Property Hub - Investment Insights & Inspiration - Get Invested: Ramin Nakisa: As an investor you're better off dead!

Episode Date: April 30, 2021

The best investors keep it simple, and the best way to keep it simple is to ‘play dead’, according to investment expert Ramin Nakisa, who shares incredible insights in this episode. Ramin is a UK-based investment coach, author and founder of PensionCraft. Ramin worked in investment banking for 15 years. Before becoming a strategist he spent two years teaching finance in an investment bank, which was a big passion and also helped him to learn how to explain finance in a non-mathematical way … which you’ll benefit from in our discussion today. Ramin has also written two books about finance and investment: “A Financial Bestiary”, which is written for professional investors, and "Invest in Fear" which explains how to buy and sell volatility using exchange traded products, which we expand on during our great chat. Ramin was born and grew up in Worcester, did a Physics degree and doctorate at Imperial College in London then postdoctoral research in neural network models of language acquisition in the Experimental Psychology Department at Oxford University, so he has a really diverse and interesting background. In our fascinating discussion, you’ll be fast tracked and equipped to be a better investor, as Ramin reveals: *Why he’s the David Attenborough of investors *The importance of correlation and diversification *Who is the biggest risk to your investing success *Whether you should invest now or hold *His thoughts on cryptocurrency *The impact of fees on investment returns And his hilarious ‘feeding the pigs' investment analogy, so listen out for that one. Now what I really like about Ramin is that if you want to learn to be a better investor, he isn’t going to give financial advice or push products, he’ll teach you what you need to know so you can make up your own mind. And to help you do this, his company Pensioncraft offers online One-To-One Coaching in his Power Hours as well as a range of incredible online courses. And Ramin is generously offering you as a Get Invested listener, a very special time limited offer - a 10% discount on his DIY Asset Allocation course (expiring at midnight on the 31st of December 2021).  This is the most comprehensive course his company offers that takes you from an absolute beginner to a pretty advanced investor level. And it also includes two one-hour one-to-one sessions personally with Ramin via Zoom where you can either discuss the course or any investment topic such as building or getting feedback on your own portfolio.  Just register here at https://pensioncraft.com/register/diy-asset-allocation-course/ using the special coupon Bushy2021.So take the next step with Ramin at pensioncraft.com where you can also subscribe for market insights. And as you continue to upskill as an investor … make sure you join me for our unique KnowHow Property Freedom Flight program, where I’ll guide you through my proven process for property investment success.  To book your ticket or find out more, click here  https://knowhowproperty.com.au/freedom-fighters. Ramin's book recommendation: The Psychology Of Money By Morgan Hausel Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

Because I'd heard this story that Fidelity had done a study to see which of their clients performed the best. And it turned out it was the dead clients, these people who'd created a trust and who basically didn't fiddle with the portfolio. And their portfolios just blew all the others out of the water. So I'd heard that it was Jim that came up with this anecdote and he confirmed that he'd heard it from someone at Fidelity. They never found the original reference, But I think the idea is a good one, which is don't fiddle. The ideal investor is a dead investor. So if you can pretend to be dead, then that's a good way to do it.

Welcome to the Get Invested podcast, where we share great conversations with experts from all walks of life to uncover their secret know-how and where they invest their time, their skills, and their money, and the benefits that this has created. You see, the truth is that everyone invests. Every minute of every day, we're investing our time, our skills, our energy, and our money in something. Some of us are investing consciously, some unconsciously, sometimes for good, sometimes for bad, sometimes for no impact. Get Invested will help you to start living by design, not by default. I'm going to help you to make it happen, not let it happen.

You'll hear the top tips on how you can live with conscious intent so that you can live more, work less, and leave a living legacy by investing now. Listen to the show to discover the top tips on how to get started, make the most of your investment journey, and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushymartin.com.au forward slash GetInvested.

Thanks for listening, and now, let's get invested. Hi Freedom Fighters. How active are you as an investor? How often do you touch, change or play with your investments? How often do you buy or sell? Do you believe you need to be an active investor to make money? Do you think that the more active you are, the more money you'll make? To be a successful investor, you need to constantly make it happen, not let it happen.

if you believe this to be the case then you're not lonely most of us suffer the misapprehension that the more active we are the better we are and this applies to just about anything and everything but does it really apply to investment success to give you the surprising answer to this critical question i'm going to draw directly on some of the fantastic work that's been done by today's special guest, Raman Nakhisa, who produces some fantastic educational and informative YouTube videos and courses on all things equity investing, but more on Raman later. Is your investment success dependent on how active you are as an investor? This is the battle between active and passive, between buy and sell constantly versus buy

and hold or set and forget long term. Well, the answer is bound to surprise you. As Raman mentioned in the episode opening, the ideal investor is a dead investor, or if not dead, then at least forgetful, forgetful of the fact that you've even invested. Let's dive into this a little deeper. according to american investment legend james o'shaughnessy and quoted in a 2014 article in business insider if you want to be an above average investor it may pay to play dead apparently that was a conclusion of a study by u.s fund manager fidelity where fidelity analyzed

thousands of client accounts and break them down into percentiles, trying to figure out what the top performers had in common. And the result? The best investors were either dead or had forgotten they even had an account. And plenty of other research comes to the same conclusion. Investment activity is the assassin of your returns. A University of California study of 66,000 investors found that the higher an investment portfolio's turnover, the lower the average return. Those who traded and changed the most lagged the overall market's performance by 6.5%. Now that's massive over time. And as the researchers put it, active trading is hazardous to your wealth. And their conclusion on the reason

is pretty simple. Impatience adds what they call frictional costs. For anyone who shuns a buy and hold philosophy, brokerage fees and taxes quickly bite into their returns. The nature of compounding means that small disadvantages in any one year that may seem trivial at the time can take a big chunk out of your final payout. Curiously, the University of California study also found that high turnover correlated with underperformance and led the researchers to suggest that the culprit may also be mental, in particular, our overconfidence. We tend to overestimate our own abilities. Our confidence in our predictions is generally greater than their accuracy.

This is then exaggerated by another cognitive mishap called confirmation bias. Once we form an opinion, we tend to search for and interpret information in a way that's consistent with it. Overconfident investors will overestimate the value of their private information, causing them to trade too actively, the researchers suggest. Overconfidence can cause you to buy and sell at the wrong time and then mistakes and frictional costs then pile up. Another study conducted a few years back by Dalbar Institute showed that investors receive 3% less per year

than the US S&P 500 index generated over a 10-year period. And the average holding period for a typical investor was just six months. Just six months. Now, in my humble opinion, when you hold an investment for less than a year, you're not really investing. Instead, you're just guessing at short-term news and expectations. And your returns are based on how other people react to that news information. In other words, you're speculating or gambling. And the results are in.

That kind of attitude gets you 3% less per year than you'd get from doing nothing at all beyond making an initial investment in an index fund that mirrors the overall market. And there lies the secret. So, how can you play dead when you invest? Firstly, focus on the long term and ignore the short term noise. If you're investing for the next 10 or 20 years in a good quality asset,

try to ignore short-term value movements because whether your investments go up or down 3% today it just doesn't matter. Secondly, take your time and play your own devil's advocate. Feeling that you need to act on advice immediately is a big no-no. The business news is specifically designed to get you excited so that you continue reading. And the more news you consume

the more likely that your confirmation bias and your over-confidence will lead you to trade too much. Before selling, sleep on your decision for a few days and try to think of the counter-arguments to your investment case. So when in doubt, do nothing. And here's a suggestion. Practice diversification and don't micromanage. Perhaps the best way to counter over-confidence

is to always leave a margin of safety between the price you pay and the intrinsic value of your investment to allow for mistakes. If you invest in a collection of good assets bought when they're undervalued and then you hold them for the long term history shows that you're bound to do well.

As the world's most successful living investor Warren Buffett says the biggest thing about making money is time. You don't have to be particularly smart, you just have to be patient. Now over the years I've seen that active investors tend to trade a lot in general, chasing what's hot and selling what's not. And at the end of the day, they end up consistently buying high and selling low, which turns out to be really costly for long term returns.

If you're an active investor, your portfolio starts to look like a bar of soap. In other words, the more you handle it, the smaller it gets. And this goes to further reinforce that what may appear as lazy, set and forget investing isn't sexy, but it actually works. Now, these are certainly not the first studies to show that lazy portfolios work. Over time, slow and steady seem to win the race when it comes to investing. While active investors will tell you it's possible to time the market and make it killing, the data actually shows otherwise.

And the good news is that set and forget investing has been consistently proven to be the easiest and safest bet for investors. So what's the biggest take-home message in all of this? the biggest impediment to your investment success is you. How you think, how you feel and how you behave. And most of these are driven by our inherent inbuilt evolutionary psychological biases. The more you worry about your investments and get actively involved trying to buy at the bottom and sell at the top

the more likely you are to seriously hamstring your investment results. So what's the easiest way to turn this around? Invest wisely and then get the hell out of your own way and let time, the tax office and capital growth work their magic. Spend your time up front and early doing your due diligence on what to invest in and how, in alignment with how much time and money you have to spend and what your risk tolerance is,

and then get out of the way and let your investments do their work. while you get on with investing in your career and spending your limited free time with your family and friends. Don't create a second job when you invest. In other words, kiss. Keep it simple, stupid. Now, this is easy to say, but what does this mean in real terms?

What investment strategies and approaches should you adopt? Well, to whet your appetite on this for the equities and bonds portion of your investment portfolio, Let's draw on more of the great word from today's guest, Raman Akisa, who has some great YouTube videos and some courses designed so that you can make more informed investment decisions. And before we jump into it, let's reinforce that nothing we are talking about today is a recommendation nor is intended or should be interpreted in any way as financial advice.

Before you employ any of the suggestions or topics covered today, please seek independent financial advice tailored to your specific needs and circumstances. Now, as Roman clearly states, investment is a journey, and the strategies that you use when you start out are likely to be very different to the ones that you use after many years of investing. So, in this excerpt, we look at four proven strategies that will see you through your investment career. you. Now your investment journey over the long haul is a bit like learning to drive a car

or flying a plane. So cast your mind back to the time you learned how to drive. Did you just jump straight into a Formula One supercar? Well how about pilots? Do you think they learned how to fly at the controls of a commercial airliner from day one? Of course they in. The way we learn is to start off simple and then build up complexity as we go along. It's just a more natural way to learn. And that's why it's still very surprising that you see so many books and videos that say you should just jump straight into single stock picking investing from day one. That's very risky and it's very likely to underperform compared to just buying a global market index

and remember that even professional investors fail to beat the market about 80% of the time and they've got huge resources behind them with full research departments and they can almost spend 24 hours a day looking at investments because that's their job. Trying to choose single stocks which outperform when you're just starting to invest

is kind of like watching a few YouTube videos and hoping you're going to become a neurosurgeon. So if you're getting started, there's a really simple way to do that. And that's by buying just one fund. What's good about that is that it limits the biggest risk to your investments, which is your own personal behaviour. If you only have one fund, then you only have two choices. You can either buy more of that fund,

or you can sell some of the fund that you already own. And for long-term investment success, all you have to do is not sell until you need the money, preferably after decades of investment. So when you buy a fund, intend to hold it for a very long period of time and let markets work their magic. The kind of fund you'll need to do that is a multi-asset fund which contains both bonds and equity. Now, one example of that is life strategy funds produced by the likes of Vanguard. but what's really important to understand is the level of risk which is determined by how much of your portfolio is made up by shares and equities versus bonds

as well as how long your investment horizon is. In simple terms, the higher your risk appetite the higher the portion of shares and equities in your index mix and if your investment horizon is long you can afford to dial up the risk to a higher level and that's by having more shares and stocks in your equities portfolio. So the percentage of shares in the fund can go from 0% to 20% to 40% to 60% to 80% and if you want a 100% equity fund, you can just buy global equity tracker funds.

And then you just need to consider the risk-reward trade-off with 20% equity having lower risk but also lower reward over the long term. and also this is suitable for shorter term investments and as you dial up the risk then a longer investment horizon would be more appropriate but the compensation for that higher risk is potentially higher reward which you'll more likely get

if you invest for 10 years or more and there are many cheap choices out there to allow you to have a single fund and to invest as simply as possible when you're starting out or if you're very time poor and just don't have the time or knowledge, or in fact the need, to do anything more than this. The next level of investing complexity that Rahman discusses

is to have two low expense funds, a global equities fund and a bond fund, which is the approach that Rahman personally adopts, and remember, he's a very sophisticated investor with years of experience. For the global stock part of the portfolio, Rahman uses an example of a vanguard fund which tracks both foreign and US stocks and includes both developed and emerging markets to diversify the risk. Now, in his detailed YouTube video on this, titled

Investing Strategies for Beginners to Advanced, Rahman constructs six portfolios. And in these, he progressively dials up the amount of equity from 0% all the way up to 100% for the riskiest portfolio. As you'd probably expect, with the lowest risk zero equity portfolio, the price doesn't fluctuate much. It's a fairly steady line.

But what you also see is that over a long period of time, it's the one that performs the worst. Whereas the 100% equity portfolio fluctuates wildly and it loses a huge amount of money during the global financial crisis, for example, about half of its value, in fact, but then it recovers very quickly and goes on to outperform all of the other five portfolios.

Now, during this period of time, you probably would have had to rebalance your two-fund portfolio. So say you started out with a 60% equity fund and 40% in bonds fund, After a steep fall in the equity market, the actual proportion of your portfolio, which is in equity, would have fallen. So you'd have to have sold a bit of your bond fund and bought more of your equity at the lower price.

And that's why a two-fund portfolio takes more maintenance than a single multi-asset portfolio, because you have to do the rebalancing yourself. Now, over a 15-year period, Rahman's example portfolios show that you'd have made about 4% with a 100% equity portfolio over a year, whereas with a 100% bond portfolio, you'd have only made about 1.5% per year. But the risk would have been much lower.

Now, your choice of risk really depends on your risk appetite and the length of your investment horizon. but also your risk capacity, which is how much of a loss you can afford to make without affecting your quality of life. His example clearly shows the risk-reward trade-off in that if you're willing to take more risk by having more equity in your portfolio and less bonds, you have a much greater probability of getting a better return long term. now once you've been investing for a while the next third level you may decide to switch to is something which is called by Raman a core satellite investment model now the idea here

is that at the core is a really safe globally diversified asset class at the core of your investments and the core is usually low fee and consists of passive funds now for the excitement of some of you that are looking for it the perceived draw drawback with this is that it's boring now if you may want to invest in stuff which is a bit more exciting and which you think is going to give you better returns and whether you're right about that is another matter that good successful investment is generally extremely boring and akin to watching grass grow or paint dry. But hey, if you're one of those that think that investment should be a little bit more fun, then alongside your diversified cheap core portfolio, you can

incorporate something a little bit more exciting. Maybe something risky that makes up a small portion of your portfolio, so that if things do go wrong, and they often do with new and trendy fad investments. It's not going to be a disaster, but it can add a little bit of spice and a bit more engagement to your portfolio. So what could that satellite investment be? Well, perhaps some kind of thematic investment. You might believe in a narrative that robots are cheaper as a workforce, and they're also more productive than humans. So you could choose to invest in companies which produce those robots. And that way, you could make money from that long-term trend in the workplace. But be warned, the drawback with thematic investing is that

it can be more expensive in terms of expense ratios, often double the cost of diversified global funds, which can seriously eat into your profits long-term. And new and unproven industries and technologies can be very volatile and your emotional interest and attachment can lead you to make knee-jerk buy and sell decisions that hamstring your long-term results. So yes, investing in areas of belief can be more fun and you can engage with a particular theme with which you feel a connection.

But just bear in mind this shouldn't be too much of a large proportion of your portfolio because these narratives often turn around quickly and start to underperform. but you can rely on the core of your portfolio to drag your returns in the upwards direction over the long term. Finally, the most complicated strategy that Rahman discusses is constructing a portfolio which uses detailed asset allocation

which is much more active, much more complicated, much more time consuming, much riskier and not necessarily any more profitable. It's kind of like the inside of a watch. There's lots of independent moving parts, and it's very difficult to make sense of it. And that's because now you could have dozens of funds. So just in the equity part, you can have many different components.

There could be the US market, Japan, other emerging markets, and all of these would have a separate fund which tracks that region. and then for government bonds you also have regional allocations according to where you think yield curves are going to be but also which regions are going to give you the best returns and you'd also want to consider things like central bank policy which affects bond returns or maybe you want to diversify by having different asset types maybe real estate investment trusts and again, there you can have regional real estate investment trusts or you could break it down by sectors

or perhaps you want commodities like gold and silver which are quite popular. But you may consider others such as oil or even agricultural products because these could further diversify your portfolio. But all of them are driven by different factors so that makes it very difficult to keep on top of all of the different changes over time. So in summary, it's probably best to start simple in line with your level of knowledge and the time you have available and then maybe make your investments more complicated as time goes on.

But remember that even Raman just uses 2-3 funds in his portfolio because he knows that it's important to keep things as simple as possible. And having more complexity doesn't necessarily improve your long-term returns. It just improves the chances of making investment errors. Because your success is relying more on you, and you are your nest egg's biggest risk. As I discuss in my book, The Freedom Formula, if your high-performance investment cycle is the vehicle that will get you to your net wealth destination, in the quickest, safest and easiest fashion, then you need to assemble your investment gear set.

In bike terms, your gear set is a set of gears for transmitting motion for a specific purpose. So you need to choose the best available gear assembly that will easily transmit the power of your upward progress. So trying to ride a bike up a steep hill is pointless if you're stuck in top gear and simply don't have the power and the energy to keep the wheels turning. So against this year-set measuring stick,

as a time-poor, career-focused professional, anything that you invest in must be G for growth-focused, offering high asset growth over the shortest possible time frame, E for easy to implement, A for affordable, being low-cost to establish and affordable ongoing, R is for risk-averse,

because what you invest in must sit comfortably within your sleep at night factor. S is for simple and quick to understand. E is for equity low, so that you use as little of your money and or deposit as possible to secure the asset. And finally and most importantly, T is for time efficient and effective, so it doesn't require much of your time to acquire, manage or monitor and doesn't create a second part-time job.

For example, it should only require an hour a month plus two or three hours a year to monitor. Anything you decide to invest in and the way you invest in it needs to satisfy these G-E-A-R-S-E-T gear set criteria. That is simple and easy, time effective, low cost and high growth. Meaning you just need to pick investment vehicles that tick these boxes and the job's done. So keep it simple, because remember, to be a successful investor, you're better off dead. Now, if you really want to learn about the importance of asset allocation and risk management at any level of complexity, and how important this is to your investment success, Rahman has created a great series of courses for you to get invested in your knowledge as the first step to investing safely, easily and affordably in your future. and raman is generously offering you as a get invested listener a very special time limited

offer he's offering you a 10 discount on his diy asset allocation course which expires at midnight on the 31st of december 2021 to take advantage of his awesome asset allocation course which is the most comprehensive course his company offers that takes you from an absolute beginner to a pretty advanced investor level and also includes two one-hour one-on-one sessions personally with raman via zoom where you can either discuss the course or any investment topic such as building or even getting feedback on your own portfolio so just register at pensioncraft.com forward slash register forward slash DIY asset allocation course using the special coupon BUSHY2021 or just click the link in the show notes.

But don't forget to use the BUSHY2021 coupon to get your discount. And Raman discusses more about asset allocation in our great chat today. So by way of background, Raman Akhisa is a UK-based investment coach, author and founder of PensionCraft. Raman worked in investment banking for over 15 years before becoming a strategist where he spent two years teaching finance in an investment bank, which was a big passion of his and also helped him to learn how to explain finance in a non-mathematical way, which you'll really benefit from in our discussion today. Raman's also written two books about finance and investment,

A Financial Bestiary, which is written for professional investors, and Invest in Fear, which explains how to buy and sell volatility using exchange-traded products, which we actually expand on during our great chat today. Now, Raman was born and grew up in Worcester. He did a physics degree and doctorate at the Imperial College in London and then did post-doc research in neural network models of language acquisition in the Experimental Psychology Department at Oxford University.

So a really diverse and really interesting background. And in our fascinating discussion today, you'll be fast-tracked and equipped to be a better investor as Raman also reveals why he's the David Attenborough of investors, the importance of correlation and diversification, You'll learn who's the biggest risk to your investing success, whether you should invest now or hold during our current interesting times. He gives you his thoughts on cryptocurrency.

And we talk about the impact of fees on investment returns. And you'll really enjoy his hilarious feeding the pigs investment analogy. So listen out for that one. Now, what I really like about Raman is that if you want to learn to be a better investor, He isn't going to give you financial advice or push products but he'll teach you what you need to know so that you can make up your own mind. And to help you do this,

his company PensionCraft offers online one-to-one coaching in his Power Hours as well as the online courses that I've already mentioned. So take the next step with Raymond at PensionCraft.com where you can also subscribe for market insights. And as you continue to upskill as an investor, make sure you join me for our unique KnowHow Property Freedom Flight Program where I'll guide you through my proven process for property investment success.

So to book your ticket for that or to find out more, just click the link in the show notes at knowhowproperty.com.au forward slash freedom flighters or visit knowhowproperty.com.au. And while you're better off playing dead or being forgetful to become a successful investor, you're much better off being alive today as you enjoy this engaging and really informative chat with Raman Mekisa. Hi, friend and fighters.

Now, in my continual search for quality investment information from quality investment people to inform you here on Get Invested, I rarely come across someone who's not only really good at what they do, but also communicates objective, independent insights in an easily digestible, understandable and quite humble way. But this is exactly the case with today's special guest, Raman Akhisa. Now, I've been quietly listening to his very informative

and timely YouTube segments for some time now and both excited and quite humbled to be able to share his wealth of wisdom with you here today on Get Invested. So welcome and let's get invested, Raman. Thank you, Bushy. that's really kind of you so do you want me to just explain what i do yeah so yeah let's start off for those who haven't had the pleasure of enjoying you on your youtube channel and just

give us a rundown on who you are what you do but most importantly why you do what you do well i think the reason why i do what i do is because i used to work in the investment banking industry and if you work within that culture there's a lot of assumed knowledge so there's a lot of jargon that we use there's a lot of knowledge that we have and of course in any kind of discipline you have this kind of shorthand which you use and people just assume a certain amount of knowledge so what really struck me is when I left that world is how little other people understood about investing and how to succeed in investing so really my goal was to allow people who haven't had that investment banking background to understand how they can succeed in that

space in the investment space because I think the knowledge just isn't there we aren't taught at school how to invest which is really awful I think you know they teach you all kinds of things which are really not very useful at all I left school with lots of knowledge of things like Latin and physics but when it came to investing I knew absolutely nothing so I had to literally teach myself I had to bootstrap myself into the industry and so I thought if I provided a resource for people to be able to do that themselves that would be quite valuable and certainly that's the way it's turned out i think now i think you've touched on a very good point it's it's exactly the same here in australia really as it is in the uk and um i actually think it's it's actually worse than

what we think because not only are you not equipped uh financially or investment wise to really look after yourself but uh unfortunately the education system if you're not good at maths then they carry this chip on their shoulder for the rest of their life about this fear of money and this this fear of finances is that has that been your experience in the uk yeah and what really struck me was that you didn't need to be good at maths or even intelligent to do well at investing I think it's more to do with discipline than it is about being smart and really self-control and having that kind of long range approach to investing and really keeping at it for a long period of time. And that takes huge discipline, whereas, you know, you can be really clever and come up with smart ways to trade. But ultimately, those won't succeed unless you've got the kind of mental fortitude to stick at it year after year.

yeah mental fortitude is an absolute key one there's no doubt about that okay so what i'd love to do if you wouldn't mind is share your journey with the listeners uh going back as far as you are comfortable and as far as you can remember and talk us through what you've invested your time energy and money in and what you've learned from that what were some of the the wins and losses along that journey and how that's brought you back to what you're now doing. Yeah, sure. I guess what some people might find surprising was that my first love was physics. You know, I absolutely love physics and I kind of lived for physics. I lived and breathed it. I did a degree in physics and a doctorate as well. So that was my kind of

goal for life, I thought. But then, you know, I got to the point where I got married and I decided that I wanted to be able to afford a house and academia just wasn't able to pay for some of those things so I left academia and I started working on the business side and initially I started modeling human behavior so me and my team we were working on Bayesian models that would predict customer behavior so a lot of companies wanted to use this use this kind of thing for for marketing So obviously nowadays they call it big data, but we were just using some fairly simple models to try and see whether people would leave a bank

or whether they'd buy a certain product, when it was worth marketing something, and whether you could kind of nudge people into buying certain things or not and the cost required in order to do that, in order to make it worthwhile. So that was the kind of thing we were working on, which was really interesting. and then i worked um for a while just kind of freelancing so i helped companies do some of

these mathematical problems and then eventually um i had my first child so i got married we had our first child and at that point i needed something more more solid so i went to see this recruitment agent and he said well you're good at maths why don't you work in investment banking so so you know off i go to this investment bank day two i see the twin towers uh you know an aircraft plows into one of the twin towers and i think what the hell have i done you know it was a bit of a baptism of fire but i did meet some really interesting people and initially i was pushed into the kind of tech space so i was working on risk systems at an investment bank and they said right you can do maths so you work on this system modeling risk for us so that's what i did and

you know i made some interesting friends there there was a guy who created one of these risk systems and we made we made friends and he's really interesting actually he kind of learned farsi which is i'm half iranian so he could speak farsi even though he's english and um he always used to make fun of the management at this this bank and it was a french bank where they take take things very seriously so it was great fun and we used to talk about maths and um we used to go out for persian food it was great so i did meet some really interesting people and i realized that that actually being part of a tech team was not what i wanted to do if you're the only phd in the group you start to think well why is that so after that i moved into a kind of more uh more

kind of banky type of job rather than the tech job so this was more of a quant role where I used my math skills better and I was better paid so there was an entire team of people all of whom had PhDs and we just had an absolute blast this was another risk system but I was kind of moving up into the more core part of the investment business and then I was there for about two or three years um and i was learning a hell of a lot about all of the assets that we were pricing and i was right in the middle of the credit bubble so i was working on the risk systems which were involved in pricing some of these things like cdos and another asset class called abs which also imploded during the during the global financial crisis so i was really kind of

in the middle of it and it was just a wonderful environment in terms of ideas in terms of fun you know we used to have a lot of laughs in the role but um you know that that eventually i kind of got pissed off with that role because um it wasn't a client facing role and if you are in the kind of middle office in in an investment bank you just don't get the big bucks so for me it was important to try and move to the front office and and also i think to to use some of the more kind of skills that i learned in teaching so what i did is i moved to a role where i was actually teaching within the investment bank so they actually have a group which teaches how to um price all of the assets that we have or they actually teach clients and they teach staff so it's like a business

university they called it and that was brilliant i absolutely love that so that was a big big move for me because it meant that i could learn about every single asset that we traded i talked to traders i talked to sales people and i trained them so it got to the point where i could walk along the trading floor and i taught a lot of the grads and they'd all say hi roman hi hi hi and it was quite a quite a kind of collegiate atmosphere which i which i absolutely loved and uh but it forced me to learn absolutely everything and exactly how to price everything in incredible detail and that was important because you couldn't if you stand in front of a group of traders teaching them about derivatives for two weeks for seven hours a day if you get something wrong

they are absolutely ruthless and so that was a great way to learn but the way we did it was i'd sit in on two classes and then the next class i'd be teaching it so that was a real baptism of fire but what was interesting about it was that the way we taught was not mathematical so if you if you if you for example if you price a derivative you might think it's all about maths that's not true with any product that an investment bank prices it's as if you know they hand you a folder and they say, look, a client just bought this product. How do we hedge the risk? So literally, you go through this folder page by page. So first of all, we lay off the equity risk by taking opposite position. Secondly, we lay off the interest rate risk by taking this

interest rate derivative. So then the ultimate cost to the client is the cost of hedging their position. So that's how you price things. It's not to do with maths, really. It's the cost to bank of of hedging plus you add a bit of uh extra money which is your which pays your lambo or whatever it is you know that's how that's how the that's how the banks make their money so that non-mathematical approach to teaching was something i learned there and it was an incredible team that used to teach there at the investment bank so that was very useful as it turned out later on of course you never know what's going to be useful at the time i didn't know physics would be late useful later on but it was and i didn't know that the um the kind of teaching skills would

be useful either but it but it was very useful later on yeah as it is now of course of course yeah of course so and that's something i'm interested in because i what i'm picking up from uh what you're talking about already is that you have a a natural leaning towards teaching that's that's something that you're clearly very comfortable in and and very good at given you know what you're now doing on youtube uh the the physics of traction early on where did that come from can you remember i can actually because uh as a kid i grew up in um when i was very young i grew up in iran and um they used to have really clear nights if you go out to the desert and i was just completely captivated by the stars and i just thought that is the most incredible

thing what the hell are they so i wanted to learn about astronomy and astronomy was what i thought i'd end up doing so i thought astrophysics would be the way to do that as it turned out my phd was in biophysics because i got kind of interested in how physics can be applied to understanding how living things work so that was that was kind of like a the original goal was astrophysics and i still love astronomy so you know if i go out into the night sky i can name the stars and you know i used to do a bit of astrophotography that was great fun so that was how it led to physics it was via astronomy right yeah love it love it you clearly i um you've got a quite a a uh a structure of mine i always saw physics as something that's

reasonably structured and fairly logical if it you know this goes with that if you if you follow it through a bracket down small enough then then you can sort of start to put the bigger picture together and it was that sort of thinking approach and it's quite lateral but also quite logical at the same time was that something that was quite transferable and quite useful to you and what you were then doing in the investment space very much so and that's why i think there are so many maths and physics phds in finance so a lot of the products that you come up with have been thought up by physicists i mean that's good and bad right because some of the products clearly haven't survived the test of time but many of them have and if the clients want something

then your job is to produce a product which suits their requirements and often that blows up because they don't understand the risk or you don't understand the risk eventually but i think that innovation and that mindset was useful later on and certainly the the way you kind of break down a problem and and do something in a pragmatic way which seems insuperable at first so something like pricing cdo or something complex seems almost impossible but breaking it down it becomes almost beautiful and although these things did blow up i'm sure that the maths is so lovely that they'll probably come back in some form i do see them coming back now i do see some cdos are starting to be sold again but that kind of idea of tiering risk and layering risk and parceling up risk and

buying and selling it certainly that i think comes straight out of the canon from physics and and mathematics clearly yes clearly yeah okay so that i mean the good thing is that And given that you sort of transitioned through that space, you pretty much had exposure to all and every aspect. And because you've had to teach it, I mean, there's no better way to learn something than to have to teach it, I've always found. And I often say to people, if you want to learn something,

when you're learning it, think to yourself, I'm going to have to teach someone else this. And as soon as you do that, you'll be much more focused about not only taking on board what you're hearing, but then think about how am I going to then translate this and communicate this effectively to someone else that hasn't had the benefit of the learning? Has that been useful to you in terms of building that skill base

that's now so affected with what you're doing? Absolutely. I mean, I think another good way to do it is to write down what your understanding is. If anything, you know, you can write a book about it. And, in fact, the first book I wrote was written on the tube. So, you know, every morning I'd be on the 5.30 train amongst amongst all the builders working in you know traveling into the city and uh it would be like

the milk train it would be so early that you know everyone would be asleep as i left and everyone would be asleep as i came home but i'd write two hours a day because i was commuting on that train so i'd be in there squeezed amongst the builders writing all these equations into this book but ultimately it meant that i could understand the products that we traded and i wrote this book called a financial bestiary where i kind of treated it like animals at the zoo um a bestiary is like a medieval book where they talk about the different types of animals and the idea was you'd learn a moral from each of the different animals so this this is the salamander and it teaches you about moral courage this is a dragon and and so on so i did the same thing so my beasts were the

people who worked at the bank so i got pictures of the people i worked with and i say this is a trader this is what they do this is a salesperson this is what they do and this is a structurer a risk guy you know all the different roles at the bank and then also the products that we traded treated them like animals and um and i think that's a good way to understand how investment works because you can almost think of the different asset types as creatures as animals and I think the job of an investor is to understand the nature of each animal and this is why I was asking you about naturalists in Australia because David Attenborough I see myself as a kind of David Attenborough but for investment so I can say you know here are the

asset types these are the environments in which they live some assets do well in this kind of environment this kind of macro backdrop some assets do well in another type of environment and each of the different asset types evolves into its own niche and there's a continual process of evolution so as i say you know the job of the structure is the investment banks is to come up with the new organisms the new the new products and then ultimately these go out into the world and they're kind of tested in markets some of them survive some of them don't sometimes you get a merger of different types of product into one and then over time you come up with a process of evolution and and products which are robust and who've which have lived through multiple cycles of

extinction so after 2008 you know we saw many of the products were created stop existing and uh but many of them have gone on and kind of shown they were incredibly robust things like etfs which people thought were about to kind of collapse the financial system or some people have said they're akin to communism but in fact they've been incredibly robust and they've survived multiple crises and not caused systemic problems as people thought they would so i think i think that's the way i see um investment kind of almost like a naturalist yeah i love it because what is what and recognising it's a dynamic system of changing and evolving parts. And I'd love for you, we'll get to it shortly,

but I'd love for you to put some animation around some of that when we start talking about, you know, where you're seeing things now, where it's heading and put into those bestiary terms. When you mention bestiary, I go straight to Monty Python because I'm an old flame age now, but the way they used to carve up the show, they almost had that bestiary type of illustrations and the medieval type of approach of actually communicating it.

So it's a very good way of actually, one, understanding the exercise, but more importantly, for those that are listening, starting to see investment markets not as the numbers exercise, but as a living breathing organism effectively or a system of organisms like like the earth so we we have the great meteor crash that wipes out the dinosaurs and then then humans start to take ascendancy over time it's exactly the same as what you're saying in that regard as far as the as far as the financial markets are concerned yeah and i think you know if we're going to touch on asset allocation which is what i was doing so when i became a strategist at the investment bank

the role of the strategist is to to advise the people who actually invest your money so these would be your pension manager would read research which is produced by investment banks and they get ideas from us so that was the idea that we would publish research that would be given to clients and if they liked our research they'd trade with the bank so that was the kind of understood quid pro quo and if they if they did like the research and the ideas then obviously they'd come back for more so the role was to come up with the idea generation and you know some of the some of the some of the stuff i did was to do with asset allocation so it's how how the animals live together so when you construct a portfolio think of that almost like a living thing where

you have to kind of create an ecosystem where the assets live together in harmony now obviously just as with a kind of ecosystem if you have too much of one organism so for example i believe in australia there was a plague of of rabbits um those were introduced and then they kind of there were too many of them so they brought in another species in order to kill them and then there was unstable population spurt in the predators and so i think a portfolio is similar you've got to achieve that balance so i think that's why it's really important to understand things like correlation because that tells you whether two assets sit nicely together and if one of them counteracts the risk from the other so if you want i mean you could think of lots of predators

inside a room that's like having a portfolio which is 100 equity or if you have lots of things which are in a room which essentially eat the same thing then that's risky because they could run out of run out of food so so that's why i think it's important to have a diversification across different asset types in your portfolio because under different types of conditions you'll find that some of them do well and then as conditions change you want to make sure that your portfolio will do fairly well in all of those conditions. This is the kind of thinking behind portfolios like Ray Dalio's all-weather portfolio, for example, where you've got some gold, you've got some fixed income, some of it is short duration fixed income, some of it's long

duration, you've got some equity. And in each kind of environment, some of those asset types will do better so if you've got deflation the bonds will do well the equity is not well um and the gold probably would be okay if you've got a very strong growth environment then you the equity will do well so in every kind of environment something will do well so this is why i think that kind of analogy is a good one for for building a portfolio and asset allocation is this husbandry almost yeah i love it it's a it's a great analogy and a great way to put some perspective around it And to take some of the fear out of it as well. The biggest hurdle I see with a lot of would-be investors

is this fear factor. I don't understand you. This is all too complicated for me. But if you break it down into as simple terms as the way you've just done and create things out of it and think about it as an ecosystem, all of a sudden it's like, okay, this is making sense. We don't want all of one thing

because they'll end up eating each other. We've got a spread that thrives or survives in different environments at different times, then that's all we need to be doing with what we're doing in the investment space. So that's brilliant. Okay, so you got into asset allocation. Now I want to circle back to asset allocation later

and sort of break that down a little bit because I think it's a really important takeaway for the listeners, given your expertise in that area. Where did things go from there, Raman? Well, there was a kind of change of management at the bank and I didn't get on so well with the new management at the bank. um so eventually they let me go so i've been at the bank for a long time so i got a fairly good payoff and i was you know every investment bank person has an exit plan because it's kind of like

being in the second world war you know you don't want to get too matey with your friends because they often just disappear so so uh i was one of the ones that disappeared and um suddenly i was blinking in the sunshine and fortunately i had a plan and so that's how pension craft was born i wanted to teach people how to invest you know i learned the skills about how to teach at the bank i had huge product knowledge so it was a matter of actually simplifying it and making it comprehensible to people who we call retail investors who are normal people so you've got institutional investors who are the people yeah normally um but but it was people who didn't have that shared culture who were outside the culture and uh so it was very difficult at first because

i'd lost all of my resources i didn't have my bloomberg terminal and that was a terrible loss you know i mean i missed my colleagues but i missed my bloomberg terminal more uh it was like information was suddenly suddenly snatched away from me and um so i was left with how long ago was this by the way this was uh 2017 i think i started yeah yeah so you know i had to kind of basically start from scratch so i did that and um one of my colleagues from the bank came with me who was actually one of the people i worked with in hyderabad in india and we started it together i mean since then he's gone his own way but um that's another part of the story but but i mean it was all amicable and it was fine but uh for a long time it just got nowhere so i had to fall

back on tutoring to pay to pay for things like food uh so obviously i've saved a lot of money and i had a payoff from the bank and so that could pay for the everyday stuff but i had to make an income so literally i'd spend the mornings and during the day preparing um content for youtube and pension craft and then in the evenings i'd be teaching physics and maths to students which i absolutely loved i really enjoyed that but it was very draining and you know i was literally working weekends because that's when the kids wanted to learn and then during the week i'd be doing the content and stuff for pension craft so it was pretty tough uh in terms of time and you know i found it quite difficult to kind of schedule everything uh at the same time and you have to

kind of switch between two jobs which is very difficult it's very difficult uh you know i mean if you're teaching someone who's uh 18 maths to get them through their exam it's very different to talking to someone about how to invest their inheritance from their grandmother it's kind of a different mental state i'd say very draining i would have thought both uh mentally emotionally and physically over time yeah it was a very difficult time and very exhausting i think and it obviously took a toll on on me and my family life and um ultimately you know my wife decided that she didn't want to be part of that and that was a very difficult time and uh it led to divorce between me and my wife all very amicable you know i think she did the right

thing which was to decide that you know she'd had enough and she she didn't really see pension craft as a as a useful thing i think it was very difficult for her and her parents to understand a business model where you give away 95 of what you do for free i mean that sounds crazy right i mean how could you possibly make money out of that and of course at the time i wasn't but i knew that if i stuck with it that ultimately i'd gain a following and people would find the knowledge valuable because i knew i was putting everything into it i was literally pouring myself into these videos so i knew that it was valuable because i knew at the bank people found it valuable who were professional investors so it was just a matter of time ultimately i was

hoping that until people discovered that that it was useful let's drill in there because it's you It's during our most challenging times that we get our greatest insights because if we stack them up, I mean, you left probably a well-paying job with the bank and, yes, you've got the parachute of the payout, but that's a bit of a panacea at times because it's still, as you say, it's not putting bread and butter on the table week to week. you're you're then spreading yourself between tutoring and and building pension craft uh you it sounds like you had a lot of doubters around you who were who were you know i'm not being uh

deflamatory to your wife or or family but it's quite normal for you know people who are used to a regular income check to suddenly um see a position where there's nothing and they can't see anything coming so you're giving all this stuff away but but the payday is that doesn't appear to ever be coming how did you uh maintain the the fortitude and the self-belief and then then there's a divorce thrown into that so there's all of that that sort of comes back to you questioning yourself how did you manage to uh manage yourself through that process and and and stay focused on uh the vision of um uh what you're now doing uh despite that that quite deep opposition from a whole series of corners rama well i had um i was i was a member

of something called the content marketing academy content marketing academy run by a guy called chris marr who is a scottish man and he was uh really a good teacher ultimately his business didn't survive but um he provided teaching on how to do content marketing because i've you know my background was physics and and banking so i didn't know about marketing so for me this was a complete eye-opener to know that yeah you can give away stuff and still um ultimately make a profit but you've got to keep doing it that was the that was the gist of it so i had an accountability group which formed as part of that and there are four of us and we still meet every two weeks and we discuss our businesses but we discuss life you know so they saw me through the divorce

um you know they they they were the ones that said keep going and if i hadn't done that then i wouldn't be where i am today which is a business which which works and feeds me and feeds laura and feeds my dog teddy you know and ultimately it'll feed several people i suspect that's the goal so i think what really is important is to have that kind of accountability group who understand your business you understand each other and you support each other because if you don't keep going then obviously you're not going to succeed now there obviously does come a time when you realize that um it's not going to work out and it's difficult to draw the line it's difficult to know when that point is and for me i came very very close there was a point at which

i just said look if it doesn't work in the next couple of months i'm just going to give up um and i think at that point i said well what i'm going to do is i'm going to create a patreon account and and then one of the accountability groups said don't forget to say at the end of the video sign up on patreon and i thought oh yeah why don't i do that and guess what when i said sign up for patreon people did and um and so that grew very rapidly so that was that was effectively how i kept going and then once you start to see the patreon numbers build up then you realize yeah this is something that could be a viable business and now we've got you know over 700 members almost 800 on patreon and 80 000 subscribers on youtube almost 90 000 and it's growing very rapidly

and a mailing list with over 10 000 people so it certainly it certainly succeeded in the end but it was really touch and go for a long time yeah there's a living example there to me of the the patient's persistence and endurance and resilience you need to succeed in anything And it's often, you know, when you're about to give up, that the turning corner or the opportunity that's going to carry you long-term is sitting there. So it's admirable that you've been able to stick with it and maintain yourself with that accountability support group

that sits in around you to see it through. So congratulations on that, because I often say to people that are contemplating being self-employed, if you can't survive for two years on nothing then probably don't start because that's that's about the minimum you need to even get to a point where you're going to start to put some money on the table so yeah it was almost exactly two years before it did take off so that's about i think that's about right i'd heard one and a half years and then at the one and a half year point was my my kind of crunch moment and so that was that was important to keep going after that

Yeah, brilliant. So, excellent. So, what I'd love to do now, though, is to jump a little bit. No, before I do that, I'm going to go in a different direction. While you were building your career and the family and everything else, I'd love for you to share with us what, if anything, you were personally investing in along that journey and why. so when i was at the investment bank i was very time poor so for me i had very little time to

think about investments so i just put it into some fairly random investments it was a high yield bond fund because i was working in credit so i had a fairly good knowledge of how that worked and a european equity fund and um i think there was an investment grade an investment grade corporate bond fund so those were the kind of things i put into my into my eyes and i just left it you know i never even looked at it and that actually did very well because i ignored it i didn't do anything with it and i kind of learned my lesson previously because i tried trading single stocks when i was just getting into investing in the first in the first instance before i went to the bank so i used to try and invest in single stocks i

read a couple of books and it just imploded and i did all the wrong things and i made some terrible investments but then i kind of learned from that and and just kept it simple and that worked fairly well because i didn't do anything with the portfolio so that was that was a good way to invest well and i didn't really realize at that point i still didn't realize that was the kind of secret which was the fact i'd ignored it and let's spill that secret out because this is something that i I don't see many investors in many areas all get because there's always this perception that we've got to be very active to produce results.

It's almost written into our culture, I think. I mean, Australians are predominantly much more cosmopolitan now, but there's a lot of British heritage in the way we operate, think and behave here in Australia. And I'm a proud convict myself, actually. We track the heritage back far enough. But what goes with that is you've got to be doing it, you've got to be active, you've got to be making it happen,

whereas if we tease out what you've just shared with us, your best-performing investment was the one you didn't do anything with. You just set and forget. Can you sort of sum it up for us a little bit because I think there's some real gold in what you've just mentioned there. Yeah, the first time I really realised how important that message was was a story that i'd heard from jim o'shaughnessy who's written a brilliant book called what's what works on wall street so he's a kind of quant investor incredibly funny guy he has the best

memes on twitter he's really great on fin twit but he's really generous with his time you know he spends a lot of time mentoring people and sharing his knowledge a lot of stuff about philosophy but also about about um if you listen to his podcast it's very good it's called infinite loops where he talks about things like philosophy and things which you wouldn't have thought would be related to investment so one of the things that he actually shared with me was i'd heard this story that fidelity had done a study to see which of their clients perform the best and it turned out it was the dead clients these people who'd who created a trust and who basically didn't fiddle with the portfolio and their portfolios just blew all the others out of the water so i

i'd heard that it was jim that came up with this anecdote and he confirmed that he'd heard it from someone at fidelity they never found the original reference but but i think the idea is a good one which is don't fiddle the ideal investor is a dead investor so if you can pretend to be dead then uh that's a good way to do it so in fact that's why i say i call it the kind of teddy investment approach so you can see how teddy spends most of the time for the listeners who who aren't watching this and raman's beautiful dog is spread eagled on the couch uh directly behind him so but teddy would make a great investor because you know he has short bouts of intense activity interspersed with long periods of sleeping on the sofa so i think that's probably

the best approach to investing because there are certain times when you get these incredible opportunities when equity markets sell off and there's a big crash and everyone's saying don't invest or there's just indifference about the equity market and then you get these periods like now when you know your plumber's telling you to buy tesla and that tells you that something's not quite right and things are probably overpriced so i think having a sensitivity to that and you having these periods of intense activity when you capitalize on the opportunities is important and then having long periods of doing nothing is absolutely okay and keeping FOMO at bay you know this fear of missing out which makes people desperate to to invest so I speak to quite a

lot of high net worth investors now and many of them are in a position where they've sold a business they've got millions to invest and it's in cash and they feel bad about it because they think well i should be fully invested all these investment banks are coming up to me very kindly offering to invest my money for me and i just tell them look you don't need the money and there's no rush to invest take your time because you can afford to invest when things are much more much much better in terms of an entry point when prices are low yes so i think i think that fear of missing out forces us to kind of try and fiddle yeah it does i agree that 100 and i don't know i know you're uh ascribed to some of warren buffett's philosophies as well but one of his best i think

is to is to spend a lot of time with the bat ready to hit the ball but until the perfect perfect ball comes along you you don't swing so uh it's a pretty good analogy i think tell me uh you sort of touched on a little bit but i'd love for you to share with us what you believe has been your worst investment ever so far as i had some awful ones i've got to say and i think probably the worst and this one has all of the cognitive biases built into it so these are the kind of things you should avoid so this was when i bought why veil garden centers i love gardening right so i love gardening i think i understand it and in the uk it's really big you know people every spring they go out and they buy lots of stuff for the garden and it's you know millions of gardeners in the uk

so it's really a kind of little bit of paradise in your back garden that everyone tries to construct so i thought well you know we've got all these gardeners a great investment would be something like this company called wyvale garden centers so you know i go and i buy large quantities of this stock so i was too concentrated that's my first mistake the second thing is it comes spring time it rained on bank holiday monday the sales of these companies depend hugely on that bank holiday and the share price tanks and so what do i do do i hold on no i sold just after it crashed so i bought at the peak i sold at the bottom and obviously you know i've kind of locked myself out of it and guess what happened it rallied straight away so i was locked out of the investment and i'd

done all the things which i shouldn't do i'd gone for a sector where i'm familiar with it so that was kind of like a familiarity bias yeah i'd hugely concentrated my portfolio i mean single stock stuff generally doesn't work and uh and then i sold when it fell which is exactly what you shouldn't do and I bought at the top so I mean literally it was a disaster but that taught me that actually funds might be a better way to go where it comes off the shelf as a portfolio which is diversified it's fairly cheap you know the management costs are low and you don't have to think about things like rebalancing or any of that stuff it's all done for you so that's I think how i first came to realize that was maybe not going to work for me but i had read a few books

and i thought look i've got all this data i can look at the earnings growth historically i can look at the price to earnings growth ratio and all these ratios i looked at the dividend but but in fact it was just a foolish game and it was a game i was going to lose and i think that's the important thing not everyone has the best not there isn't a single approach to investing there are multiple paths to a good portfolio so one of the things that pension craft is that i never tell people what to do i just present the data and i always try and present both sides of an argument for and against an investment and ultimately people have to find their own way and everyone has their own style of investing so some of the pension crafters usually the younger ones are heavily

invested in crypto which is fine if you understand the risks of that and you're you're kind of happy with with the investment itself whereas some of the older people invest more in things like venture capital trusts where you're funding startup companies or they invest in russia or emerging markets or some of them just have a single fund you know that's it and they keep it really simple so there is no one size fits all and i think it's important to have that diversity in the community but we're all nice to each other but you can see the friction sometimes on the on the slack group where we talk to each other where there's a kind of clash of cultures but we're always polite well we're usually polite to each other we try and keep it polite but but i think

that's important there isn't just one way to do it and i think that's why copying warren buffett or copying me is a mistake and people always ask me how do you invest and tell me what to do but i never do because that's not my goal my goal is to teach you how to do it for yourself in your style and you touched on a really important point there because all the the fundamental whether you're the technical or you're a quant or whether you're a value investor or you whether you're looking at fundamentals uh the missing missing piece or the bit that's unique about uh all that is how you think, because how you think and then how you act are going to have a big impact on the sorts of results

you're going to get from your investing. And I think I'm interested in your thoughts around this, but the missing piece that I see in a lot of investors is that they spend all the time externally looking at what's going to happen. They spend very little time thinking about how they think and what's between the ears and what impact that's going to have on their own behaviours.

what's what's your thoughts around that yeah i mean it was an interesting thread on pension craft recently where one of the old timers on on in our community said what do you think is a biggest risk for your portfolio and i said the biggest risk is you because your behavior ultimately determines how much money you'll make and if you have the wrong kinds of behavior then it'll be a disaster so i think that's the single biggest risk and i think people talk about understanding things like volatility and correlation i talk about it but much more important is to understand your own psychology so i think it's really important to understand it and to master your own behavior and to overcome your own cognitive biases whatever those are

and we all have them you know we're very ill-suited to being investors if we sense a sell-off our natural reaction is to run away from it and to take risk off the table when you should actually be running towards the fire and of course evolution has told us that you don't run towards fire so you've almost got to be like a marine i mean they truly drill marines to run into enemy fire and it takes a special kind of mindset to do that and that's what it feels like if you've got a big sell-off like in 2008 and you have to buy in that carnage you feel sick i mean literally you feel sick because you can see what's happening in markets every new story you read is saying that the world is ending and you know the system's about to collapse and it seems quite plausible

that it will but i think that's why it's important to know that that is not the case that a lot of what people say is not true and usually everything's okay i think that's the important thing be an optimist because ultimately these things do recover if you invest in single stock sometimes those don't recover but if you index if you if you go for indices you know like a whole market or funds then ultimately they do recover if you have a diversified portfolio again it has to have certain caveats but that's the important message i think yeah i think the one that sort of goes parallel with that is that uh a lot of investors believe they need to create a job for themselves effectively they don't they're not recognizing the time but they they need to put that amount

of energy in it coming back to your dead investor analogy which i think is a really good one which i'm going to use thank you run uh the uh if you get active early and do your homework and do your due diligence and and get into something that's diversified and it's going to follow the general direction of the market providing you know we we all still believe that it's generally going to go up then the best thing you can do from there is get the hell out of the way and and for me i often say things not if an investment is creating a job for me it's not an investment that's not an investment that's a job what i actually want to do is my investments to fund my lifestyle so i can put my energy into the things i actually enjoy doing outside of that

and just yet monitor it sure but not not have to be so active in it that it's actually replacing my employment income with with the time i need to spend managing monitoring the investments what's your view on that side of things yeah absolutely i think that really you shouldn't be spending too much time on investment there are certain periods of times when periods of time when you should be focusing on what's going on and those are the big sell-offs that's when nobody else wants to be involved those are the real opportunities but most of the time you should just be fairly hands-off and just get on with your life you know enjoy the stuff that you do spend time with your family do whatever it is that makes you happy and and as you say i don't

think investment is a job and i think you should have realistic expectations about investment investment doesn't make you rich investment keeps you rich and ultimately it takes a long time and it should be boring right so if people say i'm really excited about this trade then immediately that's a red flag for me it should you know it should be really boring like taking out the rubbish or washing up the dishes you know it should be there should be just something that you do as part of your routine yeah yeah absolutely great yeah awesome boss um what i'd love to do now is jump briefly into the future for a minute and then i want to drill into some uh neutral topics of interest so i'd love you to point out a picture of what your ideal lifestyle is and make that as

vivid as you possibly can for us and then talk to us about what you have invested in and what you will invest in to either make that happen or continue to allow that to happen yeah so for me an ideal lifestyle is a fairly simple one i mean i don't particularly want to live in monaco or have a fancy car so for me having a fairly simple life but you know comfortable you know i like gardening i love my dog um my partner laura you know we we obviously we want to go on things like holidays and not spend all of our time working so i mean when i first started pension craft it was literally 24 hours a day seven days a week doing this and the tutoring but now what actually Laura's helped me do is to map out time at the weekends so you know we go and see friends and

we relax we do some cooking together personally I really like to go for walks with Ted you know my dog and have time to do that which I'd never had time to do before so I think having that time when you can kind of recover and live your life as well as do the interesting stuff which I really enjoy which is the the pension craft teaching and the business side of things i think having that balance is very important as you say i think that's one of your uh threefold approaches to to life the three things which are important yeah yes no that's a really good analogy and in terms of uh your investment approach now that's going to continue to create and then fund that ongoing lifestyle what what are you again we're not asking you to uh give it any big criticism but

your your investing approach how how has that evolved and and what are you doing personally in that regard well this is why i always say don't copy me because you know not everyone else is got a startup business who's my age with my medical conditions or whatever it is that you know worries you so so i'd say um up to the point where i left the investment bank there was just that portfolio which i'd left for a long time and then once i started pensioncraft i opened up a vanguard account and i've been generally very cautious in that account since it's opened so the reason for that is that i've got a fixed amount of capital and if i lost it that was it there was no second bite of the cherry. And I didn't know I was going to have enough money to

live until quite recently. So for me, it was very important to be cautious. So I've had a very cautious portfolio, a lot of fixed income in it. And Vanguard has closed my only equity fund. So when valuations got to very high levels last year in February, I sold half of my equity. and then Vanguard shut down my remaining equity they closed my fund in February and so I've literally got no equity at all now so everything I've got is in bonds and cash so what I'm going to gradually do over the next two years or so is average back into the equity market because ultimately that's where you get the highest returns and I'm still fairly young and now I've got the ability to pay for my lifestyle I don't depend on my investments that's the important

thing you're having investments that you depend on is a very different game from having investments which ultimately could let you retire so now i'm being more risk on so i'm putting more risk on the table and i'm going to gradually build that up over time and if there is a big equity market sell-off then i'll accelerate my equity purchases and go all in but if there isn't then i'll just gradually build up to a mostly equity portfolio yeah something i'd love you to touch on because where australia is perhaps a little bit different from uh the uk europe and the us is that we are very tax advantaged in property here in australia and australians have an absolute love for property. In fact, on average

the real estate represents about 54% of household wealth here in this country and property has certainly been very generous to myself and my wife over the long term. I know things are a bit different in the UK. What, if any part, does property play in your thinking around investment, both now in the future well in terms of of wealth the uk is exactly the same about half of uk wealth is tied up in property and many of the clients i speak to not only have a portfolio of standard

market investments they also have large buy to let portfolios so we often have this discussion about which is most advantageous and look if you have property then it can provide a good income the other benefit is that it gives you leverage returns so if you if you put a small amount in obviously you can amplify your returns but also your losses that's obviously a risk and it's very closely tied to gdp that's the other that's the first problem i'd say so if you do have an economic downturn generally that's a negative for house prices and because of the fact it's very liquid it's very difficult to sell and it's costly to sell your property but it can take a while to get out of that market so if you need the money then putting it in property is a bad idea so only

money that you can really leave um on the table and untouched for decades i'd say would be suitable for the for the real estate market but it does provide you with that kind of income and you know the leverage can be attractive to some people but obviously the house you live in is not an investment it's a lot better yeah beautiful yeah i'm glad you said that because that's a conversation i had with people here when they come say well i've got money in my house from no you haven't that's actually that's costing you money and it's not worth anything until you sell it and then you've got to live somewhere so you know don't don't give me that your home is an investment because that's that's a place where you live so one of the problems you can't diversify it so you can

always buy real estate investment trust so that's commercial property wrapped up as a kind of equity which allows you to diversify globally and that's got sectors as well so you can invest in things like data centers or the area of land which is used for mobile phones mobile phone masts you know they have to sit on land somewhere so the way they actually fund that is via real estate investment trusts or you can buy shopping centers obviously not so good at the moment or office space again not great at the moment um but these are the kind of things where obviously you'd buy it when it's stuffed you know because that's that's when you get the reasonable valuation so if you're a if you're kind of like um if you're somebody who wants to make the best

possible profits you'd buy those when when they're depressed but what's good about the market is that it's very liquid so literally you can sell these things in seconds and it does provide an income as well so that might be another way to get exposure to property which isn't necessarily the case which isn't necessarily as illiquid as physical property that you buy as a as an individual investor and also you don't have to fix somebody's boiler at two in the morning which is another aspect of real estate which i'm sure you may have had to deal with we don't have people to do that man i i'd say yeah the property is a game of finance and it's also an elite team sport and you're not a player you you just manage the managers mate so you make

sure you've got better people to do that so you're not getting up at two o'clock on saturday night with a screwdriver to go out and fix the yeah that's dispersed hey yeah i'd love to now dive into a subject that i know you've got some passion for and and it's something that i haven't really spoken too much about on the podcast today i'd like to really elaborate on this area if you don't mind and that's the importance of asset asset allocation and so i'd love you to take us through the key aspects of of that if you like because i know you've got a really good course that that revolves exactly around that can you sort of take us on on the key things that need to be thought about so that the listeners can start to then understand how important asset

allocation really is now we started off with this metaphor of of animals and understanding that a portfolio is kind of like a menagerie or a kind of petting zoo that you have to put together yourself. And all of the animals have to sit nicely together. And I think that's the way to understand asset allocation. What is the attribute of this asset type? So let's say it's equity. What are the drivers of equity? What makes the price go up and down? And then secondly, what kind of macroeconomic environment would be good for that asset? And the answers are often quite difficult to understand and sometimes it's not clear-cut some assets do well in a certain environment in one era but they're not in the same environment in another era so it's not as simple

as just saying well interest rates are going down so it's good for this or that so but broadly it's understanding the attributes of the different asset types what are they so in the in the asset allocation course we go through each of the different asset types how to work out the risk of the portfolio how to work out the correlation of the portfolio and whether things diversify each other so for example equity generally does well during periods of economic growth because earnings go up for companies and if earnings go up then the prices track them upwards sometimes earnings go up without prices tracking them if people are too glum and sometimes prices go up, even if earnings don't. So in 2019, earnings in the US were basically flat for

three quarters, but equity markets kept on going up. And that's the point at which I sold. It was the third quarter of earnings growth. And then obviously, we had the pandemic and everything sold off. And I was quite pleased that I'd sold half of my equity at that point. So it's important to understand what drives each market. In equity, it's earnings growth. Prices ultimately track earnings growth and in the fixed income space there are a whole bunch of drivers so for bonds generally bonds feed on misery so whereas equity does well during periods of happiness in the economy the bonds feed on misery so if there's bad economic news if there's a disaster in the equity market that's when bonds really thrive and that's why they sit so nicely together because

when equities are selling off you want something that's not going to sell off with it and basically within equity there's almost nothing which is a safe haven during one of these massive sell-offs you've got to move to another asset class which is fixed income and the safest of safe asset classes is u.s treasuries and the other thing to understand about bonds is how long are you tying up your money so if you're tying up your money for a long period of time you're baking in a fixed rate of interest if everyone else is earning more than you if interest rates rise well that's terrible because you've locked in a low rate so if interest rates rise the price of bonds go down and if interest rates fall the price of bonds go up so

that's another important thing to understand yeah central banks the role of central banks is very important too so they're the guys who determine the level of interest rates based on the economy so a lot of the stuff i talk about on youtube is what the fed's going to do because that really matters and understanding what the fed is saying is also really important because you'll understand what's going on in markets much better if you understand that monetary policy and i think a lot of people don't understand that so that's another big part of of what we teach and then we've got things like slightly more esoteric asset classes like commodities i know people in australia will be glued up to that particular asset type because that's essentially the lifeblood of

of growth you have to if you're building beijing you have to have concrete you have to have rebar you've got to have glass steel so understanding the drivers of commodities is much harder i think because it depends on things like mining mines being shut or demand being modified by economic slumps whatever it is so i think these are the kind of broad ways of understanding what's the driver of the asset class how is it correlated to the other assets that you've got and do they diversify each other and if they do then they might sit well together in a portfolio and then finally what are the macroeconomic environments where those particular assets will do well just to give you a kind of broad overview of what you'd learn in the asset allocation class yeah

if you were to sort of sum up the most successful asset allocation strategies that you've seen and again this is not financial advice and we're not suggesting that you the listeners rush out and do this but what can you share in that regard well i think i think having a having a mix of of equity and bonds which is suitable to your risk appetite is the most important thing and to explain why let me just tell you about what happened in march last year in 2020 now i'd gone blue in the face telling people that when equity markets sell off you don't sell you buy yeah and and people would all say oh yes from and i agree i'd never do that i'd never sell you can bet one month after it happened i started getting the call saying woman i sold and now i'm locked out of the market

and prices have gone up and what am i going to do so for many of those people who are many of whom i'm still talking to you now about that we're talking about how to get back into the market so you know i think i think having an asset allocation which is suitable to your risk appetite which means that you won't sell when equity markets fall is really important so let's say every 10 years or so let's say equity markets fall 50 from their previous peak if that's the case then if your portfolio is 50 bonds 50 equity then you'll only take half of the hit and that might make you less likely to sell so it's really about controlling your own ability to sleep at night if you're somebody who doesn't like risk or doesn't want risk

or doesn't need risk then you know having less equity in your portfolio might make sense yeah so i think that's important you know i think that's important the asset allocation really the biggest the biggest choice is how much equity how much bonds and um and that level of risk because if you don't understand the risk effectively you're just kind of shooting in the dark you've got no idea what's going to happen to your portfolio yeah totally something and i'll bet you this is a question you're getting quite a bit of as well is for those that haven't invested yet and and it's sitting in cash uh given there's a lot of a lot of talk about the emerging asset bubble and the and the the correction stroke crash exercise what do you say to them

in terms of do i sit back and catch and wait for the correction and jump in or do i do i just jump in anyway a lot of the people i speak to don't have a lump sum so these are people who are regularly investing their salary and for them this is irrelevant right they can basically put their fingers in their ears and just carry on investing as much as they can as much in equity as they can for a long period of time for the people who do have a large lump sum it's a very different story they're very nervous now because they see all the stories they see the valuations sky high now the justification for that until recently was that interest rates were low so people could say well it kind of understandable that valuations are

are the highest they've ever been in many cases because interest rates are low well they're not so low now because we've seen u.s treasuries go from 0.8 percent to 1.7 percent over a handful of months so that justification can't be used anymore so now they have to say well it's fiscal stimulus which is creating this this increase in equity prices or this is a new paradigm which is always a red flag or they say valuation doesn't matter anymore because in this new world it doesn't matter whether a company is earning enough profits to justify its price now when people say valuation doesn't matter that's when you know valuation matters most of all that's a sure sign that something's badly wrong so for these clients i usually say well i understand what you're saying

and but you don't know how long the bubble is going to last and in japan in the late 80s and early 90s valuations went to double what they are now so literally a price to earnings multiple of 60 or 50 50 to 60 i think it was so you can't just stay out of the markets waiting for a crash so you do have to allocate some capital maybe not all of it but some of it and i think your portfolio really has to express your beliefs about probability and you always have to allocate based on the most likely outcome and if you always if you always allocate in terms of tail risks you'd never get out of bed you know if you worried about risks in the same way that people do um in their daily lives then you literally never get out of bed you'd never drive your car you'd never

drink any alcohol you know you'd take no pleasure in life so similarly for a portfolio you've just got to say well i've got to take some risk i'm not completely sure there's going to be a crash so i have some equity but maybe i won't allocate my whole 100 of my over my money into equity so that's what i generally say and you can always dollar cost average into markets because then if there is a crash this is what i'm doing then you can then you can really fill your boots and go fully into equity yeah and again that debt investor strategy if you're just drip feeding a little bits in regardless what's happening in the market and therefore timing and market swings is relevant because you're focusing on the next 20 or 30 years not not the next two or three months

which is always a challenge. Tell me, you touched on crypto before. I'd love your thoughts on it. And I'm talking here from an investor perspective, not a speculator because there's a number of people that have been calling me saying, look, I'm going to sell my investment properties and put it all into crypto.

I just, I shake my head when I hear this sort of stuff. But I'd love your thoughts around crypto generally as a long-term investable vehicle, not a short-term speculation. What's your thoughts? Well, like anything, the value of crypto depends on what people are willing to pay for it. Ultimately, that's true of any market. But the difference between crypto and other asset types is that it doesn't generate an income. and the reason why I personally I don't invest in it is because of the difficulty of accessing the market so if there was an ETF for crypto I'd probably invest some of my portfolio in it you

know just a small percentage because it does provide some diversification because you know it's not really tied to any other asset classes and obviously the returns have been good recently but it is a very crashy asset class and what worries me is just as many people approach me after equity markets crashed because they bought at the top and they sold, it's so much worse for crypto because the crashes are so much bigger. And we haven't had a crash in it recently, but you just look back to 2018 and the crash was huge. So I think for many people, the cognitive biases are made that much worse by the volatility, which is around 80%. And the volatility still hasn't come down for things like Bitcoin. People said it would by now, but it hasn't. It still remains

very high so i think as long as you understand the risk and you understand the behavior i don't have any issues with with crypto as an investment would i have it as a large percentage of my portfolio probably not because i think you also got to think about what is the impact of the thing i own so if i buy some equity tracker effectively i'm providing capital for companies that provide goods and services or if i buy a corporate bond fund i'm funding these companies which provide the goods and services that we use every day whereas with crypto all i'm really doing is paying for a number yeah i'm paying for a for a key and um it also has a certain energy cost which i don't like so what's the net effect on the world it doesn't have any practical use as

a transaction system they're not great for bitcoin in particular other cryptos are better but you know i don't really see why the world is a better place because of it because i'm not paranoid about about about fiat currencies i don't share that rather extreme world view that you know fiat currencies are doomed i just don't think that's true and i think a lot of the narrative you hear on on youtube which is that fiat currencies will become worthless because are being printed to oblivion i think that's just nonsense and i think that's very misleading so what i don't like about it is that kind of religious aspect where you stop thinking and if you speak to bitcoin people you realize it is like a religion you know they'll tell you about it day

and night and they just tweet about it and they're really quite boring unfortunately um um so so that's why i don't like it uh because i don't like the religious aspect well it's it's become a i love your thoughts on this and maybe i'm just more aware of it now but the perceived story that's sold around crypto and we're seeing the same with the whole uh uh gamestop reddit herd mentality it's it's all about the story and this disconnect between what the thing's doing and what people believe it's worth. What's your views on that? Is that a trend that you're seeing?

I mean, you've been more active and involved a lot longer in the markets globally than I have. Yeah, I mean, for example, GameStop, everyone is kind of selling that as sticking it to the big guy, the guys in suits, yeah? But if you look at trading volume, what makes the guy at the investment bank able to have a Lamborghini it's because there's trade flow and the more trades there are the more

money they make now trading flow had actually been going down for a long time until GameStop until we got this massive pandemania you know this incredible rally that we got in equity markets after March in 2020 and because of that huge increase in flow there's been a huge increase in profits at investment banks so really what what what gamestop and the so-called democratization of of investment has done is it's made bankers richer if you trade a lot you're just giving your money away to an investment bank you're paying for their lambo so that's probably not the intended consequence it's not really having the effect that people think it is and really making a company like gamestop which is a broken business model increasing the price of the equity is not an

efficient use of capital ultimately you know it's a company that shouldn't be allowed to thrive because what they're doing is is no longer kind of relevant why would you buy games from a game store in a shopping mall when you can stream stuff now or you can buy online i think that's that's a mistake so i think that's a good example of an unintended consequence yeah yeah it's it's like the old zombie companies back in the japanese exercise where things have been kept alive you know we if we use the medical analogy we we're using the the uh electric shocks to keep the body alive but the brain's dead it's actually actually gone and uh when we start to see that level of perception driving and same in crypto it's it's it's the old greater fool approach you know as

long as the greater fool is going to pay more than i'll i'll keep jumping in but there's no other justification for it other than that pretty much um japan's an interesting example actually if you look at the amount of retail investors this is normal investors involved in generating the flow of of business in the equity market a lot of the trades were done by retail investors during the bubble but then after the bubble popped and nobody was interested in equity anymore except for some big institutional players the amount of retail investment dropped dramatically and i suspect what we'll see is maybe not falling back to levels that they were at before but a lot of the people who are new to the market will see after the next correction which is

ultimately going to happen there'll be less interest and i think a lot of that flow will will kind of go away because people also realize that the best way to invest is not to trade a lot and they're going to have less time on their hands because they won't be stuck at home once the lockdowns end exactly right exactly right let's just touch on that because that's something that i know you've spoken about quite a bit in the past and it's a game so i think not a lot of investors really get their head around that that's the effect of fees on investment returns can you just uh expand on that subject for us yeah there was really great um talk which i heard by a canadian guy called larry bates who he creates something called the t-rex calculator

so t-rex and if you just look for larry bates t-rex on google you'll find his calculator but effectively what you do is you you tell this calculator how much am i investing what will my return be say six percent how long am i investing for 10 years and what's the fee i'm paying so let's say returns are six percent and you're paying two percent in fees well you'll get a pretty good return over that 10-year period because of compounding but if you're paying two percent of it away away every year then you're giving away a third of your gains so what the t-rex calculator works out is what percentage of the gains you keep the analogy i always think of when i'm thinking about this is imagine you're feeding pigs right you're one of the snouts in

the trough but it's like your broker is one of the other pigs and he's got a really big snout and he's eating some of your returns and then you've got your platform eating some of your returns and your fund manager so the idea is to have less snouts in the trough because that way you get to keep more of the returns and that's what the t-rex calculator does it works out the percentage you keep so reasonably now you can you can trade with a fund that costs you 0.2 you can buy global equity for 0.2 your platform depending on how much you invest will be roughly 0.2 again so you're all in fee every year should be about 0.4 so that's a very small snout and you get to eat more of the return so i think that's the key thing having the least number of people between you and the assets

which generate your your returns and then it's really simple and then the least amount of turn so you're not sort of buying and selling all the time or moving in and out uh unnecessarily and you put those two together and then get out get the hell out of the way and uh let time do its work and yeah i think that sums it up and i love that pig analogy yeah i love the way you keep bringing it back to uh to that uh now something else i just want to sort of close on before we get into the ambush series you've written a great book called Investing in Fear and it's one

thing that permeates every aspect of every level of media these days, Raman because the I'm going to sort of display my hand here, I think a lot of media needs fear to engage our eyeballs

and our earbuds to keep us watching I'd love for you to talk about your book Investing in Fear and what are some of the key take-homes that might be relevant to the listeners on that one? Well, I knew that lots of people were investing in volatility. So, you know, it's something we used to talk about at the investment bank,

and we obviously had to understand volatility. But it sounds like it's just like if you're at school and you're working out how much something changes over time, that's called the standard deviation. so it's literally as if you're trading the amount of wiggliness in a stock so that's what volatility is and you can actually buy and sell it but what i'd heard was from clients that there were grannies buying volatility products and betting on whether the level of vix which is called the fear index whether it would go up or down so i thought well surely they don't understand

the product because it is quite complex because you can't actually buy the vix directly you have to buy futures on the vix and that in turn has a carry cost so all the time that you hold the product it's losing money and less fear spikes so the whole book is teaching you about when it kind of makes sense and how to get exposure to that volatility so how do you minimize your carry cost. There are certain products which do that. So the rent you pay while you wait for a crisis to happen is smaller. And then secondly, once one of these crises do happen, can you buy a product that will make money as the price of VIX falls? And what's the best way to do that? You know, what's the best level of VIX to get in and out? And it turns out you can't really predict

the spike upwards but the spike or the kind of falling down of the volatility afterwards is more predictable so i think that's probably the better way to play it and if you are going to go for a long-term volatility exposure as part of your portfolio it's best to go for one of these these products which minimize the the the kind of roll cost which is the price you pay to hold it but uh that's the role that's the goal of the book to try and explain how these these costs and strategies might work in a in a portfolio practically yeah yeah i love it again i think the fear increasingly is going to play a big part in every aspect of our lives given that the the focus of all forms of media on that very thing uh so uh and as a hedge sort of uh

embracing that as an opportunity rather than as a threat is something that i haven't seen anyone else put in the engine to it. So I'm going to jump into the ambush round, if I can, which are just five quick questions that the listeners always love to glean your words of wisdom on. And the first of those is what's your favourite quote and why? I think it's probably one by Warren Buffett, which is when the tide goes out, you can see who's swimming naked.

because at the moment that's what's happening right we're seeing lots of scandals unearthed and the tide's gone out yeah no doubt about that the top other than your own books what's the top book that you'd recommend listeners read and why it's probably morgan housel's book which is the psychology of investing or the psychology of money by morgan housel because i think that touches on this theme of how to control your own behavior when it comes to investing which i think is probably the most important thing yeah absolutely great now this one's a little bit left field most aussies feel like they pay way too much tax uh what's the top and leading thing that you've done to minimize the tax that you pay burning less

i used to pay a fortune in tax and then i left investment banking and now i pay very little that's an easy solution and running your own business is also a very good way to build as well yeah back on the investment advice i want to cover off on both ends of the spectrum here what's both the worst investment advice you've ever received and the best investment advice you've ever received i think the worst was to buy gold and it was actually from one of my strategist friends at the bank who is the gold strategist the precious metal strategist strategist and my mistake was to believe them and that they knew what the hell they were talking about so that was an awkward moment uh sorry adele um and then the best advice i think probably was um was the fact that it was

probably that Jim O'Shaughnessy thing, which is the best investor is a dead investor, that really caught my attention and made me realise the best behaviour. Yeah. Such a good analogy.

I actually haven't heard that before and I'm going to use that, Raman, because it says it all. It's, if you just allow Tom and the markets to do their work, then that's providing you've done the right thing,

diversified yourself early on. And I think, correct me if I'm wrong, but I think Buffett has said that once he passes, he's suggesting his wife just put money into a good Vanguard index and set and forget, get out of the road. Yeah, that's right. An S&P 500 fund, a little bit into treasuries, and that's it. So if the best stock selector in the planet thinks that's the best thing to do,

that's good enough for me. Yeah, likewise. Last one, what's a personal habit or a rewarding ritual that you believe contributes most to your investment success today? I think learning about investment is probably the best thing because even though it initially leads people to make complex portfolios, ultimately it makes them create simple portfolios. And usually I just have two funds in my portfolio.

So I think understanding how to invest is probably the most important thing is that continual learning and I'm still learning when I make courses when I make videos that process should never end because things are always changing. Yeah, yeah, spot on. Final question, and it's a big one, but it gives you an opportunity to wrap all this up neatly. If I gave you a microphone that spoke to every single one of the 7.7 doing and not people that are currently alive in the world and I gave you one minute to talk, what would you suggest they invest in?

So firstly, I'd say have a plan. Don't just buy stuff willy-nilly. What I see a lot of the time is people end up with a portfolio, like an accretion disc around a black hole where it just basically sucks in all these different trades and products keep it simple you literally just need a couple of funds and you're done the second thing is know what your goals are some people want to have a champagne lifestyle some people want a simple lifestyle but if you know what your goal is you can build your portfolio to fit that goal learn about yourself that's as important as learning about markets and keep less

snouts in the trough so don't pay too much in order to have those investments pay as little in fees as possible and basically have fun with it but uh i'd say keep it as simple as possible and if you do want to have a little speculative bet for fun make it a small proportion of the portfolio not a big allocation yeah yeah beautifully said uh now and for those that if you've enjoyed our conversation as much as I have and want to reach out to you and do some more with you, how can I do that? Well, just watch our YouTube channel.

Just go to YouTube and look for PensionCraft and you'll see links to the stuff that we provide, the membership. You can support us on YouTube or you can also sign up for our newsletter, which is free. So that's what we offer. YouTube's a good place to start.

Yeah, awesome. Look, you've been very generous with your time. I know it's very early in the morning there in the UK and you've got the hot cuppa to keep you company, but really enjoyed the opportunity. You know, I've been getting a lot of value out of your YouTube segments for quite some time now and that was what really sparked my interest to get you on because I want many more Australians to be tuning

into the sort of ancient wisdom almost that you're sharing there that's giving them impartial advice that they often can't get from anywhere else. Everyone else has got a vested interest in trying to push them in a certain direction. What I love about what you're doing is you're giving them the information that then allows them to make more informed decisions based on what suits them.

So very appreciative and looking forward to staying in touch as you continue to grow and prosper. Thanks, Ryan. Thanks for a great interview. I really enjoyed that. Thank you, Bushy. Thank you, Raymond. Talk soon.

To get a summary of all this investment gold in the show notes, just email me on hello at khgroup.com.au. That's H-E-L-L-O at khgroup.com.au. Or check us out at www.bushymartin.com.au forward slash getinvested. I look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening. And as always, dream as if you live forever

and live as if you die tomorrow.