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Many physicians hand off their money to brokers and money managers thinking that’s the best they can do. The funds are then invested in mutual funds exchange traded funds (ETFs) and other vehicles that give medicine professionals a sense that their money is working.

But then they see their year-end return and their sense of security is punctured. Why isn’t the money growing more?  How long will it take before I see a return that advances my goals?

I continue to share information about the benefits of multifamily real estate investment. Before we return to that topic, consider still yet another way doctors go wrong with their money.

Dividing the money pie

Most doctors are different than people in other professionals. First, it has taken a decade of schooling to join their profession. And once they do set up shop or take a position with a medical group they are making far more money than the average American worker.

Yet so often they are not taking full advantage of their position. Instead, they are pushing earnings into common vehicles. I’ve mentioned mutual funds and ETFs. But there are also real estate investment trusts (REITs). These pools of money seem easy. Pour money in, then take it out of the market as needed.

In truth, each of these vehicles may begin well, but by the time the medical professional receives a dividend they are forced to contend with the facts of investment life: They have less equity that expected, in part, because brokers and fund managers take their piece of the pie; and other intermediaries and salesman all get their crumb—before the dividend arrives.

What is an accredited investor?

Some physicians are not aware that their income puts them in an important category, if as an individual they make more than $200,000 annually, or $300,000 as a married couple they are considered an accredited investor. Another bench mark is $1 million in assets, excluding their home, or a net worth of $5 million or more in a trust.

This is an important distinction. Medical professionals—any professional—who meet the criteria are entitled to wealth creation opportunities that are different than people with smaller annual incomes. Direct participation in real estate and other transactions is far more attractive and effective than pouring money into a fund.

Participating in smaller direct equity groups gives doctors a much bigger return on investments. How do they do it? Many crowd funding sites and syndicates offer investments that cut out the middle men of Wall Street. By putting an end to the nibbling of brokers and others, the investor enjoys a much sweeter piece of the pie at the end of the year.

What is a syndicate?

There are a lot of excellent investment opportunities out there. But how do you find them? Consider a syndicate. defines the term this way:

“A syndicate is a temporary professional financial services group formed for the purpose of handling a large transaction that would be hard or impossible for the entities involved to handle individually. Syndication allows companies to pool their resources and share risks. There are several different types of syndicates, including underwriting syndicates, banking syndicates and insurance syndicates.”

You may have been contacted by an underwriting syndicate, a group of investment banks, for example, that combine resources to issue a new stock to the public. The lead bank is considered the manager of the syndicate. They are seeking wealthy investors who may be willing to buy a large portion of the issue—accredited investors.

Does the phrase “temporary financial services group” worry you?  It may sound synonymous with “fly-by-night” endeavors. In this case, temporary means established institutions have come together for one basic task. Once the sale of the stock issue is complete, the syndicate disbands. But not all joint ventures are temps.

Thirty days after the sale is complete, or if the securities cannot be sold at the offering price, the syndicate breaks up. Some other types of syndicates represent a joint effort, but are not temporary.

In some cases, syndicates form because the financial risk may be too big for one company to assume and yet the potential for success is huge. Large real estate projects work in this way too. Companies share their expertise to make the offering.

Don’t need cash? Find tax-deferred vehicles

Not every investor wants or needs a cash return. Rather, they are looking for a thriving vehicle where they can safely place a large sum.  In this case, it is wise to seek a third-party firm that can hold IRA monies. As a result, the doctor or other professional can participate using tax-deferred methods.

Despite lucrative annual incomes, our earning years are limited and only begin after most of us in the medical profession have borrowed a huge sum of money for education.

In the Black is an investment philosophy that urges medical professionals of all kinds to take better care of their money. Knowledge is power.  And sometimes small changes bring substantial improvements.

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