In this article I would like to explore investment for doctors, and in particular whether doctors should overweight their investments in healthcare-related assets such as medical real estate, biotechnology and healthcare stocks, as well as their own practice.
Your own practice or business
Running and growing your own medical practice and potentially another associated healthcare business (e.g. offering post-operative care) can be a great investment for doctors. It is critical though that you run your practice as a proper business, which includes business planning and regular financial reporting. Now more than ever do you need to look at maximising your profits, whilst also building a sustainable business. Ideally, you would also be thinking about succession planning, so the practice does not have to stop with you.
Medical real estate
Whilst buying your own rooms can be a great investment for doctors, I am not convinced that adding further medical commercial properties to your investment portfolio would be a good idea. They are typically big, lumpy investments, and having two such properties in your asset base will almost certainly lead to a lack of liquidity (immediate or quick access to cash) and a highly concentrated portfolio. A common mistake that I see is where doctors spend too much money on their fit-out, which is ultimately a depreciating asset.
Blue chip healthcare and pharmaceutical shares will probably already from part of your portfolio if you are invested in a diversified super fund. From my point of view there should really be no need to overweight your position by making extra investments. Biotechnology stocks or start-up healthcare companies should be seen as high risk and speculative, and should not form a core part of your investment portfolio. This type of investment is typically better suited as a satellite investment. You can read more about the core-satellite investment strategy HERE.
Summary – investment for doctors
While investing in your own practice can typically yield very good returns, care should be taken not to overweight your position into other medical assets such as real estate and shares.
About Yves Schoof
I specialise in managing and coordinating the financial affairs of medical professionals and have been recognised as one of the best financial planners in Australia. I am a Certified Financial Planner and member of the Financial Planning Association of Australia.
As I understand your time is extremely valuable and scarce, I am able to offer flexible meetings times, including outside business hours and during the weekend. I can even come and meet you somewhere convenient, or talk via videoconference on Skype.
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Yves Schoof and Affluence Private Wealth are Authorised Representatives of Synchron, AFS Licence No. 243313. The information posted is intended to be general in nature and is not personal financial product advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided and the nature of the relevant financial product having regard to your objectives, financial situation and needs. In particular, you should seek independent financial advice and read the relevant product disclosure statement (PDS) or other offer document prior to making a decision.
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