Disability insurance is advisable for most physicians. This is a complicated product, and it is important to do some due diligence to find the right fit for your situation.
Explore This IssueACEP Now: Vol 34 – No 01– January 2015
Life insurance is recommended if you have family members who are dependent on your income. Long-term care insurance is appropriate for some physicians with such family needs and requires careful evaluation of the company and a review of the fine print of the policy.
6 Investing—Simple Is Smart
If you like to watch CNBC, read The Wall Street Journal, study the markets, explore various investment options, and play with individual stocks, then by all means, do so at your own financial risk. The likelihood that you will beat the averages is remote when even the best financial gurus in the country have difficulty consistently beating a mix of 60/40 of low-cost index funds in stocks and bonds.
The vast majority of investors will be well-served by the following guidelines: 1) keep it simple, 2) stick with very-low-cost index funds or exchange-traded funds from large discount brokerage firms, and 3) block out the noise of the talking heads on the financial shows. Be skeptical of all advice. Have some exposure to the U.S. stock market and the bond market, and mix in a little international exposure. The exact mix will vary depending on your age and risk tolerance. Adjust your asset allocation yearly. Don’t try to be a market timer. You won’t hit a home run every year with this plan, but you won’t strike out either. Over the long haul, there is good evidence that this type of investment plan is the wisest course for most investors. Invest your money; don’t gamble with it.
This area is filled with sharks and con artists eager to separate you from your money. Some do it legally (with outrageous fees while providing no added value), and some belong in prison. Rick Ferri, a leading expert on exchange-traded funds, warns, “Many Wall Street firms exist to make money from you, not for you.” Certainly there are countless ethical and reliable practitioners in the field, so “doctor, beware.”
Dr. Segan is an emergency medicine physician and attorney based in Woodmere, New York.
Seven Financial Tips
1. Make a plan now for financial serenity—your family and your patients will benefit.
- Financial peace of mind will make you a better partner, parent, and physician.
- Financial serenity will be forever elusive without a realistic plan.
2. You must learn the basics of investing to avoid becoming shark bait.
- Your financial well-being is too important to delegate.
- There are plenty of “advisors” eager to separate you from your hard-earned money.
- Knowledge and skepticism are your prophylactics to becoming a victim of unscrupulous financial advice.
3. Do something radical—live below your means and feed your piggybank.
- Become a disciplined saver.
- Live less extravagantly now, and you can better weather the unexpected events in the future.
4. Build an ethical, prudent team of advisors.
- Find a CPA, lawyer, and insurance agent who will make your well-being a priority.
- If you need a financial advisor, hire one who will charge you an hourly fee.
5. Have sufficient insurance in case unexpected mayhem finds you.
- Most doctors should have disability insurance.
- Ask your insurance agent about umbrella insurance.
- Finding the right balance between obtaining appropriate coverage and being overinsured is essential.
6. Fully fund your retirement plans.
- The federal government is giving you a gift with tax-advantaged retirement plans.
- Ask your CPA which IRA and retirement plans you and your partner qualify for.
- Maximally funding these plans should be your top investing goal.
7. Keep your investment portfolio very simple and very low cost.
- Very-low-cost index funds are the foundation for a sound portfolio.
- A simple allocation of assets (60 percent stock funds and 40 percent bond funds) is appropriate for most investors.