Wealth is built through disciplined work, intelligent investing, and consistent behavior over a long time. The principles below are designed to build wealth. More importantly, following these principles will help you live a good life, avoiding the common pitfalls where wealth destroys the best things in life—family, health, peace of mind—which are free. This is our mission—to help you live your best life. Building wealth is just one part of a bigger picture.
Invest in yourself and your ability to make an income.
Your practice is the tool that maximizes your productive potential and is the engine that funds everything else. Become a master of your craft—first clinically, then operationally and as a leader of people. Own your practice until the day you’re ready to retire, then pass the torch by selling it to another doctor.
Focus 100% of your income-producing time and energy on one practice. Get to a sustainable pace and keep that pace. This approach will keep your practice from consuming you and prevent your investments from adding clutter and complexity to your life. Any deviation or distraction from this will cost you—financially or otherwise.
Hire a trusted advisor.
If you become an elite doctor, the stakes will be high. Elite performers hire coaches. Over the course of life, an intelligent, principled, trusted advisor, hired to manage your investments and to provide comprehensive financial planning will be worth far more than the fee.
Invest in publicly traded companies through low-cost mutual funds (or ETFs).
Companies—people organized to create value at a profit—are the source of all economic growth. Public companies provide a free market, low trading costs, and regulations designed to protect investors. All investing has risk; low-cost equity mutual funds (and ETFs) will provide the passive income you need to carry you through your non-working years. They provide instant, almost free diversification and will keep you in the fairway.
Likewise, we reject all “investments” that are speculative in nature because they provide zero expected return as there is no underlying productive asset (gold, crypto, futures, and lottery tickets, to name a few). You should do the same; don’t follow lemmings into these hyped, fad “investments,” no matter how many celebrity endorsements they bring.
Behavioral principles to maximize your wealth.
Have faith in the future.
Every investment rests on the belief that a brighter future awaits.
Be patient.
Market returns do not come in nicely packaged annual averages; real world, year-by-year returns come in volatile, unpredictable, and sometimes painfully boring ways.
Stick to the plan.
The wealthiest doctors don’t get rich from a lucky break or hot tip—they stick with a simple, boring, repeatable investment plan for decades.
Core principles of scientific investment management.
Markets work and prices are efficient.
The price of a stock right now has already incorporated all known information about the world and that company.
Time in the market beats timing the market.
Invest as early as possible and stay invested as long as possible. Like the tide, stay invested and over time the market will carry you to your goals.
Diversify.
Often called “the only free lunch” of investing. You trade away the chance for a home run in exchange for a lifetime of singles and doubles, and no strikeouts.
Asset Allocation.
Allows you to maximize expected return while simultaneously minimizing risk.
Rebalance regularly.
This is the only systematic way to buy low and sell high.
Keep costs low.
Lower costs mean more money in your pocket.
Maximize tax efficiency.
By optimizing retirement plans, fund selection, and asset location.
Focus on long-term expected return; ignore short-term historical returns.
Almost every popular investing “strategy” is simply chasing the hottest stock.
Action steps to take now:
1. Focus on and measure success by dollars invested
This is hard to do but is your most controllable driver of long-term wealth.
2. Embrace market declines
A market decline is a sale. When prices fall, risk also falls and expected return rises—don’t get scared like everyone else, take advantage of these opportunities!