Doctors and financial planning

Most doctors come to me and say “we took medicine because we were not good in math”. That is great. However many doctors (egged on by some CA) have started measuring ‘door to door time’ – when they have to go to a hospital they not only calculate time spent at the hospital but also the travel time. They do some survey among their patients. Then there is always online feed back.

However doctors are not sure what to see with respect to their investments…or finance in general. Here…suits not only doctors but even the patient!

  1. Net Worth: Most people get into an argument about whether they should repay the loans or make an investment. In most times they are just guessing and have no solid basis to decide either way. Even assuming that they invest in shares, they may not factor in the dividends when they calculate their return! How Gross! Well, well. Net worth is assets minus liabilities – and that FIGURE SHOULD ONLY KEEP going up, never come down.
  2. Savings Rate: What is the rate of savings – i.e. what percentage of your income are you able to save or invest.  A good number is like about 30% if you are a single income family, and if you are a double income family, I really cannot comment – because if the husband is earning say 4x of the wife’s income, the ratio looks funny. So in a double income family the one salary should be saved completely and about 30% of the bigger income should be saved.
  3. Debt: Income ratio: If the debt that you are carrying in your books is more than 3x your annual income, it might add to your stress. So if your debt is less than 2.5x of your annual post tax income, you are in better shape. Of course as your age increases, debt should disappear.
  4. Your weighted average CAGR on your investments: It is not enough knowing how much is your asset allocation, etc. what you need to know is the weighted average return on your investing. This means your investment income / total investments * 100. This number has to be greater than the rate of inflation impacting you and your family. If this figure is very low – say 5% it just means you are doing a terrible job and have filled your life with debt based products like endowment plans. This number ideally should be nicely above the PPF rate.

 

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3 Responses to “Doctors and financial planning”

  1. Subra and myself are born before WWW”
    So he calculate double income means more income! Sorry ! Subra!
    WWW= not world wide Web!
    WWW= working wife wealthy phenomenon
    wealthy wife (lady doctor) example is a financial hydrogen bomb!

  2. marrying a lady doctor doesn’t make anyone “rich”
    whether you marry a lady doctor or lady lawyer or lady collector or lady ceo or lady i.t. professional from any metro like Mumbai ,is always costlier than some “village girl from “naupad” village orissa, because 85% of professional women dont work after marriage!,yet the quality of “life” will be 10000 times more, and finally,they dont “cook” and you cant “sleep”,because of very high “personal inflation!”
    nothing against any “women”! just if you upgrade life” life may not “UPGRADE”!
    surendra

  3. Dear Mr Surendra,

    Sad to see that, you have found this, very late…
    Any how, try to re-adjust and prosper. All the best.

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