There’s a lot of financial information out there. Some of it is helpful, and some of it is unhelpful. I’m sure many of you take notice when the Dow Jones falls 1,000 points in two days. And even if you don’t usually follow the stock market on a daily basis, when the stock market is dropping, the financial news media will let you know about it. Because when the stock market is crashing, ...

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Physician financial literacy is dismal. In the past, many physicians got their first introduction to finance from insurance salesman or financial advisors who give presentations over a free steak dinner. My medical school’s attempt at teaching us personal finance was to have a financial advisory firm give a half-day lecture about student loan management, budgeting, and investing. While the advice wasn’t inherently bad, I don’t think many of my classmates retained ...

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The tricky part about retirement planning is uncertainty. Uncertainty in retirement planning comes from three major sources. 1. Current and future income Doctors are fortunate in that they have very high job security. Even if you were to be let go from your current position, there will almost always be another position somewhere in the country (although you might have to move out of your current metropolitan area). However, the high income doctors currently ...

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No, I’m not saying that the process of investing in index funds is difficult. In fact, it’s actually quite simple to build a diversified index portfolio, whether your money is invested at Vanguard, Fidelity, Schwab, or Etrade. What makes investing in the stock market so difficult is tolerating its high volatility. Many investors are unable to stick with the stock market in the long run because of the ups and downs. But those who stay invested ...

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I was driving up to Northern Michigan recently for a nice vacation with family, and like any long road trip, before I left, I turned on my GPS on my iPhone to see how many hours it would take to get there. There’s an initial excitement to get on the road, looking forward to how enjoyable your upcoming vacation will be. However, once you hit the highway, road trips can become long, ...

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Vanguard, Fidelity, and Schwab have been engaging in a fierce competition to claim the mantle as the leading provider of low-cost index funds. As a result, each has aggressively lowered their fees for their index fund offerings over the past few years and advertised their low-cost offerings to investors. After the latest round of fee reductions in mid-2017, I wrote a post speculating whether it was inevitable that Vanguard, Fidelity, ...

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Many residents and fellows will contribute to a 401(k) or 403(b) over the course of their medical training. They should be commended for saving for retirement on just a resident’s income. Often, newly-minted attendings wonder what to do with these 401(k)s or 403(b)s from their training hospitals. In particular, they wonder whether they should convert their 401(k) to a Roth IRA. 4 options: some better than others In general, there are four things ...

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It is no secret that medical school is getting very expensive. Over the past 20 years, the cost of medical school has greatly outpaced the rate of inflation, and medical school debt is rapidly rising. The average medical student now graduates with over $192,000 in student loans, but with the cost of attendance for the most expensive private medical schools approaching $100,000, there are some physicians who ...

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No one can predict the future, but when making projections for things like retirement planning, what investment return should you expect? What do we mean by “investment return?” Before we get into the numbers, we need to go through a few definitions. Nominal returns vs. real returns These are just fancy words for before-inflation and after-inflation returns. Real returns (after-inflation) returns are equal to the nominal returns (before-inflation) minus the inflation rate. Real returns ...

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I strongly believe that clinical physicians do not have an edge on the rest of the market. Therefore, they should heed Warren Buffett’s advice — avoid picking individual stocks and invest in index funds. Nevertheless, some doctors do believe that they have an edge when it comes to investing in health care stocks. They think that just because they are a doctor, they are better trained to ...

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