Many dentists and doctorsin Indiainvest in real estate for investment after setting up their practice andearning handsomely. We tend to be invested much overweight in real estate whichis usually not a good idea. A part of that thinking goes on to believe thatreal estate is a safe bet as it will grow upwards only unlike stock marketwhich can go downwards anytime and secondly, it can be withdrawn as and whenneeded with no time based bond like a few mutual funds, market linkedsecurities and debentures. We have to understand real estate is one of theasset classes and there will be periods of exacerbations & remissions(meaning over-performance and under-performance. The real problem is sometimes,when husband and wife, both are dentists/doctors; let us assume practicing inseparate outlets.
A typical example of self-employed professionals earning wellbut just well oiled earning machines only, that is where the buck stops as theyusually won’t be doing any financialplanning. Because of an overtly busy schedule, they usually won’t be keeping acheck on how much they earn because of variability in the monthly earnings(nothing is fixed in a private practice) and because of this usually, personaland professional expenses get muddled up. They do not have time for investmentplanning, tax planning etc. and end up making wrong investment choices at thefag end of financial year in March on just a verbal advice, hearsay or freeadvice or even worse, evade tax by hiding income.
Many are so busy with erraticworking hours that they don’t have the time or inclination to spend time onmanaging finances. Such medico/dental couples need to take certain drasticsteps like separating out personal and professional expenses, creating a budgetwith a high insurance cover for both and kids so that personal goals andprofessional expenses are taken care off in case of unfortunate events. Certainrealistic financial goals like children’s education, retirement plans have tobe worked out with the help of a financialplanner, if not by themselves and then have to realistically stride towardsachieving the same by investing properly and reviewing their investmentsregularly. They have to take stern decisions of investment via financialadvisor if they are not comfortable doing this on their own.Do’s and Don’ts for us – The Dentists / DoctorsWe, the healthprofessionals are fond of giving instructions to our patients as doctors ordentists, but when it comes to finance, we ourselves have to follow a few do’sand don’ts or saying it other way, a taste of our own medicine in matters offinance.
We have to follow a few cardinal rules to ensure that our finances remainin a healthy condition (similar to what we expect in our patients):1. The temptation to splurgeshould be curbed big time once we start earning the big bucks. This urgebasically stems from the so called ‘exile’ period we have spent in our so manyspent years as a junior student first, then as a senior student and then careerstruggling etc.
when we feel, we missed out on opportunities to have fun as westarted to earn well much later in life than our school, college or otherfriends. The urge spills on to fancy vacations, new cars, eating out everyalternate day etc. This juncture is very important to keep a check on ourexpenditure and concentrate on savings and investments. This doesn’t mean thatwe totally limit ourselves to the above, but drawing a decent line somewheredown the line does help a lot.2.
Prime importance is to begiven to have good amount of life cover and disability insurance cover so thatfinancial needs of family and profession are taken care of in case of unforeseenand unfortunate events.3. In this era of ‘consumer is king’, when there is a patientknocking on the doors of consumer court every minute, a good indemnity cover isalso a must. 4. For most of us, ourprivate practice is our biggest investment, so we have to know to nurture,grow, save & ring fence the same.5. We all have a very busyschedule and we work manyatimes post our fixed hours as well to attend tovarious emergencies. On top of that, we have our family, health and socialengagements etc.
also to look forward to. A healthy life wise fitness scheduleis a must for each one of us. We have to eat just the right and ado a regular exerciseto remain in a good physical shape. We have to be associated with some passionwhich can be a game, a brain challenging activity which makes us switch offfrom our work for some time and pursue the same so that we continually get akick in our life to stay mentally fit as well and this is important for our soundfinancial health also.6. Our financial plan has tobe firm and proper after a thorough and proper research with primary andsecondary financial goals listed and it should be deftly executed to achievethose goals. If there is no time to research and make a plan, outsource thesame by hiring the services of a good financial planner who should have a properinvestment plan investing in a variety of assets including equity, mutual funds and debt so that the investmentportfolio is diversified and the returns are optimum and are appreciated long-termcapital wise. It’s high time that we understand the importance of suchfinancial professionals.
The loans and debts should not go beyond our ways andmeans. We shouldpay off our education loans first and only then go for home loan or loans forbuying property to set up our own clinic. We should ensure that we understandthe investments and performance of the investments rather than blindlyfollowing the advice of the financial planner.