How many orthodontists do you know who practice entirely for fun while they make way more money from their investments? You can be one of them.
I remember sitting in the audience at an ortho business meeting about 3 years ago when two doctors from Canada showed the crowd of orthodontists how they built a real estate empire. They did it one purchase at a time, over years, making smart moves until they basically owned a large part of a commercial district around a mall. Me and my partner actually laughed out loud at the absurdity (and simplicity) of it all after he showed his 10th (or maybe 20th) purchase. Sure, it takes a lot of knowledge and smart risk management, but no matter the approach, one sentence they emphasized stuck out in my mind:
“As orthodontists, you’ll make a great living and you can use this extra cash flow to invest in something that will make more money than your practice.”
Oversimplified, but incredibly accurate.
Obviously, you need to be diligent and grow your practice(s). This is a given if you want cash flow to invest in other places. So, as I always say, you need to have some sort of business plan and implement it effectively.
And when you want to buy that new car or home or boat, give some thought to what that money could be doing if you invested it in something else that could be making (instead of spending) cash. I’ll never forget the investment commercial I saw years ago where they explained that you could buy a $10,000 watch or you could invest it and have $150,000 years later.
So, will you buy commercial real estate, single family homes, collectibles, cryptocurrency, etc? What’s the right call?
Let me remind you of an amazing tenet explained in the 1927 classic book “The Richest Man In Babylon”. I won’t get into all of the details of the book, but it’s one of the simplest to read and most powerful life lesson books you’ll ever read. I give it out as a gift to all of my graduating seniors in the practice.
One chapter reminds you to only invest in things you understand or can fully understand through explanation from your partner. It’s known that dentists in particular are idiots when it comes to investing in businesses. They’re known as suckers. Know how many have lost there shirts on buying restaurants? A ton. It’s a joke in that industry (which by the way, you should always look to be the third owner of a restaurant, a lesson taught to me by a restauranteur who owns many, but I have no intention…). But you CAN make incredible money if you diligently invest in something you know, understand and appreciate.
For instance, my friend played a ton of “Magic, the Gathering” when he was younger. So, now that he is a dentist, he bought old, mint cards. One went from $8000 to $125,000 in about 3 years. And he has many cards like this. He knows that world inside and out, knows the auctions, knows the rules, knows what people want, knows how to evaluate the cards, etc, etc, etc.
I know more than a few orthodontists who make a WAY bigger income from their invested money than from their practices. They practice truly for fun, not to make money and the idea of whether or not they should sell or stay isn’t even an issue.
So, again I will ask you: where do you want to invest your extra money (assuming your traditional retirement accounts are being max funded) and how do you plan on becoming an expert in those areas?