This is a YouTube video titled "End of Year Financial Considerations for #doctors" created on December 31, 2024. The content is a monologue or talk focused on personal finance advice for doctors, covering topics such as calculating net worth annually, savings rates, investment tracking, required minimum distributions, and regulatory filing requirements. The speaker provides detailed financial tips and references blog resources for further information. There is only one speaker, and the content is informational rather than conversational.
I wanted to talk about some of the things I do at the end of every year that you might want to do some of them as well, one of which is a calculation. Calculate my net worth once a year, everything I own minus everything I owe. We put it in a spreadsheet and compare it to the year before. Right. I think you ought to do that about once a year. That is the measurement of wealth. It's not your income, despite what the media will tell you, despite what the IRS sometimes seems to think. Right. Income is not wealth. Income is what you make. Wealth is what you have. And the measurement of wealth is net worth. I think it's worth measuring once a year. You don't need to calculate it every week, for crying out loud. Right? That's the whole point of this, is to be able to automate some of this and, you know, have a great life and still have your finances taken care of. You don't want to spend your whole life on your finances. But once a year is probably a good idea to calculate your net worth. You might be surprised the first time you do this. It might take a stiff drink to add up all those debts. Because for most docs and many other professionals, the first time you calculate your net worth, it's going to be negative. You might be $200,000 in the hole. You might be $500,000 in the hole. That's pretty sobering to realize that you're actually less wealthy, more broke than the person living under the aqueduct. Right. So. But the key is not necessarily where you start, but what direction you're heading in and how fast you're going. Right. So start calculating that. Something else worth calculating every year, I think, is your savings rate. This is just everything you put away toward retirement usually is what it's calculated as divided by your gross income. Right. I generally recommend for attending physicians and similar professionals that they save 20% of their gross income for retirement every year. You know, if you need to pay off student loans, that's in addition to that. If you need to save for your kids college, that's in addition to that. If you want to save up for a second house, that's in addition to that. About 20% is what needs to go toward retirement savings. So calculate it every year. See how you're doing. If you calculate it and you're like, oh, 18% this year. Well, that's pretty good. Right? You're in the ballpark. If you're 32%, you should go, wow, we did really well. Do we really need to be saving this much. What are our financial goals? But if you calculate it and you find out it's 4%, that's a problem. 18% might be enough. Who knows what your number's really going to be? Is it 18% or 22% or whatever? It's not 4%, though. I promise you, if you're only putting 4% toward your retirement and you're not a resident or a fellow or something, there's a problem. You've got to be saving more money than that toward retirement. You're just not going to get there. Okay. The way you have big retirement accounts is by putting a lot of money into them. You can hope that your investments will do a lot of the heavy lifting. And they will do some of the heavy lifting, but you have to do quite a bit of it, too, right? Especially in the beginning. I think when we realized we were millionaires and it took us about seven years out of residency to become millionaires. I looked at our portfolio and 80% of our first million dollars was just brute force savings. It was money we didn't spend. Now everyone says they want to be a millionaire. It's not actually true. What most people want to do is spend a million dollars. That is not the same thing. In fact, it is the polar opposite of being a millionaire. You become a millionaire by not spending a million dollars that you could have spent. That's how you become a millionaire. So if you want to be a millionaire, you got to save some money. All right, what else do I do at the end of the year? Well, I usually update my investment spreadsheet. Right? We track our investments. And so I update that spreadsheet and see where we're at. You know, some people rebalance at the end of every year. Obviously at the end of the year. By the end of the year, if you are of RMD required minimum distribution age, which is now highly variable. It used to be, you know, 70. Now it's 72. For some, it's going to be 75 eventually. For most people, if you're of that age, you got to take your rmd. Not taking an RMD before the end of the year has a big penalty. It's like half of what you were supposed to take is the penalty. It's huge. The only other penalties I know of that are really big in life are like, not filing your Form 5500EZ when you close a Solo 401 or when it has more than $250,000 in it at the end of the prior year, you basically have Seven months to file that. So it's due the end of July. In a year in which you had $250,000 or more in there, it's due seven months after you close it. Whenever you close your 401k, there's a big fat penalty associated with that you don't want to deal with. Now, most people are usually able to get out of that penalty, but you still want to be aware of it. If you had a company in place before January 1, 2024, you've got to an LLC or a corporation, you've got to register that with FinCEN, right? Is a requirement this year, right? They're trying to crack down on money launderers or whatever. So you got to register the beneficial ownership information of your LLCs and corporations. That's supposed to be done by the end of the year as well. So blog post on all this stuff. If you go to whitecoatinvestor.com and go to the search bar, search FinCEN or beneficial ownership Information or Financial Transparency act, you'll find that. If you search 5500EZ, you'll find that. If you search savings rate, you'll find that. If you search how to calculate my return, you'll find that, right? I've been writing blog posts now for 13 years, almost 14 years. Every question that doctors have that I can come up with that I can answer with a blog post, there's a blog post on. And if you come up with a new one, I'll write a new blog post just for you and run it out on the blog as well. Because this is a resource for you and your financial life. And the end of the year is kind of a time where most of us step back for a second, see how we're going, you know, see what progress we're making toward our goals, do a few calculations, update some spreadsheets, and I hope you'll take some time this week to do that. 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.
