One of the most important things we do for our clients is talk them out of bad decisions. In life, the decisions you don’t make are as important as the decisions you do make. Like the decision not to do meth. Likewise, the investments you don’t make are as important as the investments you do make.
We were recently introduced to a 65-year-old dentist who doesn’t have anything saved for retirement. Admittedly, he spent his life keeping up with the Jones’. Additionally, he blew his entire life savings (several million dollars, he told us) on a bad investment with a friend. Very sad.
My father-in-law, a physician, told me that when he graduated from residency, the director of his program told him to “take the first $500,000 you save and burn it!” When he was asked why, he simply said, “well, that’s what you’re going to do anyways, so just get it over with.”
Doctors are big earners with targets on their wallets. For the person who needs cash for his next gig, doctors are the perfect prey. On the flipside, I think the intelligence of most doctors can hurt them when it comes to investing – they are smart people, but unfortunately many don’t know or admit the limits of their knowledge and experience in this area. And besides, who wants to admit they lack knowledge in matters of finance and economics; or worse, that they can’t be trusted to spot a good investment opportunity? That would be like my third grader admitting to her friends that “she’s just not a very strong reader.”
So inevitably we get a lot of phone calls from our clients asking some variation of the same question: “There is this really good investment opportunity that we’re really excited about. Do you think we should do it?” I should say that I admire our clients who call and ask. Wisdom, as it turns out, has more to do with our ability to seek and receive instruction than knowing all the answers.
If you’re already bored reading this blog post, I’ll summarize my answer to the question of whether or not to invest: No. No, you should not invest in this or that. Yes, let this one go by…and the next…and the one after that. Let me tell you why…