The Guide to Investing for Doctors: 6 Best Investments for Doctors and Physicians

As high-income earners, doctors have even more investing opportunities than the average person, allowing them to build wealth and even fast-track retirement. In this guide to investing for doctors, we’ll share the six best investments for physicians and doctors, common benefits and risks to consider, and how to choose the best investment vehicle for you!

Summary:

• Investing can help you build wealth for retirement, but there are significant risks to consider, such as market downturns and illiquidity.

• Real estate is one of the best investments for doctors, as it provides monthly cash flow, long-term appreciation, and tax benefits during your high-earning years.

• Turnkey rentals combine the best of active and passive investing, allowing you to enjoy the benefits of rental property investing without the same time commitment.

6 Best Investments for Doctors

Do you want to put your hard-earned income to work? The best investments for doctors allow you to build wealth alongside your busy medical career:

1. Real Estate Investing

Real estate is one of the most popular investment vehicles, as it allows you to build wealth in several ways. You can earn cash flow, the monthly net profit you receive from your rental property after subtracting your mortgage and expenses. You can also invest for appreciation, building home equity as the housing market grows. Finally, you can use depreciation, write-offs, and other tax deductions to offset your high W2 income.

What’s more, real estate investing doesn’t have to be another full-time job. You can invest actively or passively in real estate, depending on your goals and how much time you’re able to commit to your investments.

Turnkey rentals combine the best of active and passive investing. These newly built or renovated properties are ready to rent on day one, require very little maintenance early on, and are professionally managed for you.

Rent to Retirement offers low-maintenance, professionally managed turnkey rentals nationwide!

Active Real Estate Investing

With active real estate investing, you’ll need to set aside time each week to deal with tenants, coordinate maintenance and repairs, and handle other routine tasks. Common active real estate investments include: 

• Long-term rentals
• Short-term rentals
• House flipping
• Wholesaling

Passive Real Estate Investing

With passive real estate investing, you are not usually involved in the day-to-day of your investments. In most cases, someone else is managing them for you! Common passive real estate investments include: 

• Turnkey properties (mostly passive)
• REITs
• Syndications
• Crowdfunding
• Private money lending

2. Paying Off Student Loans

Most doctors graduate with a significant amount of student loan debt. Paying off your student loans should be a priority if the interest rate on your loan(s) is higher than the potential returns of other investment opportunities.

3. Index Funds

An index fund is a basket of stocks or bonds that tracks the performance of a market index—such as the S&P 500. These long-term investments are widely regarded as “safer” than individual stocks, as they are diversified, aren’t actively managed, and have relatively low fees.

4. Retirement Accounts

Investing in tax-advantaged accounts can help grow your nest egg during your working years. Physicians, who are typically high-income earners, can contribute to pre-tax retirement accounts and delay paying taxes on that money until they take distributions in retirement (when they are in a lower tax bracket). 

Is investing in something like a Roth IRA better than real estate investing? We put them head-to-head in our Roth IRA vs. Real Estate article! 

5. High-Yield Savings Accounts

If you’re looking to maintain a certain level of liquidity and put your cash where it will at least outgrow inflation, get a high-yield savings account (HYSA). Today, these accounts pay roughly 4%-5% APY, which could be 10 times more than a regular savings or checking account! Deposits are FDIC-insured up to $250,000, meaning your money is protected in the event of a bank failure.

6. Starting or Buying a Business

Self-employed physicians earn more than employed physicians. You can start your own practice, or you can also build a medical-adjacent business around medical equipment, health insurance consulting, or wellness coaching. This could boost your income potential and even allow you to generate passive income!

Want to invest in real estate without the headaches? 

The Benefits and Risks of Investing for Physicians

Investing can help you build wealth, but you must also accept certain risks. Some investments are much riskier than others, so the investment vehicle you choose will depend on your risk tolerance.

Benefits

• Grow your nest egg for retirement
• Combat the effects of inflation
• Take advantage of compounding interest
• Defer taxes and reduce your taxable income

Risks

• Market downturns
• Credit risk
• Less liquidity
• Non-deposit investments aren’t FDIC-insured

Factors to Consider Before You Invest

Not every investment is the right investment for you. Carefully consider the following factors when choosing where to invest your money:

Long-Term Goals

When do you plan to retire? How much money will you need? Choose an investment vehicle that can generate the type of return you need to achieve your investing goals.

Risk Tolerance

How much risk are you comfortable taking on? “Safer” investments will often give you lower returns, while riskier investments may give you higher returns.

Timeframe

When do you want to receive a return on your investment? If you want a return today and down the road, consider an investment like turnkey rentals, which will give you consistent monthly cash flow, appreciation, and tax benefits!

Check out our cash-flowing turnkey rental properties for sale!

Time Commitment

Time is a common pain point for busy doctors and physicians, but if you have the bandwidth to buy and manage rental properties or start a business, these investments often deliver the highest returns. Otherwise, you might need to opt for a more passive investing strategy, like turnkey rentals, REITs, or index funds!

Taxes

Taxes are one of the most important factors to consider with any investment strategy. Many physicians will use investments to defer taxes until their non-working years when they fall into a much lower tax bracket—potentially saving them hundreds of thousands of dollars!

How Much Money Should Doctors Invest?

Some doctors want to build generational wealth they can pass down to their children, but for most, the goal is to retire on their own terms and not run out of money. How much money you invest will depend on your long-term goals and the type of lifestyle you want in retirement.

If you plan to retire at 65 and withdraw $75,000 each year, you’ll need roughly $1,500,000 to support a 20-year retirement. If you want to retire at 50, you’ll need roughly $2,625,000 for a 35-year retirement.

Invest in Financial Wellness

Are you ready to make your money work harder for you? The sooner you start, the faster you can earn passive income, build wealth, and retire on your terms!

Turnkey rentals are a great place to start. These properties give you all of the benefits of normal rental properties, including consistent cash flow, long-term appreciation, and tax advantages. Because they are managed for you, they require a much smaller time commitment!

Investing for Doctors FAQs

What Is the Best Investment for Doctors?

The best investment for you depends on several factors, including your age, goals, risk tolerance, and how involved you want to be. Turnkey rentals are a popular option, as they allow doctors to build wealth with real estate without having to find tenants, collect rent, and handle other time-consuming landlording tasks!

What Is a Physician Investor?

A physician investor is simply any physician who invests their money to make a return. You can place your money in real estate, stocks, bonds, retirement accounts, businesses, or other investments!

Do Doctors Invest in Real Estate?

Yes, many doctors invest in real estate for appreciation, tax benefits, and even cash flow. There are several passive (and semi-passive) real estate investments that allow doctors to build wealth without a huge time commitment!