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Pay down debt or invest? Advice for physicians

Learn whether it's better to pay down debt or start investing if you're a medical student, resident or new to practice physician.

When it comes to debt, some people want to pay it off as quickly as possible. But it’s important to keep in mind that investing for your future is also important. Physicians typically don't have a pension to help fund their retirements, making this an important consideration.

When it comes to debt most people want it paid off, like, yesterday!

But investing for your future is important, too.

Physicians generally don't have pension plans or other automatic savings plans to help them fund their lifestyle post-practice.

So you’ll need to save for this on your own and the sooner you start, the more you can save and earn on your investments.

Obviously, both debt-repayment and investing are important. But which takes priority?

Should saving for retirement be your main goal?

What about getting on the property ladder?

If you're planning to buy a home in the next few years paying down your debt will help free up your cash flow to carry a mortgage and other home expenses.

But you’ll also need to save money for a down payment.

If you have an RRSP, The Home Buyers’ Plan can help.

It’s important to know that not all debt is bad if you have expensive debt, then it's a good idea to pay it off as quickly as you can.

But relatively inexpensive debt can be seen as good, so you may want to use some of your income to pay down the debt and leave some free to invest.

Maybe you just want to focus on becoming debt free...and we get that!

There's nothing wrong with this approach. After all, debt can be an emotional issue and it’s certainly not one-size-fits-all. You need to feel comfortable with your personal financial strategy.

Another aspect to consider is your desire to gain investment experience.

Even when you’re busy paying down debt, you might want to start a small investment portfolio as soon as possible in order to see how investing works and get into the habit of saving now so you’re more comfortable with your finances later down the road, when things could get more serious.

At MD, we’ve advised thousands of physicians about paying down debt and investing, so to explore your options and learn more, speak to your MD advisor today.