In this article, Vittorio Mena O.D.,M.S. and Bill Potter O.D. will exchange interview questions on basic personal finance topics for the OD. 

Question: Vitto, you’ve taken an interesting approach in your second career. How did you get started in the financial community?

When COVID hit and the economy shut down for that month or two before things started to slowly come back to semi “normal” I had an eye-opening experience. We can easily lose our jobs or get let go from a practice or corporation especially if artificial intelligence can potentially take over medicine in the future. We are all vulnerable, so I was having a discussion with my cousin (who works in the luxury automotive world) in Florida talking about life and the future and how can we still get paid while not being in an office or working the traditional 9-5 grind? He told me about one of his friends that has a financial brokerage and had always wanted to tell me about it since I am proactive in optometry and had a large following on social media, but thought I would not be interested in it since I am an optometrist. As an eye doctor I did not really care so much about business or business finance or personal finance since I did not study that or had no real interest in it. I went on to have that conversation with both my cousin and his friend and as we were talking, I understood most of what this gentleman was talking about when he mentioned words like compounding interest and starting early with investing and also protecting oneself with insurance.

What really struck a chord with me was that he showed me a tool on how to mathematically minimize debt (example: student/private loans, credit cards, mortgage, car payments etc etc) to your advantage. No one and I mean NO ONE in the financial industry shows or cares to show anyone how to get out of debt. They might have a conversation on it but there is no tool to show you how to get out of it. I started talking myself into this new career path since understanding finances is an important part of life. Statistically 95% of people will fail financially and it does not matter your race, where you live or type of job you have. It all comes down to being not only knowledgeable with your money but more specifically efficient with your money. I am proud to say that I currently hold my 2-14 life/variable annuity license, Series 6 and Series 63 licenses which allows me to help people with investments around the entire United States. I am also studying for my Series 65 license (which allows me to do fancier investment options for clients/colleagues).

Question: What is your ultimate goal, in terms of managing optometric practice and financial services?

My goal with my new licenses is to genuinely and honestly spread the word to everyone that has an open ear. What I realized is that true wealth is created by creating value and having an impact on society. It is a great feeling when you are able to help someone become a better version of themselves, whether it is medically, financially, socially, behaviorally, etc. The biggest problem is that many times you think that agents have your best interest at heart, but it really comes down to whatever makes the company they represent and/or the agent the most money. Since I am an optometrist, I understand how the optometry world works. My job is to not only help my colleagues see clearer but also to make their futures brighter. It takes time and due diligence for that future to be bright but in the meantime people have short term and long term goals, some want to own a business, others want to venture out in real estate, others want to have 2-3 houses or travel the world. Regardless of what an individual wants to accomplish, the goal is to get you where you want to go the fastest way possible and whenever a road block comes up (since it will happen) reroute you and keep you on that straight path.

Question: What is the most common mistake made by the average OD in terms of long-term financial planning and retirement?

The biggest mistake I have witnessed people making thus far is the absence of a game plan when it comes to money. If we were to build a house from scratch do we just start building the house, or do we come up with a blue print first? Why is it that most people go on a lifelong journey with money and not create a blueprint for it? Just like in sports, the coach designs a game plan for the team and in order to win a game if you are solid on both ends of the court/floor aka defense and offense the chances of success are 99.99%. Defense in this particular matter is insurance and offense involves investments, whether short term or long term. Since it takes time for our offense to get going in the money world, we only need defense for a limited period of time to protect us during our vulnerable periods such as student loan debt, mortgages, car payments etc. Once our offense is kicking, we do not need to rely on the insurance component so much.

What destroys people financially is purchasing the wrong type of life insurance since that is draining them from wealth down the road. The second thing that destroys people is to not open up their 401Ks right away and procrastinate on this or do not know how to fully invest outside of their 401Ks. The third thing that destroys people is holding off on paying off their debts and paying the lowest amount possible. The fourth thing that destroys people is having over $50,000 sitting in a regular bank account earning very little interest on their money. Just one of those four things alone can cripple someone’s finances and that is just the tip of the iceberg. My job is to complete the puzzle to someone’s life by optimizing their current situation just like a coach helps players get better each and every day.

Question: Bill, tell us about your approach to the things we talked about above. How have you structured your personal savings and investing? (Insurance, stock equity, home ownership)

Insurance coverage was the first pillar that we established long before we had significant assets. It’s especially important when you are younger and don’t have the finances needed to cover life’s events. Disability, property, and umbrella policies should be started right away. The challenge with life insurance is that it’s tempting to defer coverage if you don’t have family that relies on your income. That said, term life is cheapest at younger ages, so it can be a challenging individual decision. Disability is a must, and the umbrella policy is there to pick up where property insurance leaves off.

After insurance was in order, we started to build equity. I am not totally comfortable with real estate investing, so my single family home is my only venture there. Many of our readers hold real estate positions for income, which is a great way to go if there is enough confidence, knowledge, and time to manage. My family’s comfort zone has been in the stock market and I enjoy managing a portfolio on a daily basis, especially now that I am “retired.”

Question: How do you pick your stocks? That is a daunting task for many!

My stock approach is to simulate the S and P 500 by buying most of the top 25 stocks with a bias towards those that pay dividends on an increasing basis. There is essentially no cost to this if you use a discount broker like Fidelity, though you lose a few pennies on the bid/ask spread at purchase. For anyone not confident in individual stocks, the mutual fund approach is viable. My criticism of index funds is that by the time you gather enough assets to retire, the fund company is taking about a paycheck per year in fees for something that you can easily do yourself. Managed funds, on the other hand, require confidence in the manager that may require some research.

From there, you have to decide on your proportion of stocks vs. bonds and cash. We keep about 80% stocks and 20% CDs and bonds. It seems like a lot of stock, but it’s left over from recent days when return on cash was extremely low. We’ll migrate towards 70-75% stocks as I go further into retirement. Two year CDs are paying about 5%, and top corporate bonds are close behind.

Hopefully we have shown a bit of a blueprint for personal financial success! Over time, it becomes apparent that control of expenses and development of assets are keys to success. The ultimate goal is to have a portfolio that works for you and your family, allowing you to live life to the fullest!