If you are a medical doctor, most people think you are set for life…that you will retire rich and live the great Australian lifestyle that everyone dreams of.
Sadly, as you might know, this is NOT always the case.
Many doctors live an average, but not a rich lifestyle in retirement.
Why? Here are several common reasons why doctors don’t retire rich:
- Equating high income with wealth:
Many people think because doctors earn a high income, that they should be able to retire rich. Unfortunately that is not always the case. Many actors, sports stars and celebrities earn millions during their active working years, but many end up penniless and broke in their old age.
Being rich is not about the fancy sports cars or a big house. It is the assets you have that can still generate you income when you stop working. If you stopped working today because of an illness or an accident, will your assets give you enough income to sustain your lifestyle and pay off all your debts?
If the answer is no, then you might need to start looking at building your assets and net worth.
- Starting late
Most physicians and specialists start making full income around 30 years old. This means overall, people who have selected other vocations have several years of a head start over those who choose the medical profession. If they have saved and invested smartly, this means they have had the benefit of magical compounding of their wealth over several years.
This can have a huge impact on their final wealth at retirement by having a good head start. That’s why as a doctor you need to make sure you have a good investment plan in your 30s and 40s to catch up with the rest.
- Malpractice lawsuits and other unexpected events
Sadly, we live in an increasingly litigious society. There are also lots of unscrupulous people looking for a way to earn a quick buck. In fact there are 2600-2900 medical negligence lawsuits per year. So firstly, make sure you are well insured against any of these people who are trying to get a slice of your hard earned wealth.
Secondly, while your insurance may pay off your legal fees and any legal losses, it may not cover the reputation damage and emotion stress you would go through. It’s always good to have wealth stored up.
It’s also important to have wealth stored up in case anything happens to you. As a medical doctor, you rely on your skills. But accidents do happen. While your insurance payout can help, you cannot rely entirely on that for a good comfortable retirement. You need to have a good investment portfolio to fall back on.
- Bad investments
Let’s face it, the reality is as a medical doctor you probably are not the best at investing your money. Simply because you are dedicated to your profession to heal people. You don’t have the time to be researching and improving your financial intelligence. That’s why it’s important to have good experts who have spent the necessary time, energy and effort to identify the best investments to suit your needs.
You need to have a balanced investment portfolio that consists of both high risk and low risk investments to give you a good combination of income and growth. This balance will need to change as you age and as your risk profile evolves.
Chances are if you have a financial planner, they would have you invested heavily in mutual funds. While this is a great vehicle, you really don’t want to have your entire wealth fluctuate with the stock market. You need to have a good balance of different asset classes.
Every balanced and good portfolio should have some real estate in it. The problem is where and what to buy?
Buying in a good area vs a bad area could mean a difference of 5% annualised growth. Spread that over 20 years and that amount will mean a difference of hundreds of thousands.
So to help you on the first step, I would like to offer you a free checklist titled “10 Mistakes to Avoid When Investing in Property.” This FREE check list I have compiled has literally saved my clients millions of dollars in mistakes.
I want to make it available for free to you today as a special thanks for investing your time to read this article. Simply click on the image below.
I hope it will help you avoid potential costly mistakes in your investment journey.