Just like others, doctors need concrete financial planning to address their short and long-term goals. At the same time, short-term goals encompass going on a vacation, home renovation, etc. Long-term goals entail weddings, giving children the best possible education, buying a home and saving enough for retirement. Physicians are always busy, and on their toes, doctors need to take time and chalk out a financial plan to address these significant goals.
Steps Doctors Can Take Toward Financial Planning
1. Get an Indemnity Cover:
A professional indemnity cover/ medical indemnity insurance protects doctors against any legal liabilities they may incur as a part of their practice. This cover protects doctors against legal costs and compensation filed by patients in case of a legal row, which can run into several lakh of rupees or even crores. A new-age indemnity plan covers the costs of hiring the services of a lawyer. It ensures medical professionals can focus on their practice without worrying about the quantum of financial losses that litigation can bring. This cover cushions their savings from being wiped out, thus putting a question mark on their career and reputation.
2. Repaying education loans before applying for others:
Most doctors seek education loans to fund their overseas education. However, an education loan covers tuition fees as opposed to a personal loan or a loan against property for doctors. It covers tuition fees, accommodation expenses and travel costs while studying abroad but can be used for diverse needs like setting up their clinic, funding research projects, etc., as they move ahead in their career. Depending on your financial requirements, you can opt for a loan.A loan against property for doctors offers loans up to Rs. 10.50 Crore*, whereas a personal loan for doctors offers up to Rs. 55 lakh. Also, once they complete their course, a significant portion of their earnings goes into repaying the loan. On the other hand, repaying an existing education loan on time helps them avail of business and personal loans for their different needs, which can add pressure to their monthly income.
3. Build wealth for significant milestones of life:
Financial planning is all about wealth creation to address significant life milestones such as marriage, buying a home or car, giving children the best possible education, funding their higher education, wedding and leading a stress-free retired life. Through prudent investments in different asset classes such as equities, debt, fixed deposits, etc., doctors must build wealth to address the significant milestones of their lives.
4. Diversification of investments:
Investing in different assets is a good idea. It diversifies your investment portfolio. It is essential to understand the risks and returns associated with different asset classes such as equities, debt, fixed deposits, gold, real estate, etc. Doctors should seek professional help before making any investment in the available assets.
5. Build a retirement corpus:
Doctors don’t have a specific retirement age and continue to work until they are physically able to. This gives them the freedom to choose their retirement age. Therefore, if their financial plan is sound, they can build a retirement corpus fast and retire early. Thus, financial planning for doctors is a must. A disciplined approach to their finances could lead them to a great deal of prosperity.
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