Comments on: Encounters with a Financial Planner http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/ The Journey of a Young Physician from Educational Debt to Financial Independence Fri, 10 Oct 2008 21:31:26 +0000 http://wordpress.org/?v=2.6 By: Dr. T http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-255 Dr. T Wed, 06 Feb 2008 08:37:42 +0000 http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-255 I hope to one day have the problems that your partners have but I don't foresee that happening over my 30 year career. I understand that I will eventually pay for a planners expertise but I won't be needing one for a while. I also firmly believe that no-one is going to be as concerned about your family's best interest as you will be so I am hesitant to turn too much control over to someone else, I'll pay for advice, a consult perhaps, but I would prefer to be the one making the final decision. Physicians do require a different approach, we are(should?) be much more focused on risk management than on chasing higher returns. Most of us have invested so much time and money that it is smarter to play it safe. I just want to be able to retire and provide a good foundation for my children, not to leave my children with an inheritance. After coming from a very middle class family, I will have to agree with Buffett when he said that inherited wealth is just food stamps for the rich. I hope to one day have the problems that your partners have but I don’t foresee that happening over my 30 year career.

I understand that I will eventually pay for a planners expertise but I won’t be needing one for a while. I also firmly believe that no-one is going to be as concerned about your family’s best interest as you will be so I am hesitant to turn too much control over to someone else, I’ll pay for advice, a consult perhaps, but I would prefer to be the one making the final decision.

Physicians do require a different approach, we are(should?) be much more focused on risk management than on chasing higher returns. Most of us have invested so much time and money that it is smarter to play it safe. I just want to be able to retire and provide a good foundation for my children, not to leave my children with an inheritance.

After coming from a very middle class family, I will have to agree with Buffett when he said that inherited wealth is just food stamps for the rich.

]]> By: anonymous http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-250 anonymous Tue, 05 Feb 2008 11:35:46 +0000 http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-250 you need a financial advisor specializing in physicians. i don't know your field but if you are not going into primary care or a poorly paid subspecialty or academics, you will likely have lots of money to invest. it becomes a question of expertise-you are paying them to know what will help you maximize your return based on their experience with others like you and ahead of you. most of my senior partners remain in the highest tax brackets in retirement. despite having many tax advantaged investments. their kids college funds are fully funded and being paid out of savings, not out of current earnings. they own multiple homes. you might argue right place, right time, and i couldn't disagree, but the fact remains that it takes a lot of time and energy to manage your finances carefully and for us, despite the interest in doing it personally, i chose to pay someone to do it so i could spend the time with wife and children. ymmv. you will regain the option of roth ira theoretically in a few years. you will have to decide roth 401. interestingly, every single financial planner specializing in physicians is arguing that our tax bracket makes the current cost of tax so high that they would not recommend pursuing the roth. i of course established these accounts anyways just to put dates on them in case of changes in future law, but again uniformly the advice was against it once training was completed. this despite a general belief that the tax rates will go up when we are retired and that we will be in whatever the highest bracket is. you may argue that they just get more money to invest (and higher commission), but some of these guys were not commission based and were talking about money they would not manage anyways. the biggest things are trust and competence in a financial advisor for physicians. i realize you wrote this a long time ago and may not care anymore. obviously i am up on call and really really bored. ymmv you need a financial advisor specializing in physicians. i don’t know your field but if you are not going into primary care or a poorly paid subspecialty or academics, you will likely have lots of money to invest. it becomes a question of expertise-you are paying them to know what will help you maximize your return based on their experience with others like you and ahead of you.
most of my senior partners remain in the highest tax brackets in retirement. despite having many tax advantaged investments. their kids college funds are fully funded and being paid out of savings, not out of current earnings. they own multiple homes. you might argue right place, right time, and i couldn’t disagree, but the fact remains that it takes a lot of time and energy to manage your finances carefully and for us, despite the interest in doing it personally, i chose to pay someone to do it so i could spend the time with wife and children. ymmv.

you will regain the option of roth ira theoretically in a few years. you will have to decide roth 401. interestingly, every single financial planner specializing in physicians is arguing that our tax bracket makes the current cost of tax so high that they would not recommend pursuing the roth. i of course established these accounts anyways just to put dates on them in case of changes in future law, but again uniformly the advice was against it once training was completed. this despite a general belief that the tax rates will go up when we are retired and that we will be in whatever the highest bracket is. you may argue that they just get more money to invest (and higher commission), but some of these guys were not commission based and were talking about money they would not manage anyways. the biggest things are trust and competence in a financial advisor for physicians.
i realize you wrote this a long time ago and may not care anymore. obviously i am up on call and really really bored.
ymmv

]]> By: Dr. T http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-19 Dr. T Wed, 20 Jun 2007 04:02:34 +0000 http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-19 thanks for the link BC, I definitely took the easy route at the time. I have taken a more active approach recently and am looking at changing mutual funds for my Roth, this time on my own. I also felt that my Uncle didn't fully appreciate my tax situation fully. As a resident I make about $42,000 a year but this should only be for a couple more years. After this I hope to have a salary that would disqualify me from making contributions to a Roth. So in theory I should be maxing out my Roth NOW because hopefully I will not be able to contribute to it in a couple of more years. This fact seemed to escape my Uncle. He mumbled something about nothing being guaranteed. He believes that the Government will take this tax break away in the future. keep following along, it should be an interesting journey thanks for the link BC,

I definitely took the easy route at the time. I have taken a more active approach recently and am looking at changing mutual funds for my Roth, this time on my own.

I also felt that my Uncle didn’t fully appreciate my tax situation fully. As a resident I make about $42,000 a year but this should only be for a couple more years. After this I hope to have a salary that would disqualify me from making contributions to a Roth.

So in theory I should be maxing out my Roth NOW because hopefully I will not be able to contribute to it in a couple of more years. This fact seemed to escape my Uncle. He mumbled something about nothing being guaranteed. He believes that the Government will take this tax break away in the future.

keep following along, it should be an interesting journey

]]> By: BC http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-18 BC Mon, 18 Jun 2007 00:52:31 +0000 http://www.debttodreams.com/2007/06/16/encounters-with-a-financial-planner/equity-investments/#comment-18 I think you're absolutely right that you could do this yourself. You could go to morningstar or yahoo and search the returns of the last year, 5 or ten. Isn't the question you should be asking is: Is that the best way to select which funds to invest in? Hey, just a suggestion, but check out this ebook on the brokerage and fund industry: http://www.portfoliosolutions.com/v2/main.aspx?id=books/seriousmoney or google the "ye mutual fund study" The academic studies of the last 20 or so years seem to suggest that portfolio return is largely due to asset allocation and expenses, not specific fund selection. Your main concerns should be getting a diverse (not just stocks!) portfolio with limited expenses, and limited tax consequences. best of luck... I think you’re absolutely right that you could do this yourself. You could go to morningstar or yahoo and search the returns of the last year, 5 or ten. Isn’t the question you should be asking is: Is that the best way to select which funds to invest in?

Hey, just a suggestion, but check out this ebook on the brokerage and fund industry:

http://www.portfoliosolutions.com/v2/main.aspx?id=books/seriousmoney

or google the “ye mutual fund study”

The academic studies of the last 20 or so years seem to suggest that portfolio return is largely due to asset allocation and expenses, not specific fund selection. Your main concerns should be getting a diverse (not just stocks!) portfolio with limited expenses, and limited tax consequences.

best of luck…

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