The Two Best Investments for Dentists

Nate Williams Investments 2 Comments

This post is the third in a series of five posts that lay out the PFG Investment Philosophy. This describes the two best investments for dentists. Through these posts, we try and lay the foundation of knowledge around investments that clients should know, and answer the most commonly asked questions.

What are the Best Investments for Dentists?

There are two.

First, Invest in Yourself and Your Business

We believe in this key principle of investing in yourself and your ability to earn a good living. We advise young dental school students to finish school; we advise recent grads to get a good job where they can further their skills and to look for a practice to buy or start; and we advise doctors who are in practice to reinvest back in their businesses in the form of advertising, new equipment and continuing education.

But you personally can only do so much. And very quickly (hopefully sooner than later), your ability to pay for self-improvement far exceeds your ability to implement the upgrades. At this point you need to start investing outside of yourself.

Second, Invest in Others’ Businesses – Through Stocks and Bonds

When you’re ready to look outside yourself and your business, we recommend you invest in the best businesses in the world. To do that there are only two ways possible: 1) buy ownership in the companies (stocks) or 2) loan money to them (bonds). And more specifically, to allow us a high level of diversification at a very low cost, we own and loan to these companies through mutual funds.

What’s at the heart of these investments? People and their ability to work and innovate. Regardless of which century we’re in, the country, political party in office, or whether we’re in a time of war or peace, productivity is the driver of all economic progress – human labor and innovation. Productive people organize together to form companies in order to convert labor and innovation into products and services that can be sold for a profit. We invest in those companies.

Investments We Advise Against

Because they are unproductive assets, we never invest in precious metals, commodities or raw land. If you buy a bar of gold, one hundred years from now it will be the same bar of gold having produced nothing in the meantime. The same is true for a bag of wheat or a piece of dirt. But a company will create much profit during that time. It is a productive asset.

We also advise against investing in activities that will take your time, or give you a second career. If you want a second career for the career’s sake, that’s a different story. But if you’re looking for an investment return only, we caution you to stay away from directly buying real estate, franchises, farming or other ventures that will take your time. Dentistry is a very profitable profession; the probability that your time will be more profitable somewhere else is very, very small.

In conclusion we strongly advise, once you’re ready to invest outside of yourself, that you invest in low cost, low turnover, highly diversified stock and bond mutual funds. Our favorites are these (here).

Nate WilliamsThe Two Best Investments for Dentists

Comments 2

  1. Concerned

    “If you buy a bar of gold, one hundred years from now it will be the same bar of gold having produced nothing in the meantime. The same is true for a bag of wheat or a piece of dirt”

    Talk about a gross oversimplification. Plenty of investments don’t “produce” anything. Is it intentional that you just pretend appreciation isn’t a thing. Land & Real Estate for example, while certainly has it’s own set of risks associated, has outperformed the S&P500 consistently for decades.

    1. Post
      Nate Williams

      Dear Mr. “Concerned,”
      Thanks for your comment on the post. I’m happy to have you disagree with my position. One key component we’re looking for in what we categorize as an “investment” is the productive nature of the investment itself. I don’t disagree that values of things change, of course they do; but I’m not interested in buying static things, calling them investments, and hoping they go up. I’d rather invest in a business that has a plan to make a profit and to provide a return on my investment by productively adding value to society. As for the comparison to land/real estate to the S&P, perhaps you could be more specific as to which land and which real estate: are you referring to land/real estate in Silicon Valley? Or Death Valley? Putting all “Land and Real Estate” into one category doesn’t provide any practical help, unless you’re suggesting we invest in a REIT index fund, which we do.
      Either way, I wish you the best of luck in your land-lording ventures.

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