As a doctor, you know the consequences of inaction on your physical health. But what happens if you ignore your financial wellness?
The reality is that all our choices create a compound effect that becomes our future. If you want to build a solid portfolio that takes you into a steady retirement, it’s important to start now.
While there are no failsafe investments, taking strategic actions now will put you on a stronger path to a better economic future. Follow these tips to start building the retirement you want to live later today.
1. Eliminate Debt
Over a decade of medical school, licensing, insurance, and other essentials are part of your financial landscape. You might not be able to do anything about the cost of these expenses, but you can work on eliminating their impact on your future.
Before you start setting money aside for savings, review your debts. If there are any high-interest bills, such as credit cards or loans, set aside extra each month to pay them off. Instead of putting future non-emergency expenses on a credit card, wait to buy until you’ve saved enough cash to cover the costs.
Getting rid of debt early adds the interest you would have paid to your bank account and frees up your income to make more advantageous investments.
2. Protect Your Assets
Except for mandated coverage, such as automobile and malpractice policies, insurance can seem like an easy expense to skip. Why bother with health coverage when you’re in decent shape and a doctor? Why invest in disability insurance if you have a hefty amount in savings?
The answer is that these monthly premiums keep you from using your assets in the event of a catastrophic or expensive situation. As a physician, you’re still susceptible to accidents, heart attacks, cancer, and other events that could deplete your savings and then some. A health insurance policy is your buffer between a $3,000-$5,000 maximum out-of-pocket issue and a $20,000 hospital stay for a mild heart attack.
Disability coverage is another overlooked asset protection option. Most doctors only make money when they’re seeing patients. Should something happen that keeps you from treating people, whether it’s as minor as a broken bone that requires a few weeks off from work or as major as a heart attack, your disability policy ensures you continue to receive part of your weekly income instead of digging into your savings account.
3. Educate Yourself on Your Portfolio Options
Stocks, bonds, mutual funds, real estate, passive investing … these are all potential ways to build your retirement savings. But which is right for you? While a diverse portfolio is usually recommended as the best way to grow your finances, investments aren’t a one-size-fits-all strategy. Your risk tolerance, assets, time to retirement, and other factors play a role in the right type of investment for you.
So, how do you choose where to allocate your funds?
You’re a busy professional, and delegating non-essential tasks is how you keep your head above water. When it comes to investing in your retirement, though, it’s critical that you take the time to educate yourself on your options and their potential consequences.
Using a financial advisor with experience helping doctors, like OJM Group, propels you forward in your portfolio journey. These experts understand healthcare workers’ unique challenges and goals, which can save you time explaining them to another advisor.
Listen to their suggestions and ask informed questions, such as:
- How will this investment affect my taxes this year and in the future?
- What is the risk tolerance level for this particular investment?
- Are there similar options with less/more risk (depending on your preferences)?
- How would my long-term results change if I invested $5/$20/$100 more monthly into this investment?
How financial advisors get paid varies, too. You may prefer to work with a group that receives a set rate for their work, or you might rather pay a percentage of the results with the expectation that your advisor will put more effort into curating and caring for your portfolio.
Conclusion
It’s never too soon or too late to start planning for retirement, but the earlier you begin, the more solid your foundation becomes. Regardless of where you’re at in your planning stage, use these tips to build your portfolio and help your Future Self enjoy the Golden Years you’re working hard for today.
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