The best (and worst) financial advice I ever got

LIVE LIKE A STUDENT . . . The best financial advice I ever got was: don’t live like a staff physician until you’re a staff physician—and your debt is paid off. I lived very frugally as a student and resident and was able to quickly pay off my student debt (which was at a much higher interest rate than in today’s market).—DR. SARAH GILES, a remote and rural family/emergency doctor. . . . AND MINIMIZE DEBT The best financial advice I received was as I was nearing the end of my residency. A staff physician told me that the fastest way I could pay off my medical student debt was to maintain my resident lifestyle for my first year as a staff physician. Although I went on to complete a fellowship after residency, I did take this advice to heart and did not increase my cost of living despite working many locum shifts and effectively doubling my fellowship salary. Now, at the conclusion of my fellowship, I have paid off approximately 50% of my medical student and resident debt just from working approximately six to seven locums each year and putting that money toward debt instead of an increased lifestyle. I still have a small bit to pay off, but coming out of fellowship with less than one third the debt I started with has made me feel so much more optimistic. Read: Insuring your income? The ins and outs of disability insurance for physicians Worst advice: It was right at the beginning of medical school, when physician after physician would stand in front of our class filled with green medical students and say, “Don’t stress out about going into debt during medical school; there is a reason that the banks have given you such big loans … because they know you will be able to pay it off one day. When you’re staff you will make enough money to pay it off quickly, so enjoy your time in medical school!” If I had thrown caution to the wind in those early days of medical school as some of my colleagues did, I would not have been able to feed my family through to the end of my residency, nor would I have even had enough money to write my royal college exams!—DR. GINEVRA MILLS, a reproductive endocrinologist in Victoria. STAY MARRIED Best advice: Avoid divorce, as you lose half your ass(ets). If you get divorced you have to give your spouse 50% of everything including real estate, investments, RRSPs, cars, cottage, etc. After the initial glow of a promising new life, you’ll have just traded in old problems for new problems—with less money.—DR. JOHN CROSBY, a family physician in Cambridge, Ont. YOU’RE NOT A GENIUS (AND FORGET THE BOAT) Buy the best principal residence you can afford and that will serve all your needs—close to a good school, work, transportation, amenities. Capital gain exemption on your principal residence is the only substantial tax break you have. Location, location, location. Don’t follow the Joneses. Do some inner work and discover that happiness is unconditional; and things will not do it. The two happiest days a boat gives its owner are the purchase and sell dates. Invest (and only invest) in companies that produce products that you are and will be using for the foreseeable future. Make sure you max out your contribution to the tax-free savings plan first, and then RRSP. If you make money in your investment please remind yourself that you are not a genius. (My son reminds me and I appreciate him more for it.) This one is tougher than you think. Getting this one wrong can cost you big. It can take a lifetime to finally learn that we just don’t have a clue about the future—and to accept and like it. That’s called genuine curiosity, and happiness.—DR. CARLOS YU, a family physician in Ajax, Ont. HOLDING COMPANY My ex-accountant advised me to create a holding company attached to my medical corporation to invest my money. I did it and it was one of the best things I have done.—DR. JABIR JASSAM, a family physician in Ottawa. Read: Masterclass: 10 tips for collecting art from one of Canada's leading art advisors INVEST AND FORGET The best financial advice that I ever got was learning about exchange-traded funds (ETFs). As most physicians will have sizable savings that need investing in order to save for retirement, we are ripe for the picking of financial planners who will take a percentage of investment returns. These fees can be hidden in the form of management expense ratio or in additional fees from financial planners. These plans are typically not compared fairly to ETFs, which are indexed to the market. If the market goes up, the funds go up. If the market goes down, the funds go down. The planners who want your money may promise to “beat the market,” but more often than not they fall short of the market. With ETFs, you avoid high fees, which can be reinvested into growing your money further. With ETFs, the plan should be to “invest and forget” as the funds will grow with the market.—DR. GORDON LOCKE, radiation oncology physician, University of Toronto BIG-CITY DOCTORS BEWARE For doctors outside metropolitan areas, finance is easy. They are big fish in small ponds. Average home prices might even be a fraction of annual physician billings. If a physician works at least as hard as he did in residency (or harder) and saves at least 10% of his gross income, he will easily achieve financial independence by his early 50s, or much sooner. He could very soon become the stereotypical rich doctor with fancy cars, a big cottage and a float plane. Family doctors (and many specialists) who choose to live near Toronto, Montreal and Vancouver will never feel rich, without outside help. In fact, it has become impossible for a new family doc to start practice on her own and get out of debt in many parts of Toronto and Vancouver. But joining a group practice that prioritizes efficiency can still generate solid remuneration. Financial independence is still possible by your early 50s, but not if you try to have the same standard of living as your college friends who chose other professions in the big city. If a physician lives like a student for her first year(s) of practice, resides in a condo or townhome, drives used vehicles, and embraces Tim Hortons over Starbucks, she will slowly get ahead. Saving 10% or more of your gross earnings will put you on solid footing by your early 40s, but it will still take 15 to 20 years of serious saving to feel like you can slow down without impacting your style of living. However, financially focused big-city doctors often amass enormous net worth by paying off gigantic mortgages for even modest homes. If they then relocate to a smaller centre, they often seem to be much further ahead financially than their colleagues who started practice in the hinterland right out of residency. With focus, intention, and some self-sacrifice, most physicians can still catch up to many of their friends who went into finance, business, or law. Worst advice: “We follow a strict budget in our house. Each month, we pay all the bills and spend all the rest!”—DR. SHAWN WHATLEY, a family physician in Newmarket, Ont. START EARLY, BUY A HOUSE The best advice that I ever got was to start early. The benefits of compound interest can be tremendous. The worst advice I got was not to invest in housing. While Evergrande is a cautionary tale, investing in a good place and a good location usually pays off, especially if you can live in it for a few years.—DR. ERIC CADESKY, a family physician in Vancouver Read: Getting off the fee-for-service hamster wheel DELAY INCORPORATING Do not incorporate immediately out of residency was the best advice I ever got. For some reason, most new doctors believe incorporation is a must right away. However, if you have not filled your RRSP or your TFSA, and you aren’t able to maintain any money in the corporation, then you are simply paying the accounting fees for a corporation you aren’t getting anything out of. Particularly if you are saving for a house (which is incredibly difficult these days!), then certainly it doesn’t make sense to incorporate right away. The worst advice: Don’t worry too much about money during training since as soon as you are staff, your income will increase. While this is true, I wish I had paid more attention to my finances and spending in residency as I would be a lot farther ahead in my financial independence at this point. I think ideally, learning to save and invest as soon as you become a resident is wise, as you aren’t trying to play catch up as a young professional often in their 30s. —DR. CHRISTINE NICHOLAS, a plastic surgeon in Milton, Ont. MATCH INVESTMENTS TO VALUES The best financial advice I ever got was from Tim Nash’s Sustainable Economist, a website, right after my first daughter was born and I had spent a lot of my maternity leave reading about climate change and health. I decided that if the Lancet called climate change the biggest health threat of the 21st century, I should treat it as such, and my husband and I planned for me to go back to work at 50% fulltime, with 50% of my time dedicated to research, policy and advocacy around climate change and health (almost all of it unpaid). We were recalibrating our investments and our expenditures, and booked time with Tim. He took us through every industry, asked what we would be comfortable investing in, and assessed our level of risk and financial goals. It was the most intensive joint visioning my pediatrician husband, Dr. Darcy Scott, and I had undergone to that point in our partnership—or since! I think it was the closest thing to setting a strategic plan for our marriage that we have ever participated in. We ended up divesting from companies involved in the extraction, transport, and processing of fossil fuels, as well as from arms and other harmful sectors, and investing in a diversified portfolio of bonds and ETFs heavy on renewable energy and low-carbon solutions. Read: Complicated but good: Why this ‘mind-boggling’ personal pension is gaining ground with doctors That was about nine years ago now, and a fossil-fuel-free portfolio has outperformed the parent index since then. It was an incredible opportunity to concretize shared values and goals between my partner and me—and I learned a lot of the material that I later put to work in successful efforts to have the Canadian Medical Association divest from fossil fuels. In 2014, we had wildfires here in Yellowknife that resulted in a full doubling of ER visits for asthma. As these impacts on health and health systems increase along with our changing climate, I am glad that my money is working as hard to support the health of children outside of the health system as my husband and I are working to support child health through our efforts within it.—DR. COURTNEY HOWARD, an ER physician in Yellowknife RRSPS AND REAL ESTATE The best financial advice I ever got was when I was an intern in 1976. One of my preceptors said, “As soon as you can, start contributing as much as you can to an RRSP.” This was followed by more excellent advice from the same preceptor: “Set up your RRSP through MD Management.” The third piece of excellent advice came in 1992 when I left family practice in Maple Ridge, B.C., where we lived, to enter a specialty training program at UBC. The only places we could find to rent in Vancouver for me to stay weeknights were either dreadfully expensive or tiny and/or noisy and/or dirty. The same wise preceptor, now my husband, said, “At these prices we might as well buy an older house, put in a small living area in the basement for you, and rent out the rest of the house. It’ll cost the same, and we’ll end up with a place where the kids can stay if any of them decide to go to university in Vancouver in the future.” I told him that buying a house in Vancouver was nuts, which I’m never going to live down . . . . My husband also offered a bonus bit of advice: Think really hard before buying a strata unit, because you have no control over the strata fees and they can go up high and fast. The worst advice I ever got was from my bank manager, who advised that I should invest my savings in stocks under the bank’s management. I thought this sounded like a good idea, so I did. Alas, under the bank’s management, my savings shrank steadily. Fortunately, this story has a happy ending because of the best financial decision I ever made, to ask my husband to take over the management of my savings and of my RRSP as well. Once he took over, my savings grew nicely—and, unlike banks and other professional fund managers, he doesn’t charge me a management expense ratio (usually somewhere between 0.25% to 0.75% of the value of the portfolio, charged every year, even when the value of the portfolio goes down.)—DR. GILLIAN ARSENAULT, a retired physician in Maple Ridge, B.C. Read: Higher cottage values bring greater responsibilities

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