In Part One I stated that optometry is a great profession, and it can pay your bills, but passive income is what allows you to become independently wealthy. The trick is to have the discipline to take some portion of your take-home from optometry and invest it where the money can grow passively. Of course, having that discipline is the hard part! I’m no expert, but let me share with you some basic things I’ve learned along the way.
1) Automatic Draft
I’m a big fan of automatic drafts – “out of sight, out of mind” is the only thing that has ever worked for me.. Use auto-draft for your take-home salary (and always “pay yourself first), but also for those dreaded estimated quarterly taxes, as well as your retirement fund. Each year I figure out how much I need to pay for taxes and retirement, and set up automatic payments every two weeks. The IRS has an Electronic Federal Tax Payment System website (www.eftps.gov/eftps/) that makes it easy to schedule your tax payments.
2) Real Estate
Owning your own building is an easy way to start building wealth through real estate. If the mortgage payment, taxes, and insurance costs are similar to your monthly rent, it usually is a no-brainer, although you still need to make sure it’s a good piece of property that will appreciate in value over time. Owning other rental property can be a good investment, especially if you are handy and can buy “fixer-upper” properties.
3) Stock Market
Nothing beats the stock market. Find the right financial advisor, and don’t be afraid to ask hard questions about fees. Your financial advisor should do more than buy and sell stocks for you. A good broker will look at your entire retirement picture, including taxes and insurance, and help you stay on track to meet your financial goals.
4) START EARLY
Albert Einstein was a pretty smart guy. He called compound interest the most powerful force in the universe, and I believe him. Starting your retirement savings early is absolutely the best advice you will ever get. Everyone knows it. But damn I’ll admit it always seems there’s something else to spend that money on.
5) Practice Sale
Selling your office isn’t enough. Regarding retirement, think of selling your practice as icing on the cake. We’ll talk about that in part three.
To see what you missed in part one of this blog series please click here