Physicians are the healers of our society. We expect them to be compensated for their years of study, training, and long hours. Yet a shockingly small number of doctors ever achieve the comfortable lifestyle they expected when they chose their profession. Here are a few reasons doctors never get rich.
1. Doctors get a late start to the game
By the time a doctor finishes medical school and residency, they’re likely in their mid-to-late 30s. Then they have to pay down their student loans, all while starting a family. While in the past the first job a doctor took was likely his/her last, this is no longer the case and many doctors don’t achieve comfortable employment until their 40s. Strong investing is all about getting in early and letting cash flow and compound interest build over time.
2. Doctors face a myriad of business financial challenges
While running your own practice was once the standard, now this is much more the exception rather than the rule. This lack of entrepreneurial opportunities coupled with tightening reimbursements for the same services aren’t helping either. Insurance companies look for ways to avoid, delay, or reduce payment all the time. Even if you work for someone else, malpractice insurance is tougher every year. It’s hard for a doctor to justify an investment when they need their cash now.
3. Some doctors overestimate their financial know-how
Doctors are some of the smartest people, capable of learning tremendous amounts of information and juggling countless tasks. But being good at one thing doesn’t make you good at everything. Many doctors succumb to poor investments or scam opportunities out of over confidence or lack of a good advisor within a specific investment sector.
4. Doctors are expected to live a certain lifestyle
Practicing medicine isn’t the glamorous lifestyle it once was. As I said before, even doctors who make a comfortable living have to deal with some obscene costs. And yet, we expect doctors to live, dress, drive, and socialize like a well-off professional. Many fall into the trap of neglecting long term wealth opportunities for short term flair. Even if you aren’t taken by the desire to live a fancy lifestyle, after so many years of working hard for no pay, it is easy to feel you deserve to “splurge a little” when you are finally an attending physician. This is all too common to increase your debt load further.
5. Doctors lack the time and energy to plan
Ask any child of a doctor (including myself) how often they got to spend quality time with their mom or dad during the early stages of their career and their response will be disheartening. Medical school and residency can require doctors to work 90 hours per week. Even private practice doctors work more than the average, what with patient RVU/quotas, call schedules, EMR “paperwork,” and combative insurance companies. After a 15 hour day on one’s feet, no one wants to plan 20 years ahead.
All this means that only about 5% of doctors ever achieve true, long term wealth. Some even live paycheck to paycheck and spend their retirement wondering why they worked so hard. The trick is to start investing early in sound, safe, long term opportunities.
Solution to achieve wealth:
Step 1: Understand investment options. There are thousands of financial products available, but most of them are useless, ineffective, and downright scams. You need a basic understanding of your investment options so you can pick the right advisor to handle all the details.
Step 2: Make long term investments with a mix of risk. Generally speaking, you want to invest in riskier opportunities when you’re younger and more conservative opportunities when you near retirement age. Bonds are typically low risk (although they are underperforming at the moment) and safe, as is real estate.
Step 3: Find the right advisor. You want someone that’s qualified and experience, but also someone who has some skin in the game, not someone who collects a fee each time they trade your money. You want a firm that has incentive to grow your money.
Written by Mark A. Mascia, President and CEO of Mascia Development
Mark manages the investment and operating activities of Mascia Development, a diversified value real estate investment firm that acquires, owns and manages retail, medical office, family offices, multi-family, and industrial real estate properties in the most promising long term growth areas nationwide. Through crowdfunding, they create powerful real estate opportunities for high net worth individuals.
A fully integrated real estate company, Mascia Development has in-house capabilities in acquisitions, financing, re-development, and construction; and their principals have experience in property and portfolio management, leasing, and maintenance.
Mark has a strong career in real estate, previously managing a property of portfolios valued over $1.1 billion. Mark has worked at Archstone-Smith (a former publicly traded REIT) and Monument Realty, one of the largest office real estate developers in the Washington, DC metro area. Mark teaches real estate development and finance at New York University.
For more information, visit www.masicadev.com.
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