An investment review is the key to ongoing success of doctors. However with time-consuming work demands, doctors can often push aside their portfolios or assume they’re on track to reaching their financial goals.
But this can be dangerous, and see you experience losses or miss out on prime opportunities that eventually jeopardise your long term goals.
Here’s how you can keep track of your investments and keep them performing well.
Set a review framework
Firstly, you should establish a review framework to follow. Doctors often have extremely busy schedules and will need to allow a set period of time to conduct the review. How long and comprehensive your review is will depend on the characteristics of your portfolio, including its size, risks, complexities, the type of investments and what level of monitoring they require. This will also influence the tools you use to conduct your review.
Also consider how you will use your review – are you simply trying to review your gains and make small adjustments, or will you use it to further guide the selection of other investments and your overall strategy?
Know where you’re at
If you’re confident in your situation and your investments are growing in comparison to the risks involved, then you may not need to alter a lot. However, if your current situation looks different to the last review, you may be concerned. But how do you know what to look out for?
These are the questions to ask when taking stock of your situation:
Are your goals still the same or have they changed? Perhaps you have a new business venture or an upcoming lifestyle change such as a marriage or new child. You might even have a new vision for your dream retirement lifestyle.
At every review, it’s important to define both your shorter term and long term goals to ensure your investments are helping you achieve them. Short term goals in particular will influence the type of investments you take on or sell.
How much risk are you willing to take on? If you’re after more security in your finances or looking for sustainable growth, then you may want to consider taking on lower risk assets or diversifying your portfolio with stocks, equities, property and more. However, if you have the financial capacity and cash flow to take on a high-risk, high-return investments, then take quality advice and know your limits.
Are you close to retirement or are you at an earlier career stage? Young doctors with plenty of time can afford to make bigger changes to their portfolio or take on more risk, while practitioners close to retirement will have a lot more pressure and time constraints.
Review investment performance
The performance of your investments will determine if and how you change direction in your strategy.
Are your investments performing well and generating the desired return, or are you carrying dead weight? While it’s always important to take the long-term view and ride the highs and lows of the stock market, it’s also equally important to identify when an investment just isn’t working. Holding on to a bad performing investment for too long can be detrimental to your portfolio and goals.
As a doctor, you’ll have unique insights into where the health and medical trends are, so it may be time to explore other opportunities or diversify your portfolio.
Understand tax complications
Before you make changes to your portfolio, consider the tax consequences and all the ‘hidden’ costs. With doctors already facing complex tax implications, you don’t want the added losses to burden you financially.
At the very least, you should be conducting your portfolio annually. However as you grow and take on more investments, you may need quarterly or half yearly reviews. This will ensure that any problems can be rectified early on without causing too much damage to your overall strategy. It will also guide your investment decisions and ensure you’re acting based on your strategy and long-term plan, as opposed to making rash, emotional choices.
Work with an experienced medical wealth adviser
You shouldn’t go it alone. A medical wealth expert, who understands your unique circumstances, provides you with the experience and understanding to review your position (without the emotion) and guide you in the right direction towards your wealth goals. No matter how long you’ve been investing for, it’s a medical wealth expert’s job to know the latest investment trends, tools and research, so they will be equipped with valuable and specialised knowledge for you. They will also understand all of the tax and accounting ramifications.
Finally, they will ensure the process is efficient, so you can get back to doing what you do best – looking after your patients.
Contact DocWealth, specialists in accounting, financial planning, investment and finance, investment and business for medical professionals. We operate in Adelaide, Sydney, Melbourne and throughout Australia. Managing partner Kym Nitschke is available for a free initial discussion about your situation. Call us on (08) 8379 9950 or send me an email.
– Kym Nitschke
The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Taxation, legal and other matters referred to on this website are of a general nature only and are based on DocWealth’s interpretation of laws existing at the time and should not be relied upon in place of appropriate professional advice. Those laws may change from time to time.
DocWealth specialises in accounting, tax and financial advice for superannuation. Contact us now for a no obligations discussion about your needs.