Financial Freedom For Doctors

The Times Rich List – some surprises!

The Times Rich List came out this weekend, and there are some surprises!

The number of philanthropists has increased massively. The amount given to charity by the rich nowadays far exceeds that given by Governments.

Many of the donors are now recognising that it is not enough to just give to less well off countries – “Handouts breed a dependency culture” says Sir Tom Hunter, who has pledged to give away £1 billion in his lifetime through the Hunter Foundation.

I agree with them that it is no longer best to keep quiet about your donations – telling the world that you have been generous motivates many others to follow suit. Terry Pratchett, recently diagnosed with Alzheimers, has given £500,000 to the Alzheimers Research Trust, stimulating a massive campaign amongst his fans and a further £50,000 initially from them.

The number of women on the rich list has increased, but it is stunning how few there are – 94 out of 1000! Work to be done there, girls!

Do have a perusal, it is interesting work, and remember, one of the differences between the rich and the poor is that:

“Rich people admire other rich and successful people. Poor people resent rich and successful people” – T Harv Ecker, Secrets of the Millionaire Mind

Learn from them, try not to resent them, and allow yourself to receive opportunities….

Here’s to a financially free future!

Alison

Compounding - or why I am not planning to buy the recommended added years to my NHS pension...

I just love compounding! It is an essential aid to helping us doctors reach financial freedom!

Einstein is quoted as saying that compounding is the 9th wonder of the world!

Unfortunately it works both ways - if you are in debt & paying interest, you pay more interest for every month that you are in debt.

But when you are in credit, and using, say, property or the stock market to invest (rather than a bank savings account or even ISA, where your interest rate does not keep up with inflation once you have paid your tax) - wow, the sky's your limit!

For example, knowing that, if I wished to take advantage of Added Years I needed to do so by the end of March 2008 (in view of changes to the NHS pension scheme), I got myself a quote.

I am expected to earn about £73.69 per week via my state pension. Not altogether sure if this includes the NHS superannuation scheme, which is the best available (not for long..). I have long wondered whether to buy the added years. Last time I had a quote I was going to need to pay in over £500 per month. That must have been while I was still full-time....

They are now suggesting that I pay in £310.55 per month. Of course, this is a great deal, with the Government (as employer) contributing, & reduced tax payable on the income...

But - if I invested with the stock market knowledge that I have obtained, with an appreciation value of 30% per annum (that is the low time-input method) - the gains are so much greater. After 15 years I would have £532,326

If on the other hand I used the more time-intensive method that I have been practising, giving a return of 3% per month or 36% per annum (and other students are achieving 4 or even 6% per month), then compounding would lead to my investment (£10 to start, then £310.55 per month) growing to £2,104,913 over 15 years. This estimate excludes tax & brokers fees, but I doubt that the NHS pension investments could better it...

See how much difference a few percent makes over time? THAT is the power of compounding...

Think it over!

Here's to financial free*dom!

Alison

Rich Dad Poor Dad's Cashflow 101

Hi!

Cashflow 101 was a game of Monopoly type created by Robert Kiyosaki of Rich Dad Poor Dad fame. It is absolutely brilliant, and helps us to learn by playing - fun, and enters our brains at a deeper level. 

I am planning to set up games in Sussex for my Financial Freedom for Doctors group. The game is not cheap, costs £100 plus some for importation tax, better on Ebay. Traditionally you buy it, then charge people £5 per game to play with you. UP to 6 can play.

It teaches you about investing in real estate, the stock market, and about the fun of joint venturing for mutual gain (eg going halves on a property); it also demonstrates that it is much more difficult for a high earning professional like me to get out of the rat race than for a low paid person eg receptionist, as by the time we start learning this stuff we docs have already started increasing our overheads by buying "doodads" (non investments) like better cars, holidays, and private school fees. The game tends to take 4 hrs to play....

Robert Kiyosaki also does a childrens version, but my cashflow mentor reckons that most kids would be able to play this with you...

see http://www.richdad.com/

I love it!

Alison