Doctors’ financial needs are often complex and unique, so it can be difficult to know whether you need a financial adviser and what services they can offer? It’s important to understand some of the key elements of financial planning and how it can benefit you, before taking the leap.
Financial planning is more than getting personal insurance to protect you and your family, clearing debt or obtaining the highest interest rate for your cash.
There are many factors to consider such as your income, current assets and any debt you have accumulated. Your debt may include anything from study costs to a personal car loan, or a practice loan. Financial advisers will also take into account other factors such as:
- Should you pay additional tax to start repaying your study debt?
- Is your loan tax deductible?
- Would your loan repayments be lower if your debts were consolidated?
- Can you pay your loans off sooner and free up some cash flow?
This all takes considerable time and expertise your accountant may not have, so it can be beneficial to speak with a professional financial adviser. They have expertise covering everything from investing, taxation, insurance and super, to retirement and estate planning. Our financial advisers will look at your whole situation, both personally and professionally, to create a strategic plan to maximise your income and assets to achieve your goals.
Insurance cover is the foundation of a sound financial plan because it protects your assets and health, so this should also be considered. But how do you know whether you can afford insurance and what type is right for you?
One of the first questions your financial adviser will ask is whether you have a budget? It’s essential to know how much income is coming in and how much you spend, as this information will guide your decisions. For example, how much you can afford to pay for insurance cover or what debt you can afford to buy your practice. For access to a terrific budgeting tool that’s easy to use visit: moneysmart.gov.au
Next, focus on your income sources. For example, you may be a PAYG earner working in the public system or derive income from your private practice. If so, you want to ensure you have taken advantage of the tax strategies available to you as a doctor, such as salary sacrifice or salary packaging in the public system. Of course, the big question is do you earn enough income to meet your ongoing expenses and future lump sum requirements?
Strategy and investment options
Once you have all this information you need to consider your goals. Are you planning for your retirement and want to know when you can actually afford to retire? Are you looking at how you can make the most of the income you now enjoy? Maybe you have a lump sum and want to know the best way to invest it? All of these questions can be answered by your financial adviser.
There are a couple of important elements to financial planning that are worth understanding. The first part of a financial plan is strategic and does not include any investment or insurance recommendations. The strategic component looks at the options available to you and determines the best way to achieve your goals. For example, one strategy might be setting up a self-managed superannuation fund (SMSF) and purchasing your practice property in this. Another strategy may be increasing your personal superannuation contributions to save you some tax now (salary sacrifice) and to create retirement savings in the future. As a doctor, you might also need to consider options to protect your assets.
Once the strategy has been agreed, we then consider your investment options and which investment manager might be best. Having a sound financial plan in place will minimise any stress over financial decisions in the future and should help you achieve your personal and professional goals faster.
Working with a financial adviser will not only ensure you receive expert advice, but also makes for more objective and rational decision-making.
To discuss your situation, contact the advice team at Doctors Wealth Management. Call 1800 128 268 or book an appointment online today.
Important: *The material contained in this publication is of general nature only. It is not, nor is intended to be legal, accounting, tax or financial advice. Doctors Financial Services Pty Ltd (DFS) and its related entities have not considered your individual objectives, financial situation and needs in providing this information. If you wish to take any action based on the content of this publication, we recommend that you seek appropriate professional advice. While we endeavour to ensure that this information is as current as possible at the time of publication, we take no responsibility for matters arising from changed circumstances, information or material. DFS and its related entities will not be liable for any loss or damage, however caused (including through negligence), that may be directly or indirectly suffered by you or anyone else in connection with the use of information provided. Doctors Wealth Management is a registered business name of Doctors Financial Services Pty Ltd ABN 56 610 510 328, AFSL 487758. Doctors Wealth Management Financial Advisers are Authorised Representatives of DFS.