Here are four options for the savvy physician investor.
In terms of finances, many physicians begin their career with a huge burden. On average, medical school debt amounts to around $215,900. And that excludes education-related debt accrued before entering medical school. Once medical students go on to become full-fledged doctors, they can expect to shell out between $365,000 and $440,000 for loan repayment — that's around $165,000-$240,000 solely from interest. That's why physicians need to be smart in their financial decisions. One good method of saving and earning is through investing.
Here are four options you can consider:
High-yield savings accounts are recommended for physicians who aren't willing to take too many risks in their investments. Just like any savings account, you deposit your capital in a bank, usually an online bank, and let your wealth grow over time. While regular savings accounts only offer an average of 0.04% annual percentage yield (APY), high-yield variants can amount to as much as 0.6% APY. The only downside is that you can't readily withdraw your money from ATMs as you'll need to transfer the money to your main bank account first.
CDs are another low-risk investment option. They're issued at banks and require you to deposit a lump sum for a set amount of time, without withdrawing from it. The time period can range from several weeks to years, giving you flexibility in your choice. Note that the longer the time period, the higher the APY. For instance, 1-year CD rates go up to as much as 0.6% APY, while 3-year CD rates are much higher at around 1% APY. When opting for this investment, just make sure you won't be needing your deposited cash anytime soon.
ETFs are for investors who are willing to take on some level of risk (and, in return, higher rewards). ETFs are a type of security that tracks assets. There are various types available, and each can hold multiple underlying assets, such as bonds, commodities, or currencies. If you're looking for a relatively safer ETF option, it’s important to know that there is also a means to invest in gold — a well-known safe-haven investment. Gold ETFs allow you to invest in gold without having to acquire it physically. Some of the top gold ETFs include the SPDR Gold Trust ETF (GLD) and the iShares Gold Trust (IAU). Both of the firms handling these ETFs deal in physical gold, as opposed to mining shares or futures. GLD is the largest fund that invests in gold, while IAU is the low-cost option. They're most useful during economic downturns since the value of gold tends to go up when the economy is struggling.
Investing in stocks or equities involve buying part of a corporation, which gives you the right to a margin of that corporation's profits. You can choose to invest in healthcare corporations to help in furthering their research. One promising stock option is Guardant Health (GH), a company working on a next-generation diagnostic test for cancer patients. Alternatively, you could stick to the popular bets, like Walt Disney (DIS) and PayPal (PYPL), both of which are going strong after the boost in users during the pandemic. Just remember to do your research before purchasing stocks to ensure that the corporation you're investing in will prove profitable in the long run.