WCI #100: How To Get Rich as a Doctor

This is the White Coat Investor podcast where we help those who wear the 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. Here's your host, Dr. Jim Dahli. Welcome to podcast number 100, how to get rich as a doctor. If you're looking to boost returns, lower taxes and build wealth, join the WCI monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses, and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Thanks so much for what you do. The work you do each day is very important. Sometimes we forget how important what we're doing is because it becomes routine to to us. But as I was reviewing actually a medical litigation panel that I'm going to be serving on here in a few months about a case that's unfortunately going to court, I was reminded just how critical what we do, even little things that we're called to help out with, such as running a code and another floor and just lending a hand there, really makes a difference in people's lives and can have a dramatic outcome in their futures. So thanks for making the sacrifices you've made to be able to do what you do. Speaking of which, our quote of the day today comes from Navel, who said, become the best in the world at what you do. Keep redefining what you do until this is true. Well, this is podcast number 100. We're really proud that we're still here. If you look around at all the podcasts out there, most of them never even get to podcast 100. They just end up flaming out and giving up before they get there. So this is quite an accomplishment and I think we ought to thank those who have doing all the work behind the scenes. The main one is Cindy, part of our staff here at the White Coat Investor, who has learned how to run a podcast basically from scratch. So 100 episodes ago, neither of us knew anything about podcasting. I told her to go figure out how to do a podcast and that we were going to do one and she has literally gone and done that. So thank you to Cindy for all her help. I was trying to get her on this podcast, but she refused to come on the podcast and talk to you. So that's her own fault. Those of you who watch this or listen to this on YouTube probably know that Katie has been putting those videos together as well. So also thank you to Katie for her help with the podcast. In celebration of podcast number 100, I'm announcing a special sale for our fire your financial advisor course. This is our eight hour course that takes you from zero to hero. The goal of it is to basically allow you and teach you how to put together your own written financial plan. The course costs 499. That's our regular price. And we actually think that's a pretty good price. People a lot of times ask us for a medical student discount or resident discount or a military discount. I consider that the medical student price. I just don't jack the price up for attending physicians. And we think it's a great value because if you go hire a financial advisor to help you draw up a financial plan, a written financial plan, it's going to cost you at a minimum 2,000 bucks, probably closer to 3, 4, $5,000, and with a lot of advisors, even more than that. So I think 499 is a heck of a bargain as far as that goes. Now this obviously isn't the only way to get your written financial plan in place. You can go read books and spend time on blogs and Internet forums and eventually learn this stu. I mean, that's how I did mine and obviously it works. But this, the goal here is to allow you to spend a little bit of money to cut a lot of time off the learning curve about how to do a written financial plan. And although the course is provocatively titled fire your financial advisor, the truth of the matter is a lot of it is teaching you how to interact with a financial advisor and to make sure you're picking a good one. So even if you don't want to fire your financial advisor or you just don't want to hire one, go ahead and take the course. It will help you know more when you're talking with them and help you to speak more of their language so you can get more out of the relationship and get more out of your fees. It will help you get good advice at a fair price. So what's the sale? Well, the sale this time is going to be a little different than before. Before we've had a discounted price. This time we're going to give you something extra instead of discounting the price. And what are we going to give you? We are going to give you access to the 2018 Physician Wellness and financial literacy conference. This is the conference we held in Park City a year ago. There are 13 hours of videos in this online conference. It includes lectures from Jonathan Clements, William Bernstein, Mike Piper, even a couple of them from me. And so it's an additional 13 hours of video in addition to the eight hour course. And so it's a great value. We're giving that to you free. It's totally free if you buy, fire your financial Advisor at the regular 499 price. Now, the course, as always, comes with a no questions asked, 100% money back guarantee that lasts one week after you buy it. So the only catch with this special discount is we're not going to give you the free conference, the WCICON 18 conference, until a week has passed, right? No fair getting the money back guarantee, getting the whole conference and then asking for your money back. We're not going to let you do that. So you got to wait a week to get WC icon 18. That's all right. That'll give you some time to take the fire your financial advisor course. If you really do want it early, just let us know. Shoot us an email, let us know you're not going to return the fire your financial advisor course and we'll give it to you the same day you buy it if you like. But that will eliminate the possibility of you being able to return that course for the money back guarantee. Otherwise, go ahead and come on by the website and you can just click on a link there to the course and sign up for it. You can do it today. It's easy to sign up. All you need is a credit card and we'll get you going on that right away and get your financial plan in place. Okay, Today I titled this podcast how to get rich as a Doctor. So let's talk for a few minutes about that. The first thing is to avoid getting poor. Okay, what does that mean? Well, initially in the medical pipeline, the first thing most people do is get poor, right? They take on a whole bunch of debt to pay for medical school or dental school or whatever. So minimize how much of that you take out. Minimize the cost of your education, take advantage of other resources, apply for scholarships, go to the cheapest school you can get into, et cetera, and in particular, make sure you match. If you're a physician doing well enough in medical school and assessing what you really are able to do and making sure you match is critical. Not matching can be a financial catastrophe. I mean, a lot of people just have to apply twice, no big deal. You only lose a year of earnings, but far too many these days, particularly those coming out of Caribbean. Medical schools are not matching at all after two, three, four tries and they're left with a physician level of debt and no physician job, no physician level income. And that's a real catastrophe. So make sure you get through your training. The doctor income is what's going to fuel your wealth creation. Even if you end up with a great side gig or you become a real estate mogul, the doctor income is going to kick that off. It's the cash cow, so make sure that you get it. You also want to make sure that you get a good job that you can do for a long time. Career longevity actually matters more than your paycheck. You want something you're going to enjoy doing. Far better to spend 30 years as a pediatrician than five years as an orthopedic surgeon. Make sure you get your contract evaluated. Make sure you're being paid fairly. I'm always amazed when I run into people that say they're being paid at the 10th or 20th percentile for their specialty. Why are there no jobs that would pay at the 40th or 50th percentile that you would be happy doing? I find that hard to imagine. So either pass on those jobs or try to negotiate a higher pay rate. Far too many of us are getting paid less than we really should be. Another way to make sure you avoid getting poor is to be adequately insured. For most docs, that means disability insurance. Primarily, disability insurance protects that cash cow you have that thing you invested a decade of your life to get. This ability to turn your time into a high income. You need to protect that. If you don't have disability insurance, go by the white coat investor, click on recommended insurance agents and call one of those agents up. This is really important. You need disability insurance. Likewise, you need health insurance. Illnesses and injuries happen to docs too, and they can really do a number on your finances. Property insurance, you know, fire insurance on your home, and anything particularly expensive should be insured. If you can't afford to just replace it with cash, you probably ought to have insurance on it. Liability insurance matters as well. Not only professional liability insurance or your malpractice coverage, but also a personal liability policy. Those are usually embedded into your auto policies and your homeowner's policies. But you also need to stack a personal liability policy or an umbrella policy on top of those policies. The limits on that should be similar to your malpractice insurance. 1 million, 2 million, 3 million, 5 million. That sort of a limit. The good news is an umbrella policy is very Cheap compared to a malpractice policy. I think I pay about well now I'm part time, so I think I'm paying about $10,000 a year in malpractice insurance. For two or three hundred thousand dollars a year, I have twice as much personal liability insurance. It just isn't very expensive. So I go out and get an umbrella insurance policy today from the same company probably that offers you either your homeowners or your auto or both. You also, if somebody else is dependent on your income, need to get some term life insurance. Again, this is cheap insurance. It doesn't cost much to get term life insurance. And so get that in place if somebody else is dependent on you. Okay, now you're kind of done playing defense a little bit. It's time to play a little bit of offense and becoming rich as a doctor. Make sure you take advantage of your live like a resident period. This is the period lasting two to five years after you come out of training. And no matter what your financial situation, you ought to have this period in your life. If your financial situation is bad, you've got low income and relatively high debt. This is the way you clean up that debt. If you live in a high cost of living area, this is how you get into a house in that area. If you don't have loans and you live in a low cost of living area, this is how you build wealth and hit early financial independence. But everyone should do it. Take advantage of that fact that you are used to living on much less. What do I mean when I say live like a resident? Well, a resident's making something like 50 grand a year. And if you can go and start making an attending income of 200 or 250 or $300,000, there's a big difference between 50 grand and $300,000. Even with the increased tax burden, if you can just hold your lifestyle somewhere close to that $50,000 a year for a few years, you'll be surprised what you can do with that wealth. You can use the difference to pay off your student loans, to save up a down payment on your dream home, to catch up to your college roommates in retirement savings. And you can do that, but you've got to have the discipline to not have a lifestyle explosion as soon as you come out of training. After that two to five year period of intense wealth building, it's okay to dial it back a little bit and loosen the purse strings. Make sure you're still putting 20% of your gross income toward retirement, plus enough to meet any Other financial goals you may have, like college savings, for instance. But remember that your income and savings rate matter far more than your investment return. At that stage. It really is all about how much money you're putting into the portfolio. Of course, make sure you have some sort of reasonable investment plan. There is no perfect plan. You just need a good one. Most of your money at this stage of your life should be invested in riskier assets like stocks and real estate. Some of your money should probably also be invested in safer assets like bonds. Keep your fees and your taxes as low as possible and then stay the course with this plan through market ups and downs for decades. Take some basic asset protection steps okay, this isn't that hard. Max out your retirement accounts. Make sure you have malpractice and personal liability insurance. Title your property properly. Those are kind of the things that you should do for asset protection. Know your state's asset protection law. It's all state specific. Also, you should probably do some basic estate planning. You need a will. You probably need a revocable trust. Make sure you've named all the correct beneficiaries and all of your insurance accounts and any annuities you may have in your retirement accounts. You can have payable on death designations, even on your taxable and bank accounts. Do those basic estate planning steps as well. This process of becoming rich as a doctor really isn't all that complicated. Don't lose the forest for the trees. Don't get paralysis by analysis. Make sure you're doing something toward it and you'll be surprised how much better you feel once you have your financial ducks in a row and you know you're on your way to becoming wealthy. All right, we're going to take a bunch of Speak Pipe questions today if you haven't had a chance to leave us a question. The way you do this is you go to a link where you just record your voice right from your computer into the Speak Pipe. That's the company that provides this recording service for us. You can find that link just by going to. Let's see, what's the link here? The link is speakpipe.com whitecoatinvestor alright. Speakpipe.com White Coat Investor Record your questions. We'll get them on the podcast. We're starting to get more and more of them, but so far we've been able to get them all on the podcast that people have left us. So keep doing that. It's going to be harder and harder as the time goes by to get emailed questions or tweeted. Questions onto the podcast since we're taking so many of these Speak Pipe ones, but you can send us those as well and we'll do what we can as far as they go. But if you really want your question on the podcast, put it on the Speak pipe. All right, Our first one here is from Alex Foster who writes The Life of FIMD blog.

I'm a PGY2 with an access to 457. I can contribute 19,000 of that per year. I've been maxing out mine and my my wife's Roth IRA in residency and not worrying about the 457 too much. Now here's the prelude to my question Power of compounding it's an amazing thing. If there are only a way to get as much money as you can to the Roth at a young age, you could really see some great returns over the lifetime of that investment. I have two years left in residency. I'd like to max out my 457 both years and roll that amount over into my Roth once I leave the program while still being taxed at the 12% tax bracket. Here's the part that might be hard to swallow for some and I'd like your take. What I'd like to do is take out a balance transfer credit card with an 18 to 21 month 0% interest rate and max out the credit while writing a check to myself and putting it in the bank. I do have an excellent credit score with over nine credit cards all with high limits paid in full on time each month. I'd use this money to offset the money going into the 457 monthly for daily expenses. I think I proved to myself that I can be diligent with money and don't plan to blow it all on cocaine and hookers. Plan a plan. Pay off the card with a sign on bonus. I know that's not guaranteed. Or dip into other savings which I do have. Or plan a Plan B. Apply for another balance card at the end of the term and transfer balance onto the new card. I'm aware that cards are risky business, but I've used them wisely for 15 years. I'm curious, what would you do to put $38,000 into your Roth in an early stage in your career?

Alex is basically asking should I invest in a 457B using money borrowed on a 0% credit card? Well, two questions here really. 1. Should you use the 457B to start with? Remember, a 457 is your employer's money, so it's subject to the creditors of your employer. And it also often has different distribution options than a 401k or 403. So you want to make sure that your employer is stable. Number one, before you ever use one of these accounts. Number two, look at your distribution options, particularly for the governmental 457s. They're usually pretty good. You can just roll them into an IRA when you leave that employer for the non governmental ones. Sometimes you have to take it all out as one lump sum and that's not a very great option. So look at what the distributions options are, look at the fees, look at the investment options, and of course, make sure the employer is stable because it's technically their money until you take it out of the account. But the real question here is, should you borrow money on a 0% credit card in order to invest more in residency? Well, I have a confession to make. I did this myself. It wasn't for a 457B. We weren't that good of savers. Katie and I were living on about $37,000 a year as residents and we were doing pretty good if we could fund a Roth ira. And so that's what we did. But our last year we didn't have the cash, so we borrowed it on a 0% credit card and we put it, you know, use that to max out our Roth IRAs. It must have been, I don't know, 2005, 2006. Now, of course, we paid it off a few months later, just like Alex is talking about. And so obviously I'd be a hypocrite if I told him not to do it. But let me say a few things about it. First of all, nothing you do as a resident short of maybe buying some disability or term life insurance is going to make you rich. The truth is, what makes you rich is what you do those first few years, particularly the first year of residency. So don't try to make your life overly complicated during residency. Trying to become wealthy, then you can't do it. It doesn't matter what house you buy or how you invest or what any of the other things you do in your financial life are. It's really about when you're an attending. So don't kid yourself that this is some necessary thing you have to do to become wealthy. I also think you ought to recognize that when you finish, you're going to have two more competing uses for your money that you wouldn't otherwise have had. One, you got to pay off the credit cards, right? I mean, this is debt, you're going to have to pay it off. And two, if you're using this to fund a tax deferred 457B, you're probably also going to want to do a Roth conversion on that money the year you leave residency. And so now not only do you have to start making payments on student loans and you want to max out your new retirement accounts and you want to save up a down payment and you want to build a real emergency fund, maybe you have some credit cards or cars you need to pay off. But now you got two more competing uses for that scarce money. In your first year out of residency, you've got to pay off the credit cards and probably pay the taxes on a Roth conversion of the 457B. So I think you ought to tread carefully here and just remember that you don't get rich in residency and don't try to rush this process too much. It's okay not to do this sort of thing. But, you know, obviously Alex has got some experience doing it, hasn't screwed it up yet, probably won't screw it up this time. You know, if you need permission to do it, go ahead. I did it once too. All right, our next question comes from Kristen.

Hey, white coat investor. I love your podcast. I'm a resident in my last year of training and you've really encouraged me to begin working on my financial plan for life after residency. I recently assessed whether or not I would need to budget expenses for taking care of my parents as they age. Both my parents are in their early 60s and have worked as pharmacists their entire lives. They recently shared their with me and I'm nauseated by the fact that they've only managed to save 1 million between both of their 401ks. And the only other retirement savings they have is about 300k in equity in their home. They still have two car payments that they make monthly and a mortgage. My mom started talking about retiring early, perhaps sometime this year, but when I do the math, the numbers just don't add up. I'm concerned their financial advisor has been misleading them. I'd like to recommend a retirement planning book. Do you have any suggestions? Also, do you have any advice on how to go about firing your parents? Financial advisor? Thanks in advance.

Okay, so Kristen is worried about her mom and dad. I don't know, maybe she's a little over worried. I mean, they are millionaires. That's pretty good. A lot of us out there have parents that aren't millionaires with parents with nothing and are really going to have to be taking care of them in retirement. Whereas this set of parents have got not only their home but another million dollars socked away. Yes, they're not doing a lot of things right, but most Americans aren't doing a lot of things right. Sure, they've got a couple of car payments and a mortgage, but you know, those things can be wiped out with that million dollars. And if they can start making good decisions as far as managing their debt, that'll probably go a long way. So what do you do in this situation? Well, first of all, Kristen, you want a book recommendation? Here's your book recommendation. It's written by Mike Piper. It's very short, only costs five or six bucks. It's about 100 pages. It's called Can I Retire? It's a great book for somebody in their early 60s approaching that decision of when should I retire, Do I have enough money to do it, et cetera. And I suspect if you can get your parents to read that, they will have a huge awakening. And all of a sudden, on their own accord, they'll pay off those car loans, they'll take care of the mortgage, they'll decide to work a couple more years and kind of shore up that nest egg, etc. And your concerns will go away. However, what else can you do? Well, first of all, you're worried about firing the advisor. I didn't hear anything in your short message that the advisor is doing wrong. I mean, they have gotten to become millionaires. There must be something going on right now. Maybe there's something I don't know and the advisor is giving them bad advice. Maybe the advisor is telling them to carry car loans into retirement. I don't know. But I wouldn't necessarily feel like you have to fire the advisor. You can enlist the advisor's aide, go with them to their next meeting with the advisor and express your concerns and maybe that will help. But if you're really worried the advisor is giving them bad advice, particularly if you know something that you didn't mention in your message. Buy them a second opinion. You know, a lot of second opinions are totally free. I've got a long list of recommended financial advisors on the site. Call one of them up and see if they'll do a second opinion on your parents finances. And sometimes hearing it from somebody besides you goes a lot further. I mean, a lot of people don't like taking advice from anybody whose diapers they changed. Let's not kid ourselves. So pay for a second opinion for them. But this is not totally undoable. Right? They're in the early 60s. They can still work longer. That solves most retirement income problems. If you can just work a few more years, they're going to be eligible for Social Security really soon. And they can take 40 grand a year out of that million dollar portfolio. You add that to another 30 or $40,000 from their Social Security and that's what a lot of people are living on, including Doctors in retirement. $80,000 can go a long way if you don't have a mortgage payment, don't have any car payments. If you do realize that you're going to end up having to help them decide up front how much you're going to help them and under what terms and let them know, say this is what we're going to do, this is what we're not going to do. And remember, it should always be the one who's the actual blood child of the parents who has that discussion. It shouldn't be the son in law or the daughter in law having the discussion. You need to have it with your own parents. All right, let's take one off the email. I was asked to keep this one anonymous. First, I just want to thank you for all you do question about my finances maybe would be great for the podcast. I agree. I'm trying to grasp the big picture and see what I'm doing wrong. I'm six years out of training internal medicine make 300 or $350,000 a year. My husband makes 100 or $150,000 a year in a non medical profession. We have two small children. We live in a medium cost of living area. We're W2 employees. We each max out our 401k each year and have oh looks like about 400,000 total in those I max out a 457 in HSA. We put enough in 529s for our kids to get the tax credit and currently are putting $333 a month for each in those 529 accounts. We plan to pay for public college for each. So $200,000 is what I've been quoted. Our mortgage is 515,000 on a house we bought for 590. That's now worth 700 or 750 at a 3% fixed rate. That doesn't sound too bad. We have a taxable account with Vanguard that's worth another 88,000 and we saved prior to kids in another taxable account that has 47,000 and have $20,000 in checking. So Fair amount of assets there. Now let's talk about the debt. We have a HELOC that's $40,000 at 5% variable, no credit card debt. We have a car loan at 19,000 at 1.9% with two years left on it. Another car loan at 1.75%. $35,000 for four years. I know you'll yell at me about the car loans. Yep, I will yell at you about the car loans. We have $180,000 in student loans at 4.48% fixed. I blew this one refinanced after residency when I could have qualified for repay. I'm pretty sure now, knowing what you've taught me, that's too bad. That's tragic. I've had that happen actually to a lot of readers and listeners over the years. My husband has a rental property that is worth about 225,000. He owes 164,000 on the mortgage and the interest rate is at 6%. We break even with rental income each month. We're going to try sell this this summer. So my question is, what should I be doing? Okay, well, this is like a, you know, four hour discussion with a financial planner for sure. Should I sell off the condo, pay off the heloc, then the student loans, then the car loans? I feel that I saved pretty well, but maybe need to be focusing more on paying down debt. I think I agree with that. Basically, I'm sick of feeling I'm living paycheck to paycheck with nearly half a million of income a year. All right, first of all, you're not living paycheck to paycheck. You don't get to subtract out all the money you're saving and then say you're living paycheck to paycheck. I make $500,000, pay $150,000 in taxes, save $100,000 and spend $250,000. I'm living to paycheck to paycheck. No, that's not how it works. Living to paycheck to paycheck means you're making $500,000, paying 150,000 in taxes and spending $350,000. You're not doing that. So you're not living paycheck to paycheck. So don't get too dramatic about that. Second, why is your husband own something that you don't? As a general rule, you want to combine your finances. It's our money, it's our income, There are debts. Trying to do it all separately holds a lot of People back from success. Doing it together provides accountability and a sense of teamwork. Third, Yep. I'm going to yell at you about the car loans. Reliable transportation can be had for $5,000. So the only reason to spend 19,000 or $35,000 on a car is because you have your financial ducks in a row and want to blow some money on a luxury. I'm okay with that. I'm okay with blowing money on a luxury. I spend a lot of money that I don't have to spend. I just got back a couple of weeks ago from going skiing in a helicopter. Okay. I mean, you're just like pouring money out the window as the helicopter flies, right? It costs a lot of money to rent a helicopter for the day, but we got our ducks in a row first before we bought luxuries like that. When you're borrowing money for that luxury, you are not in the same position. Personally, I'd sell both those cars and buy a couple of $5,000 cars. Now I doubt that this listener is going to do that, but at least when they're paid off, keep making those car payments into a savings account so you can buy cash next time. Yes, I know the interest rates are low. It's not the interest rate that's an issue. It's the habit and the mindset. Okay, some advice on what to do with your money. This advice might be worth exactly what you're paying for it, but here it is. I think you ought to stop saving for your kids education when you haven't even paid for your own education yet. You really ought to be focusing there. You can only help others from a position of strength and trying to save up money in a 529 while you still have, I think almost 5% interest rate. Student loans is kind of silly. Pay off your student loans first, get your ducks in a row, and then start saving for your kids college. They can always get loans for their college if they need to, or better yet, just go to a cheaper college. But you're not gonna be able to borrow money for retirement. Now let's get rid of those student loans. You owe $180,000. You got a bunch of money in taxable accounts. I'd liquidate them both, the $88,000 one and the $47,000 one and take whatever you can get from the sale of the rental property and throw it all at the loans. And then I'd be squeezing my budget super hard and throwing everything else I can at it. I think that this listener can have those student loans Paid off by Labor Day. Seriously, get those out of your life. Get them out from hanging over your head and ruining your life and stressing you out. Just get them gone. Then pay off that heloc. Then pay off those car loans, assuming you're not willing to sell the cars, which is what I do. And all along the way, continue to max out your 401k and 457bs. But once you get rid of those little ankle biter debts, you can restart the 529 contributions and the taxable account contributions and think about making extra mortgages payments. All right, let's go back to the Speak pipe. This one comes from Paul Gill. Hello white coat investor. I was very interested in learning more about the option of investing in your own medical office building. Whether this be owning the building yourself, owning a percentage or having share ownership, period. The other question I have is how to maximize the profitability of this over the long term. And any related advice. Thank you. Paul is basically wanting to know if he should invest in a medical office building and how to max out the profit from it. Well, the nice thing about investing in a building that you're the tenant of is you know, you have at least one good tenant and obviously you want to make sure that that tenant is going to be there for a long time. You know, if this isn't a stable clinical situation for you, you probably don't want to be buying the building. But otherwise it's just like any other real estate investment. You want to buy it low, you want to maximize the rents, you want to minimize the expenses and the hassles. It has aspects of a second job, but also some nice potential rewards and some nice tax benefits. A lot of people consider their medical office building their best investment and so I think it's fine to do. But it's like any other real estate investment. You need to learn about investing in real estate. The devil is in the details and every deal is individual and so be careful going into those deals. You can lose a lot of money too, but for most docs it's usually a pretty good idea if you're going to be there a long time. All right, we're going to take our next question from the Speak pipe. This one's from Benjamin. Hi Jim, thanks for all the work you're doing. My wife and I are both employed surgeons, employed by the same group. We currently have our healthcare through a high deductible plan and we're maxing out our hsa. We're taking all the appropriate steps to have Our second child probably at some point early next year. My question is this. When we go through our next open enrollment, if we have an expected delivery and the costs associated with that, does it make sense for us to split up our health care such that she gets a traditional plan with a lower deductible through our employer and I remain on individual a high deductible plan with a lower HSA contribution? Or is there some unforeseen problem I'm going to run into by having both of us on different plans? Thanks so much and I love all your help. So, Benjamin, Benjamin, that comment cracks me up. We're taking the appropriate steps to have a child that's, you know, as I told my wife, that's the best part is the trying. But at any rate, he's asking, should we split our health plans and keep just me on the high deductible health plan? Well, in this sort of a situation you just have to run the numbers. I'd probably keep it simple and just not do the high deductible health plan for that year, but I guess it could make sense to split it between the two partners. The general rule here with high deductible health plans is that you first choose your health plan, the one that's appropriate for you and your medical situation. And if the right health plan for you and your family is a high deductible health plan, then of course use the health savings account. But don't let the HSA tail wag the health insurance dog. Look at the health insurance first and don't do anything just to get an HSA. It's not that valuable. I mean, it's only a $7,000 a year family contribution, a $3,500 a year individual contribution. It's not going to change your financial life dramatically. But it is a nice investment account if you're going to use a high deductible health plan. Anyway, our next question is anonymous.

First, thanks for your service. I discovered your book while my wife was in medical school and I've been loyal follower since. She's now in her final year of residency as a chief and she's got a great gig lined up that will have her total compensation at just above 400,000 this July. My income has been fantastic in terms of supporting us through her training. I'm not in medical industry. I've got a salary of around 100,000. We have a child and planning on having at least one more and we experience the stresses that come along with a family that has two working spouses. For that reason and for the goals of diversification and eventual passive income. I've read a few books on real estate and have been toying around with the idea of entering the industry in landlord capacity, following a model perhaps similar to the passive income MD post of buying a property a year. The idea would be for me to quit my current job, play more of a stay at home type role to ease some of the stresses of having two working spouses and manage efforts of aggressively and paying off our student loan debt and investing in retirement accounts, but essentially having a side gig of using around 30 grand a year to build a real estate portfolio. We'll be located in the Midwest. Would love to hear your thoughts.

Basically, he's asking, should I become a stay at home dad and a real estate investor? Sure, why not? That's a great career. Just be aware of the usual issues. When you leave a career to become a stay at home parent, it's harder to go back. You often miss a few raises and you end up with lower career income over time. So sometimes it's better to go part time in case you're not sure, or kind of ease your way out so that you can go back at some point, especially in that critical first year out of residency when you have all these great uses for cash and not much cash. So I think that's, you know, something to be careful about there. But I think real estate investing is great. If you want to be a real estate investor. You know, there's some benefits to being a real estate professional you get. You're able to deduct your losses that way and you can get a Realtor license and cut down on the commissions you have to pay when you buy and sell. You know, you can really get access to the MLS for instance, and there's lots of things you can do when you become, you know, a part time or a full time real estate professional that can make it a great combination with a physician. The idea is the physician income provides the cash to invest and the other person spends their time on the investment and can really add value there. All right, our next question comes from Nathan.

Hi Jim, my name is Nathan and I wanted to thank you for what you do. I have a question about Roth IRA asset allocation for my son. He is three years old and currently employed by my company as a model. We plan to continue to fund his Roth IRA with about the maximum amount possible until he is at age 18. My question is about asset allocation. I've read some of your posts about 529. Plan asset allocation. And I wonder if you have similar thoughts about Roth iras for my child, period. Again, he's three years old and I plan to max out his Roth contributions until he's about 18. What specific advice can you give me? Or more accurately, what would you do for a Roth IRA fund for your child age 3, moving forward for the next 15 years or so, period. I'm looking for specific asset allocation advice or at least as specific as you're willing to give. Again, thanks a million for what you do. It's been invaluable to me and my family.

Okay, so basically Nathan's asking about the asset allocation for a three year old's Roth ira. Well, the nice thing about kids is they have a very high risk tolerance. They're not paying attention to how much that money is winning or losing or gaining or any of that during you know, market downturn. So you can be pretty aggressive with their money. I found they don't really care. And for me I don't feel like it's my money so it's easier for me to invest it aggressively as well. So all of my kids money I invest pretty aggressively. Their 529s are 100% stock. In fact 50% of the stock in my kids 529s is small value. I just take a lot of risk there because I feel like I can make up the difference out of my earnings. I have other, you know, assets that I can use to pay for that. They can go to a cheaper school. Heck, they could take out loans. Although I anticipate my kids won't be taking out college loans. But there are just so many options there. I feel like you can be really aggressive. Obviously a three year old has a very long time horizon, can afford to take a lot of equities risk. So I think it's okay. They're being pretty aggressive. You know, some people in that situation would probably go 100% stock. What I do in my kids Roth IRAs is I just keep it simple. I just chose the latest year I could among the Vanguard Target retirement funds. So all my kids Roth IRAs are in the Vanguard Target Retirement 2060 fund. And I think that's about 90% stock and about 10% bonds. So it's not 100% stock but it's still pretty darn aggressive. And it's a one stop shopping solution that they can just leave it there once they're 18 and leave the house and be perfectly fine there. So that's what I've been using in their Roth IRAs. Perhaps a more important thing to talk about in this sort of a situation, because I do the same thing. As you've noticed if you read the blog, my kids pictures are all over it. And I'm paying them to be models and I'm paying them a fair price. I've done all the paperwork. I even showed that they were U.S. citizens. And you know, I issue them W2s and do a W3 each year. And I keep time cards for their modeling time. You know, everything is by the book so that if I ever get audited, I can prove that income. But I think you need to be careful just how much you're paying, right? You're talking about maxing out a Roth IRA each year. Paying a kid $6,000 to be a model for your website. I mean, even if the going rate for a kid model is 100 bucks an hour, that 60 hours a year they're modeling for you might be a little tricky convincing the IRS that that is indeed fair salary for them. Be aware too, if you are employing your kids that are under seven. The irs? Actually it's not the irs, it's the Social Security administration is going to send you a letter every year asking you what they do for your business. I just fill that out model and send it back to them. But you need to be a little bit careful there. You got to pay them a fair rate and you got to treat them like any other employee. The benefits there, of course, are that if the only owners of the business are their parents and the business isn't incorporated, you don't have to pay payroll taxes. They won't make enough to pay income taxes on it. And if you put that money in a Roth ira, it's never taxed again and it's a deduction to your business. So it's really is a great tax move to pay your kids anytime you can from a legitimate business that you own. But you need to be careful that you do it by the book. All right, we're coming to the end of this podcast. Don't forget about that Fire your financial advisor set sale. Okay, you can get to those links right from the website. Just click on the courses at the top and go to fire your financial advisor. That will be good for the next week. This sale is going to be open from April 4, which should be the day this podcast is released through April 12th. So through next Friday you can get fire your financial advisor for 499 and WCICON 18, that 13 hour video online conference from Park City that we had a year ago. All comes totally free. When you buy, fire your financial advisor at the regular price. If you're looking to boost returns, lower taxes and build wealth. Join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns. And for introductions to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Head up, shoulders back. You've got this. We can help. And we'll see you next time on the White Coat Investor Podcast. My dad your host, Dr. Dalla, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment and information only and should not be considered official personalized financial advice.