MEDICAL ECONOMICS SPECIAL SECTION: Personal finance: Top tips from top advisors

Let's face it, as smooth as you'd like your financial future to be, it can be fraught with landmines-the unexpected injury that keeps you out of work for months, the kid who decides to (gasp!) go to medical school, or the elderly parent who needs your help making ends meet. But the right advice at the right time can disarm any bombs that might destroy your plans. We asked our top financial advisers* for some of the best tips they ever gave physicians. Here's a roundup of their sage advice, ranging from tax tips to warnings about ignoring your spouse's investment style.

Don't chase performance

A 45-year-old internist had loaded up his mutual fund portfolio with over three dozen hot funds publicized in the press by the time he met with Martha Moore Hobson, a financial planner with Hobson Yoder Financial Group in Oak Ridge, Tenn., in 1998. "Like many news junkies, this physician picked his funds from the covers of financial magazines, and plowed money into those touted as 'The Fund of the Month,'" says Hobson. "But by the time he bought in, these popular funds were on the downswing, and his portfolio ended up overweighted in large-cap growth and tech issues. Pretty soon several of his tech funds closed or were folded into other funds." Hobson explained to the internist the danger of following the crowd: "When a fund grows too big too fast, it makes it difficult for the managers to maneuver profitably. The result is less-than-stellar returns."

"The physician's initial investment of $450,000 has grown to over $900,000 in 8 years," reports Hobson, "more than a 9% average annual return. Now he understands that we can create wealth over time if we choose balanced investments wisely and stick with them."

Benefit charities and heirs

"With a charitable gift annuity, they could give $500,000, get guaranteed income for the rest of their lives, and reap a current tax deduction," notes Diliberto. "The only downside was that their grandchildren would end up with less cash, but this couple had other investments that would allow them to pay for the kids' college education anyway."

Diliberto contacted the university and set up a donation through its 'giving department,' which calculated a perpetual annual income for the couple of nearly $40,000 a year. Part of that payment is taxable as income and part of it is con sidered a tax-free return of the donor's principal. "When the second spouse dies, the university gets all that's left in the account, and everyone's satisfied," Diliberto says.