Making long-term financial plans may be critical to your success. Think about where you are at, what your long and short-term goals are and what could happen down the road to keep you from reaching your goals. Here are 7 things to consider when planning for long-term wealth:
1. Paying off your student loans
According to a report from researchers at Boston University and the Association of American Medical Colleges, 23 percent of those at private medical schools graduated with loans of $250,000 or more. The first thing you should do after graduation is to find out how much you owe and determine a repayment strategy. Then stick to it – even if it means passing on recreational purchases and activities.
2. Having a diversified investment strategy
How much risk is too much with regards to investing? History tells us that a diversified portfolio across investment classes is critical to helping you avoid risk. A portfolio that includes domestic and foreign securities, real estate, and other investment options should prove far less risky than holding the majority of your investments in stocks and bonds. Consider these investment tips.
3. Thinking twice before opening a practice
While the rewards of owning your own practice (or being a partner in a practice) may be great, it comes with considerable risks – especially when you consider today’s increasing focus on efficiency and documentation. Before you decide if it’s the right thing for you, consider the cost of opening a business and whether or not it’s something that truly interests you. Business, legal, financial, human resource and site management decisions can require as much of your attention as treating your patients.
4. Keeping your spending habits in check
You worked hard to get to where you are now and it’s no crime to enjoy the fruits of your labor. Just think twice before you reward yourself with that exotic sports car or dream house. It may be worthy of your standing in the community, but it could strap you financially in the long run.
5. Choosing your mate wisely
Marriage may be the biggest financial risk you will ever take. And should it not go as planned, divorce is a complicated issue that can seriously impact your long-term wealth. Deciding who should get what can be quite a challenge. Your home, rental property, retirement plans, stock options, deferred compensation, professional practices and more will all be on the table.
State laws vary greatly concerning divorce, but having competent representation with experience in divorce and financial matters can help you hold on to your fair share.
6. Protecting your income
What would happen if you were no longer able to work? As a physician, your ability to earn a good income is probably your greatest asset. Protecting your income with disability and life insurance is one of the most important steps you can take to safeguard yourself and your family financially.
Don’t wait. By purchasing life and disability coverage at a young age when you are healthy, you can lock in lower rates for years to come — even if your health changes.
7. Planning for the worst
By the time you turn 50, find the money to purchase Long-Term Care (LTC) Insurance. The younger you are when you make the purchase, the less it will cost. Accidents and illness such as dementia, stroke and heart attack can render even the strongest of us incapable of caring for ourselves. And, according to the National Clearinghouse for Long Term Care Information, you have a 70 percent chance of needing long-term care sometime after age 65.