Dental professionals tap alternative methods of savings and financing.
by Pamela Yellen
Have you ever sat down and totaled how much you’ve spent on financing costs for your practice? If not, it might be because you know the answer would make you gasp. Whether you finance or lease your equipment, it can cost you hundreds of thousands of dollars in interest payments you’ll never see again if you use traditional methods of financing.
Many dentists and dental lab owners are not aware there are ways to bypass banks and other lenders to become their own sources of financing, while recapturing the interest they would otherwise never see again. Financially savvy dental professionals are using these methods to get the capital they need to build cutting-edge practices, while building savings for retirement.
It may sound too good to be true, but this strategy has been around for over 100 years. Famous people like Walt Disney and J.C. Penney used it to finance their businesses when no banker would lend them a dime.
This method uses a little-known, turbo-charged variation of a financial asset that has increased in value during every market crash and in every period of economic boom and bust for more than 160 years — dividend-paying whole life insurance. But this is not the kind of whole life policy most advisors and experts talk about.
With this variation, you don’t have to die to “win.” A large portion of the premium goes into a rider that significantly boosts the growth of money in the policy and reduces the commission the agent receives by 50 to 70 percent.
This method of saving and paying for your office improvements allows you to “bank on yourself.” Could it be right for your practice? Here's a checklist for you to use to give your financing and savings plans a check-up:
- Take the time to sit down and add up how much you have spent on financing costs for your practice. Whether you finance or lease your equipment and office, it can cost you hundreds of thousands of dollars in interest payments over the years. Do you know how much you are paying over time?
- If you pay cash to equip your practice, factor in the cost of tying up money that could otherwise be earning interest or investment income. For instance, if you were to pay $100,000 in cash for equipment or furnishings, your actual cost is $100,000 plus the loss of interest that your $100,000 could have earned.
- Determine how your financing method impacts your plan to save for retirement. Relying on traditional methods can be costly because the interest you are paying to banks or other lenders is being diverted from what you could be saving toward retirement.