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Monthly Archives: June 2019

Five Ways to Juggle Multiple Savings Goals

Many doctors may have competing short-term goals; saving for the down payment on their first home, a big vacation, new furniture, etc. Many people are comfortable maintaining one account for their emergency/opportunity fund and directing monies to this account systematically each month or when cash builds up in their checking account.

For others, though, one lump sum of money sitting in an account doesn’t help them to determine whether they can afford each of their goals or even reach their goals to begin with. For those clients, I tend to recommend a strategy of using multiple accounts to accumulate the funds to meet each goal.

If you prefer the multiple account strategy, I have a few suggestions you may find helpful:

  • Determine the purpose of the money. Most people should have an emergency reserve of 3-6 months of income, depending on their personal situation. Start with this fund and list the other purposes.
  • Determine the amount you need for each goal. Write down the expected amount for each goal and be very specific.
  • Determine the time horizon for each goal. It is important to identify when you will need the money, so you can determine how much to set aside each month to reach that particular goal.
  • Determine your monthly excess cash flow. After your fixed and necessary variable monthly expenses, calculate how much money is left over each month to put toward savings goals. I highly recommend a budgeting exercise; however, if you haven’t done one and choose not to do a budget, perhaps you know how much your checking account builds up each month. If so, unless you alter your spending habits, this is your monthly excess.
  • Determine where to put the money. This will vary by person or family depending on income, time horizon and risk tolerance to name a few. If you are incredibly conservative and reaching the goals will be close, multiple accounts that preserve the monies are probably best.

If, on the other hand you are much more aggressive, are comfortable with delaying the goals due to a decrease in principal or have a longer time horizon to meet the goal, you may want to consider other investment options.

It’s important to remember online savings accounts tend to pay a higher interest rate than typical brick-and-mortar banks, so it is beneficial to do some research unless you already have a financial advisor. They should know which options are best or be able to find out for you. Your financial advisor can make recommendations based on your overall comfort and knowledge of investments.

If you’re struggling to juggle multiple savings goals, our advisors can help.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

For Disability Coverage, Should You Go Your Own Way?

For a physician, purchasing an individual long-term disability policy to replace or supplement group disability through your employer can be fundamental to the financial planning process and a basic asset protection tool; in brief, the policy protects one’s ability to earn an income.

As you transition from school to residency or fellowship, you may see that your employer offers a group disability policy. Although you may have access to long-term disability coverage at a nominal cost or even no-cost, the differences between group and individual coverage can be vast and the policy offered should be reviewed by your advisor before enrolling in the coverage. You may want to consider an individual policy, and here’s why:

  • Definition of own occupation: Oftentimes, an employer-sponsored policy will protect an insured in their specialty for 24 months, after which the definition is even broader—basically, if you can work, you are not considered disabled. With an individual policy, an insured can obtain a definition of disability, what I call “True” own occupation coverage; meaning, if the insured cannot work in his/her specialty but can work in another capacity, say teaching at a medical school, the disability benefit will continue.
  • Portability: Some employers do offer long-term disability coverage that can be converted to an individual policy when an employee leaves the employer. This is not always the case and, even if the coverage is portable, it is typically subpar to the long-term coverage an insured can obtain individually. Individual policies are owned by the insured and cover the individual at any employer.
  • Taxability: If the employer pays for the coverage, the benefits received are taxable to the insured. If the insured pays for the coverage with after-tax dollars, the benefits are not taxable.

Despite some of the benefits of individual coverage, group disability offered through an employer may be necessary for those physicians unable to obtain individual coverage due to pre-existing health conditions. And depending on the employer type, the coverage may provide the physician’s needs at a lower price. Be sure to review with your advisor to get all the relevant information before making a decision.

Not sure if an individual disability policy is right for you?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

Before You Take That Job, Review the Benefits

Employee benefits are an integral component of a physician’s overall financial plan, and your financial advisor should review these benefit offerings with you to determine which of those options best meet your needs.

When discussing with your advisor, covering every aspect of your potential benefit package is the goal, but here are a few highlights to pay attention to:

  • Retirement plans: Most employers offer a retirement plan to their employees. Your financial advisor should discuss the plan offerings to ensure you are maximizing matching dollars and your total contribution. For many physicians, their retirement plan will be one of their largest assets to fund retirement. Additionally, many employers offer a Roth option for employee deferrals in addition to the typical pre-tax or Traditional employee deferral. Your advisor should discuss the tax implications of each option and how it fits into your overall investment strategy.
  • Long-term disability: If your employer provides disability benefits, it is important for you to understand the coverage offered and how it integrates with any existing individual disability insurance you own or are considering purchasing. Most employer long-term disability plans have a definition of disability that only protects physicians in their specialty for a limited time. If you are required to pay a portion of the cost of coverage, you can often opt out of coverage to increase the amount of individual coverage you can purchase, which may be the best option for many physicians. For others, the long-term disability benefits could fill a gap in their financial plan and your advisor should help you maximize this offering as necessary.
  • Medical coverage: Many employers now offer a high-deductible option in the medical coverage choices. Depending on your family situation, a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) option may be optimal. However, it is important to understand the benefits of choosing a plan with current tax savings even though there may be higher out-of-pocket expenses.

Reviewing benefits for a new job is important, but don’t limit the benefit review to a new job only. Open enrollment is an important time in the ongoing financial planning process, and your financial advisor should take an active role in helping you determine which employee benefits to adjust as your individual or family circumstances change over time.

Are you in need of a benefit review with a financial advisor?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates.

Three Reasons to Consider a Physician Loan for Your Home

For a newly practicing physician, or even a resident or fellow training in an area with lower housing costs, a physician loan can be a great way to purchase a home. Here are our top three reasons a physician loan may be the home financing solution for you.

  • Low or no down payment. The amount of the down payment will depend on the purchase price, home type and location. In many parts of the country, it is possible to find zero down on a home up to $750k, while in other areas, 5-10% may be the minimum.
  • No mortgage insurance. Often referred to as “PMI,” this insurance is required for lenders who purchase a home with less than 20% down. Physician loans are specialized products, privately financed and are not required to charge PMI, an added cost that is not deductible to high-income earners under current tax law.
  • Debt-to-income ratio. Physicians often carry large student loan balances, which can be even more burdensome for a couple who both carry these loans. Physician loan products do not consider student loans when calculating debt-to-income ratio, a key determinant in the approval process.

There are many factors in determining whether to opt for a physician loan versus conventional financing, even when the 20% down payment is available. It’s important to speak with various lenders to find the product that best suits your needs, however, because lenders in the same city may offer very different terms.

Talk with a trusted advisor about the pros and cons as it relates to your situation but be very cautious about one key factor: Banks like physicians and will often lend a doctor more money than they can afford to pay. Your advisor can discuss this with you as well.

Is a physician loan right for you? We can help you decide.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.
The views and opinions expressed in this article are those of the author, are for educational purposes only and do not necessarily reflect the official policy or position of Larson Financial Group, LLC or any of its affiliates. This article is not intended to be a solicitation for an extension of credit for a loan.

Three Things You Didn’t Know About Taking a Vacation

When was the last time you took a good vacation? Has it been months? Years? A decade or more? You wouldn’t be alone.

According to an article from Medscape, over a third of family physicians and almost as many emergency medicine physicians, internists and general surgeons take off two weeks per year at most.

Planning time away from your practice and daily grind are key to preventing burnout. A study conducted in 2010 found some interesting things about vacationing. Here are a few things you may not have known about taking a vacation.

  • Anticipating a vacation can be as rewarding as actually taking a vacation. Vacationers are generally happier than non-vacationers, but post-vacation happiness was similar among both groups. That could mean that planning and then looking forward to a vacation may be more beneficial to your stress levels than the vacation itself.
  • Quantity over quality. Given that post-vacation happiness levels are similar between vacationers and non-vacationers, the length of the trip you take may matter less than you think. Consider taking a handful of shorter vacations throughout the year as opposed to one or two long vacations to maximize the “pre-trip happiness.”
  • You may not be relaxed unless you’re truly relaxed. Vacations generally don’t add much to your happiness, post-trip. Only those who take “very relaxed” holiday trips benefit most in terms of post-trip happiness. When you decide to take your vacation, truly leave work at work. To gain the maximum benefit, focus on the vacation and getting the most enjoyment and relaxation out of your activities before you return to work.

As a doctor, it can be tough to schedule time away. You’re busy, you have patients to see and you may have a practice to run.

To remain happy in your career and prevent burnout that can be very common among doctors, make it a priority to take some time out for yourself and your family throughout the year. You’ll thank yourself down the road.

Are you inspired to plan your next vacation? Our financial advisors can help you fit it in the budget.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services. Please consult the appropriate professional regarding your legal or tax planning needs.
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