What this book is about…

This book explains how to create wealth by implementing sensible, safe and achievable financial plans created specifically for Australian GPs.

This book emphasises staying in control of your business and investments at all times, and avoiding the traps inherent in the financial planning process, mainly institutional bias in product selection and chronic short-termism.

This book encourages GPs to invest in their practices, their homes, direct shares and property, including practice premises. This book explains how the return on these investments will be better if the right structure is used: trusts, companies and self-managed super funds are critical components of every financial plan.

This book takes a very long-term approach to investing. It takes decades, even generations, for strategies to really bear fruit. Patience is crucial. Keep it simple and have faith in what you are doing. It does work. It just takes time.

This book stresses the unique nature of GP incomes: their height, stability, scalability and longevity combine to create a unique opportunity for every GP to acquire wealth and to establish a sound financial base for this generation and the next.

This book emphasizes that outstanding wealth takes decades, not years, to create. We know this because we have seen it done by thousands of GPs in the past. As any wealthy person will tell you, the best time to get started was always two decades ago. But the next best time is today.

So please read on and enjoy the journey!

Australia: the ‘lucky’ economy

No one is really sure what Donald Horne meant when he titled his 1964 classic “The Lucky Country”. It became a term of endearment, but Horne went to great lengths to dispel this view. He meant it critically. He could see doom on the horizon.

Horne was not very prescient, at least in economic matters. For fifty-three years later, in 2017, Australia retains one of the world’s strongest economies. Sure, there are problems. Some say two decades of unbroken growth has led to complacency, that we are becoming uncompetitive on the world stage, and desperately need better exchange rates (i.e. a lower $A) and a more productive workforce to maintain our historically high standard of living.

This is a depressing view. It’s not one we share. To demonstrate what we mean, let us ask one question: where else would you want to live? Can you name a better country, with better prospects and standard of living?

Australia’s economy proved world class during the GFC of 2008. Our strong resources base carried the day. The consequential high dollar hurts manufacturers, harming exports and import substitutes, but it keeps inflation down and interest rates down, and has been a boon to import consumers (think cars, TVs, PCs). This combined with technology-driven productivity gains means Australia has an economic record that is the envy of treasurers around the world.

Australia has a stable Westminster based political system, a relatively independent civil service, an independent court system, an extensive social welfare safety net, an equitable tax system, a low incidence of governmental corruption, a world class public education system including world class universities, an educated and skilled workforce and an enviable climate.

By way of contrast, in 2012 Barack Obama and Mitt Romney each spent close to $US1 billion on their election campaigns. And in 2016 America actually elected a billionaire.

Australia’s health system is first class. It’s not perfect – as we are sure you no better than anyone – but it’s better than the international alternatives.

Australia is a nice place to live. That’s why every year hundreds of thousands of people emigrate here – bringing their proactivity with them. It is like a constant boost for our economy.

Medicine: the ‘lucky’ profession

In the Lucky Country, medicine is the ‘Lucky’ Profession.

Australian GPs almost always enjoy world class facilities and resources, funded by a generous National Health scheme that provides good health care to all Australians pretty much independently of their means. It’s not a perfect system, but it’s a pretty good system.

Medicine is the only profession that exists entirely to serve the national interest. That is why it is also the only profession that is underwritten by the Australian Government.

Do you know any unemployed GPs?

Virtually every GP in Australia earns a very good living, with an almost guaranteed income in the top few % of the income population. The growing and aging population means this is not going to change in your life-time, and the net demand for medical services will rise and rise despite increases in the supply of medical graduates and the best efforts of the federal government.

It’s an unstoppable phenomenon.

We do put ‘lucky’ in inverted commas, though. Luck has little to do with it. Medicine is a most demanding profession. The entry requirements are sky high and it takes more than ten years of training to produce a fully qualified GP. It’s a gruelingly strenuous process that no one can simply ‘luck’ their way through. But you already know that.

Thank goodness, then, that being a GP in Australia means you are in the highest paid profession in one of the wealthiest and most privileged countries in the world.

Our thesis could not be simpler: the height, stability, scalability and longevity of the GP’s income means that virtually every GP, no matter what their age or current financial position, can create and implement a financial plan to achieve long term financial security within a reasonable time.

It does not matter if you are 26 or 62, it’s not too early and it’s not too late; and it can be done.

This book tells you how.

The executive summary

Personally, we think books on finance are the best type of book to read. That’s why we presume you will want to read this one from e-cover to e-cover. But if you like a summary before you start, then make sure you read this page.

  1. You can practice medicine until you are in your seventies if you want to, assuming your mind and body are up to it. So take good care of them and make sure they last the distance. You have worked hard to get where you are now. Make sure you enjoy yourself and get the most out of your career and personal relationships. It’s not all about money.
  2. Owning a practice is the best investment for a GP, assuming life circumstances allow it.
  3. Owning a good home in a major capital city is the next best investment. Own as many homes as the bank will lend you and then pay off that loan as fast as you can. Keep the old home as an investment when you move up.
  4. Stay away from managed funds and other institutional investments. Focus on direct investments in a diversified selection of Australian shares and property. Own these investments through controlled trusts and super funds, and use a judicious amount of debt to speed up the capital appreciation process.
  5. Never sell a good property or a good share. Appreciate they are long-term investments, measured in decades, and even generations. Invest for your grandchildren.
  6. Surgery premises are usually excellent investments.
  7. Never trust an investment adviser who works for an institution.
  8. Take a conservative position on the taxation of practice income. GPs should practice through trusts, with all personal services income distributed to the GP who generated it; and making sure a reasonable remuneration is included in the GP’s assessable income, even when the practice is clearly a business for income tax purposes.
  9. Have adequate risk insurances in place, but do not over-insure. Hopefully you are not wasting your money. Just don’t waste too much.
  10. Don’t own valuable assets in your own name: if you don’t own them you cannot lose them, at least to a litigious patient. Trusts, super funds and, sometimes, spouses should own valuable assets; not GPs.
  11. Have a sensible will in place.
  12. Contribute as much as you can to a cost-effective super fund or a SMSF every year no matter what your age. For most GPs this is all that is really needed to be financially secure.
  13. Handle debt with care. Never have consumer debt, and minimise non-deductible debt. Make sure deductible debt is at the lowest possible interest rate and never pay mortgage insurance.
  14. Start retiring early, but never stop. Gradually cut back over the last few decades, making sure your costs are cut back too, and that your practice is always profitable. Change co-ownership arrangements and even change practices if you need to.
  15. Finally, never forget the four basic rules:
    1. keep it simple;
    2. never trust anyone with your money;
    3. never give up control; and
    4. choose direct investments.

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