Early Retirement Now With Big ERN- WCI Podcast #385

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White coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011. Hello WCI listeners. I'm still taking some time off to rest and recover from my accident, but don't worry, I'll be back in a few weeks. Until then, enjoy this episode from the Podcast Archives this is White Coat Investor Podcast Early Retirement Now. This episode is brought to you by SoFi helping medical professionals like US bank borrow and invest to achieve financial wellness. SoFi offers up to 4.6% APY on their savings accounts as well as an investment platform, financial planning, and student loan refinancing featuring an exclusive rate discount for med professionals and $100 a month payments for residents. Check out all that SoFi offers at whitecoatinvestor.com SoFi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth, LLC. The brokerage product is offered by SoFi Securities LLC, member of FINRA SIPC Investing comes with risk, including risk of loss. Additional terms and conditions may apply. Thanks for what you do out there, and your work's not easy. If nobody said thank you today, let me be the first all right, we've got a special guest today that I've been looking forward to speaking with ever since we scheduled this. I so let's get him on the line. Okay, Today's guest is Big Earn, aka Karsten. I should call him Dr. Karsten. He's the mind behind the Early Retirement now blog. It's called Big Earn because he's a pretty tall dude at six six, which was pretty clear when we were both standing hunched over on the plane next to each other on the flight back from fincon this year. He was hunched much more than I was. He's from Germany originally, but came to the US for his schooling at Purdue and then Minnesota where He completed a PhD in economics. He worked for the Federal Reserve for a while and taught economics. Then he joined the research department of an investment manager and got a CFA designation. He spent 10 years there before punching out to live the fire lifestyle a few years ago. Spent the first few months of that on a world tour visiting 20 plus countries before settling down in the Northwest with his wife and daughter. Early Retirement now is a popular FI blog primarily because of Karsten's rigorous academic approach. Today we're going to explore some of his favorite topics to blog about and get his take on a Lot of controversial areas of personal finance and investing. Carsten, welcome to the podcast.

Oh, thank you for having me. Thank you.

Now, how did you end up in economics to start with?

Yeah, so I've always been interested in math, but then as I graduated from high school, I was looking for something a little bit more applied than just pure math. So I enrolled in business and economics in college back in Germany. And then I found business a little bit too lightweight. Sorry to say that economics was more fun and so transferred to economics. And I also had the opportunity to come to the US for PhD studies in economics. And so that was at the University of Minnesota, where, as a fun fact, I actually overlapped with a physician on fire. Of course, I didn't know him back then, but so we spent, I think three years apparently together at the University of Minnesota. So he in the med school and I was over on the west bank in the econ department.

Well, you. You guys were there the same time. But, you know what's interesting is you both ended up getting bitten by the firebug later. When, when did you get bit by the firebug?

Yeah, pretty early on, I generally liked all jobs that I did, and. But I realized that I'm not going to do this until I'm 67. And it became very obvious then in 2008, so I had just left the Federal Reserve, so very safe job, obviously. And I went to work for bank of New York Mellon Asset Management. And during my first week on the job, Bear Stearns failed. And then six months later, Lehman Brothers failed. In fact, in 2017, I had interviewed for Lehman Brothers and for AIG. And so out of the three job opportunities, I actually picked the right one and I stayed with BNY Mellon. But it's definitely shook you up a little bit, right? So. So you realize I'm not going to do this job really until I'm 67. So. And basically what I did is I didn't even have to change much, right? I saved about 50 to 60% of my net income, which was very easy to do because it was a highly compensated job. And so I basically kept my lifestyle that I had from the Fed and just lived the same lifestyle. And it was, it was a comprom. Comfortable lifestyle. It's not like I was overly frugal or anything. And I thought, well, if I do this job for 10 years, I should have enough money to retire. And then sure enough, in 2018, I finally pulled the plug.

You know, around here we call that live like a resident. And if you keep doing it for 10 years after you get out of residency, you can basically retire right then with no special investments, no particularly complicated thing. You just gotta keep living the same lifestyle while you're making more. So 2018 was your early retirement day. Right. What surprised you about early retirement, both for good and bad, and what hasn't surprised you?

So we planned this very well, so I don't think that we had any major surprises. I was obviously surprised in a very positive way how well the stock market has performed. So we're now three years, actually three and a half years almost to the day into early retirement and our net worth has grown by 70%. And so that's obviously something that I hadn't taken into account. So not in my wildest dreams. So that's the good surprise. I'm also surprised that I'm still quite busy. So between household chores, blogging, picked up a consulting gig and teach an online class at UC Berkeley Extension. So I've never felt bored. So that's the good news. I was a little bit worried, how am I going to fill my week? And there's never been an issue. And I think it's still a very good balance. So I have the flexibility to do something for fun, even during the week. Any Tuesday morning, the weather looks good. I can go skiing or hiking, do some other fun stuff, and we can still travel extensively and we have the flexibility to do that without the constraints of a corporate job. So by and large, everything has worked out as expected and there are no major surprises there.

Yeah. So the tagline on your blog is you can't afford not to retire early. Do you think most people should retire early if they can?

Yeah. Funny thing is, I mean, that blog has been in business for five years and I haven't changed the tagline. And I think it's still a pretty good tagline. Obviously, most people shouldn't retire early. Right. Because we need people to work as business leaders, as innovators, medical professionals too. Right. So many of them take a lot of time to become proficient in what they're doing. And so then the age 40 to 60, that's the most productive time of their earnings years. And they probably shouldn't retire too early. The economy needs you. So not everybody should retire early. But the reason why I use this quote goes back to my background in economics and think about it as opportunity cost. The way we teach opportunity cost to college kids is this example. Well, imagine you want to go out on Friday night and party, and the opportunity cost is that, well, you could have instead picked up a shift at your waitering job. And so the opportunity cost is that lost income. I think that's a really beautiful example of opportunity cost. But then in mid career I realized that it switches. So I had enough money and I realized that every day I go to work it creates this opportunity cost that I can't spend time with my loved ones, I can't travel as much as I want, and I don't have enough time for hiking and skiing and snowshoeing in the winter. It actually turns out there's also an opportunity cost in terms of making too much money and not having enough fun. So there's this beautiful quote by Dietrich Bonhoeffer, Time is our most precious resource, for it is the most irrevocable. So think about that, whether you can afford to keep working when considering that limited time you have on the planet. And so that's the way I think. This is why I still like this tagline.

Well, I guess we'll stop the podcast right there. I'm off to the ski resort. See you later. All right. No, but I certainly feel that these days, you know, I mean, I've now I reached financial independence, you and Lee, for about the same time when you guys, you know, left your main work there. And that's about the same time I reached financial independence as well and continued to work since then. But I think a lot about that opportunity cost, you know, and so so far it's, I've looked at it as so long as I can do everything I want to do and still keep working, I've kept working. But the more stuff I find to do out there, the more I feel that opportunity cost, for sure.

Yep, exactly.

All right, well, one of your favorite topics on your blog is to write about safe withdrawal rates, withdrawal strategies. Like you have a series of blog posts on the topic that's almost up to 50 posts and you get into lots of weeds in those posts. But I wanted to ask you just a few higher level questions on the topic. And the first one is what do people get wrong most frequently when talking about safe withdrawal rates?

All right, so where do I even start? Right, so because there are so many issues with the 4% rule. But the major issues are, I mean, first one is not understanding how much of a difference your personal idiosyncratic parameters make in your withdrawal rate. Right? So you take a 30 year old withdrawal, a short work history, long retirement horizon, decades until you can get Social Security or pensions, and probably you don't even have a pension in this day and age. And that person will probably want to do a safe withdrawal rate much less than 4%. And then on the other hand, on the other side of the spectrum, you take a 50 year old who's not too far away from pensions and Social Security, probably has much higher pension accruals and Social Security benefits, has a paid off house, you should probably target much more than 4%. So my number one beef with the 4% rule, it's not so much the 4% part, it's more of the rule part and the 4%, again, I don't want to look like that. I'm the overly conservative and the, and the Grinch of the fire community. I actually, I gave more advice to people that should have done a higher than 4% withdrawal, right? Because they fell into that latter category, right? They're a little bit older, the professional career, they have some very generous benefits and they could have easily done a 5% or 6% initial withdrawal, right? So if they had just relied on that, that Trinity study result, they probably would still be working instead of retiring early. So that's the one dimension, that's the idiosyncratic dimension. The other dimension is market valuation. So as people are not factoring in asset valuation, so a lot of people point to the Trinity study and then they say, well, the 4% rule is very safe. It has a 98% success rate. And that's true. But the question is, how would this success rate change? If we look at not all of the prior historical simulations, but we look at only the prior retirement cohorts that faced conditions that are similar to what we face today, very expensive equity multiples or CAPE ratios in the 30s and above, and very low interest rates. And then when you slice the prior retirement cohorts and you take out all the irrelevant cohorts that might have retired at the bottom of the bear market, well, then of course you can do a much higher safe withdrawal, right? And you look at only the cohorts that retired during conditions that were similar to today's conditions, you have a much higher conditional failure rate and a much lower conditional success rate. So look at not just these unconditional Trinity study results, but also do some conditioning to factor in that we have very expensive equity valuations. And then also this is one of my favorite pet peeves is not understanding percentage calculation because you hear a lot of people say, well, 3%, 4%, 5% withdrawal, right? What does it really matter? It's just a percent difference. And of course that's wrong because imagine you have a $2 million nest egg. And then going from a 3% to a 4% means you go from $60,000 a year to 80,000 dol. $80,000 a year annual budget. And that's not a 1%, that's a 33% difference. So when I do some of my simulations and people roll their eyes, oh, my God, how can you do the percentage of the safe withdrawal rate, how can you do that down to the 3.3% or 3.35%? Isn't that overkill in terms of precision? Well, it's overkill in terms of precision. If you just look at the, at the headline number, if you look at how much that actually means in terms of your annual withdrawals, this could be very substantial amounts. If you go from a 3.5 to a 3.75% safe withdrawal rate, it is a meaningful dollar amount. And then also if you look at some of the, the back tests that I'm doing, so sometimes you, it's just a 0.25% difference in the withdrawal rate. And you go from something that is super safe to something that's already really, really shaky in the, in the historical scale simulation. So don't get too offended by somebody doing some more careful and robust and mathematically sound analysis. This is actually one of the places where you want to have a little bit more precision. And then again, if in the end you calculate your safe withdrawal rate and it comes out as 3.81, nobody is going to blame you. If you go from 3.81 to 3.8 or 3.9, that's okay. But maybe you can do some rounding in the end. But on the way to get your safe withdrawal rate, you probably want to cross all the T's and dot all the I's and be a little bit more careful. The rounding should be done at the end because you don't want to compound any kind of rounding or estimation errors.

Now, along your second point about valuations, we had Bill Bernstein on here a couple of weeks ago and he likes to make the point. If you don't like expected returns going forward today, with bond yields being so low, with expected returns on stocks being so low, consider the alternative, which is having a lot less money, that you haven't actually had this run up in asset prices. And yes, you've got higher expected returns going forward, but you might only have it on two thirds of the money. And so I think that comes into play as well when thinking about this is yes, maybe you have to take a little bit smaller withdrawal rate, but you're also taking it on a lot more money than you would be taking it on otherwise.

Right, right, right. So in that sense, I'm a little bit worried about the people who just barely barely scraped by. And with the recent run up in equities, they just barely make it to the 25x or barely make it to the 4%. So that's, that's the danger part. Right, but, but you're right. I mean, obviously most people should now look at their portfolio. Hey, I mean, this is a lot more than I expected. And I can afford to do a little bit less of a safe withdrawal rate. And you don't have to do a lot less. Right. When I first did this whole safe withdrawal rate analysis, I thought, oh my go, maybe if you have something like a repeat of the Great Depression, maybe no safe withdrawal rate is safe. Maybe we have to go down to 1% or below 1%. But that's not true. I mean, all you have to do is you go from 4% to 3.3% and you're fine even in the worst possible scenario like the Great Depression. So it doesn't take a lot of reduction. And yeah, so with the recent run up, I think a lot of people will be in good shape.

So you think the people saying use a 2% safe withdrawal rate are just as crazy as I think they are?

Yes, yes.

All right, let's get into specifics. I mean, you are now an early retiree. What strategy are you using to spend your nest egg?

Right. So back in 2018, we looked at our net worth and how much we expect in future cash flows. Pension. I have a small pension, Social Security for my wife and me. I looked at how much can we withdraw so that even in the historically worst case scenario, we wouldn't run out of money. Not only not run out of money, but hopefully have a little bit left that we can use to give to our daughter and to charities. And I think I calculated something like a 3.5% safe withdrawal rate. And then now, I mean, as I said in the beginning, portfolio has grown by 70%. I don't see a reason of, of raising our budget by 70%. So my personal retirement planning has now shifted from managing the risk of running out of money to almost managing the risk of over accumulation. Right. So should we raise our consumption? Should we build in more fudge factors and more fun factors in the future? And so in that sense, probably right now I'm my worst customer because I don't even need all this safe withdrawal rate mechanics anymore because I'M probably pretty safe now. But again, I'm a little bit worried about the people that just because of the recent run up, they just make it to manage the next 10, 20, 30 years.

So you just spend what you want and look every now and then at what you're spending and make sure it's less than your calculated safe withdrawal rate. That's it? That's your whole strategy?

Yeah, that's it. It's pretty easy. And I mean, I mean obviously you don't have quite the long life expectancy because again, you have this inflation uncertainty. I mean, how do I even gauge the inflation uncertainty? I'm 47 now, my wife is 39. That annuity, I don't even know how much is going to pay out in real terms. Maybe at age 70, if you get a decent yield on it and you're scared about sky high stocks, it would be more defensible. But again, you have to look at the exact numbers. And again, sometimes these annuity salesmen, they just quote you the yield and they say, well, that's a much better yield than the bond market or even the stock market return. But again, this is you hand over the asset and the asset is gone. You will never get that back. Can't really compare that to a bond yield. You can't compare it to an equity, certainly not the dividend yield and not even the equity expected return. So yes, I agree that if you're a little bit older you might consider the annuity. But again, I'm almost sure that might not be a very good deal either, even for a 70 year old.

Now let's turn the page a little bit. You've written before about how you're not a fan of emergency funds. I've always seen an emergency fund as a bit of a catch 22 in the beginning. When you really need one, it's hard to get one and there's a lot of opportunity cost to saving one up. And by the time it's easy for you to have one, you no longer really need it. I mean, certainly someone that's already fi or even anywhere close has no need for an emergency fund. Their entire nest egg functions as an emergency fund. How do you think people should think about emergency funds?

The way you put it is a lot more eloquent than my ramblings on the blog, but that's probably 90% of what I wrote in a whole sequence of emergency funds. It's actually that post that was my first claim to fame back in 2016 and that was featured in Physician on Fire's Sunday's best. And that was the first time ever anybody had reposted something I wrote. So it's still still a post that's very near and dear to my heart. And again, you're completely right. So young investors face this opportunity cost of missing out on stock market returns because you still have your entire career ahead of you and you're more able to suffer that equity volatility. And then I also think there's a bit of a behavioral component. So if you don't keep your money in a money market account, but instead you put it in an equity index fund and then he's already potentially, hopefully it has grown a little bit and you have some capital gains, there is this additional mental burden of spending that emergency fund on something frivolous like an emergency flat screen TV or an emergency trip to Las Vegas, something like that. But then again, if you really do need the emergency fund, right? I mean, the roof caved in and something needs to get fixed right away. Again, I can get money out of an equity index fund just as quickly as I can get it out of a Fidelity money market fund. So it's still accessible. But I like this little bit of this additional burden that you're not going to tap your emergency fund as quickly as you might touch a money market fund. But again, I agree with everything you said.

The downside, of course, with that approach is it might be worth 40% less than you thought it was going to be worth when it comes time to have the emergency, right?

Yes, yes. And again, if you have only one single emergency in your entire life, and maybe you could argue that way, but then again, I mean, you potentially have several emergencies through your entire lifetime and sometimes your equity holdings, they're underwater, sometimes they are wildly better than your money market fund. And again, of course, if you have an emergency every six months, then that's probably not an issue with emergency, but that's probably incorrect budgeting. But so again, so if you average this pros and cons emergency fund in the money market versus the stock market, and you average this over say, a 30 year horizon, and every three years you have a major emergency where you have to fix the boiler or the roof or the AC unit, and yeah, sometimes you're underwater with the stock market, but you would think that maybe 60 or 70% of the time you are way ahead of the money market account with your equity index fund.

Yeah, fair enough. You're also not a big fan of robo advisors. Why not?

They charge an additional fee. Usually it's something like 25 basis points AUM. And for that fee you get two services. The first is the asset allocation recommendation and the second one is tax loss harvesting. And the funny thing is why should I pay 25 basis points? Again, this is not a one time fee, right? This is an annual fee. Why should I pay 25 basis points? Actually, just the other day I went to a Robo Advisor webpage and they tell you the recommended asset allocation. So this is sliding bar. You can enter your risk tolerance and it gives you the asset allocation. Why should I pay for something that they already tell me for free on the website or you can go to your website. I think you had a post the other day, it's actually an older post, but you have added to this the 150 different portfolio allocations that people have recommended. You can get so much input and free advice on the Internet. It's actually not so much an issue of finding the. It's actually more of an issue of weeding out the bad advice and landing at something that is, that is reasonable. But I mean, in the worst possible case, you just take that Robo Advisor recommended allocation and you can implement that yourself. You can implement that with the Vanguard funds, with the Fidelity funds and there's a lot of free information out there on how to do that. The second service they provide, they give you is tax loss harvesting, right? And so in your taxable account you can quote, unquote, harvest taxable losses and you can write them off against your other taxable gains. And then even up to a certain upper limit of $3,000 a year, you can even write it off against your ordinary income. That's very useful, but it's also something that you can do yourself. And I also want to point out that there are at least two tax pitfalls that I think the Robo Advisors are not taking into account very seriously. I'm actually amazed that nobody has complained about this or even filed a lawsuit or something. For example, the first thing is that unless you move your entire net worth, all of your financial assets, I should say to the Robo Advisor where the Robo Advisor can then make sure there are no wash sales, right? Because this tax loss harvesting, claiming tax losses only works if you don't have any offsetting transaction within plus or minus 30 days of that tax loss harvesting transaction. And obviously the Robo Advisors if you hold say your taxable account and an IRA and a Roth IRA if you hold that all with the Robo Advisor, obviously the Robo Advisor makes sure that when you harvest A loss in one account, you don't invalidate the tax loss harvesting in your retirement account. But what if you hold the retirement account somewhere else? And by the way, the Robo advisor also wants the fee for your retirement account. So they might do the tax loss harvesting and it might be worth on a standalone basis where the AUM compensates you with the AUM fee. Yeah, you can make up the AUM fee through the tax loss harvesting. But. But what if you have to keep all of your other assets too where you can do tax loss harvesting, say in a Roth IRA or in a traditional ira. So the problem is that what if you claimed your tax losses from your Robo advisor, but say in your corporate 401k account, you made transactions that would invalidate your tax losses. So that could be a very expensive tax liability. And the other tax liability is that it doesn't apply to people who say they start an account with a Robo advisor and then they put new money and say they put cash in there and then that's invested in their ETFs. What some people might do is they take an existing portfolio of ETFs and mutual funds and then move it over to the Robo advisor. Well, what does the Robo Advisor do? They liquidate all the assets that don't fit into their mold, that are not on their list of ETFs that they are trading in their program and that they rebalance the whole portfolio and potentially realize such a large chunk of capital gains that even with all the robo advising and tax loss harvesting that they might be doing over the rest of your lifetime, you will never recover that initial loss that they realize the initial tax hit that they generated when they did the initial rebalance. So be careful about that. So if you want to do a Robo advisor route and you invest directly with them, make sure that you don't have any offsetting trades in your other accounts that are not with the Robo Advisor and never ever transfer any existing accounts with built in capital gains to the Robo advisor.

Yeah, that's a real problem anytime you change advisors of any kind. Right. If that advisor isn't good about working around the portfolio you've got, you may end up taking a hit every time you change advisors.

Exactly. And it's actually a reason to diy, right? Because I mean, you can move your account from one broker to another broker and do it in kind without liquidating the assets. But it's exactly as I said. So you imagine you go from one advisor to another advisor and that other advisor. Oh, all of these funds, they're kind of junk and I'm going to move them to the funds that I like. There would be a huge tax headache because of that.

Yeah. Speaking of diy, do you feel the same way about target date funds? Target retirement, life cycle funds, whatever you want to call them, should investors use those or should they roll them out?

Right. So I wrote a blog post, it's, it says, it's titled what's wrong with target date funds? And first of all, to be sure, I think there's a lot of things that are right with target date funds. So if you're a hands off investor, maybe you lack a little bit discipline and organization. I think it's a not bad, it's not a bad deal. It's certainly better than not contributing to a 401k at all or putting your 401k contributions into a money market account. But I personally, I don't particularly like target date funds. First of all, you can just implement them yourself and save the additional layer of fees. So in that blog post I showed that both Fidelity and Vanguard, they have the funds. You can just invest yourself in the underlying funds and there's no need to do the target date funds and you save a little. I think it's up to 10 basis points or so per year. It's not trivial. And then on top of that, target date funds are calibrated and optimized for a very generic retirement savings. So there would be somebody who starts working at age between 20 and 25 with zero initial assets. And then this person accumulates assets very regularly, consistently over time, probably 40 to 45 years. But not everybody will fit into that mold. Right? So what if you find yourself as a 45 year old and you start from scratch, Maybe you never saved for retirement. Should you then use a target date fund for a 45 year old? Well, maybe you should be more aggressive because the 45 year old target date fund, so say 20 years away from retirement, might already be too conservative. So at 45 with zero assets, you should be a lot more aggressive. And then likewise, imagine you're 25 and you receive a big gift or an inheritance. You might already shift to a little bit more conservative asset allocation. So maybe that target date fund that says we are 40 years away from retirement, that might be too aggressive for you. So again, because my little niche in the finance community is you want to personalize stuff, right? You want to, just as you personalize your safe withdrawal rate analysis, you potentially have to do a Little bit of hacking here too. Right. So maybe make some adjustments. If you want to retire at age 45, you probably, you might have to be a little bit more risk averse than the average 45 year old working person who still has 20 years to retirement. So it's very hard to fit that all into one mold because there's so many different idiosyncratic differences among people.

I've got some more investing questions, but let's step away from investing for a minute. Something I saw when I went to your website was that you use a health sharing ministry plan, Medishare like, like a lot of early retirees. Tell us what your experience has been like there, particularly when it comes to claims or need for shares.

When I retired in 2018, I had five more months of corporate health insurance until December 2018. But then I had to pick a health plan we had and we still have relatively high income, so especially taxable income so that we don't qualify for any generous ACA subsidies. And now there's been a little bit of a relaxation of some of the rules. But I did the math. It's still not really cost effective for us to do the Obamacare plan. But then also to be sure, we haven't had any claims. Right. So we only do our annual health checkups. And so I don't have any experience about how the claims would work. So what I can say is that what I like about Medishare is that it's a ppo, so it has negotiated rates, it has a network of providers. You call up the provider ahead of time and they tell you yes, we are in their network and we have negotiated and competitive rates. And yeah, I mean so far so good. If anything changes, I'll probably write about it on my blog. But yeah, so far we like it because the premium is I think it's only about half of what a halfway decent plan would have cost us over the exchange here in Washington state. And, and then of course, I mean it's a high deductible plan. So we pay I think the first $10,000 out of pocket, which we never even got close to. I think right now we pay something like $2,000 or so out of pocket, but we would have paid the $2,000 out of pocket anyways even with the bronze or silver plan that I was looking at and we save half or even more than half of the of the cost of that plan. So so far we're happy.

Speaking of Washington state, what did you decide to do about their new long term care Insurance law.

So I don't have any W2 income from Washington state. So I get W income from state of California. And then all the other income we have is dividends, interest and capital gains. So as far as I know, I don't have to pay any premium for the long term care. So think of the long term care insurance is essentially a payroll tax for just regular W2 income. And so we're not impacted by that.

Basically just ignore it. That's helpful. All right, let's get back into some investing topics. It's pretty clear that you're not a big fan of bonds. And I'm curious whether that's a long held belief or simply a reflection of our very low current interest rate environment.

Right, so. Correct. I mean, it's mostly because of low interest rates. And for the most part I used 100% equities or other risky assets like real estate and trading equity options while I accumulated. And with low or high bond rates, I think it's actually sensible to be 100% or close to 100% until maybe a few years before retirement. And then of course, in retirement it's no longer prudent to stay 100% stocks. It's way too risky if we have a repeat of say 1930s or 1970s, that would not support the kind of safe withdrawal rate that people normally recommend. So yes, so in retirement you need a little bit more in safe assets. And so right now what we do is I have about a 30% allocation to an option trading account. And then because I'm trading derivatives there and I keep the principle of this account, I actually keep that in bonds. So these are muni bonds. And I have some preferred shares too, which are kind of a hybrid between stocks and bonds as definitely a lot more risky than the average U.S. treasury. But yes, I definitely want to hold something like 30% of my assets in something that is significantly less volatile than the S&P 500. So yes, I've definitely shifted. And even with low bond yields, there's really almost no way around the idea that you want to shift down your, your risk budget a little bit in retirement.

Yeah. Even though yields are low. We'll get into options here in a minute because I want to hear more about what you're doing there. But before we do that, let's just talk about stocks and the stock market Expected returns. What should investors expect from stocks going forward for the next decade or two? What range of outcomes do you think is most likely and what should investors do with that information, if anything?

Right so we're recording this on December 2, 2021. Right. So the current situation is very high price earnings ratios. I think the CAPE ratio today I calculated as something like 38, which is historically outrageously high. So it's almost as high as before the dot com crisis. It's higher than before. It's not trivial. And then on top of that, target date funds are calibrated and optimized for a very generic retirement saver. So it would be somebody who starts working at age between 20 and 25 with zero initial assets, and then this person accumulates assets very regularly, consistently over time, probably 40 to 45 years. But not everybody will fit into that mold. Right? So what if you find yourself as a 45 year old and you start from scratch? Maybe you never saved for retirement. Should you then use a target date fund for a 45 year old? Well, maybe you should be more aggressive because the 45 year old target date fund, so say 20 years away from retirement, might already be too conservative. So at 45 with zero assets, you should be a lot more aggressive. And then likewise, imagine you're 25 and you receive a big gift or an inheritance, you might already shift to a little bit more conservative asset allocation. So maybe that target date fund that says you're 40 years away from retirement, that might be too aggressive for you. So again, because my little niche in the finance community is you want to personalize stuff, right? You want to just as you personalize your safe withdrawal rate analysis, you potentially have to do a little bit of hacking here too, right? So maybe make some adjustments. If you want to retire at age 45, you probably, you might have to be a little bit more risk averse than the average 45 year old working person who still has 20 years to retirement. So it's very hard to fit that all into one mold because there's so many different idiosyncratic differences among people.

I've got some more investing questions, but let's step away from investing for a minute. Something I saw when I went to your website was that you use a health sharing ministry plan, Medishare. Like a lot of early retirees. Tell us what your experience has been like there, particularly when it comes to claims or need for shares.

Yeah, so when I retired in 2018, I had five more months of corporate health insurance until December 2018, but then I had to pick a health plan. And so we had, and we still have relatively high income, so especially taxable income, so that we don't qualify for any generous ACA subsidies. And now there's been a little bit of relaxation of some of the rules, but I did the math. It's still not really cost effective for us to do the Obamacare plan. But, but then also to be sure, we haven't had any claims. Right. So we only do our annual health checkups. And so I don't have any experience about how the claims would work. So what I can say is that what I like about Medishare is that it's a ppo, so it has negotiated rates, it has a network of providers. You call up the provider ahead of time and they tell you, yes, we are in their network and we have negotiated and competitive rates. And yeah, I mean, so far so good. If anything changes, I'll probably write about it on my blog. But yeah, so far we like it because the premium is, I think it's only about half of what a, what a halfway decent plan would have cost us over the exchange here in Washington state. And then of course, I mean it's a high deductible plan. So we pay I think the first $10,000 out of pocket, which we never even got close to. I think right now we pay something like $2,000 or so out of pocket, but we would have paid the $2,000 out of pocket anyways even with the bronze or silver plan that I was looking at. And we save half or even more than half of the cost of that plan. So far we're happy.

Speaking of Washington state, what did you decide to do about their new long term care insurance law?

So I don't have any W2 income from Washington state. So I get W income from state of California and then all the other income we have is dividends, interest and capital gains. So as far as I know, I don't have to pay any premium for the long term care. So think of the long term care insurance is essentially a payroll tax for just regular W2 income. And so we're not impacted by that.

Basically just ignore it. That's helpful. All right, let's get back into some investing topics. It's pretty clear that you're not a big fan of bonds and I'm curious whether that's a long held belief or simply a reflection of our very low current interest rate environment.

Right. So correct. I mean it's mostly because of low interest rates and for the most part I used 100% equities or other risky assets like real estate and trading equity options while I accumulated. And with low or high bond rates, I think it's actually, it's actually sensible to be 100% or close to 100% until maybe a few years before retirement. And then, of course, in retirement, it's no longer prudent to stay 100% stocks. It's way too risky if we have a repeat of, of say, 1930s or 1970s, that would not support the kind of safe withdrawal rate that people normally recommend. So, yes, so in retirement, you need a little bit more in safe assets. And so right now what we do is I have about a 30% allocation to an option trading account because I'm trading derivatives there. And I keep the, the principal of this account. I actually keep that in bonds. So these are muni bonds, and I have some preferred shares too, which are kind of a hybrid between stocks and bonds is definitely a lot more risky than the average U.S. treasury. But yes, I definitely want to hold something like 30% of my assets in something that is significantly less volatile than the S&P 500. So, yes, I've definitely shifted. And even with low bond yields, there's really almost no way around the idea that you want to shift down your risk budget a little bit in retirement.

Even though yields are low. We'll get into options here in a minute because I want to hear more about what you're doing there. But before we do that, let's just talk about stocks and stock market expected returns. What should investors expect from stocks going forward for the next decade or two? What range of outcomes do you think is most likely, and what should investors do with that information, if anything?

Right, so we're recording this on December 2, 2021. Right. So the current situation is very high price earnings ratios. I think the Cape ratio today I calculated as something like 38, which is historically outrageously high. So it's almost as high as before the dot com crisis. It's higher than before in 1929 or in the 1960s. So I definitely think that we have to curb our expectations. And then all expected returns are lower across the board. Right. As bonds have very low yields and with the potential of rate hikes. So that's going to be a little bit of a drag, at least short term on bond returns. Of course, in exchange for longer term, then you have higher bond yields and then you make a little bit more again. But the path going there is a little bit painful. And then, by the way, I'm not trying to give any doomsday forecast personally. I'm still very aggressively invested in stocks, so I'm not forecasting negative returns. But I would say that real equity returns are probably going to be somewhere 3.5% to 4% over the next decade and then hopefully by that time corporate profits, if they keep growing the way they have been growing over the last decade, and then equity returns have done a little bit of a smaller, only single digit run instead of double digit run, that valuations catch up to more sustainable long term ratios and I think after that we can probably go back again to something like 6, 7% real equity returns. So I'm not saying that the high valuation causes me to be too worried, but obviously historically has been correlated with some stock market crashes. Now the problem is that equity valuations, even though they are highly correlated with say the next 10, 15 year returns, they are notoriously unreliable in forecasting what is the next, when is the next crash and how bad is the next crash. So it's very hard to gauge that. But yeah, I mean, obviously I think that high valuations, then uncertainty about how inflation is going to work out over the next few years, high deficits, potentially looming tax hikes, especially hikes on corporate taxes, it's all going to be a drag on the stock market. What some people are going to point to, and I could be convinced of that, is that we are right at the edge of, at the beginning of another technological revolution, right? So all of this machine learning and artificial intelligence, that's all going to create a big productivity boost and we're just going to grow ourselves out of this problem. It would be nice if we could. And so that would be the one thing that I'm holding up there that might actually cause the whole situation to look much better than anybody forecasts these days.

Wouldn't that be wonderful? All right, let's talk about options. Now, you're a fan of using options in a portfolio. There's lots of ways to invest with options. What strategies do you prefer?

There are a million different option strategies. And then what I'm doing specifically involves selling put options on the S&P 500 index. So I'm selling downside insurance on the index and I still have to be moderately bullish on stocks, obviously. So I bet on the market going either sideways or up and it can even go slightly down. I'll still make money. So only if the market drops dramatically and then over a very short time span, I would lose money. And I've been doing this for over 10 years now. It has been very profitable. So we have about 30% of our net worth in that option strategy. And so far, I mean there's a knock on wood, the cash flow from this strategy alone has been enough to finance our retirement, so I don't need to tap into any of the other investments. And we've been riding the whole equity bull market without ever having to make any withdrawals from the taxable equity holdings. And then all of our retirement accounts, they are also, yeah, pretty much 100% equities. And so we left them untouched too. So that's been working out very well so far.

Yeah, well, we've also had a, a pretty bullish market for the last decade. My biggest problem with options has always been that the expected return is zero before costs, negative after costs, similar to insurance that way, really. And unless you're better at it than the average trader, unless you can add alpha, you're going to come out behind. Do you agree with that? And if not, why not?

So I agree with that. I disagree with that central assumption that options have zero expected return. But I really like that insurance analogy because that's exactly how I define my business model. And it's the reason why I believe I make money. It's the reason why I make money consistently and reliably. So again, this incorrect assumption is that zero return assumption for all options. And there's a very quick way to demonstrate that that, that can't be true. So, so imagine you buy a call option on the S&P 500 and you sell a put option with the same strike and the same expiration date. So you have now created a elementary option theory. So that's a synthetic forward contract, right? And because that forward contract pays you the expected equity risk premium, which is positive, means that the option contracts, they can't Both have a 0 expected return. Or you could even go further. And then, so you do a bond that pays off at that same expiration date and then the two options, that would be a synthetic equity index fund, and you don't do the index fund through Fidelity or Vanguard, but you have synthetically created this through a bond plus two options. And so again, because these two options make this an equity risk premium, and the equity risk premium is positive, on average, equities should pay a lot more than the bond. There has to be some positive expected return somewhere inherent in these two option positions. And it gets even better. So I would make the case that the downside protection demands the higher premium. So in fact, the upside risk premium that you are buying there, that has the same risk profile as a casino gamble, right? Or a lottery ticket. So you put a small wager in and then you have a very high or even unlimited upside potential. I don't think there's a very large risk premium that somebody pays you to take on that risk. Actually, in fact, might be the opposite way. Right. That might actually be that sucker option bet. And I totally agree. I think a lot of option trades are like that. Basically sucker bets where people then will get less than an expected zero return or maybe a zero return. And then through fees and taxes and everything, they're going to be dragged below the zero line. But it's the downside risk that's the very highly compensated. This is just like any other insurance contract. I buy homeowners insurance and it costs me say $1,000 a year. And my expected money that I get out of that contract is a lot less than $1,000. I'd be lucky if I get even $500 out of that in expected terms. But I still buy it because I have such an aversion against my house burning down. So I still buy the homeowner's insurance. And it's a little bit the same with the short, short put. I think there are a lot of. These are not even unsophisticated investors. Sometimes very sophisticated investors like pension funds and endowments, they can't afford to take on the full equity premium. They sometimes do something like an equity collar where they buy, where they buy a put option to hedge the downside and then they sell a call option to sell off a little bit of that unlimited upside potential. And because they sell such a strong aversion against that negatively skewed payoff from a big enough equity drop, and there's not that many people that are willing to take on this risk. And I'm one of them. And I think I get paid pretty well for that because it is exactly like an insurance contract. Now, unfortunately, I can't really do what say a car insurance or homeowner's insurance can do. You diversify simultaneously over a lot of drivers and a lot of homeowners. And then some people, they have a damage, you pay that out. But the overwhelming majority of contracts you just pay in and they never get anything back. So I try to do that same thing with my short put options. So I sell them a little bit out of the money. And so that maybe 98% of the time I keep the premium and then 2% of the time I have to sometimes pay quite substantial amounts back. Unfortunately, I have to do this throughout the year. I can't do this simultaneously. So I can't, unfortunately, I can't sell put options on say 200 different indices and Then some of them I pay out something, and for most of them, I keep the premiums. I have to do this over time, which complicates things a little bit. But I think the general idea of the insurance premium that I'm making is still valid and I do as very, very short expiration time. So I. There are three expiration times for the major option contracts. Monday, Wednesday, Friday. And on Mondays, I sell the Wednesday options. On Wednesdays I sell the Friday options, and on Fridays, I sell the Monday options. And so I have basically 52 weeks, 156 independent bets throughout the year. And yes, of course, occasionally I pay out quite substantially, but. And so far, this strategy has made very good, very good money. And again, it's because I'm actually using the richer and the purer equity risk premium and get compensated for that and the premium that everybody else is chasing after, the upside potential with no downside potential is what everybody wants. You want to put a small wager and get rich from that. That's really the sucker bet. So I'm staying away from that. I'm doing the purer downside bet, and I make the insurance income on that. So this is my little option strategy. And I mean, so far it has been going very well, even back in 2020. I did quite well even in March 2020.

You know, I think if you went to a gold rush, you'd be the guy selling the shovels.

That's right. That's right. And it's the dirty work. It's not the very pleasant work because you are taking on the downside risk. And everybody else, you know, they want to tell people at their. At the cocktail party what smart investors they are, and they invested in this stock and they made a thousand percent on this. And well, unfortunately, I'm only making really very small amounts, make them regularly. Every once in a while, I lose maybe a month or two months worth of premium. As long as I have only one or two events like that every year, I'm still fine. And it's not a very. Not a very glamorous kind of job in the financial market, but it's almost like cleaning the sewers. And that's what I do in the financial system.

Now, you have a PhD in economics and worked for a big investment firm for a decade. Do you think the average investor should do what you're doing with options?

Well, it depends on how you define get into options. Right. So getting into the weeds and trading options yourself would be tough for the average retail investor because you're selling Naked put options with leverage. So you want to know the option math, which I don't think is really that complicated. And I think the bigger obstacle might be, do you really have the bandwidth to do this yourself? And again, I'm. I want to make sure it's not like I'm sitting the entire day in front of the trading screen. So I have to do three trades a week. I can sometimes do each trade in just a few minutes. So I always tell people if I'm on the ski slope on a Wednesday and I have to do my auction trades, I can do all of my option trades that day on my phone on one ski lift. Right. So it doesn't take a lot of time, but you probably want to have a little bit of. Of focus on what's going on in the market. Yeah, okay. I might do the one trade in the Lyft ride, but on all the other rides, I'm still on my phone and checking the option quotes and checking the S&P 500 quotes. So imagine if you're an emergency room doctor, you can't do that, right? Because you have to work during that time. You can't just leave the patient there on the stretcher and say, okay, everybody take a break. I have to check my option codes. Or imagine you're a lawyer or a police officer. So, and then on top of that, I don't think there are any mutual funds or ETFs that would do this. That would do this for you. So, yeah, I mean, you have to do it yourself or you have to hire somebody. A lot of people have approached me and they asked me, hey, can you do this for me? And right now I'm not set up to do this, but if I ever change my mind and I offer this as a service, I probably announce this on my blog. But yeah, I mean, right now I think the only way to do that is to do it yourself. And you have to have the, the bandwidth and, yeah, a little bit of the knowledge in terms of risk management and stuff before you want to do this yourself. I don't think 99% of the people shouldn't do this themselves. I think that, as I said, I really like this risk premium because that's the purer and better compensated equity risk premium. And so I like the asset class in general. And if more people could do it without doing it themselves, I mean, just like I'm investing in real estate through real estate funds, but I don't want to manage a multifamily student housing in San Luis Obispo but if I find people who do this for me, I would be very interested in that kind of asset class.

Let's talk about another controversial area. You're not afraid of using leverage. What do you think are the best opportunities to use leverage to lower risk and boost returns?

Just to be sure, leverage can be dangerous. Every 10 years or so, stock market crashes, and we're reminded of that. But I think there are a few occasions and a few applications of leverage. If it's used correctly and cautiously, we can even reduce risk. So think about an investor, say a young investor, say, imagine Karsten 10 years ago, and imagine I have 100% equities and I want to diversify some of that equity risk. And by the way, it might already be internationally diversified, so I've already done all of those levers. But how do I diversify that equity risk if I'm already maxed out, right? So somebody. So in traditional finance, so somebody will say, well, you have to sell some of your equities and put that into bonds, right? I mean, you look at this efficient frontier diagram. On the one end you have bonds and the other hand you have stocks. Then you draw your efficient frontier. And then if you want to reduce your risk, you have to move along this efficient frontier line. And unfortunately, you face this opportunity cost. If you want to invest more in bonds, you're also going to lose some of your expected return from your equity market portfolio. So in that sense, to overcome this, what I have suggested is why don't you just buy the diversifying asset on margin? I mean, don't buy more equities on margin. That is the dangerous leverage. You don't want to do that. That could wipe out your portfolio if the drop is big enough. But if you use the leverage to buy the diversifying asset on leverage, and at least over the last 40 years, bonds have been more or less either uncorrelated with stocks or have been even negatively correlated with stocks. So in that sense, you can buy the diversifying asset on leverage. And what you can show is you could actually expand this range of the efficient frontier if you allow for a little bit of leverage. So this is one point I once made in a blog post, and there's some additional finance theory. So what you could do is, which is even better, you look at this efficient frontier diagram and you look at where is the tangency point, right? Where is the point where you have the highest Sharpe ratio, where you get the highest return per unit of risk you're taking on, and then you take that Tangency portfolio and you start levering up that tangency portfolio. And whereas the efficient frontier line, it bends to the side to the unattractive area, this, this tangent line at the, at the highest chart ratio portfolio, it just moves up linearly. So, so there are actually points in this risk versus return trade off that are attainable with leverage that you wouldn't have been able to attain without leverage. So there was a, there was a point that I made and it's actually more than just a purely theoretical point I raised there. I don't think that any, any one of my readers has ever implemented it that way. But so at the place where I worked we had a product like that where we said look instead of. So our target return was a 100% equity portfolio. But what if we are allowed to use some leverage between stocks, bonds and cash? And so we had a product like that and I think by the time I left it had a 29 year long track record and it had an average outperformance over the equity index by 3 percentage points. And it had about the same risk level as the equity and it had extremely high correlation with the equity index. But by playing around with the equity weight and the bond weight and sometimes you take more leverage, sometimes you take less leverage, you could squeeze out a little bit extra return by doing this smart allocation between stocks and bonds. And of course, well, this was run by a large institutional asset manager. I mean this would be something that I probably wouldn't want to touch myself because there's actually a lot of computer code that was involved with that. But maybe without all the bells and whistles, you can still outperform prob the index by maybe a percent and a half to 2%. And then that additional, that, that 3% outperformance, that was, that's why you have to pay a professional asset manager. But yeah, I mean this is, this is not just a theoretical little gizmo, right? This is something that people have used in real world financial applications. And that's actually one of the, one of the longest running and one of the most successful products that we were selling to big institutional investors. So this is not just an idea, this is something that people actually use. But then again, it sounds easy in theory, but you still have to have some gauge on expected returns and you have to have a gauge on what is the expected correlation between stocks and bonds, right? So you have to, it takes a little bit of time and effort to monitor that relationship and how high or how low that correlation is. So it is an Active strategy. So this is not something that the average passive retail investor would want to touch. But just as a discussion starter, I wrote that blog post and I'm glad you found this. Look through my blog.

Now there's a book out called the Value of Debt. I don't know if you've ever read it, but the basic idea behind it is for those who can handle it and can get relatively favorable terms on the debt, that an amount of 15 to 35% of the value of your investable assets in debt is kind of an ideal amount of leverage. Not too much risk, but enough to boost returns significantly. What do you think about that amount of leverage in a portfolio?

Yeah, I don't think that there is any fixed amount. Right. I mean, so for example, I know a lot of real estate investors and they did just fine during the global financial crisis and I mean obviously they didn't go overboard with their leverage. Yeah, I guess it depends on the asset class. Yeah, I wouldn't be opposed to a little bit of leverage. So for example, it goes back to this question of what is the optimal asset allocation over the life cycle? Right. So imagine you start as a 20 or 25 year old with zero assets and you're saving for retirement. You can actually show that your first year of contributions you almost want to be. You could be as high as maybe 10 times leveraged. If you were to do this as a mathematical optimizer and you had no leverage constraint, you might even get much higher than 15% leverage. And yeah, I would probably. But you will reach a point in your life where you probably want to have no leverage and less than 100% equities. And so yeah, it depends on the personal situation. 15 to 30% leverage is probably, you can go much more than that if you're a very young investor and if you're close to retirement, you probably don't want to be 15 to 30% leverage again.

It's interesting you mentioned that. It's interesting you mentioned that. It's a really theoretically it all looks great, right? I don't know if you're familiar with the tale of a boglehead by the name of market Timer who was a grad student in 2008 in finance or economics or something and decided to put this to the test. And the idea was, well, I don't want to have all this sequence of returns risk, I don't want all this money in equity just as I'm on the eve of retirement, I should spread that out throughout my life. And so he leveraged himself up in grad school essentially with all this debt. And then of course he did it right before the whole 2008 meltdown and you can follow it in real time on this thread on the Bogleheads forum. And he basically ended up melting down completely and lost it all. Eventually climbed back out of it through saving and working and investing. But it's really an eye opening caution to applying things that sound really great in theory and then in practice don't always work out so well.

Right. And again, there's probably a more measured approach. Would have been okay, right, if he had instead of investing, because what would have been his income as a grad student? So if he had already levered his first year salary as an assistant professor in economics or an assistant professor in finance, that's a big chunk of money. But if he had just levered up 2x the contributions to say a Roth IRA, and I think in a Roth IRA you probably don't want to lever anyways. But if he had just levered up his, his then income and contributions, he might have been fine. But I think he went a little bit overboard with the leverage and that's what killed him. The other thing, I'm pretty sure what killed him is that once it started moving a little bit against him, he became too aggressive and probably even doubled down. And that's also a really big danger. And you think, well, the market is wrong and I'm right. And of course the market can stay wrong longer than you can stay liquid, especially if you're a grad student.

And that's exactly what happened to them.

Right. So that's. Yeah, it's a cautionary tale. Be careful with leverage.

At any rate, we're, we need to wrap up. We're over an hour at this point, but you've got the year of 30 to 40,000 high income professionals, mostly doctors, who are going to listen to this podcast eventually. What do you want to say to them that we haven't already talked about?

Yeah, so we covered a lot of material and a lot of the technical issues. And one thing that I always want to make sure that people take away from these kinds of conversations is that people in the FHIR community tend to get a bad replacement. So there was this New York Times article where they featured a lawyer who lives like a real penny pincher. She buys only brown bananas and then she borrows the Netflix account logins from friends and relatives. And I think it's, don't be distracted by that because then people get the wrong impression that the Only way you can retire early is by being a penny pincher. Like that. So. And then also, sadly, if you look at some of the FIRE blogs, there's a bit of a selection bias, right. So the people that retire the earliest were the ones that were the most extreme, but the overwhelming majority, right. 99% of the people that you're going to encounter in the FHIR community are people just like me. Right. I mean, we were not overly frugal and we were not overly frivolous with our spending, and we lived very lavishly while accumulating assets over 10 years while I was at BNY Mellon. And nobody had any idea that we were particularly frugal and nobody noticed that we were particularly frugal. So you can actually reach fire in, say, 10 years without depriving yourself of any fun. So we had. And by the way, I probably. I could have reached early retirement maybe two or three years earlier than that if I had deprived myself, but I didn't want to. Right. So smell the roses. Have some fun along the way. And then in your retirement, also make sure you don't have too tight of a budget because you have more time. More time means you have more opportunities to spend money, potentially. So anyways, I just wanted to leave people with that thought that especially in our community. Right. Because as we mentioned at the beginning, right. We're almost. It's very. There are so many parallels. Right. My first few years at the Federal Reserve, okay, paid was not very richly paid. It's almost like an intern and then hit it big and worked for Wall street and then had basically a doctor's salary. And so live like an intern, at least for a few years or maybe slowly slide it up and it makes it much easier to reach early retirement. And anybody can do it, and especially our community and your community.

Yeah, awesome. That's great advice. Well, Carsten, big urn, Dr. Jeske, whatever we're going to call you, thank you so much for coming on the White Coat Investor podcast today.

Okay. Thank you so much for having me.

All right. That was great to talk with them. I hope that didn't go over the heads of too many of you. That was a little more in depth discussion, I think, on finance than we've had with a lot of our podcast guests. But I like to get in the weeds every now and then. I hope you do, too. If nothing else, it shows you that there's a lot out there to learn and always, always will be. All right. As I mentioned at the top of the podcast, Sofi is helping medical professionals like US bank borrow and invest to achieve financial wellness. Whether you're a resident or close to retirement, SoFi offers medical professionals exclusive rates and services to help get your money right. Visit their dedicated page to see all that SoFi has to offer at whitecoatinvestor.com SoFi one more time, that's whitecoatinvestor.com sofi loans originated by SoFi Bank NA NMLS 696891 Advisory Services by SoFi Wealth, LLC. The brokerage product is offered by SoFi Securities, LLC. Member Finra SIPC. Vesting comes with risk, including risk of loss. Additional terms and conditions may apply. Thanks to those who leave us five star reviews and tell your friends about the podcast. Most recent review from Heather Bow says awesome content, great mix of topics and engaging guests. This podcast presents actionable tips that can easily be implemented. Five stars. Thank you so much for that, Heather. For the rest of you, keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast. The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.