This is part 2 of 4 of Stupid Doctor Tricks, a financial M&M if you will. Check out part 1 here. These were compiled from a long thread on Sermo, a physician-only forum. It’s a great place to chat and even make a little money. If you would like to join, go there from this link and we both get $10. Don’t worry, it doesn’t cost you anything, unlike if you make the errors on this page.
Investing In The Financial Markets
1) Trading Options
2) “Greed” and it cost me $2 Million (would love to hear the details on that one)
3) Buying and selling individual stocks (in this case selling Apple and buying Bank of America)
4) Falling in love with a single stock $40K
5) Buying on margin
6) Not spending enough time tracking investments
7) Panicking and selling when the market goes down
8) Only putting $10K into some start-up called AOL
9) Bought and lost a bundle on companies that I had no idea what they did (I don’t even want to think about the dot.coms)
10) Not getting out of the market in 2000. Lost a lot of money that took years to make up
11) Thinking I could time the market
12) Bought Lehman bonds in 2007
13) Holding Lehman Brothers stock, hoping for rebound and Fed to rescue and eventually lost all (quite a substantial amount
14) With just a few stocks my dad and I lost about $400K
15) Getting cold feet and bailing out of the market when it had bottomed out in 11/08
These are common mistakes among all investors. It is important to be widely diversified, to avoid trying to time the market, and to develop an investing plan you can stick with. An index fund investor owns all the Apples and AOLs in the market, so if you don’t want to miss the next one, buy a total market index fund.
A Bit of Cynicism
1) Getting divorced (repeated multiple times)
2) Having children (repeated multiple times)
3) Falling in love with the wrong woman…
4) Not listening to my wife
5) Going to law school (an MD/JD who never used the JD)
6) Going to medical school/becoming a physician (mentioned multiple times)
7) Going into primary care (multiple posters)
8) Staying in academic practice
9) Marrying my second wife after a whirlwind courtship. 12 years later, she had an affair with a rich lawyer and took half and left. Just after I educated her ungrateful children
10) Went into internal medicine
11) Letting my first wife have access to the checkbook for too long before splitting.
12) First marriage ($800k down)
Cynicism aside, if the first rule of physician personal finance is “Spend Less Than You Earn”, then surely the second is “One House, One Spouse.” Divorce is not only emotionally devastating, but financially devastating. Most docs that get divorced never really fully recover. Stock market losses pale in comparison. This section also illustrates the importance of choosing your specialty wisely. If you like pediatrics and ophthalmology about the same, shouldn’t you consider that one will allow you to have a much better lifestyle later on?
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Lifestyle Choices
1) Buying a timeshare
2) Not saving for retirement when I had the chance
3) Chasing women
4) Spending too much remodeling and landscaping homes I thought I would stay in long term
5) Moving to a town where we did not fit
6) Buying the toys that I love to play with
7) Built our dream home. We did it smart, and cost-conscious, and came in under budget, thank goodness, and we love it, but I wish I hadn’t done it now as I could retire sooner if I hadn’t done it
8) Not saving more (but I like my toys…)
9) Making 200k playing online poker during med school and blowing half of it on clubbing, girls, and watches instead of investing it
10) Working at a low-paying academic job for several years between college and medical school
11) Practiced in a small community
12) Dumping $75k into a pool/backyard in my first house out of residency then leaving a year later. Recouped $0
13) Purchased a small sailboat; there is credibility to the saying, ” the happiest days as a boat owner are the day you buy it and the day you sell it”
14) Accumulating more things than I need (having too much stuff is a burden)
15) Vacation home (fun but money pit), boat (not fun and money pit) and health club investments
16) Bought into the idea that we “deserved our dream house”, so built an absolutely ginormous copper roof-Corian-granite-marble-cherry-Viking-Subzero-custom everything post and beam ego stroke and promptly realized that we did not want to work 60 hours a week forever to pay for it
Realize now that every time you buy something expensive, you are affecting how long and how hard you will work prior to retiring. That’s fine if you love spending 60 hours a week at work and see yourself doing it until you’re 70. But if not, think twice before getting the big house, the nice car, the boat, the pool, or sending the kids to an expensive private liberal arts college. It’s also very expensive to change jobs. Choose your job and the community it is in wisely.
Continue on to part 3, or leave a comment detailing your own mistakes (or better yet, those of a colleague!)
My financial mistake – building a house with no savings. Went over budget and put $30K on credit cards to finish the house!
Dangit, more familiar no-no’s on this list. On to the third article.
These put a lump in my throat.
And fill me with gratitude for my own experiences.
Should have fully funded a Roth IRA through college, med school (maybe not realistic), and residency. Also you should talk about expectations of houses, cars, etc with your significant other before you get married.