Steven Podnos, MD, MBA, CFP

 Are there any financial benefits to leasing my car through my practice?

 In most cases, leasing or owning an automobile through the medical practice does not result in any tax benefits. Even if the practice were to pay all costs of the car, any non business-related use must pass through as income to you, the individual physician. 

It is possible to argue that having the practice own or lease the car allows a "cleaner" personal tax return (one without any automobile-related information.) In addition, leasing may result in larger tax deductions for depreciation, especially for more expensive cars. (You should confirm this with your accountant, because it applies only in certain cases).  

Using a mortgage calculator, you can try comparing the cost of leasing to the cost of owning by running the ownership option as a 5 to 7 year mortgage with a low rate of interest-say, 3% to 5%. 

If the monthly cost is not much less than the cost of leasing, then leasing may be an acceptable option from a financial standpoint. If the leasing cost turns out to be significantly higher than the ownership cost, then at least you will have a good idea of how much acquiring a new car every few years really costs. 

Some physicians buy high-quality automobiles that are around 2 years old and were previously leased to someone else, keep them for 2 to 3 years, then trade them in for another used, but fairly new car. This can be a good strategy for acquiring a nice car every 2 to 3 years at a much-reduced cost. 

Often these cars come with good warranties and service packages. You can calculate the approximate cost of ownership per year to compare this strategy with the choices of leasing or buying new cars.  

In my view the least expensive approach to operating an automobile is simply to buy an inexpensive-to-moderately-priced vehicle and use it for its entire useful life. Any other approach  generally will cost you more money- even though it may provide the pleasure of driving a new automobile. You will have to decide how much that pleasure is worth to you. 

 is principal of Wealth Management LLC in Merritt Island, Florida.

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Q: My checking accounts pay next to nothing in interest, and even most certificates of deposit are paying barely more than 1%. Yet I see advertisements offering much higher returns on various investments. How is that possible?

  The important thing to remember regarding fixed-income investments is the relationship between risk and return. Basically, a higher interest rate on your investment means you are taking greater risk. You may not always see the risks clearly, but they exist. Among them: 

 A U.S. Treasury investment, such as a treasury bill, almost certainly will return the promised interest and principal to you. A corporate bond generally is riskier, however, and thus should pay you a higher rate of interest. Bonds from unrated companies, foreign companies, and even some foreign governments may carry risks that are difficult to identify or quantify, however, so be extremely cautious when considering them as an investment. 

Moreover, if prevailing interest rates increase because of the higher inflation (as usually happens), the value of your bond when you sell it will be reduced. In other words, you should be compensated, in the form of a higher rate of return, on any fixed-income investment that lasts more than a couple of years. 

The Federal Deposit Insurance Corp. guarantees deposits in commercial banks only up to $250,000 if your bank fails. Having any more than that at the bank makes you, in effect, the bank's general creditor. It's not worth the risk for a 1% return on a certificate of deposit, is it? 

Podnos is principal of WealthCare LLC in Merritt Island, Florida. The information in his answer is not intended for, nor can it be used by any taxpayer for the purpose of avoiding federal tax penalties. Send your money management questions to 

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Many in my generation and previous ones grew up in homes that had enough money for basics but little else.  Relatively simple items such as a new record album or nice item of clothing were considered treats. I find that people who grew up like this derive a deep sense of pleasure from having enough money to lead a more affluent lifestyle. I worry about much of the current young generation, which has grown up with significantly "more."  

Parents cannot help noticing that  children have different temperaments concerning money. Some are born savers; others are not. This "hard-wired" characteristic can be difficult to change and will have a great effect on a child's later financial behavior.  

When your child is in grade school, many studies suggest, helping him or her develop a work ethic and encouraging delayed gratification will help the child do better socially in later life. An allowance and some assigned chores may help in this regard. Teaching your child to save some of his or her earnings for future purchases and to give to charity may help build a sense of gratitude and develop the habit of delayed gratification. 

During high school and even the later years of middle school, take two steps in your child's monetary education. First, if time allows, an outside job can be a wonderful experience. Your teen will learn how difficult it can be to earn and save money and perhaps will be motivated to go to college.  

You might think that you can wait another day to teach your kids financial responsibility. But it pays to teach them early.

Author | Steven Podnos, MD, MBA, CFP

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