Medical Schooling

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Looking for today’s post?

Disappointed at its apparent brevity?

Don’t be.

This is actually my longest and most thought out post to date.

It’s just that you’ll have to do a little clicking to move over to richmondsavers.com (an excellent finance/travel site run by the talented Brad and Laura.) And you should check out you their site while you’re there too. (You won’t regret it.)

Today’s post was literally 16 years in the making.

It encompasses all that I’ve learned from my medical education and practice about financial planning.

So please click over.

How build wealth like a doctor

But before you do feel free to enjoy this profound picture.

 

12_funny+pictures

Start Clicking Private….

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3 Responses to “Medical Schooling”

  1. Robert February 14, 2014 at 8:17 am #

    Doc, that was a great post! A lot of great analogies there. Well done!


    A minor bone to pick with you regards the title for #4: “Avoid avoidable risk.” Obviously, one should avoid risk that one doesn’t get rewarded for, such as nondiversified portfolios. That is the point you were trying to make and I agree with it. However, the title should read “Avoid unrewarded risk” or something like that. The technical term for this is “idiosyncratic risk”. If you didn’t mind making your readers’ eyes glaze over, you could have entitled it, “Avoid idiosyncratic risk”.


    Life is a balance of risk and reward. Often, to gain a reward, you have to take a risk. If you are too afraid of risk, you will have an unfulfilled life. You take a risk when you fall in love or get married, or have kids, or even go to medical school! (I’ll bet you took on a lot of student debt, betting that you would be able to cut it academically, that your health would last, that you wouldn’t be injured in an accident, etc., and then get stuck with high debts but without a doctor’s high income to pay it off).


    It is a well-known mantra in investing that you have to take some risk to gain a reward. The “risk-free rate” is a benchmark. Often, that is US Treasuries (though that isn’t quite the risk-free investment it once was!). Your point #1 said in 30 years a dollar would be worth at least 1.8 dollars. That is about 2% compounded real rate of return. That is basically treasuries or blue chip corporate bonds. The dollar becomes 7.6 dollars if invested in a diversified stock portfolio returning the 7% average real rate of return of the US market over the past many decades. You take a greater risk to achieve that higher return (vs. U.S. treasuries). For long-term investors, I believe the “gamble” is well worth it. But it is entirely “avoidable”. You could live with the risk-free investment if you preferred to always avoid avoidable risk.


    Like I said, it is a minor bone to pick, and I agree with the point you were trying to make. Just didn’t like the title.

  2. Miles Dividend M.D. February 14, 2014 at 8:46 am #

    Robert,

    That is a fair criticism.

    I think the real problem with number four is that it’s an imperfect analogy.

    It was a bit of a stretch for me to equate avoidable risk (like motorcycles and guns) with uncompensated risk (like investing in undiversified portfolios.)

    I happily take on excess risk in my own portfolio by tilting small, and including emerging markets.

    I took some artistic license. After all 10 is a nice round number.

    Thanks ,

    Alexi

  3. Miles Dividend M.D. February 14, 2014 at 4:53 pm #

    On and I forgot to mention, I already had a request in to Brad at richmond savers to change the “1.8” to “6.8%”. Good catch (as always. )

    AZ

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