Physician in Mid-Career Worried that he will not have enough to Retire
Jeff has been in practice for fifteen years and is generally considered the best local doctor in his field. He has entrusted all his investments to a wealth management team who have been very clear that he is not close to achieving financial independence despite solid returns on his portfolio. He contacted me to ask about taking a more aggressive approach including hedge funds, options, and shorting selected businesses and market sectors to “juice his returns”.
Clearly a highly intelligent individual, he had a much better than average understanding of these aggressive strategies but lacked the time to execute them himself preferring to direct his team to do soon his behalf. However, on detailed discussion, he turned out to be very uncomfortable with the possible losses these approaches might induce, but still felt that he had to do something or continue with work including being on call until his was in his 80s.
Investors in a hurry can get themselves in serious trouble. A more complete review showed that the problem was not earning or investment return, but instead a very low rate of saving entirely related to spending far beyond requirements on items such as expensive clothing, cars, trips, cottages and a huge home which they no longer needed or enjoyed, but felt were essential to his image.
Jeff sat down with his partner and was relieved to discover they both agreed to simplify their lives. They sold their home, one of the cottages, two of the cars and reduced spending after buying a much smaller but comfortable condo. With the provided extra funds and planned increased savings, the wealth advisors redid their projections and were able to reassure the couple that retirement would now both be possible and reasonable in a much shorter time frame than previously.
KEY CONCEPTS:
Investors in a hurry can and often do make costly mistakes
Expensive baubles rarely provide more than temporary pleasure.
Ego or attempting to impress others with your possessions can get in the way of financial independence