Investing can feel overwhelming, especially for busy professionals like doctors. After all, when you’re dealing with life-or-death decisions in the clinic or operating room, the thought of understanding the stock market or portfolio management can feel like a daunting, unnecessary chore.
But for me, investing became a side project that I started in my late teens. I juggled med school, the stresses of life as a young doctor, and the stock market—and I’ve come out with some big wins, a few close calls, and plenty of valuable lessons.
So, in this blog post, I’m going to share 20 lessons I’ve learned over the past two decades of DIY investing. Some of these lessons are things I wish I knew when I started, while others are ideas I’ve picked up through personal experience. Whether you’re a doctor looking to dip your toe into investing or already managing a portfolio, these lessons will hopefully save you time, money, and sleepless nights.
1. The Stock Market Will Crash
This is inevitable. The stock market is cyclical—it goes up, it goes down, and it will crash. Knowing this helped me stay calm during downturns and focus on the long-term. Panicking and selling during a dip is a rookie mistake.
2. You Can Either Eat Well or Sleep Well
When it comes to investing, more risk often means more sleepless nights. Understanding your risk tolerance and risk capacity is essential. Some people can stomach high volatility, while others feel anxious at the smallest market dip. The key is finding a balance.
3. Fees Matter!
This is an underrated but crucial point. Hidden fees in your investments—management fees, transaction costs, and so on—can quietly erode your returns over time. Always look for low-fee index funds or investment options where the fees are transparent.
4. Risk-Adjusted Returns > Pure Risk
Chasing the highest possible returns is tempting, but it’s not always the best strategy. Risk-adjusted returns are more important. In other words, don’t take on more risk than you’re comfortable with, and focus on minimizing losses before dreaming of huge gains.
5. Passive Investing Beats Active Investing
For most doctors and busy professionals, passive investing—such as buying well-diversified low-cost index funds—outperforms stock-picking in the long run. Why? Stock-picking demands time, expertise, and emotional fortitude, while passive investing is straightforward, reliable, and far less demanding.
The not-so-secret truth of the financial industry is that over 90% of professional fund managers fail to beat the S&P 500 consistently. We’ve broken it down further in this article. Go ahead, take a look and see why passive is the way to go for most medics. Read it here.
6. Feelings Matter as Much as Facts
Greed and fear are two of the most powerful emotions when it comes to investing.
FOMO (fear of missing out) can push you to buy into overhyped stocks, while fear can cause you to sell during downturns. Understand your own emotional triggers and have a strategy in place to avoid these pitfalls.
7. Start Small
You don’t need to dive in headfirst. Start with small investments, learn as you go, and increase your exposure gradually as you become more comfortable.
8. Time in the Market Beats Timing the Market
It’s hard to predict the future, but you’d be surprised at how many people try.
Market timing—trying to buy low and sell high—is notoriously difficult and often a losing game. What really works? Time in the market.
The longer you stay invested, the better your chances of compounding returns and weathering market volatility. As Investment Legend Peter Lynch stated in his book “One Up on Wall Street” If you had missed just the best ten days of a bull market, your overall returns would have significantly diminished. It’s a powerful reminder that staying invested through market cycles is key to long-term success.
9. Don’t Invest Money You’ll Need Soon
If you’ll need the money in the next 3-5 years, keep it out of the stock market. That’s your savings and emergency fund, and it shouldn’t be subject to the whims of market crashes.
10. Automate Your Investments
Set it and forget it. Automating your investments takes emotion out of the equation and ensures you’re regularly contributing to your portfolio without having to overthink each move. This works really well with passive investing via a well-diversified index fund.
11. Compounding Is Magic
It’s one of the most powerful forces in investing. Small, consistent contributions over a long period of time can lead to exponential growth thanks to compound interest.
12. Prepare for the Unexpected
This is a lifesaver—literally. Have a cash buffer, diversify your portfolio, and consider insurance to protect against life’s curveballs. This saved me from a near disaster a few years ago when an unexpected expense could have forced me to sell at a loss.
13. Asset Allocation Matters
Diversify across asset classes (stocks, bonds, real estate, etc.). This helps balance risk and rewards while protecting your portfolio from wild swings in any one area.
14. Don’t “Diworsify”
There’s such a thing as too much diversification. Don’t just invest in random assets for the sake of diversification. Make sure your choices complement each other and contribute to your overall strategy.
15. Avoid Hot Tips
Those flashy stock tips from the media? Usually noise. Stick to your strategy, and don’t get swept up in the hype of the latest stock market darling.
16. Defense Matters Too
In addition to investing, you need to protect yourself with an emergency fund, life insurance, and income protection. This ensures that you’re not forced to sell investments at the worst possible time.
17. The Barbell Approach
For risk-takers: Keep high-risk investments (like startups or cryptocurrency) to less than 5% of your portfolio. The rest should be safer, long-term investments like index funds or bonds.
18. Maximise Tax-Advantaged Accounts
Use tax-efficient accounts like a Stocks & Shares ISA, Self-Invested Personal Pension (SIPP), or 401(k) (for U.S. investors). These accounts allow your investments to grow tax-free, which can significantly boost your returns.
19. Don’t Follow the Crowd
FOMO is dangerous, and it can lead you to make irrational decisions. Don’t chase after what everyone else is doing—invest based on your own goals and strategy.
20. Never Stop Learning
The world of investing is always evolving, and there’s always something new to learn. Stay curious, read books, listen to podcasts, and learn from others’ experiences.
So, What’s Your Experience?
What has been your biggest lesson as an investor? Did any of the 20 lessons resonate with you? I’d love to hear your thoughts.
Bonus for Doctors:
If you’re a busy doctor and unsure where to start, I’ve created an Investing Safety Assessment to help you understand your risk tolerance and financial blind spots. It’s a quick quiz that can give you insight into your financial personality and help you make smarter investment decisions.
Check Your Investing Safety Score: Here
If we haven’t met yet, I’m Dr. Ndubuisi Andy Egwim, a former salaried GP and investor. I founded Moneywise Doctor to help medics make smarter financial decisions and avoid costly mistakes.
P.S. If this blog helped, please share it with your fellow doctors or repost it to your network.
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