Building Wealth Beyond the Practice: An Investment Framework

The concentration problem

For most dentists, the practice — and often its building — represents an outsized share of net worth. That concentration built your wealth, but relying on it for your future is fragile: the value depends on a single business, in a single location, sold in a single transaction. The job of an investment portfolio is to diversify that risk away, not add more of it.

The priority ladder

1. 1Capture any employer/plan match — an immediate return.
2. 2Fund an HSA if eligible — the most tax-advantaged account there is.
3. 3Max the practice retirement plan (and a cash balance plan for high earners).
4. 4Use a backdoor Roth where income phases you out of direct Roth contributions.
5. 5Invest additional savings in a diversified taxable account.

Portfolio design

For nearly everyone, boring wins: a globally diversified mix of low-cost index funds, weighted between stocks and bonds by time horizon and risk tolerance. Decades of evidence show a simple, low-cost, diversified portfolio outperforms most active strategies after fees. For larger taxable accounts, direct indexing can add tax-loss-harvesting value.

Tax-aware investing

Where you hold an asset matters as much as what you hold. Coordinating asset location (which accounts hold which investments), harvesting losses, and integrating the portfolio with your tax and retirement-plan decisions can meaningfully improve after-tax results — the only returns you actually keep.

From portfolio to income

Accumulation is only half the job. As you approach retirement, the focus shifts to turning assets — and any practice-sale proceeds — into a durable, tax-smart paycheck: a sustainable withdrawal rate, a sensible withdrawal order across account types, and a bond/cash buffer to avoid selling stocks in a downturn.