Investing as a New Dentist – What You Need to Know

As a newly practicing dentist, it’s important to consider investing to help achieve your future financial goals. Starting to invest early while paying down student debt allows more time for your savings to grow and compound.

However, before you start investing, it’s important to know who is in the best position to guide you and what qualities they should possess. It’s also helpful to first understand some investing basics.

Know who's dealing with your money

Except for Quebec, anyone in Canada can call themselves a “Financial Planner” without any credentials. Since there is no government legislation to regulate these individuals, the onus is on you to ensure they’re trained, certified, and held responsible for providing you with professional financial planning advice. Since this might be difficult and risky to do, a Certified Financial Planner® (CFP) is likely your best option.

Your Certified Financial Planner® (CFP) Checklist

  • Following their education and successful completion of two examinations, CFP applying candidates must have a minimum of three years’ qualifying work
  • Is CFP educated, CFP trained, and CFP certified
  • Possesses a strong understanding of topics such as personal tax planning, insurance, investments, retirement planning. and estate planning
  • Is aware of how a decision in any of the above (or other areas) impact one another
  • If selling financial products such as securities and insurance, or providing investment advice, the CFP must be regulated by provincial regulatory authorities
  • Knows your risk profile and how your financial goals align with your life goals
  • Is transparent, provides details of services in writing, and openly answers questions about their experience and qualifications
  • Is clear about how they charge for their services (cost of product, percentage of assets under management, fee-for-service, hourly or flat rates, etc.)

What's a portfolio and what goes in it?

A portfolio is generally made up of traditional assets such as fixed income, equity, and money market instruments. It can also include other financial components such as real estate, commodities, derivatives, currencies, and hedge funds.

You can also choose from the following portfolio management approaches:

  • Work with a financial advisor: They will help you select a portfolio based on your goals and circumstances.
  • Do-it-yourself: You select and manage your own securities through a brokerage, such as Q-Trade.
  • Full management by a discretionary manager: The portfolio manager makes investment decisions on your behalf, such as our partner, Cumberland Private Wealth Management Inc.

Portfolios can be self-managed by the investor (you) and/or managed by a financial professional for a combined approach.

What is diversification and why is it important?

Imagine that you have invested in only one kind of equity fund and due to market conditions, the industry representing that fund plummets. An example of this was the recent decline in energy prices due to the COVID-19 related slowdown in economic activity. This would have caused you to lose a significant investment, and that may have been averted or your loss may have been reduced if you had a wide variety of investments in your portfolio.

This is one example of why diversification or spreading the potential for risk across a broad range of asset classes is important.

Any investment, however, has an element of risk, which an investor is exposed to and must bear if they wish to make potential gains. The idea is to reduce that chance of risk and maximize the return within the agreed upon limits of an investor’s risk tolerance and financial objectives.

Starting to invest early helps you save more for your future. Why wait?
Book a meeting with one of our experienced Investment Planning Advisors* to get started today.

*Restrictions may apply to advisory services in certain jurisdictions. Financial planning and advisory services are provided by licensed advisors at CDSPI Advisory Services Inc.

Information on this site is for informational purposes only and is not intended to provide financial, legal, accounting or tax advice.