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Do it Yourself Considerations
By Clifton N. McIntire, Jr.; CIMA, CFP®
By Lisa Ellen McIntire; CIMA, CFP®
In order to self create and monitor an investment portfolio for personal, office, or medical foundation use, the physician investor should ask him/herself three questions:
1. How much do I have invested?
2. How much did I make on my investments?
3. How much risk did I take to get that rate of return?
How Am I Doing?
Most doctors and health care professionals know how much money they have invested. If they don’t, they can add a few statements together to obtain a total. Few actually know the rate of return achieved during last year’s debacle, or so far this year in 2009. Everyone can get this number by simply subtracting the ending balance from the beginning balance and dividing the difference. But, few take the time to do it. Why? A typical response to the question is, “We were doing fine” -or- “We did terrible last year.”
But, ask how much risk is in the portfolio and help is needed. Nobel laureate Harry Markowitz, PhD said, “If you take more risk, you deserve more return.” Using standard deviation, he referred to the “variability of returns” – in other words, how much the portfolio goes up and down, its volatility.
Your Own Portfolio
How, and even whether or not to create and manage your own portfolio, is what this brief post is about.
First, you must determine what to do with your investments. How much risk can be taken and what is the time frame? You must understand the concept of risk vs. reward and write an investment policy statement.
Next, the assets that will be used for investment must be selected. This involves asset allocation and mixing different styles of investment management to achieve the desired results, and is the point where you go it alone, or professional investment managers are selected.
Be sure to review expenses, like wrap accounts, service fees, AUMs, commissions and compare mutual funds with private money management.
Monitor
Once the initial portfolio is in place, the performance must be monitored to assure compliance with the investment policy. Here’s where you consider 401k or 403(b) plans, pension plans, retirement accounts, as well as how to change doctor trustees or managers when necessary.
Assessment
Finally, consider the role of professional consultants. Now after all of this, if you still want to do it yourself rather than be a doctor, the entire process will be professionally illustrated. An actual physicians’ financial plan with investing portfolio was reviewed previously, along with the steps taken to improve returns and reduce risk.
Conclusion
And so, your thoughts and comments on this Medical Executive-Post are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, be sure to subscribe to the ME-P. It is fast, free and secure.
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Filed under: Financial Planning, Investing, Portfolio Management, Recommended Books | Tagged: AUMs, Clifton N. McIntire, david marcinko, ETFs, Financial Planning, Harry Markowitz, Investing, Lisa Ellen McIntire, Mutual Funds, Portfolio Management, WRAP accounts |
The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants 
“Physicians have a significantly low propensity to accumulate substantial wealth.”
– Thomas Stanley, author of The Millionaire Next Door
Glen
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Sales – Sales and Sales
Q: “What do financial advisors need to focus on most, when it comes to being able to work effectively with today’s affluent investors – like doctors and other medical professionals?”
A: Is it financial training, economic experience and deep knowledge and education? Nope! It’s sales skills.
Don’t believe me? Read what industry insiders are saying right here?
http://registeredrep.com/newsletters/practice/are_you_working_on_your_sales_skills_0318/
This essay, and philosophy, is just one reason why I resigned as a “trained” certified financial planner, and returned as an educated healthcare economist and physician-focused and fiduciary financial advisor; more than a decade ago.
Forewarned is forearmed. Do not suffer the sales mentality foolishly.
Fraternally
Dr. David Edward Marcinko; MBA, CMP™
http://www.CertifiedMedicalPlanner.com
[Editor-in-Chief]
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Mutual Funds Continue To Get Cheaper
DIYs – For the last 20 years, the average expense ratio for equity long-term mutual funds has dropped significantly, a trend that continued last year. Why?
http://www.fa-mag.com/fa-news/10709-mutual-funds-continue-to-get-cheaper.html
Hardin
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