the most important of this discussion is, the fact that demand for dental/medical
services, although should be unrelated to the performance of the larger economy
and its bewildering cycles of expansion and contraction that should bedevil the
rest of us, but the contrary has started happening to all of us. In other
words, being a dentist/doctor used to be low-beta and low-volatility giving us an
edge, if we use it, which they usually don’t. The ever changing economic slump
has raised its venomous fangs to our field as well and we surely are feeling
the pinch since the money in any business remains in cycle of circulation. We
normally used to have very steady, high-paid work irrespective of the economy
which meant that we could afford to take more risk in our investment portfolios.
Our late start also pushes up this need. Ideally, dentists/doctors in their 30’s
should allocate about 80% of their portfolio to stocks (high risk, but high returns).
In fact, we should be overweighting value and small company stocks that are
even higher-beta than the stock market as a whole. What is surprising to find
according to a survey is that 37% of dentists/doctors have less than 70%
allocated to equities at this age. If the dentist/doctor hits the jackpot at
along the way, he should immediately scale back to a safe portfolio that can
sustain him throughout his retirement. Otherwise, as that happy valley
draws near, we need to start shepherding our portfolio more conservatively
whether we have hit his magic number or not. With no labor income in
front of us, we become just like any other retiree at about a 40/60 stock/bond
portfolio by the time, we get within sight of the gates at Leisure World. If
our health permits and we can work part-time in retirement, we can invest more
aggressively to make our portfolio sound. Many of us are majorly focused on investments and have a
product-centric approach rather than managing our personal finances
holistically because that’s where an expert financial consultant can actually help. A
financial advisor can help us plan the financial needs that include goal
planning, net worth analysis, cash flow management, asset allocation strategies
to minimize taxation, insurance planning, risk management, succession planning
and managing the tax liabilities. We have to understand a few vital points
Unlike simple investment planning, financial planning approach is
a much broader concept that helps us to take care of us finances by the
The methodology and uniqueness of wasting a decade (although it
was for gaining education) shall always continue to haunt us inevitably, so without
much ado, we need to get in touch with an expert to plan and organize our
finances. We usually delay our cash inflows and also require intensive capital
investments in infrastructures and machineries which significantly affect our
financial life in the longer run.
Availability of time is gold and for us, it is a diamond and a
hard sought luxury. With our working schedules being round the clock, we often
run short of time and are not able to focus properly on the financial matters. Thus,
to keep our financial life healthy and running and hopping on the right track
at the right speed, a financial planner is the most necessary.
Own practice or a salaried job is one of the biggest dilemmas, a
dentist / doctor faces in the initial phase of his career. We dentists usually have
lack of employment opportunities (salaried job wise) and own practice is always
a better idea, but since it demands high investments, we tend to take wrong
decisions of over spending or under decorating. Setting up an own practice is
not so easy and an expert advice on managing the financial aspects will be
necessary. A financial planner helps us calculate how much investment is
required, space requirements, cost, place, services offered and other overhead
costs. They can also help identify the status of the cash flow, listing of the
revenue and expenses.
Partnering up a financial planner can help manage the wrong mixing
up of the personal and professional expenses and help further planning in the
right direction to make just the right kind of investment choices. .
Time problem not withstanding, an investment in a good financial
planner who can manage the finances and give us sound investment advice as per our
needs and desired goals can be a real match winner saga for us.
7. However, the bottom line
is that it might be fine to use a financial advisor, but making sure that the
advice is good and is a better bargain i.e. a good advice for a fair price. The
sooner you realize that you can competently do it yourself, the sooner you will
reach financial independence. In my experience, it is rare for an early retiree
(think late 40s or early 50s) to pay any significant sum for financial planning
or investment management. Rather than trying to pinch pennies on minor
expenses, just get the big expenses right and everything rest will fall into
place and take good care of itself.
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