HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
I met someone recently who is still working at about age 70. They really like what they do, and in my opinion, are very good it. They do not appear to be hurting, but realize, considering their age, they probably should have more in the bank. They are a self-described “creative type” (they are), and feel the more they must think about money, the more it hurts their creativity.
Let me frame the advice I would provide them about their finances, keeping this in mind.
1) I love to think about money. It is my passion. I find the subject of money, investing and finance as much fun as Benny Goodman found playing the clarinet. As I have said before, I wish the stock market were open on Saturday and Sunday because the weekends bore me.
I mention this because it almost certainly blunts my insight into a subject that someone else finds not only not fun, but very uncomfortable. If any reader can offer a perspective or insight I have overlooked, please feel free to contact me.
2) There are some things in life that are so important that no matter how much you dislike it, you just have to do. For example; I am an introvert. I am terribly shy. Most people love to meet new people. I find it very uncomfortable. BUT, to get anywhere, you have to interact with people. So I say to myself; “Bob, if other people can do this, I can too”, and just try my best.
(I am in a partnership with a man who is one of the most genuine, truly nice, charming people you could ever meet. Both he and I realize this. Whenever we have any business to conduct, I let him do the talking, and he lets me take care of the money. We both recognize what we do best).
Money is important. It is never as important as your patient, or your integrity, or your freedom, but it is important. Even if you have no personal desire for material goods beyond those required to maintain your basic existence, money is still important. Unless you live a life of self-sufficiency on an isolated piece of land, you need some money to buy the necessities. If you become ill or there is an emergency, money is important. Money also allows you to help your loved ones (say you have a special-needs child or grandchild), or can be given to charity to help make our world a little better.
So here is my advice.
1) The best possible situation is where your spouse is good with money. I can think of physicians here in Columbia (three that receive this newsletter) who are really excellent docs and who let the spouse handle the money. Everything works out just fine.
The worst possible situation is where someone doesn’t like to handle money yet is too arrogant to accept it.
2) If your spouse, or a close family member or trusted friend, is not good with money and willing to help, then what do you do? All I can recommend is that you must be very, very, very careful of whom you choose as your financial advisor. Don’t force it. It is much better for your money to sit in (unexciting, boring) CDs at the bank, earning miniscule amounts of interest, than to get punk or even dishonest advice, and lose money it has taken years to accumulate.
3) Fortunately, people who are uncomfortable with handling money seem to be intrinsically risk-averse. They are very unlikely to be the ones that participate in the hair-brained, obviously stupid schemes that tend to entrap physicians. They are also, fortunately, usually thrifty.
4) This advice may seem a little hard-hearted, yet is the most obvious and the best: It’s your money, so it’s your responsibility. There’s no one you can trust and rely upon more than you. Even though it may be difficult, take the time and the effort to learn about how to manage your money.
The most important things in life, the ones really worth having, are never easy.
RMD
In Interim Bulletin #144A (February 17), I noted that silver had broken to a new 30-year high, and although gold and the miners had yet to follow, I thought it was most likely silver would pull the rest of the precious metals with it. That’s what has happened so far. Silver continues to make new highs (see chart of SLV, page 4). Now Silver Wheaton (SLW), Coeur D’Alene (CDE) and GoldCorp (GG) have followed and broken to new highs. The precious metals will be the subject of the next letter.
Fed Chairman Ben Bernanke testified last week before Congress. Rep. Ron Paul asked him to define a dollar. He could not.
RMD comment: Before we went off the gold standard, the dollar was defined for 140 years as exactly $20.66=one oz of gold. There is currently no definition because the paper dollars in circulation are intrinsically worthless; fixed to nothing. Buy some gold and silver.
On Friday, it was reported there were 192,000 non-farm jobs added and the unemployment rate fell from 9.0 to 8.9%
RMD comment: Before you get too excited, also note the Labor Participation Rate (the potential job pool, those 16 and older, who are looking for a job), fell to a 27 year low. So many people have been unable to find jobs that they have stopped looking.
J P Morgan (JPM), probably the most solid and best run of the big US banks, has announced it will now accept gold as collateral for loans.
RMD comment: Be your own bank and own some physical gold.
Wall Street Journal, 2/2/11. “EU Closes Insurers’ Gender Rate Gap. The European Union’s highest court declared illegal the widespread practice of charging men and women different rates for insurance…Insurers routinely charge women, who live longer, lower premiums for life insurance, young male drivers, who statistically cause more accidents, pay higher premiums for auto policies”.
RMD comment: Beyond absurd. What were these people smoking? This is terribly discriminatory against women. Even though I have been retired for more than 5 years, as I remember, there are differences between men and women. Should men and women pay the same insurance rates for prostate and uterine cancer?
Play out the implications for yourself: documented, verifiable differences (ie, science) are trumped by political correctness. This is scary stuff, a triumph for the anti-vivisectionists (Strictly defined; anti-vivisection means against research on living animals. In a broad sense, it refers to anti-intellectualism).
Several weeks ago I was in Santa Fe, NM. I went into a quality antique jewelry store that has been in business for decades. An 18 ct. gold amber-tipped cigarette holder immediately caught my eye. I asked them to take it apart and weigh the parts that were gold (14.9 gm. x 0.75=about 11.2 gm. of gold). The melt value was almost $600. The list price was $750 (I would be getting the antique value and the neatness basically for free).
I had initially gone into the store in a T-shirt and shorts after exercising and lifting weights. I went back to the room and changed into a suit (I found out a long time ago; the nicer you dress, the more respect you get).
I said “would you take $600 cash”? The lady went to the back to ask the owner. I could hear him say something about the gold value. He came out, and in a manner I had never before seen from a jeweler, asked me belligerently “What price were you quoted?” I said “this one” and pointed to the label.
He walked to the back. The lady came back and started to write it up at $750. I again asked if they would take $600. The owner came back out (he was really having a bad hair day) and said because I was staying at the hotel, he could give me a 10% discount ($675). By now I had had enough, so I said no thanks and walked out.
Over the next two days I thought about that. It was a reasonable deal. Sans the unpleasant experience, I could have bought it for a fair price (any further increase in the price of gold and it’s a steal). But I just couldn’t pull the trigger.
My point: I have come to appreciate that the people who are most successful are the ones who can work with people they might not like (Note: this does not apply if they are dishonest. Never deal with dishonest people). Try to divorce your feelings and just look at the dollars and cents. Likewise, be assured that if this had been more important, and for more money, I would have swallowed hard, gone back in there, and bought it.
Last week I spoke before the (local) Boone County Medical Society. I noted that one reason many physicians have problems with their finances is because of lack of instruction. I said “US medical school graduates are arguably the best trained professionals in the world yet receive no instruction on how to invest the hard-earned fruits of their labor. The average medical student graduates $150K in debt. The average DO student graduates with almost $200K of student loans. Since this is the average, many students are even further in hock.
This occurs where the medical establishment profits greatly from our capitalistic system. Some Deans and hospital administrators make 7-figure salaries and serve on the Boards of Directors of for-profit corporations. Medical schools generate significant profits from CME courses.
Yet if anyone even brings up the subject of money or finances, they are considered a pathetic money-grubber unworthy of the fraternity of medicine. I believe this is naïve, hypocritical and indefensible” (There were significant, prolonged applause, even some “here, here”).
RMD comment: Dr. William C. Roberts, Editor of The American Journal of Cardiology, has been my greatest supporter. I hope those of you that are in academic medicine, or members of the medical establishment, will do what you can to help further
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