Great earners but Poor Investors

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Why do some of the highest-paid professionals fail to build wealth

A high income doesn’t mean wealth. They are mutually exclusive and rarely guarantee each other. A high income will help to build wealth if you can tactfully deploy it. It can also be the end of you. You think the money will continue to flow, you keep increasing your lifestyle, and one day you will look back and realize you haven’t built anything for yourself that is tangible and will take care of you when you decide to stop working. The day you decide to stop seeing patients is the day you will stop bringing in a paycheck.

Thinking like a doctor vs thinking like an investor

The path of a physician is relatively linear. We go to undergrad, we do research, we go to medical school, and then apply for residency. Up until that moment, many of the decisions that we need to make are already made for us. As an investor, you have to choose your own path. This is very different from what we have been programmed to do. As a physician, we try to mitigate risk, avoid adverse outcomes, and always hedge our choices with failsafes. Being an investor means absorbing a certain degree of risk. You can classify your own risk tolerance but every investment comes with some risk. How much you can tolerate depends on you ! Physicians are usually taught to be very risk-averse based on the premise of our training. Every physician can be taught to become an investor.

Over concentration 

We tend to have an over concentration into one asset class, and that is ourselves. We are all in ourselves. We work and working gives us a paycheck. Most of us are over-concentrated in our W2 jobs. Investors will look at this as an EXTREMELY risky investment because all of our wealth is concentrated in one asset class. As physicians, we need to realize the importance of diversifying our income streams. Your W2 job is great, but you need to build up something else. The world becomes more costly, physician comps change, and a “doctor’s salary” is no longer the sole source of income you should rely on. Find PRN work, try locums, explore the world of health care consulting. The soft skills you’ve learnt as a physician can translate and transfer into various other clinical and non-clinical roles.

Shift from an earner to an allocater

You must become the CEO of your own life. Yes, you are an earner, but after that, you must put on your CEO hat and begin to allocate the dollars you are making. These dollars have the potential to generate even more income for you without requiring additional time input. Being a strong earner is great, but you also need to figure out what to do with the income you generate. You could spend it all on a mansion and an exotic car, but more than likely, that car or house won’t take care of you when you want to slow down your work.

In conclusion

Physicians are taught to be rule following risk adverse workers. To truly grow, you need to take a small step outside of your comfort zone to see what’s out there.

A.K, MD