thenimmediately, now we understand.
What we understand next is thatactually it can be your friend
and we want to take on a littlebit more of it, or at least we
(10:12):
understand that it is part ofthe journey in the process and
it doesn't emotionally unnerveus so much anymore and we can
achieve financial freedom muchsooner, which is a great thing,
which is a good thing.
So, therefore, if we removeemotional factors and volatility
as in from our decision makingwhenever it comes to our asset,
all we're really left with istime frame as in when do we need
the money?
Now, if you look at returns over10 years and above on any
(10:36):
conceivable period of history,from the beginning of the stock
market or when these things weremeasured, which is roughly the
1920s, you'll see that over a10-year time frame, a
well-selected, well-diversifiedportfolio of stocks has outpaced
a portfolio of bonds and it'scertainly outpaced a portfolio
of cash.
Of course, inflation on averageis about 3% to 4% percent every
(10:59):
year.
The world stock market hasreturned roughly 10 percent on
year, year on year.
So therefore you've got amargin, real returns, of seven
percent just there.
Now, seven percent margin orprofit margin compounds to quite
a lot with time.
We won't get into compoundingtoday, of course, but einstein
called it the eighth wonder ofthe world for a reason.
(11:20):
Let's just say that, whereasthe low risk portfolios that you
see out there are sometimesgetting like three, four percent
returns every year, and that'sbefore we factor in inflation
have we even got a profit marginthere?
It's actually bananas, and thishappens a lot.
I mean, the number of portfoliosthat I look into just through
having conversations with people, through running dentistry,
invest, and you see thatvirtually every single one has
(11:41):
got something to optimize onthis front is just bananas
sometimes.
You see, you look into people'sportfolios.
I had one lady the other dayand, uh, she had 20 cash in her
portfolio, even though shedidn't need the money for 10
years.
She was in her early 40s andshe wasn't able to access her
pension until she was 57.
Therefore, really, all of thatmoney should have been doing
something in her pension and,when queried, the professional
(12:05):
that was in charge of her moneyhad simply forgotten to allocate
it to some sort of asset otherthan cash, which is just
frigging bananas.
This is the sort of stuffthat's out there.
So really I implore anybody outthere to start looking into
your portfolio and questioningthings, because actually, in my
experience, it's very rare thatthere's not something to
optimize, and when we're talkingabout optimizing something,
(12:25):
we're literally talking aboutyour future.
We're literally talking aboutfinancial freedom here, so one
little tiny tweak can make ahuge difference or pull that
forward by about five to 10years.
Anyway, it's not just as simpleas selecting any old stock.
I'm just going to go ahead andthrow that out there.
You have to get the rightcombination.
You have to invest in a waythat diversifies you across the
(12:45):
whole of the global economy, butbefore you decide that you're
going to pick a fund with stocksin it, you have to know that
stocks are the right assetselection for you and therefore
you need to nail down yourtimeframe.
If you don't need the money for10 years, then stocks have at
least 10 years, then thevolatility is not so much of a
factor and you really areorientating your money towards
(13:07):
returns, whereas if you aregoing to retire in the next 10
years and you need that money,well, really that's where you
want to diversify into moredefensive assets such as cash
and such as bonds.
But really, at that stage, thatis probably where it's worth
having a conversation with agood financial planner.
At that point, food for thoughtand, by the way, please just
(13:27):
caveat, please bear in mind thatI'm caveating everything that
I'm saying right now with notfinancial advice.
There's a little bit more to it, but painting with broad
strokes.
This is the stuff that anybodycan use to set up their own
portfolio.
Anyway, we've dealt with assets.
Next move is funds.
Now, obviously, we talked aboutstocks just a second ago.
If you're investing inindividual companies, no matter
(13:48):
how big the company, there'salways a risk that that company
can go busted any one time.
So what you really want to dois have a collection of
companies.
Now, helpfully in the world ofETFs and online investing and
apps investing, somebody,somewhere, has compiled a lot of
these bonds and stocks intofunds that we can select as in
(14:08):
off the shelf, pre-madecombinations, pre-packaged
specific combinations ofcompanies sometimes as much as
tens of thousands all in oneplace that you can buy as one
product, or you can buy as onepre-packaged asset, or it's
there ready to go.
You just purchase the fundrather than having to purchase
(14:29):
all the individual companies.
It's going to be slightlytedious to get exposure to 8,000
, 10,000 companies, maybe evenmore.
You'd have to buy individuallythose 10,000 companies, so why
not just buy it via a fund,which is so much more convenient
?
Now, when it comes to fundselection, obviously, this is
determined by your assetselection.
If your timeframe is over 10years and volatility and
(14:49):
emotional factors are not aconsideration, then a 100%
stocks portfolio is somethingyou could feasibly argue as an
option.
Therefore, you want a fund thatis 100% stocks at that point,
but not just any one, awell-diversified one.
Now, the really cool thing isthat, because of how simplified
investing has been made thesedays, well, a lot of funds out
(15:12):
there.
Passive funds will simply mimiccommon indexes or indices.
Therefore, we really just haveto find one that mimics an index
that we like, and then we'reaway because it's done all of
the thinking for us.
What is an index?
I mean, an index is just ameasurement, it's just a.
It's just well.
We'll give the S&P 500 as anexample.
It's not quite this, but itpretty much is this the 500
(15:35):
biggest companies in America.
Basically, it's a selection,it's a collection of those
companies all amalgamatedtogether in terms of their
market cap.
So let's say, for example,apple is like now I don't know
these off the top of my head,but let's say, for example,
apple is 20% of the US's 500biggest companies.
(15:57):
Then therefore, because we'veselected 500 companies to go
into this fund, well then Appleis going to constitute 20% of
this fund.
Of course, it's just anarbitrary measurement.
Why does it have to be 500?
The answer is it doesn't.
The Dow Jones is 30.
Someone just made this up oneday and then they just decided
to measure it and it kind ofworked out and it went well.
There's no reason it has to bethat, but anyway, that's
(16:19):
certainly if you have somethingthat's been around since the
1950s, which the S&P 500 has.
Well then, you've got a lot ofdata to show that it's continued
to grow with time.
That's the only reason whypeople gravitate towards indexes
.
They're not a magic combinationof assets.
That's really not what they are.
It's just that they've beenaround for such a long time and
have a lot of data and have alot of credibility and belief.
That's all, anyway.
(16:41):
So the whole idea is is to getfunds that mimic indexes that
perform extremely well, or atleast that's certainly one
investing thesis anyway, notjust the S&P.
There's loads out there youmight want to check out.
The MSCI is another cool indexas well.
When it comes to fund selection,really, what you want to do is
a few things to look out for Now, the funds won't 100% mimic the
(17:04):
indexes.
That's an important thing toremember.
So say, for example, in the S&P500, of those 500 companies,
you might get like 10 thatconstitute like 0.0001% of the
market cap of the fund or themarket cap of the index, rather.
So, therefore, is it reallyworth the fund managers while to
purchase those funds and go outof the market cap of the fund,
therefore, or the market cap ofthe index, rather?
So, therefore, is it reallyworth the fund managers while to
purchase those funds and go outof the way to get it and
(17:26):
maintain them in terms of them,of rebalancing them in the
portfolio?
Probably not, so they probablyjust omit them to a degree,
which is an important thing toremember.
But anyway, this is a key tenetwhenever it comes to the
investing side of things,because not every fund will 100%
(17:49):
mimic the index that we talkedabout just a second ago, and you
can actually look up to whatdegree they mimic the index in
the key investor informationdocument of each fund.
It'll give you a percentagevariance in that index document
as regards to the performance ofthe index versus the
performance of the fundgenerally.
(18:09):
You want to keep it to within0.2 percent, if you can, because
then you know that the funddoes actually mimic the index
anyway.
Something interesting there's alot to be said for passive funds
as well.
The difference between apassive fund is it will just
blindly mimic an index, whereasan active fund will have a fund
manager who will actively buy in, dip in and out of the market
(18:32):
at opportune moments, what he orshe believes to be opportune
moments, in order to make profit.
Now, the vast majority of fundsthat are active do not
outperform passive funds, eventhough they might be able to eke
out a few percentage pointsextra off returns.
Once you factored in theadditional fees for funds,
typically you will find thatpassive funds outperform.
(18:54):
Now there's some data on that.
Apparently, in the UK, 75% ofactive funds do not beat the
market.
In the US, apparently, it's alittle higher.
It's more like 93% of activefunds do not beat the market,
where the benchmark we're usingis the S&P 500 in both those
examples.
But really what that serves tohighlight to me is you've got a
(19:14):
one in four chance of being ableto beat the market and you're
also in for a little bit of awhite knuckle ride because you
have no idea if your fund is the75% or the 25%.
To me, it might just be so muchless stressful to just go and
find a really good index thatyou know has performed for a
very long time.
Stressful to just go and find areally good index that you know
has performed for a very longtime.
If you're looking at fees interms of the funds, really what
(19:36):
I would expect to pay for a goodpassive fund is between 0.1 to
0.2% fund fee, whereas for anactive fund, what I would expect
to pay is maybe like 1% to 2%,something along those lines.
And remember, if your margin interms of profitability is 10%
basically if you have an activefund, sometimes you're giving
away one out of 10 is obviously10% of your profit, or two out
(19:58):
of 10 is 20% of your profit,where 2% is a fee and 10% is
potentially a return if it'scomparable to the market, well
then you're basically givingaway 10 to 20% of your profit,
profit which is actually quite alot whenever you frame it in
those terms.
So definitely, if you ask me,I'm of the school of thought
that passive is superior, buthorses for courses.
(20:18):
Once you've determined yourasset and then use that to
determine your fund and find agood fund, then the next move is
to find a good account which istax efficient, maintains a good
balance between tax efficiencyand ease of access, because
those are the two keydeterminants of what account you
might choose for what, whataccount you might go for.
Then you just got to decidewhat makes sense for you.
(20:39):
Where do we actually store thisfund?
In terms of a tax wrapper,there's only really three in the
uk.
If you're investing in apersonal name.
It's either going to be ageneral investment account,
sometimes called a fund andshares account, depending on the
platform that you choose An ISA, there's different tax files,
so there's five different types,or a self-invested personal
(21:01):
pension.
If it's inside a limitedcompany, obviously that is
another option that a lot ofdentists have.
However, it's not in yourpersonal name, it is, of course,
incorporated.
If it's in your personal name,you just got a way up which
makes sense for you.
Again, this podcast wouldprobably double or triple in
length if we were to go into thepros and cons of each and every
investing account, but it'salways.
(21:22):
It can literally only be one ofthose three generally broad
strokes here, absolutely broadstrokes here, absolutely broad
strokes.
If having access to your moneyat all times is a non-negotiable
for you, then you're going toprioritize the ISA and take the
tax hit, whereas if you're happyto Well, if it makes sense to
you from a point of view you'rehappy to put your money into a
(21:46):
pot and not have access to ituntil a certain age, then you
may wish to prioritize a pension, because we can't ignore the
tax benefits of pensions, ofcourse.
But it's always going to be atoss-up between those two things
ease of access, accessibility,slash, tax efficiency.
Those are the two main thingsthat you've got to decide.
It's a little bit like a like ascale or like a seesaw.
We've got a way up which ismore important to us.
(22:08):
Again, it makes more and moresense, the older you get, to
prioritize the pension as well,because obviously it's going to
be sooner, it's going to becloser and closer to when you
can actually access that moneyin terms of time.
So this is just something toconsider.
I see a lot of people out therewhenever it comes to received
wisdom, investing or parents.
I feel like everybody's had aparent wag their finger at them
(22:30):
once upon a time in their lifeand say that they should
contribute to their pension andmax that out.
Actually, if you ask me,there's such a thing as
contributing too soon to yourpension.
I know there is presently nolifetime allowance, but that
will come back.
Therefore, if you have too muchmoney in your pension pot, you
can't get that out.
You're almost beholden as towhat the government decides to
do if they decide to tax thatvery heavily.
(22:53):
If you wish, you can read up onwhen they brought the lifetime
allowance in I think it was 2012and how that actually went down
over the years in terms of whatthe allowance was, as in the
threshold at which you weretaxed heavily in your pension,
went down every year, eventhough you might expect to go up
.
Off the top of my head, I thinkit was 2 million, then it went
(23:14):
to 1.8, 1.6, and then maybe allthe way down to 1.2.
But anyway, something toresearch really counterintuitive
.
And then the Labour governmentjust completely got rid of it a
few years ago, which was alittle unexpected.
But if you ask me, it's amatter of time till they bring
that back, because they knowthat when the money's in there,
people can't get it out andthey're kind of you know they
(23:36):
can bring that back and there'snot a great deal people can do
about it.
It might be popular votes wise,but yeah, your money's kind of
stranded.
But of course listen, you knowwhat I mean they make sense for
a lot of people, definitely notbashing pensions.
I'm just saying it's a littlebit more of a decision than a
lot of people think.
It is Decision number four whatplatform do we go for?
Really, what you've got tofigure out.
There's a few things here interms of deciding what platform
(24:01):
is good for you, but you'llnotice how we haven't even spoke
about platform whatsoever upuntil now.
All we've talked about is asset, the combination of assets, the
blend of assets, rather as inyour fund, how the assets are
packaged, in other words, andthe account that they go into.
We haven't talked aboutplatform whatsoever, and that's
because, if you ask me, it's thefinal thing that you need to
decide, because actually, youneed to figure out what assets
you want and then decide andthen find a platform that has
(24:24):
them, rather than find aplatform and then try to find
the best assets on the platformto take you towards your goals
is not an efficient way of doingit.
All about these little tweaksthat make a huge difference
platform, if the biggest thingthat's important to decide
whenever it comes to yourplatform is is, is, is, is, is,
(24:46):
is, is the fees as well as thefunctionality.
So you want a nice slick app,you'd be surprised.
Even in 2025, some of thebiggest names do not have slick
act, slip, slip, big pardon.
Slick apps uh, they can be alittle clunky in terms of
usability.
Some of the biggest names, eventhe one that I use uh,
(25:08):
thankfully, it has somewhatdecent fees and a good selection
of assets on there.
So those are the real thingsthat you want to weigh up.
Basically, whenever it comes tothat, there's no one size fits
all.
You may be interested to know.
You may be interested to knowthat certain platforms will
charge you a fixed fee versus apercentage fee.
So that means, as yourportfolio grows, it works out to
(25:29):
be that much more economicalfor you because you're not
giving away a percentage.
You're giving away a flat feeand say that flat fee is like 20
, 30 pounds every month.
Obviously, if you have asignificant amount of money
invested, well then a percentageis going to scale with that.
There's going to be a crossoverpoint where the flat fee starts
to make more sense versus thepercentage.
Obviously, you just got toweigh that up on an individual
(25:49):
basis.
Worth mentioning because noteverybody knows that there are
certain platforms out there thatclaim themselves to be no fees
and they advertise themselves asthat.
I'd be extremely wary.
They've got to make their moneysomehow.
They can only make their moneythrough one of three things it's
either going to be trading fees, it's going to be holding fees
or it's going to be somethingthat's a little complicated that
we're going to see for anotherday, called the spread.
(26:11):
So, if a platform out there isadvertising itself as no fee, it
still has to make money somehow.
So therefore, if you ask me, itprobably means they're making
money in a little bit more of alow key way and taking advantage
of the spread that we talkedabout just a second ago.
Does it actually work out moreeconomical for you to use those
platforms versus a platformthat's up front with their fees?
(26:34):
Well, I'm dubious.
Put it like that.
Food for thought, something toconsider.
If you look at the fees on aplatform in terms of the ongoing
fees, the platform fees,usually I would expect those to
be around about the 0.1, 0.2%mark, if you ask me.
So that's in addition to thefund fee that we talked about
(26:54):
just a second ago.
So you might be paying 0.3,0.4%.
All in that, it's for theplatform fee and the fund fee.
If it's higher than that redflag right there, just have a
real look around at how youmight be able to get a better
deal.
Popular Podcasts
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Clay Travis and Buck Sexton Show
The Clay Travis and Buck Sexton Show. Clay Travis and Buck Sexton tackle the biggest stories in news, politics and current events with intelligence and humor. From the border crisis, to the madness of cancel culture and far-left missteps, Clay and Buck guide listeners through the latest headlines and hot topics with fun and entertaining conversations and opinions.