I’ve reviewed hundreds of investment portfolios from many types of physicians -- emergency medicine physicians, neurosurgeons, radiologists, cardiologists, dermatologists, and more.
A common theme emerges: many have unnecessarily complex finances.
Here are a few examples:
Opening investment accounts at 10 different custodians
Owning 5 mutual funds that invest in pretty much the same thing even though the funds have different names.
Hiring 3 different financial advisors with each telling you something different. One guy is telling you to get out of the stock market. The other guy is telling you to put more money into the stock market. The third guy doesn’t believe in stocks at all and wants you to invest in “alternative investments.”
Keeping 8 different credit cards after being suckered in with the initial teaser offers.
Buying multiple properties such as condos and then renting them out, thus creating tax nightmares and potential cash flow problems.
I could go on but that’s just a taste of what I’ve seen after meeting with many physicians over the years.
Some complexity is inevitable especially as your assets grow.
But self-created complexity for no real financial goal simply sucks your time away from you and results in a disorganized financial life.
The Ockham’s razor principle states that if there are multiple competing hypotheses, the one with the fewest assumptions should be selected.
In other words simpler is usually better.
It’s also applicable to your finances and investments.
Complexity doesn’t necessarily result in higher investment returns or a lower tax bill. You always give up something when you make your financial life complex just to save a few bucks here and there.
So what I want you to do is sit down and figure out the parts of your finances and investments which you don’t understand.
Make a list of all of your accounts -- investment, banking, credit card, whatever -- for both you and your spouse if married.
Which ones can you cut completely?
Which ones can you consolidate?
This is one of the things I do for my clients.
It isn’t directly related to investment returns.
But it can have a big positive impact on their lives because they’ll finally see how everything fits together.
If that’s something that interests you, then we should explore whether we’re a good fit to work together and have me as your personal financial trainer.
You can get started by replying to this email and providing your contact info, or by going here:
Talk again soon.
Setu Mazumdar, MD, CFP®