Join me in this episode as I sit down with Brad Lazarus to explore breathtaking investment strategies!
Learn why pullbacks are crucial for a sustainable market, discover the benefits of options investing, and understand the importance of a diversified core and satellite portfolio.
We discuss the transition from property to stocks, the power of compounding, and how even beginners can make significant returns.
If you're eager to elevate your investing game, this chat is packed with strategies you can't miss!
Thousands have learnt via our Investment Academy - learn more here:
https://investlikeapro.co.uk/academy
More on InvestLikeAPro:
https://investlikeapro.co.uk/
Follow me on Facebook for regular investment insights:
https://www.facebook.com/manish.kataria.7758
Connect with me on Linkedin:
https://www.linkedin.com/in/manishkcfa/
IMPORTANT: Your Capital is at Risk. Investments may not be covered by the FSCS. This is NOT investment advice - for information purposes only. Please seek advice from a regulated advisor before investing. The value of investments can fall as well as rise - don't rely on past performance.
Welcome to the Invest Like a Pro podcast, teaching you diversified
Speaker:investing with a simple set and forget approach to stocks and options.
Speaker:Build inflation beating wealth for your future and recurring income for today.
Speaker:And now your host, former J.
Speaker:P.
Speaker:Morgan investment manager, Manish Kataria.
Speaker:Welcome everyone, and I've got a really special guest with me today.
Speaker:Brad Lazarus.
Speaker:Welcome Brad to the podcast.
Speaker:Thank you.
Speaker:Hi, how you doing?
Speaker:I'm all right, thank you.
Speaker:We were just having a quick chat before we started recording and
Speaker:we were discussing the market.
Speaker:We've had a really good run in the markets and it's, almost gone up
Speaker:in a straight line and and actually it's quite healthy to have a pullback
Speaker:every now and then, isn't it?
Speaker:Because you get used to you get almost get complacent when the market's going
Speaker:up all the time and markets are not meant to go up all the time because then it
Speaker:would just be too easy and then it would stop going up in a perverse kind of way.
Speaker:So, so you actually need pullbacks you need corrections.
Speaker:For two reasons.
Speaker:One is so that makes market growth more sustainable.
Speaker:But the second reason is, because it allows us to
Speaker:capitalize as smart investors.
Speaker:It allows us to capitalize and, buy into the corrections, pound cost
Speaker:averaging, dollar cost averaging.
Speaker:And that's what really turbocharges your returns, right?
Speaker:And, on options, I know we're going to talk about your sort of experience, Bye.
Speaker:Bye.
Speaker:investing with options.
Speaker:Yeah.
Speaker:With options, you get the double benefit, which is that something called implied
Speaker:volatility goes up, which means you get even more income on your options trades.
Speaker:So these are times to really capitalise on.
Speaker:Yeah.
Speaker:Yeah.
Speaker:And I think the other thing as well, I think as a, I think it's, almost
Speaker:these pullbacks almost give you a reason to get engaged in the market.
Speaker:Which, because if the market just keeps going up and keeps going up,
Speaker:you almost go, well, I won't look at it today because it keeps going up.
Speaker:But if you get these pullbacks, I think they engage with them.
Speaker:There's a it's like everything you learn more from mistakes and errors and failures
Speaker:than you do from successes in the markets.
Speaker:You probably learn more from the pullback than you do from a Straight upwards growth
Speaker:I agree.
Speaker:I agree.
Speaker:And if you look at the market this year for 2024, we're still up
Speaker:around eight to 10 percent already.
Speaker:And that's the sort of in a typical year.
Speaker:That's what you would expect.
Speaker:So far, we're in August now, we've already achieved that.
Speaker:So it's completely to be expected.
Speaker:So so the way I look at these some people you see the headlines and you see kind
Speaker:of social media commentary and, hear about the frenzy about the sell offs
Speaker:and, but actually when I look at these sell offs, I see it as an opportunity.
Speaker:I'm rubbing my hands with glee because I've got some cash sitting around.
Speaker:And and most people do, and these are the types to be deploying that cash.
Speaker:So, so for me, it's very much a a green day.
Speaker:What did we say before?
Speaker:Cost averaging, dollar cost averaging, power cost averaging on steroids,
Speaker:on steroids, exactly.
Speaker:Yeah
Speaker:I've got a lot better at that over the last 18 months a year, just being
Speaker:patient with cash on the side waiting.
Speaker:And if you're engaged in the market and you see what's going on you
Speaker:are, ready to you're almost like a sniper or it's a bit like that.
Speaker:I agree.
Speaker:And, prob and the final thing to say on this, by the time this episode goes out.
Speaker:We'll be wondering what we were talking about because the likelihood
Speaker:is that it will be back to normality and the market will be recovering.
Speaker:We will have breezed past the all time high and wondering
Speaker:what the fuss was about.
Speaker:Yeah, as
Speaker:it always does, yeah.
Speaker:So, so we'll be, and if we didn't capitalize on this we,
Speaker:might be kicking ourselves.
Speaker:So yeah, always look at these things as an opportunity.
Speaker:So, so, Brad, you were part of you're a, graduate of the Investment Academy.
Speaker:Yes.
Speaker:We've known each other for, I don't know, eight, nine years.
Speaker:Pre
Speaker:investment Academy.
Speaker:Yeah.
Speaker:Pre investment Academy in this current format.
Speaker:And I think we met at a prop working event, didn't we?
Speaker:We did.
Speaker:I think it was in Harrow.
Speaker:I don't think it exists now.
Speaker:It was in Harrow.
Speaker:Yeah,
Speaker:I was trying to double down on property at the time, hence being there, so.
Speaker:Yeah, I remember we met there.
Speaker:Yeah.
Speaker:Yeah.
Speaker:So we, were talking, we hit it off straight away, didn't we?
Speaker:Because we'd started talking about this property, but actually I discovered
Speaker:you're, an expert on online marketing and business development, that sort of thing.
Speaker:And I was very early stages of, thinking about how I'm going to
Speaker:take my investment knowledge.
Speaker:And you gave me A whole kind of world of ideas that just opened up to me
Speaker:in that conversation and and you're probably the most influential in terms
Speaker:of me shaping what I'm doing now in terms of the investment academy, in
Speaker:terms of how I communicate to investors.
Speaker:And I remember you saying to me very clearly It's all about content marketing
Speaker:and delivering value to, the audience.
Speaker:And I just love that aspect.
Speaker:And before I met you, I probably wouldn't have even considered how to go about
Speaker:Well, I think I, used to, I always consider it as being packaging up
Speaker:your IP, your intellectual property.
Speaker:How do you package that up and deliver that to an audience where
Speaker:it's digestible and you can take people from a zero to hero in their
Speaker:own kind of life, if you like.
Speaker:And you when I, when we had that initial conversation and then we used to do coffee
Speaker:and all that kind of stuff, didn't we for, years after that, it was, there was
Speaker:a, there was an exchange of ideas because at the time I was a very green investor
Speaker:and from an influential perspective, you also sent me on this path, which
Speaker:I've never looked back from really, so.
Speaker:So now it's been a very fruitful relationship, hasn't it?
Speaker:Yeah, absolutely it has.
Speaker:Absolutely.
Speaker:And it's, there's such a great sort of exchange of ideas every time we meet.
Speaker:Yeah, so and you've really, as you mentioned, you've really taken investing
Speaker:to a new level and in many ways, you're a model student because you came into
Speaker:this process without kind of having any investment expertise, right?
Speaker:I think, is that fair to say you weren't doing much investing when we first met?
Speaker:I guess I was in a situation that many of your students are when
Speaker:they come in to invest like a pro.
Speaker:I was, yes, I was putting money into a pension.
Speaker:I had an interest in property.
Speaker:Okay.
Speaker:I can't really say that I was any more sophisticated than that, really.
Speaker:I didn't really know what else, which way to take it and stuff really.
Speaker:So yeah, I would say that's probably about right.
Speaker:And, so it goes to show that to succeed in investing, which I
Speaker:think, You certainly have, right?
Speaker:And we'll talk about what your investment journey looks like and what you're doing
Speaker:now and what kind of returns you're generating in both kind of set and forget
Speaker:portfolio and your options portfolio.
Speaker:But it goes to show that you don't need to have investment
Speaker:expertise, investment experience, any specific knowledge or know how.
Speaker:Anyone can pick up investing.
Speaker:It's super simple to do.
Speaker:You just need that initial confidence and some know how to run with.
Speaker:And you can have a very successful career in investing in passive investing.
Speaker:Right.
Speaker:Would you agree with that?
Speaker:Oh, a hundred percent.
Speaker:It depends on how far you want to take your Kind of investing
Speaker:by how far you want to take it.
Speaker:It was like, how active do you want to be?
Speaker:I'm somebody that, as you we laugh about it, but I'm somebody that will just
Speaker:borrow down rabbit holes until I get to the center of the earth kind of thing.
Speaker:I'll just keep burrowing and I enjoy that.
Speaker:I'm ridiculously curious and it's a blessing and a curse
Speaker:sometimes as well for me.
Speaker:It's a blessing cause I'm always learning new stuff.
Speaker:It's a curse because.
Speaker:I went when do you reign this in, terms of the amount of activity,
Speaker:but I, for me, it's a case of how do you get the confidence?
Speaker:Because if I look back to the level of confidence that I had in being what I
Speaker:consider to be an active investor, if you would have told me seven years,
Speaker:six, seven years ago, You'd be options trading, and doing pretty okay out of it
Speaker:and doing the kind of options trading with a significant sums that I'm trading in.
Speaker:I would never, ever have believed you.
Speaker:I just absolutely no way that I would have thought I'd been able to do that,
Speaker:but just inch by inch, getting engaged in it understanding risk reward,
Speaker:all of those elements that you teach in the academy, you move forward.
Speaker:And what you thought was quite a tricky kind of concept
Speaker:becomes part of your thinking.
Speaker:You don't even think about it so that's, I was saying this to
Speaker:somebody that I'm talking to at the moment who's getting into options.
Speaker:I said, and this isn't just options, it's investing generally, I think.
Speaker:It's like learning another language.
Speaker:And you can't learn it's like, the best way to learn a
Speaker:language is go to the country.
Speaker:And, learn it and go and speak it.
Speaker:And that's you've got to do, you've got to learn actively, I think and that
Speaker:means being engaged and, but at the same time, knowing what you want to achieve,
Speaker:where the boundary is for you in terms of how active or not you want to be.
Speaker:Yeah.
Speaker:Yeah.
Speaker:And you mentioned going down rabbit holes.
Speaker:You are a champion at going down rabbit holes.
Speaker:Honestly, I'll
Speaker:take that as a compliment
Speaker:because there are times when I've mentioned something to you and you
Speaker:come back to me a week later and you're teaching me stuff about this, stuff.
Speaker:Right.
Speaker:And I'm thinking, wow, this is great.
Speaker:Next time I want to learn something, I'm just going to mention it
Speaker:to you and you're going to come back and teach me all about it.
Speaker:And options is something you've really mastered.
Speaker:Honestly, there are times when I.
Speaker:Picking up the phone to you and asking you questions about stuff.
Speaker:Yeah, no, it's great because I get, it's a good exchange
Speaker:because you you need to speak.
Speaker:I always say there's nobody, I live in Finchley, North West London.
Speaker:There's no one local around here that wants to talk about options.
Speaker:So it's, and a lot of the time you, talk options.
Speaker:Through Facebook groups or a discord group that I'm on that type of stuff,
Speaker:but to actually pick up the phone and talk to somebody about a trade idea or
Speaker:how this is going or that's going it's within options and investing generally is
Speaker:such a valuable thing to have, I think.
Speaker:It
Speaker:is, And we have a good sort of community now of sort of academy graduates.
Speaker:You know in our Facebook group and in our private Facebook group, which
Speaker:obviously you're a part of and we have Mastermind investment mastermind.
Speaker:That's always very good.
Speaker:Yeah.
Speaker:Yeah, and that's a great forum for us to get together and talk about
Speaker:what we're up to and the kind of Challenges we're facing or issues.
Speaker:We're trying to solve and and I think that works really well.
Speaker:So What about general and your sort of general investment journey?
Speaker:What else are you up to apart from options?
Speaker:We'll come back to options later, but in, in terms of general investing.
Speaker:Yeah.
Speaker:For me, it's primarily, index like ETFs the kind of standard kind
Speaker:of stuff which forms what you in the academy would call the core.
Speaker:And then options is obviously a significant part now.
Speaker:And then you move into areas like, okay, well, you have your ISAs, you
Speaker:max, like you say in the academy, you want to max out your tax free
Speaker:wrappers which is obviously the ISA and then the your pension.
Speaker:But then I switched everything to a SAS pension.
Speaker:So I now, in the SAS pension, I semi replicate Everything I've just
Speaker:mentioned in terms of all those buckets, if you like, inside of the sass.
Speaker:So I'm actually trading options inside the sass now as well.
Speaker:Yeah.
Speaker:Yeah.
Speaker:Well, that's one of the benefits of Having a SAS because you can actually do options
Speaker:in your SAS, so you can not only earn the income through options, but earn it in a
Speaker:tax free wrapper which is really useful because you can't do options in an ISA.
Speaker:So, so for tax free wrappers, SAS works really well.
Speaker:There are some SAS providers they're not great.
Speaker:A lot of the SAS providers will allow you to do options.
Speaker:So that's great.
Speaker:It's all passive though, right?
Speaker:Everything you're doing is not, really hands on.
Speaker:You can do from your computer, and and it's pretty hands off, would you say?
Speaker:How passive is passive?
Speaker:I guess it's that kind of, it's that, conversation, right?
Speaker:It's like a lot of people think that having three rental
Speaker:properties is passive income.
Speaker:Well, if you speak to the landlords of, who's got three rental properties
Speaker:you probably tell, you it's not as passive as passive income.
Speaker:One is led to believe and I think any, anything that gives you the consistency
Speaker:or the returns above, maybe the standard s and p you are gonna need to be a little
Speaker:bit more active with is my take on it.
Speaker:I dunno if you agree with that?
Speaker:It depends on your objectives, right?
Speaker:So, so it depends on when you first go through the sort of in
Speaker:your investments approach, what are you going to be investing in?
Speaker:You always want to sit down and think about what your objectives
Speaker:are, what is your risk profile, and then fit everything around.
Speaker:Your objectives and risk profile.
Speaker:So, and that determines what you invest in, right?
Speaker:So if you are looking for kind of market beating returns the market
Speaker:delivers 8 to 12 percent per annum.
Speaker:It has done for decades, if not centuries.
Speaker:And that's very, passive.
Speaker:You can just buy ETFs and passive tracker funds to give you that.
Speaker:And if that works for you, which it does for most people, you know that
Speaker:to get those returns on a consistent basis Over a number of years that's
Speaker:going to compound up very nicely And then you can remain very passive.
Speaker:But if you are looking to attain Returns of say, 15, 20, 25%, then yeah, you
Speaker:need to step up your level of activity.
Speaker:What's interesting about that though is because at times when the S& P or the
Speaker:market is getting 8, 9, 10 percent a year and you've got a secured loans portfolio,
Speaker:which is getting 8, 9, 10 percent a year.
Speaker:You're thinking, what am I bothering with this secured loans thing for?
Speaker:I could just throw all this in the, into the market and buy trackers and I'm, done.
Speaker:And then the market, It dips, but you don't see the dip in the
Speaker:secured loans portfolio and that's when you go, Oh, okay, fine.
Speaker:Really the biggest difference for me is that with secured loans, you're
Speaker:picking individual loans, individual developers, individual projects, and
Speaker:you can potentially lose your entire capital in one of these, right?
Speaker:So that's that's the difference.
Speaker:No, nobody's ever lost money.
Speaker:Investing in stocks in a diversified way, right?
Speaker:So that's the key difference because stocks have never ever lost money,
Speaker:but there've been some high profile failures in, property projects.
Speaker:So you have to be, you have to be highly selective.
Speaker:You've got to make sure that you pick the right projects.
Speaker:And really the key, point here is you have to differentiate
Speaker:between volatility and risk.
Speaker:And with stocks, you get that.
Speaker:You get volatility.
Speaker:Of course, that goes with the territory.
Speaker:Of course, on a daily basis, they move up and down.
Speaker:You see that, and it's visible.
Speaker:Whereas with other asset classes, that may not be so visible, but you get risk.
Speaker:With stocks, you get the volatility.
Speaker:With other asset classes, you get risk.
Speaker:And if you pick the wrong secured loan, you've got risk of losing
Speaker:your capital in its entirety.
Speaker:But you don't see the volatility.
Speaker:I think that's the right
Speaker:and therein lies that how active do you want to be in secured loans?
Speaker:And I spent many I went down many kind of hours of rabbit holes learning
Speaker:about what makes the secure bit of the secured loan, I guess is
Speaker:ultimately what it comes down to.
Speaker:With development and I think what you're referring to is bridging loans
Speaker:versus development loans, right?
Speaker:Correct.
Speaker:Yes.
Speaker:And so with develop with bridging loans, they're pretty vanilla, right?
Speaker:Yeah.
Speaker:They're they're a loan to a, to an established property,
Speaker:which is maybe already cash flowing and it's pretty simple.
Speaker:Whereas with development loans, there are so many moving parts, right?
Speaker:So many different levels of risk.
Speaker:So, the, risk of.
Speaker:Construction, the risk of cost increases the risk of your
Speaker:end values going up and down.
Speaker:There is so, there are so many variables which you have to factor into the
Speaker:risk levels increase, for me, increase pretty significantly, without you
Speaker:getting actually, without you getting compensated for the additional returns.
Speaker:That you're taking on and most people don't know those return.
Speaker:Most people don't, aren't aware of those additional risks that they're taking on.
Speaker:Yes, a hundred percent.
Speaker:And I think if you wrap that risk up another level, I dabbled in equity
Speaker:investments in property development.
Speaker:And I'm pleased I just dipped my toe in the water there because that isn't
Speaker:that's risk a whole other level.
Speaker:And it's interesting talking to some people in, the property business, in the
Speaker:property game landlords and what have you.
Speaker:And people don't understand.
Speaker:The difference between debt and equity.
Speaker:And they're almost entirely, okay, property is the vehicle,
Speaker:but they almost feel like two different asset classes in many
Speaker:respects.
Speaker:Yeah.
Speaker:I agree.
Speaker:I agree.
Speaker:I see posts all the time on Facebook and social media about people
Speaker:advertising opportunities and they have the words expected return of 35
Speaker:percent or something, which sounds.
Speaker:Quite exciting.
Speaker:But then when you delve deeper this is over an expected two or three years and
Speaker:the security is a personal guarantee, which is pretty much meaningless.
Speaker:And when you do the annualized returns, you take off the tax and
Speaker:everything you think, why on earth would you take on all those risks
Speaker:for a return that is so uncertain?
Speaker:I can say I literally had a handful of dip my toe in the water equity investments.
Speaker:And none of them came off anywhere close to what the expected was, from a returns
Speaker:perspective and the time perspective.
Speaker:So, so that was when I understood that.
Speaker:I remember us talking about this a while ago and.
Speaker:You basically said, Oh, well that's debt returns with equity risk.
Speaker:Is that, the phrase?
Speaker:Yeah.
Speaker:That's put everything into context for me now and not going anywhere near that stuff
Speaker:again, so that and that's kind of part of going back to the original question,
Speaker:which was how active do you want to be?
Speaker:People talk about you want it to be passive.
Speaker:You want it to be, actually, if you're interested in this stuff, which I am,
Speaker:get active because you learn a lot.
Speaker:And that was my first almost kind of experience, if you like, of
Speaker:being quite active in investing.
Speaker:Yeah.
Speaker:So, so the the reward for being passive.
Speaker:active is that you get a higher return than what the market has delivered
Speaker:historically, and that's why you're doing it, because you, that's your reward.
Speaker:And if you want to stay passive, you can, but you're going to
Speaker:get the market returns, right?
Speaker:So it depends.
Speaker:Again, we come back to what are we looking for in the first place?
Speaker:What are our objectives?
Speaker:What are our return targets?
Speaker:And you can be, very passive getting getting market returns, eight to 12
Speaker:percent, which certainly beat inflation, which can be tax efficient will compound
Speaker:over time and will get to your objectives, whatever they, might be, but somebody
Speaker:else might have more punchy targets.
Speaker:So you've been investing in a pretty active way over the
Speaker:last seven, eight, nine years.
Speaker:So you must have learned a few lessons during this time as we did.
Speaker:I, think our audience would be really interested in learning about what
Speaker:lessons you picked up during that time.
Speaker:And how would you do things differently now, knowing what you know now?
Speaker:Would you have done anything differently seven, eight years
Speaker:ago when you started this process?
Speaker:I think I would have done options sooner.
Speaker:I definitely would have done that.
Speaker:Dabbled in that sooner, just to start that learning curve.
Speaker:I think ultimately, and everybody says this, I would have, wish I would have
Speaker:done this in my early 30s or my late 20s.
Speaker:I'm really on it with my kids now.
Speaker:I'm quite active in their junior ices, so, and I just think it's that the
Speaker:compounding element is absolutely massive.
Speaker:You don't have to take the risks if you've had the compounding over the years,
Speaker:so I think I would have got onto this a little bit sooner if you like.
Speaker:I think maybe in the early days I might have looked a little bit,
Speaker:been a little bit more diligent on a couple of the secured loans.
Speaker:One's gone bad and that was, and the reason why it's interesting
Speaker:because, one of the things that we haven't talked about is this
Speaker:whole kind of concept of cash drag.
Speaker:So when you're invested in the market and you've got all your funds invested,
Speaker:let's say, you don't need to worry about.
Speaker:This lump of cash sitting on the side waiting to get invested
Speaker:being eaten up by inflation.
Speaker:When you're doing secured loans and you want to stay diversified across
Speaker:a number of different loans, you are, going to have a natural period where
Speaker:there is cash sitting on the side.
Speaker:And that pulls the overall portfolio returns down and your, and it
Speaker:also slightly forces you, you feel pressured into maybe going into a
Speaker:loan you don't feel comfortable with because you want to deploy the cash.
Speaker:Just to deploy the cash.
Speaker:You become a motivated investor, don't you?
Speaker:Exactly.
Speaker:And actually looking back now, I wish I hadn't been such a
Speaker:motivated investor at times.
Speaker:So that might be a, That might be a regret, if you like.
Speaker:Yeah, And whereas with stocks, because they're liquid, and same with
Speaker:options, you can get invested pretty quickly in a diversified way, and
Speaker:it reduces the amount of time your cash is sitting around doing nothing.
Speaker:Right?
Speaker:So that's one of the positives.
Speaker:But I remember actually, one other thing I would add is, Going back to
Speaker:our kind of early days when we were first getting to know each other, I
Speaker:remember, correct me if I'm wrong, I remember you were being, you were very
Speaker:pro property, but not very pro stocks.
Speaker:When I checked with you what you were invested in, you didn't really
Speaker:have much exposure to stocks.
Speaker:Equities, options, financial markets, but that's really changed now.
Speaker:It's almost an about turn now, right?
Speaker:So I was putting money into the pension.
Speaker:We're not really putting money into the pension.
Speaker:You're putting money into the pension and that's being invested in the market.
Speaker:So you don't really, most people have no transparency over that at all.
Speaker:And it's almost quite difficult to get that transparency to, to
Speaker:see what is behind the pension kind of title, if you like.
Speaker:It wasn't that exciting, I think.
Speaker:That's probably what it was.
Speaker:And I found property exciting.
Speaker:And I could understand it maybe a little bit more.
Speaker:I think maybe that's what it was.
Speaker:So even though I was exposed, I wasn't engaged in my own investments,
Speaker:if that makes sense, yeah,
Speaker:I think it's really common.
Speaker:We understand property because we live in a property and
Speaker:understand how property works.
Speaker:I find when people join the investment academy they're almost coming along
Speaker:to have the whole world of stocks and financial markets demystified.
Speaker:And the reason they haven't invested in the first place is because they
Speaker:just didn't understand things.
Speaker:And that, and the default kind of, action is to do nothing, right?
Speaker:Maybe, you can relate to that because you didn't, maybe
Speaker:didn't quite have confidence.
Speaker:in stocks and the compounding power and the inflation beating returns
Speaker:that they've always delivered.
Speaker:Many people don't understand that because they just see the headlines and they
Speaker:see what the perception of stocks is.
Speaker:And it's not a roller coaster, right?
Speaker:It is a real kind of, it's a real investment that generates
Speaker:Inflation beating returns.
Speaker:Always has done, always will do.
Speaker:So that's kind of part of the challenge which some people have, I think.
Speaker:And maybe you went through a similar journey, it sounds like.
Speaker:Once you, actually demystify it, it's actually it's, a super
Speaker:interesting kind of space.
Speaker:And obviously being involved in options, you naturally then you have
Speaker:you, need to be looking at the market.
Speaker:So fast forward to today.
Speaker:How are you doing?
Speaker:Do you want to share some of the success stories?
Speaker:What kind of returns are you achieving in your equity portfolio
Speaker:and your options portfolio?
Speaker:I have two different attitudes to risk reward within my pension,
Speaker:the SAS, and the general account.
Speaker:So in, I'm generally targeting in auctions, I'm targeting
Speaker:a 30 percent return a year.
Speaker:That's what I'm targeting.
Speaker:And then in my sass, I'm targeting anything up to about 20 percent return,
Speaker:so it's less risky, but still, punchy comparatively to the market, I guess
Speaker:you would say standard market returns.
Speaker:The other thing that I've learned in options is you need to find a style of
Speaker:trading, I think, that you're comfortable with, that suits your personality, It
Speaker:suits the amount of time that you have, how active you want to be, how engaged in
Speaker:the market you want to be, how much more learning you want to do around options.
Speaker:There's so many different facets of it.
Speaker:And it's about really trying to understand what, where you sit in that.
Speaker:And that's taken me a good two and a half to three years to go,
Speaker:okay, I feel like I'm this type of a trader now, this suits my style.
Speaker:And if you would have told me, Two and a half, three years ago, when
Speaker:I sold my first put option that I was going to have a certain trading
Speaker:style that suited my personality.
Speaker:I wouldn't have had a clue what you were talking about.
Speaker:Not a clue.
Speaker:Now it makes total sense to me.
Speaker:I'm, a pretty lazy investor when it comes to regular sort of passive ETFs.
Speaker:And when it comes to options, so I do the vanilla kind of strategies, the wheel
Speaker:strategy, the cash secure approach, which kind of give you the steady Eddie sort
Speaker:of one to two to 3 percent per month.
Speaker:But yeah, you can tell from what Brad's doing, he's
Speaker:targeting a lot more than that.
Speaker:You made a great point about, investing according to your personal style
Speaker:and that's always the way, right?
Speaker:Whether it's your personal risk profile, your objectives or your style, how
Speaker:passable or active you want to be, right?
Speaker:And that's discovering your style.
Speaker:That's the key thing, I think.
Speaker:We talk about or you, teach is about diversification, right?
Speaker:So when you, go and start in options.
Speaker:You, want to be diversified.
Speaker:Well, you can diversify, generally, the thinking is, well, I'm going
Speaker:to diversify by underlying.
Speaker:Okay, so I'm going to sell a put on this stock.
Speaker:I'm going to sell a put on this index.
Speaker:I'm going to, or that index.
Speaker:And you want to try and find that balance between what if the market goes up?
Speaker:This trade's going to come good if the market goes down, this trade's
Speaker:going to come good, and that depends on the underlying, right?
Speaker:The big turning point for me was, how am I going to grow, how am I going to
Speaker:find a scalable option strategy that allows me to spend a limited amount
Speaker:of time per day, And if I want to take this account up to half a million, or a
Speaker:million even, how am I going to do that?
Speaker:And I'm not going to do that by selling one contract on this and one
Speaker:contract like I was doing before.
Speaker:I needed a help.
Speaker:So it's that kind of classic case of what gets, a business from, 0 to
Speaker:200 grand turnover is the totally different strategy from what gets
Speaker:it to, to 200 to 5 million turnover.
Speaker:So it was almost that was the thinking that I was going
Speaker:through, having to go through.
Speaker:And that's when I shifted my Kind of strategies, if you like.
Speaker:I know we're not going to go too deep into the technical side of it,
Speaker:but there's a number of different strategies, which weren't complicated.
Speaker:Just fundamentally everything is about starts with selling a put, right?
Speaker:That's really what it comes down to.
Speaker:So what you're talking about for the benefit of our audiences are strategies
Speaker:which enable you to apply leverage.
Speaker:Yeah.
Speaker:Right, to optimize the leverage because with options, you can do them with cash,
Speaker:but also once you're a little bit more advanced, you can apply leverage and what
Speaker:you're talking about is, you mentioned futures, so options on futures enable you
Speaker:to really make the most of the available leverage to increase your returns.
Speaker:And beyond that go talking about the diversification.
Speaker:And so what I wanted was a system.
Speaker:I wanted a systemized repeatable process.
Speaker:So again, go back to your kind of key concept of core and
Speaker:satellite the, core of what I do now, what I call campaign trades.
Speaker:These are trades, which, and they are all on essentially the S& P futures,
Speaker:which is known as forward slash ES.
Speaker:But my diversification, so I'll have eight or nine of these trades on at
Speaker:any one point, but the diversification is strike price and expiration date.
Speaker:So that's where the diversification comes from now.
Speaker:So we're still trading primarily 80%, 70 percent the same underlying,
Speaker:but the diversification comes from a different expiration period.
Speaker:a different strike price.
Speaker:When you place the trade is it happens every two weeks and it's
Speaker:all campaign style basically.
Speaker:I don't use screeners anymore.
Speaker:if I just did the straight up campaign trades in my general
Speaker:account, it would probably be about a 20 percent return roughly.
Speaker:And then I take a satellite where I'm doing some strangles, for example,
Speaker:which I know you, you touch on strangles in the, options course, but the,
Speaker:Those strangles boost the returns up another 10 percent to about that 30.
Speaker:So it's an 80 20, kind of 80, 80 core, 20 percent satellite,
Speaker:Right.
Speaker:Okay.
Speaker:So when, you talked about your 30 percent annualized returns, that's really made
Speaker:up of a core and satellite approach.
Speaker:So your core is about 80 percent of your strategy, correct?
Speaker:There's 20 percent returns of the 30.
Speaker:Satellites is 20 percent of the portfolio, which delivers an
Speaker:additional 10 percent return.
Speaker:So got it right.
Speaker:And it takes a little bit of management, but it's relatively passive.
Speaker:One other thing around that is I have a plan.
Speaker:I never had a plan before.
Speaker:It was quite sporadic and so now I have a trade plan.
Speaker:In my view, this is exactly what separates a successful long term
Speaker:sustainable investor compared to somebody who doesn't really understand
Speaker:how to set up their portfolio.
Speaker:And this is all about being a portfolio manager.
Speaker:A regular investor, a typical investor, would approach investing, in terms of
Speaker:individual stocks and individual trades.
Speaker:They see something being mentioned in a magazine or their friend down
Speaker:the pub mentions a stock or whatever.
Speaker:So they end up putting together randomly selected stocks.
Speaker:without any process, it becomes a mishmash.
Speaker:But when you set up your portfolio in a properly structured way, which
Speaker:is actually, it's not very difficult to do, properly diversified using
Speaker:the core and satellite approach.
Speaker:And this applies not just to options, but to equities, ETFs, stocks.
Speaker:When you put things together in a properly structured way, as you're doing that lays
Speaker:the foundations for long term sustainable returns, and you're not going to get
Speaker:blown over by things that are unexpected.
Speaker:You're going to have sustainable, long term, compounded returns.
Speaker:Well, I think if you put that plan together, yeah, I think if you put that
Speaker:you mitigate the risk of being blown over,
Speaker:it's, fascinating.
Speaker:You've been doing this for a while and you've taken it to another level.
Speaker:You're getting great returns.
Speaker:For somebody just starting off at the start of the process who hasn't really
Speaker:done options, hasn't really done ETFs and diversified, structured investing,
Speaker:what would be your advice to them?
Speaker:I think, investing the core principles of what you teach in terms of
Speaker:the core investment strategy, I don't think that's overwhelming.
Speaker:Give yourself time, don't put yourself under too much pressure to know
Speaker:everything in the next, six weeks, not even in the next six months.
Speaker:It's I always say it's this is a process, not an event, right?
Speaker:I'm going to spend an hour and then I'm going to know
Speaker:everything that I need to know.
Speaker:I know a lot of people don't think like that.
Speaker:I'm going to spend 10 hours on this and I should know everything
Speaker:that I need to know about this.
Speaker:I'm not necessarily sure that works.
Speaker:If you haven't done investing.
Speaker:Get an ISA open in AJ Bell, whatever it is, and start averaging in a bit.
Speaker:But no, where are you averaging in, the grand scheme of
Speaker:thing, of the market, right?
Speaker:Start to understand why am I buying at this price?
Speaker:I could set something up where I average in every single month.
Speaker:Great.
Speaker:But then if that's all you want to do, but go back and see where you bought.
Speaker:I think that's an interesting, where did I buy?
Speaker:Get a chart of the S& P 500 out and go and see, where you bought and where
Speaker:does that sit within the context of the market over the last 12 months
Speaker:that you've been averaging in.
Speaker:Yeah.
Speaker:That's one way to do it.
Speaker:And I, and, but if you look at the longer term, longer horizon, and if
Speaker:you're investing for the It actually doesn't really matter, right?
Speaker:If you pound cost average consistently drip feed money into the markets, it
Speaker:actually doesn't matter which price you bought in at and, all of that stuff.
Speaker:That's almost noise because over the long term, the consistency of returns in the
Speaker:markets is there for us to see zoom out.
Speaker:on any chart and you'll just see the markets have
Speaker:consistently delivered returns.
Speaker:So you can do it in two ways.
Speaker:One is keep an eye on where you're buying which is what you said, or almost close
Speaker:your eyes and just invest consistent.
Speaker:Consistency is the biggest thing in my view because if you, invest
Speaker:consistently, if you ignore the noise, if you do it all in a tax efficient
Speaker:way, and if you minimize your fees.
Speaker:All of those are all the ingredients you need to have long term consistent returns.
Speaker:That's all it really requires and be diversified, right?
Speaker:That's all you need.
Speaker:And honestly, people agonize about should I buy NVIDIA or should I buy Tesla and
Speaker:should I buy this crypto or should I buy gold or should I buy the S& P 500?
Speaker:All of that stuff makes zero difference, right?
Speaker:In the long term.
Speaker:It's irrelevant.
Speaker:Right.
Speaker:What's really going to move the needle for your longterm future financial
Speaker:security are those things I mentioned.
Speaker:Be diversified, be properly structured in your portfolio reduce fees, reduce
Speaker:taxes, and invest in a consistent way.
Speaker:That's really what's going to move the needle.
Speaker:Yeah.
Speaker:Yeah.
Speaker:I think, yeah, on that long term horizon, definitely.
Speaker:And I think if you do that, I think my point is there is if you do that and you
Speaker:find, Oh, hang on, this is interesting.
Speaker:I'm feeling quite engaged in the market.
Speaker:Then maybe that's the next step to go, okay, let me burrow down this rabbit
Speaker:hole and see if there's a how can I get more active and therefore edge my
Speaker:returns up maybe, and that's one of your
Speaker:satellites, right?
Speaker:Because your core does its stuff, it just does its stuff in the background.
Speaker:But if you find something you're really engaged with, put it into one of your
Speaker:satellites, which are a smaller, it's a smaller bucket of your overall portfolio.
Speaker:And that can be more engaging, more fun and more active.
Speaker:Yeah.
Speaker:It's almost like a, it's a, it's almost like a therapy bucket in a way.
Speaker:It just gets the It gets the risk element out of you.
Speaker:It's that okay, if I want to FOMO for whatever reason,
Speaker:then you go and do it there.
Speaker:If I'm going, you shouldn't be FOMO.
Speaker:That's one big lesson that I have learned in the last two years is just relax.
Speaker:Everything will come back it will be okay.
Speaker:Absolutely.
Speaker:And, the difference is the typical investor would probably put a
Speaker:large part of their portfolio into the satellites, as I call them.
Speaker:Whereas when you structure your portfolio properly, you should.
Speaker:Limit the amount you put into these kind of more active words.
Speaker:engaging, satellites, which you know to, manage the risk in your
Speaker:overall portfolio, treat these as, smaller buckets within your overall.
Speaker:And that's what I think will give you sustainable returns over the long term.
Speaker:Yeah.
Speaker:This has been a really
Speaker:fascinating conversation.
Speaker:Oh good.
Speaker:I never quite know, because most of the time when I have these conversations
Speaker:with people, they glaze over.
Speaker:Well, hopefully our audience won't glaze over.
Speaker:It's been some really interesting topics, some really important lessons.
Speaker:And, you, as I mentioned right at the start you're, a model
Speaker:student, because you've not only embraced everything, I teach, but
Speaker:you've taken it to another level.
Speaker:And, for you, this is a big part of your life now, the whole past, isn't it?
Speaker:Yeah.
Speaker:Yeah.
Speaker:Yeah.
Speaker:A hundred percent.
Speaker:The skills that I've learned in the last few years are just for life
Speaker:now, I will, I can see myself trading options well in just before my death
Speaker:I can, I don't see how that changes I find it engaging and interesting
Speaker:it's been a fascinating journey.
Speaker:And, just to finish on that note you talked about how it's, With you for life.
Speaker:And, earlier you talked about how you engage your kids into
Speaker:this whole kind of activity.
Speaker:Yeah.
Speaker:The whole process as well.
Speaker:So, and I try to do the same.
Speaker:It doesn't always work out, what, is it, what do you actually say to, what
Speaker:is the advice you give to your kids?
Speaker:And, what, yeah.
Speaker:It's interesting
Speaker:' cause you, because you sometimes come off as a bit of a secondhand car salesman.
Speaker:It's like you're trying to sell something that they don't necessarily wanna.
Speaker:I tried to do is try to get them vaguely engaged in what is going on.
Speaker:As in I'll show them inside their ISA account and I'll show them the percentages
Speaker:and this is the percentage return that you've made in the last 2 years.
Speaker:And here's the lump sum.
Speaker:Think about what you could buy with that lump sum, If they're ever
Speaker:allowed to touch it, but they're.
Speaker:It's like just try to bring it bring it into kind of real
Speaker:life to a certain extent.
Speaker:I've been buying a bit of Tesla for, I'm quite bullish on many things
Speaker:stock wise or anything like that, but I am quite bullish on Tesla.
Speaker:So I've been buying them a bit of Tesla and I've been showing them these are
Speaker:the things that you're buying into.
Speaker:These are the elements of Tesla's plan in the next five to ten years that you
Speaker:And if they're successful this X amount of money is going to grow
Speaker:so it's a little bit like that.
Speaker:And I bought them some Bitcoin as well.
Speaker:And this satellitey type stuff.
Speaker:So yeah, too much.
Speaker:Yeah.
Speaker:I think it's, great to get them engaged in something they can relate to when I I
Speaker:don't want to talk about being diversified and talking about ETFs, I say to them,
Speaker:look, when you buy a diversified tracker fund, you own a bit of Microsoft, you
Speaker:own a bit of Apple, and you own a bit of Tesla, as you mentioned, right?
Speaker:Yeah.
Speaker:And so that engaged them, because they themselves They own an Apple phone.
Speaker:They use Microsoft in their devices and it gets them invested.
Speaker:It becomes a real world thing, right?
Speaker:The investment is not just a few digits or making returns.
Speaker:It's about owning a piece of these real businesses which shape the world.
Speaker:Yeah, and
Speaker:trying to get them to join those dots.
Speaker:Yeah.
Speaker:It's quite challenging.
Speaker:Look, it took me years to get engaged.
Speaker:I want to teach them that I use this, the 80, 20, 20 percent needs
Speaker:to go off into savings and 80% you can do what you, want with it.
Speaker:And then there's lessons around that.
Speaker:And I remember one day, I think my son got like a, he got 20 pounds for a
Speaker:birthday present and he put it on my desk.
Speaker:It was a five pounds and a 10 pounds, and I think he put a a, post-it
Speaker:note on the five pounds and he went invest this, and then he put
Speaker:a post-it note on the 10 pounds.
Speaker:He said, transfer this to my Revolut, wow.
Speaker:I was like.
Speaker:Yes, indoctrination is doing well here.
Speaker:You're doing a good job, Brad.
Speaker:Yeah.
Speaker:But I think it's important.
Speaker:That's kind of part of that whole process, isn't it?
Speaker:Get it get into the mindset of this whole thing it's so valuable for them now
Speaker:when they're so young to be compounding,
Speaker:it really is.
Speaker:And it will make such a huge difference.
Speaker:So it's good to good to hear that.
Speaker:And you've obviously got smart kids who you've Train them well in the
Speaker:world of investing, which is going to, which is going to help their
Speaker:sort of future financial security.
Speaker:Amazing.
Speaker:Thanks for your time.
Speaker:And it's been a really interesting chat.
Speaker:If people want to get in touch, can they find you on social
Speaker:media or anything like that?
Speaker:I'm on Facebook.
Speaker:Yeah.
Speaker:I'm in the group in your master, in the invest like a pro group.
Speaker:Find me on Facebook.
Speaker:If you go to, bradlazarus.
Speaker:co.
Speaker:uk, my website is there.
Speaker:So there's bits, you can contact me via that as well.
Speaker:Perfect.
Speaker:Okay.
Speaker:And, as Brad mentioned he's, very much a part of the overall community.
Speaker:So if anyone ever has.
Speaker:Questions and they post it on our private Facebook group Brad's
Speaker:he's he comes up with one or two interesting nuggets occasionally.
Speaker:Yeah.
Speaker:Well, when I can, it's really helpful with all that stuff.
Speaker:So, so he's a great resource as part of the community.
Speaker:So thanks again, Brad.
Speaker:And I just wanted to say to everyone that, yeah, look, I hope
Speaker:you enjoyed this conversation.
Speaker:Hope you've got some interesting nuggets out of this.
Speaker:If you want to find out more.
Speaker:And, become a successful investor like Brad has become go and
Speaker:check out the Investment Academy.
Speaker:It's on investlikeapro.
Speaker:co.
Speaker:uk forward slash academy.
Speaker:And follow our podcast we have a YouTube channel as well.
Speaker:So like, subscribe and follow the YouTube videos as well.
Speaker:And I will See you next time.
Speaker:Thanks very much Brad.
Speaker:Pleasure.