Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Why doctors are such bad investors

Daniel Shin, MD
Finance
April 4, 2021
Share
Tweet
Share

At any given moment, about half of the physicians in the U.S. aren’t millionaires. While certainly, this is true for most Americans in general, doctors make much more than most Americans. In fact, compared to the average income in the United States of $87,864, physicians make 3 to 4 times more income than the average. Specifically, in 2020, physicians reported an average annual income of $243k and $346k for primary care physicians and specialists, respectively.

With such high incomes, how is it possible that all physicians don’t retire with millions of dollars in the bank? There are many reasons. Here are just a few:

  • A relatively short earning career
  • High student debt burden
  • High lifestyle costs
  • Bad investment choices

We could talk endlessly about these reasons, and I’m sure we will, at some point. Today, I’m going to focus on this last factor: bad investment choices.

How to be a bad investor

The same Medscape survey that revealed the high relative income of doctors also showed that about half of them reported making bad investments in stocks or real estate.

When you think about the factors that may make it more likely for doctors to become bad investors, a few damaging beliefs come to mind:

  • “I’ve got to make up for lost time”
  • “I’m smarter than everyone else”
  • “I’m too busy, you should do it”

Let’s review these one-by-one to understand the origin of these beliefs.

“I’ve got to make up for lost time.”

By the time I finished residency training, I was 34 years old and $300,000 in debt. If not for the Dr-ess, my family would have started out earning money a decade after our friends who went into other professions.

It takes an incredible amount of education and training to become a physician, and especially a specialist. This takes a really long time.

Including college, it was 17 years before I earned my first paycheck as an attending physician.

I remember the first couple of years of my job. I had this frantic feeling that I needed to make as much money as I could, as fast as I could, to make up for lost time. I pushed myself to work more hours but rapidly found myself on the brink of burnout.

This feeling crossed over to investing and is one of the main drivers behind my decision to transition from index fund investing to rental real estate investing.

Bigger returns, faster returns — now. If not directed with care, this feeling can make doctors the perfect mark for bad investment choices and get rich quick schemes.

ADVERTISEMENT

“I’m smarter than everyone else.”

This is an interesting belief, because in many cases, it’s true. As an aggregate, physicians have some of the highest IQs of various professions. The entire process to become a doctor selects for high levels of intelligence and motivation.

The fallacy is for doctors to believe that sheer intelligence will automatically make you a good investor.

A physician might be an expert at recognizing the difference between a cancerous or benign blob on a CT scan. But recognizing a great stock or a great real estate investment? Not necessarily.

“I’m too busy; you should do it.”

Finally, many physicians are quite busy. The average doctor works about 52 hours a week. With these long work hours, it is quite tempting to offload financial management to others.

While surely the vast majority of financial advisors are quite ethical, there are certainly some salesmen masquerading as advisors.
Over time, high management fees and poor investment choices can significantly impact a doctor’s ability to accumulate wealth.

What should we do about it?

So how do we combat all these beliefs that can make doctors into bad investors? I have a few thoughts.

First of all, don’t panic. Most of us are indeed starting behind the eight-ball when it comes to wealth accumulation. But even with a shorter runway, physicians make enough money to make up for lost time. With a well-constructed financial plan, you can hit your goals, whatever they might be.

Second of all, be humble. Recognize that vast scientific knowledge doesn’t always translate into financial wizardry. Take the time to educate yourself in any area where you plan to invest. For example, I only started to accelerate my real estate investment after I took a formal real estate investing course.

Finally, take ownership. Realize that your financial future is your responsibility. Don’t offload all the details to an advisor without having a basic understanding of what is happening to your money.

Conclusion

So there you go. I hope this helps you understand why many doctors are such bad investors. If you’re hearing some of the damaging beliefs echoing in your mind, just repeat after me: “Don’t panic. Be humble. Take ownership.”

Hopefully, this mantra will help you get on the path to success.

Daniel Shin is a urologist who blogs at The Darwinian Doctor.

Image credit: Shutterstock.com

Prev

Don’t be the patient that says this

April 4, 2021 Kevin 2
…
Next

In memory of Bernard Lown

April 4, 2021 Kevin 1
…

Tagged as: Practice Management

Post navigation

< Previous Post
Don’t be the patient that says this
Next Post >
In memory of Bernard Lown

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

Related Posts

  • Why do doctors who hate being doctors still practice?

    Kristin Puhl, MD
  • Doctors: It’s time to unionize

    Thomas D. Guastavino, MD
  • When doctors are right

    Sophia Zilber
  • We’re doctors. We signed the book.

    Jonathan Peters, MD
  • Why doctors-in-training need better nutritional education

    Abeer Arain, MD, MPH
  • Who says doctors don’t care?

    Cindy Thompson

More in Finance

  • The hidden impact of denials on health care systems

    Diana Ortiz, JD
  • Why physicians are unlike the “average” investor

    David B. Mandell, JD, MBA
  • Signing bonuses and taxes: What physicians should know

    Shane Tenny, CFP
  • 5 steps to ride out a non-compete without uprooting your family

    Stanley Liu, MD
  • What every physician should know before buying into a medical practice

    Dennis Hursh, Esq
  • Navigating your 457 plan: key steps for physicians changing jobs

    Shane Tenny, CFP
  • Most Popular

  • Past Week

    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Why no medical malpractice firm responded to my scientific protocol

      Howard Smith, MD | Physician
    • A world without antidepressants: What could possibly go wrong?

      Tomi Mitchell, MD | Meds
    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • Bridging the digital divide: Addressing health inequities through home-based AI solutions

      Dr. Sreeram Mullankandy | Tech
  • Past 6 Months

    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • The silent crisis hurting pain patients and their doctors

      Kayvan Haddadan, MD | Physician
    • What happened to real care in health care?

      Christopher H. Foster, PhD, MPA | Policy
    • How the CDC’s opioid rules created a crisis for chronic pain patients

      Charles LeBaron, MD | Conditions
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
    • How to build a culture where physicians feel valued [PODCAST]

      The Podcast by KevinMD | Podcast
  • Recent Posts

    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • When rock bottom is a turning point: Why the turmoil at HHS may be a blessing in disguise

      Muhamad Aly Rifai, MD | Physician
    • How grief transformed a psychiatrist’s approach to patient care

      Devina Maya Wadhwa, MD | Physician
    • A speech pathologist’s key to better, safer patient care

      Adena Dacy, CCC-SLP | Conditions
    • Navigating physician non-competes: a strategy for staying put [PODCAST]

      The Podcast by KevinMD | Podcast

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 1 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

ADVERTISEMENT

  • Most Popular

  • Past Week

    • A faster path to becoming a doctor is possible—here’s how

      Ankit Jain | Education
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • Why no medical malpractice firm responded to my scientific protocol

      Howard Smith, MD | Physician
    • A world without antidepressants: What could possibly go wrong?

      Tomi Mitchell, MD | Meds
    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • Bridging the digital divide: Addressing health inequities through home-based AI solutions

      Dr. Sreeram Mullankandy | Tech
  • Past 6 Months

    • Internal Medicine 2025: inspiration at the annual meeting

      American College of Physicians | Physician
    • The silent crisis hurting pain patients and their doctors

      Kayvan Haddadan, MD | Physician
    • What happened to real care in health care?

      Christopher H. Foster, PhD, MPA | Policy
    • How the CDC’s opioid rules created a crisis for chronic pain patients

      Charles LeBaron, MD | Conditions
    • Are quotas a solution to physician shortages?

      Jacob Murphy | Education
    • How to build a culture where physicians feel valued [PODCAST]

      The Podcast by KevinMD | Podcast
  • Recent Posts

    • Why funding cuts to academic medical centers impact all of us [PODCAST]

      The Podcast by KevinMD | Podcast
    • What’s driving medical students away from primary care?

      ​​Vineeth Amba, MPH, Archita Goyal, and Wayne Altman, MD | Education
    • When rock bottom is a turning point: Why the turmoil at HHS may be a blessing in disguise

      Muhamad Aly Rifai, MD | Physician
    • How grief transformed a psychiatrist’s approach to patient care

      Devina Maya Wadhwa, MD | Physician
    • A speech pathologist’s key to better, safer patient care

      Adena Dacy, CCC-SLP | Conditions
    • Navigating physician non-competes: a strategy for staying put [PODCAST]

      The Podcast by KevinMD | Podcast

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Why doctors are such bad investors
1 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...