Are you a medical professional looking to grow your wealth wisely? As a busy doctor, nurse, or healthcare expert, you’ve worked hard to earn your income, but do you know how to make the most of it? In this podcast, we’ll share expert advice and strategies to help you build a secure financial future, achieve your long-term goals, and create a lasting legacy. From investing in the right assets to managing your finances effectively, we’ll cover it all. So, if you’re ready to take control of your financial health and start building wealth, listen until the end and let’s get started!

Alright, welcome to the Deep Dive. You know, today we are taking a look at something that I think is super important, especially for all of you out there as medical professionals. We're talking about smart investing strategies just for you guys. And we're going to be taking a deep dive into this guide from Davies Wealth Management, and this is from March 12, 2025, which is pretty recent.

And it's called How to Invest Wisely as a Medical Professional. So hopefully by the end of this deep dive, we'll have unearthed some real financial gems for all of you out there. Yeah, absolutely. I'm excited to dig into this.

It's, you know, I think one of the really fascinating things that the guide addresses right off the bat is that it's kind of a paradoxical situation for a lot of doctors, right? You have this huge earning potential, but you also have all of these unique financial roadblocks that most people don't even think about. Yeah, that's so true. It's almost like because you're a doctor, people assume you just magically know how to manage money.

It's part of your, I don't know, your medical training or something. But let's be real for a second. Medical school doesn't exactly give you a finance minor. And speaking of med school, this guide kind of jumps right into the big one, right?

Student loan debt. It's a big one for a lot of you out there. Absolutely. I mean, it's the elephant in the room, right?

And it's a big elephant. Yeah. So just to give you guys some perspective, the average med school debt in 2024 was $234,597. And remember when we had that pause on federal loan repayments during COVID, yeah, well, that ended back in October of 2023.

So, you know, a lot of you guys out there, you're back in repayment mode and those loans, they can really impact your financial planning, especially when you're just starting out in your career. It's like, you know, it's like trying to run a marathon, but you've got this like lead weight strapped to your ankle, you know, like it's not, it's not impossible, but it's definitely a lot harder to keep pace with everyone else who started investing back when they were in their twenties. That's a great analogy. And that's actually the second big challenge that this guide dives into.

Starting late. They've got this really powerful example to kind of illustrate just how much of an impact this can have. They say, like, imagine someone who invests $500 every month. They start at age 25, assuming like a 7% average annual return, which isn't unreasonable.

They could have over a million dollars by the time they're 65. That's pretty amazing. But if you're starting at 35, which a lot of doctors do after residency, they need to invest almost double that amount to reach the same target. Wow.

Okay. So time, time really is money when it comes to investing. But before we like, you know, get too down in the dumps about having to catch up, I think it's really important to say that, you know, it's never too late to start. Right.

Like, what do you, what do you think about that? Oh, absolutely. I mean, I think the key is to just, you know, acknowledge the reality that you're starting a bit later and then be proactive, you know, make a plan to strategize around it. Kind of like going back to your marathon analogy.

It's like adjusting your training plan to account for that ankle weight. You might need to train a little differently, but you can still cross that finish line. Okay. That's, that's a much more encouraging way to look at it.

I like that. But let's be honest. Even if you're super motivated to invest, there's always the issue of time, right? Doctors are busy people.

In fact, this guide, they actually cite a Medscape survey that said doctors work on average 51 hours a week. I mean, just finding time to like breathe is a challenge, let alone finding time to, you know, analyze your investment portfolio or whatever. It's true. And you know, being a medical professional, it demands so much of your time and energy.

So, so many people, you know, they end up either just making really quick financial decisions because they don't have time to really think about it or even worse, they just completely neglect their finances because it just all feels too overwhelming. Yeah. Which is totally understandable, but definitely not the best thing to do in the long run. And it's not just the long hours, right?

Doctors have all of these like unique expenses that come with the territory. Oh yeah, for sure. You know, you got those high insurance premiums, especially if you're in certain specialties. I think the guide mentioned like a 5% premium for obstetrics.

Plus all the continuing education, the licensing fees, malpractice insurance. It's a lot to juggle. So it's not just about how much you earn. It's really about what you get to keep after all of those professional expenses are taken out.

And that's where this guide, I think, starts to get really interesting because they start to like really tackle this question of, okay, you've got student loans, but you also want to build wealth, right? Do you focus on paying down the debt first or do you try to, you know, build your wealth at the same time? And this is a classic dilemma for anyone with student loans, but it's even more complicated for doctors, right? Because you've got those higher debt amounts and you're starting to earn later.

It's a real balancing act for sure. And while, you know, some financial experts out there, they'll tell you to like aggressively pay off all your debt first. This guide actually has a slightly different take. They recommend that you allocate 20 to 30% of your after-tax income to debt repayment, but also, and this is important, they say you should dedicate 15 to 20% to investments right from the start.

Oh, interesting. So it's not like a, you know, an all or nothing kind of situation. You can actually like make progress on both fronts at the same time. I'm kind of curious though, for people with federal loans, are there, are there strategies like specifically for those loans to help manage those big monthly payments while still having some room, you know, to invest?

Yeah, that's a great question. And the guide specifically mentions, you know, looking into income-driven repayment plans for federal loans. And these plans, they can really help to lower your monthly payments, especially in those first few years when you're just starting out and every dollar counts, you know, it can give you a little bit of breathing room in your budget so you can start investing. But you know, it's important to really understand the terms of those plans, you know, read the fine print because they can have a big impact on your long-term repayment strategy.

Right. Okay. So it's not a one size fits all kind of solution. All right.

So we've established that like starting to invest even while you're paying off debt is super important. But the big question is where do you actually put your money? What's this like magical investment portfolio mix that the guide talks about? Well, it's not exactly magic, but it is tailored for medical professionals.

You know, they recommend that about 50 to 60 percent of your portfolio should be invested in low-cost index funds. Okay. So that's a big chunk in index funds. I mean, I know those are like generally considered a good foundation for any investment portfolio.

But why? Like, why are they especially good for busy professionals like doctors? There are a couple of reasons. One is that, you know, index funds, they're designed to like track a specific market index, you know, like the S&P 500.

So basically you're investing in like a whole basket of stocks that, you know, represent a pretty broad segment of the market. So that helps to reduce your risk because you're not putting all your eggs in one basket. Right. That makes sense.

So what's the other reason? The other big reason is that they're passively managed. So you don't have to rely on some fund manager to pick individual stocks for you. Yeah.

So the odds are lower compared to, you know, actively managed funds. And because they're just tracking the market, they tend to do pretty well over the long term. Okay. So it's like a, like a set it and forget it approach, which makes sense for someone who doesn't really have a lot of time or, you know, isn't really interested in like constantly checking the market, which let's face it, most doctors are.

Exactly. It's about, you know, finding a strategy that works for your lifestyle, you know, your time constraints, all of that. But, you know, the guy doesn't just stop with index funds. They also recommend diversifying a bit further by allocating 10 to 20% of your portfolio to individual stocks.

Okay. So now it's getting interesting. So we're moving a little bit beyond, you know, the passive approach here. So what's the, what's the thinking behind this?

Why individual stocks and especially for medical professionals? Well, I think it's about leveraging your expertise. You know, as a medical professional, you have this unique insight into the healthcare industry, right? You understand the trends, the challenges, the companies that are doing well, the ones that are maybe not doing so well.

So if you dedicate, you know, a portion of your portfolio to individual stocks, especially in the healthcare sector, it lets you capitalize on that knowledge. So it's like, it's like you've got this like insider track on the market. I can see why that would be appealing, but wouldn't that take a lot of, you know, research and time, which as we've established, doctors don't exactly have a surplus of. It does require some due diligence for sure, but you don't have to do it all yourself.

You know, there are resources available to help you research healthcare stocks. You can find analysts who specialize in this, or you can talk to a financial advisor who focuses on, you know, the healthcare sector. And remember, this is a long game, right? We're thinking long-term here.

It's about building that diversified portfolio that matches your, you know, risk tolerance and your financial goals. Yeah. Okay. That makes sense.

So we've got, you know, the foundation with those index funds, a little dash of, you know, inside info with some individual stocks. What else is in this doctor-specific investment mix? What else did they recommend? Right.

Well, no portfolio is complete without a bit of stability, right? That's where bonds come in. This is just allocating 20 to 30% to bonds just because they're generally more stable and less volatile than stocks. Okay.

So bonds are like the steady eddy of the investment world, I guess. That's a good way to put it. They're there to kind of balance out those potential ups and downs of the stock market, which is especially important as you start getting closer to retirement and you want to, you know, make sure you're not taking too many risks and you can preserve your capital. And finally, the guide suggests adding about 10 to 15% to alternative investments, so things like real estate.

Real estate. Interesting. You know, that's not something you hear about every day as an investment. So what are some of the specific opportunities they mention for, you know, for doctors in real estate?

Well, they talk about a couple of things. You know, rental properties near hospitals or medical centers. Those tend to have, you know, pretty consistent demand, right? Yeah.

Because you've got medical students, residents, you know, other healthcare professionals who are always looking for places to live. They also mentioned investing in medical office buildings and, you know, that can be really lucrative, especially if you understand the local healthcare market, right? And you can find some good tenants, maybe some reputable practices who will sign those long-term leases. So it's kind of about using your knowledge of the, you know, healthcare industry to find like strategic real estate investments.

What about people who, you know, they're not, they don't want to be a landlord or they don't want to get into the like, you know, crazy world of commercial real estate. Are there, are there like, I don't know, easier ways to get involved with real estate investing? Yeah. They do mention REITs, real estate investment trusts.

And basically those offer a way to invest in real estate without having to like directly own or manage properties. Yeah. So you're essentially buying shares of companies that own and operate, you know, real estate. And those can, you know, generate income through rents or, you know, if the value of the property goes up.

Okay. So REITs are like a simplified way to get into real estate. Interesting. I'm sensing a theme here, by the way, diversification, diversification, diversification, but, you know, diversifying your investments, that's not the only, you know, important thing to do when you're thinking about financial planning, right?

The guide, they also talk a lot about maximizing tax advantages. Oh, absolutely. Yeah. And medical professionals, they often end up in those higher tax brackets.

So using those tax advantage accounts strategically can make a huge difference in the long run, you know, for your financial outcomes. Right. So it's like, you know, you're playing this financial chess game, right? Figuring out how to like outsmart the taxman and keep more of your, keep more of your hard-earned money.

So let's talk about that. Let's break down this tax advantage strategy. Where do we even begin? Well, they suggest like a hierarchy for how you should contribute to those tax advantaged accounts.

And the first thing they say is, you know, make sure you take advantage of any employer-sponsored retirement plan, especially if they offer a matching contribution, you know, never say no to free money. Right. Exactly. It's like getting a bonus just for, for saving for retirement.

Okay. So you've maxed out your employer match. What's next? What's the next step on this, this tax advantage ladder?

So if you qualify for a health savings account or HSA, you know, prioritize that next. The HSA is great because it offers this triple tax advantage. You get the deduction for the contributions, your earnings grow tax-free, and then when you take the money out for, you know, qualified medical expenses, those withdrawals are tax-free too. Wow.

Okay. So that's, that's like the, the holy grail of a tax advantaged accounts. Are there contribution limits? Like how much can you actually put in?

Yeah. So for 2024, the 401k limit is $22,500 and for the HSA it's $3,850 for individuals. Okay. Good to know.

Good numbers to keep in mind. So what if you've maxed out those accounts, you know, the 401k match, the HSA, and you still have, you know, some money left over that you want to, you know, put away in some tax advantage way. What do you do then? Right.

So then you can kind of circle back to your 401k or maybe it's a 403b depending on your employer and max out whatever's left of that contribution limit. And you know, if your plan allows it, you can even make after tax contributions and those can grow tax deferred and it just gives you, you know, some extra flexibility once you're in retirement. It's like you've got this multilayered approach to building your retirement nest egg. I like it.

But before we get too caught up thinking about retirement, the guide, they make this really important point about, you know, safeguarding your most valuable asset, your ability to earn an income. It's a sobering thought, but you know, the stats are out there, the social security administration, they say that one in four 20 year olds is going to face some kind of disability before they reach retirement age. And for medical professionals, you know, your careers, they rely so heavily on your physical and cognitive abilities. It's a risk you can't really ignore.

So true. Which brings us to disability insurance. And I'll be honest, it's not exactly the most fun thing to think about, but it's clearly really important. So when you're choosing a policy, what are some of the key things you should be looking for, especially if you're a doctor?

There are a few things that are especially important for medical professionals. The first thing is to make sure that the policy defines disability based on your own occupation. So that means you'll get those benefits if you can't perform the duties of your specific medical specialty, even if, you know, theoretically you could do some other kind of work. So like, let's say, I don't know, a surgeon who gets a hand injury and can't operate anymore, but you know, maybe they could work as a, I don't know, as a consultant or something.

They would still be covered under that own occupation definition, right? Exactly. So protecting your earning potential in your chosen field. Okay.

Another thing to look for is non-cancellable and guaranteed renewable terms. Basically what that means is that the insurance company can't just cancel your policy or, you know, raise your premiums just because, you know, your health changes or you change your occupation as long as you're paying your premiums on time. Okay. So that's good.

You know that your coverage is, you know, is stable. Are there any other features that are like really important to look for? Yeah. You definitely want to make sure you have what's called residual or partial disability benefits.

So this covers those situations where, you know, maybe you can still work, but you can't work at full capacity because of your disability. So for example, let's say there's a doctor who, you know, because of a chronic condition can only see half the number of patients they used to see, they would still get some of their disability benefits, even though they're still working. Right. Okay.

So it's not always like this all or nothing thing. It's more of a spectrum, right? And having, having that coverage for partial disability, that makes sure you're protected even if you can, you know, still do some work. Exactly.

And one last thing to consider is cost of living adjustments. This just makes sure that, you know, your benefits keep pace with inflation over time. So disability insurance, check. What's next on this financial safety checklist?

All right. So the next thing is to build yourself a nice solid emergency fund. The emergency fund. Yeah.

Good old emergency fund. It's like the financial equivalent of, uh, of a first aid kit. It's, it's essential, you know, when you're dealing with unexpected situations. I love that analogy.

That's exactly right. You know, every medical professional, they should have about three to six months of living expenses, you know, just put away in a, in a high yield savings account. And that just gives you a buffer, you know, in case something unexpected happens, like a sudden illness, the job change, you know, even a big car repair or something. It's about, it's about that peace of mind, right?

Knowing that, you know, if something happens, you can handle it without having to, you know, touch your investments or take on debt or something like that. Absolutely. It's about building that resilient foundation, financially speaking. And speaking of foundations, you know, we can't really skip over the importance of, you know, having an estate plan in place, a comprehensive one.

Estate planning. Okay. Now that's something a lot of people, you know, they put it off. They think it's like something you do when you're, you know, older or something, but you're saying this is important even for, you know, for younger doctors.

Yeah. I think so. Because really it's about being in control, right? It's about making sure that your wishes are followed no matter what the future holds.

And it's not just about, you know, distributing your assets after you're gone. It's also about, you know, what happens if you become incapacitated and you want to make sure that, you know, your financial and medical decisions, they're handled the way you want them to be handled. Okay. Yeah.

Yeah. Right. That's where, you know, things like a durable power of attorney for, you know, finances and a healthcare power of attorney come in, right? Exactly.

You're choosing someone you trust to make those decisions for you if, you know, you're not able to. It's like having a co-pilot, right? To help you navigate some of those tricky situations. What about, you know, some of those doctors who, you know, they've got more complex financial situations.

Maybe they've got a lot of assets, things like that. Are there specific estate planning strategies that they should be thinking about? The guide mentions a couple of things that are, you know, a bit more advanced like irrevocable trusts and family limited partnerships. And those can be helpful for things like, you know, minimizing estate taxes or maybe, you know, protecting assets from potential lawsuits.

Okay. So that sounds kind of complicated. It's definitely an area where like talking to a lawyer who specializes in this stuff and a state planning attorney would be a good idea. Absolutely.

Estate planning, it can get really nuanced. So having a professional who understands all the ins and outs can, you know, save you a lot of headaches later. Okay. So we've got disability insurance, emergency funds, and estate planning, all very important for, you know, making sure your financial future is secure.

But there's one big one we haven't talked about yet and that's retirement. Ah, yes. Retirement, the golden years, right? It might seem, you know, really far off, especially when you're just starting out in your career, but the guide is very clear that it's never too early to start thinking about retirement.

Sensing a theme here, starting early is key, but how do you even begin to like wrap your head around retirement planning when you're still dealing with student loans and building your career and all that? It's like, where do you even start? Well, the guide, they have a really nice breakdown of it. The first step is to define your goals for retirement.

What does your dream retirement look like? Where do you want to live? What do you want to spend your time doing? And then once you have a good picture of that, you can start to estimate, okay, how much is this going to cost?

What will my expenses be? Okay, so it's about like creating a vision for your retirement and then working backward to figure out, okay, how much money do I need to make this happen? What about, you know, people who like haven't really figured out their dream retirement yet? Like they don't know what they want to do, they don't know where they want to live.

Any advice for those people? You know, it's totally fine if your vision is a little bit fluid right now. Your retirement goals, they're allowed to change as, you know, your life changes, your priorities change. The important thing is to start thinking about it now and, you know, to revisit your plan as you move through your career.

Okay, so you've got your vision, you've kind of, you know, thought about how much it's going to cost, now what? How do you make sure that you're actually saving enough to, you know, to reach those goals? The guide recommends using retirement calculators and those are really helpful because they can help you figure out, you know, how much you need to be saving, they take into account all sorts of things like, you know, how old you are now, your income, what kind of return you're expecting on your investments and then, you know, those estimated retirement expenses that you've thought about. And then they can kind of project, you know, okay, based on all that, this is how much you need to save to, you know, have that retirement that you want.

Right. It's like those compound interest calculations we were talking about earlier, right? The sooner you start saving, the more time your money has to grow. Absolutely.

Yeah, time is your best friend when it comes to retirement planning. But you also have to remember to factor in inflation. You know, the cost of things, it's probably going to go up over time, so you want to make sure that you're accounting for that when you're, you know, figuring out how much you'll need in retirement. Yeah, that's true.

A dollar today isn't going to buy you as much, you know, 20, 30 years from now. Okay, so figure out your goals, estimate your expenses, you know, do the math and don't forget about inflation. Got it. Right.

But then, okay, once you've figured out how much to save, how do you actually invest those savings to make sure they, you know, they last through your retirement? Well, that's where it gets a little more, you know, a little more nuanced. You know, a lot of the general principles of investing still apply, you know, like diversification and tax-advantaged accounts, but retirement investing, it does have its own set of things you need to consider. Okay, so it's not just about, you know, picking the same investments that you would for your, you know, your regular portfolio.

So what are some of the key differences when you're thinking specifically about retirement investing? Well, one big difference is your time horizon, right? You're talking about decades here, not just a few years. So you can actually take on a bit more risk early on, you know, when you're further away from retirement.

And then as you get closer, you know, your risk tolerance is probably going to go down and you'll want to shift your portfolio to be a little bit more conservative, you know, just to protect what you've built. So it's not like a static strategy, you have to adjust it as you go. What about diversification? Is that still important when you're thinking about retirement?

Oh, absolutely. But when you're talking about retirement, you want to think about diversifying not just across different asset classes, like, you know, stocks and bonds, but also across different account types. You mean like, you know, 401ks, IRAs, HSAs, all those different retirement accounts. Exactly.

You know, each one has its own set of rules and, you know, tax benefits and different ways you can take money out. So by spreading your savings across those different accounts, you're really maximizing those tax advantages and it gives you more, you know, more flexibility to manage your income once you are in retirement. So it's like you're building this like multifaceted retirement plan, you know, it's got all these different pieces. What about, you know, for those doctors who are, you know, getting closer to retirement, are there any specific things that they should be, you know, paying attention to?

Yeah, for sure. For people in that stage, succession planning becomes really important, especially if you have a private practice. You know, what's going to happen to your practice when you retire? That's a big decision and it takes some, you know, some careful planning.

So are we talking about, you know, finding someone to take over, maybe selling the practice to a bigger healthcare organization, or maybe you just, you know, gradually reduce your workload and bring in some new partners. Those are all good options. The guide recommends starting to think about this, you know, succession planning at least five to ten years before you plan to retire so you can make sure it's a smooth transition. That's a good point.

Don't wait until the last minute. And I imagine, you know, for any of these, you know, these big financial decisions, having a financial advisor who, you know, understands, you know, what doctors go through, that can be really helpful. Absolutely. It's like having a, you know, a trusted guide to help you navigate all of this complicated financial stuff and make sure you're making the, you know, the right decisions for you, your goals, your values.

All right. Well, we've covered a lot of ground here in this deep dive. We've talked about everything from, you know, student loan debt to retirement planning. So, like, what are the big takeaways you want our listeners to remember?

What are the key points? I think the big thing is that, you know, investing is a medical professional. It's about, you know, understanding that you have these unique challenges and then in making smart decisions and being proactive about securing your financial future. It's about starting early, diversifying your investments, making the most of those tax advantaged accounts, and then, you know, making sure your income and your assets are, you know, well protected.

It sounds like a good plan for financial success. Do you have any final words of wisdom for our listeners before we wrap up this part of the deep dive? Yeah. I would just say, you know, don't wait.

Take action. Knowledge is great, but it's only powerful if you actually use it right. So start planning, talk to an expert, get some advice, and take control of your financial future. Start today.

How wise words. And with that, you know, I want to leave everyone with something to think about. We've been talking about, you know, your financial future as individual doctors, but what about the financial health of, you know, the whole healthcare system? How do all of these individual choices that we make, you know, about our own finances, how do they affect the bigger picture?

That's something to, you know, to think about as we head into part two of our deep dive. Yeah. That was a lot to cover. We really went through a lot of ground there when it comes to, you know, finances for medical professionals.

We really did. But, you know, you know me, I always like to kind of zoom out a little bit, connect the dots, see how all of this fits into the bigger picture. You know what I mean? Always thinking big picture.

So what's, what's on your mind this time? Well, you know, we were talking about those, those really high insurance premiums that doctors have to pay, like that 5% for obstetrics that the guy had mentioned, and it got me thinking about like the domino effect, you know, the ripple effect of those costs. Yeah, that's an interesting point. You're basically drawing this connection between, you know, the individual choices that doctors make about their finances and the, the overall health of, you know, the healthcare system, right?

Exactly. Because those high insurance costs, you know, for doctors, they end up contributing to the, the rising cost of healthcare for, you know, for everybody, for patients. It's kind of a vicious cycle, isn't it? It is.