Top Investment Strategies for Busy Physicians
As a busy doctor, you’re a master at juggling tasks. Handling patients, diagnosing and creating treatment plans, completing administrative work, and dealing with staff are all within your daily responsibilities. But with so much depending on you, making time and energy to handle your finances can be a struggle.
The good news is that investing in your future doesn’t have to be a full-time (or even part-time) job. In many cases, a quick meeting with a financial advisor to discuss your goals can get you started. Once your accounts are established, all it takes is the occasional check-in to keep them working for you.
Whether you work with a specialist to create a portfolio or do the work yourself, understanding your options is key. Here, we’ve compiled the top investment strategies for busy physicians to help you make the most of your wealth.
1. Emergency Fund Savings
The first strategy for every savvy investor is a high-yield savings account, where you’ll store your emergency funds. This step is important because the rest of your investments may incur penalties if you need to access the cash.
A high-yield savings account lets you earn interest on your money while keeping it within reach. Unlike traditional savings accounts, which usually offer an average APY of .45%, the rates of high-yield accounts are competitive and can reach 4.25% or higher.
There’s no set requirement for an emergency fund, but many financial experts recommend setting aside 3-6 months of expenses before investing in other options. OJM Group covers this topic in this article on beginning investments for physicians.
2. Certificates of Deposit
Better known as CDs, these products are nearly as quick to create as a high-yield savings account. You deposit money once into a CD, which sits for a specified time and accrues interest. If you don’t touch the funds early, you’ll receive the full amount plus interest upon the CD’s maturity date.
CDs are available at nearly every financial institution. They’re easy to set up and come with a fixed interest rate. Typically, the longer you keep your money in the CD, the higher the interest rate you can receive. Maturity terms can be as early as three months or extend to ten years.
3. Index or Mutual Funds
Index and mutual funds are often grouped together, but the two are distinctly different. However, they’re both relatively low-risk investments.
Index funds are a mostly passive investment strategy in which money increases or decreases based on the stock market. They look at a stock’s big picture instead of its daily changes. Popular index funds include the S&P 500, Dow Jones, and Nasdaq.
Conversely, mutual funds include money from a pool of investors. This money is managed by a Fund Manager, who makes short-term investments like money market or bond funds.
4. Side Businesses
The value-added model of healthcare trend has made side medical businesses a popular investment. If you own a private practice, hiring someone in another specialty or bringing in a nurse practitioner can be a lucrative way to add income without doing the work.
The type of business that is right for you depends on your work. For instance, if you frequently refer patients for lab work, hiring a lab tech and conducting the testing on-site or in an adjacent facility may be cost-effective.
5. Exchange-Traded Funds
ETFs are similar to mutual funds in that they are pooled investments that can be active or passive. SEC-registered investment advisers usually handle active ETFs. They track an index or security and can be easily traded as their prices change throughout the day.
An ETF can be US-only or have international assets, too. Its performance depends on the index related to it, such as the SPDR S&P 500 ETF. These funds are ideal for busy physicians who want to diversify their investments and trade individual stocks.
Conclusion
The investment strategy that’s right for you depends on your goals. Do you want something hands-on or hands-off? Are you looking to make more money in a higher-risk opportunity, or do you prefer a long-term, slow and steady increase that’s lower risk?
No matter your financial goals in the long run, these five easy and quick investment strategies will grow your portfolio. Once you’ve set up each account, you’ll only need to check in occasionally to watch how your finances are doing, and you can get back to work!
