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Doctor vs Plumber: Which person is WEALTHIER at Age 42

Published on 12/8/2017 by Graham Stephan
Here’s the surprising difference between two career paths which end up oddly similar in wealth, despite two widely different routes - a doctor and a plumber. Enjoy! Snapchat / Instagram: GPStephan

You have two people starting out at 18 years old. One decides to be a plumber, one decides to be a doctor. Who will have a higher net worth, all things considered?

Now to do this, for congruency, I’m considering that both professions end up saving 50% of their paycheck and invest it at an 8% return. I’m also considering that each salary increases over time with experience and inflation.

Let’s consider the plumber first. The plumber starts working at 18 years old at $12 per hour as an apprentice. Because the plumber never went to college, the plumber has zero student debt and can get right to making money and investing. We can also assume a 50 hour work week, meaning at the beginning, the plumber is likely pulling in about $2400 per month before taxes, $2000 per month after taxes, and can invest $1000 per month.

After 4 years, we’ll assume the plumber is now making $5,000 per month before taxes, $4000 after taxes, and can invest $2000 per month. After 10 years, we’ll assume the plumber is making $100,000 per year before taxes as an experienced full time plumber, $70,000 after taxes, and can save $3000 per month

At the age of 22, our plumber should be worth nearly $60,000 - investing $12,000 per year for 4 years. At the age of 28, our plumber should be worth nearly $290,000 - this is the base $60,000 + $2000 per month, 8% interest, over an additional 6 more years. At the age of 50, our plumber should be worth almost $3,800,000 - his base amount of $290,000 + $3000 per month invested over 22 years at the same 8% return. So our 18-year old plumber became a 50-year-old with $3,800,000 net worth.

Let’s compare this to our doctor. The big thing here is that the doctor starts investing and earning later much later in life.

We’re going to assume 4 years of undergraduate education at $20,000 per year and that any income goes towards paying down debts before investing. After 4 years of undergraduate college, our doctor will be negative -$80,000 in education costs. After those 4 years, the doctor will be up against 4 additional years of medical school - let’s assume this is $50,000 per year. At the end of undergraduate and medical school, our doctor will be about $280,000 in debt - without earning or investing a single dime. I’m leaving out cost of living and interest just out of simplicity.

After 8 years of school, the doctor will then do 3-5 years of residency - so let’s assume 4 years, at a $60,000 per year salary. Remember, half of this goes to pay down debt. The doctor is now 30 years old. From 4 years of a $60,000 salary, $50,000 after taxes, the doctor has paid off $100,000 of the student loan, bringing the total debt down to -$180,000.

But after residency, the doctor begins to make significantly more…at the age of 31. Remember our plumber is making $100,000 before taxes….but our doctor starts out making $320,000 before taxes. After taxes, this should be about $250,000 - half of that pays off a student down. The doctor will have paid off the student loans by the age of 32 with $75,000 in investments and net worth. By the age of 40, assuming the doctor is still making $320,000 per year and investing half, the doctor will have a net worth of $1,575,000.

Now lets say the doctor gets a pay raise to $450,000 per year at the age of 40, or $350,000 after taxes - and again invests half of that. By the age of 50 years old, the doctor is worth over $6.1 million dollars, or $2.3 million dollars more than the plumber.

The break even point where the doctor and plumber have the same net worth, in this above calculation, is about 42 years old. That means when both our plumber and doctor are 42, they will be work exactly the same, even though they took dramatically different paths.

The purpose of this is to illustrate that the prestige of a career has less of an impact on how much you’re worth and it’s more about saving and investing early on that are going to make the biggest differences. It doesn’t matter what you do, you still have the potential to become wealthy and financially independent later on in life.

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com

Suggested reading: The Millionaire Real Estate Agent: http://goo.gl/TPTSVC Your money or your life: https://goo.gl/fmlaJR The Millionaire Real Estate Investor: https://goo.gl/sV9xtl How to Win Friends and Influence People: https://goo.gl/1f3Meq Think and grow rich: https://goo.gl/SSKlyu Awaken the giant within: https://goo.gl/niIAEI The Book on Rental Property Investing: https://goo.gl/qtJqFq

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