WCI #219: Financial Priorities as a New Attending

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 Dahli. This is White Coat Investor podcast 219 Financial Priorities as a new attending, getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status, and one in seven doctors get disabled at some point during their career. Because these policies can only be purchased through brokers, we put together a list of vetted agents who are experienced with working with the specific needs of medical professionals and who have your best interest at heart. If you have questions about insurance and what kind of policies would be the best fit for you, check out our insurance recommended list@whitecoatinvestor.com insurance and feel the peace of mind that comes with knowing you have the optimal policy in place. You can do this and the White Coat Investor can help. All right, welcome back to the White Coat Investor Podcast. We've missed you guys. It's been a week, right? Actually, we're recording this the same day as the last one recorded. It's only been about an hour for us, but for you it's been a week. So here we go. This one we're recording what's today? June 17th. It's going to run on July 15th. So if it sounds out of date, that's why it's about a month before, before it actually runs. But I think most of what's going to be in this podcast is going to be just as up to date a month from now as it is today. All right, let's do a quote. This one's from William Bernstein. He says, how do we know that economists have a sense of humor? They use decimal points. There are just too many variables to pretend great precision. You might as well try to mathematically model your love life. I think there's quite a bit of truth to that. You know, the social sciences themselves are not physics by any means, and finance certainly has a lot of things coming into it and going out of it all the time that are influenced by people. And when you put people in the mix, things get weird. Those of you who practice medicine, especially psychiatry, know that very well. Thanks for what you do. By the way, whether you are exercising today, out hiking, whether you are racing the Tour de France, as one of our recent listeners, is whether you are going to work, coming home, whatever. Thanks for watching you do your job's hard and someone ought to tell you thanks for doing it. All right, in case you are not aware, we are giving away Fire your Financial advisor to anybody who refinances $100,000 or more of student loans through the White Coat Investor links. This is a win, win, win deal. If you're not going for forgiveness with your student loans, you can get a lower rate, you get cash back, you get a free fire your financial advisor online course, and you get better service than you're probably getting from your prior student loan companies. So it's really a pretty great deal. Not only will you get the amazing cash rebates we've negotiated, but now you'll also get another $799 in value that course. So join more than 5,000 other professionals who have created their own financial plan with the help of the White Coat Investor. That's valid for loans initiated from May 1st through October 31st, 2021. You have to claim the course within 90 days of loan disbursement. You can do that@whitecoatinvestor.com refi bonus all right, let's talk a little bit about financial priorities as a new Attending. Lots of those. It's a really complicated time of your financial life. Actually, probably the most important year of your financial life is that first year out of training. In fact, if you tell me what you do with your financial Life and that first year out of training, I can predict the next 30 or 40 years of your financial life with surprising accuracy. So let's talk about some of the things you ought to be thinking about. It's July, right? We got a bunch of new Attendings out there. Tick these off in your mind as we go down this list and make sure you've gotten them all taken care of. If you don't start working today on those that you don't have taken care of. All right, the first one is probably going to be to upgrade your disability insurance. Most of the time as a resident, you can only buy $5,000, maybe $7,500 worth of coverage, and most Attendings probably want and need more coverage than that in the event that they get disabled. Typical Attending amounts seem to range from $10,000 to $20,000. Now remember, you have to not only be able to live off that amount, but you have to also be able to save for retirement because this policy is only going to pay until you're 65 or 67. So take a look at your disability insurance. If you don't have it yet. For heaven's sake, go get it. You should have bought it as an intern. But if you still don't have it, go get disability insurance. But it's a good time to take a look at it, make sure you have enough. Maybe buy another policy. Maybe if your health has changed or you took up some dangerous hobbies, exercise your future increase option rider and get that in place. Same thing for life insurance. If you have anybody else. Depending on your income, you need term life insurance, big fat policy, some sort of seven figure policy. Maybe you had $1 million as a resident, maybe it's time to bump that up to $3 million or something like that. So take a careful look at that as attending. While disability insurance is kind of expensive, life insurance is pretty cheap. No reason not to have enough. Likewise, while we're talking about insurance, it's a good time to put an umbrella policy in place. Remember, an umbrella is an excess personal liability policy that you stack on top of your auto insurance and on top of your homeowner's insurance. You usually buy it from the same people that you're getting those policies from. And instead of having a $50,000 limit, you're you now have a million dollar limit or a $3 million limit or a $5 million limit. And these are pretty cheap. Just a few hundred dollars a year gets you way more coverage than your state minimums on your auto policy. About 80% of umbrella policy claims are actually auto related. So it's really mostly an excess auto liability policy. But think about it. You run over some CEO driving a Tesla, $50,000 isn't going to go very far. That's not even going to pay for the car, much less the medical bills. And then the lost earnings from that person you hit. You know you need more liability coverage than that. Next thing is your student loans. Okay, if you don't already have your student loans taken care of, now's the time to make sure you have a plan in place. If you need help putting that plan in place, we recommend studentloanadvice.com if you already got it figured out, chances are good that you need to refinance. If you haven't refinanced private loans already, make sure you do that. You might want to do it again now that you're an attending and qualify for better rates. But this is also the time if you're not going for forgiveness, this is the time to refinance your federal loans. Go get a cash bonus, get a free fire your financial advisor course, get A lower rate, get better service, and get those suckers refinanced. It's not unusual at all for me to see people take their loans from 6% to 2%, the shorter the term. And if you're willing to run the interest rate yourself with a variable rate loan, the better rate you get. And what's interesting is people who took that advice the last few years and then had rates fall on them ended up having student loan rates under 1%, which is pretty phenomenal, right? Almost everything you're paying at that point is going toward principal rather than interest. So that's a good thing. This is a good time. If you don't already have it in place, and I hope you already do. But if you don't put a budget plan in place, a spending plan, right? You need to be living like a resident at this point in your life, right? You come out of residency, this is the live like your resident, live like a resident period. It lasts two to five years, okay? You don't have to live exactly like a resident. You can give yourself a tiny raise, but don't grow into your tenant income all at once. Take the difference between your tenant income and your resident lifestyle and use it to build wealth to pay off student loans, save up a down payment on your dream home, max out retirement accounts, build an emergency fund, all that kind of stuff. The issue with most new attendings is you have more to do, more good uses of money than you have money. And so you have to prioritize those according to what your priorities are. But eventually the money's going to run out probably before your good uses for it. And that's why living like a resident matters, because it gives you way more money to spread among all those great things you have to use your money for. If you have credit cards, you got credit card debt. You are not unusual. Many new attendees have been dragging credit card debt all the way through medical school and residency just making minimum payments. Now's the time to wipe that stuff out, right? As an attending, every month you're having 15 to $40,000 hit your checking account, wipe out those credit cards. How big can they be at this point? Do you really have more than 5 or 10 or $30,000 in credit cards? You can wipe those out in just two or three months. Same thing with your car loan. You got some $8,000 car loan because you had to replace a car in residency. Go, knock that out, be done with it. Get it out of your life. Simplify your life. Make sure you have a written financial plan. In place. If you don't know how to do that to put that plan in place, try the fire your financial advisor course. If that doesn't work, at least the course will teach you how to find a good financial planner that can help you do that. You can find financial planners as well at the White Coat Investor website under our recommended tab. And of course, now is a great time to start paying on those student loans, right? The whole point of live like a resident is to get that schooling paid for. You're not really done with medical school until you've paid for it. So let's get it paid for, right? If you're like most doctors, average doctor, average debt, you should be able to wipe out that medical school debt in two to three years of living like a resident, and then you're done, you're free from it. If you want to change careers, you can. If you want to cut back, you can. If you want to rush toward financial independence, you can. If you just want to live the good life, you can. Because you don't have those loans hanging over you every month, and that 2, 3, 4, 5, $6,000 a month, whatever you're paying toward them every month, you can now redeploy toward your other financial goals. Or you can just take a really great trip every single month. It's really up to you. But get that knocked out and out of your life, okay? Another great thing to consider when you are brand new attending is Roth accounts, right? In general, Roth is good for residents. Unless you're playing games with your student loans, try to get more of them forgiven. You want to use Roth accounts in lower earnings years. That includes residency years, fellowship years, and the year you come out of training. Because remember, you got half a year of income, low income as a trainee, and half a year of higher income. So that's still lower than your peak earnings years. It's a good year to use Roth accounts. Also may be a good year to do a Roth conversion, right? If you had a tax deferred 403 or something during residency, if you have the money to pay the taxes, consider converting it to a Roth IRA right now @ a lower tax bracket than you'll be in next year. All right? Make sure your job is working out okay. Make sure the job likes you and you like the job. That usually takes a few months, maybe six months, maybe 12 months. And then start working toward buying a house, okay? You don't have to wait until you have the cash to buy a house. It's okay to use a mortgage. You don't even have to have the cash to make a 20% down payment. I'm okay with you buying a house using a doctor mortgage, right? Less than 20% down. They will work with you based on your contract income rather than your actual tax statements or your actual pay stubs. And they'll only look at the required student loan payments that you have to make rather than the total amount you owe. That's what a doctor mortgage is. And you don't have to pay private mortgage insurance. Pmi, that mortgage insurance that they make you pay when you put down less than 20% in order to protect the lender from you defaulting. Dr. Mortgages don't require you to pay that. So go ahead and buy a house. Once you know you're in a stable personal and professional situation, get a real emergency fund, right? You probably had some tiny little thing as a resident. You know, if you had a $2,500 emergency fund as a resident, maybe now's the time to bump that up to 10 or $15,000. The usual guidelines are three to six months worth of your living expenses. So look at what you spend, multiply it by three. That's your emergency fund. Figure out your retirement accounts. You got a new employer, maybe you're self employed and you want to open an individual 401. Whatever, figure them out. Figure out what's available to you and start maxing them out, right? If you start saving for retirement from day one, you will probably work half as long as your peers that don't do that. Those early dollars really become the largest part of your portfolio down the road. So get those retirement accounts going. You should be able to do that even while you're paying off student loans, even while you're building emergency fund, even while you're paying off credit card debt, right? Because you're living like a resident. So you have this huge amount of money between your attending salary and your resident lifestyle. And you know, if you're driving some terrible car, right now's the time to start saving up for a better one, right? Saving up so you can pay cash for it. Not going out and buying $120,000 Tesla on credit, but saving up to pay cash for the car you want to drive. And maybe you take a little trip, reward yourself for finishing residency, right? I'm not saying you gotta, you know, have full on austerity measures, but that's the general concept is you live about like you were as a resident while earning like an attending. All right, I hope that helps, gives you some financial priorities. As a new attending, it's hard for me to say, prioritize your emergency fund over your credit card debt or your student loans over maxing out retirement accounts. My hope is that by living as a resident, you'll be able to do it all at once. Let's take our first question from Dan Barbera. This one's about cybersecurity and identity theft.

Hi, Jim, My name is Dan Barbera. I'm an Air Force flight surgeon down in Hurlburt Field, Florida. I've been a longtime fan of the website and the podcast, and I really appreciate your help over the years. Thanks to you and a physician father who kind of got me off on the right foot as far as financial education. I have a lot of things squared away as far as insurance and emergency fund and starting to have a good savings rate. So I find myself, like a lot of other people, kind of wondering what's next. Something that I feel like I've been ignoring for a while is kind of cyber security. It certainly seems when you look into it, that there's a lot higher risk of a cyber breach than there is over policy limits, judgments like you talk about on the podcast or any of those other things, but I just haven't gotten around to doing it. I find myself looking for information about password managers, password randomizers, authenticators. I do see that you actually had a guest post in February of this year, although I don't think that was highlighted on the podcast yet. But just wondering if you had any other thoughts or if you wanted to highlight any of the tips from the guest post on kind of cyber security, getting good management of your passwords and making sure that there isn't bad case of identity theft that could ruin someone's finances. Thank you for all that you do.

Great question, Dan, and I am not an expert in this. In fact, we brought on our CTO Chief Technology Officer last year, and the first thing he did was pull all his hair out at our password practices, and we revised everything at the White Coat Investor in our personal lives. We have authenticators now, right. So you have to have two methods in order to log into something. Not only do you have to know the password, but you have to have a device like your phone in order to log into something. We started using LastPass, which is our password generator, and we made long passwords, randomized passwords for everything. And so obviously I can't remember all these passwords, but it does demonstrate to me just how insecure everything at the hospital is by comparison. Right, because you actually have to remember your passwords there. I can't use a LastPass or similar technology there. I have to actually be able to remember my passwords. So nobody there is using any sort of reasonable password security at all compared to what you're doing at home. So the main thing I think is to do the basics. And the basics are you're not logging into your financial accounts at the library or the hospital. Right. Maybe if you want to be extreme like some people, you have a dedicated laptop that only does your finances. Make sure the laptop has a password on it, make sure you keep it secure, those sorts of things. I would probably spend the money on something like LastPass. I probably should have done that long before we did. For both personal and business purposes as much as you can and use those passwords. If you are using the same password for everything, you are putting everything at risk. And you know, it's interesting now that we have somebody watching this stuff. It's not unusual for us to have 35,000 attempts to hack the white coat investor in a single day. And I suspect that lots of other websites are having similar issues as hackers out there kind of prowl around and try to see what they can get into. And so it is worth securing yourself against. Now, is it worth buying insurance against this sort of stuff? You know, these identity theft insurance products out there? And I don't know that I know enough yet. My thought is that's something that I can probably afford to self insure. And my general rule with insurance is not to buy insurance that I can afford to self insure. And so I suppose those people who offer these services for insurance will also offer them if I pay them cash. And I want their services in the event that there is a breach. So a lot of people ask about should they split their money between two brokerage accounts or two mutual fund houses in order to reduce the risk of Vanguard or Fidelity being hacked? I think that's probably not as important as a lot of people think. But you know, naturally that happens to me. I've got money at Schwab and one 401k and some money at Fidelity in another 401k and some of the TSP, another 401k and some accounts of Vanguard and 529s over the Utah 529. So just naturally, I think for a lot of us that happens automatically. But you know, whether that's worth the additional complexity or not comes down to how paranoid you are about cybersecurity. And maybe you want to do that. But mostly it's just, let's do the basics, right, which is password security, which is computer security, and those sorts of things. And if it's really important, use an authenticator. And so that's a special kind of software that you load an app on your phone and it gives you a code. So not only do you have to put in your password, but you also have to put in this code that gets sent out to it. It's a lot like the text message you get when you log into Vanguard if you have a authenticator that way. All right, hope that's helpful. Let's take our next question from Ankur.

Hey, Dr. Daly, this is Ankur from Florida. My question is regarding income driven repayment and the COVID pandemic. I graduated medical school last year and consolidated my loans right away and entered repayment in repayee. So I've been making $0 payments since then. And now that it's been a year since I reconsolidated, I recently submitted my income recertification. However, Fedloans is saying that I don't have to, that they won't process the the IDR request until January of 2023. And I just got off the phone with them and they said that because of the pandemic, they're extending the $0 payments until that time or like they're not processing the income recertification. So they're saying that I don't have to pay an increase in my student loan payments this year or next year until January of 2023. Is this something you've heard of? Have other people experienced this or did I hit a flaw in the system? Thanks.

This is kind of classic for the student loan servicing companies, right? You call them up tomorrow, ask the same questions, you'll get a different answer. No, the 0% deal has not been extended into 2023. It runs out under current law as of today. I mean, who knows what's going to happen? But as of today, it ends on October 1, 2021. That's when your payments will start being more substantial and you'll have to start and interest will start accruing. Now, I don't know what your income has been, what your calculated IDR payment is. Maybe it's $0, maybe that's the case, but I suspect it won't be. If you've had a full year of being an intern, you'll probably owe something on those payments. But you know what they're talking about. I have no idea. That's why I'd call back and get Another answer. Maybe they're going to consider your income to still be what it was in 2021. I don't know. But that's not what they're supposed to be doing. What they're supposed to be doing is each year looking at your inc and determine your payments based on that. And they're only supposed to be zero percent interest through this October. After that, your payments are going to start accruing. If you're not paying on them, the loan is going to be getting bigger. So no, I haven't heard what they're talking about. I think somebody gave you bad information. That's not unusual. When you call up student loan servicing companies, remember they got some $11 an hour employees sitting behind the phone making up answers. So when in doubt, escalate your questions to the next level. When in doubt, call back. Make sure you're getting the same answer. Keep track of all your paperwork, all your payments, even $0 payments, every certification form you do keep, all that stuff. You might need it, especially if you're going for public service loan forgiveness. Now if you end up refinancing your loans and paying them off anyway and not going for forgiveness, this isn't going to matter all that much. It saves you a little bit of interest to be 0% for a while, but for the most part you're paying all those loans back. So no big deal. But if you are going for PSLF or even IDR forgiveness, which I'm not a huge fan, I'm just Because it takes so long, then you want to keep really careful records of all these payments you're making. Hope that's helpful. Good luck with that. Let me know if you learn more about it. All right, next question comes in from ricardo about solo 401ks and controlled groups. Let's take a listen to that.

Hey Jim, this is Ricardo again. I had another question unrelated to my first one. It was regarding a side business that I have doing some lectures for a pharmaceutical company. I started doing this in 2019 and I had some 1099 income. Since this is totally unrelated to my work in my primary care internal medicine office which I own, I thought this would be a great opportunity to start an individual 401k. I remember when I posted this idea in the forum, the comment was made that because I own Greater than 80% of my business, that is my primary care practice, it is in a controlled group with my side gig. It was further commented that because of this controlled group, I am not eligible to form or to contribute to this individual 401k. Now, my question is, besides the actual income that I would get from the speaking events, is there any other benefit to doing a side gig? I'm in about the 32% tax bracket, maybe a little bit higher this year, and I was wondering, is there any other benefit to doing this side gig or is it not worth it from a retirement planning point of view? Thanks.

Okay, great question, Ricardo. First of all, you got good advice on the forum. That's true. If you own the practice and you get some 1099 income, it's all looked at as one business. As far as how many 401 s you can have. If you have questions about this topic, if you're thinking about using a second 401, go to my post called Multiple 401 Rules. You Google anything like that, it'll pop right up on Google. And it goes through the rules for having more than 1 401k. Yes, you can have more than 1 401, but, but you can only have 1 401k per unrelated employer. And in your case, because you own the whole business, the whole 1099 business, and you own your whole practice, that's, you know, those are the same employer essentially. And so you can't do something for yourself that you're not offering to your employees in the practice. And so that's mainly what they're trying to protect, is protect those employees from the owners, just hosing them and taking advantage of all these great retirement accounts. And so that advice was good. So then you ask, is it worth it? Well, I mean, if the only reason you're doing a side gig is to put more money into a solo 401k, it may not be worth it. But even so, remember, you can usually, because you usually max out the 401k at your main gig, assume it's a W2 gig at a hospital. The only amount you're putting into an individual 401 from a side gig is about 20% of your net net profit, net of all business expenses, including the employer, half of payroll taxes. And so if all you're getting is that in there, then obviously that can't be the main reason you're doing it. Because 80% of the profit has got to go somewhere else, right? Either you got to spend it or you got to invest in a taxable account, or you can use it to go in your HSA or whatever, right? But truthfully, the main benefit to you, retirement wise of having additional income is that you can save additional income just because you can't do it in a retirement account doesn't mean you can't save it. You can always save it in a taxable account. There may be some non monetary benefits as well. Maybe it makes you more excited about work. Maybe you learn some new skills about it that you can apply in your main job. Whatever. Lots of non monetary benefits to having a side gig as well. If nothing else, it diversifies your income a little bit. But as far as retirement goes, no, you're not going to be able to use another retirement account because of this side gig. And if that keeps you from wanting to do it, well, quit doing it. All right, next question comes from an anonymous caller. Let's take a listen.

Hello, what are your thoughts on Hedge Fundy's excellent Adventure portfolio? It was a post on Bogleheads in 2019. It consists of 60% Upro and 40% PMF, which are 3x, leveraged S&P 500 and long term treasury funds respectively. Viewing it on Portfolio Visualizer, it returned almost 30% annually since 2009, which was when you Pro was introduced. Admittedly, that is a period where The S&P 500 did very well and interest rates fell, which is best case for this scenario. Recently I saw a post on Optimized Portfolio which simulated data back to 1987 and found that it beat the S&P 500 by about 7% over that time frame. I understand that 3x leverages daily, so that on an annual basis the performance is almost certainly not 3x. Also, I think it's crazy to put everything into this portfolio since the leverage introduces additional volatility, but probably more importantly just the risk of it falling out. However, the historical performance is strong. Putting 10% of your portfolio into this, especially inside of a Roth account, to mitigate the tax inefficiency of all that leverage, seems reasonable. What do you think? Thanks for all that you do.

All right, this is a complex question. I know what you're talking about. Cindy just told me while we had this turned off that she's like, I have no idea what he's asking about. Well, this is a poster on the Bogleheads forum who goes by the handle Hedge Fundy. H E D G E F U N D I E and he decided to take an excellent adventure where he put a bunch of money into these 3x ETFs. He put some into a ETF that basically leverages up the return of the S&P 500 by 3x, the daily return leveraged 3x and the other fund that leverages up the Return of long term treasuries 3x. So it's tons of leverage. And he tries to back test it and show that it's awesome. So he shows how he, you know, invested in this in February of 2019, put $143,000 in it. And by the August of that year he'd gained $43,000. So that's great for him that he made a bunch of money or went from $100,000 to $143,000. Sorry. Well, you know what? Great for you. If that changes your life, then go for it. That's pretty much what I say. But I think it's dumb. And the reason why is because I don't think these are good long term investments. As a general rule, something that's designed to be traded and to be held the day, which is basically how these things are set up. Right. Because they're leveraged by the day. They're supposed to give you three times the return of the S&P 500 every day is really not a long term holding. These are kind of gimmicky ETFs, and I'm not a big fan of holding them. No matter what you combine them with, I just don't think they're good investment. Right. This feels more like playing in the markets. It feels like gambling in the markets. It doesn't feel like something that I can buy and then go to the Grand Canyon for three weeks. Remember, when you're leveraged 3X, a 33% drop in the fund wipes out your entire investment. That's the problem with leverage. So they backtested it. Right. This is the classic error with backtesting. You find something that did really well in the past and you assume that whatever caused it to do well in the past is going to continue into the future. Well, what did well over the 10 years prior to 2019 when he put this post up there? Well, The S&P 500 did really well and long term Treasuries did really well. So is it any surprise that if you combine these two and add some leverage that you had a pretty good return? Well, no, that's not surprising at all. You know, if you go back to the decade prior to that, when The S&P 500 didn't actually make much at all, you may not like the return of this portfolio very much at all. And if I had to guess what the 2000s are going to contain compared to the 2000 teens, I would guess it'd be more like the 2000s than the 2000 teens. But obviously my crystal ball is cloudy and I have no idea what the future holds. But no, I don't recommend these sorts of these sorts of schemes to try to boost your returns. I think there's better ways to use leverage if you want to use leverage in your portfolio than using these leveraged ETFs. You know, I find it very ironic that in his original post he says this was inspired by Market Timer's famous thread on his leveraged life cycle investment strategy during the financial crisis. And I watched that one in real time back in 2008 as this other Boglehead poster by the name of Market Timer not only went back broke, but went way below broke while he was in graduate school. Fortunately, it eventually had a happy ending. He ended up paying off all that debt he got trying to use leveraged investing in the 2008 global financial crisis. But you know, there's some pretty significant lessons learned that maybe this isn't the best way to invest, especially in today's market when there's so much speculation and so much fervor and froth going on. You know, this is probably not the time to be implementing some sort of highly leveraged market portfolio. You know, it'd be interesting to look at how that 3x treasury fund did, particularly as interest rates went up a little bit this year. It probably got hammered pretty hard I would imagine. But no, I don't really recommend this portfolio. I would not put it on my list of reasonable portfolios. If you've seen that blog post, 150 portfolios better than yours. This one is definitely not on it because I don't think it's a reasonable portfolio. I think you ought to avoid it. But maybe I'm just an old stick in the mud and I don't understand the times and the benefits of using all these 3x leveraged ETFs, but in my experience, they're a great way for day traders to get into trouble. Not really something for long term investors to be using. All right, next question comes from email. Can you talk about 529 asset allocation on your podcast? Should money in a 529 account be treated as one of your personal buckets and as such be invested at your personal asset allocation? Alternatively, if not, do you believe in a blended approach that changes over time and increases fixed income allocation closer to college, treating this similarly to a retirement account with a target date? Or instead just go aggressive the whole way and supplement college payments with personal funds if the time for college happens to coincide with a Bear market. Well, I think long term blog readers know where I stand on this issue. Whether that's the right stance, you know, can be argued for sure. This is a controversial topic. Most people don't actually agree with me on this one, including the people who run 529 plans. But it is my firm belief that you can take a lot of risk with a 529. And so I take a lot of risk with our 529s. They are 100% equity and in fact 50% of the 529 is in small value funds with the rest being in international funds. And that's the way my kids 529s are invested in. And that paid off really well more recently as small value has done very well, but for the 10 years prior to that hasn't necessarily done as well as it would have if I just stuck with a total market fund. But at any rate, the reason I believe you can invest those aggressively is because the consequences of shortfall, at least in my case, are so minimal. Think of all the other ways you can pay for college in the event that the returns you're hoping for don't materialize in the 529. Number one, your kid can go to a cheaper school is probably the most significant thing. Number two, they can earn some money during the summers and while they're at school to help supplement the costs. Number three is your cash flow, right? You're still making money, you're still working, you can help pay for school with your cash flow. Number four is your other savings, right? You've got some money probably in a taxable account somewhere and a savings account account, you know, you wouldn't even have to raid retirement accounts to get into. And of course the government is ever ready to loan your child money to go to school. You know, they may not qualify for that based on your income. They may not be actual financial need there, and I'm not a big fan of it anyway. But the truth is there's a lot of other things you can do to pay for school in the event of shortfall. So the consequences of risk showing up are much lower than they are for risk showing up when it comes to your retirement portfolio, right? Nobody's going to give you a loan for retirement and you don't have this other bucket of money or these other earnings you can use to pay for retirement. So I actually think you can take more risk saving for college despite the shorter time horizon than you can saving for retirement. Now, if you don't feel the same way you can do what most 529s do, which is get less aggressive as you get closer to the years you're going to spend it. If you buy the equivalent of a target date fund in your 529, that's what it'll do. You know, when the kid's 4, it's pretty aggressive. By the time the kid's 14, it's much less aggressive. And by the time the kid's 18, it's hardly aggressive at all. But the truth is, you know, if the kid's going to undergraduate and professional school for four years, some of that money when they're 18 isn't going to be spent for seven more years. That's assuming no gap years or any sabbaticals or anything like that. Right. So some of it, you have quite a bit of time to let it sit in there in the event of a bear market and see if it re recovers. So I don't think you ever have to have it all in cash, even if they're 18. But you know, you can be less aggressive as you go along. So no right answer there. Do what's right for you. You know, our asset allocation is pretty aggressive, but I would treat it as a separate allocation than your retirement money. For me, I have a different asset allocation for every financial goal I have. And so college goal, pretty aggressive. My kid's 20s fund, pretty aggressive. Our retirement goal, aggressive, but not as aggressive as those. And we go from there. You know, if I was saving up money to buy a Tesla next year, it wouldn't be very aggressive at all. It'd probably all be in cash. But for college, we can take significantly more risk for that. I hope that's helpful to you. If you want to read more about that, I have a blog post called 3 reasons why you can take more risk with a 529. Go ahead and check that out. Getting quality disability and life insurance should be the first financial chore for a doctor to complete. Most docs don't have the ideal policy for their gender, specialty, state or health status. 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