Physicians need not pump cash into artichoke yogurt startups or Senegalese chinchilla farms to wreck their finances.
A similarly dependable road to poor returns, according to James M. Dahle, MD, FACEP, is more banal: Just don’t pay attention.
Blogging for ACEP Now, a publication of the American College of Emergency Physicians, the author of The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing notes that too many physicians do not accept the reality that managing finances well requires time and focus.
Other common missteps:
- “Investing” in whole life insurance. Premiums are high, closing off opportunities for making more productive investments or paying off student debt.
- Opting for actively managed mutual funds. This defies evidence that low-cost, passively managed mutual funds perform better long term than the vast majority of actively managed funds. “Some mutual fund managers will beat the market, but you are just as unlikely to succeed at choosing those managers a priori as they are to repeat their past performance,” Dr. Dahle writes.
- Remaining hazy on retirement accounts. It’s actually useful for physicians to read their 401(k) account plan documents, according to Dr. Dahle, in order to grasp the plan’s mechanics, understand the fees involved and so forth.