3 rules of investing during the economic recovery

The US economy is turning around according to the latest news. But before private practice owners begin turning to investing again, there are three rules that need to be followed to ensure they get the highest return on investment. P. Christopher Music, author of What Every Private Practice Physical Therapist Needs to Know About His or Her Financial Future provides us with the three rules and explains how they work to benefit private practice physical therapists.

First, when considering investments during the economic recovery it is important to be very clear about the ultimate purpose of the money that is invested.  Whether it is an IRA or some kind of pension plan set up for a private practice, this particular investment would be for the purpose of retirement.  When deciding on the purpose of an account there are right and wrong ways to invest.  If the money is invested for retirement income this gives a professional time to invest in assets that provide for the ups and downs to potentially create guaranteed lifetime income.  “Simply investing income inappropriately is too risky to achieve financial goals for the long term,” according to Music.

Second, Music says that private practice professionals must be prepared to accept the risk to achieve a stated rate of return.  Investments are often sold on past performance that people will chase to make investment returns however; the past performance of an investment is useless unless the investor was invested in that fund during that time frame. There is a risk for every investment that is made and to accept that risk is a very important factor.  If the investments are aggressive, the value of the investment will increase during a robust economy and depreciate when a recession hits, so accepting risk means riding a rollercoaster of boom and bust in personal economic conditions over time.

Third, private practice owners should invest to achieve the greatest return for the lowest amount of risk.  According to Music, there has been tons of painstaking research that has been done to prove precisely how to do this.  Even investors who invest in mutual funds or individual stocks end up taking a lot more risk than required to achieve the desired rate of return.

These are the three critical areas that must be considered by private practice physical therapists in a comprehensive financial plan to achieve financial security during a period of economic recovery.  According to P. Christopher music, experience has proved that neglect of any of these three areas can destroy financial well being.

About P. Christopher Music:
After 18-plus years of being a financial planner, P. Christopher Music decided there had to be a better way. Witnessing financial debacles of big industry and government-driven economies caused Christopher to take action, developing an instrument that measures the success of any financial plan. The Financial Prosperity IndexTM (FPI) is the back bone of Music’s firm, Wealth Advisory Associates (WAA). WAA is a financial planning firm focused on helping private-practice physical therapists understand and implement the most effective strategies to achieving financial success and security. Visit www.wealthadvisoryassociates.com