B R A N D O F I N O C O M M U N I C A T I O N S I N C.

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3 ABOUT THE AUTHOR onald Jay Korn is a New York-based financial writer with par- expertise in investments, real estate, financial planning, Dticular taxes and insurance. He has authored seven books on financial topics and is a regular contributor to Financial Planning, Black Enterprise, Tax Hotline and Bottom Line/Personal. He is the author of Retirement Planning (Doctor s Digest, May/June 2005). ADVISORY BOARD Clark M. Blackman II, executive vice president, managing director and chief investment officer, Investec Advisory Group, Houston. Denise Friday, senior vice president of sales and marketing, AMA Insurance Agency, Chicago, Ill. Diahann W. Lassus, president, Lassus Wherley, New Providence, N.J. Marc Singer, founding partner and adviser, Singer Xenos Wealth Management, Coral Gables, Fla. Kathy Stepp, principal and founder, Stepp & Rothwell, Overland Park, Kan. EDITOR Noreen Perrotta SENIOR EDITOR Frank Murphy CREATIVE DIRECTOR Gary DeFazio ART/PRODUCTION DIRECTOR Dushan G. Lukic PUBLISHER Jeannette Brandofino MARKETING DIRECTOR Linda Zani Thomas Doctor s Digest (ISSN ), March/April 2006, Volume 2, Number 2. Published bimonthly by Brandofino Communications, Inc., 12 Spruce Park, Syosset, NY For general subscription information & paid subscriptions circulation@doctorsdigest.net. Doctor s Digest is available on a paid subscription basis at the following annual rate: $54 (Foreign $108). Single copy price: $12. To order send check or money order payment to: Doctor's Digest, 12 Spruce Park, Syosset, NY 11791, Attn: Circulation Department (be sure to indicate title of issue, shipping address and phone number). Visit our Website at For Advertising Sales & Editorial call or write sales@doctorsdigest.net or editorial@doctorsdigest.net. Postage paid at Mechanicsburg, PA Copyright 2006 and published by Brandofino Communications, Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopy, recording or any information-retrieval system, without the permission in writing from the publisher. Article reprints in quantities of 100 to 100,000 are available through Rockwater, Inc. Please contact Beth Ann Rocheleau via at brocheleau@rockwaterinc.com, identifying the article(s) you want to reprint, including publication title, article title, page numbers and quantity desired. DOCTOR S DIGEST and the split diagonal, two toned publication cover are trademarks of Brandofino Communications, Inc. B R A N D O F I N O C O M M U N I C A T I O N S I N C.

4 Dear Doctor: This issue, we re veering a bit from our usual focus on medical practice issues to cover financial planning for physicians. But for many physicians, personal finance and practice finance are intertwined. Private-practice physicians are essentially owners of small businesses, and they use those businesses to provide themselves with such benefits as life, health and disability insurance and tax-deferred retirement plans all essential components of a sound financial plan. This is not generic financial-planning information it is tailored to the unique needs of physicians. To keep that focus, author Don Korn spoke with a number of financial-planning experts who work extensively with physicians, such as advisory board member Denise Friday, senior vice president of sales and marketing with AMA Insurance Agency, a subsidiary of the American Medical Association. Another board member, Marc Singer, a partner of Singer Xenos Wealth Management in Coral Gables, Fla., has developed innovative investment strategies that help physicians protect their personal assets from liability claims. And board member Clark M. Blackman, executive vice president, managing director and chief investment officer of Investec Advisory Group in Houston, has been on Worth magazine's list of top advisers in America for the last nine years. They and many others offer their expertise to you, the readers of Doctor s Digest. If this issue is new to you and you wish to catch up on back issues, log on to our Website and sign up for a free e-subscription. Go to and click on e-subscribe and follow the prompts. And tell your colleagues about it as well. While you re on the Website, you can read comments by physician readers and experts on the content of Doctor s Digest in our Reader Reviews section. And you can let us know what you think of this book, our past issues, our line-up of future issues and how well we re meeting your needs. We appreciate the feedback it is vital to our mission of providing solutions to physicians everyday practice management problems. Jeannette Brandofino Publisher publisher@doctorsdigest.net

5 Financial Planning Financial planning is the process of setting long- and short-term financial goals and developing a plan to achieve those goals. For most physicians, long-term goals include a college fund for their children and putting away enough money to ensure a comfortable retirement. In addition, physicians expect to enjoy a lifestyle commensurate with their incomes and status in the community. With a proper financial plan and a bit of discipline, most doctors should be able to achieve these goals. Steps to Take Set a realistic budget. Track your expenses for a few months to see where your money is going. If you re having trouble making ends meet, take a close look at your spending and figure out ways to cut back. Keep debt in check. Borrowing to buy a house or pay medical school expenses often makes good financial sense. Racking up debt on high-rate credit cards and paying only the minimum amount required does not. Don t fall into the easy credit trap. Start saving for retirement and your children s education as early as possible. The power of compounding will make these enormous financial goals easier to achieve. Protect yourself and your family. Adequate levels of life, disability and property/casualty coverage can prevent your financial plan from being sidelined by an unexpected catastrophe. Invest appropriately. Learn about investing and determine your level of risk tolerance. Set up an asset allocation plan that reflects your goals and stick to it. Finding a Financial Adviser You may be able to handle all this yourself, but many doctors seek outside help with their finances. You can choose from an array of professionals: accountants, attorneys, certified financial planners, insurance agents, stock brokers, etc. Be sure you thoroughly check the background of any financial adviser with whom you work, and monitor any financial transactions made on your behalf. The edition of Doctor s Digest offers information and expert advice on personal financial planning issues for physicians. In the following chapters, you ll find the information you need to help you develop a sound financial plan and work toward achieving your financial goals.

6 Contents Chapter 1 Draw Up a Plan to Meet Your Financial Needs 8 Start the process by setting financial goals for next year, the next decade, even for the next generation. Chapter 2 Reduce Your Risks With Insurance Coverage 40 To keep your financial plan secure from unexpected adverse events, you need a portfolio of insurance policies to provide adequate coverage at a reasonable cost. Chapter 3 Building a Balanced Investment Portfolio 70 Before you invest, determine an asset allocation formula that will help you achieve your goals. Chapter 4 Start Early to Build Savings for College 102 There are a number of options available for accumulating and investing college funds some even offer tax breaks. Chapter 5 Doctors Have Many Options for Retirement Savings 126 The goal here is to be able to stop working yet still have enough money for a comfortable lifestyle, even if retirement stretches out for decades. Resources For More Information 154