Best Investment for Physicians – Overview
Most investment opportunities are available for everyone. However, some investment options are available only to physicians. Doctors tend to make a late start, with a heavy student loan debt.
Thus, doctors are more compelled to seek advantageous investment chances. These are efficient ways for physicians to quicken their journey to financial success.
Below are the investment ideas for physicians we came up with after thorough research. These are not financial suggestions, so please always consult your financial advisor before investing.
Top 5 Investment Opportunities for Physicians
To help budding physicians get a boost, we’ve listed the top investment opportunities for physicians:
1 – Starting a practice/Buying a partnership
This investment is specific to physicians. It may include opening their practice or buying into a partnership of hospital-based doctors.
This may also involve the physician joining another doctor to take over their practice later.
At times, when you buy a partnership, it can be classified as sweat equity, while at other times, it can be considered as financial equity.
In the case of financial equity, the physician often has to have saved up a significant amount of money or seek finance from a lender.
When physicians build or improve a medical practice, they create a valuable asset that can be later sold to afford a comfortable retirement.
Even in a hospital-based physician partnership, you can always choose a buy-out equivalent for a few months of accounts receivable.
Still, the most prominent benefit of owning your practice is that it usually makes more money throughout your career.
2 – Owning a medically associated business
Apart from medical practice, physicians can also own a separate but similar business. These may include:
#1. Dialysis centers (for Nephrologists)
#2. Outpatient surgical centers (for Anesthesiologists and Surgeons)
#3. Endoscopy centers (for Gastroenterologists)
#4. Imaging diagnostic centers (for Radiologists)
#5. Urgent medical care centers (for Primary and Emergency Care Physicians)
#6. Labs (for Pathologists)
#7. Dental labs (for Dentists)
When managed well, these alternative businesses often provide physicians with more income than their practice.
3 – Repaying student loans
Another excellent investment opportunity for physicians is paying off the huge student debt they’ve accumulated during their medical courses.
Usually, doctors end up with non-deductible student loans with interest rates as high as 5% to 10%. Still, most fixed-income investments return less than 2% to 3%.
Investing in bonds or CDs doesn’t make sense when you have a 6.8% student loan, providing a higher and assured return.
Although anyone can have a student loan, physicians are more likely to have a larger amount and higher interest rates. Physicians are also less likely to subtract the interest on their loans.
4 – Index fund investment
Index funds are excellent investment opportunities for physicians. Good index funds today require professional management.
These come with market-matching returns and have broad diversity and daily liquidity.
When you consider the heavy analysis of publicly traded stocks, data shows that index fund investment is far better.
According to investment experts, physicians should ideally try to invest up to 20% of their gross income into a practical mix of index funds.
This way, you can be a multi-millionaire by the time you retire.
5 – Real estate debt funds
Although real estate investment may not be smart tax-wise, no one can deny that it is one of the most popular forms of investment worldwide.
Usually, real estate developers often pay as much as 7% to 12% returns for short-term borrowing.
This is an excellent way for real estate developers to avoid the hassle of applying for a loan from a bank or a private lender.
When intelligent investors and real estate experts collaborate, they have the potential to earn double-digit returns on their investment amount.
Although this industry is significantly risky and less liquid, most accredited investors choose to make real estate investments.
These include a large number of physicians, too.
As a physician, you will likely only start creating wealth in your 30s. Though this might seem like a late start, physicians’ opportunities are incredibly varied.
As mentioned above, the investment opportunities are ripe for doctors to take.
However, consulting with an investment expert before investing your hard-earned money into any business venture is highly recommended.