Calling All MD’s, Stephane Ruah At Your Financial Rescue

08/23/19  |  Rebecca Perez  |  179 views

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Did you know Medical practitioners (also known as MDs) are the highest percentile of students to leave graduate school with debts compiling a quarter of a million dollars? Out of that amount, only 10% or less have financial clarity on their situation. The rest end of spending most if not all of their adult life paying back arduous interest year after year because of a decision they made in their early 20's. Not to worry, we sat down with Senior Investment Advisor, Stephane Ruah from Industrial Alliance Securities Inc. to help change the situation around for all current and future medical graduates! Stéphane and his wealth management group are a young and dynamic team of investment advisors that mainly focus in helping young professionals navigate the complex world of wealth management.  Their disciplined investment approach has helped young medical professionals grow their wealth early in their careers.  Stéphane’s approach is based upon a few simple and powerful principles that aim create wealth for doctors who are in the stage of launching their practice.

"I've been in the industry for over a decade, and I've noticed patterns doctors tend to make when it comes to their financial wealth. Here's what I suggest based on clients experience :

1. Avoid the debt trap

Beware of the large loans offered by financial institutions. Canadian medical students graduate medical school with an average of more that $100k of accumulated debt.  It's not unusual to see students accumulate $250k of debt after their studies. Having some debt in order to cover the cost of various programs is perfectly reasonable.  However, our financial institutions have given students access to increasingly easy credit which has created situations of oversized debts for graduates. Regardless of their financial situation, a medical student is offered loans or lines of credits of over $100k no questions asked! Even if you never asked for a line of a credit, you are offered one. This may result in students taking on a growing debt they don’t need. 

What does this mean for the financial future of graduating medical students?

For example, medical student accepts an offer for a line of credit of $100k in the first year at an interest rate of 8% if the credit line is entirely drawn, the value of the debt at the end of his/her 4-year program will be $137,566.  That is a total of $37,566 of interest charges!

This is due to compound interest. Compound interest is the addition of interest to the principle sum of a loan or deposit, or in simpler terms interest accrued on interest. Here's how you can use the power of compounding to your advantage

2. Start saving early

Invest in your future using the power of compounding. After years of grueling studies and stressful exams, it is normal for young medical professionals to focus their attention on growing their practice. The accumulation of wealth for the future is often the goal after graduating. The longer you wait to start investing, the more you miss out on the power of compounding. Let's illustrate with a simple scenario:  

Sandra is a 25-year-old medical school graduate who has the option to start investing $1000 per month. At age 45 she would have accumulated the following amounts depending on when she started to invest:  Now at 25 or in 10 years at age 35.


Average  Return 5 Years 10 Years 20 Years 30 Years
3% $65,621 $141,694 $332,118 $588,032
5% $69,623 $158,481 $416,631 $837,129
7% $73,839 $177,403 $526,382 $1,212,876
10% $80,587 $210,374 $756,030 $2,171,321

Assuming a 5% annual rate of return: starting at age 35, Dr. Sandra would have $158,481 at age 45. Now had she started  immediately after school at age 25, Dr. Sandra would have $416,631 at age 45. Starting ten years earlier gave her 30% more leverage at the same total sum. The earlier you can start this plan, better return you can make. 

There's also a very common questions MD's face upon graduating. Should you incorporate or not?


3. Incorporate as an MD

Nobody enjoys having to pay federal and provincial taxes on their hard earned money. The highest earners can be taxed at an incremental rate of up to 53.53%.  As an incorporated legal entity, you would be taxed at the small business rates which offer much lower tax rates that range from 17% to 26.6%. This allows you to keep more money invested and compounding.  At first glance, it seems like a no brainer to incorporate right away. On the other hand, incorporating your practice comes with some additional costs and restrictions. If for example, most or all of the income generated is used for everyday living expenses or to pay off loans, the benefit of incorporating is not as attractive considering the costs associated to set up and maintain an incorporated practice. When making this decision, it is best to speak with an Investment Advisor who can give you clarity on your current situation. We have access to a vast network of external professionals. Together they can determine the right choice for your particular situation.


Stéphane and his team of professionals are mainly oriented in helping young doctors avoid the debt trap along with starting to accumulate wealth at an early stage. They offer a free one on one consultation at your convenience.

Stephane Ruah, sruah@iagto.ca contact at 514-909-0309

This information has been prepared by Stephane Ruah who is an Investment Advisor for Industrial Alliance Securities Inc. Opinions expressed in this article are those of the Investment Advisor only and do not necessarily reflect those of Industrial Alliance Securities Inc. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.  Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates. For more information contact Stephane Ruah and his team of advisors sruah@iagto.ca

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