Doctors Financial Planning-How they have to do?
Doctors also need Financial Planning in order to achieve their Financial Goals and Dreams. But Doctors do not know they should Financial Planning.
Ten years back I used to think that Doctors are the highest income earners and career is so stable.
This is still true to some extent. But it is not same in case of all Doctors.
Yes, In their definitely will opportunity to earn money always as it has huge demand for Doctors.
Some of you know that I am running a Telugu You tube channel in the name of Paisa Health.
I am getting some leads for the purpose of Financial Planning.
Recently, I got a call from an Anesthesia who is looking for Financial Planning.
I gave Financial Planning to him along with Senior Doctor who a Lady Doctor.
I have realized after gathering data from both these Doctors that their Financial Health is so weak.
In order to improve their Financial Health they have to change behavior so much.
Let’s discuss first about the Steps to be followed by Doctors in their Financial Journey…
Doctors must Do Insurance Planning right…
Life Insurance Planning…
I have seen well Doctors also falling into insurance agents trap who sells endowment type or ULIP plans.
Doctors also not able to understand importance of protecting their dependents and Financial Goals with the help of Term Life Insurance.
They tend to buy these insurance policies because they are getting some maturity with these kind of policies.
A Doctor, who is earning 10 lakh a year may be able to pay 1 lakh per year as insurance premium.
But, with that 1 lakh premium, he may be insured for 20 lakh insurance coverage which is not at all enough to protect his/her dependents.
They are having different family back grounds prior to becoming a Doctor.
A Young Doctor whose family rich enough will not require any kind of life insurance at all. Under need-analysis of life insurance required to take click this link to read.
Young Doctor whose family belong to middle class or below middle class will definitely need life insurance.
But that too only Term Life insurance. You should not mix your investment and Life Insurance. Click here to read why.
Doctors belonging to rich families if you take Endowment Policies, then you will lose some wealth. lets see How?
Premium Per your 1,50000
Number of year… 30 years
return from policy 4% per year
Maturity after 30 years ₹ 87,49,250.29
But if you invest the same instead of this endowment type policy according to your risk tolerance in a portfolio where you will get 10% return per year.
Then below wealth you can create…
Accidental Insurance Planning for Doctors…
Doctors who belong to very rich families not required accidental insurance, But Doctor who belong to the middle class or below middle class should have accidental insurance.
I recommend you to have accidental insurance while pursuing MBBS OR P.G as you get sty fund.
You can pay the accident insurance premium from that sty fund.
As you are also exposed to accidental risk like other people, you may not be able to do your normal job after the accident.
In that case, Accidental Insurance ensures that you will get monthly Income based on the Insurance Coverage Opted.
But very few Doctors are planning for this Accidental Insurance.
Health Insurance Planning for Doctors…
As a Doctor you must have been experienced how people losing their wealth because of serious health issues when they occur.
Solution for this is Health Insurance.
I strongly recommend you to have health insurance much before you complete your post graduation.
Critical Insurance Cover…
This policy will give claim when you are affected with serious illnesses like kidney or heart liver etc.
I recommend you to take this insurance when your education completed.
I think you can not afford all these policies when your education is not completed.
Professional Indemnity Insurance Cover for Doctors…
In your occupation, There may be situations patients may die due to your negligence or due to your support staff negligence.
Patient are getting smarter every day.
If situation demanded and patient went to court against you, then you may have to give away your wealth if the court verdict comes against you.
To protect you from such risks, you need to have professional indemnity Insurance for Doctors.
Out of above insurances, I recommend you to have health and accidental Insurances while you are studying. you may try life insurance also if you can afford.
Other two insurances you can have when you start your career.
Investment Planning to Doctors…
If you have great skill as a Doctor, You may be thinking of setting up own Hospital in future.
But to do that you need plan your investments well.
A Sebi Registered Investment Adviser can tell you whether you can set up a Hospital and how to do investment for that goal not disturbing your other goals like Child Higher Education etc.
I heard from Doctors these days setting up own hospital needs huge capital and Political Support.
Investment Planning for Child Higher Education…
Being a Doctor, you may be thinking that your kids also should become Doctors as this profession is good for income earning and also will get earning opportunities for sure.
But inflation for the higher education is huge in India. It may be around 10% to 12% year.
Your investments should earn somewhere near to the inflation.
You may not want your kids to suffer of paying educational loans or yourself also.
So, before buying a bigger house you have to think about the child higher education corpus.
House Investment Planning for Doctors…
Having monthly income in lakhs, you can definitely afford a own house But do not stretch too much in buying a bigger house.
If you do that you may be out of funds to invest for your kids higher education.
Retirement Planning or Financial Freedom Planning for Doctors…
Few Doctors said to me that they have no retirement and they can earn at age 70 years also.
My point is you can work after age 60 also. But you should do this if you do not want to sit alone, not for livelihood.
By the time you attain age of 60, you should be in a position of having enough corpus even if you do not work at all.
Hence, for that you need to invest for this Financial Freedom goal wisely.
What the Lady Doctor( at the begining of this article I have spoken about) is doing…
She is 38 years old competed working as anesthesia Doctor at Hyderabad.
Her husband worked in I.T 5 years and taking care of children since then.
They accumulated zero corpus all these earning years as her P.G completed recently.
Now she is earning only Rs.1,00,000 per month by working for 8 hours in a day.
Her family spending Rs.90,000 out of that 1 lakh earning. But still want to construct an own house or worth 30 lakh by taking loan from bank.
It is very clear that they can not afford that house that they are planning.
Not only house goal but also they have child higher education goals.
But after giving financial planning to them I have realized that they can afford child higher education with the present income.
They are not in a position to achieve at least 10% of their goals with present income.
The Lady Doctor should earn an other Rs.50,000 more at least and her husband should earn Rs.1,00,000 per month like earlier.
If they do like I said above then only they can achieve financial goals.
You should not follow your senior Doctors for Investments…
Senior Doctors will tell you to invest in real estate by taking loan. They say that they became rich because of this way.
But do remember they accumulated wealth because they have high income not because their investments have given significant returns.
Read this article why you should buy land for investment. Click here to read.
You should follow asset allocation based on your risk tolerance in order to accumulate wealth for your financial goals.
Doctors are well dressed but they are depressed too. This is the quote that I read some where.
But it is true even Doctors are also if they increase their standard of living, then they may not be able to achieve their future financial goals.
Hence they may be depressed when their goals are not met.
So, even doctors have to do financial planning in order to achieve their financial goals with peace of mind.
Read article about Inflation. Click here to read.