Thread by @hyderabaddoctor

Investment tips for doctors

It is a fact that most of us lack the basics of managing our finances. It is not unusual to come across doctors who have little awareness about their income, expenses & future goals (for which money is needed). Here are some tips that could help. twitter.com/i/web/status/1…

1. Life insurance: If you have dependents (children, spouse), life insurance is a must to safeguard their future in case of any unexpected incidents. Life #insurance is to protect the risk, and not an investment to get returns. Term plans are good.

2. Medical insurance: Medical care is expensive and we would have to bear the expenses if we or our family members fall sick. Family floater schemes are the best as premiums work out to be lower.

3. Professional indemnity insurance: Even if you are an excellent doctor, mistakes can happen, and it is better to have it covered. If you go for group insurance through professional organizations, premiums can be 50% lesser.

4. If you earn in cash, deposit them, as only then it can be invested. If you keep cash at home, the value depreciates over time. Using cash to buy gold (beyond certain amount) or real estate is illegal and moreover, they may not be the best options.

5. Keep only small amounts of money in savings account, which could be needed in emergency (may be equivalent to 3-6 months of income).
Also avoid investing in fixed deposits, as returns most often do not even beat the inflation.

6. The best & most rewarding investment is equity. You can invest in mutual funds or directly in shares. You should choose 4-5 mutual funds, including large, small and midcap categories. Direct (growth) funds are better. Do not have too many mutual funds, as difficult to monitor.

7. You could also invest directly in shares. It is better to invest for long term.
There are only two reasons to sell equity- first, when you need money; and second, if you feel the company would not do well in future.
For ex-50-100% rise in share price is not a reason to sell.

8. Gold is not a good investment. Over long term, returns are not good.
If you love gold, you can invest via sovereign gold bonds (SGBs)- it is safe to hold SGBs in digital format, and you earn 2.5% interest per year.
Do not allocate >5-10% of your portfolio to gold.

9. Real estate is risky. It can give tremendous returns at times. It can become a source of litigation, or can create differences among family members. One can not sell parts of real estate.
If you need 15 lacs for your child's education, you can't sell a plot worth one crore.

10. One can own a home for emotional satisfaction and happiness. Owning a second flat for earning rental income is not a wise decision, as returns are low.
Avoid taking loan for buying home (if you have money), as you end up paying much more. Try to prepay loans at the earliest.

11. Public provident fund, Sukanya samriddhi scheme and senior citizen saving scheme are good options for those who are looking for fixed returns (though the returns are lower than equity).
Debt or hybrid mutual funds are also good options for those with lower risk appetite.

12. REITs (real estate investment trusts), InvITs (infrastructure investment trusts) and recently launched Nexus REIT are good products with relatively lower risks and they offer quarterly payouts. About 5-10% of portfolio can be allocated to these products.

13. Take home message
*Have an idea of income, expenses (current & future)
*Make a list of goals and likely expenses for them
*Invest your money wisely to take some pressure off from the work (returns from equity could be more than what you earn from medical practice!)

Disclaimer: These are based on my personal experiences. Do your own research and consult your financial advisor before investing your hard earned money.
#Equity #investments #Doctors #MedTwitter