Financial planning for doctors: Start early to ensure a successful future

The correlation between a high-income occupation and net worth is not inherently a positive one. When I think about this truism, I am reminded of medical practice, one of the noblest professions in the world. The concepts of finance and accounting are alien for many doctors, since you of course go to medical school to learn medicine—not business.

“This is about planning for a second stream of income during your golden years, so that you work because you want to and not because you have to.”
-Yogin Sabnis, CFP, managing director at VSK Financial Consultancy Services Pvt. Ltd., Mumbai, India

Many doctors are majorly focused on investments and have a product-centric approach rather than managing their personal finances holistically. That’s where an expert financial planner can help (more on this in my previous mdCurrent-India article at:

Key Point: Ensuring a secure financial future starts with early planning. It’s important to limit the amount of debt you accumulate at one time, invest in equity mutual funds during the early working years, plan for retirement, prepare for contingencies, and buy adequate life, health, and indemnity insurance.

Here is some advice that is especially helpful for physicians in order to achieve financial freedom and security:
1. Do not pile up huge debt. If you’re like many doctors, you had or have educational loans to repay during your early working years. Then you require a home loan as you start your family. You may also require a commercial property loan for setting up a clinic/nursing home for a private practice. Do not make the mistake of taking out too many loans at once.

What you can do is borrow for one purpose at a time. For instance, focus on repaying your outstanding educational loan. Then take a home loan for your residential property and rent a commercial property for your practice. Once you have cleared off a major portion of your home loan, you can consider borrowing to set up a clinic.

2. Save and invest in equity mutual funds for the long term during your early working years. It’s important to get into the habit of investing in a savings and investment plan in your early working years irrespective of your loan liabilities. It is important to adopt an attitude of earn-invest-spend rather than earn-spend-invest. Invest small chunks of your savings portion regularly in equity mutual funds in the form of systematic investment plans (SIPs) for long-term wealth creation. They are the best asset class to beat inflation.

Adopt a goal-based investing approach for items such as your children’s education, their marriage, your annual vacations, etc. Defining the target amount and the...

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