ACG's Best Investment Strategies for Dentists

By Jimmy Pickert, CFA, CRPS®

Jimmy Pickert, CFA, CRPS®

Jimmy Pickert, CFA, CRPS® Portfolio Manager

As a dentist, you’ve worked hard to get ahead in your career by mastering your education and profession. But your success shouldn’t stop short of your financial plans. When building a prosperous life, you must also employ the best investment strategies for dentists. As you further your career, you owe it to yourself to create a plan to accumulate and preserve your wealth, and enjoy the fruits of your hard work.

To help jumpstart your financial brainstorming, here are some key investment tips to guide the process:

1. Create a Financial Plan

An essential piece of advice we can offer is to prioritize financial planning. Without goals-based strategies guiding your investment decisions, you’ll make choices in the dark. You will also have no way to measure if you’re on track to meet your goals.

Think about your journey through dentistry: More than likely, you created and acted on a plan to attend dental school. If any life changes emerged, you probably adjusted your plan to keep your career goals on track. The same thinking applies to your investments. No matter what your stage of career or earning power, you should make creating a plan your #1 priority.

High salary compensation doesn’t mean financial security for dentists; you must build a plan to make this security a reality.

2. Control for Emotional Reactions

Managing emotional reactions when investing is nearly as essential as the plan that’s guiding you. When you let emotions guide how to invest, you can often make knee-jerk reactions. Our emotional states can overpower our rational thinking. You then risk focusing on short-term market movement, like a cycle peak, rather than ensuring the investment aligns with your long-term goals.

As such, investors who let emotions drive their decisions often make poor moves when confronted with market volatility. Chasing returns or attempting to avoid losses based on your emotions can leave you with an eroding portfolio. So, be sure to keep your emotions in check. Base your investment choices on proven research and sound logic.

3. Remain Disciplined During Market Volatility

While you need to control your emotions, you can’t avoid the reality that volatility exists — the markets inevitably move up and down. If you’re investing with a potential for returns, you will experience risk. And while you can’t control or predict the markets, you can take steps to prepare for the uncertainty.

First, remember to keep your eye on your investment goals, and don’t let talking heads and headlines get the best of you. As you invest and prepare for retirement, you’ll run across a myriad of news hype and financial pundits shouting emotion-provoking tactics. Instead of gripping the fear that comes from an alarming headline, remained focused on the goals you’re pursuing.

Second, remember that the markets are unpredictable — the economy can quickly change within a 6-month horizon. Even the most educated and experienced investment researchers must leave room for unpredictability, because no one can precisely know what markets will consistently do. When one week brings growth, another could completely flop and deliver losses. If you plan to invest, you must be okay with accepting a level of the unknown during the process.

4. Diversify Your Portfolio

Use variation when building your portfolio. If you put all your money in only one investment, you risk losing it all. By diversifying your investments, you increase your chances of having investments that perform well when others don’t. Nearly every investment has flatlined at some point, so past performance doesn’t guarantee its future returns. Typically, investments ebb and flow with markets. Diversifying your portfolio — and matching this with strategic asset allocation that mixes different asset classes and types together — helps you ride these waves with less risk. By doing so, you also help overcome chasing returns based on emotion.

Ultimately, whether trying to increase retirement savings or grow an inheritance, the best investment decisions for dentists require forethought and care. Working with a financial advisor can help you ensure that the strategies you create build wealth and the future you desire. At ACG, we can help you put clarity around your wealth. We’ll work along with you to strategically address challenging market risks, temptations, and triumphs, so you have the foundation you need to pursue long-term investment success.

Need help with investment decisions? Reach out to one of our financial advisors today.

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— Posted on August 09, 2017 by Jimmy Pickert, CFA, CRPS®

— Topics: Investments