The stock market is often complex and may seem like a far-removed entity from the world of dentistry. However, it’s beneficial for dental professionals to understand its investment opportunities, which could potentially maximise and protect their income.
When choosing to interact with the stock market, individuals put their capital at risk. The highs of a profit are as equally significant as the potential lows of a loss, and it’s important for people to understand the landscape of the stock market before they invest. This can be an extensive ordeal, which is why some investors could choose to seek out a stockbroker.
A third party
Individuals do not need the help of a stockbroker to trade, but working with one could open up more time to focus on other individual or business projects whilst reaping the rewards. A stockbroker is an individual who will buy or sell your shares, finalising trades on your behalf.
The level of control a dental professional hands over depends entirely on the deal struck with their stockbroker. For example, the investor could research the shares that interest them and instruct the stockbroker to buy or sell at an agreed time and given price. This way, decisions can be based entirely on their understanding of the market.
Share trading is often complex, and it’s no surprise that some professionals may not wish to balance a career in dentistry, a private life and a comprehensive approach to investing. Their stockbroker may take on a more advisory role, providing insight into potential trades that they have researched and recommended. This removes some of the leg work from the process – but not as much as a discretionary approach.
Here, the stockbroker will buy and sell shares completely on your behalf. The purchase and sale of shares may be completed when the stockbroker thinks they can get the best deal, without the investor having to interfere heavily in the process.
Less time spent researching the market and making decisions based upon it is more convenient, but choosing a quality stockbroker that you trust is essential: a 2015 report found that half of its analysed discretionary portfolios underperformed in the market over three years, whilst 20 per cent saw positive returns.
Choosing wisely
The right stockbroker for each investor may be entirely different. You may wish to trade online, for example, which will widen the range of brokers you can work with and allow you the freedom to trade from wherever you are in the world. Exploring online brokers that make communication clear and simple would be key.
The expense of working with a stockbroker should also be considered. Many will charge on a commission basis, taking a percentage of the transaction value. A minimum flat fee may have to be met or paid regardless. Understanding how much this is, as well as the amount of money you are willing to invest over time, could help you judge whom you wish to trade with and the type of stocks you want to invest in.
Most importantly, investors should engage with stockbrokers registered with the Financial Conduct Authority (FCA). This body regulates nearly 50,000 businesses, aiming to keep financial markets honest, fair and effective. When a stockbroker is registered with the FCA, they are obliged to act in the best interests of their client – this is essential when protecting and managing investments.
If the time is right
Stocks fluctuate all the time, and there is no guarantee of a rise or fall at any given moment. Looking broadly, by the beginning of 2023 indexes such as the FTSE 100 had recovered following the dramatic hits it took during the coronavirus pandemic, reaching lows in March 2020.
However, fears over another recession may make investors think twice. Share values fall with a recession, and if it were to creep over the horizon, there may be better times to make the leap into the market than now. The decision can’t be made by anyone but the investor or whoever they trust their investment funds with, but the prospect of potential success and losses should be evaluated with equal fervour, even when working with a stockbroker.
Dental professionals should consider a free consultation with Money4dentists, the specialist independent financial advisers who have worked exclusively with dentists for more than 16 years. It understands the unique financial situations of dental professionals, and can help organise and decide upon investments that suits your risk preferences and financial capabilities. The expert team makes share dealing simple to understand and can help those beginning and during their investment journey.
Share dealing isn’t for everyone, but the benefits for a sensible investor may be exceptional. Understanding your unique ability to trade in the market and finding the right stockbroker to help you on your way could help you decide upon investments that reward you in the years to come.
For more information call 0845 345 5060, email info@money4dentists.com or visit www.money4dentists.com
References available on request.