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Ready, set, invest – when should you start?

in Managing your finances

Ready, set, invest – when should you start?

Stuart Wemyss is a director of financial advisory firm ProSolution Private Clients. In this article, he explains why is it crucial to monitor your cash flow and start investing as a young dentist.

One of the advantages of undertaking a trade is that you are able to skip 3 to 4 years of university and start earning an income. By the time you graduate from university, a good tradie is probably earning the same or more money than a graduate dentist. What’s more, they have been in full-time employment for some time and have probably been through the partying and spending stage of their lives. Whilst dentists have a significantly higher earning capacity than tradesmen over their career, it’s not a magic bullet. 

The key thing you must master before you even consider starting investing is to control your cash flow. This simply means knowing where you are spending your money. You don’t need to count every dollar and cent. However, you do need to know where 95% of your income is going.

Why is it so important to monitor cash flow?
It’s not because you need to cut expenditure wherever possible and turn into a complete scrooge. It is simply because if you don’t monitor where your cash flow is going you will simply just adjust your expenditure in line with your income. That is, if you end up earning 20% more next year you will find you’ll also end up spending 20% more – although it isn’t obvious at the time. This will continue until you (eventually) gain control. I’ve seen couples earning very large incomes and spending 100% of it (sometimes even more – going into debt) simply because they have never got into the habit of monitoring cash flow. Therefore, if you want to make the most of your financial opportunities, get into the habit as soon as you start working.

Property purchase
Once you have control over cash flow you should save a deposit and purchase property as soon as possible. The reason I have nominated property as your first investment is because it gives you the maximum leverage. That is, you can borrow 90% to 100% of a property’s value and you won’t be subject to margin calls or anything like that. This will also serve as a forced savings plan (as the rental income probably won’t cover the total interest cost). The single most important thing you must get right at this point is buying an investment grade property. Please read that sentence again as it’s the single most important thing I have written. How you own the property, the number of bedrooms, whether you rent it out or occupy it, how you finance it and so on are all relatively insignificant compared to correct asset selection. Just buy the best quality property you can. If you don’t live in an investable area then it will definitely have to be an investment property (as you’ll need to invest in an established capital city).

If you focus on these two things; master cash flow and invest only in investment grade property you’ll be almost guaranteed to achieve success as the equity that the property will accumulate will give you plenty of future opportunities including buying a home, investing in more property, investing in shares, buying into a practice and so on.

Stuart Wemyss

Stuart Wemyss is a director of financial advisory firm ProSolution Private Clients. One of its services includes a 2-Year Young Professionals financial advisory programme which mentors and advises dentists to ensure they maximise all of their financial opportunities. Visit


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