Investing Insights for Future-Conscious Doctors and Medical Professionals

By Ari Rastegar

Regardless of the medicine you practice or your role at a hospital/clinic,  you’re busy and just one person, and the financial and clerical aspects of working in your respective field are cumbersome. In addition to your responsibility to patients, you’re tending to family and endeavoring to protect your time. Amid everything, is the need to plan for retirement and build a reliable stream of wealth, something that reflects the decades of schoolwork and dedicated hours you’ve invested in yourself. Leveraging your salary to fund return-generating investments provides passive income, tax protection, and equity growth.

We’ll address considerations for the future, anticipating recession, and factors to consider in selecting an asset class that meets your investment criteria.

Prescribed Planning for the Future and Preparing for Recession

Commensurate with the work you put in to earn your career, medical practitioners are naturally well-compensated and earn above average salary. Accordingly, doctors and other members of the medical community have unique investment needs. 

For many in the medical profession, employment contracts guarantee consistent compensation for a fixed period. Compared to vocations that offer more sporadic income in the form of commissions, bonuses, and gratuities, the medical field creates an excellent base for building your portfolio, wealth, and passive income. However, being a medical practitioner carries challenges: student loan debt that can burden professionals for decades and significant income tax liability. 

You have a discernible advantage in many forms of investment. Stable income will help you qualify for investment financing, secure more favorable terms, and fluidly develop your portfolio. As you scale, ensure your investment strategy is diversified to preserve and build your wealth despite the performance of a particular submarket. 

Near or at the crest of the current economic cycle, we need to hedge for the future by staying mindful of the potential for falling values, inflation, and rising interest rates. Leverage due diligence to choose an asset class that is recession-resistant and creates shelter against tax liability.

Selecting an Asset Class

By way of overview, these are among the fundamental considerations in choosing an investment category:

• Degree of risk and your tolerance
• Typical return on investment
• Management responsibilities
• Control/influence over value
• Capital requirements 
• Legal liability
• Tax benefits
• Liquidity

Inherently linked to rate of return, risk tops the list. Securities, for instance, offer some of the highest potential returns but also pose the most significant risk of loss. 

Comparatively, physical assets such as real property fluctuate less in value and present acceptable financial and legal risks with proper structure and management. Real estate investment offers opportunities to influence the value of our assets through improvements and operational enhancements. Securities are typically favorable in terms of liquidity, while real property has an edge in hedging for inflation.

Some of the best investments in either class for medical practitioners include mutual funds, REITs, qualified opportunity zone funds (QOFs), and other professionally managed investments that spare the investor management duties while offering a degree of freedom regarding the allocation of funds and diversification strategy. Shared-risk investments also offer reduced barriers to entry with lower initial capital requirements and no need to acquire financing or source deals.

Diligent investors that ensure their portfolio is diversified, and invest with the advisement of professionals, can achieve independent success in publicly traded stocks, bonds, commodities, and real property; however, stable returns are available through shared-risk investments that place due diligence, financing, and operations duties in the care of experienced asset managers.

Liquidity is a paramount concern when you have an exit strategy in mind and want to ensure the ability to roll-over your gain to a new project or business venture. Prudent advice here is to research and embrace any available income and capital gains tax deductions, credits, and deferral programs available for your chosen asset class. 

Assets that require an extended period to convert to cash may hamper your subsequent investment plans, particularly in mature or declining markets. Correspondingly, a well-planned and timed exit strategy is essential for the timely transfer of any asset. 

Leveraging Respective Expertise

With a preliminary plan and asset class identified, find a seasoned, registered investment advisor and CPA. Do your homework: check their references, read client/peer reviews, and observe their thought leadership presence. From there, you’ll have an excellent foundation to build out the rest of your team – your mastermind group.

Assemble a qualified team of advisors that will help you improve your finances, identify opportunities, and pursue measurable investment goals. Irrespective of industry, numerous professionals neglect to make the necessary preparations in finding a niche-specific CPA and registered investment advisor who are ‘fee-only’ (aren’t after commissions).

These professionals oversee your portfolio and help you develop a bespoke investment strategy. Much as it’s hard-wired into our professional DNA to confidently recommend our clients/patients to other reputable specialists – medical pros benefit in the same manner by asking professional and personal peers for referrals to legitimate legal, financial, and business partners. 

Many Roads to Wealth

Fun for some – a requisite task for others – investing for retirement stability, tax shelter, and passive income is a proven way to build and protect wealth. According to the level of risk you’re able to bear, your resources, and inclinations, you have an array of asset classes and sub-niches to explore with your investment and financial advisors. For busy medical practitioners with limited time to manage or optimize investments for the best returns, working with experts and professionally-managed investments offer mitigated risk and dividends exceeding par.

Ari Rastegar is the Founder and CEO of Rastegar Property, a vertically integrated real estate investment firm.