Surgeons are faced with a variety of critical decisions to make at the beginning of their careers to build a successful practice, such as choosing the right organization to grow, signing a fair contract, developing their surgical technique and building a patient base.
Alexander Vaccaro, MD, PhD, president of Rothman Orthopaedic Institute in Philadelphia, told Becker's Spine Review about one investment that early-career surgeons should avoid when it comes to their finances.
Question: What is the worst investment or decision you made in your career? If given the opportunity, what would you do differently?
Dr. Vaccaro: The worst decision or investment I've made in my life is listening to financial advisers when I first entered practice, believing they were truly fiduciaries of my hard-earned money and abandoning the simple strategy of index fund capital allocation as a method of building long-term financial security. When you're young and naive, you're often influenced by savvy, smooth-talking financial advisers and disability brokers on the importance of letting them manage your money. What I found over time is that simple dollar cost averaging, exploiting index funds and therefore minimizing unnecessary fees, and maximizing tax-deferred investment opportunities including 529 plans for educational purposes was the most efficient way to develop wealth over time.
Why pay on average 60 to 100 basis points to a broker with additional hidden fees when a standard wholesale brokerage firm can provide similar outcomes for 14 to 20 basis points on average? Remember to diversify index fund investments depending on market trending covering the gamut of treasuries, mutual funds, low, mid and large caps, as well as international securities. Never ignore maxing out tax-deferred investment opportunities such as your 401(k) and 529 plans. Let your money work for you as you are caring for those in need.