WCI #173: The Dangers of Robinhood

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. This is White Coat Investor Podcast 173, the Dangers of Robinhood. If you're finding our podcasts informative and helpful, we would encourage you to sign up for our monthly newsletter. It is totally free and includes useful action information not available on the regular blog posts or this podcast. It's almost like being in a secret club. The kind of club that can boost your knowledge and enhance your wealth at the same time with no strings attached. Sign up today@whitecoatinvestor.com Newsletter. You can do this and the White Coat Investor can help. All right, we're recording this on the 18th of August. It's going to run on the 27th of August. So those of you who like your content are produced relatively close to the date you hear it. This one's for you. I suppose this is only nine days between production and listening, which is pretty good for us. It takes a while to put these together. A few things we got going on. Our scholarship contest is coming to a close again. You have to have your applications in by the end of August, 31st of August, midnight mountain time. If you want to apply for the White Coat Investor Scholarship. We're giving away tens of thousands of dollars in cash and prizes this year. If you want that, make sure you get your application in. You can find details at our scholarship page on whitecoatinvestor.com so whitecoatinvestor.com scholarship will take you there. We need two other things as well from those of you who are not in school. First we need some judges. I'm told we only have 40 something judges. We usually have 60, 70, 80, something like that judges. And we don't want the judges to have to read too many essays each. So if we can get a few more of you volunteering, that would be super helpful. Please email scholarshiphitecodeinvestor.com, put scholarship judge in the subject line and we'll get you in there. You can't be a student or resident, but if you're a professional, practicing professional, retired professional, et cetera, then you can be a judge for the contest. We also need people to donate to the scholarship. Katie and I are matching every dollar donated by White Coat Investor listeners this year so your money will go twice as far as it normally would. You can Also donate at that page whitecoatinvestor.com scholarship there's a link there that you can use to donate. So thank you for what you do there. I have another request of you. We want to make this podcast as useful as possible for you. And so we are going to survey as many listeners as are willing to fill out a quick survey. I mean, this thing probably only takes three or four minutes. It's mostly checkboxes, just a survey on what you want out of this podcast, podcast length, guess, things like that. If you would be so kind as to go to whitecoatinvestor.com podcast survey and fill it out, we would very much appreciate it and it will make your experience even better on the White Coat Investor Podcast. All right, let's talk a little bit about Robinhood. Robinhood has been taking the investing world by storm the last few months, and I think it's worth mentioning a few things about Robinhood on the podcast. First of all, Robinhood is just a brokerage account. It's a brokerage account like you can open at Vanguard or Fidelity or E Trade or Schwab or wherever else. At the end of the day, that's what it is. It's a brokerage account. It does a few nice things right. It has no commissions, which helps keep the cost down. They raise money in other ways, obviously, but no commissions. And they allow you to buy fractional shares, which is something that a lot of brokerages do. I think Fidelity's brokerage allows you to buy fractional shares, so it's convenient for those with not a lot of money in that respect. But Robinhood has kind of gone above and beyond this in order to become a bit of a cultural phenomenon and particularly attract young people to who have never invested before. The problem with this is it also tends to inculcate them with a trader's mentality. And so it makes investing exciting and fun and all these things that may be good investing is not. And there's a few dangers of it as well because they make it so convenient and so easy to do that there are a few people that are getting into trouble with it. Which brings us to a really sad story that was run in Forbes recently with the title 20 Year Old Robinhood Customer dies by suicide after seeing a $730,000 negative balance. And the article reads, the note found on his computer by his parents on June 12, 2020 asked a simple question. How is a 20 year old with no income able to get assigned almost a million dollars worth of leverage? The tragic message was Written by Alexander e. Kearns, a 20 year old student at the University of Nebraska, home from college and living with his parents in Naperville, Illinois. Earlier that day, Kearns life So this fellow had started trading on Robinhood because it was so fun and he was looking to get rich. And you know, Robinhood makes it fun and easy, gives you free shares of stocks, makes the commissions free. And actually in the first quarter of 2020 they added 3 million new accounts to their platform. That's 1% of the United States population was added to their platform in one quarter. And so it's obviously a huge trend. And then of course people start staying at home, having lots of time and you know, the stock market's going up and down wildly with the COVID pandemic. And so it really sucked a lot of people in to become day traders. For the first time, day trading seems to be popular again. This is the first time for this generation this has happened. Those of us who are a little older, and I won't tell you how old today. Those of us who are a little older remember the late 90s. And I can remember even as we went into the 2000 or 2002 bear watching some classmates. I don't know how they had money before they came into med school, but they did who are day trading in the med student lounge and talking to doctors who had been day trading between patients and so on and so forth. But I seem to go out of favor after the tech bubble burst for many years, seems to be back now and Robinhood is not helping now they've had, you know, a couple of competitors that do similar things. I think we bull is one of those that just makes trading stocks really, really convenient and seem fun. But you can see if you go to their website, you know, they have cash management and stocks and funds and options and gold and crypto. You know, it says you can tap into the cryptocurrency market to buy Hodl and sell Bitcoin, ethereum, dogecoin and more 24,7 with Robinhood crypto. So it just really sucks people into this trading mentality. Well, investing is not supposed to be fun. It's not supposed to be exciting. You don't need bubbles to burst every time you, you know, balloons to go up every time you buy or sell a stock or make a profit. All that does is make you think you're in a casino. And then you start acting like you're in a casino, which is generally detrimental to your wealth and sometimes even your health, as in the case of this Alexander Kearns. You know, it's really sad because when you get to the end of the story, you see that there was a screenshot from his mobile phone showing a negative $730,000 cash balance displayed in red. But it turns out it was just a temporary balance until the stocks underlying his options actually settled in his account. So he didn't actually even lose the money that caused him to despair and take his own life. So really sad story all around, but not the only interaction I've had about Robinhood in the last month. I actually had one of my high school friends call me up or text me and ask, hey, what do you think about Robinhood? And so I got on the phone with him and spent a half hour or 45 minutes talking about investing and really teaching the basics of investing. And then at the end of the day, I think I sent him a link to this article about this young man, Kearns, as well as a link to Bernstein's if youf can can, that 16 page pamphlet. It's a PDF on the Internet. If you Google, if you can, you'll pull it right up. And he read that. And so I closed the loop about a month later. And he said, what'd you end up doing after our Robinhood chat? And my friend said, I went back and looked at my two deferred compensation accounts and changed them to index funds. They're doing better now and decided it would be better to just put more money into those accounts. I did put $1,000 into Robinhood just for fun and got $500 in Exxon and 500 in Royal Caribbean. I replied back, well, Royal Caribbean had a great month and it sounds like you're doing all the right stuff. And he said, thank you for the good advice. Sadly, I learned a lot from the articles you sent me. I was behind the game, but if I go broke, I'll just move into your backyard. So, good friend and it's nice to be able to help people out. When the student is ready, the teacher will appear. Right? But I've had those companies try to advertise with us here at the White Coat Investor in the past. And like many companies that we have turned down just because we don't believe in what they're doing, we. We've turned them down as well. So that kind of tells you about how I feel about referring you to them and what they've been doing. All right, let's get into some of your questions and answer those. This one comes in by email. I'm a family medicine physician in the northwest 10 years out of residency I've been working at a federally qualified health center since I left residency and it's been a privilege and joy caring for underserved families, but time for me to work in a less chaotic environment and enjoy parenting my preschooler and make a more competitive salary. I'd been planning on starting my own direct patient care practice for about a year, but it was delayed by Covid so I'm going to open next fall instead of this fall. I'm a calm and disciplined investor who can tolerate risk well with planning. However, the uncertainty of life in the last few months, especially daycare as a single mom and potential sick leave needs, make me want to be a little more conservative with my business plan. My previously well researched business plan was starting with 120,000 in cash savings and a couple of small side gigs. This would cover a year of my living expenses, $65,000 annually, $20,000 to start up and eight months of practice expenses. I would have no staff to start. I'll have an additional $20,000 in savings by waiting a year and continuing on my tight budget. I plan to not take a business loan, but have an array of options related to side gigs and assets if things go very slowly. Since this has been delayed by a year, what are your thoughts on where my written financial plan savings should be going for the next 12 months? Should I put the full 25% for retirement in the next year funding my Roth 403B HSA in taxable accounts knowing I may need to borrow against them or use them in a couple of years? How about the $6,000 to $10,000 I typically put into the college fund annually? I already have a lot in cash because of my business plan and I plan to not fully fund retirement this year and likely next year, especially the taxable in 529. But I don't like the idea of missing another year of tax advantaged savings assuming I will not have the income to save for retirement for one to two years once I start the business. Are there problems with having a backup that involves borrowing against a house or retirement plan short term while I get a steady income? Does the recent likely future market downturn affect this substantially? Prior to this downturn, I also considered cashing out taxable investments if things were dire, but it seems like it may be a bad idea to plan for that given the market. Luckily, I did cash out $30,000 for my taxable account as the market hit its high in February. I have no delusions about being able to time things in the future. So I got a salary of $160,000, cash of $110,000, taxable investments of 80, $40,000 in a Roth IRA, $30,000 in HSA, $370,000 in a 403 and some money in a 529. I've got a mortgage and $100,000 in student loans. Okay, well, let's go through your questions one by one. First of all, investing in yourself, investing in your future earnings, investing in your practice is a great use of money. It might mean you miss a few retirement account contributions for a little while to do that, but it's usually worth it, especially if it means a higher income long term going forward, and especially if it means you're happier because that means that you will have more longevity in your career. That gives more time for your investments to compound, more time to make Social Security contributions, more time to actually save and invest. And you generally do better financially by being happier. I also love seeing the well thought out business and financial plan. When I see that, I know you're going to be fine. Right? A doc who can live on $65,000 despite making more than twice that is going to be fine. And I think this doc is probably going to use less of that cash than she thinks and be profitable sooner than she thinks. At which point she can use that cash to pay off the rest of the student loans, which is probably what I'd do before I put too much more into taxable investments. But where should savings go in the next year? Boy, I'd really lean toward just keeping it in cash for now until the business is stabilized. I'd hold off on both retirement and college contributions until you know, you're there. If you're going to fund anything, I'd fund the retirement accounts, but certainly not the taxable account or the 529s. Those can wait. And you can always catch up on both taxable and 529 accounts. So there's not even really anything lost there other than a year's worth of tax protected earnings, which is not much compared to the benefits of having a little bit of extra cash around when you're having a major life change. I think it's okay to have a backup that involves borrowing against your assets, but if you really need it, you're probably seeing so few patients that you'll have time to do more side gigs and, and you really ought to be looking into those. First, a couple other things you mentioned. The recent and likely future Market downturn? Well, my crystal ball is cloudy as always, but the recent market downturn is essentially completely recovered. There's always a future market downturn out there. I don't let it affect my plans. I have no idea what is going to happen in the short term. I would not consider cashing out in February to be a good sign. It suggests to me that you may have difficulty staying the course going forward. So I'd spend some time really analyzing that decision and maybe even dialing back the risk in the portfolio. Obviously, in retrospect, assuming you reinvested that money in March, that worked out great to pull the money out in February, but most of us are unable to time that well on both ends. And I suspect that money is probably still sitting in cash. And so yes, you avoided the fall, but you also avoided the entire recovery, so you didn't really come out ahead there. So I'd be careful with this idea of being able to pull money out and somehow time the market going forward. But other otherwise, I think you're going to be really successful and really happy with the direct patient care model. All right, let's take our next question off the speak pipe. This one's from Ray.

Hi Jim. I'm a surgical subspecialist in South Florida. About four years into practice. I have a question about whether it makes sense to invest in bonds in a taxable account when somebody has a mortgage at 4% to be making payments upon. My wife and I have a annual gross income of $500,000. We max out all of our retirement allocations and tax deferred and backdoor Roth accounts. And after having paid down our non mortgage debts, we have about $7,500 additional per month to put into taxable accounts or to throw at the mortgage. We have put about 2,500 of that into the mortgage. That's a 30 year fixed at 4% with a balance of about 625,000. And then we've taken about 5,000 of it to put into a taxable account, which is small, it's young, but which is balanced 100% into equity. Our thought was that it didn't make sense to put money into bonds within that taxable account when we had a 4% mortgage. Does that make sense? Our retirement contributions are largely in target date funds that are balanced between stocks and bonds. Thank you for everything that you do. It's been extraordinarily helpful.

Okay, so the question is, does it make sense to invest in bonds and taxable when you have a mortgage? And really it doesn't. And the reason why is that mortgages function as a negative bond. So anytime you pay down a mortgage is just like investing in bonds, except for most of us, you're getting a guaranteed return higher than what you can earn in bonds. So it's even better deal than bonds. Even if you only have a 2.75 or 3 or 4% mortgage, it's still better than what you're earning in bonds these days because bond yields are so low. So I pretty much didn't have a taxable account at all until my mortgage was gone. Now that taxable account is larger than all our other accounts combined. And it's really amazing how much you can save when you have no other payments. So I highly recommend that. But in general, you know, it's perfectly fine to go 100% stock while you have a mortgage as long as you can tolerate the fluctuations of the market. If you panic and sell from that portfolio, well, you probably would have been better off having some bonds in it. But the truth is that a mortgage functions as a negative bond. And so it's okay to put what you would have been putting toward bonds toward that mortgage to try to pay it off. And I hope that's helpful. Okay, next question comes in by email. My question is about factor investing and tilting towards small cap value. In particular, I understand that historically small value has done better than the total market, but it has struggled more recently. My question is, isn't it possible that small value stocks were priced too low historically? Then studies and articles came out about how great of a buy they were and now their pricing is corrected such that their long term returns are consistent with the rest of the market. Yes, that is possible. It is one possible way to interpret the data. The market generally prices in all the public knowledge that's out there. So once it became widely known that small value historically outperformed, wouldn't you expect the increased investment that area to close that price gap and lead to performance consistent with the rest of the market? Or put another way, I have a hard time believing that one category of stock will just continue to outperform everything else over a long time because everyone would buy it and the price would go up. I know you tilt towards small cap value, so I'd love to hear your response to this. And if the answer is there's more risk, so more reward, then please clarify why small growth stocks which are more risky, wouldn't have even greater returns. Thank you. Okay, so yes, it's possible. It's possible that that phenomenon is just A result of data mining. Our data in finance is very limited. You got about 100 years of good data and another 50 or 100 years of okay data, and that's it. And you probably only got it in a handful of countries, and most of those countries besides the US you've only got it going back 30, 40, 50 years. And so the data is really limited. And it's possible that you're just finding, you know, a fluctuance in the data that is not actually a true thing. This isn't physics, right? You can't run the experiment a thousand times and really be confident in your answers. It's investing and it's a bit of a social science in that respect. So that being said, those who really believe in and know about small in value, this factor investing, they believe that it is probably a risk story that small value stocks are riskier than large growth stocks. A smaller and smaller the company, the fewer products they have, the less cash they have, the less ability they have to weather a big economic storm. A value company, of course, is also generally in a more precarious position than a growth company. And so in that respect, it's also a little bit more risky. So the idea is that you are paid more, your return is higher in the very long run for investing in small value stocks because you're taking on more risk. Part of the story may also be what we call a behavioral story. Basically, people avoid these stocks. They like the sexy companies they've heard of, they like the Fang stocks, your Apples and your Facebook and your Netflix and your Zoom kind of stocks because you've heard of them and you know they're growing rapidly and they're in the headlines. And so because of that, people are more likely to invest in those stocks and stay away from small value stocks. And I don't see any reason why that would change either. I mean, the risk story is not going to change. The behavioral story is not going to change. There have been long periods of time, of course, where small value did not pay off, where it was outperformed by the overall market and other segments of the market. And so you have to expect that going forward, that even if over the 30 to 60 years that you invest, even if small value wins over that time period, you should probably expect a 15, 20 year time period somewhere in there where they underperform. So it's really a lifelong commitment if you're going to invest your portfolio and tilt it toward small value stocks. So that brings us to small growth. What is the deal with small growth well, for a long time, people talked about small growth being a black hole, right? That it suffers from a lottery effect where people are essentially taking a gamble on these stocks in hope that they're finding the next Facebook. And so because of that, they're willing to accept lower returns, just like people buy lottery tickets, knowing that they're probably losing their entire investment. But maybe, just maybe, they're going to strike it rich. And so that is why they have postulated that there has been this poor performance of small growth in the long run. Of course, in the last 10 years, the performance hasn't been that bad at all. And so maybe that was just a factor that came from data mining and isn't real either. But only time will tell. In some ways, you only get one ride around on this roller coaster and you got to, you got to make your bets and take your chances. And so that's, that's what you're doing with small value investing. You might believe that over your time horizon, it's going to pay off. But don't tilt your portfolio more than you believe. Otherwise, you'll panic in a moment like this and end up selling low just before small value starts doing really great. All right, let's take our next question off the speak pipe. This one's from an Anonymous listener. Hey, Dr. Dolley, thanks for all that you do. I am currently an emergency physician working two different 1099 jobs. But one of those jobs will be transitioning to a hospital based employee with W2. I'm wondering if there's a way that I can decrease my amount of estimated tax that needs to be paid over the next five months or do I have to continue with the estimated tax based on last year's income? I also, I don't know how this will affect my ability to max out my individual 401k. Thanks for any advice. Okay, so it sounds like this listener is going from a 1099 job to a W2 job and still some 1099 work. So wants to know, do I have to keep making estimated tax payments? Well, I don't know. It depends. You know, if that W2 job is the vast majority of your income now, and you're having enough withheld from that, you might not have to make quarterly estimated payments anymore. Chances are, though, that you're probably still going to have to make at least some quarterly estimated payments. They'll just be smaller. The idea is between your W2 withholdings and your quarterly estimated payments, you need to get into the safe harbor and the safe harbor for A high earner is either paying 100% of what you owe this year, paying 110% of what you owed last year, or being within $1,000 of your tax bill. If you are not in that safe harbor, you'll owe some penalties. So expect that. So you make your best guess and you do the best you can. One really cool trick that you can do with W2 withholdings is that you can have more withheld at the end of the year and it's treated by the IRS as those withheld evenly throughout the year. That's different from quarterly estimated payments. You can't just pay all your taxes in your fourth quarterly estimated payment or the IRS will nail you with some penalties because of that. The only way you can pay all your taxes at the end is if you make all your money at the end. Otherwise you'll owe some penalties. And so keep that in mind. But you can do that with W2 withholdings. You just have to go in there toward the end of the year and increase the number or decrease the number of whatever you call them, the exemptions that you're claiming. Okay. Also keep in mind the rules for multiple 401 s. Okay? If you have two separate employers, right? Yourself on the 1099 income and your employer on the W2 income, you can have two 401ks. Each of those 401ks gets a $57,000 total limit for contributions, but you still only get one $19,500 employee contribution, no matter how many 401ks you're eligible for. And so what people typically do is they put $19,500 into their employer's 401k, they get whatever match they're offering, maybe it's another $10,000 and then they put 20% of their self employment earnings into that solo 401k. And so that's probably what you'll end up doing, I suspect. All right, let's do our quote of the day. This one comes from Charlie Ellis who said over the past 20 years, more than four out of five of the pros got beaten by the market averages. For individuals, the grim reality is far worse. So if you're not investing in index funds, you better have a really good reason to do so. Our next question comes in by email from Matt from New York. Says, my wife is leaving her job this month to become a full time stay at home mother and I'm unsure what I should do with her 401. How would one calculate, make the decision between one keeping the account open and continuing to make yearly backdoor Roth IRA contributions. Or two, move her assets into an individual IRA and contribute to a brokerage account instead of the backdoor Roth IRA. In our case, the existing average mutual fund and 401 fee is 1.53% per year, and the new average expense ratio would be 0.25% per year at the backdoor Roth IRA or the brokerage account. Seems to me the option 2 is mathematically the better choice, but I'm looking for a second opinion. Well, it depends. It depends on how long that money stays in that 401k. For example, let's say your wife takes a job in a year and has another 401k, it's a good 401k, and you roll over that money into the 401k. Well, in that case, you would have been better off doing the backdoor Roth IRA because you only had to pay that higher fee for a year. But on the other hand, if that money is going to sit in that 401 for the next 30 years, well, that's going to add up quite a bit at 1.3% per year, in which case you may start wondering if it's really worth it. But it's not like there's no benefit to having a backdoor Roth ira for those 30 years. So I think in this case I would go for the backdoor Roth ira, but I would consider a few other options. First of all, if this is a relatively small 401k, rather than leaving it in that 401k, you might consider just converting it to a Roth IRA. Maybe wait till next year when you're living off only your income, pay the taxes and do a Roth conversion. Convert it to a Roth ira. That's another thing that allows you to do backdoor Roth ira, but also allows you to have relatively low expense ratios on the remaining amount of money. And I think I'd try to do that if it was a relatively small 401k. Now, if this is some $400,000 401, maybe that tax bill is just too much for you to swallow at this point, in which case you're left with your dilemma. But I think for now I'd probably leave it in the 401 if that's your only choice, and start doing backdoor Roth IRAs. It's not like you can't change your mind at any given time and roll that money over to an IRA if you want. Our next question comes from Sam. Let's take a listen on the speak pipe.

Hey, Dr. Dali my name is Sam and I'm a brand new intern in ENT this year. I was fortunate over the last three to six months to have a lot of free time at the end of my fourth year as well as the quarantine era to dive into my financial education, which I exclusively give the credit to you for. After reading your book and listening to your podcast, I have a philosophical question for you about investing. A Classical three fund portfolio has one to one relationship of US Stocks to international stocks. In my mind, this seems a lot like it's just an international stock fund with a really heavy US Tilt. Is there a reason this is so common? Does the US just have that much better returns to where it justifies this? To me, this seems like it's going against the common wisdom of not putting all your eggs in one basket. It also seems similar to how you're often encouraged to not have a significant portion of your portfolio and the company you work for. I just wanted to see if you had any thoughts about this. I appreciate all your insight and I'm so appreciative of all you do. I proselytize you to anyone that will listen to me that's in the medical field. Thanks again.

You know, you guys are getting really good at asking the harder questions on these last few podcasts, and nobody's asking me the same ones I've answered 100 times over and over again. Those ones are much easier. So Sam's a new intern, is already pretty smart about money and investing. He's saying, why would you tilt toward U.S. stocks? Isn't that the same as home country bias and investing in your own employer's stocks? Well, not entirely. First of all, the US Has a few advantages, right? For all its problems, it is the most financially successful country that has ever existed in the world and has some unique freedoms and liberties and institutions and cultures that make a difference compared to some other countries. And so if for no other reason, tilting a little bit toward the US is not entirely crazy because of that reason. In fact, Jack Bogle doesn't even think international stocks are necessary at all because US Companies do so much business overseas. Obviously lots of people disagree with them. The other thing that would suggest maybe you should tilt your portfolio a bit toward US stocks is that you're going to spend dollars in retirement. And so by doing so you reduce the amount of currency risk that you have. For example, if the dollar weakens dramatically, or rather the dollar strengthens dramatically, and you have a bunch of money in overseas stocks, those returns are going to be relatively poor. Now, my portfolio is not one to one, US to international. It's actually two to one US to international. So in that respect, because I have more than the market weight of US Stocks, I suppose I have a US tilt to my portfolio and I'm perfectly happy with that. I think reasonable is anywhere from about 80% of your stocks being US stocks to market weight, which is around 50 50. But lots of people disagree on this topic. The most important thing is whatever percentage of international stocks you decide to have is to pick something and stick with it, knowing that over the long run, international stocks are going to outperform US Stocks in some years and US stocks are going to outperform international stocks in some years. And you want to make sure you own the winning class when the time comes. So don't get caught performance, chasing, doing whatever has done well in the recent past because you get burned doing it. Thanks so much for what you do. Medicine in particular is not easy these days. Walking into a hospital or clinic sometimes feels like you're going to war. You know, I could sense that when I went to the dentist recently. You know, walk in there, masks are mandatory. They've taken all the chairs but three out of the waiting room. You know, the place is getting sanitized like crazy. And you should have seen the dental hygienist, how she gowned up before taking care of me. I mean, she's got twice the PPE on that. I had intubating patients in the er, you know, everything short of a PAPR respirator mask. But, you know, we all feel a little bit like we're going to a war zone these days. So thank you very much for what you do. It's not easy, it is risky and it's certainly not the easiest way to have a high income. But if nobody's told you, thank you today, let me be the first. Let's take another question. This one comes from Ankur.

Hi Dr. Dalle, thank you for everything you do. I wanted to know if there is a way to set up a brokerage account to be able to invest in syndications. I tried calling for Dalit and tried setting this up myself. However, I was told that this can't be done. I know we can invest in real estate through the ira, but I was wondering if something can similar be done through the taxable account. The main reason for me to do this is our taxable account is held in done is by entirety and I would like that asset protection benefit of that. If you could provide some guidance.

Thanks okay, this is an interesting question because it reflects a little bit of a lack of understanding. Right? He wants to know, how do I set up a brokerage account to invest in real estate? Fidelity won't let me do it. Well, you don't need to go through Fidelity. I mean, if you want to invest in private real estate, you can just go to the person offering the private real estate investment. If that's a syndicator. Right. You're basically buying into an LLC is what you're doing using a private placement memorandum. So what is formed when you do that? A new company, an llc. That's what you're invested in. You're not investing in through an account at Fidelity or an account at Vanguard or an account at Robinhood. Right. You're just going straight to the syndicator. Same thing. If you go to a private real estate fund or a company that offers private real estate funds, you're opening an account with them. And that works really well for taxable accounts. But because you can have 15 taxable accounts all over the place, it's no big deal. It's a little bit trickier. If you want to invest in these investments through an IRA or a self directed 401k in that respect, you'll need a special account that you go through, you know, some sort of a checkbook account where all the money that goes into that investment comes out of this account and all the income from that investment goes back into that checking account because it can't go to you personally. So it's a little more complicated. If you want to do it inside a retirement account, it's very easy if you just want to keep it in a taxable account. But you don't have to go to Fidelity or E Trade to open anything special to do it. You can just go straight to the investment. I understand what you want, though. What you want is to title that account as tenants by the entirety. So try to provide you some asset protection. If one or the other member of the couple gets sued above policy limits and that judgment is not reduced on appeal, although that's very, very unlikely. It isn't, you know, zero percent that that can happen. But I think you will find when you go to these private real estate investments, whether they're funds, whether they're syndicators, whatever, I think you will find that they will let you buy that share of that llc, become a member of that LLC with whatever entity you want. It can be an ira, it can be a trust, it can be in your name, it can be your name and your spouse's name. It can certainly be in your and your spouse's name tenants by the entirety that I'm sure they'll let you invest in that manner and so I don't think that's going to cause you any problems at all with this. Thanks for those of you who've been leaving us five star reviews and telling your friends about the podcast, it really does help us get the word out about this. One of our more recent reviews said this this is from Meg and thanks for this Meg. Dr. Dali provides detailed yet easy to understand financial advice for the high income professional. I've been listening to podcast his for years. I appreciated episodes number 137, 139 tutorials of those paying off their student loans and others who have achieved financial success so much that they finally motivated me to write this five star review. I hope Dr. Dali will make these podcasts an end of the year tradition. Thanks for all you do. Five stars. Thank you for that Meg. Remember, if you would like to win the White Coat Investor Scholarship and you are a medical or dental student or other professional student, please apply. You have until August 31st to do so. We need more judges. Okay, email scholarshipecoatinvestor.com we need people to donate to the scholarship. You can do that@whitecoatinvestor.com scholarship. If you're finding our podcasts informative and helpful, we would encourage you to sign up for our monthly newsletter. It is totally free and includes useful, actionable information not available on the regular blog posts or this podcast. It's almost like being in a secret club. The kind of club that can boost your knowledge and enhance your wealth at the same time, with no strings attached. Sign up today@whitecoatinvestor.com Newsletter. 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. 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.