What is a doctor loan?

A “doctor loan” or physician home loan is a mortgage that makes it faster and easier for residents, attending physicians and other medical professionals to buy a home with a low down payment while avoiding mortgage insurance.

What are the advantages of a doctor loan?

Doctor loans—which have been around for decades—were originally designed to lure soon-to-be affluent medical professionals into the banks. Physicians represent not only a profitable niche but also a good risk for the banks since doctors default on their loans at the lowest rate of any profession. All of these advantages hail from the bankers bending over backward to win your business, and the advantages are real.

1. Doctor loans avoid principal mortgage insurance (PMI)

Principal mortgage insurance (PMI) is an insurance policy that protects the bank if you, the mortgagee, “default” or fail to make the promised payments on your home loan. PMI is expensive, does you zero good and it’s not even tax deductible, so physicians should avoid it when they can.

You can dodge PMI if you put 20% down on a home but many young doctors simply don’t have that kind of cash. With a doctor mortgage loan and a decent credit score, physicians can borrow 95% to 100% of the home’s purchase price with no PMI. A low or zero down payment leaves more money for other goals like paying off student loans, investing for retirement or saving for college.

2. Doctor mortgage loans help physicians get into a home sooner

Since they use a physician-specific loan approval process, the lenders behind doctor loans may allow you  to close on your home up to two months before you actually begin your practice.

These lenders use your employment contract as proof of income instead of relying on two years worth of tax returns. Josh Mettle, who handles doctor loans nationwide at Fairway Independent Mortgage Corporation, notes that “this is huge for physicians relocating across the country, needing to get their family settled and house in order before they start a busy work schedule.”

Bear in mind, no two physician employment contracts are created equally.  When applying for a home loan, even a doctor mortgage, you should have your employment contract reviewed by the lender as early as humanly possible so you can plan accordingly. Mettle advises his clients to make sure that their employment contract is not only reviewed and approved by the loan officer, but also by the underwriter who will eventually have the ultimate power to approve the loan.

3. It’s easier for debt-ridden physicians to qualify for a doctor loan

Many doctor mortgages do not include deferred student loan payments when they calculate the debt-to-income (DTI) ratio that bankers use to make lending decisions. This can make the difference between qualifying for a loan or being shut out of your dream home. For physicians early in their attending careers or carrying heavy student loan burdens, this factor can make a doctor mortgage loan the only option since conventional and jumbo mortgage loans are not nearly as accommodating to those with medical school debt.

What are the disadvantages of a doctor loan?

While there’s nothing inherently “wrong” with these loan products, they make it easier for unwary doctors to get into financial trouble both now and for years to come. The disadvantages of doctor loans have everything to do with how they are used.

1. Physicians get in over their heads when doctor loans go wrong

The appeal of a “nothing down loan” or a low down payment conceals the downside risk of a leveraged real estate purchase.

Consider this example. A physician buys a one million dollar home with a one million dollar doctor loan with a zero down payment.  Then, when the real estate market hits a bump and home prices drop by an average of 10%, she will own a $900,000 house with a $1,000,000 loan, which results in  $100,000 of negative equity. This condition, known as “being upside down in your home,” was quite common during the post-2008 housing crisis.

Young doctors who sold homes like these were required to come to the closing table with a check for $100,000 just to be able to consummate the sale of their home. And remember, that’s $100,000 in after-tax money, which is about $200,000 in pre-tax earnings, or the equivalent of one year’s salary for the average physician. Ouch!

2. Doctor loans make housing decisions faster but not better

In his book, “Decisive: How to Make Better Choices in Life and Work,” behavioral economist Chip Heath points out that people (doctors included) are bad at imagining the future and worse at imagining how we will feel in that future. As a result, we tend to make decisions that we believe will make us happy but don’t.

This reality bears itself out in “the dream home” that many physicians envision for themselves while they are still in training. The perfect job and the perfect house in the perfect location might bring happiness but alas, perfection is far from perfect.

Sometimes young doctors take a job in a new city only to realize that the weather is not quite what they had imagined, the schools are not up to speed, or worse… they realize that their new partners are bilking Medicare. So they move, and they bear all the costs of a housing mistake.

The instant money that comes from doctor loans leaves no time for physician families to slow down, rent for a while, build up savings, pay off and refinance high interest rate loans, shop the market or really consider the things that are known to make people happy. One of these things is a sense of making real progress toward financial security.

Is a doctor loan a good idea?

Buying a home is a big decision with far reaching consequences. Physician mortgage loans are nothing more than a tool that may make things better or worse for you depending on how you use it. Take some time to consider not only the pros and cons of a doctor loan but the impact it may have on your life.

Josh Mettle, the author of “Why Physician Home Loans Fail: How to Avoid the Landmines for a Flawless Home Purchase”, is a mortgage lender with Fairway Independent Mortgage Corporation where he specializes in mortgage financing for physicians. Check out his podcast on Physician Financial Success.

7 Ways to Get Financially Organized Without Wasting a Bunch of Time

As a physician, it’s hard to make progress toward your goals if you’re lost in a sea of accounts and paperwork. Dealing with the scattered bits and pieces of your financial life make it impossilbe to see whether or not you're really on track.

But if you can get financially organized, you create a clear path in front of you that makes it easier to build financial security for your family.

Ready to get started? These seven strategies will allow you clean up your finances right now.

1. Go Paperless

Start the organization process by cutting off what supplies the clutter: an endless array of paper statements sent by every company you work with each month.

Turn off paper statements and get documents electronically. This limits the amount of paper you physically have sitting around on your desk. It’s also safer, since things won’t get lost or stolen in the mail.

Next, set up a cloud-based storage system to keep your information in a single, easy-to-access place. Google Drive is a great (and free) option, and you’ve already got it if you’ve got Gmail.

You can log into your cloud storage from any device -- laptop, smartphone, iPad -- and access all the same information anywhere.

2. Keep Your Information Safe and Secure

Managing everything online and electronically is a great method for staying financially organized -- but it’s not without its own risks and challenges. The biggest? Keeping all that information safe.

Use strong passwords, and assign a different password to every account. You don’t want to write these down in a place where someone else could see or take your notes, either.

So use a tool like LastPass to generate encrypted logins for every financial account you have. The service “remembers” all that data and manages it in one place for you. If you go this route, turn on 2-factor authentication for added security.

3. Throw Out What You No Longer Need

Even after you make the effort to go paperless, you’ll likely receive some physical documents by mail. Do you need to keep all that stuff?

It is important to hang on to certain documents, but you want to make sure you’re not just accumulating clutter. Go through your existing financial information and make sure you’re only keeping what you actually need:

  • Annual tax returns (always keep the returns; you can toss supporting documentation for individual returns after 3 years)

  • Year-end statements from investment accounts (keep for 3 years, then you can toss)

  • Documents that contain records that relate to your home, for as long as you live in or own that home

  • Forms that show contributions and withdrawals from IRAs and 401(k)s, and any 8606 forms (you’ll have these if you reported nondeductible contributions to traditional IRAs)

You can throw out things like receipts and deposit slips after you receive your monthly account statements (and ensure all the charges match up to your records). And you don’t need to keep pay stubs after you receive your W-2 for the year.

4. Create a Process for Paperwork and Documents

Keep the physical paperwork you do need to hang onto nicely organized. Our simple 3-step process for managing it all can help:

  1. Get a large box and label it. Write “Financial Records,” and the year.

  2. As you receive all your paperwork throughout the year, you can put your documents into the box. You don’t even have to organize it neatly; just put it in as you receive it.

  3. At the end of the year, choose a spot where you can store the box. Place it there and then get yourself a new box. Write “Financial Records,” the new year, and repeat the process. After a couple of years go by, you can move older boxes to the attic or basement.

This ensures you keep what you need, you know where it’s at, and you don’t need to continuously sort through it. If you need to fetch documents for your financial planner or tax preparer, you’ll know where to find your box.

5. Choose the Right Credit Cards

Keep your credit in check by using it deliberately. Get 2 credit cards and use one for online purchases. Use the other for in-person transactions, so you always have a useable card if one becomes compromised. Some card issuers will even issue two cards on the same account, making things even easier.

Choose credit cards that offer cash back, not points or miles, like these:

  • Quicksilver® Rewards from CapitalOne: Earn unlimited 1.5% cash-back on every purchase.

  • Discover it® Card: Get 5% cash back in rotating categories (like gas stations, restaurants, and Amazon) that change each quarter, and unlimited 1% cash back on all other purchases.

6. Audit Your Accounts

When’s the last time you tracked down every financial account with your name on it? Make a list of all your bank accounts, credit cards, investment accounts, retirement plans (from past and present employers), and so on.

Consider closing accounts that you don’t use anymore. You could also consolidate accounts, whether it’s putting two savings accounts together or rolling over an old retirement plan into your current account.

Do the same with your service and subscription accounts. Make a list and then ask: do I use these? Do I need them? Close the ones you don’t want or need. More organization means more savings.

7. Refinance and/or Consolidate Student Loans

Refinancing your student debt can save money. It can also provide you with a more manageable financial situation if you consolidate multiple loans into one.

When you refinance, you get a new loan to pay of an old one (or a single new loan to pay off multiple existing debts).

Refinancing and consolidating may make sense if you can originate that new loan with better terms -- and without giving up benefits that came with the old debt, having to put up collateral, or getting co-signer on the new loan.

Use our guide to refinancing medical school debt to help you decide if this should be part of your financial organization process.

Building a solid financial foundation starts when you get financially organized and put your information in consolidated, easy-to-reach places.

Need help getting started? Get subscription-based financial advice to help you organize your financial life and then start taking action toward your goals.

13 Tax Mistakes Doctors Make That Cost Thousands

Tax mistakes are the most common financial mistakes physicians make. Errors, oversights and outright blunders cost thousands in unnecessary income taxes so a little tax planning goes a long way to save money for doctors.

If you want to catch mistakes before they cost you, check out the list below. By the way, the financial mistakes you see here are real: we have seen at least one doctor make every error on this list. (See Assumptions at the end of this article.)

1. Overlooking the Health Savings Account means overpaying taxes

A Health Savings Account (HSA) is a tax-advantaged savings vehicle that lets you make tax-deductible contributions, enjoy tax-deferred growth, and make distributions that are tax-free when used to pay qualified medical expenses. it’s also the best tax break you can get as a physician since it’s a permanent benefit.

Anyone who is covered by a qualifying high deductible health plan (HDHP) can contribute to a Health Savings Account. Many doctors don’t know they have a HDHP option or they don’t understand how HSAs work, so they stay the course with first-dollar coverage and lose the tax benefit.

This mistake costs doctors who are eligible for a family HSA plan $2,228 each year.

2. Spending your HSA makes healthcare less affordable in retirement

Health Savings Accounts are poorly understood by most physicians who often mistake them for FSAs (Flexible Spending Accounts). With the balance in a Flexible Spending Account, you must “use it or lose it” by the end of the year. With HSAs though, “using it” means you lose the power of tax-free compound growth. The smart move here is to invest the HSA balance and let it compound over time.

By making the mistake of spending your HSA each year, you throw away more than $390,000 in tax-free earnings over a 30 year period and that’s money you could have used to cover the cost of healthcare in retirement.

3. Skipping the 529 tax deduction is like skipping college

Section 529 college savings plans are tax-deferred accounts that can be used to pay qualified higher education expenses including college tuition, fees, room, board and the cost of a computer.

While almost every physician has heard about 529 plans, it’s no wonder they tend to skip the accounts altogether. The rules— including how much you can contribute, how much you can deduct, how many accounts you need and whether the deduction is granted to one taxpayer, one return or one account—all vary from state to state. Still, it makes sense to puzzle out the rules, especially in more expensive states where the top tax rate can run to 9%.

Physicians who pay taxes in Colorado, Georgia, Idaho, Iowa, Kansas, Louisiana, Maryland, Michigan, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, Ohio, Oklahoma, Oregon, Rhode Island, South Carolina, Utah, Virginia, West Virginia, and Wisconsin all get a state tax break. In Oregon, the deduction is worth $455 per year. In New York, it’s worth $882 per family. In a handful of states—Colorado, New Mexico, South Carolina and West Virginia—the deduction is unlimited. Perversely, the state with the highest tax rate offers no deduction at all: thanks California!

 No matter where you live, 529 plan accounts can grow tax-deferred until you withdraw the money to pay for college, tax-free. Assuming a savings fate of $500 per month over 18 years, skipping the 529 plan is a mistake that can cost physicians over $90,000 in tax-free growth: enough to send one child to a state college for four years.

4. Believing you cannot contribute to an IRA leaves assets unprotected

Tax advisors often tell physicians “you cannot deduct an IRA contribution” which doctors mistakenly understand to mean, “there’s no reason to do an IRA.” It’s the first logic error in this two-part tax blunder.

Assuming annual household contributions of $11,000 over 30 years, the “tax arbitrage” opportunity—the way you can leverage your current high tax bracket against the lower tax rates you will see in retirement—is worth more than $168,000 to a physician family. The mistake is compounded by the fact that the alternative vehicle to hold these savings is often a taxable account where income and dividends are taxed every year.

When you combine this mistake with the fact that IRAs receive asset protection from creditors under the Bankruptcy Abuse Prevention Act, it’s easy to see how a well-meaning tax man’s casual comment can steer plenty of docs in the wrong direction. But there’s more to this story.

5. Failing to use a Backdoor Roth IRA makes retirement more taxing

A “backdoor Roth IRA” isn’t really a Roth IRA at all. It’s a Traditional IRA that receives a nondeductible contribution that is converted to a Roth IRA.

The physician family who contributes $11,000 to Traditional IRAs each year for 30 years ($5500 per spouse) and then dutifully converts those contributions to a Roth IRA will owe no income taxes to withdraw the money.

On the other hand, physician families who merely contribute to a Traditional IRA and fail to do the conversion will be forced to begin withdrawing the money at age 70½ and pay more than $90,000 in income taxes.

6. Ignoring Roth rules makes the Backdoor Roth (surprisingly) taxable

The rules surrounding IRA conversions are so complicated that many physicians wind up paying taxes for something intended to save them.

First, physicians need to understand there are two kinds of money in most IRAs: pre-tax money (that comes from 401k rollovers and previously deducted direct IRA contributions) and post-tax money (that comes from direct contributions that were not tax-deductible). You can think of this as “bad money” (pre-tax) and “good money” (after-tax). To effect a successful Roth conversion, you have to separate the good money from the bad (using a 401k rollover) or you will pay taxes on the bad money that is converted.

Second, doctors need to know that “IRA” means all of your Traditional IRAs, no matter where they are held, and your SIMPLE and SEP-IRA balances. The IRS sees all of these accounts as “your IRA” such that when you convert one, you are deemed to have converted a pro rata portion of all your IRAs.

Finally, even if you manage to separate the good money from the bad, you still need to handle your tax return correctly. If you fail to tell your tax specialist that you “converted a Traditional IRA with basis to a Roth IRA” or if someone fouled up Form 8606 of your tax return somewhere along the way, you are very likely to (unknowingly) pay unnecessary taxes which might conservatively be estimated at $3,600 for a physician family with two IRAs.

7. Rocking the wrong Roth makes doctors pay more tax now and less later

Did you know there are three Roths? It’s true. There’s the “front door” Roth IRA that’s right for interns, residents and hardworking but underpaid doctors who can contribute directly to a Roth IRA. Then there’s the backdoor Roth IRA that’s right for docs who cannot directly contribute to a Roth IRA. And finally there’s the Roth 401k that’s right for low earners but disastrous for high earners.

When you contribute to the non-Roth portion of your 401k, you are able to defer taxes into the future, when rates may be lower for you.

But when you contribute directly to a Roth 401k, you are essentially raising your hand to the IRS and saying, “please tax me now.” If you’re a high earner, you’ll pay an extra $6000 in taxes each year by rocking this Roth.

8. Underfunding your 401k is like giving extra money to the tax man

Sometimes it makes sense not to fund your 401k, like when there’s no employer match, when you’ve got a ton of high interest rate student loan debt and when you have zero dollars in your Emergency Fund. But for all but a few physicians, the best bet is to stuff your 401k as full as you can.

Even knowing this, many physicians fail to do so. Sometimes there’s a mix up and they fail to enroll. Other times they enroll but fail to contribute enough to get the match. And occasionally the contribution limits change but they have elected a flat-dollar contribution amount that’s never reviewed, resulting in a contribution gap.

To avoid paying an extra $6,000 to $8,000 a year in taxes, check your 401k account every year in September to see if you’re on track to make the maximum contribution by year’s end. If not, you still have time to fix it.

9. Working extra hard to pay extra taxes for self-employed physicians

Moonlighting, doing locums, researching, lecturing, teaching, acting as a contracted medical director and other sideline doctor gigs are a great way to pick up some extra cash—and extra taxes— if you overlook special deductions available only to self-employed physicians.

If you don’t have a 401k at work, you can easily set aside $18,000 in a tax-deferred self-employed retirement plan. Physicians who do have a 401k at work can establish a profit sharing retirement plan for their own business and contribute up to $36,000 in 2017. If you have a whole bunch of self-employment income, you can even establish a defined benefit plan and save even more. But doctors who didn’t know about these opportunities will likely pay somewhere between $2,000 and $9,000 in extra taxes.

10. Blowing up your retirement plan by overlooking the fine print

While this is a less common mistake, the consequences are dire. Small physician practices who lack a skilled business manager—often radiologists and ER docs—sometimes have an “everybody does their own thing” style of retirement plan in which everyone opens a SEP-IRA wherever they like and everyone contributes as much as they like.

In these cases, there is a de facto qualified retirement plan in place for the entire practice but there is no documentation and no one checking to make sure the contributions meet IRS guidelines. Occasionally these groups will hire a W2 employee and exclude them from the plan, which runs afoul of the rules surrounding “affiliated service groups.”

These situations are complex and often require an ERISA attorney and an accountant to straighten out the plan. Those who fail to get with the program run the risk of having their plan “disqualified” which leads to immediate taxation of the entire plan balance plus the payment of penalties, undoing all the tax savings from the plan. It’s impossible to estimate the cost of this mistake but know that the low end is on the order of tens of thousands of dollars.

11. Holding taxable bond funds in a taxable account

Although veteran investors know that a taxable bond fund generates income that causes state and federal income taxes, many physicians—even those under the care of financial advisors who should know better—own taxable bond funds in taxable accounts.

For example, a surgeon owns a joint account with her husband that holds $1.2 million in mutual funds, including $400,000 invested in corporate bonds. Those bonds yield dividends of approximately $13,000 this year. Their tax bill for these dividends is approximately $4,000, so only $9,000 remains of the return they garnered.

Had this couple purchased a tax-exempt bond fund that pays dividends of $11,000, they may owe no taxes. As a result, this couple would have an additional $2,000 this year and years to come.

12. Giving away tax benefits when donating to charity

When you give to charity, you can donate cash or you could donate securities. Since qualified charities are treated as non-profit organizations under the tax code, giving them appreciated securities means physicians not only receive a tax deduction but they avoid paying capital gains tax.

For example, a physician family owns mutual fund shares worth $50,000 for which they paid $30,000. If they donate the shares to charity, the charity can sell the shares to raise $50,000 cash and sidestep the capital gain. However, if that couple makes the mistake of first selling the shares, they will pay unnecessary capital gains tax of $2,000.

13. Just saying “yes” to stupid tax penalties

While many physicians assume the Internal Revenue Service is a bunch of jack-booted thugs intent on making life difficult, the IRS tends to be a little more understanding, particularly in the case of honest first-time mistakes.

If you have failed to file or failed to pay your taxes and it’s your first offense, you can ask for an “abatement” by writing a well-worded letter to the IRS asking them to waive the penalty. We all make mistakes but failure to ask for an abatement means sending good money after bad. Remember, if they say “no,” you are no worse off than if you hadn’t asked at all.


The biggest tax mistake physicians make is to think of taxes only at “tax time” when it’s too late to do anything about it. Most doctors file their personal taxes on a calendar year basis which means that you pay on April 15th for everything that happened between January 1 and December 31 of the prior year… after the fact.

To avoid making tax mistakes that cost thousands, start thinking about this year’s tax bill right now, and check in with your financial advisor and your tax specialist throughout the year to see what you can do to pay no more than what you truly owe.

ASSUMPTIONS: Federal marginal income tax rate of 33% (which kicks in at $230K for joint filers), a 20% capital gains tax rate, no state income tax, no Medicare surtax and a hypothetical 7% return. For post-retirement tax calculations, we assume a 25% federal marginal income tax bracket. These are conservative assumptions which means a few physicians will save less by avoiding the mistakes above but many doctors can save much more than what is demonstrated.

The Minimalist Guide to Estate Planning for Doctors

Doctors despise two things: lawyers and paperwork. Not surprisingly, many physician families are short on life insurance, lacking a will and have no plan to make sure their spouses and children will be financially secure when they die prematurely.

Estate planning may seem morbid and time consuming but there are a few easy things you can do to start getting on track with a bare bones estate plan.

1. Get $6 Million in 20-Year Term Life Insurance

Term insurance is the purest, simplest and cheapest form of life insurance and it’s the only kind of life insurance most physician families  need. It covers you for a period of time (the “term” of the policy) and pays a benefit in the event of death. A 20-year term is adequate for most physician families since it covers the time between now and when your kids should be ready to go off to college. It also buys you time to accrue substantial equity in your home while you start building a retirement fund and a college fund.

Since life insurance benefits are free from income tax in most cases, a six million dollar benefit is enough to purchase or pay off a reasonably-priced home, send two kids to a top notch college and provide an income of $8,000 per month for the next fifty years, an amount comparable to the after-tax income of a primary care doctor. Premiums for a healthy young doctor who doesn’t smoke run about $10 a day.

Almost any licensed life insurance agent will do when it comes time to buy term life. The product is practically a commodity since the price is governed by your state’s insurance commissioner. You will have more options if you use an agent that represents more than one company, and you are likely to get a better deal. However, if the agent offers you “permanent” or “cash value” life insurance, particularly variable universal life (VUL), take your business elsewhere.

2. Make A Will

If you have an estate of $2 million or less (which is most young doctors), you can get away with a “simple” will that determines who will raise your children, who will handle any assets you leave them, and who gets the rest of your “stuff.”

While all states have “intestate laws” that determine what happens when you die without a will, these laws vary from state to state and may leave very important decisions in the hands of the court system.

Ideally, you and your spouse would carefully select a competent, caring attorney, have them custom-craft all of your estate planning documents and give you counsel over the coming years to keep everything on track.  However, if you are pressed for time and you wouldn’t otherwise seek legal counsel, you can make a DIY will using software products from LegalZoom or Nolo to get the job done.

3. Check Beneficiary Designations

Some assets—retirement accounts, college savings plans, health savings accounts and property held in joint title can pass to your heirs and beneficiaries by a process called “will substitute.”

Assets transferred by will substitute have a built in mechanism that determines what happens to them upon death. Joint assets pass to the surviving joint tenant. Retirement accounts pass to the named beneficiary and so do health savings accounts. College savings plans pass to the “successor account owner” (not the child, in most cases).

If you haven’t reviewed these beneficiary designations and titles in the past three years, it’s time to check into the matter. You can login to your retirement accounts (401k, 403b, Roth IRA). You can call the company that holds your 529 plan. You can find out exactly who owns your house by visiting your county's recorder, tax assessor or appraisal office online. No attorney required.

While this may seem redundant, you might be surprised by what you find: no beneficiary designation at all, accounts left to minor children, property held with ex-spouses, etc.

4. Make Things Accessible

There’s nothing like the convenience of an online bank account. You can login any time you like, check your balance, move money around and pay your bill. However, if your spouse cannot access your online accounts, the hours and days after your demise will be difficult and scary for them.

To make life easier for your survivors, put your usernames, passwords and other login credentials (including the secret answers to account verification questions) in one secure place where you can grant access. Password management software like Lastpass makes it easy to keep this information secure while allowing you to share it with people you trust.

While this “one size fits none” approach to estate planning will not reduce estate taxes or avoid probate, it’s better than nothing and it goes a long way toward easing the post-death transition for surviving family members.

If you are interested in a custom-tailored estate plan that can protect your assets and keep your family on track with their finances even if you die, contact us for help or check out our guide to estate planning for doctors.

Investing - Where to put your money now

You make more money than you spend. It’s the right problem to have, but it’s a problem nonetheless. In fact, every new dollar of savings seems to call for a new investment strategy, but you don’t know where to begin.

When you ignore the problem, cash piles up in your checking account—first $40,000, then six figures. Now you’re getting nervous. If it was hard to invest a smaller sum, it seems impossible to invest more than $100,000.

Then one day, you stumble upon the headline that brought you here, hoping to find the answer. And if this were any ordinary article, you might be well on your way to making the same mistake that most of your colleagues have made at least once in their careers: they pile their money into a hot investment touted at the time.

First they buy it. Then they watch it drop like a rock. And months later, when the promised results fail to materialize, they sell everything and feel foolish.

It gets worse as the cash continues to pile up and your question goes unanswered: “Where do I put my money, now?”

The best investment strategies have nothing new about them and they work. Here are three investment strategies you can use over and over again, decade after decade, to make your savings last.

1. Stop trading stocks. Start owning markets. 

I know you’ve heard stories in the break room about how your colleague’s latest stock pick shot up 147 percent or how he nabbed a tax-free bond paying five full percentage points above average.

Sounds like he’s making a killing, right?

Not exactly. Chances are good he’s gotten killed on plenty of trades, but physician culture won’t allow him to tell you about his blunders. I’ve seen plenty of doctors who stock-picked their way to a small fortune, but most started out with a much larger one.

Instead of taking a bunch of risk by betting on one stock, keep risk in check by owning a whole bunch of them—the easy way. Single stocks can go bankrupt and single bonds can go into default, wiping you out completely. Index funds, which represent ownership in hundreds if not thousands of companies, make it easy to gain instant diversification, diluting the uncompensated or “bad” risk while retaining the “good” risk that leads to rewards over the long haul.

Index funds are cheap. With carrying costs (a.k.a. “operating expense ratios”) as low as 0.05 percent, you can buy an index fund and gain exposure to bonds or stocks around the world for a pittance. That tiny carrying cost also buys you the freedom to stop acting like a stockbroker and get back to serving as a healthcare provider.

Savvy physicians prefer mutual funds for their tax efficiency. Since they follow a buy-and-hold approach to investing, index funds are more likely to realize tax-favored capital gains and tax-qualified dividends than more highly taxed short term gains. This keeps your tax bill in check.

2. Stop timing the markets. Start owning them (all). 

If you have heard about index investing, you probably know about the SP 500, a basket of stocks that represents the 500 biggest companies in the U.S. The index was made famous in the ‘80s and ‘90s as it ran up to the dotcom bubble, then vilified in the ensuing “lost decade” when the ten year return on that index was close to zero.

What index hecklers fail to realize, even to this day, is that there’s more than one index. In fact, you can gain exposure to practically all the stocks and bonds on the planet by owning as few as four mutual funds. Had investors done this during the past ten years, they would have avoided some of the tech wreck, found the lost decade and enjoyed very decent returns after all.

Unfortunately, the average investor seldom receives average returns. According to a recent study by mutual fund data company Morningstar, “the typical investor gained only 4.8 percent annualized over the ten years ended December 2013 versus 7.3 percent for the typical fund.” That’s a yawning 2.5 percent gap.

Why did investors miss out on fully one-third of the market returns? It’s simple. They did the same thing with their funds that your colleague did with his stocks: they traded in and out of the market. To garner the returns advertised over the past decade, or even the last three decades, you would have to own them through thick and thin, no matter how dramatic nor dire the news.

3. Invest like a Nobel Prize winner. 

The main argument against an index-only strategy is exactly that it generates merely average returns in the best case scenario. This logic appeals to doctors who have never once settled for things that are merely average, and that’s pretty much all the physicians I’ve met.

Thanks to the research of Nobel laureate Eugene Fama, we now know it’s possible to reliably beat the averages over the long run—but it’s not free.

Fama, a financial luminary who founded the first small cap index mutual fund way back when fax machines were the size of washing machines, discovered that the smaller a company is, the more likely it is to outperform a larger one. This is known as the “small cap effect,” and it’s robust, having been observed in U.S. market history as well as the return series of developed foreign stock markets and even emerging markets.

Fama and colleague Kenneth French, both researchers who hail from the University of Chicago’s renowned Booth School of Business, also found that the stocks of cheap companies, known as “value stocks,” tend to outperform their more expensive “growth stock” peers in what is known as the “value effect.” This effect is also robust in markets domestic and foreign, and is available to investors using index funds.

While a small cap value tilt may add up to four percentage points more than the average untilted portfolio over long periods of time, it brings more volatility, too. When equity markets decline, those index funds filled with cheap little stocks take it hard, and you may wish you had never owned them. The only way to reliably garner the higher expected returns from small cap value stocks is to remain fully invested and stay the course, even when times are tough.

This too is old news. Even though Fama won the Nobel Prize in economics in 2013, his research on the small cap and value effects has been public knowledge since the 1980s.

These perfectly decent strategies are so mundane—so incredibly boring—that you and your colleagues may never have heard of them. After all, words like “diversified,” “tax-efficient” and “cost-effective” make wimpy headlines. The good news is that you can start using a solid investment strategy and keep using it year after year, decade after decade, secure in the knowledge that you have found a permanent answer to a nagging question. Remember, the answer to good investing is more than where you put your money now. It’s where you keep it over the long haul.

 This article originally appeared in Orthopreneur with the same title "Investing - Where to Put Your Money Now".