A Physician’s 4 Common Obstacles to Building Wealth
The most common mistakes and missteps made by physicians that reduce the likelihood of achieving financial freedom
More than most people, physicians face many financial challenges endemic to their career which, if not addressed early on with deliberate steps, can become obstacles to building wealth even a high six-figure income can’t overcome. However, most obstacles can be anticipated and, with sound planning and targeted strategies, they can be reduced to mere speed bumps, or eliminated altogether.
Drawing upon the experiences of a number of our physician clients, these are the biggest obstacles many will face in building wealth:
1. Not Having a Serious Retirement Income Plan
With their careers front and center in their lives for at least the first couple of decades, many physicians give little thought to retirement, let alone plan for it. While they may have in mind a target date for retirement, many have no clear ambition for what they might consider to be a “good life” for the rest of their lives. And, without clarity in what it is they are after, it’s difficult to put any kind of math to a plan.
2. Not Having a Sound Investment Strategy
The challenge in investing is not that it takes special skills or knowledge; it’s that it is often driven by emotions which can be devastating for investors who lack a clear investment strategy along with the patience and discipline to follow it. It’s emotions that drive investors to buy high in times of market exuberance and sell low during market panics, and it’s why some investors still haven’t recovered from the losses they suffered from the 2008 market crash. Having a well-conceived investment strategy enables investors to stay focused on their individual benchmarks, rather than market benchmarks or indexes, which are meaningless to an individual’s long-term strategy.
3. Investing too Conservatively
There is no denying that investing in ultra-safe or guaranteed vehicles offers the peace-of-mind that you won’t lose your money due to market fluctuations. However, it ignores the more ominous risks of inflation and longevity, which, when combined can produce more pronounced asset loss over time. History has shown us that the potential for stock market losses is more of a “perceived” risk where investors can only lose money if they actually sell their stocks into market declines; whereas inflation and longevity are “real” risks which can’t be avoided: but they can be mitigated with the right investment strategy.
4. Trying to Go it Alone
With so much at stake, it’s surprising that there are still some physicians who would rather go it alone, thinking they can do better on their own, or that investment advice is not worth the cost. Yet, studies have shown that, left alone, investors tend to make decisions that impede their ability to achieve their long-term objectives. A recent Study by Vanguard, a leading “do-it-yourself” mutual fund provider, indicates that by working with an experienced, independent financial advisor, investors can increase their returns by an average of 3 percent per year. And it’s not necessarily because they can come up with more brilliant investment strategies; rather it’s because they can keep investors from making costly mistakes.
If you would like help overcoming these common obstacles, please contact us to arrange a no obligation consultation with one of our financial advisors experienced in helping physicians develop a personal wealth-building strategy.