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Saturday, March 3, 2001

It's never too early to start planning for retirement

By Camille Mojica Rey

Despite busy schedules and a market downturn, now is the time for young physicians to take the time to plan a life-long investment strategy that will afford them the retirement of their dreams. "The future actually looks brighter than it appears to be at this point in time," said Mark Cherniack, a certified financial analyst.

Cherniack predicted that the Federal Reserve will continue to lower interest rates, making this an ideal time to invest. But, more importantly, money invested now in a well-diversified portfolio can be expected generate return within an expected range of about 10 percent over the coming decades. "In investing, time is your friend," Cherniack explained.

The key to realizing this return is to "understand why and how you're investing," Cherniack said. "How you invest is more important than what you invest in," he said. Surgeons should strive to diversify their portfolios, guard against emotional reactions to ups and downs in the economy and the stock market.

Cherniack, a portfolio manager with Wells Fargo in Minneapolis, was among the panelists for an instructional course on financial planning targeted towards surgeons in their 30s and 40s. The experts agreed: Now is the time to invest, buy insurance and get educated on the subtleties of tax laws.

The first step in investing, however, is planning. Fewer than 20 percent of physicians have a plan and more than 40 percent are living beyond their means, said John Bangs, a professor of finance at the University of Missouri in Columbia, Missouri. Bangs encouraged physicians to include insurance in their preparations for the future. "Act now while you're insurable," he told the participants.

Bangs gave advice on choosing a financial professional: "It's important to work with someone who has been in the business for a while and who has worked with physicians," he said. Bangs also recommended that physicians do their homework before purchasing insurance products. "It's real important that when you plan, you look at the company," he explained.

John Scherer a tax specialist from St. Cloud, Minn. was also among the panelists. He advised participants on the emerging issues concerning the federal gift and estate tax system. He pointed out the importance of establishing wills and designating guardians for minor children.

Moderator William Kane, MD, began the session be describing the Baby Boom generation, giving advice from previous generations and putting the future of physicians in financial perspective. He advised participants to review their investment strategies every year, but to also consider the non-financial aspects of retirement. The happiest retirees are those that remain active, Dr. Kane said. "The goal is to stay as busy as possible."

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Last modified 03/March/2001 by IS