Income protection is a usual concern for doctors who seek to sort their
finances – personally or with professional help. Here are some common income
protection methods:
1.
Set
up an emergency fund. Emergency funds are separate accounts from your savings
and expenditures. These represent at least six months of your salary and are
placed on near-cash or easily-converted-to-cash instruments like time deposits.
2.
Purchase
an insurance policy. This is a regular way of protecting one's income earning
capabilities. Policies are designed to make payments to you or your
beneficiaries in case of unemployment, incapacity, or death.
3.
Invest
in mutual funds. Unlike insurance policies that have fixed returns, mutual
funds can offer higher payout as these rely on the funds' performance. A fund
can be managed to invest in bonds, equity, both bonds and equity, or even commodities
and foreign exchange (Forex).
4.
Invest
in stocks. New players in the stock market can use a method called dollar cost
averaging where you would need to invest a certain amount on regular intervals
in a stock you think would perform well in the long run. This method helps
reduce the impact of volatility on your investment purchases.
5.
Invest
in a business. You can also set aside cash you can use to start a business that
would bring in extra income for your family's use.
There are more available strategies to protect your income. Qualified
financial planners can present you with varied or even combination of options
tailored to your needs.
