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Stupid Doctor Tricks: Physicians’ Biggest Financial Mistakes

stupid doctor tricks

Listening to The White Coat Investor podcast the other day, I heard him talk about how there are brilliant physicians out there who scored 270 on Step 1 of the USMLE that cannot invest their way out of a paper bag.

It’s sad but true. Intelligence and success in one arena does not foretell success in all aspects of life. In fact, the more one focuses all energies on one discipline, the more likely other areas are going to be neglected.

For far too many physicians, personal finance is one of those disciplines that fall to the wayside. We are busy launching our careers, adjusting to new surroundings, growing our families, and enjoying a bit of freedom when we have a little time off.

Reading a money book or taking a course to improve our personal finance knowledge is not often on the agenda. And we pay the price.

Dr. Jim Dahle has compiled a long list of mistakes physicians have admitted to making. This post was originally published on The White Coat Investor.


Stupid Doctor Tricks: Physicians’ Biggest Financial Mistakes


Whenever possible, it is best to learn from the financial mistakes of others rather than your own.  For example, I’ve made the mistake of using a commissioned financial advisor who sold me crappy, expensive, loaded mutual funds; I’ve bought whole life insurance, and I’ve incurred unnecessary taxes in a taxable account due to not fully understanding the kiddie tax laws.

Luckily, these mistakes pale in comparison to financial errors made by some of our colleagues.  A recent thread on Sermo revealed a lot of the big financial mistakes other physicians have made before you, and I’ve detailed them below in this and the other 3 posts in this series:


Stupid Doctor Tricks Part 2
Stupid Doctor Tricks Part 3
Stupid Doctor Tricks Part 4


Consider this a financial “Morbidity and Mortality Conference.”  Painful to listen to sometimes, but better than having to make each mistake on your own.  Add your experiences as a comment at the end of this post.


stupid doctor tricks



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#1 Getting Ripped Off


  1. Working with a “financial planner” who specializes in working with physicians and almost got me into whole life insurance
  2. Overpaying for legal advice ($3500 to review an employment contract)
  3. Buying a universal variable life insurance policy as an “estate plan”
  4. Investing with Bernie Madoff
  5. Listening to brokers/financial planners/coin dealers
  6. Not realizing that the goal of brokers is to take your money and make it theirs
  7. Giving OTHERS control of substantial sums of MY money
  8. Hiring an expert to manage my money. This guy charged 1% per year on the balance. Got a call from the fraud division of the FBI and they seized all my money.  After about 2 yrs sweating got it back without interest. Taught me to learn about investing. I decided I may not be a pro, but I won’t steal my own money
  9. Investing (before I learned about personal finance) through a professional who gave “free” advice steering me to load mutual funds and life insurance with high fees
  10. Listening to an attending during med school for stock pick advice
  11. Paying a lawyer to do my tax returns for 10 years . . . He charged $10,000 for a return that a national tax preparation company does for $1,500 or less
  12. Allowing myself to get talked into a variable annuity when I was a chief resident. Bought it at roughly market peak; it sank with the market in 2001-2002; paid lots of charges and surrender charges when I got rid of it three years later to buy my first house, and due to nature of variable annuity, I didn’t even get to write the losses off on my taxes… Stay away from those RIPOFF variable annuities; get a tax-deferred or even taxable account like everyone else
  13. Relying on money managers for too great a percentage of my net worth… It’s best to learn enough to oversee a lot of your assets on your own
  14. Bought front-loaded mutual funds
  15. Getting ripped off to the tune of 11 k for a real estate closing by my lawyer who charged by the hour. Took his fees right out of the mortgage check before I ever saw it
  16. Buying a timeshare, buying a variable annuity, buying whole life insurance and depending on brokers to make financial decisions
  17. Stock tips from friends, relatives, or cab drivers should be avoided at all costs Those free financial newsletters are just scams. What they touted are probably their own holding which they will sell when your rush to buy them pushes up the stock price transiently before they fall off the cliff.



There is a common theme here and it is one I tackle frequently on this blog.  You need to be very aware of how, and how much your advisors are paid.  This includes financial planners, stockbrokers, insurance agents, realtors, attorneys, accountants, and investment managers.

As a general rule, people don’t go into these fields for the same reason firemen and kindergarten teachers choose their jobs.  There is no Hippocratic Oath among financial professionals.  It is your job to understand how much you’re paying and whether that is a fair price.  Understanding how the person advising you makes their money also helps you understand their conflicts of interest.


#2 Insurance Issues


  1. Not buying disability insurance
  2. Mentioned a few divorce-related situational depression issues resolved in the past on a disability insurance application
  3. Not getting OWN-OCCUPATION disability insurance on the first day of residency
  4. Bought too much useless, expensive insurance


Well, no one said they wished they’d bought more life insurance.  Of course, there’s a real survivorship bias there.  All those dead guys who should have bought more aren’t here to tell us.  Buy plenty of the insurance you need and avoid the insurance you don’t.


#3 Personal Finance Issues


  1. Using credit cards [PoF: Can be the opposite of a mistake]
  2. Buying too big of a house
  3. Should have listened to Dave Ramsey and completed his course about 8 years earlier
  4. Spent too much on a wedding
  5. Credit card debt in med school
  6. Marrying a fiscally irresponsible spouse
  7. Spending $600 to replace the clutch on a $1000 car then donating it to charity 2 months later
  8. Sending my kids to a private college in the future (50K a year, what a waste!)
  9. Quitting one job before I had another (thankfully savings helped me through that transition)
  10. Buying a used jeep and not noting it was burning out its engine from an oil leak
  11. Not being aware of recurring automatic charges. I signed up for AOL when it first came out. Had automatic recurring credit card charges of $24.95 a month for over 14 years (wife paid the bills) for essentially nothing that you cannot get for free now. Just stopped it when our credit card had to be changed.
  12. Not saving as much as possible early in my career to take advantage of compound interest
  13. Allowing lifestyle to creep upwards with increasing financial success
  14. Keeping the house in the divorce — I had to spend $76K repairing it to then short-sell at a >$200K loss. I’ll be paying on the loan I had to take for the repairs for the next 15 years
  15. Giving my daughter a credit card (for “emergencies”) when she entered college in Boston
  16. Not starting 529 plans for kids early enough, not investing aggressively enough


There you have it.  A lot of accumulated experience that may save you thousands.  Add your experiences to the comments below.

These are mistakes made every day by millions of people.  They aren’t particularly specific to doctors, but doctors certainly make them as much or more than other people.  Spend less than you earn, be wise with your cash, and if, heaven forbid you get divorced, take the 401K, not the house.

This is the end of Stupid Doctor Tricks Part 1 of 4.  Continue on to Part 2.  Or better yet, leave a comment below noting one or more of your own financial errors.  Too many of us feel that talking about money is taboo, so we just keep making the same mistakes over and over again.

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What are your biggest financial mistakes? Share your experiences and let others benefit from them, just as you’ve benefited from seeing others’ mistakes.


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8 thoughts on “Stupid Doctor Tricks: Physicians’ Biggest Financial Mistakes”

  1. Two events to note:
    Joining the military: very rewarding to my experience and character, but effectively froze my income potential until I separated.
    Bad timing: accumulated money for a down payment in a stock based mutual fund. We bought the home in 2009 when I left the military; guess what the mortgage crash of 2008 did to our balance. The lesson was to diversify so we could pick from cash and bond funds during bear markets.
    Happily married to an equal partner who is willing to weather any market with me equally!

  2. Subscribe to get more great content like this, an awesome spreadsheet, and more!
  3. Early in my career I received a letter on very expensive paper with real gold leaf. Very elegant!

    The investment company was offering a method to lower my income and save taxes.

    They would bill me for up to 50% of my income thus reducing my taxable income.

    At retirement they would start returning it to me at a lower tax rate.

    The plan was endorsed by a couple of astronauts and several Senators.

    I’m sure when I went to retrieve the money at retirement the company would vanish. Furthermore, I’m sure the IRS would surely see this for the tax dodge it was and charge interest and penalties!

    Luckily I passed on this unbelievable offer.

  4. At one point in my life, I wanted more levered exposure to stocks. I though investing in options would be a great way for me to make quick money. I started off small and quickly made a few thousand dollars by writing put options which expired without being exercised. I stood tall and felt confident of my ability.

    I decided to up my game and put over $30,000 to work on another option. This time, it did not work out well for me. I was long the option. The price fell over a period of time but I was too stubborn to get out. Ultimately, I lost 100% of the cost.

    That was the last time I got myself into options. I also realized that sticking with plain, time proven investments such as the S&P 500 index or real estate is the best way to go.

  5. Homeowner’s Insurance-When rates climbed, I called USAA and asked about higher deductibles. I went with 10% deductible. I didn’t read the electronic copy of the policy. The clerk didn’t explain it. I thought this was 10% of loss but was 10% of home value per claim. Hail damage and new roof followed. Insurance paid zero.

  6. I married a fiscally irresponsible spouse. I’m lucky to have emerged from that marriage at age 44 without being bankrupted. Thankfully, he assumed responsibility for the $250K in debt he’d run up, and it was in our property settlement.

    Also used financial “advisor” to purchase front loaded investments. I can’t list that as a total disaster as they’ve performed well, but still… I lost faith in her when I started teaching HER things about personal finance and tax planning, and realized she probably advised me to file for SS at age 62 so as to delay distributions from accounts she was earning money on.


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