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Dentists Who Invest Podcast
Official Podcast of the Dentists Who Invest platform. Talking all things investing, money and finance with a dental spin. Have you ever wondered how you can grow your wealth and protect your hard earned money as a Dentist? We've got you covered. Featuring famous guests such as Andrew Craig, Edward Zuckerberg and Benyamin Ahmed we delve deep into EVERY aspect of finance to educate and empower ALL Dentists.
Dentists Who Invest Podcast
Here's How To Design A Portfolio That Beats 99% Of Other Investors with Dr James Martin [CPD Available]
Get a free audit of your indemnity cover here >>> https://quote.allmedpro.co.uk/dental-indemnity-2025-new-proposal-dwi/
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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?
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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.
I've heard people explain investing in lots of different ways, but actually and if you ask me, people overly complicate it a lot of the time and that's why, today, I'm going to break investing down into four simple steps. Whether you're a beginner, an intermediate or an expert, I promise you probably never thought about it in this way and there's going to be little bits of wisdom that you can pull out. Looking forward to this one, why do people overcomplicate investing? I think it happens a lot and I think that social media has a big role to play in that, especially if you spend a lot of time on Twitter and X for people, post charts and everything along those lines. And as someone who's been that style of investor and kind of saw the light a little bit and come back to the more steady eddy stuff, I can definitely say I've seen both sides of the fence. Having said that, I'm a little bit more open to those more faster styles than maybe a lot of people that are out there. Both have their place and both have their merits, but, if you ask me, you've got to walk before you can run, and maybe that's where I see people run afoul of the whole investing side of things a lot more than they should do. What do I mean by that? Understand the basics which, by the way, are amazing strategies that will make people millionaires with time and probably beat 95% of what's out there In fact, you know what I'm going to say 99% of what's out there versus people's standard investment portfolios. Even if you do the very steady Eddie index funds linked investing strategies that are out there, you will still beat the vast majority of people. It is crazy Trading. Whenever you start to go down that route, really, it's like 0.0001% that you're better than Provide and you can master it. Of course, but anyway, let's revert back to what I was saying just a second ago. Let's keep things simple where we can, because the simpler the better.
Dr James:You only really need to know four things in order to set up an investment portfolio. This is the most eloquent I've ever seen anybody articulate investing before, and it's not my concept. It's not my idea, by the way, I have put my own flavor on it with time, but, like I was saying a second ago, I can't take all the credit. I really really, really can't, but I definitely have never seen this articulated more beautifully. Here's the four things you need to know and here's the order that you need to know them in as well. I'm going to cover them high level. Then we're going to get into the nitty gritty and the specifics of each one, so that everybody can make these decisions and make the best investment portfolio they can.
Dr James:First thing you need to know is your asset. What blend of assets are going to take you to where you need to go and allow you to achieve your goals? As in financial freedom? That is the whole point and principle behind investing. Second thing you need to know is the fund, as in. How are those assets packaged together? How can we make that as efficient as possible in terms of fees and returns? Third thing you need to know is your account. Will it be a pension? Will it be an ISA? Will it be a GIA, will it be something else? You've got to decide that. Then the fourth thing you need to know is the platform and actually, when it comes to deciding the platform, look beyond the ones that are out there that you see quoted an awful lot on social media, because those are the ones that tend to have a little bit more fees. You pay for the brand.
Dr James:If you ask me now, you'll notice that I actually said at the very beginning that you gotta under. You gotta make the decisions in that order. Notice what you decide first. You actually decide on your asset first. You decide on your asset before everything else, and I feel a lot of people do this the wrong way around. They'll pick a platform because they'll be like oh, this platform sounds cool, I've heard someone say good things about this and then they'll try to find the assets that they like in that platform.
Dr James:Actually, your platform selection should be determined by your asset first of all, and your asset is mainly determined by your timeframe, as in when you need the money. Because if you need a certain asset that will take you towards your goal, that will take you the fastest towards your goal in the most efficient way, then actually, why are we trying to pick a platform and then just shoehorn in the best asset that we can? Why are we picking from the selection of assets that are on a platform that we think is cool, versus selecting the asset first, which is going to be the greatest determinant of how efficiently we reach financial freedom, and then letting that determine the platforms that we find that asset on, narrowing it down our selection to those platforms and then deciding based off the decision as to what asset we're going to select in the first place is actually far better to do it that way, and that was a decision that I made wrong at the start. So, yeah, asset comes first, then fund, then account, then platform, in that order. So let's talk about assets first of all. What do I mean by that?
Dr James:Well, really, your asset is what you invest your cash in, as in an asset is something designed to retain value and appreciate with time. Therefore, by that definition, cash is not actually an asset. In that instance, it does retain value, but it doesn't appreciate with time, it depreciates. And what I find really helpful was whenever someone said to me back in the day. They said, james, you got to think about all these ways that you can store value, all these things that you can invest in, as just different forms of asset. They're just different means and they're just different portals through which you can invest your money into something, and really, cash is just a way of measuring their value. It's a measure of value, that's all it is. So, therefore, by that token, really, whether you have your money in a property or in a stock or in bonds or anything under the sun.
Dr James:All cash does is just a way of measuring how valuable it is relative to something else. That's all it is. It's kind of arbitrary, it doesn't actually really mean anything. It's all relative effectively. And that's all cash is. It's just a yardstick, it's just a meter stick. It's just like the same. We measure a house in terms of meters, in terms of its dimensions. We measure its value in terms of cash. That's all we do. That's all it is. It's just a metric. That's simply all it is.
Dr James:So you know, when price goes up and down, let's say the price of an asset goes up and down, everybody thinks the value of cash is fixed. But actually, would the value of an asset not appear to go up if the value of the cash decreased? Think about it. That's also true. So really, we think cash is the given and the constant. We think money is safe in our bank account and it just because it has the appearance of being static when we look on the bank screen, that it's a fixed number and it stays that way. Actually, its value is fluctuation as well. Check out the dxy the value of the dollar measured against a basket of other currencies. Measure, measure how it fluctuates with time. Actually, that's why exchange rates go up and down as well, because the value of the cash is fluctuating anyway.
Dr James:We went on a small tangent there. Your biggest determinant with regards to time frame, with regards to your asset, is your time frame, as in when do you need the money. Now, what do I mean by that? Really, you can break investing down into three things Returns, volatility and inflation. It's only really those three things you know when you look at a chart returns, volatility and inflation. It's only really those three things you know when you look at a chart. You know when you look at an investment chart, really, you can boil that chart down to one of all the fluctuations and all the movement on that chart is only 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 be conscious of is inflation, as in how that rises with time, because a return may not necessarily be a true return if it is lower than inflation or around about the same rate. So we have to actually beat inflation in order to get some true returns in our investment portfolio. Now, that's interesting because a lot of people equate risk and volatility, but they're not the same thing 1000%.
Dr James:I see far too many people allocated low risk portfolios and what those actually mean is low volatility portfolios. We tend to equate risk. What we tend to assume risk is, whenever we hear that term, is total capital loss, the principle that we may lose all of our money. But if you ask me, a well-selected portfolio of bonds versus stocks the two most common assets that people will invest in. Whenever going through a financial advisor or going through a typical investment account, really whenever it comes to those assets, what we have to remember and what we have to bear in mind is that actually, we need those to outpace inflation by as much as possible, and we also. It's our portfolio, whether it's in a low risk portfolio with bonds, which is a standard definition, risk inverted commas or high risk portfolio of full of stocks.
Dr James:Actually, if we look at it through the lens of which portfolio is more likely to lose all of our money? Neither of those portfolios is more likely to lose all of your money than the other. You're either providing your investment in the world bond market or the world stock market. I mean, obviously it depends on the fund. There's a few more variables there, of course, but actually neither of those portfolios is more risky than the other in terms of the chances of losing our money. It comes back to our definition of risk Whereas what you might conceivably argue is that the low risk portfolio, which, say, is comprised of a higher proportion of bonds, is more likely to lose us money with time, because the real returns will never outpace inflation.
Dr James:Therefore, in a weird way, the lowest risk portfolios people are allocated those portfolios as low risk all the time, but in a weird way, they're actually some of the risky yes portfolios, because we're never actually going to achieve our goals and attain financial freedom. So this is the thing. That's the crazy thing that's out there and this is a standard definition that if you go to a lot of financial advisors, slash financial planners up and down the country. They have to use this because it is a regulatory requirement by the FCA to categorize your investors in terms of risk. But the weird paradox is that when you put them in a low risk portfolio, it's also the risky-ass portfolio sometimes, and this is something that we have to remember. We have to get over this.
Dr James:Risk does not equal volatility. If you want to get really academic for this, this is a podcast for another day. There's actually four definitions. There's four types of risk, four common ones at least. Anyway, there's many more, but anyway, that is one of the biggest belief shattering things that is out there whenever it comes to the investing side of things. Now we got to understand on that basis, really, if we're deciding to ourselves okay, cool, once we've removed volatility as a factor, once we understand that that's actually part of the journey, once we understand that actually it's a good thing to take on a little bit more volatility when we've got the right asset blend, then immediately, now we understand. What we understand next is that actually it can be your friend and we want to take on a little bit more of it, or at least we understand that it is part of the journey in the process and it doesn't emotionally unnerve us so much anymore and we can achieve financial freedom much sooner, which is a great thing, which is a good thing. So, therefore, if we remove emotional factors and volatility as in from our decision making whenever it comes to our asset, all we're really left with is time frame as in when do we need the money?
Dr James:Now, if you look at returns over 10 years and above on any conceivable period of history, from the beginning of the stock market or when these things were measured, which is roughly the 1920s, you'll see that over a 10-year time frame, a well-selected, well-diversified portfolio of stocks has outpaced a portfolio of bonds and it's certainly outpaced a portfolio of cash. Of course, inflation on average is about 3% to 4% percent every year. The world stock market has returned roughly 10 percent on year, year on year. So therefore you've got a margin, real returns, of seven percent just there. Now, seven percent margin or profit margin compounds to quite a lot with time. We won't get into compounding today, of course, but einstein called it the eighth wonder of the world for a reason. Let's just say that, whereas the low risk portfolios that you see out there are sometimes getting like three, four percent returns every year, and that's before we factor in inflation have we even got a profit margin there? It's actually bananas, and this happens a lot.
Dr James:I mean, the number of portfolios that I look into just through having conversations with people, through running dentistry, invest, and you see that virtually every single one has got something to optimize on this front is just bananas sometimes. You see, you look into people's portfolios. I had one lady the other day and, uh, she had 20 cash in her portfolio, even though she didn't need the money for 10 years. She was in her early 40s and she wasn't able to access her pension until she was 57. Therefore, really, all of that money should have been doing something in her pension and, when queried, the professional that was in charge of her money had simply forgotten to allocate it to some sort of asset other than cash, which is just frigging bananas. This is the sort of stuff that's out there. So really I implore anybody out there to start looking into your portfolio and questioning things, because actually, in my experience, it's very rare that there's not something to optimize, and when we're talking about optimizing something, we're literally talking about your future. We're literally talking about financial freedom here, so one little tiny tweak can make a huge difference or pull that forward by about five to 10 years.
Dr James:Anyway, it's not just as simple as selecting any old stock. I'm just going to go ahead and throw that out there. You have to get the right combination. You have to invest in a way that diversifies you across the whole of the global economy, but before you decide that you're going to pick a fund with stocks in it, you have to know that stocks are the right asset selection for you and therefore you need to nail down your timeframe. If you don't need the money for 10 years, then stocks have at least 10 years, then the volatility is not so much of a factor and you really are orientating your money towards returns, whereas if you are going to retire in the next 10 years and you need that money, well, really that's where you want to diversify into more defensive assets such as cash and such as bonds. But really, at that stage, that is probably where it's worth having a conversation with a good financial planner. At that point, food for thought and, by the way, please just caveat, please bear in mind that I'm caveating everything that I'm saying right now with not financial advice. There's a little bit more to it, but painting with broad strokes. This is the stuff that anybody can use to set up their own portfolio. Anyway, we've dealt with assets.
Dr James:Next move is funds. Now, obviously, we talked about stocks just a second ago. If you're investing in individual companies, no matter how big the company, there's always a risk that that company can go busted any one time. So what you really want to do is have a collection of companies. Now, helpfully in the world of ETFs and online investing and apps investing, somebody, somewhere, has compiled a lot of these bonds and stocks into funds that we can select as in off the shelf, pre-made combinations, pre-packaged specific combinations of companies sometimes as much as tens of thousands all in one place that you can buy as one product, or you can buy as one pre-packaged asset, or it's there ready to go. You just purchase the fund rather than having to purchase all the individual companies. It's going to be slightly tedious to get exposure to 8,000, 10,000 companies, maybe even more. You'd have to buy individually those 10,000 companies, so why not just buy it via a fund, which is so much more convenient?
Dr James:Now, when it comes to fund selection, obviously, this is determined by your asset selection. If your timeframe is over 10 years and volatility and emotional factors are not a consideration, then a 100% stocks portfolio is something you could feasibly argue as an option. Therefore, you want a fund that is 100% stocks at that point, but not just any one, a well-diversified one. Now, the really cool thing is that, because of how simplified investing has been made these days, well, a lot of funds out there. Passive funds will simply mimic common indexes or indices. Therefore, we really just have to find one that mimics an index that we like, and then we're away because it's done all of the thinking for us. What is an index? I mean, an index is just a measurement, it's just a. It's just well.
Dr James:We'll give the S&P 500 as an example. It's not quite this, but it pretty much is this the 500 biggest companies in America. Basically, it's a selection, it's a collection of those companies all amalgamated together 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 500 biggest companies. Then therefore, because we've selected 500 companies to go into this fund, well then Apple is going to constitute 20% of this fund.
Dr James:Of course, it's just an arbitrary measurement. Why does it have to be 500? The answer is it doesn't. The Dow Jones is 30. Someone just made this up one day and then they just decided to measure it and it kind of worked out and it went well.
Dr James:There's no reason it has to be that, but anyway, that's certainly if you have something that's been around since the 1950s, which the S&P 500 has. Well then, you've got a lot of data to show that it's continued to grow with time. That's the only reason why people gravitate towards indexes. They're not a magic combination of assets. That's really not what they are. It's just that they've been around for such a long time and have a lot of data and have a lot of credibility and belief. That's all, anyway. So the whole idea is is to get funds that mimic indexes that perform extremely well, or at least that's certainly one investing thesis anyway, not just the S&P. There's loads out there you might want to check out. The MSCI is another cool index as well.
Dr James: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 indexes. That's an important thing to remember. So say, for example, in the S&P 500, of those 500 companies, you might get like 10 that constitute like 0.0001% of the market cap of the fund or the market cap of the index, rather. So, therefore, is it really worth the fund managers while to purchase those funds and go out of the market cap of the fund, therefore, or the market cap of the index, rather? So, therefore, is it really worth the fund managers while to purchase those funds and go out of the way to get it and maintain them in terms of them, of rebalancing them in the portfolio? Probably not, so they probably just omit them to a degree, which is an important thing to remember. But anyway, this is a key tenet whenever it comes to the investing side of things, because not every fund will 100% mimic the index that we talked about just a second ago, and you can actually look up to what degree they mimic the index in the key investor information document of each fund. It'll give you a percentage variance in that index document as regards to the performance of the index versus the performance of the fund generally. You want to keep it to within 0.2 percent, if you can, because then you know that the fund does actually mimic the index anyway.
Dr James:Something interesting there's a lot to be said for passive funds as well. The difference between a passive fund is it will just blindly mimic an index, whereas an active fund will have a fund manager who will actively buy in, dip in and out of the market at opportune moments, what he or she believes to be opportune moments, in order to make profit. Now, the vast majority of funds that are active do not outperform passive funds, even though they might be able to eke out a few percentage points extra off returns. Once you factored in the additional fees for funds, typically you will find that passive funds outperform. Now there's some data on that. Apparently, in the UK, 75% of active funds do not beat the market. In the US, apparently, it's a little higher. It's more like 93% of active funds do not beat the market, where the benchmark we're using is the S&P 500 in both those examples. But really what that serves to highlight to me is you've got a one in four chance of being able to beat the market and you're also in for a little bit of a white knuckle ride because you have no idea if your fund is the 75% or the 25%.
Dr James:To me, it might just be so much less stressful to just go and find a really good index that you know has performed for a very long time. Stressful to just go and find a really good index that you know has performed for a very long time. If you're looking at fees in terms of the funds, really what I would expect to pay for a good passive fund is between 0.1 to 0.2% fund fee, whereas for an active fund, what I would expect to pay is maybe like 1% to 2%, something along those lines. And remember, if your margin in terms of profitability is 10% basically if you have an active fund, sometimes you're giving away one out of 10 is obviously 10% of your profit, or two out of 10 is 20% of your profit, where 2% is a fee and 10% is potentially a return if it's comparable to the market, well then you're basically giving away 10 to 20% of your profit, profit which is actually quite a lot whenever you frame it in those terms. So definitely, if you ask me, I'm of the school of thought that passive is superior, but horses for courses.
Dr James:Once you've determined your asset and then use that to determine your fund and find a good fund, then the next move is to find a good account which is tax efficient, maintains a good balance between tax efficiency and ease of access, because those are the two key determinants of what account you might choose for what, what account you might go for. Then you just got to decide what makes sense for you. Where do we actually store this fund? In terms of a tax wrapper, there's only really three in the uk. If you're investing in a personal name. It's either going to be a general investment account, sometimes called a fund and shares 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 pension. If it's inside a limited company, obviously that is another option that a lot of dentists have. However, it's not in your personal name, it is, of course, incorporated. If it's in your personal name, you just got a way up which makes sense for you.
Dr James:Again, this podcast would probably double or triple in length if we were to go into the pros and cons of each and every investing account, but it's always. It can literally only be one of those three generally broad strokes here, absolutely broad strokes here, absolutely broad strokes. If having access to your money at all times is a non-negotiable for you, then you're going to prioritize the ISA and take the tax hit, whereas if you're happy to Well, if it makes sense to you from a point of view you're happy to put your money into a pot and not have access to it until a certain age, then you may wish to prioritize a pension, because we can't ignore the tax benefits of pensions, of course. But it's always going to be a toss-up between those two things ease of access, accessibility, slash, tax efficiency. Those are the two main things that you've got to decide. It's a little bit like a like a scale or like a seesaw. We've got a way up which is more important to us. Again, it makes more and more sense, the older you get, to prioritize the pension as well, because obviously it's going to be sooner, it's going to be closer and closer to when you can actually access that money in terms of time. So this is just something to consider.
Dr James:I see a lot of people out there whenever it comes to received wisdom, investing or parents. I feel like everybody's had a parent wag their finger at them once upon a time in their life and say that they should contribute to their pension and max that out. Actually, if you ask me, there's such a thing as contributing too soon to your pension. I know there is presently no lifetime allowance, but that will come back. Therefore, if you have too much money in your pension pot, you can't get that out. You're almost beholden as to what the government decides to do if they decide to tax that very heavily. If you wish, you can read up on when they brought the lifetime allowance in I think it was 2012 and how that actually went down over the years in terms of what the allowance was, as in the threshold at which you were taxed heavily in your pension, went down every year, even though you might expect to go up.
Dr James:Off the top of my head, I think it was 2 million, then it went to 1.8, 1.6, and then maybe all the way down to 1.2. But anyway, something to research really counterintuitive. And then the Labour government just completely got rid of it a few years ago, which was a little unexpected. But if you ask me, it's a matter of time till they bring that back, because they know that when the money's in there, people can't get it out and they're kind of you know they can bring that back and there's not 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 know what I mean they make sense for a lot of people, definitely not bashing pensions. I'm just saying it's a little bit more of a decision than a lot of people think.
Dr James:It is Decision number four what platform do we go for? Really, what you've got to figure out. There's a few things here in terms of deciding what platform is good for you, but you'll notice how we haven't even spoke about platform whatsoever up until now. All we've talked about is asset, the combination of assets, the blend of assets, rather as in your fund, how the assets are packaged, in other words, and the account that they go into. We haven't talked about platform whatsoever, and that's because, if you ask me, it's the final thing that you need to decide, because actually, you need to figure out what assets you want and then decide and then find a platform that has them, rather than find a platform and then try to find the best assets on the platform to take you towards your goals is not an efficient way of doing it.
Dr James:All about these little tweaks that make a huge difference platform, if the biggest thing that's important to decide whenever it comes to your platform is is, is, is, is, is, is, is the fees as well as the functionality. So you want a nice slick app, you'd be surprised. Even in 2025, some of the biggest names do not have slick act, slip, slip, big pardon. Slick apps uh, they can be a little clunky in terms of usability. Some of the biggest names, even the one that I use uh, thankfully, it has somewhat decent fees and a good selection of assets on there. So those are the real things that you want to weigh up.
Dr James:Basically, whenever it comes to that, there's no one size fits all. You may be interested to know. You may be interested to know that certain platforms will charge you a fixed fee versus a percentage fee. So that means, as your portfolio grows, it works out to be that much more economical for you because you're not giving away a percentage. You're giving away a flat fee and say that flat fee is like 20, 30 pounds every month. Obviously, if you have a significant amount of money invested, well then a percentage is going to scale with that. There's going to be a crossover point where the flat fee starts to make more sense versus the percentage. Obviously, you just got to weigh that up on an individual basis.
Dr James:Worth mentioning because not everybody knows that there are certain platforms out there that claim themselves to be no fees and they advertise themselves as that. I'd be extremely wary. They've got to make their money somehow. They can only make their money through 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 something that's a little complicated that we're going to see for another day, called the spread. So, if a platform out there is advertising itself as no fee, it still has to make money somehow. So therefore, if you ask me, it probably means they're making money in a little bit more of a low key way and taking advantage of the spread that we talked about just a second ago.
Dr James:Does it actually work out more economical for you to use those platforms versus a platform that's up front with their fees? Well, I'm dubious. Put it like that. Food for thought, something to consider. If you look at the fees on a platform 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 the fund fee that we talked about just a second ago. So you might be paying 0.3, 0.4%. All in that, it's for the platform fee and the fund fee. If it's higher than that red flag right there, just have a real look around at how you might be able to get a better deal.
