Why Doctors Should Invest Like Teenage Heartthrobs

"The story of my life, I take her home

I drive all night to keep her warm, and time

Is frozen"

— "The Story of My Life" by One Direction

I can't believe I'm about to say this, but I think that song by the teenage pop band is awesome! My daughter and her friends keep listening to it.

One of her friends knows the lyrics to all of their songs and even the birthdays of each member. In case you're wondering, no I'm not obsessed with the band. I just really like this one song.

The story of One Direction is fascinating and can teach you a thing or two about your personal finances.

Let me explain.

In 2010 the members auditioned for the X-Factor TV show in the UK, but none of the 5 kids knew each other. They auditioned as solo singers, but none of them made it to the final.

One of the astute judges thought their voices complemented each other well, so they got them together and formed a 5-member band. The band made it to the final round even though each singer by himself did not.

And the next worldwide sensation was born. Supposedly their concert tour this year will generate $1 billion in sales.

What does this have to do with your finances?

You see, most physicians—whether they have financial advisors or not—focus on one or two specific parts of their finances and ignore the rest. Or they simply don't know how parts of their financial life relate to the other parts.

Here are a couple of examples:

• You buy an individual stock or other investment without knowing how that particular investment effects the other investments in your account.

• You hire a financial advisor to manage one of your accounts but not the others.

• You don't figure out how your 401(k) relates to your IRA, your taxable account, your spouse's IRA, or any other investment account.

• You don't know how the investments in each specific account relate to the investments in your other accounts.

• You don't know how changing an investment in one account effects the investments in the other accounts.

• You don't realize how insurance planning relates to investment planning, or how investment planning relates to retirement planning, and so on.

In other words you focus on the parts and not how those parts fit together in a unified investment plan or financial plan.

The members of the boyband One Direction might not have amounted to anything if that one judge on the show didn't recognize how combining their voices produced something which has indeed been greater than the sum of its parts.

That’s exactly how you or your financial advisor should approach your finances and investments.

Figure out how the different parts of your financial life relate to each other and how changing one piece affects the others.

Figure out how each of your investment accounts and the specific investments in those accounts relate to every other investment you own.

I can't promise you’ll be part of the next great pop band if you do this, but what I can tell you is that you’ll likely be in much better financial shape than what you are now.