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Top 11 Ways That Doctors Should Invest Their Money

Let’s just get right into it! You already know what investments I really think you should avoid. So, what are the top 11 ways that doctors should and can (wisely) invest their money?

I didn’t necessarily create this list in an exact order of importance. That will vary based on your personal circumstances. And that is the whole point of a written financial plan…to create you financial goals and priorities and then craft your investments to meet those.

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But, all of these 11 options are great ways for physicians (and really anyone else) to invest their money. If you are doing any of these, you are doing something right!

invest money

1. In yourself

It’s true. I didn’t put these in order of importance. But this one really is the most important.

Until recently (like within the past year), I had never really considered investing in myself. I obviously had invested in myself in the past, I just didn’t realize it. In fact, the over $400k of student loans that I took out for college and medical school was a HUGE investment in myself.

But I’m not talking about good debt now when I say to invest in yourself.

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I’m talking about investing in your well-being, your personal and professional callings, and in your financial education. Doing this will bring tangible and intangible rewards that dwarf anything else on this list.

For example, it’s tough to quantify just how much I have increased my net worth simply by buying books, reading blogs, listening to podcasts, and takings courses on personal finance. Any estimate is likely an underestimate.

But even more, the money and time that I have spent learning about and working on improving my overall well-being is even more significant and even tougher to calculate.

2. Paying debt

You weren’t going to get me through this list without talking about paying debt.

Too many people see paying off their debt as throwing money away. Nothing could be further from the truth. Each dollar that you pay down your debt is a dollar your net worth increases. And each dollar that you pay to your principal above your monthly debt service decreases the amount of interest you will pay. Getting out of debt will increase your cash flow by whatever amount you are paying to debt each month.

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And I’ve never met anyone who was debt free who regrets it or is financially worse off.

Interest arbitrage is a great idea. But in my opinion, debt pay down comes first…

3. Your marriage (or partnership)

It’s not talked about enough how important your marriage or partnership (if applicable) is to your overall well-being. It is also extremely important for your financial well-being.

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And unfortunately, we all have experienced at some time in our lives just how easy it is to let even our closest relationships slip.

Invest in your marriage through mini vacations, nights out without kids, and just plain talking to each other and showing mutual interest.

This is something that I am constantly working on…and Selenid and I even just took our first mini-vacation since we both graduated last June.

Ok, now let’s get into the more traditional investments that we all think about.

4. Stock Market

I hesitated in calling this section “stock market.” While I think all doctors should invest their money in the stock market, it really should be invested in the stock market only in a very particular way…

And this way is called index funds.

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Put simply, investing in broadly diversified low cost index funds is a way to invest in the whole stock market (AKA invest in the US/global economy AKA invest in human ingenuity) for the long term.

Set your asset allocation, invest in index funds, re-balance once a year, and you will win the game.

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5. Bonds

People really hate bonds right now.

Their rates of return are really low with the exception of I bonds.

But let’s remember what bonds are used for. And let’s start to do that by remembering what they are not used for. Investing in bonds is not in order to chase really great returns. They are lower risk investments and thus have lower reward. (But I will mention that there have been time periods over which bonds have outperformed stocks.)

What bonds are actually used for is as a conservative portion of our portfolio that provides diversification and a “cushion” to the short term volatility of stocks.

And they serve very well at that function, even today.

So, I recommend that you have a portion of your portfolio dedicated to bond index funds. This proportion should be equivalent to how conservative you want to be.

More conservative = more bonds and vice versa. I have 15% of my equity portfolio in bonds.

6. High-Yield Savings Account

People are really going to hate that I am including HYSAs on this list. But they are actually an important part of how you should invest your money.

You need an emergency fund. This fund covers your expenses in, well, the case of an emergency. Like a pandemic causing loss of employment, like a major home repair, like a new car when the old one breaks down. And even more disasters that I can’t imagine.

This emergency fund needs to be invested safely. You also need it to be accessible. You do not want to chase performance or you can find yourself with a real problem when you need the money but it’s not there because your investment is not doing well at that point in time.

Invest your emergency fund money in a high-yield savings account (even though they are not currently high yield at all!).

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7. Real estate syndications and funds

I’m lumping syndications and funds together because they are fairly similar. They are also what people are generally referring to “passive” real estate investing…even though no investing, including this, is truly passive.

Related Post:
The Complete Physicians’ Guide to Real Estate Syndications

I actually don’t invest in real estate syndications or funds. But that is only because I like to invest in real estate in a different way. But these types of investments can be a really great addition to your portfolio that provides good returns and diversification.

Basically, you give your money to a sponsor who pools it with others’ money to buy either one large property or many properties. You then make money back according to the terms of your agreement if the investments work out well. If not, you can lose some or all of your money however.

So performing due diligence before investing is critical.

Watch Jordan’s Masterclass Webinar on The 12 Steps to Financial Freedom for Physicians here!

8. Direct real estate investing

Personally, this is my favorite way to invest your money.

Related Posts:
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Direct real estate investing entails owning one or many properties that you rent out. Then, you make money in many different ways:

  • Cash flow
  • Mortgage pay down by tenants
  • Forced appreciation
  • Tax savings

It’s true that this requires active involvement. But there are ways to minimize this either by automating your systems (like Selenid and I do) or by hiring a property management company.

9. Your practice

This one probably should have been higher but to be honest I didn’t really think about it until now. That’s probably because I am a hospital employee.

But many (although now less than 50% for the first time) of physicians are in private practice. Investing in your practice can grow your profits exponentially.

Related Post:
The Easiest Way to Find Savings for Your Practice

One of the private practice plastic surgeons that I knew well in NYC told me that he invests over $1 million in just the employees in his small office. However, the return on this for him was incredible both monetarily and otherwise.

Come to think of it, even employed physicians like me are investing in their practice. My way of growing my income/investment at work is to improve my skills and outcomes and productivity to negotiate a better subsequent contract.

10. Treats

I’m the first to call out others for calling things like a new watch an “investment.” It just isn’t. It’s better just to not pretend and to call a spade, a spade. The watch itself is not an investment. It’s a consumer item that you bought for some reason.

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And that reason is what differentiates if an investment was made or not with the purchase. If the purchase was made intentionally, then you made an investment in your happiness and well-being.

When I say that the purchase was made intentionally, I specifically mean that that purchase was made after thought and patience at a price that is equal to or less than the amount of happiness/satisfaction/utility that it brings you. Here is a full explanation of what I mean by intentional spendings…

Do this and the purchase is worth it. By definition. Buy it guilt free and enjoy. Don’t let anyone spend shame you.

If it doesn’t meet these criteria, reflect some more on why you want this purchase and if it is really worth it to you…

11. In a side gig

I challenge all doctors to start by trying to generate just 1% of their clinical income via a side gig.

It could be via real estate investing or leveraging your medical knowledge. Or anything else. But creating an additional stream of income can make a profound impact on your ability to reach financial freedom.

They may take some time and money invested to start and/or scale, but they are worth it in my opinion.

Here is a full guide of side gig opportunities: Physician Side Gigs to Make You Passive Money

So, how many of these ways are you investing your money in your journey to financial well-being and freedom?

What do you think? Did I miss any ways that you should invest your money? Do you disagree with any that I have included? Let me know in the comments below!

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    Jordan Frey MD, a plastic surgeon in Buffalo, NY, is one of the fastest-growing physician finance bloggers in the world. See how he went from financially clueless to increasing his net worth by $1M in 1 year and how you can do the same! Feel free to send Jordan a message at [email protected].

    9 thoughts on “Top 11 Ways That Doctors Should Invest Their Money”

    1. Hello Jordan,
      Excellent post. I think that your first three are the most important and I would venture to say that number three (marriage) is the single most important. Me and my wife and kids often discuss just how important it is to have a solid “foundation”. Everything else is built upon this. If you don’t have a good relationship with you wife or husband, nothing else is going to work very well. Also, not getting divorced will help you finances in a huge way! I know lots of guys in medicine that are working longer than they want to because they got divorced and need to work longer in order to retire and/or support their new wife and kids!
      Thank you,

      • So true! I think we often get caught in the weeds of personal finance trying to master advanced concepts without first setting a base. Spot on!

    2. I personally invest in individual stocks, have a great time doing it, and over time have made plenty of money. I don’t do direct investing in real estate because I know I would loathe it – I have REITS and those work for me. The point is not comparing different ways to build wealth as they all have their upsides and downsides; the point is different people build wealth in different ways and each person has to find out for themselves which way they want to do it

    3. Having lived through it, I can testify that these common sense approaches really do work, with minor modifications to suit our evolving circumstances. I do want to single out one that is especially gratifying, and that is our marriage of 60 years. Although we don’t have that much more time to log in, I can say that our investment in each other has really paid off and continues to do so.

    4. I’ll comment on the financial aspects of the list. I think stocks, bonds, mutual funds are overrated and generic. You’re on the right track with real estate. Active rental is too much work for full time professional, and a headache unless you use property management, or your spouse does most of it. If spouse is involved and you can take advantage of real estate professional status for tax purposes essentially off-setting active income w passive losses. You mentioned syndications but say you don’t invest in it, which I consider strange, as my approach is now mostly passive syndication and low on stocks. I have done the traditional route of 401k, index funds, 529 etc, and recently pivoted to mostly alternative investments all real estate related and mostly syndications into apartments, self storage, even a mobile home fund. Only about 1.5 yr into this new arena and seeing positive results. Cash flowing at what we spend yearly. One divestment recently that yielded 30% in 8mo (luck had a play on it). Another potential divestment before summer expected to yield 25-30%. When the market crashed during Covid shutdowns, we waited until it recovered and cashed out 80% of what we could, rest left there in 401ks that we couldn’t get out due to 10% penalty. If we wanted to we can retire now, based on 25x networth of annual expenses. Just accelerating growth via passive investments.

      • I think your plan is very reasonable and had done well for you! I don’t do syndications because I have so far favored active investing which with automation of processes has become very “passive” for us. I do like well vetted syndications as a vehicle however. But I still believe in a hybrid plan including index fund investing. Especially for those looking to “set it and forget it”

    5. Thank you for your insight.
      I am at the financial independence phase at the age of 62.
      This included a near 30 year Navy career as a Family Physician where I had a mission.
      What? Keep the force healthy so they could complete the mission for the people of the USA and go all over the world to achieve that mission.
      My wife died on active duty in 2014 and is buried in Arlington National Cemetery with full honors.
      I retired at nearly 30 years in the Summer of 2021 with a pension.
      I did for a few months join the civilian ranks but found no mission.
      Great group and patients but I did not have a higher calling so minimal employment as an FP in 2022.
      I work as a radio host for medical issues, hope to teach at my alma mater by theFall/2023.
      I actually ran for the Florida House of Representatives in 2022 but lost in the primaries. But I did garner about 20% of the vote with a 4 month campaign and little staff.
      I pray that all of you are prosperous and are able to assist others.
      I am actually applying for a position at my local golf course wher I am taking lessons to use the machine to pick up balls at the driving range.
      Like Forrest Gump cutting the lawn for free.


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