Completing A Financial Fellowship

[Today’s post is from Investing Doc, an internal medicine physician and blogger who lives and works in Central Texas. I’ve written about the benefits of a “financial fellowship”, but Investing Doc is in the midst of doing it himself. This post previously ran on Investing Doc’s blog in July 2017. -WSP]

In many areas of medicine, there is the ability to undergo additional training for specialization. For most specialties, additional training via fellowship usually means increased income. One example of increased income is a physician who completed an internal medicine residency and then goes on to complete a cardiology fellowship.

Internal medicine is a 3-year program. Cardiology is at minimum another 3 years of fellowship beyond internal medicine training. The pay as a cardiologist or GI physician is drastically higher than a general Internal Medicine physician. However, while in fellowship physicians in training have very low-income compared to graduated nonspecialized physicians. Some physicians who choose not to specialize will say that they are completing a financial fellowship post-graduation by working like a resident and living frugally.

[Picture is from a recent trip to NASA and is the actual mission control room for Apollo missions.]

What Is A Financial Fellowship

Financial fellowship is a term that physicians who did not specialize are more frequently using. They will sometimes describe a financial fellowship as working for extra income and living frugally, like a fellow. This effectively minimized some of the income difference between those who did and did not specialize.

For example. the average cardiologist salary according to Medscape is $410k while the average internal medicine who did not go to fellowship is $215k. The difference in training between the two is as little as 3 years.

By choosing to work “like a resident” for the 3 years post-residency and complete a financial fellowship, the difference in pay becomes less dramatic over time. However, let’s not kid ourselves. The specialized physician will out earn me and other un-specialized physicians over the span of their lives if the medical environment does not drastically change.

How Much Money Is Saved Up During Financial Fellowship

Let’s say I live like a resident, picking up extra shifts and live like a doctor still in training. In effect, I’m completing the financial fellowship with a savings rate of 50% of my gross pay or more by living frugally. At this savings rate, I can expect to contribute at least $175,000 to my account for the 3 years while the cardiologist or other specialty physician finishes fellowship.

Putting the money in an index fund with a 6% rate of return gives a total of $788,344.48 after 3 years. This assumes that the cardiologist in training puts little money towards savings. Part of this assumption is because interviews eat up savings and are costly.

Moneychimp Calculator

How Long Until The Specialized Physician Has A Higher Net Worth

Let’s assume the internal medicine physician decides to complete the financial fellowship then drop down to average income ($215k). After all, no one can be expected to work like a resident forever. The cardiologist would have to work only an additional 5-6 years after their graduation before having a higher net worth.

Assuming that the average physician took no breaks in education, the cardiologist would theoretically have a higher net worth at 39 years old. After 39 years old, the physician who specialized will have a much higher lifelong earning potential. The difference in savings will be dramatic by the time of retirement between the physician who did specialize and did not specialize.

The Financial Fellowship Is Only Temporary

The financial fellowship lasts only as long as the hard-working physician is willing to keep up the same pace. I think living and working like a resident is not a long-term solution. This is most likely a large reason why you don’t see very many old hospitalists.

I’m not using the financial fellowship as an argument not to specialize. I don’t think anyone would advocate for a lower pay specialty unless they really feel a calling. If a young physician is willing to work hard, it is possible to complete a financial fellowship to see a huge boost in income to get rid of student loans, pay for a house, or save for their children’s college fund. This helps minimize the financial hit that non-specialized physicians take after graduation.

I’ll keep working hard for the next 2 years in an effort to complete my financial fellowship. As of right now, I’m on track to out save even my own estimates as above!