Physician finances: What to do in these uncertain times

April 27, 2020

You don’t need a lecture about what to do and not to do with your money. What you need is a survival guide.

I set out to write a traditional missive for physicians about “6 Things to Do and Not Do” when markets are volatile, the world is uncertain, and challenges and opportunities abound. But it seemed trivial. Physicians are in the heart of the current calamity, many placing their lives on the line. 

You don’t need a lecture about what to do and not to do with your money. You don’t need an old-school presentation on traditional means and ways. What you need is a survival guide. A way to look at the changing world and make financially literate decisions moving forward. 

So, in the tradition of Pavlov’s pyramid (dogfood, bell, eventually drool to the bell without dogfood) and Maslow’s hierarchy (a bit more complex), I created the comprehensive Investment Philosophy Pyramid. My dog is not very happy with Pavlov and his bell, but that is another story.

Let’s start at the bottom and work our way up.

Indulge: Invest in Your Mind and Body.

This seems ridiculous when many of you cannot even pause to take a breath or bio-break. But taking a breath is the most important thing you can do. We are, all of us, caught up in an “otherness” that can make thinking straight nearly impossible. 

We are grieving. And grief comes in waves. At the bottom of the wave, if you can get through it, there are moments of clarity, self- awareness and creativity. Even one breath, one stretch can help free that energy. If you have the luxury to be with family, to sleep, to exercise, do it. This is your base of activities financial and otherwise.  Protect it, as much as you can.

Activities to do Freely: This is not the time to cancel your 401k or pension contributions.

With markets up and down, averaging in is a good way to go.  A higher rate of savings will beat a higher rate of return any day all day.  Don’t pull back, unless you absolutely need the cash.

If you must pull from retirement assets, you may be able to take advantage of recent provisions to lower your taxes and allow you to pay back what you’ve pulled out over a 3-year period. Federal school loans are also on hiatus until September 30th. You do not have to make payments and no interest will accrue.

Also indulge by sharing your financial concerns. Call, email and connect with your financial planner or, if you don’t have one, find one, preferably a Certified Financial Planner who acts as a fiduciary.  It’s not a sign of weakness to ask for help. You’re not bothering them. This is what they have trained and prepared for, what you ‘re paying them for, so use them. Let them shine! A good advisor will have already reached out to you.

Activities to Moderate: Please don’t look at your accounts every two minutes, or even once a day.

You can’t be highly effective in the ER or ICU if you are watching the COVID-19 news 24/7.  It’s the same with finances: the market is volatile.  It is up, it is down, it will continue to go up and down.  Your financial plan, if done properly, includes protection and buffering from the market’s vicissitudes.  If your plan doesn’t do that, it may be time to look for another advisor. 

Things to Avoid: I don’t really think I have to tell you what to avoid. 

It’s obvious, except when you are stressed, tired, grieving, anxious, which we all are now. Please do not give in to gimmicks, market timing, hot stock tips, concentrated positions and selling to lock in losses.

If you’d like to “play” and have the time to avidly watch the screens, talk to your advisor and decide what your ante is, i.e. what you can afford to lose and where you will walk away from trading. Do be prepared, when straying from plan, to lose all that money. Very few people can trade a position and make more than the bid-ask spread over time.

In sum, your best bet is to focus on what you do well: your job, your family, your health and your patients. These are your areas of highest return. If your feeling is, you’re not comfortable with your finances and your advisor can’t make you comfortable, then it is time for another advisor. Not time to jettison your plan.

And that, my friends, is my very best advice. Stay well, and thank you!

Paula C. Brancato is a financial planner with Barnum Financial Group. She can be reached at Paula.Brancato@Barnumfg.com.

Representatives do not provide tax and/or legal advice. Any discussion of taxes is for general informational purposes only, does not purport to be complete or cover every situation, and should not be construed as legal, tax or accounting advice. Clients should confer with their qualified legal, tax and accounting advisors as appropriate. Securities and investment advisory offered through qualified registered representatives of MML Investors Services, LLC. Member SIPC. 6 Corporate Drive, Shelton, CT 06484, Tel: 203-513-6000. CRN202204-263667

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