How Beginners Should Start Investing

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how beginners should start investing

Your main goal with investing should be for retirement. Investing for your (future) kids’ college expenses is probably second. You will likely need at the very least a few million to live comfortably in retirement as $2M in savings for example will get you $80,000 in pre-tax retirement income using the 4% rule.

You have to invest to get to at least to that point where you will have a decently comfortable retirement, so here is my guide on how beginners should start investing.


How I learned

When I was 18 I met with my neighbor who is a financial advisor over coffee. I was learning about different fields in finance for a paper I was writing, but he happened to give me the best advice anyone has ever given me.

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Forget Money- Doctors Have a Social Obligation

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Doctors have a social obligation

This blog’s niche is money in medicine. I try to teach other current or aspiring doctors about personal finance and how the business of our healthcare system operates. These are incredibly important topics because personal finance is woefully misunderstood, especially in the medical community. Also, many doctors went into medicine disliking business and not wanting to be involved in any way in the business side (especially employed doctors.)

In the U.S. the average after-tax savings rate is 5.7% and only 48% of people are invested in the stock market. Those are scary numbers, so I try to provide some real world and some extreme examples to wake people up to what being financially savvy can do to your life.

That said, money is hardly everything in life, and I believe that doctors have a social obligation to the world. Dedicating your time to serving those in need will be so much more valuable to you than spending your entire life accumulating wealth. The quote below is the quote that has rang through my head for the past few years because of how true it is in my experience. Continue reading “Forget Money- Doctors Have a Social Obligation”

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Focus on Cash Flow, Not Profit in Medicine

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Cash flow timing problem in medicine

I’ve learned a lot from this class called Short-Term Financial Management, which is basically an accounting class. The most important point is that profit is completely different than cash flow in medicine.

Your medical practice could run a profit every day and still go bankrupt simply from day-to-day operations because of the timing problem with cash flow in medicine. I am not talking about a major lawsuit from a patient or an investigation into your practice by Medicare. This refers only to regular operations.

Let me introduce some accounting into your life. I won’t go too in depth because no one really likes accounting… (But it’s one of the most useful things you can study in school.) If you don’t understand the Financial Statements Overview section, you are probably in the majority, and the section below it will go through the main points. Continue reading “Focus on Cash Flow, Not Profit in Medicine”

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Cars the “Low” Income Doctor Can Afford Using Net Worth

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Cars the low income doctor can afford

This post is part 2 of the Cars Doctors Can Afford series. You can check out the high income doctor’s cars here. What are the cars the “low” income doctor can afford?

I use quotations because low is a relative term. Making over $200k is awesome and even having high debt levels and delayed salary makes it very much worth it like in PA vs Family Practice Doctor.

The best rule for car buying I have ever found is Financial Samurai’s 5% net worth rule for car buying. As it sounds, you should only spend 5% of your current net worth on a car. It’s a great rule because the 60 year old who makes $100,000 and has $5M in assets shouldn’t be treated the same as the 30 year old making $100,000 with no assets.

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Cars the High Income Doctor Can Afford Using Net Worth

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Cars the high income doctor can afford

This is a fun post for me. Not only does it include one of my passions, personal finance, but also cars. My absolute weakness.

This will not be one of those posts that condemns people for leasing or financing cars. Rather, I’d like to focus on the outstanding cars the high income doctor can afford if they are serious about investing.

The best rule for car buying I have ever found is Financial Samurai’s 5% net worth rule for car buying. As it sounds, you should only spend 5% of your current net worth on a car. It’s a great rule because the 60 year old who makes $100,000 and has $5M in assets shouldn’t be treated the same as the 30 year old making $100,000 with no assets.

Continue reading “Cars the High Income Doctor Can Afford Using Net Worth”

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Where Did All of These Free-standing ER’s Come from? (Business Model and Controversy)

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Where did all of these independent free-standing ER's come from

Have you noticed 24 hour independent freestanding ER’s popping up on seemingly every major intersection, especially in well-to-do areas, within the past few years? I have. I also worked in a level 1 trauma emergency department as a scribe this summer, so I witnessed movement of some older emergency medicine doctors to these freestanding ER’s, so I have a particular interest in this.

According to AP, freestanding ER’s have had rapid growth since 2009, with much of the growth coming from Texas, where most of the free-standings are. In 2009, Texas passed a law that allowed private, for-profit facilities to deliver emergency services spurring the growth.

The focus is going to be on independent free-standings (owned by a physician or a company) rather than non-profit hospital-owned. Independent free-standings operate uniquely while hospital-owned free-standings are more of an extension of the hospital.

Where Did All of These 24 Hour Free-standing ER's Come From

Continue reading “Where Did All of These Free-standing ER’s Come from? (Business Model and Controversy)”

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How Much Should a Doctor Invest (Hint: Don’t ask your friends and family)

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How Much to Invest as a Doctor

One of the hardest parts of a medical track is understanding how much should a doctor invest. You’re on the farthest thing from a traditional career path, so who do you ask?

1. Don’t ask your parents

Your parents will probably be the first people you ask before you ask friends or visit personal finance websites. If you ask your parents how much should a doctor invest and they are somewhat financially savvy, they will tell you to invest 10-15% of your post-tax income. If you want to live really well in retirement, they will tell you to push to invest 20% of your net income. The reason they might tell you this is because it is the most widely cited recommended amount to invest. Guess what? They’re wrong.

Those numbers are for standard career paths that begin after 4 years of undergrad. Going to medical school and completing a residency is the farthest thing from being a “standard.”

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PA vs Family Practice Doctor (financial perspective)

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PA vs family practice doctor financial viewpoint

 

Is it financially worth it to become a family practice doctor or should you be a physician’s assistant (PA)? The family practice doctor has a higher salary but takes much longer to start earning his salary and has higher debt levels and taxes. The PA, on the other hand, earns less but has lower debt levels and taxes and can start investing 5 years earlier. This is a purely financial showdown: PA vs family practice doctor.

Let’s look at this from 2 standpoints. (1) A financially savvy person and (2) a not as financially savvy person.

Lastly, this is not meant to sway anyone into either field. Much more important personal factors are autonomy and length of schooling desired, as well as desired flexibility to switch specialties mid-career. I made this only because I was always curious.

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