Minesh Patel explains how every dental professional can save, spend, earn and invest to build wealth and achieve financial success.
Most dentists will have spent years mastering the drill, but not the dividend. Topics such as ‘quantitative easing’ or ‘yield curve control’ probably never featured in your CPD hours, yet they quietly shape the financial future of every dentist. From rising practice costs, squeezed NHS contracts and growing insurance fees, not to mention everyday living expenses, the financial pressure on your wallet is real.
Here’s what you can control: how you save, spend, earn and most importantly, how you invest.
Why financial literacy matters for clinicians
Dentistry is one of the few professions where income potential is high, yet it comes with a gap in financial education. Let’s be honest, most of us weren’t taught how to manage money effectively.
In dental school, you’re trained extensively on anatomy, pathology, diagnosis and treatment planning. However, nowhere in the curriculum were there any lectures on how to manage income post-graduation, plan for tax as a self-employed individual, prepare financially for retirement, or understand the basics of investing.
In fact, financial literacy in the UK in general is poor. A 2024 report from HL Savings and Resilience Barometer found just 39% of higher earners are on track to meet a comfortable retirement, with less than 20% of overall households expected to reach this goal, and dentists are no exception.
Mapping out your financial journey
Before even picking up the drill, new graduates need to understand the structure and cost of student loans, including the mechanics of the loan repayments: term, frequency, interest rate and overpayments. Financial literacy helps new dentists balance debt repayment with cashflow planning and therefore saving and investing potential.
Next comes navigating the divide between NHS and private dentistry: the former provides predictable income but tighter margins, not to mention significant bureaucracy, while the later offers greater earning potential, flexibility, but greater marketing obligations.
Developing financial literacy around what can and cannot be claimed enables dentists to assess contract values, UDA rates, and patient pricing more effectively.
The problem: the hidden cost of financial inaction
Many dentists end up developing unhealthy money habits, working into their late 60s or 70s through necessity, relying too heavily on NHS pensions, avoiding investing due to fear or lack of knowledge and leaving cash idle in low-return savings.
Take premium bonds, for example. They’re a popular choice in the UK; they may feel ‘safe’, but over the long term, they’re a poor vehicle for wealth growth. Why? Inflation quietly steals the purchasing power of your capital.
£50,000 held in premium bonds since 1990 would only buy the equivalent of £15,000 worth of goods and services today – that’s the real cost of ‘playing it safe’.
Premium bonds can still serve a purpose; a safe place for emergency funds or short-term surplus cash, but if your money isn’t growing, it’s shrinking in real terms.
The solution: investing
Whether you’re a private dentist, practice owner, or NHS associate, the most effective long-term strategy to build wealth with minimal effort is investing in the stock market. It might feel risky, but you’re already more exposed to risk than you realise.
Most workplace and private pensions are already invested in the stock market. These funds don’t buy just a handful of shares; they hold stakes in hundreds or even thousands of companies across the world, such as the Vanguard FTSE Global All Cap Index Accumulation (GBP) – which contains over 7,000 companies. That level of diversification means it’s not about ‘losing it all’, it’s about managing volatility.
And here’s the key: over time, those ups and downs smooth out, creating an upward trend. The real risk? Not investing at all.
The power of compounding and passive investing
As a dentist, you understand delayed gratification better than most; you trained for years before earning properly. Investing rewards the same kind of patience. The market fluctuates just like dental income (especially during pandemics), but over time, it rises.
Reinvesting the profits in the form of dividends or interest compounds your returns, creating exponential growth. Albert Einstein reportedly called compound interest the eighth wonder of the world. But it’s difficult for the human brain to grasp compound growth; we’re wired for short-term thinking.
Here’s a classic thought experiment: would you rather have £1 million today or 1p that doubles every day for 30 days? If you chose the latter, you’d end up with nearly £11 million. Sure, your investments won’t double daily, but historically on average, diversified stock markets have doubled approximately every 10 years.
You don’t have time between patients to track stock prices or trade crypto. Which is where passive investing comes in. Low-cost, globally diversified index funds let you own a slice of the world’s biggest companies, automatically. Your job? Be consistent and leave it alone. Think of it as ‘autopilot investing’ – simple, steady, and surprisingly effective.
Understanding the building blocks
Broadly speaking, most passive or index funds usually comprise two main asset classes:
- Shares (stocks/equities): ownership in companies. Higher risk, higher long-term return
- Bonds: loans to governments or corporations. Lower risk, lower return.
Funds may contain either of these two, or quite often a mix of both assets in varying proportions. The fund’s factsheet shows you the exact percentage allocation. Your allocation depends on your age, risk tolerance, and investment horizon. Younger or mid-career dentists often lean towards equities and as you near retirement, bonds become more relevant to smooth volatility.
10 investing rules for dentists
- Build an emergency fund first. For true emergencies only – boiler breakdowns, illness, or income gaps. Keep it safe and accessible
- Only invest money you won’t need for five to 10 years. That includes tax funds; short-term money belongs in cash
- Avoid individual stocks unless you’re experienced, and don’t chase hot trends. Ignore hype-driven investments or ‘get rich quick’ schemes. Focus on consistency, not excitement
- Choose a well-diversified fund, ideally a global one. The US makes up approximately 50-60% of global stock markets; most passive global funds reflect this naturally. Check the fund factsheet. Check how many holdings are in the fund – 10 equals riskier, 500 equals diversified
- Understand your risk tolerance and consider your investment horizon. Invest according to your comfort level and time horizon. If you’ve more than 10 years to go until retirement then a fund with higher equity exposure could be your friend. As you approach retirement, a greater bond allocation will most likely serve you better; high investment volatility is undesirable here
- Assess fund performance. Past returns aren’t guarantees, but they’re still worth looking at; to gauge if the fund has historically delivered reasonable returns
- Keep costs low. High fees quietly erode returns over time, and just like returns, costs compound too. Always check your total investment fees, including management and platform charges. If they exceed 1% annually, it’s worth finding a lower-cost alternative. Even small savings in fees can add up to (tens of) thousands over the long term
- Reinvest and review. Reinvest dividends to accelerate compounding. Review your portfolio once or twice a year; not daily. Ensure it still matches your goals and risk profile, and ignore short-term headlines
- Don’t panic sell! Market crashes are a natural part of the journey; sometimes dropping by 20 to 50%. Stay the course; stay invested. Time heals volatility; panic selling makes losses permanent
- Try drip-feed investing – ease in, not all in. Skip the stress of timing the market. With drip-feed investing, you can invest gradually through automatic recurring monthly payments from as little £25 per month.
Bonus tip: tax efficiency for dentists
Smart tax planning can supercharge your returns. As a dentist, especially a practice owner or limited company director, consider:
- Stocks and shares ISAs for tax-free growth and withdrawals
- Using private pensions/SIPPs to reduce income tax and corporation tax liabilities
- Splitting income with a spouse via shares (if appropriate and within legal limits).
These are powerful tools, but remember it’s wise to review your strategy annually, especially after changes in tax bands, thresholds, or pension rules; ideally with an accountant familiar with dental finances.
Finance your future
Dentistry demands focus, patience, resilience and long-term thinking; the very traits that make for a successful investor. You don’t need to be a financial expert to build wealth, just consistency. Let time and compounding do the heavy lifting, stay disciplined, and your future self will thank you.
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