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The Essential Components of Effective Financial Planning for Physicians

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Financial Planning for Physicians

As like any other professionals, physicians too think of financial stability in their life. Being an expert physician can be quite a lucrative career, but if you do not know how to act on financial planning and put the key components of economic protection, estate planning, and retirement benefits, financial management may become troublesome affair overtime.

Why is financial planning necessary?

Financial planning aims at ensuring all the primary and secondary economic resources are optimally utilized in the best possible way to route it to maximize return on investment over time. Financial planning is primarily the process of defining the best objectives by framing procedures, policies, programs, and budgets related to financial activities of an individual or a business.

Proper financial planning with the help of an expert advisor will ensure effective investment practices. Financial planning will enable you to:

  • Have financial stability

Proper financial planning will help individuals to ensure a fair balance between the inflow and outflow of funds to maintain stability.

  • Ensure adequate funds when in need

Proper planning will ensure that you have enough money in hand when confronting an unforeseen situation with the immediate need to raise funds.

  • Reducing uncertainties

Proper financial planning will eradicate uncertainties in terms of health and wellbeing, kid’s education, home construction and maintenance, and family finances. It also will maintain you at a stable position even with a highly fluctuating external market conditions.

Why financial planning for physicians is different?

Physicians do face many specific challenges when it comes to financial planning for their personal and professional life. Physicians do spend more than a decade for their medical college studies, specialization, residency, and fellowships. With this need, many of the doctors end up with serious students loans to be paid off during the initial phase of their practicing career. They tend to saddle between these debts and their unique personal financial challenges for a considerable duration before getting stabilized.

The primary question is whether physicians face any unique financial challenges when compared to other professionals? Do they need any special tools or financial vehicles to stabilize and secure their financial future?

Listen to what Dr. Brian J. Knabe says who is a doctor as well a reputed financial planner as “the individual challenges in terms of financial planning for physicians may not be same as for anyone else, but the combination of them surely is.” “Given the fact they enter into the workforce later when compared to others, there are many special expectations by them in terms of lifestyle and wealth as associated with the medical profession conventionally, which puts many physicians to live up to those social expectations.”

Significant components of physician financial planning

Majority of the financial advisors point to the fact that physicians should accurately plan for a unique set of protections and financial plans in order ensure financial success. Here some of the most critical components to be considered for successful financial planning in case of a physician.

  • Disability insurance – Experts suggest that it is mandatory for healthcare practitioners to invest in some disability insurance to protect their future. It is a fact that an individual medical practitioner makes no equity overtime in a cash flow business. The value of his or her future earnings is the actual value of a young doctor’s assets. So, without disability insurance, one would be in deep trouble if something unfortunate happens.
  • Healthcare malpractice insurance – One report of American Medical Association a couple of years back showed that more than 60% of doctors above age 55 are sued for some of the other medical malpractice. Even though about 70% of these sues get dismissed, still there is significant money involved if the claim gets into a trial. A good malpractice policy in place will save you from this risk at any point.
  • General insurance – As like any other individual, a physician also should have mandatory protective insurances as personal care, family care, and kid’s coverage.
  • A proper estate plan – Being a physician, it is essential to have your free will, living will, and adequate powers both in terms of personal assets as well as healthcare in place.
  • The help of a skilled and reliable financial planner – It will be worth to pay out to a competent financial advisor who can offer you the best service and manage the financial planning on your behalf by understanding your unique needs and goals. Working under tremendous pressure in relation to their professional responsibilities, a good financial advisor cum planner will act as your best partner for a secured future.

It is also crucial to consider that the finances of a doctor may also affect the patient care. Financial stressors may lead to higher work stress and end up in job dissatisfaction in an otherwise stressful profession like healthcare. It is also a significant reason why the advice of an expert financial planner is suggested to practicing physicians.

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Sukanya Samriddhi yojana calculator – A unique way to save tax

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Sukanya Samriddhi yojana

With this development, we believe that people’s mindsets change. Gone are the days when boys are edging more than their counterparts. And in every stage of life today, fit boys limit women to attract the ultimate short straw. Although equality will now increase between the two sexes, investment remains an area where women continue to focus on their parents. One of the main reasons is that a strong part has not been given to the importance of most people he is short of money. The government has taken the right steps in this direction and by launching several schemes, you can financially empower your child to save tax. One of the same scheme is the Sukanya Samriddhi yojana calculator. In this blog, we will discuss in detail plans, provisions and how you can use it to protect.

About the plan Sukanya Samriddhi yojana calculator

An initiative that has been designed for girls has gone to help them complete their education. The program was launched by Prime Minister Narendra Damodardas, 2015. Here you need to know about tax exemption: 80C

  • Beti Bachao Yojana came under the auspices of the Beti Pdao campaign and wanted to build a bright future for girls.
  • Parents are also encouraged to invest in their daughter welfare schemes, which offer incentives to all parties.

Salient features of the scheme

Plan Sukanya Samriddhi Some of the key elements given below –

  1. Flexible Investment

The girl’s parents or guardians can invest the amount that fits their budget. Investment can be between Rs 1,000 and Rs 1.5 lakh per year.

2.Multiple-way to open an account

Offices can be opened for SSY accounts or nationalized banks. It provides the flexibility of alternative plans and easy account opening.

  1. Account

Under the scheme, only one woman for one account.

Besides, the maximum number of accounts allowed in a family of two – one for each child. The maximum limit of the two accounts that twins were born after the first daughter does not apply.

  1. Age front opening

Account open to parent/child Parent, not the child reaches the age of ten years. After children make it through this age, parents are not allowed to open an account.

  1. According to maturity

Children under the age of accounts covered under SSY are 21 years since its foundation. Pass holders have the option to continue the account after maturity.

  1. During operation

Operating accounts are limited to parents and guardians for 10 years. Once the child reaches the age of 10, he can do the explained work independently.

  1. Indian Residents

Sukanya Samriddhi Yojana can be opened only in India for the account.

The documentation for sukanya samriddhi yojana calculator

If you want to open an account for your daughter, the following documents are required.

  1. Birth certificate

A copy of the birth certificate is required to open the account. You must have at least the necessary documents and a ten-year plan to validate his age of opening an account.

  1. Variation Proof

To ask parents for proof of valid identity card of the guardian/guardian who has opened an account on behalf of their daughter.

  1. Hometown

Proof of residence such as a ration card, the voter must submit an identity card, utility bill and so on.

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An overview about zero brokerage

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zero brokerage

Zero is termed as a number that makes a major difference and it counts. All the more so in the world of brokerage when zero is placed beside the right number. Now are you satisfied with the amount of brokerage you are paying? Some of you might be looking at an option of zero brokerage based trading.

Meaning of zero brokerage and discount broker

With more and more traders flocking on to the Indian stock market the prominence of zero brokerage came into existence and evoked curiosity from traders. A well thought out concept where discount brokers are not going to levy any brokerage for trade conducted.

A broker who executes buying or selling of transactions at a reduced cost is termed as discount broker. Pretty much like a full time broker, they are going to execute orders on behalf of the clients and not going to provide them with any advice. Once upon a time to even afford a broker was restricted to the elite strata of the society. But since technology has gone on to become a part of trading this has gone on to eradicate that wealth pinch. The internet is credited with the transformation as you can trade with a small amount.

Is zero brokerage expected to make a difference?

As far as zero brokerage trading in India is considered a major difference is expected. By traditional trading you have to shell out brokerages on trades. This is calculated by arriving at a % of the total volume of trade. This business model of calculating brokerage is a difficult task and an important part of the trading for an investor. The main reason being brokerage paid reduces the profit from the trades. A lot of people were disappointed as they felt paying brokerage was part of the trading game, till the point zero brokerage came into prominence.

There are numerous benefits expected with zero brokerage that are outlined below

  • There is no need to be worrying about the size and volume of your trade
  • In zero brokerage a flat monthly fee is levied and there is no need to worry about monthly trades executed
  • This goes on to enhance the profit or profitable trades or even breakeven point that is lower

There are a lot of companies who provide hidden opportunities. You have to time the stocks correctly so as to earn money from the stock market. If you are an investor in equity and commodity market you need to consult a share specialist that might help you to earn profits and cut losses. Though in the market you might come across numerous brokers providing you with profitable trades by raking in a chunk of investor’s profits they are enjoying. As an investor it is all about getting your timing right. But still major disappointment lies in store as you have to levy high brokerage.

Considering the calculations of the brokers in mind investors are even reluctant to place trades.

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The ELSS and tax saving benefits

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tax saving benefits

Those who have to work hard for every penny do not like to waste their money. For many people though earning is good till the liquidity is a problem and if the income also falls in a big tax bracket for income tax, no one loves to go for it. In such a case, one needs to try the options that can help him save on income tax. Among the tops tools that are known for the tax saving the list may remain incomplete if the ELSS is not added to the same. It is a mutual fund which is linked with the equity market.

What is ELSS and how it helps save tax?

ELSS is a type of mutual fund that is specifically created for the tax saving purpose. Various AMCs are there in the market that has created this mutual fund to invest in the share market. The amount invested in this mutual fund is exempted from the income tax up to the limit of 150000 per annum. This exemption is provided under section 80c. Hence the investor who has to pay income tax on his complete income can invest the amount up to 150000 in some of the best ELSS mutual funds and save tax up to the prescribed amount.

The investment:

Investment in ELSS mutual funds can help one save on income tax on the side while on the other side the invested amount in the form of a mutual fund can also help one get a good return from the market. The best part here is the investor who wants to invest in ELSS can go for investing the amount in a single go or can also pay the same in instalments. Hence one does not need to feel the burden of investment on his routine income also.  While going to investing the amount in some of the best ELSS funds, one needs to check the unit price of the fund and also find its previous performance. If one does not know about it, one can find an expert who can help one invest in the best mutual funds that offer ELSS services also. The amount invested in this fund cannot be withdrawn for the next three years, and hence one can have a good return on his mutual funds in such a period.

The investor also needs to check if the investment in a mutual fund will be in a specific company or segments such as large caps, small caps and mid caps. There can be dividend and growth options from which one needs to find an option that best fits his investment as well as profile. The investor needs to understand the terms and conditions of the AMC before going for investing in specific AMC. One must note here that ultimately this investment is linked with share market and hence the ups or downs of the market can also affect his portfolio. It is always good to read the terms and conditions of the company before investing the amount to the same.

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