Improbable ideas can take off, making investors the newest residents of Easy Street. (Who knew sunglasses for dogs — Doggles — would grow into a $3 million-a-year enterprise for a woman whose border collie was sensitive to light?)
But even heavily marketed ideas can flop famously. (See “Coke, New” and “Edsel, Discontinued.”)
So how do physicians strike a balance between being open-minded to excellent — if unusual — investment opportunities and cautious about account-draining duds? Eugene, Oregon-based Physician Family Financial Advisors recommends physicians ask themselves some questions before pumping cash into the latest idea that’s “so crazy it just might work!” A few of those questions include:
Why am I being asked to invest? Is it that you have solid experience with similar investments? Or is it merely that you have money to invest and/or you may be naive?
Exactly how will my money be used? Thoroughly review the prospectus or business plan to understand how the investment proposes to generate wealth.
Are the people who want my money trustworthy? Don’t take their word for it. Confirm they are who they claim to be and that they have experience with these types of deals. Require a background check if their integrity is even remotely in doubt.
What if things go south? Any investment involves risk. Determine what recourse you have and whom you will deal with if all does not go as hoped.
Stepping Gingerly through the Student Loan Minefield
The manifold joys of dealing with student loans are compounded by the mistakes even cautious young physicians can make when attempting to dig out from under debt.
Median medical school student loan debt for 2015 graduates was about $183,000, according to the American Association of Medical Colleges, and many owe tens of thousands more from their undergraduate days.
Daniel Wrenne, CLU, ChFC, CFP, of Lexington, Kentucky-based Wrenne Financial Planning, notes on the company’s website some key errors newly minted physicians often make, costing hundreds of thousands of dollars in some cases. Here are just a few of those missteps:
Loan forbearance. While tempting when money is tight early in one’s career, forbearance “sets off a number of negative triggers with opaque costs [and is] a terrible idea for anyone with the means to make payments,” Wrenne writes. Barring genuine financial hardship, he adds, this is an option to avoid.
Excessive interest. Physicians who are not seeking public service loan forgiveness should think about refinancing if they are paying a rate higher than 5 percent. Failing to do so can leave tens of thousands of dollars on the table.
Inattention to loan servicer errors. As human beings dealing with complicated financial matters, loan servicers can make errors. Confirm that your records match those of the National Student Loan Data System and the servicer. Deal with discrepancies promptly, and document vigorously.