Why doctors are such bad investors

At any given moment, about half of the physicians in the U.S. aren’t millionaires. While certainly, this is true for most Americans in general, doctors make much more than most Americans. In fact, compared to the average income in the United States of $87,864, physicians make 3 to 4 times more income than the average. Specifically, in 2020, physicians reported an average annual income of $243k and $346k for primary care physicians and specialists, respectively.

With such high incomes, how is it possible that all physicians don’t retire with millions of dollars in the bank? There are many reasons. Here are just a few:

  • A relatively short earning career
  • High student debt burden
  • High lifestyle costs
  • Bad investment choices

We could talk endlessly about these reasons, and I’m sure we will, at some point. Today, I’m going to focus on this last factor: bad investment choices.

How to be a bad investor

The same Medscape survey that revealed the high relative income of doctors also showed that about half of them reported making bad investments in stocks or real estate.

When you think about the factors that may make it more likely for doctors to become bad investors, a few damaging beliefs come to mind:

  • “I’ve got to make up for lost time”
  • “I’m smarter than everyone else”
  • “I’m too busy, you should do it”

Let’s review these one-by-one to understand the origin of these beliefs.

“I’ve got to make up for lost time”

By the time I finished residency training, I was 34 years old and $300,000 in debt. If not for the Dr-ess, my family would have started out earning money a decade after our friends who went into other professions.

It takes an incredible amount of education and training to become a physician, and especially a specialist. This takes a really long time.

Including college, it was 17 years before I earned my first paycheck as an attending physician.

I remember the first couple of years of my job. I had this frantic feeling that I needed to make as much money as I could, as fast as I could, to make up for lost time. I pushed myself to work more hours but rapidly found myself on the brink of burnout.

This feeling crossed over to investing and is one of the main drivers behind my decision to transition from index fund investing to rental real estate investing.

Bigger returns, faster returns — now. If not directed with care, this feeling can make doctors the perfect mark for bad investment choices and get rich quick schemes.

“I’m smarter than everyone else.”

This is an interesting belief, because in many cases, it’s true. As an aggregate, physicians have some of the highest IQs of various professions. The entire process to become a doctor selects for high levels of intelligence and motivation.

The fallacy is for doctors to believe that sheer intelligence will automatically make you a good investor.

A physician might be an expert at recognizing the difference between a cancerous or benign blob on a CT scan. But recognizing a great stock or a great real estate investment? Not necessarily.

“I’m too busy; you should do it”

Finally, many physicians are quite busy. The average doctor works about 52 hours a week. With these long work hours, it is quite tempting to offload financial management to others.

While surely the vast majority of financial advisors are quite ethical, there are certainly some salesmen masquerading as advisors.
Over time, high management fees and poor investment choices can significantly impact a doctor’s ability to accumulate wealth.

What should we do about it?

So how do we combat all these beliefs that can make doctors into bad investors? I have a few thoughts.

First of all, don’t panic. Most of us are indeed starting behind the eight-ball when it comes to wealth accumulation. But even with a shorter runway, physicians make enough money to make up for lost time. With a well-constructed financial plan, you can hit your goals, whatever they might be.

Second of all, be humble. Recognize that vast scientific knowledge doesn’t always translate into financial wizardry. Take the time to educate yourself in any area where you plan to invest. For example, I only started to accelerate my real estate investment after I took a formal real estate investing course.

Finally, take ownership. Realize that your financial future is your responsibility. Don’t offload all the details to an advisor without having a basic understanding of what is happening to your money.


So there you go. I hope this helps you understand why many doctors are such bad investors. If you’re hearing some of the damaging beliefs echoing in your mind, just repeat after me: “Don’t panic. Be humble. Take ownership.”

Hopefully, this mantra will help you get on the path to success.

Daniel Shin is a urologist who blogs at The Darwinian Doctor.

Image credit: Shutterstock.com

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