The 5 Crucial Concepts For Doctors and Dentists Building Wealth That Lasts For Life

Knowing where to start when trying to manage our finances and build true lasting wealth can be really difficult so we have put together a list 5 essential steps especially for Doctors and Dentists to building wealth that lasts for life.

Understand where you are today

When Donald Trump advised people to try injecting bleach as a remedy for COVID-19 the world looked on in disbelief, struggling to work out if laughing or crying was the right response.

But it’s what can happen when we take action before we properly diagnose the cause of our pain and without assessing the evidence behind various solutions.

When you have multiple sources of income from Private and NHS work, tax to pay on account, perhaps practice income as well as savings, investments, pensions and property it can be very difficult to truly know your financial position but deciding on the right course of action without first understanding your present situation is going to lead to bad outcomes.

What is the true state of your financial position today? Are you where you want or need to be?

Measure What Matters

There are so many ways we can choose to measure our success by that often we end up just not measuring them effectively. So, pick a few key numbers to focus on, learn how they interplay with each other and then look to improve these. How else will you be able to answer some of these key questions:

Is your net worth heading in the right direction fast enough?

Are you saving enough of your income?

Is your Net Worth going to be enough to sustain your lifestyle and if so how comfortably?

Are you taking on too much debt?

Get your head around investing

At some point, if you are going to succeed financially in life, you will need to invest money in companies. By owning shares, by lending money to them through bonds or by renting property to them or their employees.

Cash just won’t cut it.

The earlier you get on board with investing and learning how much risk you are willing to take to reach your targets the sooner you will reach your destination. This will help you build a portfolio that is designed to build wealth that lasts a lifetime, and perhaps even build a legacy

Be Efficient, Effective and Essentialist

Richard Branson once joked that the fastest way of becoming a millionaire was to start as a billionaire and buy an airline.

But behind the joke is a serious truth; the first rule of making wealth last a lifetime “do not lose money in the first place”. So, when we invest money, we need to plug all the little holes that could lose you money.

Be tax-efficient, use your ISA and Pension allowances each year and do not give money needlessly to the taxman.

Be effective, let the evidence guide every investment decision you make. Lean on advisors to give good counsel and make every penny count.

Be essentialist, Greg McKeown in his book Essentialist says “Essentialists see trade-offs as an inherent part of life, not as an inherently negative part of life. Instead of asking, “What do I have to give up?” they ask, “What do I want to go big on?”

If you want to be successful in life you must go big on one thing. As a Medical Professional you have spent years mastering your craft, so being masterful in your craft will reward you well. Don’t waste your precious downtime doing things that others have spent years mastering. Use your downtime to unwind, relax and do what you enjoy most with those you love most.

It’s the reason I have a cleaner, a PA, a bookkeeper, a swim coach and don’t try to fix my car myself. My time is essentially better spent elsewhere.

Understand the value of advice

Hiring a Financial Planner to help you make good investment decisions is important. The financial world is complex, ever-changing and full of potholes waiting to take you out.

But one of our key roles as Financial Planners is helping educate you around finance and investing. We call this behavioural coaching but it is about taking behavioural financial economics and making it relatable and understandable to our clients.

Research has shown behavioural coaching to be worth an additional 1.5% per annum in returns to investors1.

I used to own a Jaguar. To begin with I loved it but over time one tiny, but deeply infuriating, little detail killed it.

The clock.

The clock would run about 1 minute slow per week.

 In the first week after correcting the time it was fine yet slowly but surely the clock would drag to the point where it was 5 minutes behind. I’d put a destination into the Sat Nav and it would give me an arrival time, I would hit no traffic on my way, perhaps stop for a coffee and arrive ‘on time’ but I was late.

This drag is what can happen to individuals without a trusted adviser. Slowly but surely, they are dragged behind. They eventually arrive and believe they have arrived on time but could have arrived sooner if the had set off sooner or not taken the casual coffee break along the way,

Vanguard estimates the total added value of an adviser in the UK to be 3% per annum over time.

1.“Putting a value on your value: Quantifying Vanguard Advisor’s Alpha” September 2016