2018 Resolutions – Get Your Finances Sorted

2018 Resolutions – Get Your Finances Sorted

Make your 2018 financial resolutions a reality with MedCapital   Yes, it’s that time of year again. The time of year when we feel as if we have to turn over a new leaf. The time when we misguidedly imagine that the arrival of a new year will magically provide the catalyst, motivation and persistence to achieve the goals we have put off.   Don’t set yourself up for failure in 2018 by vowing to finally get your finances sorted, try to do it yourself, not have the time or the knowledge, say it’s all too hard and give up. Instead make it easy for yourself, save yourself time and utilise the knowledge of financial experts.   To get your 2018 off to an exceptional start, MedCapital are offering free Financial Health Checks to all MedRecruit doctors. Exclusively for doctors, MedCapital aligns solutions to your unique financial needs.   Despite having their own accountants, 80% of the doctors we speak to are paying too much tax. Being the elephant in the room, tax often steals the limelight when it comes to finances and with accountants at the ready to provide a quick fix, a false sense of security leads to many believing their finances are in check.   In reality, relying on an accountant to manage your finances is about as effective as relying on paracetamol to treat a tumour.   Addressing just tax, one of six established components critical to financial success, leads to a career of over-payments, missed opportunities and heightened risk. It’s no wonder that 4 out of 5 doctors are delaying retirement for financial reasons.   Unlike...
Royal New Zealand College of General Practitioners Conference and Quality Symposium 2017

Royal New Zealand College of General Practitioners Conference and Quality Symposium 2017

Next week, on Thursday 27 – Sunday 30 July, MedCapital will be attending the Royal New Zealand College of General Practitioners in Dunedin. Despite Doctors being amongst the highest income earners, financial worries have consistently been cited as one of the top factors that have negative impacts on doctors’ stress levels and lives. Further research shows that stress causes emotional disconnection and depersonalisation with patients, which in turn leads to increases in major medical errors. Contrary to “do no harm” being at the very core of the medical profession, inadequate financial management is causing harm to doctors and consequently to their patients. So why are doctors suffering due to financial stress? As a Doctor, life is busy and your income opportunities are somewhat unique due to the variety of work circumstances. To manage this effectively doctors should take a similar approach to the world of medicine, by bringing together a team of professionals with sub-specialties working as a team to deliver the desired outcome. Unfortunately, the field of finance is generally not set up to cater to doctor circumstances. Rather than working together, each individual professional; an accountant, an insurance broker or an investment banker work separately on their own pieces of the puzzle without considering the wider picture. At MedCapital our Exceptional Wealth Model caters exclusively to doctor finances, incorporating the three core components of wealth mastery; protection, growth and enjoyment. Coordinated by a Private Wealth Manager your finances are managed holistically to enable you to achieve optimum financial health. With financial wellbeing accomplished, stress is reduced and overall doctor wellbeing is improved, in turn, patient care is...
The First Steps to Financial Freedom – A Guide for New Zealand’s Junior Doctors

The First Steps to Financial Freedom – A Guide for New Zealand’s Junior Doctors

Having worked with doctors for over a decade we know that the life of a medical student and even junior doctor can often seem deprived.  Your intentions with your first few pay checks are likely to consist of  reward rather than starting down the road of retirement planning.   Most junior doctors think that even talking about planning for retirement seems premature so early on in the career path, however, much like the hours of study that went into becoming a doctor, planning and perseverance with your capital creates the foundation for long term success. As a doctor, and as you progress in your career, your opportunity to be financially independent is significantly higher than most other professions, nonetheless 65% of doctors are still working after the age of 70* and most are putting off retiring due to financial worries. It is evident that opportunities are being missed.   To support New Zealanders saving for their retirement, KiwiSaver offers an annual Member Tax Credits contribution of $521.41. To be eligible, members must have contributed $1,042.86 during the year (1 July – 30 June)** . For a PGY 1 House Office working 40-45 hours a week, that’s just over 2% of the average annual income. For the same doctor, this could generate more than $20,000 in Member Tax Credits throughout their career.   Our team at MedCapital have extensive experience supporting doctors with their financial planning and wealth management, so they know exactly what’s required to set you on your way to financial freedom regardless of where you are in your career. Working with a specialist Wealth Manager who has a thorough understanding...
The Key Issue Affecting General Practitioner’s Finances

The Key Issue Affecting General Practitioner’s Finances

On Friday 19 and Saturday 20 May 2017, MedCapital and MedRecruit will be attending the 2017 GP Conference hosted by Acurity Health Group Limited, in Wellington. Dubbed the ‘best little GP Conference’, our purpose for attending is to show alignment with Acurity’s quality values by offering specialist support that enables Doctors to live exceptional lives. A research study conducted by The Royal New Zealand College of General Practitioners (RNZCGP) showed that of the 2146 respondent New Zealand GP’s, more than half are working more than 40 hours per week and are in the highest tax bracket of 33%, earning between $150,000 and $200,000 per annum. This situation brings a common set of challenges, namely having the right financial structure in place, to pay the correct amount of tax and accentuate income. The fundamental issue at the core of this is that the majority of GP’s are time poor, so adequate planning is often neglected due to ‘not having enough time’. This is a recurrent and profound factor across the whole of medicine and further research has shown that in fact 4 out of 5 doctors are delaying retirement due to financial concerns. MedCapital specialises exclusively in helping doctors to get their finances in order, we understand the complexities of the different GP work circumstances that need to be considered when structuring finances; e.g. employed, self-employed, practice owners, etc. Our team of experts not only aim to make sure you’re not over paying your tax, we focus on the bigger picture, as there is far more to successful tax management than getting your returns in on time and claiming expenses....
6. Insufficient Insurance Coverage and Structure

6. Insufficient Insurance Coverage and Structure

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.   Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 5. Sub-optimal Debt Structures   The last one is: 6. Insufficient Insurance Coverage and Structure   The last common mistake and certainly not the least is Insufficient Insurance Coverage and Structure.   This is perhaps one of the most common mistakes and it occurs on various levels – for personal insurance so Life, TPD, Trauma, Income Protection and for most of our doctors, needle stick. The coverage is often insufficient by an amount perspective, inappropriate from a structural perspective, and in the wrong vehicle. For example we recently had a doctor whose income protection was in his Super, which is complete madness when it isdeductible outside of Super   The insurance itself is often not what the doctor actually thinks they have and that comes down to the definition which is the difference between any cover and any occupation and own occupation for TPD – Total and Payment Disability. This means if the cover is under any occupation, the insurance company would not pay out unless the doctor cannot work in any industry. So you can have a leading Neurosurgeon but provided they can pack shelves at Pack and Save, they do not get the payout.   The second most common area from a insurance coverage perspective is just quite simply the structure of the insurance payout. If it is structured correctly the payout is ok and there is no tax issue where the payment comes...
5. Sub-optimal Debt Structures

5. Sub-optimal Debt Structures

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.   Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 4. Incorrect Asset and Income Structures   This week: 5. Sub-optimal Debt Structures   The next most common mistake is Sub-optimal Debt Structures. What we mean by that is doctors having an excessive amount of non-deductible debt. This includes things like car debt that’s on a personal nature, non-deductible person debt and worst of all – credit cards, where the interest cost can be over 22%!   What we want in terms of debt structures is the majority of debt being deductible because it effectively halves the cost for most of our doctors, maximising the income that is reducing non-deductible debt. In other words, income of doctors going into their offset account to reduce their net non-deductible debt, and where possible borrowing using things like the line of credit against their house, in creating deductible debt that further lowers their taxable income. This was what was essentially used by the Pediatrician who came to us (read his story here) to result in a very, very significant reduction in his taxable income.   Poor debt structures are also around not having debt in the right place. By clever restructuring having your debt in the right vehicles makes a huge difference in terms of our doctor’s tax burdens in years to come. Do you need to have your debt structures analysed to see if they are doing you justice? Simply click here for a Complementary Wealth Assessment with one...
4. Incorrect Asset and Income Structures

4. Incorrect Asset and Income Structures

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.   Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 3. Unplanned Superannuation   This week: 4. Incorrect Asset and Income Structures   The fourth most common financial mistake doctors make is Incorrect Asset and Income Structures. This is a fairly obvious mistake but is an often overlooked one for our doctors. All professional doctors are exposed in some way to potential litigation, be it from a professional malpractice type issue or from a financial or business related issue and any assets that are usually the easiest one for a creditor to look to recover from would be cash shares and of course a family home.   As a result, appropriate structuring can put those type of assets in various legal and legitimate trust structures which does protect the financial assets. For example putting the permanent place of residence in a doctors partner’s name, or assets likewise being in the partner’s name.   In terms of the income structures there are many different alternatives in terms of where to place financial assets and in particular the benefits of a trust. Another option is when doctors get older and their children reach 18 years of age using income splitting. Income splitting, not only for doctors partners but for their children, can make a massive difference in their annual tax returns. A simple fact is that once a child reaches 18 years of age in Australia, there is no tax in the first $18,000 of income and up to $30,000 there is...
3. Unplanned Superannuation

3. Unplanned Superannuation

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.   Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 2. Non-existent Tax Planning   This week: 3. Unplanned Superannuation   The third most common financial mistake of our doctors is Unplanned Superannuation. The most common initial feedback we get from our doctors regarding super is that they often don’t even know who their super is with.   Secondly, they have no idea within $20,000 to $50,000 of how much they currently have in superannuation.   Thirdly, they have no idea of how the amounts or types of cover for insurance purposes that are within super.   And finally, they don’t really know their asset allocation or how much are returns on their super.   The main excuse for this is that a lot of our doctors are saying they are in their late 30’s or early 40’s and retirement of 20 plus years away seems like a long way away, so frankly, it’s just all too hard. If retirement feels like it’s so far in the future then it’s easy to see why they think worrying about super now is unnecessary. Unfortunately this is clearly a very poor decision because it is necessary and super is the key plank of what’s going to sustain people financially in their future.   The second key thing about unplanned superannuation is it is often structured incorrectly. The asset allocation is poorly thought through, and the amount of money that is actually going into super, is seldom adjusted...
2. Non-existent Tax Planning

2. Non-existent Tax Planning

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire.   Over the next six weeks we are going to look deeper into each mistake. Last week we looked at 1. Lack of a Detailed Budget.   This week: Non-existent Tax Planning   The second most common financial mistake that doctors are making is inadequate or Nonexistent Tax Planning. This is pretty straight forward, quite simply as doctors earnings increased over their career, particularly once they become either GP’s or Specialists, they pay the marginal tax rate. So in Australia the marginal tax rate being, heading to the top tax bracket, at $180,000 so when a doctor’s income moves from $180,000 to $280,000 per annum, they are effectively paying close to 50% of that additional $100.000 in tax. And this continues often over their entire career, so the additional tax that is paid is often unnecessary and if they planned earlier for tax effective strategies they would save an absolute fortune.   The other part of tax planning is our doctors are often poorly advised before coming to us with their taxation matters so they lodge their tax light, be it personal, super, trust or ABN type of tax returns and that can lead to potential fines. So the main point is that it’s seldom a proactive exercise, people just earn an income and pay a lot of tax and when that tax is paid it’s gone.   If you think that you have inadequate or nonexistent tax planning and would like more information from one of our Private Wealth Managers, contact...
1. Lack of a Detailed Budget

1. Lack of a Detailed Budget

There are six common mistakes that doctors make that are negatively impacting their financial future and are hurting them both now and when they retire: Lack of a detailed budget Inadequate or non-existent tax planning Unplanned superannuation Incorrect asset and income structures Suboptimal debt structure Insufficient insurance coverage and structure These lead to overpaid tax, missed investment opportunities and unacceptable risk. 100% of the doctors who have approached MedCapital were making one or more of these mistakes when they engaged us, and over 80% were making at least four. It is no wonder that 80% of doctors are delaying retirement for financial reasons.  Over the next six weeks we are going to look deeper into each mistake. First up, Lack of a Detailed Budget: This is really quite simple, without a budget we have found our doctors have no idea what their incoming and outgoing cash flow is, which often just leads to overspending. People tend not to restrict spending because doctors generally earn good money, for example there is a difference between buying an expensive pair of shoes or reasonable shoes, which tends to “wasted cash” for want of a better expression. It also means that people don’t really plan for the future, so credit card debts get out of control and they also just quite simply miss out on investing that cash flow in wealth creating opportunities because they are more focused on the current situation rather than on the future.   Are you making any of these mistakes? Just as importantly are you even aware if you are making these mistakes or not? To receive your complimentary assessment, please just CLICK HERE to enter your...