I’ve previously discussed strategies to become rich as a doctor. The formula is somewhat straightforward in that you have to hustle and discover your value. Unfortunately doctor incomes vary quite a bit among specialties, and even dramatically within a specialty.
For instance, Internist income can range from $160,000 a year for strictly outpatient care to $200,000-$300,000 in Hospitalist care, and even in the $400,000’s if you opt for locums positions on top of a full-time job. The trade-off from increasing income in this situation is that you are exchanging your time and skill set for money.
Is it worthwhile to exchange time for money?
Obviously it depends on your needs and expectations. Most workers on Wall Street and businessmen would argue that if you are still young and have no dependents, it is to your advantage to build your net worth as quickly as possible. Many engineers turned early retirement bloggers did the same during their twenties have have since accumulated enough wealth to retire in their thirties. As a doctor, you exchanged your youth for earning potential later in life. The advantage that you have is that your hourly rate ought to be higher than that of an average software engineer so you could build your net worth more quickly.
There are also consequences for a rapid growth of salaried income. Your marginal tax rates will be high, much more than if that income came from capital gains. As a service worker, you incur high amounts of stress when working harder. You have to ask yourself these questions. If you have clearly defined timelines and goals to hustle, it may be worthwhile to make this compromise. Just make sure you don’t inflate your lifestyle along with your income.
How do the ultra-wealthy get rich?
Unless your skills command an outrageously high compensation (like Taylor Swift or most professional athletes), you still don’t have enough hours in a day to generate business-mogul money. This is the wealth it takes to own skyscrapers, rent out an entire nightclub for a party, or frequently charter private jets for travel.
The fact is that you don’t need to have a stock ticker under your name to generate this wealth. The wealthy build their worth through other people’s time. If you are really successful, you build wealth through other people’s money (OPM). A multi-millionaire owner of a junk metal recycling company hires out hourly service workers to get the job done. The billionaire cellphone charging cable maker has multiple factories of workers churning out simple widgets.
Medicine has some corollaries to this rapid wealth generation phenomenon through pharmaceutical development, electronic medical records, and medical device development. Billionaire Patrick Soon-Shiong is a prime example of a medical doctor who catapulted his wealth first through drug development and subsequently in venture capital, ancillary investments, and healthcare data mining. Being a one trick pony is great, but using that trick to fuel further ventures is the key to sustain financial success.
How does that apply to me as a lowly doctor?
Treat your primary occupation as your buffer to venture into other revenue streams. If you want to work harder and longer hours as doctor, that is fine too. However, alternative income streams outside of medicine can potentially help you pay your bills if you end up not practicing medicine (downtime between job switches).
I have been exploring alternative income means outside of medicine. Obviously none of them have come to self sufficient fruition, so I still am keeping my day job in the meantime. ? However I will be documenting more of this in the future when I receive more results.
(Photo courtesy of Christopher Dombres)