Real examples of foolish investment and financial strategies physicians have tried and learned their lesson. Remember: if it's too good to be true, it probably is.
In a typical emergency medicine shift there are 2 reactions I had frequently when I saw patients.
The first is: “Why did the patient show up to the ER for that?” I’m usually referring to things like viral URIs, diaper rashes, or anxiety from a teenage girl who just broke up with her boyfriend.
The second is: “People actually do this?” Examples include: the insertion of sharp objects in bodily exitways, bites from chasing venomous snakes in the forest (I didn’t think this was dangerous, did you?), and pistol whipping just for fun while drunk with a loaded gun.
While we might poke fun at the foolish things patients do—and it’s great to tell those stories at parties—there are some similarities between those behaviors and what many physicians do with their money.
In the next few articles I’m going to share with you real examples of foolish investment and financial strategies I reviewed from several physicians and the lessons you can learn from them.
Here’s the first one:
“Low interest rates? Those are for losers!”
Last month I received a whopping $0.64 in interest from my checking account—actually it’s less than that because I have to pay tax. But that’s the market interest rate right now.
Two physicians I know told me that several years back when interest rates on CDs were about 3%, one bank on the island of Antigua paid more than double that amount (around 7%). The promise from the bank was that the CDs were “supersafe” and maybe even safer than owning US government securities.
These physicians each bought $500,000 of those CDs.
Let’s stop for a moment.
An unknown offshore bank in a Caribbean nation is offering a guaranteed interest rate on a CD that is more than double what we can get here? Gee, that doesn’t sound fishy does it?
Turns out, this was a Ponzi scheme run by Allen Stanford who bilked billions of dollars from tens of thousands of investors. While these 2 physicians thought they were getting great returns, they were just funding Stanford’s golden toilet seat on his private jet.
Lesson learned: if it’s too good to be true, it probably is.
While your personal portfolio probably isn’t involved in a Ponzi scheme, ask yourself if what you’ve been promised by a financial advisor goes against common sense and logic.