dimanche 21 août 2016

A warning to all my young med colleagues

Why Many Doctors Aren't Wealthy?

Traditionally, much of the cachet associated with being a physician had to do with the perception that the profession was equated with affluence. To the average individual today, one might make the same assumption upon hearing or reading about a physician's income. But, as noted in a recent article on TheWhiteCoatInvestor.com, many doctors lack high net worth because they are:
1. Late to the game. Some students may not finish residency or fellowship until they're 40 or older. Losing 10 years' worth of investing, capital appreciation, and compounding can mean thousands of dollars less for retirement. In this setting France is in the back of the wagon with too long med studies and a trend to practice later than in other countries.
2. Saddled with debt. It isn't unusual for physicians to start out owing a few hundred thousand dollars in medical school loan debt—in addition to the debt that can build up in residency on car loans and credit cards, and for other expenses. Over time, the interest paid on all this debt can double or triple the original debt amount. in this setting it could be useful to use financial tools and to favour an entrepreneurship approach.
3. Saving too little. Although setting aside money for retirement may be the last thing on a newly graduated physician's mind, it's those early years that could be most instrumental in maximizing one's savings. The later you start, the more you'll need to save up. The take home message is save early even a little.
4. Not disaster-proofing their finances. There is no substitute for insurance against disaster—fires, accidents, unexpected illness or death, and liability. As exorbitant as the premiums can be, they are worth every penny when a possible tragedy becomes a reality. That said, there are ways to trim premiums, especially in the case of auto and home insurance, by increasing deductibles and eliminating nonessential coverage.
5. Mistaking their expertise in one area for expertise in another. Many doctors look for shortcuts to wealth by investing in what they believe to be the next hot stock or chasing last year's top funds. But often, that works against them. The THM is that your are a physician and investment is not based on science. Investment is based on value.
6. Losing sight of the bottom line. You can't just look at an investment's earnings without factoring in the costs. A healthy profit could well be diminished by taxes, inflation, or sales commissions. A financial advisor isn't worth his or her salt if the advice costs more than the earnings. Before going in practice look at the planet. If your business is to be losing money over time change your practice or your country. By chance there is a shortage of physicians.
Remember that if you cannot thrive you will no longer care.

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