Doctors are known for their exemplary dedication and focus when it comes to their profession. They spend years studying, acquiring knowledge, and mastering their profession. Today, Indian doctors are great honor and respect through out the world.
Doctor Profession starts much later as compared to other professionals. Doctor start real earning after 30’s. Most of the Doctors feel, We are not left with much money to save and invest in early years and top of that, there might be an education or practice loan repay burden or responsibility in early days of Profession.
Ideally, around 35-40 years above, should be the phase where a doctor’s income increases and stabilises as well, and he/she can create wealth with right savings and can enjoy the Power of Componding in investments. However only 25% of doctors manage to create a solid asset base in this phase. Often, family responsibilities and lifestyle expenses result in lesser opportunities to save. At this stage, the real winners are the doctors who have saved early on in their life, cleared off their education loans and have a busy practice.
Creating net worth close to 50 to 100 Crore in lifetime is not difficult for the Doctors, Provided, they invest/Save early and wisely with right asset classes.
For most doctors, money matters always get bumped down the list of priorities due to time and/or knowledge to handle their finances. But this kind of complacency can prove to be financially harmful.
Why Doctor Need Financial Planning from Experts.
On an average, a doctor’s portfolio follows the following pattern:
#More than 60-70% invested in real estate
#10-20% in debt such as PPF, insurance policies, bonds, and post office
#10-20% in cash like savings account and FDs
#15-20% in Insurance Investments with return close to 4-5%
#Negligible equity investments
Most doctors do not have time to thoughtfully build their portfolio and, so they make decisions based on the advice of their CAs, colleagues, banks, family, friends, patients, etc. The result is a portfolio that is neither balanced, nor sophisticated. Instead, it’s a haphazard mix of investments that accumulate over time.
However, your investment should be Based on Goals, Objectives, time available for investments and right investment vehicle is at most important.
Common Investment Mistake Made by Doctor:
# An abundance of loans due to professional commitments and Requirements
# Over concentration in real estate which provide 4-8% Appreciation per year
# Buying Apartment with Loans for Getting Rent Of 2-3%.
# Inadequate insurance against risks like death, disability, professional liability, and loss of income
# Buying Insurance with Investment return close to 4-6%.
# Buying Stocks Based on Tips. Trying To Make Earnings in Intraday.
# Buying Excessive Gold-Keeping it in Locker.
# Advice From Friends, Relatives, Neighbour, social media & Colleague-Unless They Are Professional.
# Lack of Financial planning and long term investment vision
” Smart people learn from their mistakes. But the real sharp ones learn from the mistakes of others “
Understanding these typical money mistakes are the first steps towards rectifying them.The key is to learn from them and make better choices in the future. This will ensure that you will enjoy the real value of money.
Financial Check List for Doctor:
# Ensure to Protect Yourself from, Health, Critical illness, and professional Liability Insurance.
# Create an emergency fund for 6–8-Month Expenses
# Identify your Life Goals and goal due period
# Save In right Investment vehicle based on Life Goals
# Avoid any Investments in Insurance with investments
# Real estate Exposure should not be more than 50% of your Net worth
# Save At least 20-25% of your annual income towards Life Goals
# Review your investment and Your Net worth once in a year
“Right Opportunity, Right Thinking and Right Decisions Determine the Destiny”
Proper Financial Analysis and Solution would address the personnel finance issue, opportunity in investments, how do we create better and right wealth. Proper Financial Planning and Planner would create vision of life and help to create a right net worth and wealth over a period.
Picking the Right Advisor, one who understands the financial needs and goals of the doctor, and then helps him/her to create is of utmost importance. This way, the likelihood of the doctor meeting his/her goals and creating bigger wealth is much higher.
In case of Health issue, it is always Better to consult the Doctor and take an expert advice and right medicine. Similarly in case financial planning and right investment, it is prudent to consult the qualified financial planner & Experts to invest wisely would be the right choice to avoid side effect in personal finance in the later days.
At Wealthspace, we guide you through all these steps in a well-planned, systematic, and scientific manner. We help you understand your goals, place them on a timeline and then create a plan to save and invest towards these goals. We also help you evaluate the various investment avenues you can invest your money in depending on your risk appetite and investment horizon.