The current economic situation can be a bear. But as physicians, you know that it's important not to panic. You are used to dealing with pressure, so you have the skills needed to make good decisions during a market downturn.
Although investing during a bear market may not seem like a good idea, we have over 65 years of experience advising medical professionals on financial planning and management. We can confidently say that it's a great time to follow the suggestions below. You'll be prepared for the road ahead!
But what exactly is a bear market?
A bear market is a period when investors are generally not making money. The term originates from the behavior of a bear who hibernates while stocks are "sleeping," waiting for an opportunity to strike. When the market begins to fall and investors start losing money, they are said to be in a bear market.
A bear market is when the stock market falls 20% from its prior high, according to Investopedia.
The bear market is here and it's not going anywhere. This means that medical professionals need to be smart about how they invest their money. For those who have been in practice for a while, this might be a familiar situation. However, for many physicians who are just starting or those who haven't experienced a bear market before, it can be scary.
Investment advise for doctors & medical professionals
The economy goes through cycles, and we have to realize that. Bear markets come around every three to five years and last for about nine months. When there’s a downturn, it will be followed by an upturn. The sooner we realize that these cycles are a normal part of life, the better off we’ll be when they arrive.
Here are some tips to help you survive and make the most of your investment during a bear market:
Focus on your goals
Physicians need to keep their eyes on the prize when investing during a bear market. That means focusing on long-term goals, not short-term fluctuations in the Dow Jones Industrial Average or Standard & Poor's 500 Index.
Be prepared for volatility
In a downturn, it's natural to be nervous about whether you'll get back to even — or make any profit. If you're planning to invest in stocks or mutual funds, consider taking a conservative approach in the short term by buying low-cost index funds instead of individual stocks or actively managed mutual funds that have higher fees and may not perform well during turbulent times. That way, if you do lose money initially, it won't be as painful when you eventually sell at least some of your holdings at a higher price later on.
Invest in stocks that are undervalued
You should look for companies that have a strong balance sheet and are trading below their intrinsic value. If you find such a company, then it is time for you to invest in it.
Make sure you have enough cash on hand
If you don't have enough cash for emergencies, consider buying Treasury Inflation-Protected Securities (TIPS). These bonds are protected from inflation and can provide income in retirement years — especially if interest rates rise as expected this year.
In a bear market, you want to avoid putting all of your eggs in one basket. It might feel like you can't miss if you invest all of your money in one stock, but you're taking on a lot more risk than you think. You don't want all of your money placed in one industry or with one company.
Don't panic-sell at the bottom
The most important thing is to stay calm and not make any rash decisions. Panic selling is never the answer, and it's a good way to lose money. If you're tempted to panic sell, take a moment and remind yourself that the sky isn't falling just yet.
If you feel like your portfolio has fallen behind, focus on what you have rather than what others have. Just because other people have more doesn't mean they're better investors than you are. If anything, it means that they've been lucky.
Invest in yourself
Doctors are valuable employees, but they're also valuable assets when it comes to investing and building wealth. If the market is down, it's time to focus on yourself and get educated about investing so that you can learn from past mistakes, build upon successes and turn things around. This is THE best investment for doctors. You don't need an MBA or finance degree; just learn enough about investing basics so that you can build up your knowledge base over time. This will help you feel confident enough to take control of your finances again as soon as possible — even if the market remains challenging for some time.
The Bottom Line
To sum it up, there are lots of ways medical professionals can invest in a bear market, and if you play your cards right, you may just make some serious money. It all comes down to risk tolerance, but if that's not your strong suit, look into investing in something more conservative like bonds. If you play your cards right, you'll likely see some nice returns down the road.
Are you a doctor looking for investment advice? If so, look no further because Prime Financial Services can help you plan and invest during any market fluctuations. We have a team of financial advisors for physicians who specialize in creating custom solutions tailored to meet your specific needs. The best part is that this service comes with personalized service from people who truly understand your profession and know what you need!