WCI #120: Medical Missionary Work

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 Dali. Welcome to White Coat Investor Podcast 120, a teenage trip to Honduras. As a white coat, you have valuable knowledge. Various companies want that knowledge and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401 and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys. You can do this and the White Coat Investor can help. Thank you for what you do. While it might be routine for you, it is anything but for your patients who trust you on the worst days of their lives. There's a lot of work stress and liability and somebody should tell you that your work matters. So if your patients haven't lately, I hope you will accept my sincere thank you. Also, be sure to sign up for our newsletter under the WCI tab on the main website. The URL is whitecoatinvestor.com free monthly newsletter. It includes a lot of great stuff, including blog posts that don't show up anywhere else, a collection of the best stuff published on the web in the previous month for docs interested in personal finance, and a market report without any BS predictions about the future. You can sign up again@whitecoatinvestor.com FreeMonthlyNewsletter. You can unsubscribe anytime if you don't like it. And did I mention it's free. All right, today we have a special guest on the podcast. We have my daughter Whitney. Welcome to the White Co Investor podcast, Whitney.

Do I get to do jazz hands?

You don't get to do jazz hands, but you have to talk because remember, it's a podcast so you can't just wave at the camera. Although this will be on YouTube, you have to actually talk. So welcome to the podcast.

Thank you.

Can you tell she's a little bit nervous? We had a great opportunity recently. We went together down to Honduras in June. This was actually A trip put together by chg, which is a healthcare staffing company. They're the folks behind locumstory.com, which is a longtime white coat investor, podcast sponsor, Weather Be and Comp Health Global Medical Staffing, all those companies come from are under the umbrella of one Salt Lake based company that's been sponsoring us for a long time. So they decided to fund my trip down there and I said, well, I'll go if I can bring my daughter, Whitney. And they said, well, you can bring her, you got to pay for her. And I said, well, she's going to pay for at least part of it herself. And so she got to come along as well. And we had a wonderful time down there. And we thought we'd use the first part of the podcast today to tell you a little bit about that trip. So, Whitney, what was your day to day like on your trip to Honduras? Can you tell us a little bit about it?

Well, we woke up at like 6am and sometimes I had to turn the AC back on because of power outages. And then we got dressed and we went downstairs and ate breakfast to be out of there by 6:45, to be at the hospital by 7. We had like pretty traditional Honduran food prepared and then we would go to hospital and split up until lunch. And lunch is our big meal down there. So we'd go back to where we were staying for lunch to have this big meal and then go back to the hospital. So we spent about eight hours at the hospital every day doing all kinds of stuff, depending on what kind of doc you were or what you were just doing that day.

So what do you think flying into La Ceiba? What did you think of the plane we flew in on?

It was about 15 people and we had about 12 of the spots and there was no air conditioning. It was like 120 degrees and a little shaky, but it was. It was interesting.

Were you surprised that you had air conditioning in the hotel?

I was hoping for it, so it was more of like a relief than a surprise. But the air conditioning was still kind of faulty. Like it spurted water. If it was too cold for too long or when the power went out consistently, it would just turn off. So we tried to keep our room pretty cold, but it didn't go so well.

What did you think about the mall down the street from your hotel? Was that a surprise to you?

Yeah, the mall is like, almost as nice as an American mall. Like, it has a Cinemark in it and it has stores and restaurants and all Kinds of stuff. It looks exactly like an American mall and it's air conditioned escalators. It's almost identical.

So I want you to compare and contrast the mall you saw with its food court and its AC and everything you could possibly want to buy with the public hospital that you then spent your day working in. Was it surprising to you to see the difference?

Yeah, you would think more funding would go into like a hospital than the mall, but it just seems there seems to be like two very different classes because there's private clinics and there's private education and there's a lot of private versions of everything that cost money. Whereas the public hospital is free if they have it there. But stuff that they have is not like a lot things like gloves. It seems very wasteful if you throw away a pair of gloves after doing one patient, even if they're like covered in blood, you only change your gloves like two or three times a day. So it was a good thing we brought gloves with us because that was a little sketchy. Just things like that compared to like that that would never happen in an American hospital. Whereas the American mall was identical to an American mall.

Yeah, it was a very interesting experience because it gave us a chance to compare and contrast two medical systems. In fact, in Honduras itself, there are two medical systems. There is both a private medical system and a public medical system. And about 70% of the three quarters of a million people that live in La Ceiba, the city we went to on the Caribbean coast of Honduras, about 70% of them have to use the Honduran public medical system. Basically, they don't have the money to go to a private hospital or private doctor. So they end up in this public hospital. And unfortunately, the government is not particularly efficient with regards to running its hospital. For example, I was told an administrator there who had worked the previous year had not actually spent the entire budget for supplies in the hospital. And so the assumption from the central authorities was that they did not need all that money. And so they were dramatically under supplied the next year and were missing lots of basic items that you would expect, like gloves, for instance, as Whitney mentioned, but really short on all kinds of supplies. While the expertise and the people were fantastic and there seemed to be plenty of staff to take care of people, the supplies were very, very limited. And so you had to be very careful what you used. You know, if you're suture and laceration, you went right to the end of the suture. You know, you didn't want to throw any of it away. If you didn't need to. And so while the staff there was quite knowledgeable and did the best they could with the resources they had, it was interesting to see how they worked with very limited resources. For instance, I watched a paracentesis in this lady with liver failure that was done with nothing but some betadine, an 18 gauge needle, IV tubing in a bucket, which is obviously dramatically less equipment than most of us use when we do a paracentesis in our hospitals today. So, Whitney, I understand your dad made you pay for part of the trip. How much of the trip did you have to pay for?

Half of it.

And how did you raise the money for your share of the trip?

I did all kinds of stuff. I went to some neighbors and I was like, is there anything I can help you with? I'm trying to raise money to go on this trip. And a lot of them were just willing to give me some jobs. I like cleaned blinds, I vacuumed, I did dishes for some people. I cat sat, I babysat and ended up eventually getting a job towards the end, like closer to when we were about to leave on trip as a lifeguard, which I'm still working as, and to help raise all the money for this trip.

So what do you like about your job as a lifeguard?

It's really flexible, which I really like. And that's. You're just working with a lot of people your age, so it's pretty fun.

Is it easier or harder than writing posts for the white coat investor?

I feel like this is a trick.

Question, so you're not going to answer it. You know all these people want to hear from you, right?

Okay, well, I'm not necessarily a bad writer. I just don't like to write. So it's easier to sit in a chair for a couple hours than it is to spend like two days writing.

So tell us about the medical training you got as a lifeguard.

It's like basic cpr, aed. Actually, it was pretty in depth things from what to do if someone gets something stabbed in their eye or they taught us about knife wounds and stuff like that, which you would think you would never use at a public pool, but apparently you do. So it just went in depth. It's kind of skimmed the surface. Some basic medical training about all kinds of stuff, but mostly like cpr, ad use and just use of the equipment that we had there already.

So how did that training prepare you for what you did in Honduras?

I really don't know that it helped a lot. Like, it was not. It was. It was pretty Basic of like what kinds of band aids to use and stuff. But in Honduras, they have. This is what they have. And so you leave it or use it, you know, so it wasn't super helpful. But, you know, you got, you got the basics that, like, the most helpful stuff were stuff I learned in my biology class about, like, sanitation and stuff like that.

Now you were actually allowed to provide a little bit of medical care in Honduras, maybe more than you expected going into the trip. And while you were pretty closely supervised the whole time, tell the listeners a little bit about what you got to do down there from a medical perspective.

I did all kinds of stuff. I helped a lot in the L and D with some of the docs that came with us and just taking care of some, like the newborn babies. And I watched a few C sections and things like that. Helped deliver, like a placenta and so.

You delivered a placenta?

Yeah.

Something that usually you got to wait until you're a third year medical student to do.

Right? There was a lot of stuff like that. Yeah, I helped, like, helped a lot with a lot of that stuff. And I gave like, the babies vaccinations. And the lady who was explaining how to do it spoke Spanish, which I don't speak. So it was a little, like, probably not incredibly safe. But, you know, after like the fourth or fifth one, she was like, oh, you know how to do it. Have fun.

So you gave some vaccinations. You got to start some IVs.

Yeah, I put a cast on the kid. It was the same plaster material we used in my art class. And you guys use fiberglass here, so they're less familiar with it, whereas I used it a lot in my 3D art class. So that was interesting. It was kind of fun to be the person who knew the most about something.

Now, it's interesting that you have talked in the past about becoming a doctor.

Yes.

So did this trip make you more likely or less likely to want to go to medical school?

Probably more likely. But I always thought I would maybe want to be an ER doctor. I don't think I want to do that anymore.

Great. We talked you out of being an ER doctor. Wonderful. What was it about the being an ER doctor that you decided you didn't like after going. Going on this trip?

I don't know. It's. I mean, like, there's a lot of jobs that aren't, like, happy, obviously as a doctor, but especially like the ER stuff. It's hard, especially in Honduras when you knew there was stuff that could be done that you couldn't do. And just having to be like, well, that's like all we can do for them.

Yeah, for sure. It was a heartbreaking emergency medical practice. This facility served as a trauma center for this city of 3/4 of a million people. And so we had, you know, gunshot wounds to the head coming in. We had multiple motorcycle accidents a day coming in. These are real trauma patients, and we're trying to take care of them without a functioning X ray machine. Labs are often send outs and don't come back for hours. And that's assuming the family can carry the vial to a lab and bring it back. The results. When a patient needs an X ray, the family has to raise the money for an ambulance, Take the patient over there in an ambulance to get the X ray, get it read by the radiologist, and bring the patient and the reed back to the ER for the patient to receive further care. And so it was a very fragmented system and obviously not ideal for trauma. You know, imagine atls in this sort of a situation. It's just almost silly, right, to be able to do the imaging that we traditionally do in a trauma patient. I mean, typical trauma patient that comes into my ER might get pan scanned. They have a CAT scan done from the crown of their head, their bottom of their butt, you know, looking for every possible injury. The only CAT scan in this hospital gets fired up once or twice a week because they don't want the last of their remaining filter of some kind to go out. And so they batch CT scans for everybody in the hospital that needs one. And so there's no way you're getting one stat for someone with a head injury. And so you really get used to practicing with a lot less resources than you usually have. And that's hard to watch sometimes when, you know, other things can be done. Okay, Whitney, what do you like best about the experience? What was the best part of it?

Something I don't know I really liked. There were a lot of stuff that was just learning that was really cool to just see and experience how things happened in a hospital, but as well as some of the other things, like culture wise, like the food was really good and things like that. That was really cool.

What do you like the worst? What was the worst part of the experience?

The temperature and the humidity. It was so hot and so humid.

Little more humid than Utah.

It's like 2% humidity in Utah and it's like 99.9% humidity in Honduras.

What was most surprising to you? What was the biggest surprise about the trip the mall.

One of our hosts, she said, well, there's a mall down the street. We can go run down there and grab something. And we walk in and I was just shocked. I was like, we're just at this hospital that we went to, a different one. One of the days that had some dirt floors in places and some like the walls were falling down. And then you walked into this mall that was. Had escalators and looked like an American mall.

Yeah, it was pretty interesting, the contrast between the haves and the have nots in the country, for sure. Did the trip make you more grateful to be an American?

Yes. I mean, there's a lot of things that you would see in the hospital, quality of medical care and things like that. The traffic control. There was no. Kind of like, I don't know, if you walked out into the middle of that street, you probably would have gotten hit. Even if there was like. Even if you thought if. If it was by American traffic laws, you would have been fine or people yield to pedestrians, it was just like, Hong Kong, get out of my way or I'm gonna run you over.

It's interesting that you comment on the traffic. I've been to, obviously, a lot more foreign countries than you, and I thought Honduras is one of the better sets of drivers that I've run into. So I've definitely seen worse. It's far easier to drive around in Honduras than it is in Rome, for instance, but it wasn't quite American standards in anything you did. And so it certainly always makes me grateful. Anytime I go to a developing country, makes me grateful not only for the lifestyle I enjoy, but also the freedoms I enjoy. While we were there, the embassy was firebombed. The American embassy was firebombed. Now, that was eight hours away from where we were. But there was a nationwide strike going on among teachers and healthcare workers while we were there. It certainly wasn't a time of perfect political peace. There was some economic unrest, for sure, during the time period we were there. So would you do something like this again?

For sure. It was a really cool experience. I don't know that I'd necessarily go back to Honduras again. I definitely would love to, but there's a lot of other cool places that you could go and see different, even different perspectives that I'm sure some countries are not as developed as Honduras, especially medically wise, so could be really interesting.

Very well. Well, thank you very much for sharing your experience. We're going to also insert at this point a interview that I did with a Honduran doctor down there, Dr. Annette Dayan, who will tell you a little bit more about what it's like to be a doctor down there. All right, this is Annette. She's one of my friends in Honduras. She is a doctor down here. And I'm gonna ask her some questions about Honduran medicine and being down here. So first of all, can you tell us about what the training of a doctor is? At what age did you start medical school? How long did it last? And tell us about the process of becoming a doctor here in Honduras.

I started my career at 17 years old, so I was quite young. And the career here is eight years long. So we have six years of studying. We. I'm here in La Ceiba, and we only can study, like, outside from La Ceiba, which is either Tegucigalpa, which is the capital city, or San Pedro Suda, which is three hours away from here. So it's kind of long distance. And we take the first six years of, like, training, like all the theory stuff, and then we have a year of internship, and we have then a year of community service, then obligation, obligatory community service here, in which we're sent off to different towns or really remote little towns in the rural area. Or we can stay in the hospital. Not actually stay, because I've always joked around that it's like the Hunger Games, that you have to take a paper, you have literally have to get a paper away, and it's like a huge raffle, and you do as much as possible to try to get as far, as much close to home as you can.

So how many students were in your class?

Well, at the first years, because it's usually the, like, the science, biology kind of classes. Those were really big classes, like up to 100 students. And then there were other times in Tegucigalpa that we almost had up to 130 students. It all depended on which class you were taking and how many teachers, how many people were available to give that class there. So we had classes in which we only had 20 students, but we also had classes which we all. We had up to 120 students in a little. Little classroom, like, cramped up classrooms.

So when you graduated, how many people graduated with you?

Well, right now I'm gonna graduate in September, and it's a group of approximately 400 students who are going to graduate in this promotion.

And how many medical schools are there in Honduras?

There's two private medical schools, which is a little bit on the expensive side through here, which is the Catholic school, and there's Unitec, which is kind of new. It's been on for about four years now. And then there's the public school, which is Universidad Nacionalo Tornadura, which is where I'm at. And that's the only medical school we have here in Honduras.

Which one's the best school?

Ours, of course. The public university is the best one.

So how much does it cost to attend the public university?

Well, people always say it's free, but at the end of cost, you always have to pay for your matricula, which is your initial payment. You always pay. It's a little amount of money. It's about. It's about 600 lumpitas now, which is about 25, $28. But then you have to do all the expenses on books. Then you have to do all the expenses on buying your materials, because, you know, you don't get those here. You have to get your own stuff. And that's where all the exposure, expensive goal. And we always had to move out, because if you're from. Let's say you're from here and you have to move out to another city. So you have to be paying on your. Where you live, what you're gonna have to eat, what. Everything else.

How much does it cost to go to the private medical schools?

I'm actually not aware, but last time I heard, they were paying approximately 8,000 impedas, which is about $400 a month.

So in tuition?

Yes. So that's what they have to pay for.

And they pay that for six years?

Yeah, for eight years. Because they still pay on their internship, and they still pay on their community service.

So they still have to do community service even though they went to a private university service. And do you get paid as an intern?

Yes, we get paid.

You get paid, but they don't.

No, they don't get paid. Like private schools don't get paid. We get paid. We get paid four months. We get paid 5,000 impidas, which is about $220 a month. And we have to be waiting on that payment up to six months at first, and then it's. Then it's a monthly payment, and then we get paid also in our community service. That one's a little bit higher. That's 7,000 lipidas, which is about. About $300 a month. So there are times in which I was lucky enough that I stayed in my. At my hometown, so I didn't have to pay on home or food expenses. But there's other people who aren't as lucky as I was. So they had to move over to other places. So they actually spent all their money on living food and transportation.

So you made $220 a month as an intern. What do you think? Was it easy to save on that amount of money?

No, I did save a penny when I was in my internship because, you know, we have our shift night shifts, so we had to buy our food on night shifts. We had to pay our transportation, we had to pay for whatever was needed. And we always try to help, like patients because they usually don't have any money. So we ended up with no savings at all.

So if an intern making $5,000 a month in the United States. States tells me they can't save money, what would you say to them? Yes, you can.

I'm pretty sure you can, because I've lived on $200 a month, and I'm pretty sure you can't do that. That's like a huge amount of money here.

Okay, so tell us about after you finish your social service year, what happens then? Do most people go into general practice?

Yeah, most people go into general practice because they are not. They don't have a chance to go on with the residents or any. Take it on any specialties. Usually people at this point of their lives, they're trying to make a family or they already have some sons or daughters. So usually people are trying to make money as fast as possible. So there's people who aren't lucky to pay for the test for the residents, or there's people who aren't capable to pass the test too. So there's a lot of unemployed general doctors here.

Unemployed. They can't get work at all. Do they open up their own practice?

They mostly try to open up their own practice. And what they try to do is like go to the rural areas and try to get a little private clinic so they can help the community and try to live with what they gain.

So what percentage of the medical students are men versus women these days?

Well, we have a high number of women studying medicine here in Honduras. Apparently our teachers told us that at first they only had like eight students. Like eight people studying medicine, and there were seven men and just one woman. But now it's up to. It's approximately like 60% of the medical population is women.

Why do you think that is?

Well, they're really quite common here. I don't know. People like women are attracted to the medical side of here and they don't take it as much as hard work as engineering and like the stuff that includes physical too. Much physical work.

So what kind of money can a generalist that can get a job can a general practice physician expect to make in Honduras? What's a typical income?

Depends on the area and depends on where they're working. People. There are people who get lucky and they can actually get a place in like the public government side and that's the one that pays off a little bit more. And that's more on the 30,000ampedas per month or to up to 40,000 impedas. But then there's people who work, which.

Is about 1,000 to $1,500 a month as an attending position.

Yes. And there's people who work with private clinics or they just work at part time jobs like on attending surgeries and stuff in which they can get us as little as 8,000ampitas a month or up to 15,000 impedas a month, which is about $400 a month.

And is that enough money to support a family here, buy a house, have a life.

People do what they can. So usually if it's 8,000 living a month they can live. But it's very limited just to the basic stuff like just paying for the rent, getting some food and for transportation, paying for their kids education. Like little, not, not try on fancy schools but like little stuff. And that's about it.

Tell me about becoming a specialist.

Well, in order to become a specialist here you only get the public system. So even though you took the private school, you have to be on a public education to get your specialist, your specialty. So you go it's in basis credit score. So you get a test and you can try to get some, earn some credit scores from before like working on different areas of the country and try to do as much conference as possible. So actually it's kind of on a business side in which you have to pay for conference to get some points. So it's somehow because all these conferences are they are paying to the collegia medical and less, which is like the association of doctors in here. So actually you have to kind of pay a certain percentage in order to get your residency.

So how long is an internal medicine residency here?

Three years.

And how long is a surgery residency here?

General surgeon is three years, plastic surgery is six years and we open up a ped surgery and it's six years.

And what if you want to be an obstetrician?

It's three years also.

Yeah.

And what other specialties are available for training in Honduras?

Here in Honduras we have psychiatry, we have gynoe, we have pediatrician, we also have internal medicine. We have dermatology, radiology. They just opened the cardiac surgery and we have ped surgery. That's all we have available here.

What if you want to do something else? You want to be a neurosurgeon or a vascular surgeon or a rheumatologist, where would you go for treatment?

We also have neurology and neurosurgery. But if you want to be like a vascular surgeon, you have to go two other countries.

And where would people typically go?

Oh, usually. Well, they have some available specialties. In Guatemala, they're still a little high on the price because you have to pay on their private schools and you have to pay for living and everything else.

So you pay tuition as a resident, you're not paid a salary.

No, you get. You pay tuition. You are not paid once you're out of the country. So people choose Guatemala. They also choose Costa Rica. And there are chances you can get to go to Mexico or also Spain. There's a program with Spain in which you get a lot of specialty.

And are you obligated to do more social service years if you do a residency or are you free to go practice as you see fit?

We are free to go practice. Like, once we were done with our general medicine, we can work.

Where does an internal medicine doctor get paid once she's done with her training?

It actually, it depends on where she's working, where he or she is working. If she is working in a private clinic, the doctor couldn't get paid for patients. So the more patients you get in your clinic, the more you get paid.

Well, let's say you have a full schedule. You work 40 hours a week and see as many patients as you can during that time. What would you expect to be paid as an internist?

Well, I've heard, because I thought that. I'm not much aware with amounts of money, but it can be up to.

70,000, 70,000, so about $3,000 a month. And the surgeons make markedly more or about the same.

No, surgeons make more money because usually it's up to a surgery in a private clinic can be up to 80,000 Apida. So they get most of the money for surgery. So surgeons get more money.

So 3,000, $3,500 a month or so is a surge.

Yes.

Okay. And what do you think about changing countries? Have you thought about going to another country to practice?

Well, my dream is to go out to like, practice medicine in other countries to see how medicine works in our country. Like, a volunteering experience would be awesome. Like, I would love that. And working in the no such with me. Awesome, too. So that was my. That's been my dream.

Dr. Annette, thank you for your time. Appreciate the interview. Okay, let's go on to our Speak pipe questions for today. And I thought I would keep Whitney around for our first one. That comes from Mark. What's up, Jim? This is Mark down in Arizona. I want to know what you did and what you're doing to teach your kids about money. If you've got any general tips, more resources, be it books or other video series, I'd love to know what you're doing. Thanks. And basically what Mark's asking here is, what are you doing to teach your kids about money? And I thought I would pass this one on to Whitney to let her tell you in her own words what I've been doing to teach her about money.

Oh, what you've been doing? Not what I'm going to do. All right. I mean, I think one of the biggest things is, you know, having to do some of the stuff yourself. Like I have a debit card and I have a bank account that I manage basically by myself. The money that I earn goes in there, but I also get to spend that money. And there's not. There's like some restrictions, obviously, but I think the ability to give a little freedom helps you learn. Even if you buy something that may not have been worth it, you kind of realize that. And so you learn from your mistakes more. And so it's worth a lot more to you if you personally have the freedom over it instead of more like rules and restrictions over it. And I think that helps prepare you more for when you're doing it completely by yourself.

That reminds me of a chapter from Alan Roth's book, How a Second Grader Beats Wall Street. And I think the title of the chapter is the Claw Takes yous Money. And it's talking about that claw game where you pick up the stuffed animals in the machine and, and how you never actually win anything in it and it just takes your money. I had an interesting experience with that yesterday with another kid when I explained to him this was a nine year old. I believe that the claw is just going to take your money. And he didn't believe me, didn't believe me, didn't believe me. He finally got his dad to give him a dollar and he went and put it in the machine. Of course, he didn't get the stuffed animal and the claw took his money. But, you know, sometimes losing money is a better teacher than doing the right thing with the money. Right, Right. So what have your parents taught you about saving money?

We do, like, a lot of saving. There's a certain percent that we save for charity and certain percent. But I don't know. One thing I've noticed a lot with teenagers is people will be like, if we're plant making plans or something, people like, oh, I only have, like, $10 left in my account or something like that. And that always shocks me because I have, like, this safe zone for whatever reason, where I'm like, oh, this is a good amount. I should always have this amount in savings in case something comes up or something happens. It was helpful for, like, Honduras, where I could pull a little bit out of savings to help pay for that. And so saving money has been important to me because then I have it for when I need it in the future. And, you know, I have accounts that have it invested. So it makes you more money in the future just for not touching it. And so I think a lot of teenagers could use that instead of just, oh, I have money now. I need to spend it. It's more of what's going to be most beneficial with this money.

So you say you have investments. What kind of accounts do you invest in?

I have a 529 education account. I have, like, my Roth IRA. I have my regular just like, checking account.

I have a UGMA account.

Yeah, ugma. I don't know. I don't know what it's called. I know what it is, though.

What is it?

That's like the stocks and bonds, right?

Okay, so there's stocks and bonds in all those accounts, right? You said you had a Roth ira. What's the Roth IRA for?

That's the retirement account.

Okay, so what money goes in the Roth ira?

Only money that I make. So technically, in our family, at least, my dad will do a match for my Roth ira. So I can still keep. I can. I have the same amount of money that I earn, but I give the money that I earned to my dad, and he puts it in there that he'll match it by giving me the same amount back.

The daddy match.

The daddy match.

So why is it important to save for retirement? Why does that matter?

I mean, if you start saving now, it's so much easier than having to worry about it in the future. If I'm. If I save $100 now, then it's worth so much more in the future because it has more time to accumulate and grow interest.

So what is that money invested in.

Inside your Roth ira, I believe there's like a Vanguard. There's a couple different stocks and bonds, but it's like a little piece of each company and it's just like a Vanguard stock or bond.

It's a mutual fund.

Right, A mutual fund. I don't know the word.

The mutual fund buys what it has.

A teeny little piece of like all the companies. And so you get a little bit of money from all of the accounts.

Okay, so your Roth IRA is invested in one of the Vanguard Target retirement funds, which is an investment that a lot of the listeners use in their accounts as well. And then you have a UGMA account that we call around here your 20s fund. So what is that? What's that money for?

That's for like all kinds of stuff. Because in like your opinion, it's much more helpful to have money in your 20s than it is in like your 70s, things like that.

So it's your inheritance, right? It's my money you're getting from me.

It's my inheritance. But it's a lot more helpful for like college or a wedding or a car first house than it is for some cruise when I'm 65.

Okay, and then you got a 529, which is for what?

529 is the education fund. It's the money for college.

Right? So you got all these savings accounts. So are you learning? How do you learn about these accounts? What are your parents doing to help teach you about investing and these different types of tax advantaged accounts?

I mean, other than listening to Dave Ramsey on repeat. Yeah, no, when we turn on Dave Ramsey and everyone, you just hear like a collective groan and then we have to answer so many questions correctly before we get to turn it off.

So is that helpful? Do you feel like you're more financially literate than your peers are?

Problem is, if I say yes, then you're going to keep doing it.

So clearly I'm raising a teenager here, as you can tell. But you know, she has been noted at school on at least one occasion to be the only child in class who could tell the Instructor what a 401k was. Clearly what we're doing is working. I'm not sure that we're perfect at doing it. We try to have an allowance, we try to talk about money. It's not a taboo subject. We let them manage their own money as much as is reasonable and gradually introduce more and more concepts as we go along. How have your parents taught you to give money? What have you done to learn how to give Money.

So every year we like have a set amount that we're going to donate to charity. And so we have a big meeting and everyone comes up with some charities they'd like to donate it to. And then we end up narrowing it down a little bit and deciding how much money we should give to each charity based on what each family member wants. And so we decide these charities that are things that are most important to us and then decide how much money we can give them to help them. And so it shows that like we have that it's important in our family to give but also give to things that are important to us.

So do you have as much say as your mother or your father in what charities are supported in any given year?

Yeah.

So do you feel like you have some power that you actually can, can make some decisions there?

Yeah, I think everyone in some things like where we're going to go eat or what we're gonna go do for the day, that's we don't get the same like one parent vote is worth like four kids votes, but when we're sitting down at this meeting and we decide where it goes, it's worth just the same amount as every person's opinion is. So.

Well, thank you, Whitney, for going to Honduras with me and thank you for being on the White Coat Investor podcast.

You're welcome.

We're going to take on a few more speak pipe questions in this podcast. I hope, Mark, that Whitney answered your question well about what we're doing to teach our kids about money. Whitney's 15. She's got three more years before she has to get her own car, her own apartment and her own job. And hopefully by the time she leaves our nest, she will be far more equipped than the average American to manage finances. Our next question comes from an anonymous Ms. Asking about a financial advisor.

Hi Jim. You asked for more questions from women, so here goes. I'm a fourth year resident with four more years of training to go, including my fellowship. I've been reading your book and a few of the books you've recommended as well as listening to the podcast. In an effort to become financially literate, I have no debt.

I'm saving 15% of my resident salary.

Into tax deferred accounts. I also have a reasonably large taxable account as the result of a UGMA from my admittedly fantastic parents, which is managed by the family's financial advisor. During my most recent phone call with him, I had a lot of questions. As a result of all the reading I've been doing specifically about how he was paid. He said they charge a 1.15% assets under management, but as an all in fee, meaning that the account management fees.

As well as the expense ratios and.

Costs of any trades or anything else that they do all have to be contained within that 1.15%. This seemed like a pretty reasonable incentive structure to me, but I wanted to hear your thoughts. Have you heard of a fee strategy like this before? I really like this financial advisor because he takes a lot of time with me, even though I must not be a big account and I don't think.

I have the time or the right.

Personality to manage my own money. Thanks so much again for all that you do and all of your teaching. I've been spreading the word about the White Coat Investor blog and podcast to.

My female core residents and I've been.

Getting a lot of thank yous that I feel like I need to pass on to you.

Well, obviously 1.15% is higher than it has to be. I have a whole list of financial advisors under the recommended tab@whitecoatinvestor.com that charge less than 1.15%, so there's no doubt you can find a lower priced financial advisor. Also, the likelihood of that 1.15% including the expense ratios seems extremely low. That generally is not included in advisory fees, even if commissions and other fees might be. That said, if you only have a small balance, 1.15% times a small balance isn't a huge fee. So if you like the advisor and you feel like you're getting good advice, feel free to use them for now. But as your assets grow, you may want to negotiate a lower fee or find a new advisor once you start acquiring assets as an attending physician. But it's not necessarily a deal killer I think at this point. But you know you don't want to be paying 1.15% when you have a $5 million portfolio. That's a very expensive financial planning and investment management fee. All right, our next question comes from someone who calls himself fan of the WCI. Hi Dr. Dali, I noticed your portfolio has 10% invested in Treasury Inflation protected securities. I've also seen tips included in a portfolio for the middle aged investor described in the book Boglehead's Guide to Investing. However, many portfolios like the Vanguard Target Date funds don't include tips. What are the reasons to include or exclude tips for from a portfolio? Thank you. And he's basically asking why include tips or not include tips? Tips for those who don't know are treasury inflation protected securities. These are special bonds issued by the United States treasury that not only pay a yield like most bonds, but also have an inflation protection component. And the idea behind this is that they protect you against one of the most important risks of bonds and that is unexpected inflation. So if inflation spikes all of a sudden, TIPS are actually adjusted upward in value and provide some significant protection against what is perhaps the most significant risk that investors face, which is inflation. Obviously you get some inflation protection in the long term from stocks and real estate because in the long run their returns tend to outperform pace inflation, you know, as those companies can raise their prices with inflation and you know, landlords can raise rents. And so they tend to keep up with inflation in the long run, but not necessarily in the short run like TIPS do. And so TIPS are a different asset class. They provide some different characteristics and I think have a reasonable place in a reasonable portfolio. Now they make up 10% of my portfolio, which is half of my bonds. I think that's been good for me. Obviously there hasn't been a lot of unexpected inflation in the last 10 years. And so they haven't performed awesomely. And I think because of that, I think they've fallen a little bit out of favor in a lot of portfolios out there. I think a decade ago, a lot more people were including them in their portfolios that aren't necessarily including them. Now you mentioned the target retirement funds from Vanguard, that they don't include tips. And that's true in some of the higher date funds. But if you look at the 2020 fund and the Income fund, you'll see that they've added TIPS into those funds. And it seems that the smart folks at Vanguard believe that TIPS have a place for the investor that has a higher percentage of their portfolio in bonds and or is closer to retirement. And so, you know, you can take from that what you will. Maybe you don't need TIPS now and you meet them later, need them later, if you believe what Vanguard's telling you with their target retirement funds. As for me, I think splitting my bond portfolio 50% nominal and 50% inflation indexed is a reasonable strategy that I've stuck with over the years and plan to keep sticking with. Certainly they're not a mandatory class to be financially successful. You know, just because they've done poorly in the last 10 years. To me, that's a sign of a diversified portfolio. I always expect to own something that's not doing well. You know, if everything you own is skyrocketing, you May not be diversified. Not as diversified as you should be anyway. All right, our next question is from an anonymous person on the speak pipe.

Hello, Dr. Dali, this is Xavier. From listening and reading your materials, I.

Understand each mutual fund and its related ETF to be essentially similar.

For example, VTSAX and VTI are often noted as similar enough with the slight preference for VTSAX's broader holdings.

Recently, Vanguard has been pressuring me the.

Repeated communications to convert my fund holdings.

Such as VTSAX to VTI, all to.

Save 0.01 and expense ratio.

If I convert, do I risk ever.

Getting back into vtsax if they close.

The fund to new investors?

What if they close vtsax and then.

Change the index that VTI tracks to.

One I don't prefer?

Should it worry me that Jack Bogle.

Did not like ETFs and their market trading characteristics? And now Vanguard wants everyone to convert.

From traditional mutual funds to ETFs. If I'm just chasing a 0.01 expense.

Ratio savings, why not shift out of.

Vanguard to Fidelity's 0 funds?

Thank you for your time.

Okay, basically they're talking about two share classes of the Vanguard Total Stock Market Fund, vtsax, VT Sachs, whatever you want to call it. This is the mutual fund version. VTI is the exchange traded fund or ETF version. It's the same fund, though the expense ratio is nearly identical. I mean, it's literally 0.01% less for the ETF. But you don't want to obsess about expense ratios. I wrote a blog post post a few months ago called Don't Obsess about Expense Ratios. He was actually talking about Fidelity's new 0% expense ratio funds. But the same principle applies here. If you're worrying about. 0.1% in expense ratios, you're worrying about all the wrong things. When it comes to these mutual funds, there really is no significant difference between the ETF share class and the mutual fund share class. So use either one. It's fine when I buy it at Fidelity or Charles Schwab. I buy the ETF because the commissions are lower there for ETFs than they are for mutual funds. When I'm a Vanguard, I buy the mutual fund just because I prefer mutual funds and it's the same cost at Vanguard. And so I wouldn't necessarily take any pressure. The Vanguard's giving you to convert as something you have to do if you prefer mutual funds. Stay there. If you want to convert, that's not a bad thing either. Jack Bogle was far more worried about what investors tend to do with ETFs, which is speculate and trade them hour to hour and day to day rather than holding them. For the long term, I don't think he really cared. If you're going to buy and hold for the long term. An ETF that's broadly diversified and low cost versus a mutual fund that's broadly diversified and low cost, he really didn't care. Both are fine. I own both. Don't expect much difference in performance between them. And if you want more information on that subject, see my blog post called Don't Obsess About Except Expense Ratios. The next question comes from Adam on the Speak Pipe. Hi Jim, thank you for everything you do. I know you've answered the question of investing versus paying down debt many times. I understand both sides and I'm trying to do some of both. I have $100,000 in student loans at 4% and a $600,000 mortgage at 4.38% that I'm trying to pay down. But I'm also investing in a taxable account after maximizing my retirement savings. I know you're an advocate of bonds making up some of your portfolio, but it seems to make no sense to buy bonds in my situation because that money would be better spent getting a guaranteed 4% paying down my debt. I'm therefore putting 100% of my investment in stocks. Do you think this is a reasonable thing to do? Thank you again. Okay, Adam's about 100% stock asking about 100% stock portfolio. Well, Adam's got a bunch of loans, right? He's got $100,000 in student loans at 4%. He's got $600,000 in mortgage debt at 4.38% and he's investing in a taxable account. Well, the way a lot of people look at loans is that since they're also guaranteed return instruments, at least paying them down is they're kind of negative bonds. So rather than investing in bonds, you could pay down your loans and call that the bond component of your portfolio. That works fine. I mean, it really does work that way. The only issue with doing that is a lot of people fail to remember that when the stock market's dropping and they don't tolerate the stock market losses. You know, in a big nasty bear market, you might lose 50% of the money you have in stocks and you're not really going to be thinking about the fact that, oh well, at least I paid down a bunch of my student loans at that point. You're just going to be going, I lost 50% of my money, I got to bail out. And so I think it's probably worthwhile to still carry a few bonds in your portfolio, at least to help remember how bonds work and to decrease the volatility of the portfolio a bit. In a market downturn, especially if you're a young investor and have never been through a bear market before, I always think you ought to err on the conservative side until you go through your first bear market. But it's true. Paying down loans is the equivalent of investing in bonds. And obviously at 4.38% or 4%, you know you're not going to find high quality bonds that are paying that these days. At best, you're getting 3, 3.5%. And so, you know, it's a great use of your money, I think, to pay down your loans in that sort of a situation. In fact, I didn't really have much of a taxable account while I had any sort of debt other than a mortgage. And even that I ended up paying off before I had too much of a taxable account. And so I'm a big fan of maxing out retirement accounts and taking advantage of all those asset protected and tax protected accounts that are available to you and then once you have additional money above and beyond that, using that to pay off your debts. But if you want to carry a little bit of debt at low interest rate for a while and invest in a taxable account hoping to beat that, I don't think that's crazy. But don't get too carried away with it. Most stocks are far more comfortable with debt than they really should be. All right, next question comes from Andy on the Speak Pipe. Thanks for all that you do. I'm in the Midwest and I recently invested in a private real estate fund. Its past returns have averaged about 12% a year and the first couple months have been comparable. I've just received notice that it's considering going into the public sector. I have two questions. One, would you be hesitant to continue investing in the fund knowing that it might be switching from private to public? And two, since all of your recent podcast interviews have had experts discussing their hesitance to investing in the private real estate funds, is this something that you're reconsidering in your investment portfolio? Thanks again. He asked what should I do about my private real estate fund that is now going public? Well, I know exactly what fund he's talking about because I'm invested in it as well. I'm not sure I should name it specifically on the podcast. But a lot of you who are invested in it know exactly what I'm talking about. It's a real estate fund that became a reit, a real estate investment trust, and is now probably going to end up going public, meaning there will be an initial purchase offering and then it will be traded on a daily basis on the stock market. Now, I'm not a big fan of individual stocks and so I will probably end up getting out of this fund at some point after it becomes publicly traded. Now, I will be surprised if this particular fund, which is very well managed, does not go up in value significantly in the weeks and months after it goes public. It wouldn't surprise me to see it go up 30% in value. And at that point, obviously the yield, the expected return on this investment is going to be lower after that run up. And so the fact that I don't like buying individual stocks and that at that point I'll expect a lower return going forward. I will probably get out of the investment at that point. I'll make sure I qualify for long term capital gains on any gains I may have. But I may move that money back into another private real estate fund. In this case it's a debt fund, but I wouldn't necessarily have any concerns buying into it at this point. I think it's a great fund. I wouldn't necessarily have any concerns that it's going to tank in value as soon as it becomes publicly traded. It's a well run fund with good investments. It's not going to tank, certainly not in any short term fashion. And so, you know, I try not to buy investments that I'm not willing to hold onto for years. And that's the case for this fund as well. I'm willing to hold on to it for years, but as it becomes publicly traded and subject to the whims of the stock market, I may disinvest and look for another fund, hopefully with a nice capital gain to show for my efforts. He had the follow up question, are you going to stop investing in this asset class? Because several podcast experts we've had on don't really like them. Well, it's true. Rick Ferry and Bill Bernstein and Alan Roth, I asked them all that same question. If you've been listening to the podcast, I asked, what do you guys think of these private real estate investments? And to be fair, several of them said, well, I don't know much about them. Right. That's not something they invest in. And to be fair, none of these are mandatory investments, but I knew their positions on them when I invested in them. This isn't a revelation to me, right? I've read their books, I've talked to them all in person. I know how they feel about private investments. And so that's part of the reason why 85% of my portfolio is in mutual funds and index mutual funds at that. That said, I think there's still a place for real estate and portfolio. I'm not a huge fan of direct real estate investing for me because I don't like landlording, I don't like the second job aspects of it. I don't think I'm all that good at it. But I like real estate as an asset class and I think that private real estate investments are a reasonable way to invest in it. But it is definitely a caveat emptor space Buyer beware. You know, the due diligence here is far more difficult to do than it is on a typical index fund. And so you don't have to invest in them. I don't think it's crazy to invest in them if you do really do your due diligence. And you know, be careful how much you invest in any given investment and how much of your portfolio you put into them. But yes, I expect to continue to invest in some private real estate investments and as I have on the blog for the last few years, I'll continue to update you a couple of times a year on how my investments are doing. So far they've done great, so I'm really happy with them and hopefully that will continue. Okay, another question comes from James by email. I would love it if you were able to do a podcast interview in a CPA or a tax law attorney on what an S Corp is and why becoming one can be advantageous for physicians. It would be incredibly useful to also talk about the steps needed to become an S Corp, what deductions are acceptable, and other strategies to use within the S Corp to minimize taxes. Thanks so much. My private practice is switching to each individual physician becoming an S Corp starting in 2020. Okay, well, I don't know that I necessarily need a CPA or a tax law attorney for this one. I've got an S Corp. I've written about S Corps for years. The benefit of an S Corp is you don't have to pay Medicare taxes on the portion of your income that you call distribution. So when you are a sole proprietor, all of your income, all your profit from this business is subject to Medicare taxes. If you elect S Corp taxation, whether you were previously a sole proprietor or a partnership or an LLC or C corporation or whatever. If you elect S Corp taxation, whether or not you actually form a corporation, you get that benefit that you can now call part of your income salary on which you pay all your regular income taxes, plus your payroll taxes like Social Security and Medicare. And then the other part is distribution on which you don't have to pay payroll taxes. Now, if you're like most docs, you've already maxed out your Social Security taxes. So what you're saving is the Medicare tax, 2.9% of everything you call distribution. So if you have an income of $400,000 and you call $300,000 salary and $100,000 distribution, you just save $2,900 in Medicare taxes. Now, obviously you're going to get the same Medicare benefit as everybody else. And so that's pretty clean savings right there. And so if it's worth the hassle and the expense of becoming an S Corp to save that money, then it's usually worth doing. Don't expect any additional, you know, malpractice protection from incorporating in that fashion. It doesn't really give you any. Malpractice is always personal, but you may save some taxes. A lot of people think you have to incorporate to have a bunch of deductions, though that's not generally the case. Almost all business deductions that are available to an S corp are available to a sole proprietor, right? You can still write off your cme. You can write off your scrubs, you can write off your stethoscope, you can write off your business miles, you can write off, you know, everything, everything. All your work related expenses you can write off just as easily as a sole proprietor as an S Corp. So don't kid yourself that there's some huge savings there. What there is is a big hassle. You got to now start filing a bunch of extra tax forms. You've got to be filing W2s and W3s for your employees. You're now an employee of your own S Corp. And so you got to do all that employee paperwork that your employer used to do for you. And so that can be a big pain. You got to file a 941form every quarter with the taxes that you withheld from yourself as an S Corp. And so there's a fair amount of paperwork. And if you don't want to do it, which I can't blame you, having done it now for the last couple of years, you're going to pay an accountant to do it. And so it's going to cost you a little bit of money there. So you got to weigh that against the additional tax savings on the Medicare taxes. There are a few strategies you can use with the C Corp, but in general, docs don't use that just because they lose that big advantage of the S Corp. So most docs in this sort of a situation, they want to become a corporation, become an S Corp. And I think that's a reasonable thing to do as long as you can declare a significant portion of your income as distribution. Remember that the IRS requires you to pay yourself a fair salary. Now you can use a salary survey to determine what that is or you know, some other reputable source or argument to determine it. But if you're going in there and trying to convince the IRS that a full time doctor is only getting paid $60,000 a salary and $350,000 as distribution, you're probably going to lose that and you're going to end up paying a bunch of taxes and penalties to the IRS when they audit you on that point. So as a general rule, you want to make sure you are paying yourself a fair salary and you have a good method to just justify the salary you are paying to yourself. Okay, another question coming from Rip on the Speak Pipe who asks is it reasonable to use Vanguard Target Date funds for a taxable account? Jim, I'm a very loyal listener to your podcast. I have a question for you. I utilize the Vanguard Target Date retirement funds for my retirement account. I don't like to move money around too much nor to make a lot of changes. And my question is, is it reasonable to utilize the Vanguard Target Date funds for my taxable account? Specifically, is it tax efficient and is it reasonable to utilize it in a taxable account? I appreciate you responding to my question. Thank you for everything that you do. Well, if you really want to keep things simple, it's an option. I mean, it's a one stop shop for a mutual fund, especially if it's available in your 401k and your Roth IRA and your taxable account. Well, you just put it all in one fund and forget about it. There's some value in just keeping it simple there. The downside of using a Target Date Fund or a Target Retirement fund or a life Cycle fund, whatever you want to call them in a taxable account is they generally have fully taxable bonds. And if doctors are going to own bonds in a taxable account, which many would rightfully argue that they shouldn't, the bonds they should own are generally municipal bonds. And I have yet to see a target date fund with municipal bonds in it. And so it isn't that tax efficient. Plus you're kind of stuck with it if you later, you know, decide you want to have a more complex portfolio. Now you've got this fund with all these capital gains that you're going to have to pay capital gains taxes on if you want to change the portfolio. And so you're kind of stuck with this tax inefficient holding in the account. So as a general rule I recommend against target date funds inside taxable accounts. But obviously if you're really trying to keep things simple and you're willing to pay some extra taxes in order to keep them simple, it is an option. Okay, next question comes from Zach. This will be our last question on this podcast. Zach is a resident with no match going into primary care. Here's his question. Hey Dr. Dali, thank you for everything that you do. I'm just starting my PGY 3 year in internal medicine and I had a 401k related question. I currently have both the pre tax and Roth contribution option in my first 401k as a resident with no offered match by my employer. After graduating next June, I will be joining a primary care practice and starting work with them in August of 2020. For my 401k with them they're offering 100% match for the first 3% and 50% match on the next 2%. My question is primarily how to allocate my $19,000 worth of 401k contributions for the 2019-2020 year. My concern is that contributing to my 401k as a resident between January and June would potentially prevent me from obtaining the full match amount during the August through December months with my new employer as an attending. That being said, everything I contribute as a resident I can do as Roth contributions. But you know, once I start as an attending, I only have the option of pre tax contributions. My thinking was to not contribute at all to my 401k between January and June as required resident. Then between August and December contribute the $19,000 maximum and obtain approximately $8,500 in matching funds with my new employer. Just wanted to hear your thoughts on what to do with these different options. Thanks again for everything that you do. Okay, this is a really insightful question. Most residents aren't thinking about this stuff as they go to graduate, so he's trying to maximize his benefits in that year when you transition from residential to attendee. Now Obviously, you want to get as much of the match as you can from this new employer. So you better talk to them carefully because a lot of new employers don't let you use the 401k for the first year or year and a half after you start with the company. So make sure they're actually going to let you use it when you go to the new company. If they're not, you're better off maxing out the residency one. And obviously for most residents in a Roth type account, but if they will actually truly let you use the 401k and actually truly will give you a match, you want to save enough of that $19,000 contribution to get the entire match. That's free money, right? That's part of your salary. You don't want to leave that on the table. So if you got to put in all 19,000 to get your $8,500 max, well, don't put anything in the residency 401k. If you only got to put in 8,500 in the new 401k to get that $8,500 in match, we, well, that leaves you what, 9,500? I think I'm doing the math right? Yeah, I think that's right. 9,500 into the old 401k, into the Roth 401k at the residency. Then you can put your $8,500 into your new 401k at the new employer and get that entire match. You know, if that's an option, that's what I would do. But you just really need to nail down the details of how this new 401k is going to work so you can plan out what to do with your old 401K. Hope that's helpful. Zach, as a white coat, you have valuable knowledge. Various companies want that knowledge and they're willing to pay you for it. That's why we put together a list of recommendations for companies that pay you to take surveys. If you're looking for a profitable side gig for not too much effort, getting paid for surveys could be the perfect solution for you. You can make extra money, start a Solo 401 and use your medical knowledge to impact new products. One of the WCI columnists makes an extra $30,000 a year just doing these surveys. Sign up today and use a fraction of your downtime to make extra cash. Go to whitecoatinvestor.com mdsurveys you can do this and the white coat investor can help. Head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor Podcast.

My dad, your host, Dr. Dahl, 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.