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Doctors And Money – A Case Study About Financial Success

Doctors and money – it is not always a successful combination, but there is no reason why it shouldn’t be. I know I must sound somewhat like a broken record…but successful wealth creation for doctors always begins with effective cash flow management.

I thought that the most powerful way to illustrate this would be by way of a case study. Please note, personal details have been changed to protect privacy.

Doctors and money – a simple but effective case study

We recently started working with a young medical specialist. She had been saving her surplus cash flow in a bank account, where it earned next to nothing, with interest also being taxed at 49%. She knew there had to be a better way to manage her money and build wealth for retirement.

She also had a particular goal of buying a house, as well as being in a position to make lifestyle choices in 10 years time. She had no idea whether this would be achievable, and was expecting to have to work until she was 70.

However, she had underestimated the powerful combination of good cash flow, financial discipline and a reasonable amount of time…

The result

We devised a simple but very effective plan for the client. The starting point was to give our client the best possible chance of achieving financial independence within 10 years. The first requirement was to have her home mortgage fully paid off within 10 years. We calculated what monthly repayments would be realistic within the client’s existing cash flow, and took into account our client’s ‘dream home’ requirements. She was pleasantly surprised when we told her she could buy a house that would fit well in her ideal price range.

With the remainder of her free cash flow we recommended she establish a tax-effective investment portfolio that would achieve a tax rate that would sit well below her own marginal tax rate of 49%. She was baffled that she could accumulate a tax-effective $1m portfolio in that same 10-year timeframe. This will give her lifestyle options well before she can access her super.

Also, as she pays down her home mortgage, she may decide to employ some investment gearing and buy a rental property.

Sounds almost too good to be true perhaps? The truth is that our client is doing all the hard work, while we are making sure she harnesses the power of her surplus cash flow.

The best thing about this story is that our client couldn’t stop smiling as she left the meeting.

If you are a Medical Specialist who would like to achieve some ambitious personal goals, then contact us today on 08 6160 5918 or yves@affluenceprivate.com.au. We work with Doctors all over Australia.


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