Dr Harry (before he meets Dr Sally)

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We’re continuing our series on Dr Anna with Dr Harry, another fictional character who represents some of the scenarios we commonly see and help with at MedCapital. This should not be taken as personalised advice. We recommend you book an appointment with one of our private wealth managers.

Dr Harry (before he meets Dr Sally)

Originally from Sydney, Dr Harry has moved to the suburbs and is working in a mid-sized hospital. He’s 28 and is part way through his training program.

After years of study, he’s finally earning more and has decided to celebrate by treating himself to a new BMW. He’s bought the car on finance and still has a bit of student debt to pay off, but he’s confident he can do that now he’s earning more.

His friends have told him now is a good time to start investing and planning for his financial future, but he doesn’t have the time to do all the research. He’s worked on personal budgets in the past, tried the barefoot approach, but life is moving too fast and the budget gets left behind.

A few of the other junior doctors at the hospital where he works have opened online e-trading accounts with investment platforms like Raiz. Dr Harry knows investments are a good idea, but he hasn’t had time to do the research (he’s got exams looming), so he’s put $5,000 in, and hopes he’ll get at least some return. He doesn’t know how it’s invested, where it is invested, or what the risks are. 

Commentary

MedCapital Private Wealth Manager Malcolm Strain says Dr Harry’s scenario is a common one, particularly amongst doctors in their late 20s and early 30s.

“I’ve seen this a lot with younger doctors. They get towards the end of a training programme and they decide to reward themselves with a nice car, often on finance. Tesla seems to be the hot car that everyone wants right now!”

At 28, with a recent increase in income, now is a great time for Dr Harry to start planning for his future financial wellbeing. But he doesn’t have the time and it’s hard to think about his future clearly. His future consultant role is a little uncertain, and his main goal so far has just been to get to the end of the program.

Because doctors work and train so hard, a ‘reward’ like a flash new car is tempting. Unfortunately, this now means Dr Harry has additional debt (on top of his student loan and any overdrafts or credit cards).

“What often happens is that doctors like Dr Harry take on locuming or additional overtime to help pay back the loan. While this is a great idea, when your exams come and time is limited, your car loan and bills tend to start creeping up on you,” says Malcolm.

MedCapital can help with budgeting and accounting – doctors sometimes forget that some locum work and private listings are not taxed at source. While the income upfront is good, it is also important to keep on top of your tax obligations too so you don’t end up adding Tax and Penalty Interest to your list of debts.

We can also assist with your planning and asset accumulation needs. MedCapital’s private wealth managers work with you to develop your investment strategy and asset allocation in line with your risk profile.

“Doctors I work with are interested in investing. While the online platforms can be easy to use, they don’t always match your risk profile or overall strategy. Most doctors I know who have used these sorts of services aren’t sure what their appetite for risk is and how it compares to the investment. It is important to know these things when you’re investing your hard-earned money,” says Malcom.  

“Doctors like Harry often put funds into services like this to feel like they’ve invested, but they can’t tell me what they’ve invested in or what their returns are… they’re just doing what other around them have done.”

Your private wealth manager at MedCapital can help you understand and align your appetite for risk and recommend a range of investment options that match your profile. We can discuss investment strategy, your risk profile and assist with asset accumulation. It all starts with a complementary financial health check. Get in touch now to arrange yours.