financial independence

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Finance for Doctors Mr Vaikunthan Rajaratnam MBBS(Mal),AM(Mal),FRCS(Ed),FRCS(Glasg),FICS(USA),MBA(USA), Dip Hand Surgery(Eur), PG CertMedEd(Dundee),FHEA(UK),AFFST(Ed),FAcadMEd. Senior Consultant Hand Surgeon

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Page 1: Financial independence

Finance for Doctors

Mr Vaikunthan Rajaratnam MBBS(Mal),AM(Mal),FRCS(Ed),FRCS(Glasg),FICS(USA),MBA(USA),

Dip Hand Surgery(Eur),PG CertMedEd(Dundee),FHEA(UK),AFFST(Ed),FAcadMEd.

Senior Consultant Hand Surgeon

Page 2: Financial independence

Good Medical Practice: Financial and commercial dealings

• 72. You must be honest and open in any financial arrangements with patients. In particular:• a. you must inform patients about your fees and charges, wherever possible before asking for their consent to

treatment• b. you must not exploit patients' vulnerability or lack of medical knowledge when making charges for

treatment or services• c. you must not encourage patients to give, lend or bequeath money or gifts that will directly or indirectly

benefit you• d. you must not put pressure on patients or their families to make donations to other people or organisations• e. you must not put pressure on patients to accept private treatment• f. if you charge fees, you must tell patients if any part of the fee goes to another healthcare professional.

• 73. You must be honest in financial and commercial dealings with employers, insurers and other organisations or individuals. In particular:• a. before taking part in discussions about buying or selling goods or services, you must declare any relevant

financial or commercial interest that you or your family might have in the transaction• b. if you manage finances, you must make sure the funds are used for the purpose for which they were

intended and are kept in a separate account from your personal finances.

Page 3: Financial independence

Financial Independence

• state of having sufficient personal wealth to live, without having to work actively for basic necessities

Page 4: Financial independence

Rich Dad's CASHFLOW Quadrant: Rich Dad's Guide to Financial Freedom 

Page 5: Financial independence

The E-Myth Revisited: Why Most Small Businesses Don't Work and What to Do About ItMichael E. Gerber

Page 6: Financial independence

The 4-Hour Workweek: Escape 9-5, Live Anywhere, and Join the New RichTimothy Ferriss

Page 7: Financial independence

Wealth

• net worth (assets minus liabilities) • generates automatically

• capital gains, • income, and • Dividends

True wealth means having control over your time. Unless you get to do what you love every morning when you get out of bed, you are not successful. You are merely a highly paid wage slave.

Page 9: Financial independence

• Asset Accumulation Accumulating assets can focus one or both of these approaches:Gather revenue generating assets until the generated revenue surpasses living/liability expenses.Gather enough liquid assets to then sustain all future living/liability expensesExpense ReductionAnother approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.

Page 10: Financial independence

strategies to reduce expenses

• Tax• Lifestyle• Purchases• Deals• Generate revenue in high currency• Spend in low currency

Page 11: Financial independence

http://en.wikipedia.org/wiki/Financial_independence

Page 12: Financial independence

Passive sources of income

• Rental property• Dividend from stocks, bonds and income trusts• Bank fixed deposits and monthly income schemes• Royalty from books, patents, music, etc.• Alimony, Child Support or Child Trust Fund• Renting out professional or academic qualifications • Interest earned from deposit accounts, money market accounts or loans• Oil leases• Notes• Business ownership• Patent licensing• Trust deed (real estate)• Life annuity• Pensions

Page 13: Financial independence

Cash Flow Quadrant

Page 14: Financial independence

Profit and Loss

• Profit(P) = Revenue(R) – Costs (C)

• The financial functions therefore include:-• 1) Recording financial data - This is the ‘book-keeping’ part of

accounting.• 2) Measuring the result - This is the ‘financial’ part of accounting.

Page 15: Financial independence

Profits

• 1) Retained for future investment and growth – this is what happens in NHS Foundation Trusts and non profit organisations•

2) Paid out to owners and investors e.g. a ‘dividend’ – this happens in for profit companies•

3) Paid as tax

Page 16: Financial independence

Balance Sheet

• A balance sheet is a statement of the total tangible assets and liabilities of an organisation at a particular date - usually the last date of an accounting period.• (1) A statement of fixed assets, current assets and

the liabilities (sometimes referred to as "Net Assets")• (2) A statement showing how the Net Assets have been financed, for

example through share capital and retained profits.• Assets = Liabilities + Shareholders' Equity

Page 17: Financial independence

Financial Needs

• Operating Expenses• House• Car• Children's Education• Pension• Investment• Leisure• Altruism• Taxes

Private school fees 'soar at twice the rate of

inflation'Thousands of middle-class families have been

priced out of private education after school fees

soared by more than twice the rate of inflation in

a decade, according to research.

Revealed: How the cost of a degree is now

£100,000

Today's students – especially those get who get

middle-income jobs – will face an enormous debt

PAUL GALLAGHER   

  SUNDAY 09 DECEMBER 2012 

Page 18: Financial independence

Investment

• Property• Stocks• Trading• Venture Capitalist• Wealth Management• Pension funds• Insurance