How much should physicians invest? How much risk should they take with their portfolios? Should they invest short-term or hold long-term positions? Since targeting physician investors is so lucrative, how can we protect ourselves?
This blog has been getting a lot more traffic and so I am getting more emails from advertisers who would like to advertise their products and services on this blog.
Here is one email I received today:
The purpose of this post today is to make physicians aware of how we become the targets of marketers and to understand the purpose of investing so that we don’t lose sight of our financial goals.
targeting physician investors
This individual, the VP of marketing, wrote me this email because he wants to target the high-income physicians on my blog. There is absolutely nothing wrong with targeting physician investors – that’s what marketers do but even blogs are turning into advertising vehicles for these companies, so it’s good to be aware.
I’m a bit radical in that sense – I don’t consume any radio, news, or TV. All advertisement is turned off on every service I use. Maybe I’m more susceptible to advertising than others.
High Income/High Net Worth
Physicians, or any high-income medical professional, are good candidates for investment products such as this because they have disposable income. They also have a high household overheads, making them easy targets for high-return investment promises.
In order to invest on such platforms you must be an accredited investor which means you have to either have a high net worth or earn a lot annually.
This particular marketer wants to advertise commercial real estate investing to my readers. Basically, a group of commercial investors decide to buy a hospital or mall and turn to physicians and other high net worth individuals to help fund the investment.
When I tried to research the pro’s, con’s, and risks of commercial real estate investing I came mostly across websites which sell such investments to consumers (crowdfunding) followed by blogs which advertise for them – biased? Never.
Crowdfunding is kind-of-sort-of regulated by the SEC but a savvy investor shouldn’t wait for the SEC to crack the whip. We need to determine for ourselves if a particular investment is a smart option.
Why market real estate crowdfunding to physicians and not go directly to a bank? Wouldn’t commercial investors be dying for the chance to invest in something that claims 9-15% annual returns?
I clicked on this marketer’s website and much like the other real estate crowdfunding websites there are all sorts of numbers and terms which sound sexy, enticing you to want to invest, specifically designed for targeting physician investors.
There are percentages from 7% all the way up to 15%+ for projected future returns. It’s quite possible that these are possible returns but what is the downside – how easily could a bankruptcy or a pyramid scheme ruin my portfolio?
Physicians and Investing
I think it’s wise to have a diversified portfolio. Putting a portion of our investments in a real estate crowdfunding venture might make sense as long as we can understand the upsides and downsides.
I have also recently learned that you can overdo diversification – makes sense – if you have too many competing investments then you’ll never realize an actual gain.
A very important question is what percentage of our portfolio should go towards such investments? 5%? 10%? 25%?
The next question is when should a physician investor turn towards such investments? After maxing out their retirement accounts? After all debt is gone? After they have exhausted all other conservative investment options?
As physicians we are heavily invested in securities through our 401k’s, IRA’s, and Keogh’s. Most physicians max out their 401k’s for the tax benefits. Within those 401k’s they often invest in index funds or mutual funds which hold a mix of bonds and stocks.
A few of us also own rental income properties which we manage ourselves or farm out to property managers.
Purpose of Investing
Why do we invest our money?
Are we trying to become rich?
Are we trying to grow our net worth?
Are we trying to have enough for retirement?
Are we trying to protect the value of our assets?
I’ve asked this question to physician colleagues and the answers I’ve gotten have no matched the reality of the situation. It’s a question I’ve only recently been able to answer for myself.
The purpose of investing for most of us medical professionals isn’t to become rich but to preserve the value of our assets. We’re not professional investors, nor do we have the resources of such individuals to alchemize the few dollars we manage to put away so late in our lives.
Back to the Email
There is nothing wrong with having a blog that makes money off its readers. I actually tried that a while back by trying to add a membership portion to my blog but I gave up on it.
I also do clarity.fm calls which has provided me some income. I feel comfortable doing such things because I’m not using my readers to sell them something which may or may not be right for them.
I have a good amount of knowledge when it coms to things I’ve already tried myself. But advertising real estate crowdfunding to my readers doesn’t seem like the right move.
The point isn’t whether real estate crowdfunding makes money or not – in this bullish economy every investment makes money. Instead, I need to figure out if it’s in line with what I’m trying to accomplish.
The 4 of your reading this blog want to be financially independent, free of debt, and enjoy a passive income from your investments far sooner than age 70. I don’t think real estate crowdfunding will get you there. But if you think I’m wrong then please share your thoughts in the comments below.
Researching Particular Investments
Let’s say you go to research this particular real estate crowdfunding website or similar such investment products, what will you come across?
Well, you won’t stumble on a wiki for it because the marketers for such websites have paid good money to make sure either their own website, or other websites with whom they have paid relationships, result on the search.
Basically, the first few pages of any Google or DuckDuckGo search will result in paid information that has been uniquely created to sell biased information to the consumer.
The next few ‘trustworthy’ sites will be personal finance blogs where writers are providing often favorable critiques of such investments.
I am subscribed to quite a few personal finance blogs and the ads I see on there are concerning me but there is a reason why those ads continue to exist. Targeting physician investors is incredibly lucrative.
The advertising companies pay blogs such as mine money once a person clicks on those links and starts investing. If physicians weren’t clicking on those links then marketers wouldn’t bother contacting bloggers.
When physician personal finance bloggers share their financial success online then it can be enticing to do as they are doing in order to achieve the same. Targeting physician investors should be left to marketers and I’m not sure if it’s the right thing to do to fellow physicians.
I already experienced my share of harassment by piece-of-shit physicians who sit on my state’s medical board – I don’t need anyone else reaching into my pockets.
Before any physician decides to invest in anything outside of their emergency fund, their savings account, paying off their student loans, paying off their mortgage, they should be investing in order to preserve the value of their assets (keeping up with inflation and protecting against loss) before turning to riskier investments such as real estate crowdfunding.
Searching for The Big Payout
There is no big payout – I’m certain of it. Those targeting physician investors will tell you otherwise. There is no one investment that you’re going to find which will make you filthy rich, if that’s what you’re after.
You’re not going to buy your home for $250,000 and sell it for $3M unless there is massive inflation or you spent a ton of money on upgrades.
You won’t invest in a single stock and walk away with millions unless you invested a ton of money and took on massive risk.
Your 401k won’t have 50% annual returns and so your $300k investment will never morph into $15M.
Professional investors, on the other hand, spend their assets, their time, and take on high risk in order to achieve large profits. They rinse and repeat and by doing so enough times they eventually succeed. Even then, they have an exit strategy.
Positive Returns on Your Investments
It is possible that you start a business which you might sell for several million dollars down the road. But it was a business which required a lot of your time. It likely won’t be a lottery style payout – you knew how much you invested in it and the returns were appropriate and expected.
If you bought 5 single family homes and rented them for 30 years then you might sell that portfolio down the road for $7M but that was because you essentially had a second job of managing your rental properties.
Maybe you invested $15k in cryptocurrencies and cashed out at the right time and now are sitting on $100k. This is an incredible investment return but in the big scheme of things it doesn’t mean much, unfortunately. It’s not repeatable and for the handful of people who had big payouts there are 100’s who lost good money on that speculation.