Howard Speaks: The Smartest Financial Plans Will Pay Long-Term Dividends by Dr. Howard Farran

Howard Speaks: The Smartest Financial Plans Will Pay Long-Term Dividends 

by Howard Farran, DDS, MBA, publisher, Dentaltown magazine

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 profits. If you said, “Well, my plan for achieving financial 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 office 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-and-forget- it, because you’re not stuck constantly checking the value of your portfolio wondering if today is the day your flash-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 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 tried-and- 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 financial 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 proficient and efficient at root canals, crowns and implants, essentially helping you produce the cash-earning crops of dentistry today.

On a smaller scale, each time you and your spouse dine out, that could have purchased $100 worth of ads on Google or Facebook. Would you rather have a hundred clicks on your practice website, or one dinner?

Spending less than you earn

I mention in my book Uncomplicate Business that when I visited Sweden in 2012, many of the colleagues I met couldn’t wait to mention Ikea founder Ingvar Kamprad, who despite his wealth lived modestly for many years in a single-story ranch house in Switzerland. Although Kamprad had been ranked No. 8 on Bloomberg’s Billionaire’s Index, the real estate sites that listed his property for sale after he died in 2018 included a note saying “current house to demolish” because they believed although the property itself was valuable, the house that sat on it wasn’t. I don’t know many doctors who’ve been in practice for several years who’d live in such a house!

(And yes, I know Kamprad also owned a vineyard in the Provence region of France—but that only bolsters my earlier point that wise investors focus on properties that are also money-making businesses! A vineyard produces a crop of grapes every season, which can be used to produce wine or be sold to other vintners so they can create their own blends. My point about Kamprad wasn’t that he owned only one property but that he lived beneath his means. He wasn’t overextending himself trying to keep up with the Joneses.)

Rethinking retirement

I think right around the time many dentists realize they could retire, they also realize they’re not quite ready to yet. Most dentists got into dentistry because they love being able to help patients and make a huge difference in their lives. So once doctors hit a certain financial comfort level, the reason they practice becomes less about “I gotta do this to pay off my student loans” and more about “I just love making a difference in people’s lives.”

After decades and decades of grateful patients whose smiles have been transformed, it can be hard to give up that rush of satisfaction of a job well done. Which makes even more reason to reinvest in your company and focus on making it the thing you enjoy most right now!

If you’re staring down 65 but have realized you’ve still got to practice a little longer before retirement makes sense, you need to find a way to keep working, and the way to do that is to keep enjoying what you do.


Make sure you’re dedicating your money to productive assets whenever you can. If you make even 5% a year on every dollar you’ve invested, over time that will build up nicely and should leave you in a great position when it’s time to retire. But be sure to speak with a financial advisor to discuss his or her recommendations for your specific situation.

Dentaltown founder Dr. Howard Farran would love to hear your thoughts about the ideas and suggestions he mentions in this column! Post your questions and comments under the online version of the column below. And for more ideas and information, check out the Finance forum on Dentaltown’s online message boards, where Townies share their ideas and advice for personal finance and investments.

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