Proper financial planning for a health practitioner typically entails an investment component to make the most out of one’s income. Prior to finalising any investment, certain things have to be considered such as:
Income and Taxes
Understanding how income and taxes are determined serves as the baseline for proper investment planning. The doctor should be aware of how shares, property, and other investments can affect taxes. Capital gains may be higher when tax-friendly investments are chosen.
Goals and Strategies
Investment strategies are based on identified objectives. Starting with simple, short-term goals like paying off credit card debts, the individual can then progress to future aims. Doctors would normally seek income protection and appropriate plans for retirement, goals that can be achieved by choosing diverse, lucrative investment instruments.
Risks and Returns
Risks should be weighed against possible returns or capital gains. Short-term investments like online savings accounts or term deposits carry little to no risk though have lesser gains, while long-term investments (e.g. superannuation funds) can either result in significant losses or yield huge returns. The latter is usually appropriate for retirement planning and wealth accumulation. In any case, stable markets or industries should be chosen.
A medical accountant should ideally be consulted throughout the planning process. Such a professional can assess an individual’s financial situation, formulate sound strategies, determine the most advantageous sorts of investment that can be undertaken, and point out the corresponding implications.