I have met, addressed and spoken to about 5000 doctors. I know about 15000 more (assuming that those who bought my book read the book!!). Let me call myself a self-appointed expert on knowing how doctors invest. I agree that I must be knowing about 50% of what doctors do with their money, but that is not a bad start! Here are some seasoned tips to doctors. These tips may not make them rich, but it will let them sleep well and allow them to keep what they have already earned:

  1. Please do not enter a business you do not understand: Imagine you were a partner in a restaurant / hookah bar that was gutted down and 12 people died inside. You will now be arrested by the police and asked a bunch of questions – which will be tough. Really tough.
  2. I know one doc who entered into a business arrangement with a builder. Builder died. Tons of cases landed at her house. It took her 10 years to get out of the mess.
  3. Know a doctor whose house (given on rent) was used to commit suicide by the servant of his tenant!!
  4. One doc bought a car and gave it to an unknown person for using it as a taxi. Remember it was registered as a private vehicle in the name of the doc (he wanted the depreciation, right?). The man killed somebody and of course ran away. It took the doc a lot of money, and effort to get out of that mess.

What is the learning from all the 4 examples above?

When a person tells you about an investment option, he does not tell you the risks or the problems that could arise. This is easy to understand, he is a salesman why will he tell you the bad things about his product or business model? It is for you to ask!

What are the questions that you should ask – at least for an investment?

  • Is this a product you are recommending because it is good?
  • Will you buy this product for yourself or your family?
  • Is the manufacturer of this product paying you a commission for this?
  • If I were to pay you a fee which is EXACTLY the same will you still suggest the same product, commission free?
  • Is there a better product at this point in time which is more suitable for this particular goal?
  • Will you suggest a switch from this product suo moto or will I have to initiate a switch?
  • What is the average return that this product has given over the last 1, 3, 5, 7 years?
  • What is the standard deviation of this return?
  • Can you share the rolling return please?
  • I see that this fund has given 73% in 2015 – and then underperformed in 2016, and 2017, should I worry?

When you ask these questions, there is a good chance that the salesman will get vary of you. He might get a senior manager to meet with you.

It might also make him defensive if he is offering products like ULIP because he will have to give pointed answers. Get a rival salesman to answer similar questions for a DIFFERENT product.

Suddenly, you are reducing the risk in your portfolio. And that is great?

As a doc what steps do you take to reduce the risk in your portfolio? Please share in the comments.

 

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  1. Dear Subra sir,

    Though I am a full time practising physician. I am very much curious and reasonably knowledgeably in the matters of personal finance. I entirely agree with your observations about my colleagues. I keep getting investment opportunities like those at least one per week.
    I personally take an effort to save my colleagues/friends from such sharks. I mostly highlight the your blogs for clarifying their doubts.

  2. Subra,

    Did you get chance to review the practice/business financials for doctors? There are many doctors who have taken huge loans to build hospitals and struggle to make them profitable.

    The case of Mumbai cardiologist who couldn’t finish his ambitious hospital project is well known. Eventually it was taken over by a large industrial group.

    I have come across many hospitals started by doctors which are barely generating FD kind of returns on equity. A large hospital chain in Pune has downsized significantly in past 2-3 years to cut losses. The PE firms are stuck with hospital investments.

    Would like to hear your observations on this.

  3. doctors ego. Friends tell them..you studied so much, you are so intelligent…YOU MUST HAVE YOUR OWN HOSPITAL. So at 50 they borrow and build…and then repent…

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