As healthcare professionals, most of us are working full-time to earn a living as either doctors, pharmacists, PA’s or NP’s. We spend a healthy portion of that money to run our households and save the rest which we hopefully invest.
A transition point will come when you are earning more money from investing than from practicing medicine. At some point you can even cut back on your hours in medicine and earn a solid income through investing.
What Defines Your Profession?
I suppose the factors that define your profession are either what you do the most of with your time or what generates the most amount of income.
A mother who stays home with the kids might be a homemaker. A guy who works in a cafe serving coffee is a barista.
Yet each of these individuals might be doing something else on the side to generate more income or to satisfy their passion. I don’t think the homemaker will say she is a homemaker if she is earning $120k/year running her etsy store. Nor will the barista call himself a barista if he’s earning $7k/month from his real estate investments.
Finding Yourself In The Middle
You might find yourself right in the middle of your career and your investment income. You are still spending the majority of your time working at your main job but you’re earning a very healthy sum from your investments.
All the while, your investments are growing exponentially while your income is only keeping up with inflation.
The option of stopping your work as a physician might be too radical but you might wish you had more time to spend on investing. There is no reason why you couldn’t earn even more money from investing if you spent more time on it.
However, investing requires capital. The advantage of making the transition slowly is that you can continue to funnel assets into your portfolio while honing your investing skills.
The next step would be to branch out from your conservative style of investing and dabble in riskier, yet well-researched, investments. I can’t say much more about it because I’m in this transition point myself.
Focusing On What Earns You More Money
It seems more efficient to spend the majority of your effort on that which earns you more money. Of course, earning money isn’t the only thing that matters. But if you were among the many who have a limited amount of free time then focusing on investing might at some point be a better financial decision.
- Are you investments earning more per hour than your job?
- Are your investment returns going to continue to increase?
- Could spending more time investing increase your rate of return?
It’s not easy to walk away completely from income as a healthcare professional. We often get to enjoy $50/hour on the lowest end and well up to $300/hour. For most of us, fortunately, we don’t have to walk away completely and can transition gradually.
Potential To Increase Future Earnings
Up until a year ago I have been practicing medicine diligently at about 55 hours a week for a little over a decade. My income has increased by about 3.5% every year over this 10-year period. The work hasn’t gotten easier and the risks have increased but I’ve also never experienced a loss in income.
When it comes to medicine I have the option of taking on more administrative work or choose a more entrepreneurial direction in order to increase my future earnings. But for the sake of a higher income alone, I’m really not interested in either of those options.
I am still a novice investor. However, I have been very cautious and steady which happens to be a favorable factor at first. Though the market tide has raised my boat, my own investment behavior has also served me well.
Focusing On What’s More Enjoyable
If you’re a pharmacist or a PA, an MD or an RN, there is no pressure to completely cut the work ties to your profession. If you are among the lucky who can work your job part-time or on a per diem basis then you can free up more time to dedicate to your investing.
An important question to ask is, do you enjoy investing?
Few individuals enjoy investing but the ones who do, seem to do quite well. Perhaps you enjoy your investment results but don’t enjoy the process. I find myself in this latter category.
The restaurant business is among the riskiest businesses that you can start. However, my friend’s family have turned their restaurant business into a 9-figure empire. They are obviously adding something to the equation that is mitigating the risk of that business and they are profiting handsomely.
I mitigate the risk of being a physician by taking extra care when seeing patients. My bedside manner, my documentation, and my medical knowledge are all unique ways that help me lower my risk of a lawsuit or a medical board investigation.
We see our colleagues making clinical mistakes when they start feeling burnt out or when they are going through major personal problems. At the same time we see colleagues who are successfully running real estate empires on the side or running successful etsy stores.
Same way I curb my risks as a physician, I am learning of ways to lower the risks of my investment portfolio. I choose a wise asset allocation and I diversify my portfolio. I research each investment well before adding it to my portfolio and learn its nuances so that I react to its fluctuations intelligently.
Total Return vs Hourly Rate of Return
If I practice medicine full-time then I can earn around $250,000 a year which after taxes would be around $75/hour. This won’t leave me with much free time.
My investments require a few hours a month of work but not as much as my work. I spend a few hours adjusting my asset allocation and shifting funds from one broker to another when it makes sense to do so.
I won’t bore you with the math of figuring out which, my job or my investments, return a higher hourly rate of return. Though I’m getting quite close to beating the pants off of my job’s hourly wage.
So am I an investor or a physician? How about yourself, have you been earning more an hour from your investments than from your job?