WCI #213: Rules and Options for Managing Inherited Retirement Accounts

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 is your host, Dr. Jim Dali. This is White Coat Investor Podcast 213 Rules and Options for managing inherited retirement accounts. Well, I'm back. This is the first podcast I'm recording since I got back from my long trip. I've been gone about five weeks. I spent three and a half weeks in the Grand Canyon, was home for four days, basically enough time to unpack and repack and work a couple of shifts and then I was off again to Lake Powell on a canyoneering trip for another week all in. I basically didn't do any White Coat Investor stuff for five weeks and did minimal clinical work in that time period. This is the first time in my life I've basically taken five weeks in a row off. I didn't do that when I came out of residency. I didn't do that when I came out of the military. At no point in my clinical career have I had time like that. It was really cool. I highly recommend it. One of the interesting things about it is I didn't miss work at all. Now, don't get me wrong, I enjoy work. When I came back, I really enjoyed sitting down and talking to patients and helping patients and I'm enjoying recording this podcast and writing blog posts. But I didn't miss it at all, which I thought was interesting because that's the first time that's happened to me in my life. Usually if I'm gone longer than about a week, I start kind of itching to get back and do some work. And so maybe I will eventually be able to retire at some point in the future. That's kind of the message that I got from it. I don't have any plans to right now. A lot of people wonder, you've been fi for a while, a few years now, why don't you retire? And the truth is I've been able to do what I want to do despite working. And so I haven't felt a need to retire in order to travel or in order to spend time doing activities I love or spending time with my family. I've been able to somehow manage to do it all. And part of that's because I've awesome staff. We have great people here that really took care of the White Coat investor while I was gone. In fact, Katie was gone for two of those weeks. She joined me for the last 200 miles of the Grand Canyon. And so we were both basically incommunicado for weeks. I mean, I suppose we had our Inreach satellite text device, but at 160 characters, we weren't exactly trying to do much with that other than let people know we were alive each evening. But it was a great trip. If you've never been to the Grand Canyon, it's really a special place. It's magnificent. I think 99% of the people that go there do nothing more than go to the rim and look over. And let's be honest, when people say we're gonna do the Grand Canyon, they're talking about going to the South Rim. Maybe they do some little short hike on the South Rim, et cetera. And most of the other 1% get on one trail which goes from rim to rim, down from the South Rim and up the North Rim right in the middle of the park, or they float the river. The whole rest of this huge national park is basically untouched wilderness that people don't go to. So if you go to it, it's all yours and it's pretty awesome. And so our Grand Canyon trip, because we launched before a certain date, gave us a few extra days in the Grand Canyon rather than having to get through in 16 or 18 days like a lot of rowing trips do, or even less if you have a motor on your boat. We're able to spend a full 21 days between Lees Ferry and Diamond Creek. And what that allowed us to do was to take layover days and have short days that allowed us to go hiking. Go hiking, explore slot canyons, et cetera. And so it was really a raft supported hiking trip which was pretty awesome. Now, of course, we still had to do all 280 miles of rafting, going through all the major rapids of the Grand Canyon. You know, you've heard of Lava Falls, perhaps you know Sauk Dollager Horn Rapid, Upset Rapid, and of course, you know, the famous Hermit rapid with its 10 waves looking to flip your boat. But we had a great time. We had no flips. Now people fell out of inflatable kayaks all the time. But that's not nearly as big a deal as flipping a raft. But really it was, it was a pretty awesome, pretty special trip in a special place. And I was glad to be able to do it. But I'm glad to be back here with you. I hope you have been having a wonderful spring and that, you know, it's interesting. I went away to the Grand Canyon and Covid was A thing. I came back and it's like, Covid is not a thing. Nobody's wearing a mask. I went to a show the other night, nobody had a mask on. It's pretty bizarre. We still have cases, of course, but the numbers are quite low and still declining here in Utah. I hope that's the case wherever you are at as well. I estimate that 80% of doctors need, want and should use a financial advisor and or an investment manager. Some investment gurus, such as Dr. William Bernstein, think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the white coat investor can help. All right. Thanks for what you're doing out there. You are a high income professional or you're training to become one. That means your job's difficult. Maybe you're a doc, working all night, working nights, weekends, holidays, whatever. Maybe you do something else. But chances are, if you're getting paid well enough that you find this podcast interesting, you're doing something hard. So thanks for what you're doing and contributing to our society. Our quote of the day today comes from Phil DeMuth. He said, if you're looking for an investment advisor, make sure you find them. Don't let them find you. The people who find you will be the wrong people. I think there's a lot of truth to that. All right. Oh, we got something cool coming up. We are having a flash sale of our course. We are selling our fire your financial advisor course and as well as the version of it that offers cme. Remember, that's new this year. You can get CME for fire your financial advisor. Okay, it's a separate course, it costs a little bit more, but the cool news is you can use your CME funds to pay for it. Okay, but this flash sale starts on the 3rd of June and it ends on the 7th of June. The coupon code is 5000SALE. And the reason why we're using that code is because we've sold 5,000 courses. So we're celebrating that by giving a discount on the course. It's a $50 discount. That's $5,000 off the course if you buy it between the 3rd and the 7th of this month. So go ahead and sign up for that. And if you've been waiting for a discount for that, I occasionally get emails going, hey, when's the course going on Discount again? And you know, I mean, it's kind of silly to announce your sales in advance, but we're gonna do it this time. Third to the seventh is a discount for those courses. In addition to that $50 discount, you're also getting a free T shirt, right? We have this WCI store. We got swag. You know, you can go. In fact, if you just wanna buy one, you can go to shop.whitecoatinvestor.com and buy a WCI T shirt. They're pretty cool. I'm wearing one now. If you're watching this on YouTube, you can see that. But if you buy a course between the third and the seventh, you also get a free T shirt of your choice. So cool little promotion we have going there. All right, let's get into some content here. This is a funny question because this one was supposed to be answered a few weeks ago. This was supposed to be answered by Leif Dahleen, the physician on fire when he was guest hosting a few weeks ago, but he punted on this question and left it for me to do when I get back. So, Jessica, sorry about the delay on getting your question answered, but I think regular listeners will forgive Leif when they hear this question. It's not the easiest question to answer and I had to do a fair amount of research on it in order to answer. Let's listen to Jessica's question.

Hi, Dr. Dali, this is Jessica from the Bay Area. I'm not a physician, but I've appreciated your advice ever since I finished my PhD and started a career in bioinformatics. I even appreciated it when I went ahead and bought that Tesla. Anyways, the biotech that I'm working at now has a long term incentive program where they award employees with some combo of RSUs and SSARs which vest over a period of four years. They give us the option to go 5050 SSARs to RSUs or 8020 in either direction. With these awards, the company gave us an info packet and mostly what I took away from it was that SSARs are riskier and more tied to company stock price, while RSUs are more conservative and will always have value. I still don't really understand how these work and I would appreciate your advice. Thanks so much.

All right, first we gotta talk about this Tesla thing. People think I'm anti Tesla. I'm not actually anti Tesla. If you can afford a Tesla, go buy a Tesla and drive it and enjoy it. I actually really like Teslas. I wired the garage when we did the home renovation for electric cars. We actually have three plugins down there for electric cars, and at some point in the future, I'm sure we'll have one. I've actually been debating buying a Tesla myself, so I'm not anti Tesla. I just don't think people ought to roll out of residency and take out $100,000 loan to buy a Tesla. When you can afford it, go ahead and buy a Tesla and enjoy it. They're great cars. I think I may end up buying a pickup before I buy a Tesla, though. Unfortunately, that Sequoia mine just won't die. Man, those things go forever. I think I've got 259,000 miles on it. Had a little bit of a glitch coming back from the Grand Canyon with it, though. It was like it had overheated or something. Didn't actually overheat, but it was like I got bad fuel or something. Let it rest for a half hour after it had been driven hard in the sun, and all of a sudden it was fine. So I guess I don't trust it as much anymore. Maybe I'll replace it sooner rather than later because of that. At any rate, let's talk about your question. This is a great question, and it's one that applies to lots of people, particularly lots of people in the Bay Area like you, but not very many doctors. This just isn't something doctors deal with all the time. So it's interesting, though. So let's talk about it. An RSU is a restricted stock unit. It is shares of stock that you are given by the employer. What do they mean by restricted? Well, it's restricted because you have to vest into the shares. You have to stay there so long. That's the usual requirement. You got to stay there five years in order to be vested. Or sometimes they're tied to performance. Like, you have to have good performance in order for them to be vested. But in general, this is just a method of compensating employees for the success of the company and their hard work. Instead of giving them salary, you get them equity, right? Shares of stock in the company. They're restricted stock units, but they're shares of stock that once they vest, they're yours. Okay? Whether the stock value goes up or the stock value goes down, you get the same number of shares. Obviously, if the company's doing really well, that's worth a lot to you. If the company is not doing really well, it's not worth as much. So your fate is now tied with the fate of the company, which is a great thing, right? I mean, we do something similar here at the White Coat Investor for some key executive employees. But that's the idea behind it, is to get everybody to have skin in the game so they work hard and try to make the company successful. Now, when you are vested whatever the value is on those shares, you're taxed on that. And so usually some of those shares are sold and used to pay the taxes due on those gifted shares. But once they're vested, you can do whatever you want with them. You can sell them, you can keep them, you can collect the dividends from them, whatever you want to do. That's a restricted stock unit. It's not a stock option, it's not a warrant. You actually get shares of stock. The other thing you ask about, SSARs, right, these are stock appreciation rights. This is a type of employee compensation that's linked to the company's stock price during a predetermined period. Okay? So if the company's stock does not go up, these are worthless. The price goes down, they're worthless, okay? So that's the difference. If your company performs poorly, you still get something with the RSUs because you own shares of the company with an SAR. Stock appreciation rights. If the value of the company doesn't go up, you don't get anything. It's not worth anything. And so that's the main difference. And so you don't actually own the stock. You just get additional compensation based on stock price increase. It's generally paid in cash. It doesn't require the employee to own any sort of asset or contract. When it's paid to you, you got to pay taxes on it. They're beneficial to the employers because they don't have to dilute the share price by issuing additional shares. This is not all that different from the setup we have here at the White Coat Investor. It's a slightly different setup just because of our company structure. But basically, if the value of the company doesn't go up, those key executives don't get that additional compensation benefit. And so they're really incentivized to make the company more valuable. So both of these incentivize employees to, you know, make the company successful. Certainly the second type, the sars, incentivize them maybe a little bit more because you might get nothing for it. So what should you take if you're offered the ability to take any combination of these that you want? Well, how do you think the company's going to do? If you think the company is going to knock it out of the park and really the share price is going to go crazy, you may want to go with the sars. If you're a little skeptical about how the company is going to do, you may want to go with the RSUs. I don't know. This is a hard decision. When you're unsure what to do on a hard decision, why not split the difference, go 50, 50, take both and maybe that'll minimize the regret that you feel from having to make this decision. Obviously, the devil's in the details and you ought to look at the detail, the contracts and how they're pricing them and how much they're giving you of each one. But if they are truly priced equally, then it shouldn't matter too much. You're really just making a bet on how well the company does. I don't know that I'd make that bet. I think I'd probably just end up unless one of them looks like really bad deal. When you get into the details, I'd probably just split the difference. All right, let's take our next question. This one's about choosing a specialty.

Hey, Dr. Dali, I'm interested in your thoughts on whether you think it's a.

Good idea to avoid certain specialties because.

Of predicted changes in the future job market. Recently there's been a lot of discussion about em, in particular due to the job market report put out by ASAP that estimates a 9,000 surplus of EM physicians by 2030, citing the increase in non physician providers and vast expansion of residencies.

Do you think these predictions should be.

A sufficient reason to rule out certain specialties like em, or do you think that's unreasonable?

All right, great question. I've been hearing a lot about this lately. That report by ASEP certainly got a lot of people in emergency medicine worried. You know, it's interesting. I signed on to emergency medicine because I liked emergency medicine. I wasn't financially adept enough to even ask questions like this. When I was in medical school, I think I knew about what emergency docs got paid, but that was about it. When I ran my numbers coming out of residency for our financial plan, I think my assumption was that I would make $225,000 a year, every year for the rest of my career. That's what emergency docs were getting paid then. By the time I came on as a partner in a private group, I was making significantly more than that. And. And emergency medicine turned out to have a Better outcome than I expected it would have when I chose it in medical school or even when I was coming out of residency. So that was a nice surprise. You know, it's always had a pretty good hourly rate, but due to the hours you work and so on and so forth, it stacks up about midway through the specialties as far as pay goes. But the opposite could have happened as well. It could have turned out to be not as good and not as lucrative as maybe I expected when I chose it. You know, that has happened from time to time in various specialties. Radiology and cardiology perhaps in particular, have had significant changes in reimbursement schemes over the years that have substantially decreased their income from what was perhaps expected by somebody coming out of training. There's going to be some ebbs and flows in any specialty and in medicine in general, throughout your career. However, the likelihood, I think, of you having a terrible income in any specialty in medicine is pretty low, number one. Number two, the intra specialty pay differences dwarf inter specialty pay differences. I got an email this week from a pediatrician talking about how he makes over a million dollars. Okay, he's not working any crazy number of hours either. He's just running a really efficient practice and has built that practice and has done a number of other things in order to do that. And the point is, I know pediatricians making less than $100,000 and I know pediatricians making more than a million dollars dollars. And so your specialty choice is not nearly as much of a determinant on your income as you might think. Another point is that the most important financial aspect of choosing a specialty is doing something that you will want to do for a long time. You are far better off being a pediatrician for 30 years than you are being an anesthesiologist for 10, right? If you burn out of whatever you choose in 10 years, not only will you have paid a whole bunch of taxes over those 10 years, but but you will not have the benefit of compound interest working on your savings for that time period. You're just better off spreading your income out over longer years. Financially speaking, it works out better. And so as a general rule, you want to pick what you love and will love to do for a long time. Now, if you love two specialties equally, and I think there's a few medical students in this scenario, but not nearly as many as second year medical students worry there are, then sure, choose the one with a better lifestyle and the better pay, you know, and the better outlook in the future. But the truth is, most of us get through our third year, the beginning of our fourth year, and there's really only one specialty we love. And I would not tell you to avoid that specialty because you're worried that PAs or NPs are going to have a larger role in that field in the future, or because the job market is becoming more saturated, or because there are fewer jobs in that particular specialty in any given time. I would not let that impact my specialty choice almost at all, quite honestly. And if that scares a bunch of people out of em, what happens? Well, fewer people apply to em, then there's fewer emergency doctors, there's more job positions, et cetera, and things are okay. I think the fact that this article came out at a time when doctors took a big income hit last year kind of made people worry a lot. A lot of the residents coming out this year in emergency medicine are having trouble finding jobs. And the reason why is because groups aren't hiring. You know why? Because our volumes went down 40% last year and maybe they're just now recovering. People were scared to come to the ER because of further strokes or their heart attacks or their traumas or whatever because they were worried they were going to get Covid. It was not entirely logical, but it was amazing. We sat around in most ERs in the country last April and May twiddling our thumbs because people weren't coming into the er. Now most of that's recovered in my area and I think in most areas as well, but it certainly affected a lot of places. They maybe cut the number of doctors on shift and so they didn't need to hire. And so new residents are having a little bit of trouble finding spots this year. You know, places that are competitive, you know, your Colorado's and your Utahs and places like that are even more competitive than usual. But you know what? We hired two docs this year. It's not like there are no jobs at all. Two of my partners retired because they got sick of dealing with COVID related crap as well. And so there's two new spots for docs that we hired. It's not like those jobs are going away completely in emergency medicine. There's also this reservoir of jobs out there that are filled by non emergency medicine residency trained physicians. And as they retire, those spots become open and most hospitals are trying to fill those spots with an emergency medicine residency trained doc. Those jobs don't tend to be in Salt Lake City and Denver and Portland and places like that. They tend to be more rural. They tend to be in perhaps less attractive climates. But those jobs provide a reservoir that I think will allow emergency physicians to continue to get jobs there. Now, there's another pressure on emergency medicine and its workforce, and that's contract management groups starting their own residencies. And so the number of emergency medicine residents coming out is substantially increased over what it was just 10 years ago. And so that puts some additional pressure on it as well. But I wouldn't let that keep me from choosing emergency medicine. If that's your love. It's a great specialty, it's a great life, it still pays very well. It's one of the best pay by hour worked of any specialty out there. And I'd choose it again. Even in today's environment, I'd choose it again. And so I would not let this fear of what might happen in the future or what is currently happening to especially keep you from choosing it. I would focus more on what type of medicine you love to practice. But sure, if you are choosing between emergency medicine and neurosurgery or whatever, that pays a whole bunch of money, plastic surgery, spine surgery, whatever, then sure, go choose that and enjoy that. But chances are, if you're like most of us, there's only one specialty that's really for you and you'll figure out what it is, your third or fourth year of medical school, and enjoy it. So I hope that helps. All right, let's take our next question. This one is about SEP IRAs.

Dr. Daly, first, thank you for all you do. You're a great resource and I rely on all your publications heavily for my financial education. My question is about SEP IRAs. To make it brief, I'm separating from the Air Force and joining a private group. We love everything about the job and the area. Unfortunately, a few years ago, the partners changed from a 401k plan to a SEP IRA for more investment choices. However, I'd like to continue to take advantage of a backdoor Roth IRA in order to avoid the pro rata role. Could I open a Solo 401k and roll my SEP IRA contributions into that Solo 401 on an annual basis? Theoretically, I would zero out my SEP IRA account before my backdoor Roth contributions and conversions.

Is this a thing?

Do people do this or is this just a pipe dream?

Thank you. Well, thanks for your service, number one. Number two, that's kind of a dumb move. I'm disappointed to see doctor move groups doing that. I'm not sure why. Certainly SEP IR are a little bit easier to administer, but you can max out a 401k on less income than you can a SEP IRA. So also you've got a Roth option in a 401 you might have in a SEP IRA. There's a lot of good things about a 401 over a SEP IRA. So in general, this is not a move that you see groups doing. But occasionally there is a business where it makes more sense to use a SEP IRA or even a simple IRA than to have a 401. It's usually related, however, to the employers trying to avoid putting as much money into the plan for their employees or maybe just trying to trim expenses on the plan. More investment options. I mean, maybe they have some sort of self directed option there, but for the most part you can put anything you want into a 401, including a brokerage window, and certainly get great investment options. That's a silly reason not to use a 401. However, you're kind of in this situation, chances are you're not going to talk your partners out of making this change back. So what do you do now? Well, if you qualify to use a Solo 401, meaning you have some sort of other self employment income outside of this partnership, then yes, you can open a solo 401 for that income. That of course, assuming the plan allows it, and most do now, including Vanguards, which is a new change this year, you can roll your SEP ira, assuming the SEP IRA allows it and most do, into that 401 as often as you like. Now a simple you have to wait two years before you can do a rollover. But a SEP ira, you can rollover anytime. So you could still put your money in the SEP IRA each year, roll it over before December 31st into your solo 401 and do a backdoor Roth each year. Otherwise you're kind of just going to get prorated on your backdoor Roth and maybe don't want to do that, maybe just want to invest in a taxable account instead. But assuming you can open a solo 401, yeah, you could do this. Just remember that your K1 income, your partnership income, you cannot go out and open a solo 401 for that. Even though you're self employed as a partner, you have to use the partnership retirement plan. Real sorry about that, but that's the way it is. Okay, let's take this question about retirement allocations.

Hi Dr. Bally. First off, thank you so much for what you do. I'm a longtime reader of the blog. I've read the book and also listen to your podcast regularly. My question is regarding retirement allocation I know the magic number is 20%, but I'm a little bit confused about how this relates to pre and post tax money. So just for example, my wife and I make about $450,000 a year. We pay about $5,000 post tax for our debt and then we maximize pre tax retirement funds, including her 403B, my 403B and my 457, which amounts to about $60,000 pre tax. And then we each contribute to a Roth IRA, which is about $6,000 post tax, each amounting to $12,000. So my first question is, is this the 20%? And then if it is not, the follow up question would be where should we be allocating further funds? Or where do you recommend allocating further funds to reach that 20% and see long term growth? I appreciate your answers and obviously very appreciative of everything you do.

Thank you. Okay, first of all, 20% is not a magic number. All right? It is a ballpark figure. It's a rule of thumb. It's a guideline. Okay, maybe your number is 18%, maybe it's 23%, I don't know. The point of throwing that 20% out is so people understand you have to save a bunch of money. Five percent is not enough. It's not going to cut it. So a typical American that starts saving right out of college, maybe 15% is fine for a doctor who's going to have less of their income replaced by Social Security and who generally gets a later start. 20% is more appropriate if you want to have a full career and retire on about the same lifestyle as you had during your career. Just a rule of thumb though. So it's not like it's set in stone. But in general, when I use that number, I am talking about of your gross income, your pre tax gross income. So you said you made $450,000. 10% of that's 45,000. 20% of that's 90,000. So $90,000 a year toward retirement. If you want to have the same lifestyle you have now in retirement and you work more or less a full career, 30 years or so. Okay. If you want to retire earlier, you need to save more than that for retirement. Additional savings for college, for a Tesla, for vacations, whatever, that's in addition paying off debt, paying off student loans, that's in addition to that 20%. Now you mentioned something like $60,000 into employer accounts, another $12,000 into a Roth IRAs. Well, that's $72,000. That's not quite $90,000. You're still $18,000 short. So where should you invest that $18,000? Well, you invest it. Once all your retirement accounts are maxed out, you invest in a taxable account. That usually means buying stock, index funds, municipal bond funds, or perhaps buying real estate, but something like that outside of a retirement account. Now, some people have so much retirement space that they can put 20% of their earnings into retirement accounts and not even max them out. But your case is much more common among docs that you hit the cap on your retirement accounts before you hit your 20%. And so some of your savings just has to go into a taxable account. Nice thing about that, you can use it for anything. It's very flexible. You can invest it in anything and you can get to it before age 59 without having to comply with those rules. And you know, it's pretty, pretty convenient place to save money. And there's lots of tax benefits for it as well, right? Long term capital gains rates, qualified dividends rates, tax loss, harvesting the step up in basis at death. You can donate appreciated shares to charities once you've had them at least a year instead of donating cash. There's lots of benefits of a taxable account, but yeah, that's where you need to invest the rest of your retirement savings. All right, we got a guest on the podcast. Let's bring him on. All right, we have guests on the show again today. This is Dr. Jimmy Turner. You know him as the physician philosopher. He is a practicing anesthesiologist out in North Carolina. Welcome back to the White Coat Investor podcast, Jimmy.

Thanks for having me, Jim. Super excited to be here as always.

You've had all this awesome stuff going on over at your site lately. You've got a whole new redesign. Tell us about that and, and why you did that and how it's helping people.

Yeah, so we, we really took a crack at it on that one. So we, we redesigned the site. It was, I guess it ended up coming out just in the last couple months and we're still, still piecing some of that together. But yeah, it's, it's a, a new site with a new design and hopefully a clear, you know, call to what, what our purpose, our mission is over there at Position Philosopher. And so yeah, we're excited about the new site coming up and, and had a good, although a lot more work involved than I anticipated at the beginning.

Now the big font here on the front page is Teaching doctors how to live life on their terms. Why'd you choose that?

Yeah, So I think that at the end of the day, I'm really all about, like, the deeper purpose of the physician philosophers changing the culture of medicine by empowering physicians through their money and their mindset, that will allow them to practice medicine as much or as little as they want. Practice because they want to, not because they have to. And so I'm all about letting doctors practice on their terms and then choosing to practice medicine because they want to. And I think that doctors in that situation are going to be, in the best possible situation, take the best care of patients. So that's. That's kind of the name of what we do now.

You've made a pretty good transition over the last year over at the Physician Philosopher. It's much less of a blog now and much more of a podcast. Tell us why you went that direction.

Yeah, you know, it's a funny journey that we've taken. Yeah. I used to write three blog posts, posts a week for probably a year, year and a half. And then I found out that I actually like getting behind a microphone. And it turns out that other people like listening to my crazy ramblings and send me emails saying as such. And so I really started diving into this medium more and more and really started enjoying it a ton and hearing and sharing people's stories and the experiences that I've had and what I'm learning and the things that we talk to about in our alpha coaching experience to our alpha clients. And sharing that on the podcast was huge. And then Ryan Inman and I have run Meets Medicine for gosh, we're probably 70 episodes in at this point. And that's been a wildly popular podcast that has been a ton of fun to produce because I get to make fun of Ryan all the time, so it's great.

So what's the difference between the two podcasts? You have the Physician Philosopher podcast. Those episodes drop when? Mondays.

Yep, those are on Mondays.

And then you have Money meets medicine. Those drop on Wednesdays. What can people expect from those two podcasts?

Yeah. So if the idea behind the Physician Philosopher is teaching doctors how to master their money and their mindset to live life on their terms, practice medicine however they want, then the Physician Philosopher podcast is certainly more about mindset and the principles that are taught there and that we teach to a lot, you know, our clients and alpha coaching experience, it's kind of a free content way of diving into coaching concepts and mindset work and thought work and the importance of defeating burnout and imposter syndrome and even some mindset stuff. In terms of entrepreneurship and building businesses. Money Meets Medicine, on the other hand, is more of a traditional personal finance podcast where we talk about the money aspect of things. And so the two differences you can expect are one's on mindset and one's on money. And those are the two things that we're all about at the Physician Philosopher.

Awesome. Now you've mentioned a couple of times the Alpha coaching experience. This is the other big thing you've been doing, opening up this, I wouldn't call it a course, I wouldn't call it a class. I think experience is probably the right word, but it opens up several times a year. The last time was a few months ago. Tell us what feedback you got from participants in that experience and what, what it's like, what, what they liked about it, what, what you're changing about it, what's, what's going on with it.

Yeah, so it, that's actually a good description of it because there is course content, video content inside of the Alpha Coaching experience and it's where we, we teach people about the three pillars that we'll discuss here in a little bit, but about money, mindset and designing their ideal life and helping people get to that, that goal of having freedom. And, and really the main purpose there is to help doctors that feel trapped in medicine find freedom. And ultimately, you know, what I, what I would call a trap physician is someone who feels undervalued, overworked, unheard, unappreciated. Maybe they've thought about going part time or leaving medicine altogether. They've thought about building non clinical income to get to financial freedom faster. Or potentially they've tried to change the status quo in medicine and been told that's just the way it is. You know, if anyone is in that situation, that is the sort of person that, you know, really comes into the Alpha coaching experience and has, you know, a really life altering experience. And people, the words they use, you know, game changing, life changing. I think one of the, I'll give you an example, a story of, you know, a couple of our clients that have come into the program, that come from the personal finance community, they come in knowing about money, but they haven't really thought through and talked about where they are on their journey, how close they are or they're not to financial independence. And they come in and we've had a couple of docs, several docs at this point change jobs out of a malignant or pretty terrible situation that wasn't ideal for them or their family after they realized that they had Some choice that they had some options that they didn't previously know they had and wound up in really great situations that were better for them and their family once they realized they weren't stuck, they weren't trapped anymore after they mastered those three things. And so we've had a ton of awesome experiences, from clients who have started side gigs to realizing that they're closer to financial independence than they realize. We have people that have stayed in the same job that they currently exist in, but because they've done the mindset work, they now don't any longer suffer from the imposter syndrome or the burnout or feeling trapped. And so we've had a lot of clients have a variety of different kinds of successes because it kind of is whatever you come in wanting is what it's going to end up being, something you can work on. Because coaching in a lot of ways fills in the gaps to whatever process you're working on. Because all of our clients are super smart. They're intelligent, educated doctors, so they probably don't need me telling them what the answer is. Really, what they need is to have somebody help them figure out where they are and what they want and how then to go about getting that. So, yeah, it's been an awesome experience. We've had two or three cohorts at this point go through the alpha coaching experience. It's been really good. We've got great feedback, tons of awesome testimonials from clients in terms of how it's impacted their life, and it couldn't be more fun or rewarding to help doctors find that freedom they're looking for.

Now, you keep mentioning the imposter syndrome, and there may be some listeners out there that don't know what you're referring to with that. Can you explain what imposter syndrome is and why it's so common among docs?

Yeah. So imposter syndrome is this idea that you are not good at something, you are not worthy of something, you're not enough in whatever topic you might be talking about. So for physicians, sometimes they feel like they're a bad doctor. Sometimes they feel like maybe they had a bad outcome and they blame it on what they did, and they have a hard time dealing with that. And a lot of this really stems from the fact that doctors, we tend to be really hardworking. We tend to have a perfectionist nature about ourselves. And so when we go into something and something doesn't go the way that we want or we're not having as much success as we think or we feel like we're getting Monday Morning quarterback by someone else who says something about our medical care. You could have imposter syndrome about being a mom or a dad. I mean, it really can be anywhere in your life where you don't feel like you're good enough to do whatever that thing is that we're talking about. And so that's the basic idea behind it, is feeling like an imposter, like someone's going to catch you, that you're a fraud, that they're finally going to figure out you're a big fake and that you shouldn't be a doctor, or that you're not good at whatever the discussion is that we're having.

We hear that phrase, fake it till you make it. So these people with imposter syndrome are feeling like they never make it. They're always faking it.

Yeah, exactly.

All right, so a few weeks ago you had had an event you called Financial Freedom Boot Camp. What was that? And can it still be accessed?

Yeah, so the Financial Freedom Boot Camp was a ton of fun. So we, we put it on as a, an hour or two, both days, two days in a row. And yeah, so the replay still exists for this in the Physician Philosophers Facebook group. So people can go and check it out there. There's a link to click and it'll bring you right to the replay for both of them. But yeah, so we touched on the money pillar and the three pillars that we teach and really dove into the hybrid financial independence model. The first day we talked about creating cash flow and the personal finance side of things. And the second day we talked about creating non clinical income and how to figure out what side gig might be best for you if that's something that you're interested in. So those are the two topics we talked about. And it was a ton of fun. Had over a thousand people sign up and hundreds of doctors show up and we talked and got coached and the Q and A at the end as well after we did some teaching. So it was a ton of fun.

Cool. Now, lately you've been talking about a concept you're calling hybrid fi. Explain what you mean by that and why it's relevant.

Yeah, so I, in my own experience, you know, have run into this where. This situation where we have two different kind of groups in the financial blogosphere, podcastosphere, I don't know if that's even a word now, but you know, in this world where we exist, right, personal finance for doctors. And one is the traditional personal finance, teaching the 25x to get to your financial independence number, your low cost diversified index funds or a variety of other savings and paying down debt and cash flow to create basically to get to that number where you can then claim you're financially independent, then are financially independent. And some people just stop there, say that's the name of the game. You just save as much as you can to try to get there as quickly as you can. Which by the way is one of the most common things that we coach people on is they feel like they have to just save every penny they can to get to financial independence as fast as they can. And they burn themselves out doing that. And so that's one aspect. One side of things is getting to that journey fast, fire if you will. And the other side is cash flow. And so like our buddy Peter, you know Peter Kim at Passive Income md, right. So he's all about creating non clinical cash flow through passive income and typically in real estate. And so that's the other crowd that we, you know, we hear a lot about is how to create non clinical cash flow. And once you have enough cash flow every month to pay for your, your family's needs, then you're financially independent by that definition. So the hybrid financial independence model is a combination of those two things because I'm a big believer in the personal finance and cash flow and paying down debt and investing. But for most of us, and I was this way, I realized that I was going to keep saving and it was going to be another 15 or 20 years before I was going to be financially independent and have any legitimate financial freedom to change my family's life. And my kids are 10, 7 and 4 and I wasn't willing to wait that long. So I still want to do those things. I still want to save enough money to be financially independent sometime day. But I also wanted to create some cash flow right now in order to have some freedom to live the life that I want and to coach my kids soccer games and to be at gymnastics or to go to swim practice like I did last night with my little girl. And so I didn't want to have to wait 15 years to have that freedom and to live a life that I wanted to be living. And so those two steps, the hybrid FI model is the two parts. The first part being personal finance saving for tomorrow, and then the second part being creating cash flow for today. So you have some freedom, some flexibility right now. That's, that's the basic premise.

It sounds a lot like just boosting income. When you have more income, not only can you still save the same amount, but you have more money to spend, or you can work less at whatever you're doing. In a lot of ways, that's. That's what it sounds like. How's this different?

Yeah, so the. The difference is, is that a lot of the reason why, if you ask any physician. And Jim, I'd be interested to know what your thoughts are on this, but anyone that I've ever asked in this space, why would you ever go and get a side gig? If you're a doctor who earns really good money, and if you ask them, they'll have different kinds and varieties of answers, but ultimately, what it comes down to is freedom. They want autonomy and freedom, but that often means going and working an extra shift at the hospital, which gets away from the exact thing that a lot of doctors want to do, which is find balance. And so, yeah, you can work harder, you can create more income, and then, you know, squirrel it away and save it. And, you know, you're passively managed index funds, but you could also create nonclinical income through a different source, and that will actually free you and provide some empowerment to those physicians that were trying to help practice medicine on their terms. And so it's different in that it's not necessarily clinically related. And actually, most of the time it's not.

I think it's kind of a sign of the fact that doctors have so much less control over their jobs these days than they used to that they feel like they have to go outside of medicine in order to get that autonomy that they've lost in medicine. It's a little bit sad that way, but there's certainly lots of reasons why people do that. Sometimes it's just an outside interest. They're interested in something. Sometimes it's, I want more income. Sometimes they run into this. It's not really an issue, but an issue I ran into where I sat down in the first few years out of residency and ran the numbers and realized there's a cap. You know, there's a cap on how much money I'm ever going to have. And don't get me wrong, it was enough money, but just the idea that there was a cap on it, I didn't like. You know, and the fun thing about starting a side gig, some sort of entrepreneurial effort, is there is no cap. You know, who knows where it'll go to, right? And so it's kind of fun that way. And, you know, so I think everyone's got a different reason why they may pursue or not pursue a side gig for sure. I've written a little bit about what I call the income approach to financial independence and its pros and cons. And there certainly are pros and cons. For example, one of the cons is it usually involves additional work. You know, traditional financial independence doesn't involve additional work. And some of the pros, of course, which are that it can be reached much faster, you know, which is a huge pro. And you can use that additional work in order to improve your returns, if you will. All right, so you got something new coming up here. You've got some master classes. So let's do an announcement here for this. These master classes are for anyone who wants to practice medicine because they want to and not because they have to. So you are going to be holding a masterclass less than a week from the time this podcast drops. You're calling it the Three Pillars to Physician Freedom. So if you want to speed up your journey to financial freedom through a physician side gig, or you feel trapped in medicine and want to make medicine optional, this is the masterclass for you. It's going to be held on June 8, June 10 and June 12. In the masterclass, you learn how to master your money, including how to create side gig income, but also how to master your mindset in order to practice medicine however you want. So in order to claim your spot, Simply go to whitecoatinvestor.com Coaching spots are limited for this masterclass. Make sure you sign up soon. The link's in the description of the podcast episode. Wherever you're listening to the show, it's in the podcast Show Notes on the White Coat Investor. It's not that hard to remember. Whitecoatinvestor.com coaching check it out. The masterclass is free, correct? Jimmy?

It's completely free.

Now. I'm sure there's always opportunities to sign up for Jimmy's coaching in any opportunity he has. So you know, if you want more, if you like it, if you want a more intensive experience, you can always sign up for the Alpha coaching experience. But this masterclass is free. Come check it out. Get an introduction to the coaching and mindset change. Get some information on how to start and succeed in a position side gig. Learn more about managing your money. You can do all that. Whitecoatinvestor.com coaching what else can you tell us about that experience? Jamie, what should people expect from going to one of these masterclasses? Should they go to all of them? Are they all the same? Is it just a convenient thing or. Or how does it work?

Yeah, it's just three dates for convenience. Each masterclass is the same, so just sign up for whatever date works for you. And the. The additional thing that I'll throw out there is the financial freedom bootcamp that we talked about earlier. I actually gave that free for those two hours, two days in a row, and there's nothing pitched at the end of that. So in the meantime, if you want to check that out, it'll be a bit of a primer for this masterclass and set you up for understanding a little bit more about it. But, yeah, that's the idea behind it, is to teach people about their money, their mindset, and their ideal life. Because as it turns out, we've talked a lot about money, but then that was part of my journey, coming through bankruptcy as a kid, which I know we've talked about before on this podcast. But when that happened, I ended up mastering my money and setting my family on a very good journey for that. But then I ended up, despite the income I was making on the side, and despite the mastery of that, ended up being pretty miserable. And so I talk about my journey through burnout and feeling trapped in medicine myself and what it took to overcome that. And so you can expect to learn about a variety of things in that masterclass, whether it's the personal finance side of things or the mindset side of things, and how to take a deeper dive if you want to. And so I'm super excited to meet people there. There's going to be a Q and A and some discussion at the end. So if you want to interact with me and have some conversation about any of that stuff, I'd be happy to have it. And. And I love talking to people about their money and their mindset. It's my two passions.

Awesome. So it's live event. It's what, about an hour? Two hours? How long is it?

Yeah, it'll be an hour. So It'll probably be 45 minutes to 60 minutes of content, and then I'll open it up to questions, and I typically stay for however long we have questions, and so sometimes it turns into two hours, but you can head out whenever you want, and I'm there just to help people. That's what the purpose is.

Awesome. June 8th, 10th and 12th. It's free. There's no obligation. Whitecoatinvestor.com coaching thank you, Jimmy Turner of ThePhysicianPhilosopher.com for being on the podcast.

Yeah, thanks for having me, Jim. Ton of fun.

All right, we got a Few more questions from listeners here. Let's take this one about med students and federal loans. This one's coming in from Tyler.

Hello, Dr. Dalle. My name is Tyler and I'm preparing to start medical school in the coming fall. I wanted to ask you what your opinions were on current federal loan interest rates for medical school. Through my non traditional background, I'm currently in a position with some flexibility to turn down a chunk of my student loan offer. However, federal unsubsidized loans for the last two years have been set at 4.3%, a little lower after tax. When I look at your personal recommendations from a 2011 blog post entitled Student Loans versus Investing, you actually prioritized investing over loans with low interest rates in this 3 to 5% range. Given these current rates, does it make more sense for students like me to take the entire loan offer at 4.3% and leave the rest of their money invested in savings and retirement? Or for them to stay as close to debt free as possible by paying as much as they can out of pocket? Thanks for all you do. Your advice and content shows a light at the end of the tunnel for students like me who are just now embarking on their training.

All right, so federal student loans right now, if you're an undergraduate, you can get them at 2.75%. If you are in med school, dental school, whatever, graduate school, it's 4.3%. If you get a plus loan, it's 5.3%. That's for loans dispersed between July 1, 2020 and July 1, 2021. Wouldn't be surprised to see that go up a little bit this year. But I agree those rates are pretty low historically, right? You know, not as low as they've ever been. A lot of my classmates refinanced at 0.9% when we came out in 2003. But I remember a mortgage I got in 1999 was 8%, my first mortgage. So rates have been lower, rates have been higher. But here's the deal. When you sign your promissory note, you are promising that the money is going to be used for education. So borrowing extra money in order to invest it is kind of a no. No. Not only is it illegal, probably unethical, and maybe not that smart, I mean, I'm not a big fan of borrowing a lot of money in order to invest anyway, but at those low interest rates, it's not like borrowing at 2% fixed or 3% fixed or even 4.3% fixed in order to try to out invest that. That is a stupid thing to do. It's not a stupid thing to do. It's probably going to work out for you. No guarantees, of course. You got to of course factor risk into the equation, right? Avoiding a 4.3% expense. And maybe it's more than that. Once you tack on loan fees and the hassle of dealing with loans is a guarantee your investment return. There is no guaranteed investment out there right now paying better than 4.3%. You can put it in real estate and hope to do better. You can put it in stocks and hope to do better. You're almost surely not going to do better in CDs and bonds and those sorts of fixed income investments. They're paying like 1 to 2% right now. And so you can't just take a loan at 4.3% and stick in a savings account and expect to come out ahead. You're not. You're going to come out behind. You're better off using that money to pay for school. And in general, that's kind of how I feel about money you have as a non traditional student coming into medical school, the best investment is in yourself and your future earnings ability. So use your money to pay for medical school and your future earning ability. Very few people regret keeping their debt as low as they can and coming out with less debt. You have more options, more freedom, less weight hanging over your head. In general, I think that's the way you should do it. Now if you had money in retirement accounts, I'm not sure I would pull those out in order to pay for med school. I would make sure during those no income years during med school that I did Roth conversions of that money. But I probably wouldn't pull money out of retirement accounts in order to pay for medical school. But a taxable investment account or your savings account, yeah, I'd probably use that before I borrowed more money, but there's no right answer there. That's a little bit of a gray area. And I try not to be too dogmatic about stuff like that when I can be dogmatic about Teslas instead. So good luck with your decision. 4.3% is a little high for my taste in this low interest rate environment to be borrowing in order to try to out invest it it. I'd probably just use that money to pay for medical school and keep your debt down. But you wouldn't be stupid necessarily to maybe borrow a little more and invest it. The problem is people really, mathematically that makes sense. Behaviorally what happens is you end up spending more and then you end up borrowing more and spending more rather than borrowing more and investing more. And obviously that's a losing proposition. All right, let's take another question from Marcus here. Hello, Dr. Dali. I was wondering if it would be possible to make a 529 account for myself.

I don't have a child, but I'm.

Planning on having a child in the future. And so I could be able to contribute money to this fund, let it grow until the day I have a child, and then just transfer it to them. What do you think? Good question, Markus. Yes, you can open a 529 for yourself. Yes, you can change the beneficiary to your child. You probably will not get any sort of state tax break for contributing money to a 529 for an adult like yourself. So keep that in mind. But more philosophically, let's step back for a minute and try to figure out what you're trying to accomplish. Is the goal here really to get as much money into 529s as you can? Because if it is, you can put every dollar you ever earn into a 529. Truthfully, think about it, right? There are limits on how much you can put into a 529, right? But those limits are state specific, and there's 50 states, right? You can open a 529 in every state, and you can open one for all your nieces and nephews and siblings and you and your spouse and your kids and your grandkids. You can put all your money into 529s. You really can. And so I don't know what you're worried about. Are you worried that you're not going to be able to get enough money into there during the 18 years of the kid's life? And in order to pay for college, I mean, think about that, right? Year one, right? That kid's born, you get the Social Security number, you open the 529 account. If you're married, you can put in, right, 15,000 for you, and you can put in another 15,000 into your spouse's 529 for each year. And you can front load that for five years when you first open the account. So that's 75 grand a piece, $150,000 that you can put in there when your child is born, right? They're still breastfeeding. You got 150 grand in their 529. Five years later, you can put in another 150 grand. Okay, what do you suppose that grows to over 18 years? If you're putting in $30,000 a year into 529s. It's a lot of money. It's a million dollars or more, right? It's going to pay for every educational need they have. And you're going to have a ton left over for your grandkids that you can change the beneficiary to. And now you're asking why that's not enough. I got to get more in there. I got to put some in there before the kid's even born. Really? Do you really have to do that in order to meet your educational goals for this kid? I kind of doubt it. So if I were you, I would use that money for other financial goals. For now, I would put that money toward your own retirement accounts. If you're not maxing those out, paying off your student loans, paying off your mortgage, you know, beefing up your emergency fund, saving up for a Tesla, going on a great vacation, you know, saving for your own retirement, some additional money, going out and buying some rental properties, whatever you want. And then when the kid comes, then start putting some money into a 529. But start with the end in mind. Think about how much you want to have in there when they turn 18 and work your way backwards to see how much you got to put in there and when. It may be a lot less than you think. You know, my kids, we originally thought they were probably only going to have enough in there for enough to pay undergraduate tuition here in Utah, which is not that much money. It's somewhere between five and $10,000, depending on the institution, for four years. So that was kind of the amount we were thinking initially for having in 529s, you know, 40 or $50,000 a kid. We ended up putting more money than that in there. But I keep running into these people with 450, $600,000 going into 529. And I'm just trying to figure out where they're trying to send their kids to school. The very most expensive undergraduate school in the country and the very most expensive medical school in the country. Is that really the plan? You know, you just don't need that much money in 529s. It's probably not a great place to put money that's not for education. And so I wouldn't go crazy trying to get extra money in there. All right, let's take a question from Ricky.

Hi, Jim. I hope you enjoyed your vacation. Hopefully it was restful. Actually, your vacations usually are more exciting rather than restful. But anyway, I hope you enjoyed. I did have some questions regarding different asset classes as hedges or if they're good in times of inflation as we're all worried about currently. First of all, I was wondering where did this rumor that gold was a good inflation hedge come from? Is it because it's still one ounce of gold can buy a men's suit as it did 300 years ago today, as well as maybe it did well and kept up with the hyperinflation in the 70s. Also, I was thinking of how REITs actually could probably keep up with inflation, given you can always raise rents in response to rising inflation. Also, how about if I have international in my portfolio? I doubt that inflation happening in the United States will be the same as every other country internationally. So it would seem to me that investing internationally International Index Fund would be a good way to also hedge against inflation that's currently happening here in the US Also. Finally, I heard small cap value is actually a good asset class to have in terms of inflation. If you could also delve deeply into why that would be. Maybe it's because small companies have less operating costs and maybe value companies have lower expected earnings. Any insight into discussing these different asset classes in terms of inflation would be great.

Thanks.

Great question. Yeah, I had a great time. You're right. My vacations are not particularly restful, but they are very relaxing for me. You know, I slept better in the Grand Canyon than I do at home. So it was wonderful to just sleep on a cot underneath the stars for weeks straight. It was really, really great. I think I'm going to be talking about inflation a lot this year. It's really on people's minds, which I'm not necessarily asking why people are thinking about inflation. I think I get that. My question is why weren't you thinking about inflation a year or two ago? Or 3 or 5 or 10? Inflation's a big deal. It is a big issue with your portfolio. And a good part of your portfolio needs to be designed to combat inflation. That's not new though. When I set my portfolio back 15 plus years ago, inflation was a big deal. It's a big fear. When you talk about the deep risks, that's the phrase that William Bernstein uses. The deep risks to your portfolio are inflation, deflation, confiscation and devastation. These are the risks. And we're not talking about volatility. The price of your stocks goes up and comes down, whatever, right? You hold on to the long term, that basically disappears. We're talking about the real risk to losing real wealth in after inflation terms. And inflation is the chief among those, it's the most common. If you look historically across different places in the world, it is the one most likely to devastate your portfolio. So this is not something you should be worrying about this year. This is something you should be worrying about all the time. Okay? Inflation's a big deal. And when you think about what inflation most affects, we're talking about cash, we're talking about nominal bonds, fixed income for the most part. Okay, imagine that you have a scenario. You're going into the 1970s and you put all this money into 30 year bonds, right? So you get this bond that's paying 4% and then inflation goes to 10%. So you are losing 6% a year every year on that 30 year bond, right? So when you get your principal back, you're getting a whole lot less money in after inflation terms than you took out. Reminds me of the student loan. I took out one student loan. It was an Alaska State student loan. It was an 8% loan. I took it out in 1993 for my freshman year and paid for room and board with it. It's a $5,000 loan. I paid it back in 2010. I was allowed to defer the interest through undergraduate, medical school, residency and military service. So when I got out of the military in 2010, I paid it back. Essentially, I paid back a $5,000 loan with $3,200 worth of money in $1993. Okay, so that helped me. Well, if you're on the opposite end of that, that was not a good deal for Alaska. They didn't get any interest and they got paid back a whole lot less money than they loaned me in the first place. And so inflation was not good to the state of Alaska for that purpose. And that is when you are making investments like that. That's why inflation is bad. Now imagine that you had hyper inflation, not just 5% or 10% a year, but you had inflation of 100% a year or 1,000% a year. That's absolutely going to totally wipe out the value of your cash and the value of any of your nominal fixed investments. And so that's a real risk to your portfolio. If your whole portfolio is CDs and Treasury bonds, this is a big risk to your portfolio. Okay, so how do you hedge against it? How do you protect yourself against inflation? Well, the main thing is you need assets in your portfolio that are going to outperform inflation. Okay, if it's earning 10% and inflation's 3%, you're making 7% a year, you're still making gains here. Okay, so the, the first thing is you want to have a portfolio that actually makes money. Right? You want your portfolio to do some of the heavy lifting for you. So it's not just brute force savings for everything you'll need in retirement. So what are we talking about? We're talking about risky asset classes. Stocks. Right. Ownership, equity in companies, real estate. Right. You're taking significant risk there when you're investing in real estate. And so you get paid more in general over the long term, and so you outpace inflation. There are some fixed investments that can help with inflation. Two primary ones are tips, treasury inflation protected securities, and I bonds, a special type of savings bonds that are indexed to inflation and they can help offset inflation. Now that's so important to me in my portfolio design that not only do I have 60% of my portfolio in stocks and 20% in real estate, that's 80% in stuff. I expect to dramatically outperform inflation. But half of my bonds are in inflation index bonds, tips, and so they help combat inflation. Now, the downside of TIPS and I bonds is if you don't believe the government's measurement of inflation. I need to get into this in a blog post in depth. But the bottom line is the only inflation that matters is your personal inflation and the stuff you buy and how fast that's going up in price. If you're buying stuff that's going down in price, then inflation doesn't matter so much to you. But if you're consuming things that are rising faster than the general rate of inflation, education, healthcare, right. Housing right now has been going crazy. Both rents and, you know, buying houses, if that's the stuff you need to buy in the future, you know, then the cpi, the consumer price index that the government's measuring maybe doesn't have enough of that in it in order to really describe your personal rate of inflation. And so people come up with some other measures of inflation and when they use them, they say inflation is 10%. It's something terrible. Now it's not 10%. When I go to the store and I go to the, you know, buy gas, 10% inflation a year is huge. I mean, it is a massive devaluation in your money and its value and what it can buy. And we're clearly not seeing that. It's a very different experience than people had in the 70s when they were really in an inflationary environment. But is it possible that general inflation is higher than the government has stated it is? Sure it is. And if that's a big fear of yours, then I. Bonds and tips are probably not your thing because yes, they compensate you for unexpected inflation, but they measure that based on the cpi. So at least other things that are not dollars, they're not fixed income. Right? We got things like other currencies, you think they're going to do well in relationship to the dollar. We got things like gold and silver. Right. Precious metals. And why do people use precious metals? Well, because traditionally over the long run, they've kept up with inflation. They haven't outpaced inflation like stocks and real estate and even bonds have, but they've kept up with inflation. And in really bad times, people tend to put their money into that stuff, further jacking up the price. And so, you know, in the 1970s, gold did very well and part of that was fear, this flight to safety, flight to a non devaluing asset. And part of it was simply gold keeping up with inflation, cryptocurrencies, people think those might play a role in combating inflation as well. They're so new, I don't think we really know that yet. There's a good chance they could. You want to put a couple, couple percent of your portfolio in there, knock yourself out. But you know what, I said that a few months ago, then I went to the Grand Canyon. Bitcoin was 60,000. I came back, it was 30,000. So that's a lot of volatility, just a hedge against inflation. You better like it for more reasons than that if you want to put a little bit of your money into cryptocurrency. So what else did you ask about? You asked about small value stocks. I don't know that they're any better about inflation than any other stocks. The idea, however, is that higher performance has a higher return, higher risk, and so you expect it to outperform inflation by more over the long run. Real estate, however, probably has a special place when it comes to inflation for a couple of reasons. One, you can raise rents with inflation and of course the value of the property goes up with inflation. So that's good. But on the other side, it's generally leveraged and it's often leveraged with fixed debt, which is awesome. It's a great hedge in inflation, right? I'm not a big fan of debt. I'm not going to tell you to keep your mortgage around forever, your student loans around forever, but fixed, low interest rate loans and inflation, they're a pretty good inflation hedge, right? If inflation is 10% and your debt's at 3%, right? You're basically making 7% a year on your debt, right? That's pretty cool that way. But real estate's leveraged often with fixed debt and so you're winning on both sides. You're raising rents and your debt costs you less in after inflation terms each year. And so that's why real estate's may be particularly good in inflation. Hope that answers your question. We'll try to get into that more on the blog. But yeah, inflation's a big deal. I don't know why people are just now starting to pay attention to it. Just because CPI went from 2% to 4%, you should have been paying attention to it a long time ago. All right, next question is from Ryan.

Hi Jim, My name is Ryan Stevenson and I'm an ear, nose and throat physician working in Lehigh and Provo, Utah. I started this position last summer after completing training. I have a significant amount of student loan debt at 6.8% is federal and 270k in total. I also have some non medical school debt that I'm trying to pay off as fast as possible right now while my federal loan Debt is at 0% and no payments are required each month, at least until that situation expires. I'm not eligible for PSLF and will want to refinance my student loans. But my question is about timing. Perhaps it's a little bit of a crystal ball question. I'm concerned that once all of our federal loans go back up to what they were in my case 6.8%, that the demand for refinancing student loans will increase and perhaps the rates will increase. I don't know whether I am overblowing this, but I'm wondering whether I should try and refinance earlier to lock in a lower rate or whether I should try to take advantage of this 0% as long as possible and try to pay off as much as my non medical school loan debt, hopefully all of it and then as much medical school debt as I can while all of it goes to principal before it goes back up to 6.8% and I want to refinance. Thanks.

Bye Ryan. Thanks for what you do. I also practice from time to time in Lehigh, so if you really want to pay off your student loans quickly, I will just send you more patients. How's that sound? But seriously, this is a big deal. It's a big deal for the student loan refinancing companies. It's a big deal for the white coat investor as a business is a big Deal for all of our readers and listeners. We have tens of thousands, maybe certainly thousands of readers who have been holding off refinancing for the last 18 months in order to refinance the last couple of weeks of September in order to go live, hopefully the first week of October when their interest rate, interest starts accumulating again and their federal loan payments become due. So, yes, we're expecting a massive rush in student loan refinancing come this fall. So not only might rates go up, but your service might go down because they're going to get really, really busy. That's good for us. It's good for listeners like you. It's also good for the companies. But there may be some downsides of everyone trying to get through the door at once. So I think you're wise in considering refinancing a little bit earlier. Obviously, we'd love you when you refinance if you would go through our links. You can find those@whitecoatinvestor.com student loan refinancing. You get cash back. Right now we have a deal going that we will give you our fire your financial advisor course if you refinance your loans through those links. So that's pretty cool deal as well. You get cash back, you get the free course, and you get a lower rate on your student loans. Now, people are waiting because right now their loans are 0%. But there's one company right now, Common Bond. If you go through our links to Common Bond, they'll give you 0% for six months. But wait, six months takes you past October 1st. So you could actually refinance now or in a month or two months or whatever and get even more 0% interest than you're getting from the federal government. And so that's something to keep in mind, right? That's a deal you may not have known about. But in general, yeah, I think this is probably, maybe even worth refinancing a few weeks or a month early in order to beat the rush and avoid that hassle. But there's risk there, right? Maybe the Biden administration comes out and extends it again. Right. Maybe Elizabeth Warren takes over the Senate and somehow convinces all of her colleagues to pass complete student loan forgiveness for everybody. Right? There are some risks there. There are a few people who refinanced last February, February 2020 rather, who then saw their federal student loans go to 0% and no payments due. Obviously, they felt kind of burned by that. And there's always possible something like that will happen in the future. My crystal ball's cloudy, just like my shirt says here, as you can see if you're watching this on YouTube. But you know, that's what I would do. I would plan to be refinanced before October 1st this fall, and I would use a white coat investor link because I think it's a great deal. If you want to look into that common bond deal, you may go even earlier. Just recognize that it's possible that the federal government could give an additional benefit and you might miss out on it. I don't know what to do about that risk other than tell you about it and tell you about all your options. But personally I don't think they're going to extend it again. I think we're kind of done with this and people are actually going to be paying on their student loans come this fall. All right, next question comes from Kevin and this is the one we named the podcast episode for let's Talk About Inherited Retirement Accounts.

Hey Jim, this is Kevin from South Carolina. Could you go over all the rules and options for managing a sum of money that is inherited from a parent after their passing? For example, if I inherit a 401k, a Roth IRA and a taxable account, what are the tax consequences for inheriting these accounts? Should one account be liquidated first? If you want to, say, use the money for a vacation home, is there a benefit of saving one account for the next generation? Is there a way to roll the Roth dollars into my roth account or 401k dollars into my 401k account? It'd be great to get a summary of each of these accounts all in the same place. I appreciate your help. Have a great day and thanks for all you do.

Okay, let's talk about inherited accounts. Remember, this is based on current law. If you don't inherit something for 50 years, laws might be different. Things might change. For example, in Washington, there's some talk about change on the step up in basis that people get right now. Then maybe that goes away. So all I can talk about is what current law is in general. If you inherit stuff from someone that is not your spouse, you only have a few options for it. If you inherit from your spouse, you can roll those retirement accounts into your own retirement accounts and have even more options. Or you can leave them as your spouse's retirement account and have various options. So in that situation, depending on how old you are, it might make sense to not actually roll it into your own account. But most of the time that's what people do. But for a non spouse, if you're the beneficiary of a non spouse inherited ira, there's not that many options, right? If you get an IRA, a traditional IRA, you can stretch that for 10 years. You don't have to take any money out for 10 years, but by the end of 10 years, all the money has to be taken out and you have to pay taxes on it, right? It's pre tax dollars. Same thing. If you inherit a Roth IRA, you got to have all the money out within 10 years, but no taxes due on it. Right? Whereas when you take the money out of that inherited traditional IRA, you got to pay taxes on it. Prior to 2007, 401 s were actually treated differently. Now you're allowed to just treat your 401 just like you would an IRA. But bear in mind that 401 s may offer other options like annuitizing the money and leaving it in the plan for another five years. You may have some of those options. So look into the 401k. If you're actually inheriting a 401k, a taxable account, you get the step up in basis. So it's as though you bought it on the day that the person died. In a few situations, that date can be extended by six months, particularly if that person is estate owes estate taxes. But for the most part you get a step up in basis to the date of their death, which is great, right? If they bought it at $10 a share and now it's $100 a share, no one has to pay taxes on that $90 increase of share. You can sell it the day after they die and you get all the money tax free. So that's great to inherit a taxable account. If you want to spend some money now and you just inherited a bunch of taxable assets, sell them, no taxes due, and you know, buy your Tesla or whatever it is you want to buy. As a general rule, if you inherit retirement accounts, the best thing to do is probably to get as much of that stretch out of it as you can. I would try to leave that Roth IRA money in there for 10 full years, years. Then take it all out at once and reinvest it in a taxable account or use it to pay for your retirement or whatever. With the traditional ira, it's a little more trickier, right? You got to look at your current income. Maybe if you're going to retire in five years, you take nothing out in the next five years and then you take out equal amounts in the five years after that. You know, it just depends on Your situation, maybe you want to spread the withdrawals out over a full 10 years. So you're kind of balancing there the effect of having to pay taxes on it earlier versus having to pay taxes on it all at once. And that just depends on your own personal tax and financial situation. So which one's better to inherit? Well, I guess a Roth IRA is the very best thing to inherit. After that, I'd probably take the taxable money, but I'm not going to look at an inherited traditional IRA in the mouth either. That's great. Wonderful that you get an inheritance, although unfortunate, of course, because of the reason you got the inheritance. As far as leaving money to the next generation, that that particular stretch IRA idea never really worked in the first place and essentially gone now, if it ever was there, you could never give another IRA and get another stretch out of it. You're allowed to stretch it out over your whole life. So if a 4 year old inherited IRA, they could take distributions from it over their entire life. But now that's limited to 10 years, except for certain beneficiaries, which you probably aren't. So you're really probably not leaving this money to heirs. Now, you can manage it with the thought that this is eventually going to your heirs. In that case, maybe you want to invest in a taxable account so they get the step up in basis at death. But essentially this is going to be your money until you die and then it gets combined with your estate and you can leave whatever you want to heirs if you will. But those are the three ways to really inherit money and how you ought to think about it. Now, the worst thing to inherit is actually an hsa. Okay? An HSA is not only fully taxable to you as the heir, but you can't leave the money in there. So it all comes out right when you inherit it and as taxable income to you. So, I mean, it's better than a kick in the teeth, but it's really a lame thing to inherit compared to the other three types of accounts there. And so in general, don't leave your HSA to your heirs. Try to spend it during your lifetime. All right, this podcast is getting long. I hope you enjoyed it. It's great to be back with you. I hope you're all teed up for a wonderful summer. We've got a lot of fun stuff going this summer as well, although I'll be around quite a bit more than I was this spring. I estimate that 80% of doctors need, want and should use a financial advisor and or an investment manager. Some investment gurus such as Dr. William Bernstein think my estimate is way too low. At any rate, if you want to use an advisor temporarily or for your entire life, there's no reason to feel guilty about it. Just make sure you are getting good advice at a fair price. If you need help updating your financial plan or just getting one in place, check out our list of recommended financial advisors@whitecoatinvestor.com financial advisors. You can do this and the White Coat Investor can help. I mentioned a couple other promotions today. If you are interested in the masterclass that Jimmy Turner is putting on, that is whitecoatinvestor.com coaching. If you are interested in the flash sale of the fire your financial advisor course, the coupon code for that is 5,000 sales. Thanks to those of you who've been leaving us five star reviews, we got a whole bunch of them as part of our 10 year anniversary promotion. Here's one we got recently. This one is from gumd. Five stars for wci. WCI has had an immeasurable impact on my family's financial picture and Jim's straightforward approach is logical and simple. It is exactly what doctors need to hear and do. We're easy targets for get rich quick schemes and WCI has educated me on how to avoid these. Save way more than I ever thought I was going to and follow the plan to true wealth building. I started with the blog, I've read the books and I've purchased them for others and now I enjoy and often share the podcasts. Jim, the strength in what you do is constantly repeating the basic tenets. It reminds us all to stick to the plan and keep it simple. Amen to that. Thanks for the five star review that does help us to spread the word about the podcast. All right, this is the end. Head up, shoulders back. You've got this and we can help. We'll see you next week 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.