How Doctors are Different from Real Estate Investors
There’s a myth that physicians get into medicine because it pays well. Like I tell all my medical students: it pays you, but won’t make your rich. If you get into medicine for the money you will be sorely disappointed and likely suffer from burnout. Those chasing dollars often make poor treatment decisions, get locked into procedures and become technicians, spend money and rack up debt, and often retire with very little to show for it. If you are still interested in medicine after that, then I know you are here for the patients. If not, you can get out of my ER.
Doctors have many benefits. If they are in it for the right reasons, they are often very satisfied with what they do. They are content to work well into what others would call retirement, not because the have to, but because they love it. They rarely have to worry about losing their job due to layoffs. They are well-respected in the community.
Doctors pay high income taxes. It’s one of the biggest disadvantages to this type of work. They are often at the highest tax bracket. Additional production means higher taxes and a disincentive to working more. They have a high income but often spend it on flashy things that devalue quickly and add to debt. Their net worth usually stagnates over their lives. Their income also stagnates; they don’t get annual raises like many other professions.
Doctors are here to help other people. They are altruists, often putting other’s well-being before their own. They work long hours and are happiest when they can heal someone’s illness. So, they do more and more. That also leads to burnout. And, it also leads to a poor retirement. What if there was a way to keep helping people but prepare for a solid future after medicine? Read on.
I want to be clear – it’s not just physicians. It’s any high-performer, from lawyers to CEOs. They often make a lot of money but not always. They often spend a lot of money and have a mentality that this will always continue. Their retirement will be paid by that 401(k) that they never really looked at. Increasingly, they are more likely to be employed by a large company, and rely on their employers to act in their best interests. Sadly, that doesn’t always happen. They need to take control of their financial future and become more like real estate investors.
The real estate investor is always looking for the way to make money. They want the ‘value-add‘, where they can increase the value of their property. They often don’t look for short term income gain, but play the long game, always thinking about what the investment will do in the future. If we can combine the best things about being a doctor with the best things about being an investor, we could have a fantastic life and fantastic retirement.
Next week we will talk about how to make it happen.
