This is another good option. Student doctors might be able to subscribe. If not, the articles are available on their website:
http://www.pmdlive.com/
A sample article is below:
How HENRYs Can Insure Sound Investing
(from the September 2006 edition of
PMD)
Shirley M. Mueller, MD
Many young doctors are considered a HENRY (High Earner, Not Rich Yet). HENRYor HENRYETTAis also under age 50, earns over $100,000 per year, and has a secure job.
Though HENRY has longevity ahead of him, he doesn't have much time to think about his future. He is too busy working, raising a family, and accumulating dollars. As a result, most HENRYs want a simple, no-fuss approach to preserving and growing their nest eggs.
The Simple Investment
The easiest way for HENRY to participate in the stock market is to buy an index fund. The Vanguard 5000 Index Fund, for example, includes large and small plus value and growth stocks. The lure of this approach is that expenses are small and the return will ideally mirror the entire market. Because stocks have traditionally outpaced bonds over long time periods, HENRY's accumulated money can be expected to keep up with inflation.
Pro: This approach is simple, and the cost is low.
Con: There is no chance to beat the market. Without investing in bonds and international stocks, asset allocation is not achieved.
Another concept is to use what Charles Schwab coined as "Core and Explore." Your core would be a majority of holdings placed in index funds, and you would explore by also carefully selecting managed funds to improve the overall return. You outperform the market by increasing total returns with the gains on the chosen mutual funds.
The managed mutual funds that gleaned higher returns over their comparable index vehicles were scientifically studied over 15 years.
A large cap blend (ie, growth and value) index fund did better than the managed equivalent 78% of the time. Thus, an index fund is suggested for the large cap component in Core and Explore. This is traditionally a hefty part of the portfolioaround 40% to 60%. Similarly, small and mid cap value index funds outperformed managed funds with the same purpose 71% of the time. They usually comprise a smaller part of the portfolio, 10% to 20% of it, and can also be economically purchased.
Only the managed small and mid cap growth plus international funds earned their higher expenses compared to index funds. A small cap growth manager outperformed its equivalent index 100% of the time, a mid cap growth fund, 60% of the time, and an international fund, 80% of the time. This means picking a managed fund in these areas could increase total results.
By combining index with selected managed funds, the total results can historically outperform the Vanguard 5000 index.
Pro: You have a chance to beat the market, and stock asset allocation is achieved.
Con: Though this has worked historically, past history is no guarantee of future success. Because bonds are not included, asset allocation is incomplete.
Seeking Out an Advisor
An advisor can also help you invest. However, sometimes money managers are only able to help your investments outperform the market for a short period of timesustaining that success is almost impossible. Some managers acknowledge this and sell their services to clients by suggesting that they can save them money in other ways, such as by doing a financial plan, helping with estate planning, insurance issues, etc. Whether or not these extra services are worth the money management fee is something only you can decide. Older people with substantial assets receive more benefit from the comprehensive package than younger doctors just starting out. On the other hand, the financial planning can be accomplished for a fixed fee and the suggestions can be acted upon individually at any age. This saves money, but it requires effort.
Pro: A professional portfolio and wealth management plan is obtained.
Con: The cost is high and the long-term gain on the portfolio may not be above market.
