10 Mistakes That Could Cost You $10K or More – Part 1 – Episode #525

It takes hard work to run a profitable practive. Hard work that can be ruined by the financial perils that await every dentist. That’s why it helps to know the common money mistakes dentists make—mistakes that could already be costing you. On Part 1 of this episode of the Dentist Money Show, Matt and Victoria talk about five ways dentists typically lose money—and how to avoid them.

 

 

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Podcast Transcript

Matt Mulcock:
So we did a webinar last night. That’s my line usually. Yeah, we did. I liked it. I liked it. It was a good one. We had a lively crew. It was our best attend. We just confirmed this. We had, it was the best live attendance we’ve had all year or the highest and a real highest and the best, the best crew. You don’t have noticed about our webinars. I noticed a lot of the same names. We have like our webinar crew.

Victoria Ferguson:
We have our, what are you, our regulars, our webinar regulars. We should give a little stars or something to them.

Matt Mulcock:
Our regulars, I know, and I love it. Like I, I, I know I start to see the same names after a few months and I’m like, Hey, like I know you. I wouldn’t be able to pick you out of. Yeah, exactly. I know your name. I don’t know what you look like, but you seem nice. So, you know who you are. You know who you are posting all the nice comments. So anyway, we had a webinar last night and it was titled, 10 mistakes.

Victoria Ferguson:
I know you’re my virtual neighbor.

Matt Mulcock:
That could cost you $10 ,000 or more. And I think that got the people going. That got the people there. They were, they were excited to know what those mistakes were. And we got a lot of good feedback too. Like I’m going to to horn a little bit here. am I bragging too much on this? Maybe I am.

Victoria Ferguson:
I love how you said, I’m about to do something and then you’re like, maybe I not. I’m gonna tune our own horn. Horn, is that okay with you?

Matt Mulcock:
It’s like that tweet we saw, we always joke around about it’s like, I’m going to be more assertive this year if that’s okay with you.  Anyway, so we did get a lot of great feedback at the end. We had so many comments in the chat box at the end that were like, this is amazing. So much content. So for so much great content. So we thought, well, let’s do a podcast. Let’s talk about it. So yes, but there are, there are 10. So we’re going to actually do this in a two -part series because I think 10 and keeping this timely with 10 is going to be too much.

Victoria Ferguson:
Yeah, it’s a little spicy to go through.

Matt Mulcock:
So we’re going to do two parts. We’re going to do the first five and then we’re going to do a second podcast and we’ll hit the last five. So the number one, and these are in no particular order, right? We’re not saying like one is more important than the other. Maybe, we’ll kind of highlight the ones we think are the bigger ones. But the first one we talked about last night and we’ll talk about here is mindless spending. Victoria, what say ye?

Victoria Ferguson:
I say that there is an emphasis on mindless on here. Obviously we all have to spend and you should spend your hard earned dollars, but the key word is mindless. These are the things that I’m just gonna define the word mindless, I guess. These are the things you’re really not thinking about that maybe just kind of slip under the radar that maybe have just become habit, but maybe you don’t even really care about necessarily. It’s not adding value to your life in the present day. It’s not adding value to yourself in the future. It just might be something that you picked up along the way that you genuinely probably don’t care about nearly as much. And I think this is one of the biggest silent killers is mindless spending because it absolutely adds up a lot over time. And then if you do it long enough, it becomes part of like your core lifestyle and potentially something that you feel that you can’t give up. And not having awareness around this and watching that build over time absolutely eats away at things like retirement and other goals that you might have in your life. So,

Again, one of the bigger silent killers is mindless spending and so having awareness around this is huge.

Matt Mulcock:
I think that’s spot on. The mindless is the key word here. There’s, there’s such a difference right between lifestyle creep, which is kind of the definition of mindless spending. So there’s a difference between lifestyle creep and intentional upgrades to your lifestyle, right? Based on your values. Like I think a lot of times dentists will, we’ll talk to dentists and they’ll say, man, I’m spending too much. Or I shouldn’t have bought that X, Y, or Z thing. It’s like, well, maybe, but maybe not. Like it’s okay to spend money. That’s what this is all about is like enjoying your hard work to your point. So not all spending increases. We wouldn’t say all spending increases are bad. I think the key there to your point is the word mindless. It’s it’s creating awareness around your spending, making sure that you’re spending.

Again, in alignment with your values and you’re keeping it under control. Right. And all that comes down to is the percentage of your income that’s going to spending, right? That, that needs to be, that needs to be a focus for you and making sure that number is not getting out of control. yeah, go ahead.

Victoria Ferguson:
Yeah, and I think one of the best things you can do no matter what stage, and this applies to every person at every stage in your life, is ensuring that there is always a buffer for you to be able to save. In your total income, there is a bucket for your future self or other goals that you have going on, and that spending includes things like your debt payments and things you’ve committed to on top of just your regular living expenses as long as there’s a gap there that you can add to your future self, then you’re good. You always want to make sure you have that.

Matt Mulcock:
Yeah. And we talked about this last night, right? That kind of the triple edged sword of high spending, which is it’s the triple edged sword. So it’s a different type of weapon. It’s a different type of weapon. I don’t know what it is, but it truly is like multiple edges to that sword. And again, it’s just understanding these trade -offs that could, because if you really boil down financial planning, if you boil down to one thing, it’s spending. If that’s the one metric we would look at and say,

Victoria Ferguson:
Triple edge sword. It’s just a triangular. Yeah.

Matt Mulcock:
Your lifestyle is going to dictate a lot of this, pretty much everything. And so the problem, if you’re not aware of your spending is you’ve just highlighted it perfectly is, your spending is higher, which means you have to save more for retirement to sustain that lifestyle. But the, again, the triple edge there, the third edge is the fact that when you spend more, then you have a harder time saving to sustain that lifestyle. So it hits you from all angles, the higher your spending is. And so again, that’s okay. You just have to understand that, create some awareness around it. And one other thing we mentioned last night, this direct relationship between the more I spend, the less I can save. And more people, more times than not, people have a mindlessness to their spending. I’d say in general, I think mindlessness to their spending and maybe more of an awareness around their savings, meaning they’re thinking, I should be saving or I’m not saving enough. They’re like, there’s that awareness there.

We think you should actually flip this. Make, make savings mindless, meaning create a system for it, set it up, make it mindless. Your savings should be mindless. Your spending should be all around awareness. I get, you should flip that equation.

Victoria Ferguson:
I love this and I’m kind of relating this back to a podcast that we released this past a couple of days ago. And I don’t know when this one will be released, but the paradox of choice book review that we did and it, I’m kind of seeing some parallels here. Like take the decision -making out of saving, not spending, you know, like just make savings the automatic thing, not your, not your spending and the subscriptions and whatnot that, that build up over time because we all have to make so many decisions every single day. And if you haven’t listened to that podcast, you should listen to it and this will make a lot. Go check it out. I mean it, like this will make a lot more sense if you’ve listened to that podcast, but we have to make so many decisions, especially dentists. Like the average person makes 35 ,000 decisions a day, average person. And then the layer of business owner on top of that, I can’t imagine how many more decisions that you have to make a day. And so let’s just reduce the amount of decisions you have to make around savings, right? Like what can you comfortably save even if you’re starting off with $100, $500, a thousand bucks, whatever, like make that the automatic thing, not your subscriptions and swiping at the card or tapping, I guess now.

Matt Mulcock:
Great point. I love it. Okay. We hit that one thoroughly. I think let’s just jump to the next one. Number two, the number two mistake we see dentists make that can lead to at least $10 ,000, or lead to losing $10 ,000. I always have, I’m doing, okay. Never costing you. There it is. There’s the word. It’s it’s Friday. It’s Friday. okay. So the second mistake we see a lot is lack of liquidity.

Victoria Ferguson:
You want to, you hit that. I hit the first one. Yeah, you start it.

Matt Mulcock:
You want me to hit this? Okay. Okay. Yeah. This is, again, just going back to a lot of the stuff we talked about last night. most dentists, I think, believe that their stress levels are directly correlated to debt loads, to the, to the amount of debt that they have. And that makes sense to me, right? Dentists come out of school they tend to have a lot of debt. The average debt load just from, just from, just from their school is over $300 ,000 now. And so that, then you get into, you buy a practice, you want to buy a house, you want to buy a building. Like it is not uncommon, Victoria, right? For us to see seven figure, multi seven figures in debt early on in a dentist’s career. So I totally get the thinking, but we have seen this and we have no studies behind this study, buddy. This is purely anecdotal and experience working with so many dentists. That debt is actually not as correlated to stress levels as much as you’d think. What is is liquidity. This to us is actually what we call kind of your stress score. The higher amount of liquidity you have, regardless of your debt, the lower your stress. So that’s the first thing I’d say about lack of liquidity. and I guess the, the other part of this is we’ve, I call this change your mind insurance. The less liquidity you have, the higher likelihood you are going to be forced to make decisions out of desperation, which is where a lot of mistakes can be made.

Victoria Ferguson:
It’s much higher chance of making a mistake there.

Matt Mulcock:
Much higher. So the way to increase optionality, the way to maximize the ability for you to make different choices, to pivot, to not be so precise with what you’re trying to accomplish, liquidity is the key there. That should be your sole focus for a good portion of your early career.

Victoria Ferguson:
Well, and can we take just one little step back just in case someone might not know what, what we mean? What?

Matt Mulcock:
There it is. Yes. I love it. No, I love this.

Victoria Ferguson:
So for the people and to be inclusive of the space, can you define what liquidity is or what we mean by that?

Matt Mulcock:
So great. No, honestly, great point. And I love that. I truly do love that you do this because I think we do, we do jump the gun sometimes and take things for granted. So yeah, when we talk about liquidity, we’re basically just talking about like anything within that category would be anything that is easily converted to cash or that is cash. So basically anything outside of, you know, retirement accounts, anything outside of something really what we’d consider illiquid, like a, like a piece of real estate, your business. So think of it like this cash, right? Would be liquid and then a brokerage account. That’s pretty much what it is because even if your brokerage account is invested in, let’s say mutual funds, ETF stocks, bonds, those things are highly liquid, meaning they’re easily converted to cash. And so we’d consider mainly the two categories or the two things that fit within that category would be cash and a brokerage account. Is there anything else that I’m like, cash value in a whole life policy also, you could consider like a HELOC, anything that’s easily accessible, although that would turn into debt. So that might, that kind of is on the fringes of that category. The main thing would be cash and brokerage account.

Victoria Ferguson:
Yeah, I’d agree with that. And I think we’re about to, we’ll probably talk more about like within that liquidity umbrella, there’s like the emergency fund piece of it. And you don’t necessarily count a brokerage account for other reasons. But yeah, I’d say yes, this is something that’s easily accessible, but even with like investments that could take, what is it, like five days, trading days or whatever to actually receive it. So cash is your most liquid because you can access that. Why am I having such a hard time speaking today? Good Lord. That’s something you can access very, very quickly, but even your investments, even if it’s a brokerage account, it could take a week to actually hit your checking account. So they are technically liquid, but they’re just a little bit less liquid. Think of them as like slime, you know, if we’re talking consistency here. Like if your cash account is like water, your brokerage account’s kind of like Elmer’s glue. How about that? Is that a good visual? Do we not like that?

Matt Mulcock:
I did. Wow. I did not expect you. I guess I, I, not that I don’t like it. I just, it was, I did not expect that analogy, but you, I think you did it. You think you landed that one? Sure. Sure. Yeah. Let’s go with it. It’s perfect.

Victoria Ferguson:
Did I do it? Did we like it? I’ll find out pretty quickly if people didn’t like it. We’ll get an email and say like, could you not talk about Elmer’s glue on the box?

Matt Mulcock:
So there’s another part of this. There’s another part of this. I love that we just define that, but there’s another part of this when it comes to investing as well, that a lot of times people don’t necessarily think about when it comes to liquidity and again, why this can cause you to lose easily $10 ,000 or more over your career. I think lack of liquidity could lead to far more than $10 ,000 in loss in losses. another aspect of this is again, the relationship between liquidity and investing, meaning let’s say you start putting money into a brokerage account before you’ve got a proper emergency fund, both in the business and at home on the personal side, and you start investing. And then we hit some rough times or you hit some rough times. So the market either hit some rough times and you freak out, or you have something happen in your life where you need money quickly. The number one rule of compounding is never interrupted unnecessarily Charlie Munger, right? So your liquidity, by focusing on that liquidity first and not getting too rushed to go invest, you’re actually setting yourself up for success and allowing your portfolio to stay invested longer. So there’s kind of the second order level of kind of thinking here with liquidity as well when it comes to long -term investing.

Victoria Ferguson:
That’s why I kind of wanted to have that distinction there because technically, yes, your brokerage account is liquid and you wouldn’t get penalties. There are no penalties for withdrawing from it because really all a brokerage account is, I guess, to be inclusive of anyone who may not know. It’s basically a savings account that you can invest. Like there’s no like there’s not like tax benefits to it, but there’s no penalties either. Yeah.

Matt Mulcock:
Well, and I was sorry, really quick. I would say there are tax benefits to it in the sense of the growth is taxed at capital gains rates, rates, which is lower than ordinary income. So there are tax benefits in that sense, but you’re right. Not tax benefits in the sense of like an IRA or retirement account. Exactly. Yep.

Victoria Ferguson:
Like a retirement account, yeah, relative to other ones that are out there. So there’s like cash liquidity and then there’s like your investment liquidity. But again, the biggest point here is ideally you don’t wanna interrupt the work that your investment accounts are doing for you. Hence why cash liquidity is so important because you wanna use that first before you interrupt something like a brokerage account. So it’s a little bit of a buffer there, but then like if life goes really south, then you could also access your brokerage account.

Matt Mulcock:
Great distinction there. there’s levels to this cash cash is first then brokerage account. I will say the larger your brokerage account becomes over time. We see dentists later on in career that have multi seven figures in a brokerage account that actually allows you to not need as much in cash if you don’t like from an emergency fund standpoint. So it’s a good distinction to make there. So if we’re talking about the fix. So mindless spending, we just to recap that we talked about kind of having more awareness around your spending, starting to track your spending, have a system for saving, for lack of liquidity. What, Victoria thoughts on the, if we’re saying it’s a mistake, what’s the fix.

Victoria Ferguson:
We get this question a lot, like how much cash should I have on hand? How much is too much? How much is too little? So on the personal side of things, at a minimum, you’re going to want at least three months worth of your regular spending, to cover you just in case medical thing happens, family thing happens. But the other reason too is, I guess to kind of bring in a mistake that we’ll talk down the line, probably in part two, I think is with disability policies, they usually don’t kick in until three or four months later. And so you need that cash to float you until that money can come in. So that’s also another reason for that. So on the personal side, you’re looking at least three months. The range is, but again, just like anything in this business, there’s levels to this.

Healthy ranges are three to six months of cash on hand. Once you go over that six month mark, you’re starting to do something called cash drag. If you know, new learn new character unlocked cash drag. If you didn’t know what that was, now you can sound super smart. That’s basically when you’re holding too much cash on hand and that cash could be working harder for you. So we say probably no more than that six month mark, unless you have a reason like a big cash need coming up. Obviously, if you’re like, you know, buying a home or like a large purchase, then sure, like you can go over that. But as a floating kind of normal personal emergency fund, three to six months of regular living expenses.

Matt Mulcock:
Awesome. And I love that you, you highlighted the kind of the cousin of this mistake, which is too much liquidity, right? Which I’m sure maybe some people out there are like, I’d love to have that problem, but that is a problem to your point. Cash drag opportunity cost. It truly is that truly can hurt you over time and lead to a big mistake there. And then we’d say just to add to this, the, on the business side, we’d want a 1 .5 up to three months of your monthly break even your monthly overhead. and the last thing I’ll say to put a bow on this one, it’s interesting. These are really related, right? Because for us to say the fix is let’s say on the personal side to have three to six months of your living expenses. Well, that goes back to the first mistake, which is you’ve got to know your spending. You have to know your actual spending. You can’t be mindlessly spending. You have to track. So these kind of build on themselves of saying, and they’re all related.

Victoria Ferguson:
You have to know what you’re living, yeah, yeah.

Matt Mulcock:
You got to know your spending to be able to fix the lack of liquidity issue and know how much cash you even have to be holding for both personal and the business. Number three mistake that can cost you $10,000 or more mismanaging debt. This is a big one, Victoria, to you. Let’s throw it to you in the studio. I’m actually in the studio.

Victoria Ferguson:
I am not. Thank you so much. So I feel that this is one of the first mistakes that dentists will make in their career because it’s one of the bigger financial decisions that they have to make is around debt. Because you graduate and it’s like, okay, congratulations. Here’s $350 ,000 as a student loan balance. And I think, you know, like the initial feeling is like a lot of weight on your chest. You’re like, holy cow, like that’s the biggest, you know, balance I’ve seen in my life. And, you know, maybe your income is close to that, but probably your student loan balance is higher than what your income for the year is going to be at that point. And so what we see most of the time and the stat is, what is it? Over 52 % of people with student loan balances who went to dental school are going to be aggressive with that payment. So I think people’s natural inclination is just to get that down as fast as possible because it feels really bad and it’s usually like a fear -based decision or just kind of what they think is right. But there’s way more that should go into that decision. Things like, yes, what is the balance? What is the interest rate? But also what other things are going on in your life? Because what I kind of find through conversations with dentists is they don’t realize that by being aggressive with your student loan payment, for example, you are saying no to other things. Like you are pushing back the goal of buying your first home, of buying into a practice because you’re using those extra dollars towards that. And so, I don’t know, I guess I don’t have to get to the fix. I’ll let you talk on that or speak to that first before I talk more.

Matt Mulcock:
I honestly don’t have too much to add. I just totally agree with that, that this is a big mistake we see dentists make. I will say we get it. Like we do understand the, but you know, we work with, with so many dentists, like we do understand how, how hard that can probably be mentally, emotionally, that see that debt balance and feel like it’s crushing you. And so again, like we were saying earlier, not only the student loans, you come out with multiple six figures, but then you want to buy a practice, you want to buy a home. Like debt can, can be a huge stress. But again, this is why we wanted to focus on that liquidity piece first, because to your point, Victoria, every dollar you’re putting towards debt aggressively are dollars that you can’t be building up your liquidity, which we can promise you. Promise, promise, promise you that if you focus on liquidity first and build up a little nest egg in the emergency fund first, you will. I can’t even tell you how many times I’ve talked to dentists who have said this, holy cow. I’m so glad I did that because now I feel so much better, even with the same level of debt. So, and then to your point, if you’ve got, this all comes down to your goals, obviously, like what are you trying to do long -term? But if you’re a dentist that wants to go and build a practice or build multiple locations, well, paying down your student loans is not going to aid in that, in that goal early on. Yep.

Victoria Ferguson:
Because you can’t reverse it. That’s the thing. You can be like, hey, just kidding. I’d really like that money back. Yeah, no. Good luck. But before you keep going, something I want to highlight that you said too is building your liquidity. What I love about that strategy is you can always decide to do a lump sum towards your student loans. Just because you decide, hey, I’m going to stick to the minimums for now and I’m going to focus on building liquidity. At some point in time, and we see this a lot, like you get to a point where you’re like, I’m gonna just pay it off. Like, I’m just gonna get rid of this balance. Like, you can always decide to do that later. That’s why I say, like, I think it’s one of the first mistakes dentists will make is like, this is my minimum. I’m gonna put this much extra towards this. Like, maybe let’s create some flexibility here. Maybe put that, consider putting that towards your liquidity and then maybe somewhere down the line. Like we can do a bigger lump sum towards your student loans. That’s always an option that you have available to you. But if you’re incorporating extra payments on top of the minimums, then that’s done. That’s no flexibility. You can’t recall that.

Matt Mulcock:
I love that you just said this. This is something we’ve talked about so many times, the actual strategy behind paying off debt. And it’s never been more viable than right now because of high yield savings accounts. So, you know, you go pile that. So exactly what you just said, if you’re paying down debt aggressively and that’s what you want to do and that fits your goals, great. Let’s, let’s do it. But I would say to your point, don’t be doing it on a monthly basis with extra payments. Do it in bigger chunks, put that money away and do it less frequent. and why someone’s like, well, why again, liquidity is the ultimate change your mind insurance. And you cannot, especially with student loans, you can’t be calling that student loan servicer and be like, actually give them money back. Cause now I want to go start a practice. You have no, you alluded to the, to the paradox of choice podcast. One of the things that Barry Schwartz mentions in that book is that we are very, very bad at knowing like what we’re going to be thinking in the future. Right. Right. That’s, he talks a lot about that a lot. we have no clue how we’re going to be thinking six months, a year, two years from now, how we’re going to feel about something. So give yourself maximum optionality by not making extra payments on a monthly basis. Pile that money away once a quarter, twice a year, maybe at the end of the year, decide.

Victoria Ferguson:
Yeah, how we’re going to feel about it.

Matt Mulcock:
What do I want to do and realize that your life is probably going to change over the course of that time.

Victoria Ferguson:
I love what you’re saying there because I think, I don’t know, at least with our philosophy, whenever we can give a dentist flexibility, we will prioritize that over everything. Like that is, having flexibility is worth like the potential like additional cost it takes to have that because the consequence of not having the flexibility is way too expensive. That’s where you’re gonna see the $10 ,000 plus cost in that mistake. So I would rather kind of, if you want to look at it that way, like pay for flexibility instead of pay for the consequence I will get if I don’t have it.

Matt Mulcock:
I mean, if it changed your mind insurance, any extra cost you’re paying in the interest difference is your premium. It’s your premium you’re paying for change your mind insurance. So I couldn’t agree more. So as far as the fix on mismanaging debt, what thoughts do you have on that, Victoria?

Victoria Ferguson:
Just being intentional with it. And I feel like the biggest thing is consider what else you could be doing with that money before you jump into that. And that applies to like everything, not everything, but a lot of things that we do with our clients. But understand your opportunity cost and evaluate that, which basically will give you a strategic debt plan that has incorporated all other aspects of your financial plan and your life goals really. So I guess with all of these, have awareness, consider other options available to you. And if it still means, yeah, I wanna be aggressive with the debt, then great, do it. But at least you can feel better with that decision knowing that you considered all other players in the scene.

Matt Mulcock:
I think a lot of these are just take a step back. Think about it. Think about all that. Yeah. Slow down. Think about all the other factors in your life outside of just that one variable. So, okay. Number four.

Victoria Ferguson:
Yeah, slow down. Matt, over to you.

Matt Mulcock:
Waiting over to me in the studio. this, this is a huge one. Again, I’d say a silent killer, kind of like the mind was spending where you don’t even realize like this is something that doesn’t show up on a balance sheet or show up on a P and L. again, it is truly a silent killer. Yeah. It doesn’t, you don’t get a bill for this one. It’s like, man, I just lost this much money for, because I waited so long.

Victoria Ferguson:
I wish that was a feature. I think that would be a good motivator. Huh, you heard it here first people. If we do it.

Matt Mulcock:
We should work. We could maybe create something. Yeah. we’re going to create a, we’re going to create your waiting to invest bill. so even though it is silent and it is not something, that you’re totally aware of. Do not get it twisted. This thing like waiting to invest is a massive mistake that we see happen all the time, whether it be out of fear, whether it be out of, just putting your head in the sand.

Victoria Ferguson:
Analysis paralysis, yeah.

Matt Mulcock:
Yeah, exactly. Not just do analysis. Exactly. So whatever the reason, this can absolutely, this absolutely is something that will cost you far more than $10 ,000 over the course of your career. If you wait, I know it’s more difficult. We did this on the webinar last night. We know it’s more difficult to like, I don’t want to go, I don’t want to like inundate people with numbers. Sometimes it’s hard to like have all these numbers thrown at you on a podcast and you can’t visualize it, but let’s just maybe break down. We’ll keep this simple but on the, on the webinar, we gave a visual here, of, a scenario where, and I guess Victoria, do you want to break? Cause you want to break this down of like the factors that we had in this table that we presented.

Victoria Ferguson:
So this table breaks it down basically into different starting points in which somebody invested or different amounts of time that somebody spent investing. So this would be anything from like a 30 year timeframe to a 10 year timeframe of somebody investing $500 a month and earning about 10 % per year on average over the course of this time. So somebody who started or has a 30 year period, like I invested $500 a month for 30 years earning about 10 % per year on average. So that means I gave $180 ,000 of my money. So I contributed that to my account. By the end of that 30 year period, I’m netting just shy of a million bucks. Like 987K basically. So what the market gave me was roughly $800 ,000 there, but I only put in 180K of my money. Let’s go ahead.

Matt Mulcock:
So let’s stop there for one second. So let’s say I’m a 35 year old dentist and I’m basically maxing out a Roth IRA or an IRA every year, basically. By the time I’m 65, I’m sitting on a million dollars.

Victoria Ferguson:
Yeah, if you’re just doing $500 a month for 30 years and you know, you’re starting at 35, your salary is going to be way higher at 45, 55, but you only stick with $500 a month.

Matt Mulcock:
Yeah. 500 bucks a month for 30 years, you’re sitting on a million dollars, 800 plus thousand dollars of that is the compound interest over that period of time. Magic. It’s just there. So 35. Yes, of course. Yes, of course. And we’re assuming that you have the temperament and ability to stay in your seat and let the compounding do its thing.

Victoria Ferguson:
It’s just magic. I just landed there. That’s in a good diversified portfolio that’s managed well. I got to put that out there. This isn’t in like one company. Don’t do that.

Matt Mulcock:
So that’s a 35 year old doing that. That’s pretty reasonable, right? We said this 35 is a pretty common age where a dentist, you know, early thirties to mid thirties where a dentist has, especially a practice owning dentist has their feet underneath them. They’ve kind of figured out their practice. They’re, they’re, they’re flowing. They’ve got the money coming in and now they’re starting to save. I think it’s a pretty reasonable age actually. And we’re only saying 500 bucks a month. Multiply that by multiple times for, for a dentist, for at least dentists that we’re, that we’re talking to all the time where that’s you take that million bucks again, multiply that by three, four or five times with what we see dentists actually saving. So, but then let’s say, okay, you wait instead of 35, you wait to 45. What happens to the numbers?

Victoria Ferguson:
It’s so crazy because the numbers are so dramatic, even just for a 10 year timeframe. So now this is starting at 45 to 65 or a 20 year period. Again, same thing, $500 a month, you’re starting at 45. So that means you put in 120K of your money over the course of that timeframe. And by the time that you are 65. Instead of having just shy of a million bucks in your investment account, you’re now under 350K. You’re at 345K roughly, which is insane because instead of making $800 ,000, you only made 225K basically. Dramatic differences and that’s like a 10 -year period. And I’ve unfortunately seen this a lot of dentists who come to us in their forties and they haven’t been able to start quite yet. And there are pretty dramatic differences there.

Matt Mulcock:
Yeah. And we don’t need to take this graph any further. I think the 10, just even the 10 year shows, it tells the story there, but, but it just gets worse. It just gets far worse. It just, but honestly we exactly, but, but just that 35. And what I like about the fact that we’re using 35 and 45 is again, we’re not saying to a dentist, if you would have started investing at 18 years old, it’s like, well, okay, come on. Like, but most dentists out there, it’s like, it’s realistic to say, Hey,

Victoria Ferguson:
Yeah, it just gets worse. That’s all they need to know. We don’t want to stress anyone out.

Matt Mulcock:
Just start, just start now with something. And if, you know, we, we work with the tend to work with a younger crowd. So it’s like, Hey, if you’re listening right now, you’re in your thirties, you still have tons of time to make this happen. And by waiting five, 10, whatever years, it is costing you hundreds of thousands of dollars over the course of your life.

Victoria Ferguson:
The visual I like to give people, and I don’t know, I don’t mean to stress people out, but maybe some healthy stress is, if you had a hole in your wallet and every single day, a 20 or $50 bill was dropping out of it. How long would it take you to go get that fixed? Right? Like if you knew that, maybe we should create this, Matt, like some sort of like, here’s how much this is costing you to wait. Yeah. And, and.

Matt Mulcock:
I mean, I think we’re kind of trying to show that here, right? It’s literally hundreds. Yeah.

Victoria Ferguson:
But more so to your point there, like, I don’t even care if you’re starting off with $100 a month because there’s a power to building the habit early. Because I think something I hear a lot is, like, I don’t have enough to invest or I’m not like an investor yet. I don’t care if it’s even just 50 bucks or 100 bucks a month, just start the habit. And you’d be surprised like what it can do over a long period of time. So that’s the fix is start investing as early as possible after you’ve had some level of liquidity. Again, I think you brought this up, Matt, like don’t fully prioritize investing unless you have some baseline of liquidity. Again, ideally you’re looking at three months worth of your living expenses and your emergency fund.

Matt Mulcock:
There’s a quote we’ve used multiple times on this show for Morgan Housel talking about Warren Buffett. And he says, Warren Buffett skill is investing, but his secret is time. And the same secret is everyone’s secret. It’s, it’s, you know, if I’m talking, you know, we’re talking to dentists, it’s like, Hey, your skillset is dentistry and the practice that you’re building, or, or if you’re an associate, the skill that you have as a dentist, that’s what’s, that’s, that’s your skill. Your secret is the same as Warren Buffett’s. It’s time. And the only way to take advantage of that is to start, you got to start investing as early as possible. Or again, it absolutely will cost you over the course of your life. So cool. Let’s hit this last one. This is again, why we did five. I’m feel so good about doing a part one and a part two. Number five mistake that will cost, could cost you $10 ,000 or more. Victoria trying to time the market.

Victoria Ferguson:
I feel like a lot of people have heard this stat that over the last hundred years, the S &P 500, if you don’t know what that is, that’s the largest 500 companies in the US. That’s kind of what people refer to as the market sometimes. So the market has done about 10 % per year on average, freaking thinking car insurance, 10 % per year on average for the last 100 years. But the average S &P 500 investor has actually only made 4%. Dramatic difference between what people are actually getting and what the market is actually doing. And the reason for that is people have the tendency to try to time the market. And what is so baffling to me is when somebody decides to time the market and most people do this, a lot, well, I don’t know about most, I think a lot of people do this, is by trying to time the market, you are literally saying, I know something that millions of people don’t know. That’s what you’re doing really. You’re like, like I got something, I know something you all don’t. Most of the time, or actually almost 100 % of the time, the market has already priced that in, she’s already thought about it, and it’s just gonna like bite you in the butt.

Matt Mulcock
:I think again, this is one of those things that it’s like, we get it. We understand. We understand when things get crazy and you want to, whether it be, you know, you’re, you’re, you’re fearful of what’s happening or you get greedy. Like these, this is, these are human tendencies that are totally normal. And so we absolutely understand, you know, we’re not sitting over here. Like, I’ll be honest during COVID, you know, COVID was, we were all freaking out. I was freaking out and trying to keep it together, not only for my clients, but also my own, my own self, my own, you know, investment. So we are human too. We understand that this can be scary and really, really hard. We’re not sitting on our high horse and be like, you idiots, you should do, you know, it’s, it’s tough.

Victoria Ferguson:
I know. No, we feel it too. Like that was not fun to see my account drop by like 20 to 30 % in a very short amount of time. Like, ooh, that stings. So I get it.

Matt Mulcock:
Totally. It’s scary. Yeah, it’s scary. I think a lot of this comes down to one thing, which is playing the wrong game. And it’s funny because dentists will tell us, like dentists understand this. I think, well, they do. They totally understand this theoretically. They understand what this means. Like, yeah, a long -term investor shouldn’t care about what’s happening in the market. But when things get scary and that fear is shoved right in your face from social media, from the mainstream media, from your friends. All of a sudden you start to be like, well, what are you like? You start to question the game you’re actually playing. Cause if you think about the game of an investor, a long -term investor, you should not be caring what it, and here’s the thing. If you are a long -term investor with cashflow that is going into the market on a regular basis, you actually should be cheering for a downturn. You should be cheering. It’s a good thing. It’s on sale.

Victoria Ferguson:
It’s a good thing. It’s on sale. It’s on sale. Discounts, people.

Matt Mulcock:
Because exactly what you are doing is, is accumulating shares. You got to shift your mindset in my opinion to you. You are, the game is accumulating shares. That’s what the whole, this whole game is. and the lower the price, the more shares you can accumulate. So if you, if you think about that and think I’m a long -term investor, and by the way, don’t think of your timeline of investing as your career timeline. It’s your lifespan. So you might be, you might be even 45 years old and like, well, how am I going to retire in 15 years? I don’t have enough. I shouldn’t, you know, I should be less aggressive. Well, no, your investment timeline is your lifespan. So.

Victoria Ferguson:
Yeah, it’s not like you cash out entirely as soon as you retire. I feel like people kind of like, they don’t really like realize that. Like you still have the rest of your life. Like you’re not dying at 60, at least hope not. But yeah, like you still have to grow your money to be able to take care of you and your sunset years or leave a legacy depending on what you want to do.

Matt Mulcock:
Exactly, depending on what your goals are there. So again, I think just again, this is like remember, remember the game you’re playing. A lot of times the game that is being discussed on social media and or mainstream media, or maybe by your friends is the short term trading game. It’s the ego game. It’s the status chasing game. You’re if you’re playing the long term investment build wealth game. Don’t be worrying about what’s happening in the market in the short term. Easier said than done. I understand that but that should be the mindset.

Victoria Ferguson:
Yeah, yeah. Yeah, and I think another way to illustrate this is and kind of continue to showcase like why this doesn’t work is because, you know, say let’s use COVID as an example. And you like pulled out like before everything went down and then the market continued to go down. The issue with it is you have no idea when it is going to go up again. And the thing that we, there’s some constants when it comes to investing, some things that do stay true. And the one thing that’s one of them is the market has recovered from every single downturn it has ever had in the course of being a stock market, every single one. And so when you think about that, like when you pull, you know, you stop your contributions or you pull money out of the market, what you have, what you’re forced to do then is to buy in right before it takes off. And who the heck knows what day? That’s like asking, you know, Matt, like when is the market gonna take off? You know, you don’t know. yeah, actually, yeah, Matt knows, yeah. You have to pay him a lot of money to take his secret personal, what is your secret? That’s what we all do. Robbie. Yeah.

Matt Mulcock:
You want to know what my secret is? I’ll call Rabih.

Victoria Ferguson:
Yeah, right, right. But no, not like even somebody as smart and intelligent as Robbie has no idea when the next best day is. And I think you brought this up last night. Like usually the downturn and then the best day is are actually pretty close. Yeah, like in proximity. So then you’re forced to decide like when that day is. Is it Monday? Is it Friday? Is it, you know, June? We don’t know.

Matt Mulcock:
They’re clumped together.

Victoria Ferguson:
So that is where people lose a ton of money is by pulling out and then not getting back in. That’s the huge danger here.

Matt Mulcock:
It’s so true. And we didn’t use this quote last night, but we did discuss it as we were prepping for this webinar. Peter Lynch, still considered the greatest mutual fund investor of all time. Best record, best track record of like a 20 year period ever in the history of mutual funds. He has a quote to paraphrase it. He says, far more money has been lost trying to anticipate a correction than in the correction itself. And it’s to that very point, it’s people trying to get out, guess, trying to time, costing them a ton of money. The fix here is again, simple, not easy. It’s have a system and stay in your seat. Have a, have a philosophy and investment strategy that you can actually stick with. And again, take advantage of the same secret that Warren Buffett has, which is time. Most of this is really straightforward, right? It’s like living a healthy lifestyle. Every single person out there knows how to live a health, healthy lifestyle. I think a lot of times people know what they should be doing to be able to build wealth sustainably over time. And it’s, it’s really simple principle based concepts that we’re just trying to hopefully remind you of. and again, highlight that some of these mistakes.

Again, silent killers and can cost you a ton of money. So hopefully we can, you know, reship the mindset a little bit. Hopefully you get just any little nugget out of this to say, okay. I’m going to go to your point, Victoria. I’m going to go start a brokerage account and start putting a couple hundred bucks away a month and just set it and forget it. Or I’m going to go track my spending better and set up a free, you know, a frequent meeting with my spouse or partner to start looking at our spending or whatever it may be. Hopefully you got something out of this. I’m going to say this, you know, what would not be a mistake.

Victoria, like not even close to being a mistake. It might be the opposite of a mistake. You know what it is. It is coming to the Dennis money summit, which is June 21st and 22nd. I actually hope this podcast comes out before the Dennis money summit. I’m not even totally sure it will. So I’m going to highlight that if it, if it, if it doesn’t, then you’re you and you didn’t come to the summit and come into 2025, cause we’re going to do it every year. but honestly.

Victoria Ferguson:
What would that be, Matt?

Matt Mulcock:
We’re so excited about this. We are almost a month out and could not be more excited about the Dentist Money Summit. Check it out. It’s going to be in Park City, Utah. Such a wonderful opportunity to take a break from life, from work. Take a step back, hear from some incredible speakers. Hopefully reset your mindset around money and building wealth and living a rich life. So we’re, we’re so excited about that. Again, check it out at DentistMoneySummit .com.

For now, thank you so much for listening, Victoria. Thank you for your insight on this. We really appreciate it. Everyone, thank you. Until next time. Bye -bye.

Behavioral Finance