Great clarification! Thanks! and Happy New Year!

Michael

It’s a lot like expecting a doctor to fix her own Mercedes or wire her own 10,000 square foot home for electricity; sure she may have brilliant mind and 10 years of post graduate education under her belt, but she hasn’t been trained to do these other things, so when they need to be done, she’s be well served to retain a professional who has.

Good for you. You did not mention your retirement saving, I hope you have that taken care of as well. I’ve seen many doctors with a beautiful house and multiple luxury cars and yet very little in retirement saving.

Michael

1) You should keep enough cash for a emergency fund. The rest you should use to pay tuition.
2) There is no good short term investment at this time that pays anywhere near what your student loan will charge. So avoiding student loans IS a the best investment.

Your financial goal when you are at school should be to keep your loan as small as possible, that would set a good foundation once you graduate.

Michael

Thanks so much for your paper. I have learned something new from your analysis. If you don’t mind, can I ask you for your advice?
Here is my situation and I think many medical students also have the same situation like me:

During undergrad, I worked and lived below my means. Therefore, I have accumulated about 50K to 60K in saving account. However, I am debating whether I should use my savings to pay for my medical school, which is about 60K per year. Take into account that beginning next year, the government will terminate subsidize loan and rebate loan fee. Therefore, my Unsubsidized student loan interest will be 6.8% for the first 20 K + 1% loan fee, and the rest 40K (Grad plus loan) with 7.9% interest + 4% loan fee.

When looking at that number, I think I should limit my student loan as much as I can, especially the Grad plus loan. However, if I spend my saving now, I will not have cash for future investment like down payment for house or something like that. In the current economic, I think having cash is a huge advantage. Moreover, there are some programs or hospitals that give incentive or bonus to reduce my government student loan after I graduate medical school.

So, here are my questions:
1) What is the best way I should do? Should I using my savings to pay for my school?
2) If I keep my savings for the next 4 years, what should I invest in with low risk and reasonable profit?

FYI, beside savings, I don’t have any property or assistance from my family.

I would appreciate your time and advice. I am also welcome other expert’s advice.

Sincerely,

Khoi

Try the new medical management book: http://www.BusinessofMedicalPractice.com

and, the doctor-investor book:
“Financial Planning for Physicians and their Advisors”
http://www.amazon.com/Financial-Planning-Handbook-Physicians-Advisors/dp/0763745790/ref=sr_1_1?s=books&ie=UTF8&qid=1316265583&sr=1-1

Best.
Ann Miller RN MHA
http://www.MedicalExecutivePost.com

I can’t speak about management since it’s not my area of expertise. However simply knowing it’s important already give you a leg up. Speaking about investment, you can learn a lot follow my blog, and my Google+ public post. You may also like to get a book by William Bernstein, who is a neurologist-turned investor.

Michael

As a medical student, what should I learn or do beside medical school in order to prepare myself in finance? I took couple management classes in undergrad, and I can’t stress enough how important finance and business is for a physician. Unfortunately, we don’t learn it in medical school until we face the real world.

I would appreciate your advice.

Khoi

Thank you very much for the kind words. If you ever need to schedule an initial phone call or meeting with me, you may use this link below.

http://www.emailmeform.com/builder/form/410794

Michael

I’m writing in appreciation for your posts and information despite the ridiculous juvenile comments people post (see #3 and #9 above).

In reply to Jman (#3): yes, some doctors are quite wealthy. Some select fields of medicine pay very well, some people inherit money, some people invest well, some people get luck. Please don’t confuse a well reasoned review with anecdotal evidence. You can always find the exception, but don’t plan on the exception being the rule.

And kaiba (#9): Hardly worth replying to you except to point out that anonymous flames, insults, and presumptions without any basis give you no credibility.

As a hard working physician, I do make a nice salary. I live below my means, I put money into my investment and retirement accounts and I’m saving for my kids college expenses. I am financially secure as long as all goes well. This puts me in a much better position than 85% of Americans and I’m appreciative of this, but this doesn’t make me “rich”. There is no windfall in my future, there is no IPO I’ll benefit from, there are no company options that I’ve received. My solid financial situation has come from 10 years of schooling, ongoing hard work, and good financial planning. To Jman and kaiba, I think that’s the point of Michael’s post.

Michael, while I am not a client, your methodical, reasoned approach may lead me to contact you for services.

Thanks,

David, MD, FACEP

For related info, please check out this blog:
http://www.MedicalExecutivePost.com

Good Luck!
Dr. David Edward Marcinko MBA
[Editor-in-Chief]