In today's episode we are joined by two different WealthBuilders clients, Jeremy Downing, and Manish Kataria. Make sure to tune in to find out about the different approaches to investing, and finding a process that works for you.
Invest at low cost, look to diversify your investments and always do your due diligence to mitigate risk. These are some of the key lessons from today’s episode of WealthTalk, where we carry on from last week’s introduction to Pillar 3, investments. You’ll hear from two WealthBuilder clients who share differing approaches to investing, and if the investment pillar is one that interests you, then it’s important to find a process that will be well suited to you.
Show contributors - Jeremy Downing, Manish Kataria.
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Unknown Speaker 0:01 The purpose of wealth talk is to educate, inform and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Unknown Speaker 0:18
Welcome to Episode 22 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined by Kevin Wayland, the founder. Hello, Kevin.
Unknown Speaker 0:28
Hi, Chris afternoon to you. We had a torrid session last week, didn't we, we went a bit over budget on time.
Unknown Speaker 0:35
But it was lots to talk about in the investment pillar, which is where we are now pillar three. And you shared a model last week Didn't you it caught some people's attention
Unknown Speaker 0:42
wasn't really a model or just the fun way. Because you know, I'm a teacher. So I create mnemonics or acronyms or as many things as I can to make it easy to teach. So just let me say for the record, Chris, we're not saying investment self CRA P. But it's just an interesting way to focus on some of the issues, that anybody who's making an investment should be considering as part of their thought process. You know, and cost is certainly probably the most important one, because any return you get, which is what you're seeking from any investment, was going to be affected by the charges that are applied to it, we spend a bit of time on that.
Unknown Speaker 1:22
We did. Yeah. And if you're listening now, and you didn't hear wealth talk 21, which was the last episode, the model was see are a piece so the seed was cost,
Unknown Speaker 1:31
cost or charges. Yeah,
Unknown Speaker 1:32
the R was risk risky on
Unknown Speaker 1:35
a four accumulate, accumulate, which is more important thing that cash flow than accumulate. The problem with accumulating only is you're almost always dependent on more, what's going to happen at the very date, that I need the money. You see what I mean. So if you imagine you were retiring, you know, Fall of your investment money and your pension money is geared up towards a retirement date. Let's imagine that date was 2008. And you were arriving your retirement journey in 2008, the stock market gets hit completely, you haven't done anything, except expose your money to an incredible risk by hoping to accumulate, instead of doing different things along the journey to build cash flow, build capital, mitigate risk, you know, I talked about the interconnection, of all the different assets and how they play together. And as you hear from our students, you'll hear them talk about different ways that they're mixing up their assets in a very, very clever way, which is unique to them, not to me, but the principles are always the same. You know, invest at low cost, manage, and consider your risk, do due diligence to mitigate the risk, make sure you're mixing up your objectives, you don't have all eggs in one basket, that diversification concept, and have a process that works for you. And that's the P, that's the P. and the process doesn't have to be give the money to somebody else and hope they've got a better process and you is think about yourself and work out a process that can work for you. And if you remember, actually, you know, I had somebody say to me, when they heard this podcast, Chris, that the word investment stems from a Latin word, which is invest theory, which kind of means to wear the clothes of, you know, need remember that principle, which means you're invested in something. So if you wear the clothes, you, you know, you're dressed very differently to me. Right? You know that? And so I mean, you are you. So we wouldn't wear the same clothes? Why would we invest in the same way? Yeah. And we should not? Yeah, we should invest it with who we are. And I talked last time about my particular style of investing in the market is about choosing firms, and companies and businesses with a high level of recurring income, which means high level of recurring value. And that means my investments in the market, I feel anyway, reflect me, and I'm better protected, because that's the way I choose to invest. And I'm more than happy to talk to anybody about how I do that. But it doesn't make it bad for you. Yeah. And it's, again, we mentioned the technology, it's an area now that's changing so fast, and so quickly. And technology is really allowing people to invest at much lower cost and have so much more options and choice. Exactly, and be able to manage money with a process that's comfortable for them. Whether it's in a beach in Barbados, or whether they're in a hotel room in Australia, or in a bedsit or another bed to their house it. And also for example, you can do it from wherever you want to do it, particularly with use of technology. So be good to hear from some of our, you know, clients and partners and see what they're doing.
Unknown Speaker 5:12
Yes. So let's head on over and listen to the wealth of the members share how they are using investment. Hello. So I'm with wealth builders member, Jeremy downing. How are you today, Jeremy?
Unknown Speaker 5:24
I'm great. Thanks, Christian.
Unknown Speaker 5:26
Well, welcome to wealth talk, Jeremy. And you show people how to empower themselves by managing their investments in the stock market, which saves them huge amount of annual fees that normally paid in the investment world. And you show people how to lock in profit as they make it. So would you mind sharing a bit more around that, please, Jeremy?
Unknown Speaker 5:45
Yeah, that's absolutely, that's absolutely right. Yes. So what I basically show people to do is managing their own investments, instead of going through a third party, which is what I call retail investing. And traditionally, in retail investing, the amount of charges that people pay annually in retail investing, there's an average of 2% paid by people, whether the people who are managing your investing make you any money or not, they use these still leverage those 2% of annual charges. So what I teach people to do is to manage the investments themselves, so they don't have those annual charges. So for instance, if somebody was investing $100,000 in the stock market, or 100,000 pounds, obviously 2000 of that would go in fees each year. And that actually, so even though you're making money, your money that you're making, is getting paid back regularly as the charges are taken every year. Now, to give you an example of what I can show people to do, I can show people how to invest in the stock market through an online broker. And if they invested $100,000, and invested in an asset base fund in the stock market, that's the kind of funds I recommend to invest in, that investment to make would cost $4 and 95 cents, in contrast to $2,000. And, and so so it's a it's a it's a big, it's a big difference is a massive difference when you when you manage things yourselves. So that's, that's an idea of the cost savings. And then and then in terms of locking in profit, what's important to understand when a fund manager is managing your money is the managing a huge amount of money, you know, there's in some cases, billions of dollars of assets. And if the market gets into a downturn and has a major pullback or a crash, a fund manager in that environment, isn't able to take your funds off the table, if you like and stop you losing that amount of money in the market, because they've got so much if they tried to sell its basic economics, they will crash the market even further. So what they do is they tell you to hold on to it and ride the crash out and then you might have wait a few years for the market to recover. Whereas I can show people because because your own personal amount of money is a lot smaller amount of money, you can actually put an advanced order into the market, we stays there with your sleeping on holiday or whatever. And and you can say if the market falls by more than this amount, I want to take my money off the table and you can you can sell your stock and revert back into cash. And then you can go back in when the markets recovering. And that is a huge huge advantage in in managing your own investments and getting more out of the market. So you're in exactly the same market as the fund manager, but you're able to play the market a bit smarter. Without any complexity without lots and lots of investigation, you're just able to do a few things that a fund manager physically can't do, because of the amount of money they're managing. And that can give you a great advantage. So you know, it's basically saving fees, protecting yourself in a downturn. And then the third aspect is being able to lock in profit, as your as your investment goes up in value, you can add to that advanced order that will take you out the market, you can keep moving that point up where you would come out of the market. So eventually, say your fund has gone up by 15%. And you and you want to come out if your fund loses 15%, then once it's gone up by 15%, and you've moved that advanced order up, basically, you've got a no risk situation in the stock market. And if the market continues trending up for a few years, which it quite often does, once it's recovered, then then you can keep locking in more and more profit, which is something that your fund manager isn't actually able to do. So. So that's kind of it in a nutshell, those three aspects.
Unknown Speaker 9:43
Sounds fantastic, Jeremy, and in your experience, what is some of the common mistakes that people make? Who are holding funds? And is there anything that you haven't mentioned, which you see often, which is something that someone can, can can change quickly and improve?
Unknown Speaker 10:00
Yeah, I think I think one of the one of the main things is people invest in individual companies, and they there's this kind of myth that some companies are so big, they can't possibly fail. And when I'm speaking on stage, I often give an example of Kodak which, you know, in the 70s was, was a company that looked like it could never fail in a totally cornered its market. And, and technology disrupted them and, and you know, ordinary photographic film went out, and Kodak is still around, but the shadow of their former selves, and they lost sort of 90 95% of their market value over a very short period of time and, you know, nearly went completely bankrupt out of business. And, and you know, p people point to firms, you know, like IBM and apple and not giving any recommendation or saying, you know what not to do here, but, but any individual company is is subject to one of those disruptors, and what people consider safe isn't necessarily safe. So what I teach people to do is invest in funds, which are invested in assets. So, examples, property, or stock market index, which is made up of a lot of different companies, so you've got really good diversification, or precious metals, or there's many asset classes that people might prefer. And I've got what I would call intrinsic value. So they've got a value where they're not going to fall below that because there is actually an intrinsic value there. And there's nothing that can disrupt that intrinsic value. So you know, properties a good example, most people would say, well, property does bring about a bit in certain circumstances, depending on where you are in the world. But there's, there's an ultimate value through through which you know, it can't go to the floor, it can't go to zero. And that's that's always an important thing when you're investing.
Unknown Speaker 11:43
Excellent. Thank you so much for sharing your insights around the investment pillar with us today, Jeremy.
Unknown Speaker 11:47
Okay, that's great. Christian, my pleasure.
Unknown Speaker 11:50
Okay, so I'm with Manish, Qatari and welcome to wealth termination.
Unknown Speaker 11:54
Thanks very much, Christian. Thanks for having me.
Unknown Speaker 11:56
You're welcome. Now, Manish I know you've been working with investors to help them out understand more about development projects. Would you mind sharing a bit more around that place?
Unknown Speaker 12:04
Yeah, absolutely. So I, I set up invest like a pro, which is a which is a sort of website and investor circle. Where I work with other investors, I do a lot of due diligence, into investment opportunities, most of them are development projects. So development, finance. So I tend to do the due diligence, looking into the viability of these projects, looking into the security and looking into the underlying project fundamentals, and if it's something that looks interesting, if it's something that I want to invest in, you know, other investors, likely to follow me in. So so that's the in a nutshell, what I do for other investors.
Unknown Speaker 12:50
Okay, and when it comes to due diligence, which you mentioned there such an important piece, what are some of the common mistakes that you see people when they really don't cover off that due diligence, and then correctly?
Unknown Speaker 13:03
Yeah, I mean, that's, that's a really critical element of any investment analysis, you've got to do your own independent due diligence? You know, it's a really good question, because what I see a lot of right now is, you know, a lot of sort of slick presentations, you know, in this day, and age of social media, it's very, very easy to get a very sort of good, high profile, sort of message out there. And people get sort of sucked into sound bites, and the sort of typical sort of slick marketing that that, you know, we see every day. And what I say to people is, you know, cut through that slick marketing, focus on the numbers, focus on the on the fundamentals. So know your numbers, do due diligence on the developer look at it, look at their track record, you know, what is their approach to risk management, you know, get, get to know what the project is all about? Is it actually going to make any money for you? You know, what is the GDP going to be like, you know, stress test the costs, and there's so many elements, which we don't really have time to cover on this. But, you know, I, I've sort of written lots of articles on my website, which can take you through the details of, of the due diligence process. And finally, you know, if you're investing into projects, where there's security being offered, you really want to get to the bottom of how, how good that security is, does the valuation stack up for you? Because at the end of the day, you know, that's your downside protection if you're investing into something. And if that security isn't going to be worth what you hoped it would be, you're not going to have that downside protection.
Unknown Speaker 14:53
And a lot of our listeners will be perhaps invested in residential property, what are some of the additional better so development finance? Manish?
Unknown Speaker 15:04
I think it's complimentary. most investors, including myself, that I work with, you know, they have their own residential portfolio, but also invest their surplus cash or their pension pot, or there is a money into into development finance projects, and I think the two go hand in hand, you know, when you own your own properties, you know, there's a lot of, sometimes a lot of work involved. You know, it's, it's not a passive investment. It's an active investment, where you're going out looking after tenants repairs, and all the rest of it, when you're investing in somebody else's project on a passive basis, you don't have any of that headache, in terms of dealing with tenants and so forth. What it also gives you is, you know, enables you to diversify and diversification is is another key element of my DD. So when you're investing into other people's projects, you can have to 1215 projects on the go, if you've got, say 100,000 pounds, sort of investment, but you can put 10,000 into each of these into each of these projects. So you're getting good diversification as well. So those are the main sort of advantages.
Unknown Speaker 16:17
Yeah, that's great. Well, thanks
Unknown Speaker 16:18
very much for sharing your information with us today. Manage Your welcome. Good to speak Christian.
Unknown Speaker 16:24
Hey, So Jeremy, you gave that great example of someone who perhaps has 100,000 pounds, and the traditional route of having a fund manager or broker, charging around 2%, as we said, last week, is average kind of fee. Yeah, you'd be paying 2000 pounds. And Jeremy empowers people and shows people how to take control use an online platform.
Unknown Speaker 16:46
Yep. $4. Yeah, I mean, Jeremy is a very, very smart man. And and, you know, will is a good teacher as well. And I think he's got also a very interesting way that he approaches the marketplace. And very similar in some respects to the points I made about Warren Buffett, in recent, the recent Podcast, where we talked about him using his position in owning, owning something, and creating value from renting out that position. So Jeremy's a skilled man, in the era of using options and many, many ways of doing that in more complex things. So definitely would someone to look up if you want to invest in the marketplace, one of the things that I love about what Jeremy teaches, and here this one, too, that he encourages all of his students, people who follow what he does, for example, to test at all their investments in a safe environment. In other words, in a simulator, and the same way, as you want a pilot to learn how to fly a jumbo jet in the simulator, you don't get them to test flying with 300 or 400 passengers behind them, you know, whoa, no, no, he's very, very cautious, not just on his behalf, put on their behalf. And sometimes people who don't know, what they don't know, will say, well, trading is risky. Or trading means you got to sit by a computer. Every day, I remember having a conversation with Jeremy, I can't remember the exact time he looks at his watch or gets a reminder on his watch, just to look at his position. But let's say for the sake of an argument is it's 415. He looks at 415. And then it has nothing to do it just comes back to the conversation. So it's literally five minutes. Yeah. You know, so he knows how to do that. He's trained himself to do that, and, uh, to Tim, that would not suit me, but it suits him. And for those who are interested in that, definitely, Jeremy would be somebody to look up.
Unknown Speaker 18:52
Yeah. Jeremy obviously showed how to massively reduce the costs that he also talked about the risk element for the you said, stop losses.
Unknown Speaker 19:01
Yeah, well, I talked about stop losses last time and the mountain and, you know, hammering in those anchors to keep you safe. And that's really all you're doing. And why wouldn't anybody do that? I mean, why wouldn't you want to be safer than risking the market just completely falling, which we see it happen? Time and time history is a great teacher, and it tells us it will happen again. So some of those things that Jeremy shared, which I echo, of course, is to use those skills and use those techniques, and they're not difficult to learn. This is something that will take you a lifetime to learn, you can learn it in a few days.
Unknown Speaker 19:40
And if you're using those online brokers, it's very, very simple. Now to just go in, put the fingers in and, and that's it,
Unknown Speaker 19:46
and test, you know, make sure you're comfortable with it. And before you commit to flying in again, like a simulator, you test in the simulator, and then you bring that to the real world later on.
Unknown Speaker 19:58
So manage talks a lot about the due diligence aspect. And that's, of course, a key part of the wheel of wealth,
Unknown Speaker 20:06
absolutely is a key part of the wheel of wealth. And, you know, if you look at money, she's got that political background in the city, managing assets, understanding things, and he escaped the rat race. And you know, he's very much focused now on bringing the principles of good stewardship and due diligence and portfolio management, but to a much wider range of things. So he will do that inside his SAS, for example. You'll do that with his stocks. But also he'll do that with the money he invests in property, but not necessarily by buying the property and saying, Hey, I'm going to buy rental property a pillar for, I'm going to buy, buy, buy buy property, he's looking to see how we can make his money work like a bank. So he's acting like a bank, and taking the risks of a bank, which are low risk. So there's no relationship necessarily, between the risk and reward payoff would see in the stock market investment, where you need to take a higher risk to get a return. And we don't always get the same payoff. As I mentioned last time, you don't get double the risk, return by taking double the risk. But Manisha has learned and teaches and helps others create good returns on the money with an incredible amount of diligence, which means he can get a 10 12% on his money, without the risk that you would take to get that in stock market. And that's a very skillful thing to do. And that's the sort of thing that it's easy again, to learn that process. If that process could work for you. It's teachable. And he's a great teacher, too. Yeah. So the one thing that all of
Unknown Speaker 21:49
our guests there have shown is taking control of your finances. And for those familiar with the wealth builders logo, and we have the Seven Pillars. But on the right hand side, we've got the three pillars of home capacity and pensions and investments where typically there isn't so much control is there over those, right?
Unknown Speaker 22:09
I think there isn't, and I call them the parked pillars, and they tend to be people just have them and kind of accept them as they are without any challenge. Yet, you can bring those very pillars to life, we heard from previous episodes of people bringing their homes to life, their pensions for life, and their investments to life. And isn't it more fun and more engaging, when you make your money feel like it's part of you, not a part of somebody else? Otherwise, you're hoping somebody else knows more than you. And there's no real evidence that they bring any more value than you can bring? By just focusing on low cost learning a new process, and doing things for yourself?
Unknown Speaker 22:51
Yeah. So last week's episode, we really spent most of the time talking about the stock market. And today, we've started to branch out a little bit more next week, I think we might even look at some new areas as well.
Unknown Speaker 23:03
Yeah, so miniatures is introduced the idea of course, in the day, we're being in the lending market, which is kind of combining property, and money, but without holding the property. And we'll see next week, there are interesting ways of participating in some of the other assets, Chris, in the marketplace. But by doing so, as part of a crowd, or as part of a, let's say, you're you're investing as part of a in a product, where the basket of what you're investing in is packaged in a way that is much more easy for you to understand. So we'll talk about crowd funding, and the three different ways you can do that. We'll talk about investing in businesses in a way that's different from just buying the shares or owning the business. So there's just lots and lots of different ways that you you can make your money work. And the more we share, the more people can identify. Is that interesting? Is that something that might appeal to them with the knowledge, that it's not our purpose to promote an investment? We're not saying this is great, why don't you do that, we're just saying, hey, these are things that people are doing, you know, have a look, see if that might interest you to learn about that, and follow the wheel of wealth, you know, to get the education, to get the right support, to make Connexions in a safe community to do the due diligence and then decide whether to take action. And then as you turn the wheel, and it works for you, then it's building more cash flow, it's building more capital, for you to build towards your wealth, because the purpose of this pillar is still to add to wealth. No pillar exists on its own, it doesn't exist in a vacuum, you don't invest for investment sake, you invest with a view to building your wealth, or in some cases to protect your that you've already built. But let's say for now, most of us used to trying to build that well. And let's talk next week about the different ways they could do that. And I think I made one point Chris imparting on this week's episode, which is the reason why it's important to have some pillars which are little less difficult to manage, is to get your money to work, but at the same time, give you the freedom to invest more of your time and more of your money with assets when you can invest directly in yourself, because you to me. So if you love property, but you want to be invested in the market, then it might be the best thing to do to invest in the lowest cost, easiest way to manage. Whereas if you love the stock market, or Jeremy does, then you would invest much more time in the learning of how to do that. And he might invest less time in investing in property, but my invest like ministers in lending, so everybody's different. And then in the the way, it's a kind of a pick and mix the way that people choose. And it's not for us to tell people, but just to show them the opportunities for them to make their own decision is true empowerment. But in a way that's truly collaborative comes from a place of trust. Because when you think about it, we'd be doing this now for a very long time, and all the good people to kind of know who they are. And over the course of the future months, as we expose more of our trusted partners to our audience, you know, we want to bring in this rating system, don't we to encourage in the same way as you TripAdvisor a hotel. You know, you're dealing with the various people that we trust and continue to reassure us that they're operating at the highest level. And certainly Jeremy would be one of those people. And Manisha is definitely part of our customer partnership.
Unknown Speaker 26:53
Yeah. Well, that's great. And looking forward to those. And of course, if you're not connected, then do join us wealth builders Facebook group and head over to wealth builders.co.uk forward slash Facebook. And I think most of the members of the podcast the guests that we've been having that they're in the Facebook group as well. So if you want to connect, that's a great place to head to.
Unknown Speaker 27:14
Yeah, and if you don't have time to do that, or it's not your thing. Don't forget to pose the question. Using speak pipe. Yep.
Unknown Speaker 27:20
At wealth builders.co.uk forward slash wealth talk. Okay. Thanks, Kevin. Looking forward to next week.
Unknown Speaker 27:27
Yeah, I'm looking forward to it too. And we'll we'll take the lid off some of the other ways for people to invest and will be rapidly approaching the property pillar, which is, wow, that's going to take us a few episodes to do with that one. It is thanks for listening today. So yeah.
Unknown Speaker 27:46
We hope you enjoyed today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membership.
Transcribed by https://otter.ai