Physicians share where they are investing their money—and what gives them the best returns

Physicians should begin investing as early in their careers as they possibly can so they can take full advantage of compound interest, says Andrew Albano Jr., DO, MBA, the vice president for Atlantic Health System located in Morristown, NJ.

“Even modest contributions can grow substantially over time,” said Dr. Albano, who has written about money for The DO. “Start by maximizing tax-advantaged retirement accounts such as 401(k)s, 403(b)s and Roth IRAs, and explore backdoor Roth contributions if income exceeds IRS limits. Given the time constraints of medical practice, a passive investment strategy using diversified, low-cost index funds or ETFs is typically more manageable and cost-effective than active trading.”

A recently released Medscape report on where physicians are investing their money showed that many doctors are following Dr. Albano’s advice to choose passive investment vehicles, with 53% of those surveyed investing money outside of retirement accounts in mutual funds and 29% choosing ETFs.

As Medscape’s most recent physician compensation report showed an average 2024 physician pay raise of about 2.9%, one of the lowest observed compensation bumps since 2011, many physicians are likely focused on making the best investment choices possible for themselves and their families.

The investing report found that more than 60% of physicians surveyed seek out professional advice before investing, with only 38% making their financial decisions fully on their own. When looking into investing, physicians are considering myriad factors: their families, financial stability, their student loan debt and their retirement plans.

To create the report, Medscape surveyed 7,322 U.S. physicians of different ages across 29-plus specialties. Dr. Albano and Gene Tekmyster, DO, MBA, a physician at Keck Medicine of USC in Los Angeles, talked with The DO to share an osteopathic perspective on the report and the investing advice they’d like to give their colleagues.

Investing possibilities

The report suggests that physicians earning above or below $300,000 per year report similar levels of confidence in managing non-retirement investments. However, Dr. Albano cautions that this finding reflects only a single year (2024) and does not account for how confidence may shift over time with changes in income, lifestyle or financial experience.

Additionally, the survey sample may not fully represent the physician population, as respondents were predominantly male (58%), mid- to late-career (62% aged 40 to 64) and concentrated in primary care specialties such as family medicine (14%), internal medicine (12%) or pediatrics (8%). Even so, knowing the starting points of where your peers are investing can spark education on building your wealth.

“Beyond retirement accounts, non-retirement investments offer physicians additional opportunities to build long-term wealth and diversify income,” Dr. Albano recommends. “Mutual funds and individual stocks provide exposure to market growth, while real estate—especially residential properties—can deliver rental income, tax advantages and asset appreciation. These options often yield higher returns and can serve as effective wealth-building tools for physicians with high earning potential and moderate risk tolerance.

“Strategic use of non-retirement investments can offer greater financial flexibility, including earlier financial independence or the ability to reduce or adjust clinical hours later in one’s career. While many physicians can implement these strategies independently, consulting a fiduciary financial advisor—ideally one familiar with the financial realities of a medical career—can add value, particularly in managing student debt, delayed earnings and protecting growing assets.”

Where physicians are investing

Medscape found that these were the most common areas where physicians were investing their money outside of their retirement accounts: mutual funds (53%), individual stocks (49%), residential real estate/rental properties (30%), exchange-traded funds (29%), personal property (21%), individual bonds (18%), annuities (14%), cryptocurrencies (11%), commercial real estate/ lease properties (10%), medical businesses (8%) and non-medical businesses (7%).

The investment vehicles physicians reported getting the highest returns from included mutual funds (50%), individual stocks (46%), residential real estate (36%), ETFs (35%) and cryptocurrencies (29%).

“Diversification is important, and while most physicians are able to make their own decisions, a combination of professional advice and self-directed trading is ideal, taking into consideration the person’s own unique position and risk tolerance level,” Dr. Tekmyster said. “When considering professional help, it is vital to choose a firm/person that is a fiduciary and is not solely based on commission.”

With only 44% of Medscape’s interviewed doctors having researched non-retirement investments moderately or considerably, having someone you can trust in your corner is an important key to helping physicians invest in the right areas for their own lifestyles.

Like Dr. Albano, Dr. Tekmyster also recommends that physicians strive to max out their contributions to their tax-advantaged retirement accounts.

“Once these are optimized, diversification outside the market with other investments should be researched as the goal is to create a passive income stream,” he said. “A quote I heard a long time ago still resonates: ‘Physicians do not get rich by being physicians.’ The money made from salary should be used to build wealth and generate other avenues of income to drive investment growth.’”

Read the full Medscape report here.

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