ENT Pays Off Student Loans & Fertility Treatments - MtoM Podcast #176

This is the White Coat Investor Podcast Milestones to Millionaire celebrating stories of success along the journey to financial freedom. This is Milestones to Millionaire podcast number 176E&T pays off student loans and pays for fertility treatment at the same time. This podcast is sponsored by bob bayani@drdisabilityquotes.com he's an independent provider of disability insurance planning solutions to the medical community in every state and a longtime White Coat Investor sponsor. He specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. If you need to review your disability insurance coverage or to get this critical insurance in place, contact bob@whitecoatinvestor.com Dr. Disabilityquotes today by email at infodrdisabilityquotes.com or by calling 973-771-9100. Don't forget as you hear this, we are starting a sale. This is a sale on everything we sell at wci. All of our products, all of our courses, all of our swag, all of our books. Use code SUMMER20 to get 20% off all of this. This is our start of the medical year sale, right? So it goes through July 3rd and you can go to whitecoatinvestor.com courses to buy the courses. You can go to whitecoatinvestOR.com store to buy the swag and books. You know, it's all of our courses though. It's the new fire your financial advisor courses. It's the, you know, the established fire your financial advisor course, which by the way has been updated as all kinds of new stuff in it. One of the versions also has cme. It's our no hype Real estate investing course. If you're interested in private real estate investing, whether direct or through syndications or funds or whatever, you can learn more about that. It also includes our continuing financial education course, which again is good for CMEs. You can use your CME funds to buy it or you can write it off as a business expense. All of that 20% off through July 3rd. Use code SUMMER20. All right, we got a great interview today. I think you're really going to enjoy this one. Before we bring him on the line, I want to encourage you to stick around. Afterward. We're going to talk a little bit about mutual funds and ETFs. Our guest today on the Milestones to Millionaire podcast is Josh. Josh, welcome to the podcast.

Hey, thanks for having me here.

Tell us how far you are out of training, what you do for a living, and what part of the country you live in.

So I am an ent, about seven years out of training in the southeast United States and relatively high cost of living area.

Okay, let's talk about what milestone we're going to celebrate today with you. What have you done?

I have paid off my student loans which were just short of 300k.

$300,000 in less than 7 years out of training. Very well done. You should be very proud of yourself.

Feels pretty good.

When I looked at the notes for this, I turned to Megan and I said, oh, people still pay off their student loans. How quaint. Right? Because so many people are going for forgiveness programs these days. Was that ever a consideration for you? Was there ever a decision you made of whether you were going to pay them off or go for PSLF or some other type of forgiveness?

You know, I think I looked at PSLF and I had filed paperwork while I was in residency in case that was going to be the option. But it became like my fourth or fifth year in training there. It looked like I was probably going to private practice. And so even though I did the paperwork just in case, I figured it probably wasn't going to be the path I was going to take.

And was this all done with your income or do you have a partner? Are you married with kids? You get money from your parents? What's kind of the family situation and background?

Married? I do have one kid. Wife worked as a full time or nurse up until we had a kid. Now she works part time. Majority of the income though coming from me there no inheritances, no trust funds, nothing there. This was pretty much paid off by the physician salary that was working down here. My first job post training, I think that's been a big key to the overall payoff that I was able to accomplish.

So let's go back if you can, 16 years. All right, so you're seven years out of practice, what, five year residency?

Yep.

Four years in Med school. There was a time when you looked at med school and said, if I do this, I'm going to owe $300,000. Which 16 years ago to somebody who'd probably never made $100,000 in his life was an immense sum of money. Do you remember what was going through your head back then?

Yeah, it didn't really feel like real money. Perfectly honest. It just, the, I think the numbers were just so big that it sounds, this is just something I'm going to have to deal with later. But the, you know, to try to conceptualize that amount of money was, I don't think just really feasible to a first year med student who was starting to look at that. And so it's a relatively expensive, you know, at med school, even with some scholarship that deferred some of the costs there, I still was able to rack up a pretty decent size, above average size loan amount. The amount of it I don't think ever really kind of sunk in until I think until residency, until I realized that my income based repayments were not covering even the interest.

Yep, that is an unfortunate issue, isn't it? There comes a time when you realize I'm now getting paid, but you know what, I owe five years of my current salary after tax and it's a pretty sobering moment. When did you kind of start becoming more money savvy, become financially literate, if you will.

So I think I've had a decent round on that, but I just didn't have, I think the tools in order to start kind of tackling that. I've always been someone who's invested amount of money that I could save. Didn't have had a taxable brokerage account since I was a teenager. Not a very large amount in there, but something I've always kind of invested in low cost mutual funds at Vanguard since I had any bit of money. So I did have that foundation there. I was, you know, the question is really when I was going to start kind of tackling the student loans and starting plan come into place. Starting off as an attending first year, okay, you know, there, but then I had to pay for a wedding. And even though we did a low cost wedding that we were very conservative on that, that's where some of the money went there. And then that kind of rolled right into having to pay for IVF and fertility treatments. And that kind of took the front line before I could even start really trying to tackle the student loans. And so, you know, that really didn't even happen until I was two, two and a half years out of training. Just because we finally gotten the rest of our kind of ducks in a row, for me to say, okay, this is now time to me to really start, you know, getting the final plans about how we're going to hammer this out.

Yeah, let's go down a tangent here because this is something super interesting that you said, which is the cost of having kids as professionals. And, and this is a big deal when you spend a long time in training and then you finally get around to starting a family in your 30s and it doesn't always happen as, as we'd hope or maybe as it would have at least 19, you know, but it's not something you can really put off. You can't stack it behind other financial goals. It has to come up front and center. Talk to us about that conversation you guys had about fertility treatments and starting your family and those expenses.

So, yeah, that, you know, the priority. So like I said, I got married my first year out of training and we wanted to start having a family, but when it became clear that we were, you know, not. Not having success on that, we started down this. The workup. The workup is expensive. And, you know, any additional funds that we had kind of, kind of went to that and that got expensive pretty, pretty quickly. Just with the testing we did wind up going down the IVF path also. Also expensive with several failed, failed, you know, transfers and treatments there. And that's one of the things is that not only is it expensive, but, you know, it's not a guaranteed thing, you know. And so that, that thankfully was, was finally successful and we had a son in late 20, 21. And we are immensely grateful and happy that our IVF journey was successful. But, you know, that was a trying time, you know, for both me and my wife. But yeah, that was, that was a party because there's, there's a time sensitive nature to that, you know, you know, loans can be refinanced. We can deal with that later. But, you know, there's a, you know, the quote unquote ticking biological clock. You know, we don't have forever to try to sort this out, especially if we, you know, want to potentially have more than one kid. But that was always our goal. But, you know, just. It became hard just to have, have the one. And so it was just trying to get just a run on the scoreboard, so to speak. We were just trying to. We were just trying to, you know, get in the game. But it took several years of fertility treatments before we finally had our son. But yeah, that became the, you know, the big kind of financial thing that, you know, me coming out of residency, you know, thought, okay, we'll just get married, we start having kids and go from there. Was not expecting that. But I don't think I'm alone, you know, especially with, as you said, you know, you know, entering, entering, you know, trying to make a kid, you know, later in the 30s that, you know, this is a real thing that a lot of us have to deal with.

Yeah. If you had to estimate it, I doubt you've added all this up, but if you had to estimate it, how much did you spend from the time you started until, until your son was born.

You know, I don't know 100% for sure, but it might be going close to a hundred thousand dollars. I wouldn't be surprised if in the end, based on all the, you know, several rounds of retrievals and frozen embryo transfers, the medications for every single one of these cycles and everything really adds up. So I think in the end probably you're looking close at $100,000.

Yeah. And nothing covered by insurance.

Correct. And I think thankfully I was making enough at that point that, that especially spent over the time that it didn't actually, I didn't get any tax deductions from that amount because it was done over several years. But yeah, none covered by insurance. Nothing was covered. Anything on that and no. Was unable to write off any of those expenses.

Yeah. Given your income, I'm not surprised. Yeah. So maybe I ought to add that to the list of things that new attendings have as expenses that come up. You know, I talk about beefing up your emergency fund and replacing the beater and, you know, maxing out your retirement accounts and paying off student loans and those sorts of things. Maybe fertility ought to be on that list because it's so common.

Yeah, no, I, I think that, you know, and, and to be perfectly honest, even when I got into, we started getting into it, I thought like, okay, we do IVF at one time. Like, I didn't realize this is something that was going to take years and this amount of time and effort, you know, anything into it, I just, honestly was just naive regarding it all. And I'm not anymore. But.

Yeah, you're an expert now.

Yeah, but, you know, certainly, you know, certain. Certainly it's something that, if this is something that is kind of, you know, something that you're going to be looking at, planning on your financial goal that if you want to and you haven't started trying, it may be something to have contingencies for. I do think that's, that's worthwhile.

Well, congratulations on your son. That's pretty awesome.

Thank you.

Okay, so you got that, you know, big financial goal out of the way. Next you turn to student loans. Tell me about the conversation you and your wife had about this $300,000 in student loans that you just, you had. Sounds like probably on minimum payments up until that point.

Yes, I was doing income based repayments up to that point, and then my wife kind of deferred to me when it came to what I was going to do with this here. I kind of managed the finances for Our family. And you know, she, you know, I talked to her about it, but she's like, you know, you do whatever you think is right. I wound up using a white coat investor linked to refinance through First Republic bank, which is now know, no longer existing. And I refinanced the student loans February of 2020. So right, right, right before COVID hits, I refinanced there for a five year payoff at like a ridiculously low interest rate. So at that point I felt pretty comfortable there. And then of course, you know, the world shuts down one month later after I've now signed up for these big, these big, you know, bigger payments to try to pay this down and then completely miss the pay student loan holiday. In the end, I have no regrets about getting it done and paying it off. It was a five year payoff plan, but if I paid off within four years, I got some interest payments recouped. And so the plan was once I refinance to, in February 2020 to be doing that within 48 months. And so that's why in January of this year, in that 47th month, I wrote a big old check and we closed that account.

Awesome. What rate did you refinance to? Do you remember?

I think it was 1.95%.

Fixed or variable? Fixed.

Fixed.

1.9%. I mean, here's the consolation, right? You have to pay these things off anyway because you're in private practice and 1.9% is not all that different from zero.

And to be perfectly honest, that's why I paid it off at the portfolio 48 months and, and not at, you know, not sooner. You know, I, I could have paid it off sooner, but you know, you, you talk about, well, could you invest. Did I decide to invest that money? And said yes I did. I put money in a taxable brokerage account and instead of paying that off just because it was, it was pretty, as you said, pretty close to zero. So I definitely decided to, you know, extend that. But there was a, there was an end date and that was, you know, four years into that and that was coming regardless and so just paid off the rest. Then.

What can you tell us about your income over this time period? The last seven years?

So I was on a three year partnership track at my practice here starting associated about $200,000 a year when I came out of training. My practice though had a very good productivity bonus. So me working hard, kind of grinding it out, was able to increase my, my income each year probably about 250,000 by the end of the first year, 350 by my second year and a little over 400 by the end as an associate. So during that time, and that's still when I was doing that loan refinance after three years being a partner, and income definitely went up after that as well, but I was able to still, as an associate, still be able to throw, you know, have more money, you know, from the productivity bonuses, to have the ability to pay this off.

Yeah, sounds like you had options. You could have paid this off faster. So you've been doing some other things with your money. Tell us about what else you've been doing with your money over the last five years or so.

So I do. I have invested in a surgery center where I operate. I'm a part owner there. I've maxed out my 401k. I do some survey work and some minor consulting things that allow me to have a small amount into a solo 401k. Not a lot goes into that. And then the rest of it goes into a taxable brokerage account. Like I said, I've had that since I was a teenager. But, yeah, when I had the money, when I had the options and in 2020, to be throwing money at student loans or putting it in during the COVID crash. In 2020, I was thrown in the market in the COVID crash. And certainly no regrets on that front.

Yeah, very much a balanced approach.

Yeah, yeah, certainly. I did drive my Honda Civic until I became a partner, though. So I did have that there. And now I drive a slightly nicer. Slightly nicer car.

Yeah. Other than the fertility expenses, it sounds like you very much had to live like your resident. Live like a resident, period.

Yeah, I mean, you know, we moved to a higher cost of living area, and so we did have an increase in expenses from residency to that. And so our rent tripled, you know, right off the bat and everything there. But we didn't really do too much else in terms of expenses, anything else there, really, except the fertility treatments, which were the big hefty expenses. And that certainly gave us options to be able to, you know, sit on. Sit on the student loans, go from there. We did. We did build a house right before COVID as well. So we were able to move into that and build a house together, where now we're raising our family.

So how's it feel? I mean, you took a balanced approach. These things were clearly not, you know, killing you. You didn't feel this huge weight to get rid of them in two years or anything. But how's it feel now that they're gone?

It feels pretty good. But like you said, it wasn't weighing on me like it could have. It's kind of nice to have checked that box. You know, I think that the nice thing is that I had freedom to do these, to do these things and ability to kind of pay this off when I wanted to. But it's really nice to be done with that. I think you've said before that you're not really done with medical school until you've paid off those loans, and I feel like I'm done with that now. And it feels nice having said that and that, you know, I'm not working with, you know, that borrowed money anymore. That's. That's something that this is, you know, this is mine now, and I have more options for that.

Yeah, that's pretty cool. All right. What advice do you have for somebody that's, you know, maybe coming out of training now they owe $300,000, they're trying to decide how to balance, how to find a balance, what to spend their money on, what to use, what financial goals to work on first. You know, maybe they have fertility issues, maybe they don't. Maybe they, you know, got some other debt, whatever. What advice do you have for that person when it comes to balancing life with paying off loans and other financial goals?

So, you know, I think one of the big things that allowed me to have the options that I have was that I found the right job. I'm a big proponent for private practice, and as you said, being an owner, and I think that's what's really allowed me to have some of the financial freedoms that I've had. You know, I did my due diligence in selecting the practice that I started out of residency. I haven't changed jobs and became a partner here. And. And, you know, having, you know, really looking at the finances of the job that you're going to be joining, I value that highly over an employed position. Now, not everyone has that option depending on the specialty, but a lot of my financial success is really just based on my job and, you know, really putting in the effort to not only, you know, pick the right job, but make it work and, you know, grind it out and work hard has paid dividends for me. And. And so I'm always a proponent for if you have an option between a private practice or an employee position for private practice, and I champion that to the residents where I did my residency and talk to them about the options there. But those type of decisions pay Dividends moving forward. And it certainly happened for me.

Yeah, it's a lot easier to take care of your financial goals when you make more money. I often say that people dramatically overestimate the difficulty of doubling their income. Do you think that's true now that you've had this experience with your. With your professional life so far?

No, no, I've heard you say that. And. And I'm like, yep, nope, that sounds right. Because it's happened. For me, it's happened. And, you know, it happened, you know, as a. As an associate, just from productivity bonuses and being able to, you know, double income just based on production and working hard and. And, you know, spending the time doing that and then, you know, making the. The right choices. Become partner. I. I became partner, literally had to sign the paperwork, you know, July of 2020. So we're looking at the world being shut down, wondering if the practice is still going to be viable and everything, and made that decision to do this. So it was. Was not without some. Some hesitation and some risk, but did that. But it's those type of decisions and the. And the ability to, as you said, you know, be able to double your income is doable if you set yourself up for the. To make those right choices and be in those right positions. So in definite agreement with that. But it doesn't happen by accident.

Yeah. Well, Josh, you've done a fantastic job. You and your wife should be very proud. Congratulations on getting rid of your student loans, and thank you so much for coming on the podcast to share your experience with others and inspire them to do the same.

Thanks for having me.

All right. I hope you enjoyed that interview as much as I did. I think it's always cool to explore the unique things in people's lives, Right? I mean, we've seen people who just went hardcore after their student loans paid them off in 18 months. They hated the weight on their shoulders. That wasn't the way Josh felt. He's like, I'm going to balance this with all my other financial goals and, in fact, others and inspire them to do the same.

Thanks for having me. All right.

I hope you enjoyed that interview as much as I did. I think it's always cool to explore the unique things in people's lives, right? I mean, we've seen people who just went hardcore after their student loans paid them off in 18 months. They hated the weight on their shoulders. That wasn't the way Josh felt. He's like, I'm going to balance this with all my other financial goals. And in fact, he didn't even really start on it for a couple of years out of residency. It's not because he wasn't doing anything else. You know, I talked with him. He didn't even really start on it for a couple of years out of residency. It's not because he wasn't doing anything else. You know, I talked with him afterwards. Savings rate's probably in the 40% range, so he certainly puts a lot of money for building wealth, but he was working on other stuff. You know, the fertility was obviously a big expense, but he was saving and investing and doing other things at the same time. So always good to see different strokes for different folks. I promised you at the beginning of this podcast, we're going to talk a little bit about mutual funds and ETFs. And I got a question in the resident webinar recently that was basically, what is the difference between mutual funds, index funds, afterwards, savings rates? Probably in the 40% range. So he certainly puts a lot of money for building wealth, but he was working on other stuff. The fertility was obviously a big expense, but he was saving and investing and doing other things at the same time. So always good to see different strokes for different ETFs. And I forget sometimes, and please forgive me for this, but I forget sometimes that the stuff that I live and breathe every day that I've known for decades and is just part of my vocabulary is not necessarily part of yours. And so let's just go into this and explain all things here so that we're folks. I promised you at the beginning of this podcast, we're going to talk a little bit about mutual funds and ETFs, and all on the same page. And you know what we're talking about right now. Mutual funds are super important. I got a question in the resident webinar recently, and it was basically, what is the difference between mutual funds, index funds, and ETFs?

PDFs?

And I forget sometimes, and please forgive me for this, but I forget sometimes that the stuff that I live and breathe every day that I've known for decades and is just part of my vocabulary is not necessarily part of yours. And so let's just go into this and explain all things here so that we're all on the same page. And you know what we're talking about right now. Mutual funds are super important when it comes to appropriate investing plans. Every one of you needs to understand the basics of mutual funds. They are and should be, frankly, the mainstay of investing. What is a mutual fund? A mutual fund is Simply a group of people banding together to invest their money together. By doing so, they enjoy a number of benefits. They get professional management. You hire a professional management team to buy, sell and trade securities like stocks and bonds, and to manage the fund. You get economies of scale. The costs of hiring all these professionals and running a fund are dramatically lower as a percentage of your investment. When you band together with tens of thousands of other investors, instead of just being your own one investor, you get the benefits of government regulation. Mutual funds are pretty highly regulated industry. And while the first one was founded in 1924, the Investment Company act of 1940 is actually the one that set out most of the rules by which mutual funds are governed today. You get broad diversification, right? You don't get that with hedge funds. You don't get that with private investing funds. But a mutual fund has to be diversified. It was interesting. I looked up the minimum amount of diversification that a mutual fund can have. Here's what it can do and still pass regulation. You can have 25% of the fund in one stock, 25% in another stock, and 5% of the fund in each of 10 more stocks or other securities. So the minimum is 12 in a mutual fund, and nothing can be more than 25% of the fund. But in practice, you know, nearly all mutual funds own at least 50 securities. Most own more than 100. And lots of them own thousands of different securities, sometimes, particularly with bond funds, tens of thousands of securities. So you get this massive diversification. You also get daily liquidity. The funds are required to invest at least 85% of their portfolio into liquid securities, those that can be traded any day the market is open. But in practice, most funds invest nearly all of their money in liquid securities of some type. Plus, you have liquidity. You can take all of your money out of your mutual funds pretty much any day the market is open, right? It's a matter of hours until the money is in cash for the most part. And so super, super liquid is basically a level of liquidity similar to your bank account. You don't get that if you're investing in the rental property down the street or a syndication. That might tie your money up for three years or even 10 years. You don't get that sort of liquidity. And they're readily available. Mutual funds are available everywhere. You can get them in brokerage accounts at every brokerage. They're available in your 401k, your 403b, your 457b, your 401a, other employer provided Retirement accounts, they're in your self employed retirement accounts, simple IRAs, SEP IRAs, solo 401s, they're in IRAs, right? They're in HSAs, they're in education savings accounts, they're in able accounts for your disabled kid. Basically everybody agrees that this is a great investment that's ideal for both rookie and advanced investors. So they're available all over the place. All right, now you know what a mutual fund is. There are a couple of different ways to manage a mutual fund, and there's some overlap between these two ways. But in general there are actively managed funds and there are passively managed funds. In an actively managed fund, the management team is buying securities they think are going to do well, right? They're buying the stocks that want to go up, they're selling the securities that they think are going to go down. And they use all kinds of different methods to try to figure out in advance which ones are going to do best. The second method, passive management, is where you just buy all the securities of a certain type, right? This is usually in proportion to some type of index or a list of all the securities. For example, you've heard of the s and P500. It's a list of 500 representative large US companies. So an index fund that's designed to follow the s and P500 index just buys all of those 500 stocks in the proportion that they exist in the market and the investors get whatever those stocks return minus a piddly little tiny management fee. And there was debate for many years, for decades, about the merits of index fund investing, but it's kind of settled now. If you look at the data, you're going to conclude that, oh, I should be investing all my money in index funds instead of actively managed funds. It turns out it's pretty difficult, especially after the costs of all that analysis and implementation, and particularly if you're in a taxable account, tax costs of active management. So all the long term studies are very clear that the vast majority of actively managed funds will underperform a well run index fund investing in the same securities. So index funds are just these passively managed mutual funds. That's all they are. So all index funds are mutual funds, but not all mutual funds are index funds. Okay, mutual funds versus exchange traded funds, right. There's two main types of mutual funds in use today. Before 1990, actually 93 in the U.S. all mutual funds were what we refer to now as traditional mutual funds that might be abbreviated TF or mf. Investors could buy new shares or they could sell their old shares at 4pm Eastern any day the market was open. Well, in the early 90s, someone got the bright idea to allow investors to just trade their funds all day long while the markets are open. So those funds are called exchange traded funds or ETFs. And obviously most of you have no need whatsoever to buy and sell your funds at 11:37am and 2:21pm it turns out there are some other significant benefits to ETFs that have made them ever more popular for investors. The most significant of these is increase in tax efficiency of most ETFs when compared to most traditional mutual funds. When a traditional fund has to sell a bunch of securities in order to give the investors their money back, it incurs capital gains and it has to, by law, pass these on to the investors. However, the way the ETFs are bought and sold allows for the fund to give a basket of highly appreciated shares of securities to what's called an authorized participant or an AP in exchange for cash. So this authorized participant, which is, you know, this is a big bank is what they are usually, this is Morgan Stanley, this is bank of America, etc. They're authorized to create and redeem these shares of an ETF by putting together the securities that are in the etf. So this creation redemption process ensures that the net asset value, that's the price of the etf, is always equal to the value of the underlying securities. Now, mutual funds, these traditional funds, are generally equal to open funds. And so the value of that fund is set equal to the value of the underlying securities at 4pm Eastern every day. But even before ETFs, there were some closed traditional funds where that isn't actually the case. And the fund sometimes trades at a premium, right, or a discount to the value of the underlying securities. People would actually pay more for the fund than if you just made the fund yourself by buying all the underlying stocks or they'd get it at a discount. And that disconnect in price was generally a bad thing. So people kind of avoided these closed funds even though they could be traded on an exchange. But that ETF structure they came up with totally eliminated that. And so, you know, basically nobody invests in closed funds anymore. And fewer and fewer people are investing in open funds because ETFs are just so darn convenient for most of us. But the main way this ETF becomes more tax efficient is that it has this method now to flush these appreciated securities out of the fund without giving the investors capital gains. So when it's time to redeem a share, the fund simply gives the most highly appreciated shares to the authorized participant, which can then do what they want with them. But whatever they do with them, it doesn't pass the capital gains onto the fund investors. Why does the authorized participant do this? Well, they're making a little bit of money through each trade, through arbitrage, through a little premium they get where they get a little bit more from the stocks than they had to pay for the share of the etf. And so it works out for them. All they have to pay taxes on is the arbitrage. So it's a relatively small amount of tax they have to pay. And what happens to all those capital gains? Poof. They just go away. Nobody pays the taxes on them. So for that reason, ETFs in general are much more tax efficient than a traditional mutual fund, unless you're a Vanguard or now dfa. Vanguard decades ago patented a structure where their largest index funds had a traditional fund share class and an ETF share class. And the cool thing about that structure is that it allowed investors to just use traditional funds and have the same tax efficiency as ETF investors. So it was really cool thing Vanguard did, the patents run out and so other companies are starting to do it. The only other one I can think of right now that does it is dfa. But I'm sure it'll become more and more popular over time. So most ETFs happen to be index funds. And certainly most money that's invested in ETFs is invested in ETFs that are index funds. However, not all ETFs are index funds. All ETFs are a type of mutual fund. So sometimes people use the term mutual fund when they're referring only to traditional funds, including both open and closed. And that's kind of a non precise use of terminology that confuses lots of beginning investors. But that's the difference between traditional funds and ETFs. Mutual funds, index funds. Hope that terminology is more clear. Now the question lots of people are left with is, oh, should I use traditional mutual funds or ETFs? For the most part, it doesn't matter. It particularly doesn't matter if you're investing in any sort of a tax protected account like a 401K or 529. If you're in a taxable account and you're not using Vanguard or DFA funds, there's a good chance you're better off using an ETF. But the reason lots of people use ETFs even in 401s is sometimes you can just get lower costs. Like I have accounts at Fidelity and schwab, I have 401s there and I still prefer Vanguard funds, but I buy the ETF version of those funds at Fidelity and Schwab because the commissions are lower. And so you gotta look at the flexibility you want versus the hassle of having to put in buy and sell orders during the day. You gotta consider the costs. And then of course there's a tax efficiency angle if you're in a taxable account. But honestly, a passive versus Active fund issue matters a whole lot more than the ETF versus traditional mutual fund issue. So don't beat yourself up. You're investing in mutual funds, it's fine. If you're just all in traditional funds, that's not a problem. I still invest in both types of funds, so hope that's helpful to you. This podcast was sponsored by Bob Baiani@drdisabilityquotes.com One listener sent us this review. Bob has been absolutely terrific to work with. Bob has always quickly and clearly communicated with me by both email and or telephone with responses to my inquiries usually coming the same day. I have somewhat of a unique situation and Bob has been able to help explain the implications of underwriting process in a clear and professional manner. Contact bob@whitecoatinvestor.com Dr. DisabilityQuotes today by email at infodrdisabilityquotes.com or by calling 973-771-9100. 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