Unlike other professions such as engineering or CA, doctors start earning late. Acquiring a doctorate is the result of years of hard work of academics and many years of training.

Are the doctors different? Do they need some specific type of financial planning? These were some of the questions that were asked to me first, when I was addressing a group of doctors on various financial issues. My answer was both yes and no. No, because they are not separate. Since doctors are also humans, they also behave like their patients in most cases, which is one reason they should adopt a structured approach to money management. At the same time, yes, because there are some specific challenges in the life of a doctor, they need special attention.

Unlike other professions such as engineering or CA, doctors start earning late. Acquiring a doctorate is the result of years of hard work by academics, many years of training and spending a large amount of money. After study, the next decision comes to them to join the job or start their practice. In the early years, most doctors prefer to work in some hospitals.

The peak time for doctors to earn is between 35 and 55 years of age. This is where the story begins. Their smooth and regular cash flows expose them to many financial risks.

Cash flow

The cash flow of doctors, coupled with low risk of jobs, practice and economic downturn, makes them the first choice for lenders. They can get multiple credit cards with high credit limits, car loans and home loans with low documentation. As a result of this they have an excess of real estate and other loans.

When most of the earnings are in cash (especially in practice), real estate becomes the only asset where one can invest. Doing so will help them in saving taxes. They do not even realize the risk of going overboard on a single asset class and the health and life risks, which may further exacerbate this issue. Due to lack of time in life, they come in contact with many MIS vendors.

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Many doctors have a number of insurance policies, but they are still underinsured. Many have a lot of mutual funds with no target. Many invest in PMS, where they do not even understand how this work works. They oblige everyone from bankers, friends to relatives and end up with a skewed portfolio with no clear structure and direction.

Doctors spend a lot of time with their patients to diagnose the real problem, but not enough time to improve their financial health. They do not invest for their goals, but only ask for investment to make money quickly. The two major clinical trials in financial health screening are cash flow analysis and net worth analysis.

Cash flow analysis

Cash flow analysis is just like a lipid profile, which allows planning and diagnosing liquidity issues, debt and savings situations and discovers how to use investable surplus to improve overall financial health. Can.

Net worth analysis

Net worth analysis reveals the structure of financial assets and liabilities, investment asset allocation. It also analyzes how well a person can survive a crisis situation.

asset allocation

The allocation of your assets should be in accordance with your risk profile and should also have sufficient liquidity for financial and emergency needs.

Goal based investment

Goal based investments give a clear idea on the investment horizon, which further helps in the selection of suitable products. A proper financial planning structure helps in better management of money.

(Published views are personal by author.)

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