Dentaltown July 2022 - 12

howard speaks
column
The Smartest Financial Plans
Will Pay Long-Term Dividends
No matter how old you are right now, you should
be thinking about retirement. The priorities and urgency
of your particular situation will change depending
on your age, of course, but when I say " thinking about
retirement, " I mean thinking about how you're going
to pay for it when that time rolls around, because the
sale of your practice can't be the only funding source.
If you bought a farm, the way to make money off it
is not to wait until you sell it and realize those profi ts.
If you said, " Well, my plan for achieving fi nancial success
with this property is relying on the idea that hopefully
someday I can sell it for more than I bought it
for, " people would think there's something wrong with
you! Instead, every year you'd be selling a crop of corn,
soybeans, cotton, whatever. Similarly, some people buy
houses or offi ce properties and rent them out to earn
some passive income.
Investing in legacies
When you think about where you should be putting
your money in the years between now and retirement,
focus on productive assets.
I've always liked dividend stocks, especially legacy
companies such as Coca-Cola, Apple, Kraft Heinz
and Costco. I look at my grandchildren-the youngest,
Audrey, was just born last month!-and think,
" Will this company be around when these kids are my
age? " Of course Coca-Cola's going to be around when
Audrey is in her 50s, and odds are it's going to pay
an average 5% annual dividend for all the years until
that happens. It's very set-it-andforget-it,
because you're not stuck
constantly checking the value of
your portfolio wondering if today is
the day your fl ash-in-the-pan fund
maxes out.
Plus, when you think about it,
you and your family are already supporting
those very companies: You
stock up at Costco or Sam's Club.
You own a iMac laptop. You've got
by Howard Farran, DDS, MBA, founder and CEO
12 JULY 2022 // dentaltown.com
ranch dressing and ketchup in your fridge right now.
I'm a little old-fashioned that way. Sometimes a
dentist will ask, " Howard, I bought this stock at $24
a share 16 months ago, and now it's trading at $63 a
share. Should I sell? " But when I ask what the company
does or produces, or where its headquarters are,
I get a blank stare in return. If you can't tell me basic
facts like these about a company, I don't think it's the
right fund for you to invest in, especially if you're so
unsure that you're asking me for advice about it.
I'm also not a big fan of index funds, for the same
reason but writ much larger. Not only are you not going
to know what each company in that index fund
does, but also you're going to tell me that in an index
of 30 or so funds, there's not a single turd to be found
among them?
I understand the principles behind such funds-
the mix is meant to balance the ups and downs incurred
by any single entity-but if you're at the stage
where you're asking me for investment advice, I think
it's better to stick with what you know, or the triedand-true.
I tend to look at what Berkshire Hathaway
CEO Warren Buffett decides to sink his money into,
because he's incredibly smart.
Reinvesting in yourself
Another huge opportunity to improve your fi nancial
security involves living well below your means and
investing the difference.
So many times, I hear dentists say something like,
" Man, we really slugged it out through a tough year.
I'm taking the family on a week-long Christmas trip to
Hawaii. " What if, instead of spending $10,000 to get
to Hawaii over Christmas, you bought $10,000 worth
of stock in Apple or Microsoft? Or what
if you invested it in your practice?
That money could help buy
the technology and training
you need to become
more profi cient and effi
cient at root canals,
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Dentaltown July 2022

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