Have you ever noticed how everything about “being a doctor” is expensive?
- College fees,
- Course fees,
- Conference fees,
- Medical equipment,
- Medical software,
- Support staff….
It all seems to cost – well, a lot! Worse still – it’s never on sale.
Can you imagine your College or AHPRA sending out a “pay buy before midnight for 50% off your fee this year” email? Not in this lifetime perhaps.
Contrast this to:
- Christmas sales,
- Closing down sales,
- Renovation sales,
- End-of-financial-year sales.
Whatever the occasion – sales are everywhere, and who doesn’t love a sale!
There is the opportunity to grab a bargain and smile smugly as one of the “clever ones” who didn’t pay full price. People queue all night in some instances or spend hours online trawling for the bargains. But this never seems to be the case for anything to do with being a doctor.
However, there is a sale that happens that every doctor can access, and sometimes on a large scale. One that you probably don’t even realise is a sale until much after the fact……the sales in the share market, property markets, businesses or other investments.
For example, there is a perception that a company whose shares are $20 today when they were $40 a few months ago – that couldn’t be a good deal – and definitely not a “bargain”. The risk averse nature of many investors means they would perceive that this company is in trouble and it would be better to stay away.
Often people say “I’m leaving my money in savings for a while, the markets are very volatile” or “I will wait until the economy has improved before I invest”. What these people are doing is missing out on the “sale” – turning down the opportunity to purchase a company or fund at a reduced price.
Behavioural finance studies how and why people make investment decisions and the above is a key part of this area of study. People tend to feel most comfortable when they are doing what the rest of the crowd is doing. The reason for this in-built behaviour for most of us is the ‘safety in numbers’ approach was often the best in survival terms when confronted with danger.
However, this behaviour often works against you as an investor, as the long term savvy investor knows that dips in investment markets can be their best friend. They realise they can often buy a good long term investment at a discount to its real value. As such, they have in effect made a profit at the time of purchase, as the investment is likely to return to its higher intrinsic value over time.
The same principle applies whether you are buying an investment property, have an opportunity to buy into a good private practice when other doctors are unsure, or other good investments or businesses are for sale in distressed circumstances.
As Warren Buffett famously once said: as an investor it is wise to be “fearful when others are greedy and greedy when others are fearful.”
So, if you are in a position to invest for the long term, remember that when there is a “sale” on in good investments, take advantage of this and buy them at a discount to their real value. After all – who doesn’t love a bargain!
Naturally, stay the course, seek professional advice and only invest what you can afford.