WCI #238: 2021 Financial Book Reviews

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 2382021 financial book reviews did you know that the White Coat Investor not only has a podcast and a blog but but several books that will help you on your way to financial independence. These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances or early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help all right, this podcast is dropping right in the middle of Continuing Financial Education Week 2021. We do this basically every Thanksgiving week, Thanksgiving, Black Friday, what do you call it on Monday? Cyber Monday. Right? This is our CFE week and we want you to take advantage of this Thanksgiving break to do your continuing financial education if you have not yet done it this year. Now, I've always told people their initial financial education ought to include reading a few good books, maybe taking our online course fire your financial Advisor and then that you need some ongoing continuing financial education. I recommend you read one good financial book a year and follow a blog or this podcast or something similar to stay up to date on things that are changing, such as the tax laws and Congress right now. But in order to promote this during this week, CFE Week, we tell you all about all kinds of new books that are out that week. And we also put everything at the White Coat Investor on sale. So all of our online courses right now are on sale. They're all 10% off from November 22nd. So if you're hearing this the day it dropped, that's the 25th through the 29th. So you'd have until Monday at midnight mountain time in order to get this discount. 10% off on all of our courses. That includes our CFE 2021 course. That includes our older courses. It includes our Fire your financial advisor course. It also includes the version of fire your financial advisor that you can buy with your CME funds because it includes a wellness component. So if you've been thinking about taking one of these courses, here's some incentive to do it. It's 10% off. The code to put in when you get there is CFE2021. Okay. We are also putting everything else on sale. We have a white coat investor store. If you go to whitecoatinvestor.com store or just go to the homepage and click on the store, everything there, T shirts, books, everything's 10% off. Okay. That includes, you know, if you just buy an individual book, you can buy it from the store, you get a 10% off. We are also including a discount on bulk books. They're already being sold for far more than 10% off if you buy them in bulk. But we're going to knock another dollar off each book if you want to buy them. So the normal prices on those books for the original White coat investor is $15.99 a piece. For boot camp, it's $16.99 a piece. For the guide for students, it's $17.99 a piece. We'll knock a dollar off each of those. So they're $14.99, $15.99 and $16.99 if you buy at least 25 of them. So if you're thinking about buying them for your students or you're thinking about buying them for your trainees, or just to give away, this is a chance to get a little bit more of a discount on that. Don't forget too, we're coming up on crunch time now for WC Icon 22. If you want to come to WC Icon 22, please, please, please register this week. You have a little longer than the 29th. It's not the same sale. These are two different sales. You have until December 1st. That is what we call the swag bag deadline. Because after that point, we can't get you a swag bag. It takes too long to order the books, print the books, ship the, et cetera. Whether you are coming in person to WC icon22 or you are coming in virtually, you get the swag bag. As long as you register before December 1st, we're going to ship them out to those attending virtually. We'll have them there for you in person. If you are coming in person and are looking forward to seeing a bunch of you there. As I record this now, I'm recording this earlier in November, we still have room in the room block, but I would register as soon as possible in order to make sure you can actually stay at the conference hotel. It's a pretty sweet resort, right? Pool out back, Lazy river golf course, pickleball courts, wonderful meeting space, great rooms. It really is a nice place. And it's in Phoenix in February. You can't beat that. If you're coming from the Northeast, if you're coming from the Mountain west, if you're coming from the Midwest, the weather's going to be nicer in Phoenix in February than wherever you're coming from. So we encourage you to come join us, get your wellness back after Covid and learn a little bit about financial literacy. You know, we get people that are experts in financial literacy that come down and attend just to meet other white coat investors and kind of renew themselves. We get people that are just found the white coat investor community and just really want to get started that come either way. We encourage you to come to the Physician Wellness and financial literacy conference aka WCICON22. To register, go to whitecoatinvestor.com WCICON22 and get that sweet swag bag with books from each of our keynote speakers, WCI T shirt and more. All right, so today we're going to be talking about books. Okay, I've got a whole bunch of books we're going to be reviewing today. And really this week, if you follow the blog as well, you have noticed that I talked about a couple of books on Monday when I announced Continuing Financial Education Week. I talked about this sweet book from Chirag Shah and Jayanth Sridhar. Man, I hope I'm pronouncing those names right. This is a really great book. See Monday's blog post for more information. They call it Financial Freedom Rx. If you're watching this on YouTube, I'm holding it up here for the camera. They call it the Physician's Guide to Achieving Financial Independence. They got Mel Lindauer of the Bogleheads to write the foreword. It's a very Boglehead centric book but directed at physicians. So it goes into lots of details about asset location and tax efficiency and building a portfolio and those sorts of things, but also touches on lots of physician specific financial planning topics. So if you've enjoyed my books and kind of want to read another book, kind of COVID similar ground but from different points of view, this is a great option. Another book that I really enjoyed this year and that I'm implementing with my kids is called the Family Board Meeting and this is a pretty sweet book this is by shooting. You know, you'd think the author put the name on the front of the COVID That's really interesting. The name is not on the front cover.

Jim Shield.

Jim Shield. That's what it is. Yeah. Thank you, Cindy. It's called the family board meeting, and it's super short, right? You read this thing in an hour. But the concept behind a family board meeting is that your family is what's most important. And a lot of us that are busy entrepreneurs, busy doctors, whatever, tend to put our families on the back burner. So this is a way to connect with your kids. Basically, the idea is once a quarter, you have a board meeting with each kid. And by board meeting, I'm not talking about sitting down and having a boring meeting. I'm talking about, like going surfing, right? Something cool that you call a board meeting. So the rules are it's got to be at least four hours. Nobody can have their phone on or there can't be any electronics. During the meeting, the kid gets to choose the activity, and there has to be a very short reflection period at the end. And the author has seen dramatic changes in himself as well as other people he's taught this concept to and really made a connection with his kids that he didn't have before. I talked about that as well in Monday's blog post. Tuesday's blog post is all about this book. This is my favorite book of the year. It's called the Hands Off Investor. It's by Brian Burke. He's the CEO of Praxis Capital. A lot of these books tend to be advertisements for a given firm. This one's not. This one's really a step by step guide to passive investing. Whether we're talking about syndications or funds. If you are interested in those. If you are like, I don't know how to evaluate a syndication. I don't know which ones are good, which ones are bad. I don't know which side sponsors to trust. This is your book. It's great. It's called the Hands Off Investor. It's got soup to nuts information about syndications, about funds, you know, how to evaluate the sponsor, how to evaluate the deal, how to evaluate the investment structure. Great book. So check that out if you're interested. We'll of course have links to all these books in the show, notes that you can go to, and just with one click, go to them on Amazon if you're interested in purchasing them. Okay, I got a whole stack of books here that people have sent me this year, right? I mean, look at this stack, it's got to be 15 books. People send me these books wanting me to review them on the blog. Right. Because we have a big audience. Or review them on the podcast. And let's be honest, if I started doing more book reviews on the blog or on the podcast, I'd get twice as many as these books, and that's all we'd ever talk about. It'd be a book review podcast. So we're not going to do that. I wedged them all into today's podcast. So we're going to talk briefly about each of these books. If one of them rings a bell for you, sounds like something you would be interested in, then, you know, again, the links will be in the show notes. You can buy it. You can, you know, some of them maybe will be already available in your library and you can borrow them. But for the most part, if you're interested in these books, you're probably going to have to buy them. Thank you for going through our affiliate links in the show Notes. That does help support the show. All right, the first book I want to talk about, I think I mentioned a few months ago when we had Jim Lang on the podcast. He wrote this book. He's coming to speak at WC Icon 22. He's one of our keynote speakers. I'm not sure we've decided which book we're giving away yet. It may be his Retire Secure book, but this book is Beating the New Death Tax. And so it's all about the secure act, how to get around it, et cetera. He was actually giving this book away when he was on the podcast, but you can buy it at Amazon. It's a great book. It talks about strategies to protect your family from recent changes. Lang's firm is really big on both estate planning as well as tax reduction, retirement accounts, that sort of thing. So this book gets pretty into depth into those sorts of subjects. Roth Conversions, if you're thinking about Roth conversions. Great book to read about that, as well as you know, how to deal with required minimum distributions, those kinds of problems. I get a lot of flack from people saying you only talk to young dogs. There's nothing in there for old dogs thinking about retiring or who are already retired. Well, this is good for those kind of dogs.

Okay.

And my next book is actually another book James Lang and his folks sent me called Retire Secure for Professors. And those of you watching this on YouTube, I don't know what happened between the time the first book was published here and the second second book was published, but James Lang's hair went from black to gray between these two. I think he just used an updated picture in this one. But I've got the same problem going with my hair. But I thought that's pretty interesting. Two books came out the same year with very different pictures on the COVID but this one's obviously aimed at professors. If you're a professor and we have a few of you that follow the White Coat Investor, this is information that is very specific to you. If you're interested in that. Retire Secure is a great book. That's kind of the general one. And then he has, it's kind of a series. He's got them for various different professions. There isn't one for docs, but he does have one for professors. So Retire Secure for Professors by James Lane. Our next book is called Building an Elite Organization and this one is Don Wenner's book. I think I mentioned this on the podcast when I had Don on. Don is the founder and CEO of, of DLP Capital. And so this book talks about how we scale DLP Capital. So if you're an entrepreneur, this book's for you. Especially if you're at the stage kind of where White Coat Investor is at, where you're trying to scale your business, you're hiring more people, you're trying to put systems in place, you're trying to decide, you know, what your company culture is going to be. This is really a very practical, step by step guide to doing that. Building an Elite Organization by Don Wenner. All right, here is a book called Stay in Medicine, subtitled How Physicians Can Move Past Burnout and Regain Control. This one is by Janet Cruz, M.D. and Lee M.J. elias. And I like this book. It talks about we can save more lives if we save each other. And burnout is seriously your biggest financial risk. You know, just like being disabled, you can no longer turn your time into money at a high rate as doctors can do. If you become burnt out, you can't do that either. In fact, even if you're only a little burnt out and have to cut back on your hours, that has financial implications on your life. So I think it's important for anybody to do some burnout prevention kind of reading or if you're already at that stage, like up to 50% of doctors to get started as soon as possible on treatment. But there's lots of great practical tips in here. There's a whole chapter on reducing time killers. Things like huddling daily with your team, making sure you take time for training, using your leadership training making a contingency plan for unexpected events. So there's lots of really practical things here, both for running your practice as well as dealing with your own personal burnout to help you too stay in medicine. It seems like the trend a lot of times on these physician financial blogs and podcasts is get out of medicine as soon as you can. Well, that's not my goal. I want some doctors to be there to take care of me. And the truth is, despite everything you hear about fire and early retirement among docs, half of docs are working after age 65. And not all because they have to you. Medicine's still a great profession. And this can help you stay in medicine. So check out that book, Stay in medicine. Janet Cruz, M.D. is the lead author on that one. All right, here's another one. The ExitPreneur's Playbook. This is one that was given to me at fincon by Joe Valli, the author of the book. If you have a business, if you're an entrepreneur, if you're thinking about selling it and you're not sure how much it's worth, this is particularly useful for online entrepreneurs. But it's basically how to get out of your business. And don't worry, I'm not reading it because I'm closing up WCI this year or something like that. But if you are in that situation and interested in more information about how to sell your business, how to value your business, what it's worth, et cetera, it's called the exitpreneurs Playbook by Joe Valli. Okay, let's do this one Next. Two Funds for Life. This is a partner of Paul Merrimans, Chris Peterson, who talks about two Funds for life, basically creating a two fund portfolio. And you might be surprised by what the two funds are in the book. But basically it's a target retirement fund plus a small value fund. Paul and Chris are huge believers in factor investing. You know, we're talking about small tilts, value tilts, etc. But they also like the simplicity and benefits and automatic rebalancing of a target retirement fund. So how do you get both of those? Well, you add a small value fund to a target retirement fund and this book goes through in detail, incredible detail. You know what that would look like in the past with back tests, all kinds of great graphs. And you can see some of these if you're watching this on YouTube, you know, if you are interested in that concept. This is, this is a great book. I really like that. They include a chapter called Contrarian Views, a Dose of humility, basically. What could go wrong with this idea? And I think that's useful to have in a book. So check that out. You know, it's Chris Peterson. P E D E r s e n 2 funds for life. All right, this one was sent to Me by Dr. David Phelps. He is a dentist. I don't know if you know him. He's been around in this space for a long, long time. He's actually pulled himself out of his own practice twice. Once before a divorce and once after a divorce. And, you know, pretty unique methods to do it. He basically hires associates to work in the practice and then he takes the cash flow from the practice and buys real estate. And so he basically freed himself from his practice and he talks about that. So this book, of course, he's really big on freedom, kind of patriotic themes. He's down in Texas. No surprise. This one's called Own youn Freedom. Sustainable wealth for a Volatile World. He did it with a fellow by the name of Dan S. Kennedy. You know, this is more. What do you want out of life? How can you get yourself free of, you know, of your practice, of your life and be able to live your life like you want, but with kind of a real estate tilt? So if you're a fan of real estate, you want to learn more about real estate, you want to use real estate to get your freedom, this is a pretty great book to do that. Written by a dentist. Own youn Freedom by David Phelps, dds. Okay, here is a kind of a niche book that was sent to me. This is by Nathan Gartland, PharmD, and it's called FarmD to MD. Now, I don't know how many PharmDs are going to medical school, but if you are a PharmD and thinking about medical school, in medical school, already applying to medical school, this book is for you. It says it's called A Complete Guide to Getting into Medical School and written from the perspective of a pharmacist now going back to medical school. So if that's your niche, I'm sure this is the only book in it. So get this book. PharmD MD Nathan Gartland. Again, links will be in the show notes. All right, I got a few more books to do here that I'll talk about, but first we're going to bring a guest onto the program. This is going to be another one of our speakers from WCICON 22, so let's get him on the show. Okay, so my guest here is actually the only physician, financial blogger who has been doing this longer than me. Brian Foley, MD, MBA, is a physiatrist who began a blog called WealthyDoc.com in 2007. This predated White Coat Investor by about four years. Now, I didn't know about it when I started the White Coat Investor. I found it a couple of years after that, but it's been around a long time. Brian, welcome to the White Coat Investor Podcast.

Thank you, Jim. It's quite an honor to be on the Weight Group Investor Podcast.

So Brian is going to be one of our speakers at WCICON 22. He mentioned at the top of this podcast how you can register for that. You're going to be giving a couple of talks there. Tell us about the one you're going to be giving in person.

So in person I'm calling it a mini mba. And like it or not, medicine is a business. So I think the more we learn about the business environment, the more we can flourish in our own way. So I'm going to highlight some of the lessons that I got out of my MBA program. I spent three long hard years earning this, so I can't reproduce all of the content, but I'm hoping to give some of the highlights for your attendees.

Do you think it's possible to get the information that you found most useful out of an MBA without actually getting an mba?

You know, I wouldn't pretend that they're equivalent at all. There's certainly things that I learned from other students and the networks that are there that are really hard to reproduce. And then the depth and time of going through case studies provides extra value. So I have no regrets about going through that. But on the other hand, I don't think it's necessarily required for everyone. It's an over overkill even if you are interested in business and want to learn more about it. So in my mind, the attendees who would be interested in this talk would be in four different areas. One, somebody who's considering advanced business training like an mba. Two, somebody who's enrolled but would like to get an overview from a physician's perspective about what will be useful. Three, somebody who did business training but it's been a while and they'd like a refresher or four, somebody who's practicing and just want some of the tips of business but they don't have the time or they can't go through the cost, or they're not really dedicated enough to spend all the time suffering through a graduate degree but want to get some of the valuable lessons that they might have missed.

So tell us about how your business knowledge has affected your career for the good.

It's been in a lot of ways. So I've always been interested in finance and investing in business. But after seeing a lot of physicians make some pretty egregious business mistakes, I realized that formal education would be helpful for the ways. For me, it's, it's helped job opportunities, it's helped the current position I'm in. I would not have gotten without the mba, for example, partly through networking, partly because of the skill set that I brought to the table. It's helped me be a more rigorous investor. It's helped me with, with business relationships.

And a lot of it.

I think for physicians to learn some of the tools and how to speak the business of language is really important. So rather than going to my surgery center and saying I need a new radio frequency machine and it's $30,000 and oh by the way, I have another location, I'd like a second one. I'm going to them with a business proposition. Here's the break even, here's what the business we're currently losing. Here's the spreadsheets. Let me know if you have questions and making that decision with them and showing the benefit to them. So I'm just able to get things at work and out of work go much more smoothly when I understand the business environment that we work in. Again, like it or not, even if you're not interested in business, you work in the business of medicine.

Sounds like a great presentation. I'm really looking forward to this one. I'm not sure we've had anything like this in any of the prior WC icons. So this one's going to be a great presentation. Now some, obviously some people are coming to this meeting in person, some are going to be watching virtually. Of course, if you come in person you get access to everything including the virtual talks to watch either during the conference or after the conference. But a fair number of the talks are also being only given virtually. We just don't have enough room in the conference space during the conference to give every talk that we want to include in the conference. So your second talk is going to be given virtually. Tell us about that one.

So that one is a physician's viewpoint of Employment contracts and it sounds like a dry and technical topic. But I'm hoping to give some take home messages that will be really important for physicians to understand. And that comes from my background. I studied business law and did some courses put on for physicians by attorney. So I'm Going to try to save the some people some time learning some of the basic principles. But what I found through teaching students and residents and also bringing on new partners in my private practice is that physicians have not signed contracts before. They've never really had an employment written agreement and they're blindsided by it and sometimes they'll just sign it and they don't even understand what they're signing. And I've seen things go really well and things go really poorly. And so I want to highlight some of the things to look for in an employment contract, know when you should get someone to review it and what questions to ask, when to have an attorney or another specialist involved to help negotiate. So I want to cover that to make sure that you get the best contract at the start of the job when your ability to negotiate is the highest. Because over a decade, for two decades, $10,000, $50,000 here and there can make a huge difference.

Yeah, for sure. So you'll be going over restrictive covenants, you'll be going over the importance of who's paying for the tail insurance, how to negotiate RVU based contracts, those sorts of topics.

Right, Exactly. And again, I have some personal stories and the contract examples that I'll share from from residents and colleagues. Those two that you mentioned. For example, I have one colleague who wanted to change jobs and then found out there was a restrictive covenant and had to pay several hundred thousand dollars to get out of the restrictive covenant, which if she had crossed this out and talked to their employer at the beginning, it would have been fine. Another partner we tried to hire who was practicing in Florida and could not leave the practice because they found out that they have no talent insurance and needed to buy it and that would cost several hundred thousand dollars to leave that practice in Florida to join our practice. They asked us to pay it and we didn't. And so they're still there practicing in Florida. So, you know, just knowing what you're signing and perhaps changing some of it beforehand if you can, it's time to do that. So yeah, great example.

Awesome. Well, I'm looking forward to seeing you down there in person in sunny Phoenix. It's going to be a great time, both from a wellness perspective as well as from a financial literacy perspective. So we appreciate your participating in the conference and encourage people to learn more about you before they arrive. They can do that@wealthydoc.com I know you're fairly anonymous on the website, but that's becoming less and less so as the years go by, I suppose, especially as you give talks across the country. But thank you so much for coming on the podcast and being willing to participate at the conference.

My pleasure. I'm honored to be asked to be there. And I'm looking forward to attending as many of the conferences and talks there when I'm there as well.

Cool. Awesome. See you there. All right. That was great to have the wealthy doc on. Hopefully you get a chance to hear more from him at the conference. I got three more books I want to tell you about before we get into your questions. This one is a little bit of a lighter book. You can see this if you're watching this on YouTube. YouTube, it's called you what? Humorous stories, cautionary tales, and unexpected insights about a career in medicine. This is by John Chase, M.D. he is a retired orthopedic surgeon. It's really a great book about life as a doctor, your practice, just pulling all the goodness out of a career in medicine that you possibly can. I like this cartoon you can see if you're watching this on YouTube. He's got these sprinkled throughout the book. This one's from the chapter, making decisions with patients, Should I operate, not operate, scope, do a total knee, is the patient crazy? Et cetera. And it's just really a fun book to read. You know, this isn't maybe for the brand new grad. It's probably somebody mid career or late career wanting to reflect a little bit more on their career and how to really get all the juice out of it that you're interested in. Maybe not a completely financial book, but again, you might as well enjoy your career. It's not just the way to pay for your retirement, it's also what you're doing with your life. So that's called you what from John Chase, MD. All right, I got another one sent in by an advisor that's been following me for a long time, Glenn Frank. This one's called you'd Encore, A retirement planning guide. How to balance time, money, and joy. And this is a book that also has a website, time moneyandjoy.com but this is for not young docs. This one is for docs on the verge of retirement or who are already retired. And it's all about your encore, right? What's an encore? If you're at a performance, it's what they do after the curtain drops, after, you know, you clap for them, then they do something more. Well, that's what retirement is. It's your encore. And so this helps you to find the time, the money, and the joy to do whatever it is that you most want to do in retirement. And this is a difficult transition for a lot of docs. For a lot of docs. It's very difficult to walk away from a practice into something else. And we all have colleagues that we know of that really didn't have much of a life after they left medicine, whether it is measured in terms of years or in joy that they take from it. So part of retirement planning is more than just financial. It's planning what you're going to be doing and how you're going to take joy from that and how all of us type A people that ended up in medicine can get just as much fulfillment after our careers as we did during our careers. That's called you'd Encore. It's by Glenn Frank. Link will be in the show. Notes and the final book I wanted to review today on the podcast is this one called you'd Total the Heart and Soul of Financial Literacy. And this one is by Lyle Sussman, PhD and David Dubovsky, PhD, CFA. David sent me a note with it when he sent it here. I can barely read it. He has handwriting like a doctor's. We've had many medical students in our classes. We know they need this and will love this book. And I think that's true. It is more of a basics of personal finance book. This is not the book you read after you've read 35 other financial books. It is a great book though, if you are just kind of getting into finance and want to learn the basics from a great perspective. It goes through a lot of important information. Don't get me wrong, it even covers things like options calls, puts, derivatives, asset allocation, those sorts of things. But it takes it all from a relatively basic perspective and explains it from the very beginning so they don't assume you know anything. When you pick up this book and explain it all, it's called you'd Total the Heart and Soul of Financial Literacy by Sussman and Dabovsky. Check that out. It's a great book. Hope you enjoy. Enjoy it. All right, enough books. I mean, that is a stack of books I got this year. 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 books we just reviewed. You only got to read one for your continuing financial education. So pick the one that is most applicable to you. Read a book this year and make sure you spend a little bit of time on your finances. You can't put it all on medicine or all on whatever your profession is and expect to be financially successful. You have to do some continuing to in financial education. All right, let's get into some of your questions. This first one comes in via email with the title Question regarding Post Tax Investment in Regular IRA versus Brokerage Account since we are likely losing the backdoor Roth, do you see a benefit in investing in a traditional IRA with post tax money over a regular brokerage account? No crystal ball regarding where we'll be with marginal taxes versus long term capital gains in 20 years when I'll likely be retiring. But why invest post tax money in traditional IRA and pay marginal rates in the future? I'm a long term index fund investor, so don't plan to trade the invested money with any frequency added benefit of avoiding RMDs and more investment options in a brokerage account. What am I missing? Well first of all be aware that at least the latest version of the bill that I saw and we're recording this on November 3rd, I don't think it runs until the 25th. But the most recent version of that bill in Congress that I saw is not eliminating the backdoor Roth. In fact they took out all kinds of stuff. The higher tax rates, the higher capital gains tax rates. There's all kinds of stuff that was originally in the bill that is not in the bill. As I record this now pay attention because about the time this podcast comes out the final bill should be out so you can still do the backdoor Roth. So really this question is kind of no longer terribly interesting. But occasionally you'll have a situation where you have to consider the value of a post tax IRA or that's basically the way a variable annuity works, just with some additional fees versus a taxable account. And what you're really weighing is as far as the taxes go, the benefit of having tax protected growth against the downside of paying ordinary income taxes instead of marginal or instead of long term capital gains taxes when you sell the asset in the end and the more tax efficiently you invest, the harder it is for that tax protected growth to overcome the ordinary income tax on withdrawals. If your investment is not very tax efficient at all, it doesn't take that many years. But if you're an index fund investor and we're talking about putting total stock market and total international stock market index fund kind of investments in there where they're really tax efficient, it might take decades for that benefit of the tax protected growth to overcome the difference in tax rates at the end. So from that respect most are probably better off in a taxable account than a non deductible IRA or a variable annuity, especially if there's any significant fees associated with a variable annuity. But if the backdoor Roth IRA actually went away, it's possible that it could come back or your income could drop or whatever, such that you might be able to convert that money later, in which case you'd be very glad you put the money into a non deductible ira. Of course, in most states there's also an asset protection benefit and significant estate planning benefits to having that ira. It can be stretched by your heirs, it may be untouchable in bankruptcy by your creditors, et cetera. So it can be a difficult decision. The good news is it doesn't sound like anybody's going to have to make it this year, because I think the backdoor Roth IRA is going to live on. But the bottom line is the longer you leave it in there, the less tax efficient the investment, the more likely a non deductible IRA can beat a taxable account. Okay, our next question comes from Alex, who's asking about vetting professionals for speaking gigs.

Hi Dr. Dali, this is Alex in Mississippi. I'm a resident working with my program director and chair on starting a lecture series that's going to incorporate some personal finance and business management topics. Thanks to your blog and podcast, especially the ones about new financial priorities for new attendings and for new residents, I know a bunch of the topics that we want to discuss. However, I need to go about vetting a series of individuals who will be giving these lectures. I would be willing to give them myself, but my faculty mentors would prefer to be a professional in the community so that they can continue to give these on an ongoing basis as I'll only be here for another one or two years. So how do you go about vetting these people? What questions do you need to ask? How do you make sure that they're going to be good and give good advice to this vulnerable population? I know some of my co residents have been hawked whole life policies and I want to avoid that as much as possible. I would rather scrap the whole idea of the lecture series if all I'm going to do is set up my co residents and future residents here for a world of heartache and pain as their introduction to the financial industry. Thank you.

All right Alex, great question. First of all, thank you so much for what you're doing. It really does make a huge difference in the lives of your colleagues, your friends, your trainees, even your attendings and can really help them. And you're right to be concerned, right? How many of us had somebody from Northwestern Mutual or Edward Jones or Merritt come into our residency program and basically sell us stuff that really wasn't that good for us. You know, it happens all the time. And so you're right to be concerned. So how do you vet them? Well, assuming you're financially literate and you kind of understand how the industry works, you're basically looking for people that you would consider hiring, people that you would actually send friends and family to. So that's your vetting process. If you need help with that. We have the same dilemma at the White Coat Investor, Right. As we select advertisers. And so we have applications for insurance professionals. We have an application, especially for financial advisors, we have an application and we turn down the majority of people who apply. You know, we have questions in there, like, how much of your practice is selling whole life insurance? Because I'm not going to put somebody up in front of my audience when 90% of the money they make is from selling whole life insurance. Because I know what they're going to do. They're going to sell whole life insurance to my audience. And most of the time, that's not a very good move. And so you just got to vet them individually, one by one, ask them about their practice, where does their money come from, what's their fee structure, what's their experience, what, you know, what are the portfolios they put together typically look like? And I think that's the process now. How you ensure that remains good for years after you leave is a little bit harder. Right. If you're not in charge, you're not in charge. But hopefully if you get good people in place to start with, they'll keep coming back year after year because obviously there's a benefit for them. Right? They want the business, and there's nothing wrong with that. You know, they're coming in probably for free in hopes that they get a little bit of business out of it. Sometimes people will do it out of the goodness of their hearts, but for the most part, they're hoping to get business out of it. So if you're not paying them, they've got to get something from it to be interested to come in and speak as a professional. You know, I don't fly across the country and talk to groups of docs for free, and I don't expect anybody else to do it either. And so if you want people to spend the time to really put together a good presentation, that's what it takes. You either you got to pay them or you got to make sure that it helps to build their business. So good luck walking that fine line. There's lots of financial conflicts of interest there, of course, but if you want to put in something that's lasting, I think you're going to have to deal with those conflicts of interest. Our next question comes from email. I am at the beginning of trying to develop a medical device, and at this point I've only invested $2,000. It seems likely that the ultimate investment will be at least five figures, and the potential for loss on investment seems high. Do you see any pathway to using those losses to offset my taxable income? At this point, the fledgling device company is not incorporated in any way. Man, sounds like you're planning to lose from the very beginning, which doesn't sound good, but I totally get it. At least if you lose, it'd be nice if Uncle Sam would share your pain. Well, the good news is he will. Any new business you start can generate a loss and those losses can offset your ordinary income, your earned income, your taxable income for three of the first five years. You put it on schedule C, that loss will flow through to your 1040. No big deal. However, if you keep losing money year after year after year, you're at risk for the IRS reclassifying your business to a hobby. And hobby losses are not deductible. Only business losses are deductible. So by year four, you really need to be making a profit with this business. But if you, you know, realize it's not working out in year two, you can just drop it. And yes, all those losses will be deductible. Now you don't get all your money back, but if your marginal tax rate is 40%, you have 40% of it back off your taxes. So that's beneficial, right? All right. I want to thank everybody out there for being white coat investors. You know, I'm always thanking you guys for, for what you do in your professional lives, whether it's practicing medicine or dentistry or law or running a business, whatever it might be. But today I just want to say thanks for being here. Thank you for being part of our community. It's a wonderful group of people. You know, whether you participate just by listening to the podcast, whether you read the blog, whether you're in our subreddit or our forums or our Facebook group, whatever, if you come to our in person live events. Thanks. It not only has changed my life for the better to have interactions with you, but it has made it possible for us to now have. I think we're up to 14 people working either significant part time hours or full time hours here at the White Coat Investor. You know, it's pretty awesome what's been created here and without you that doesn't happen. So thanks for being here. All right, our next question is about earned income for kids. This one comes from Paul. Let's take a listen.

Hi Jim, this is Paul from Nashville. My wife and I are both physicians and we have three young daughters. Our two older daughters, aged 6 and 3 have both participated in the COVID 19 vaccine clinical trials. They have earned a few hundred dollars from their trial participation. My question is this, would this count as earned income for a possible Roth IRA contribution? Would you recommend doing that or would you recommend putting the money elsewhere, such as a trust or. My 6 year old daughter's preference would be to spend it at Dinosaur National Monument in Utah in your neck of the woods. I would appreciate your thoughts on this. Thank you for what you do.

I got bad news for you on this one. This probably isn't going to work out the way you want it to. Here's the deal. They're probably going to pay you on a 1099 MSC if it's under 600 bucks. They may not give you anything at all. But whether they give you something or not, it's taxable income. So you do have to pay taxes on it. Now presumably your kids don't have any other income, so it's not enough income that will have to pay taxes on it. But the downside is it's not considered earned income. If this activity is infrequent like I think it is, it's really not self employed income. And the IRS has actually talked about this. There's a private letter ruling, it's numbered 9106004. It's about a participant in a medical study for asthma. But basically it's taxable income, but it's not earned income. So the good news is you don't have to pay Social Security or Medicare taxes on it. The bad news of course is that it's also not eligible to help you get the earned income tax credit. It's not eligible for retirement account contributions. So I don't think you can start a Roth IRA with that income unless you can somehow turn this into a regular business form where they're getting ongoing income from this because they're in six trials a year or something and it's probably pretty hard to piece that together. So I don't think this is going to work for opening your kids Roth IRAs, which it sounds like that's what your goal is. All right, our quote of the day today comes from Phil DeMuth, PhD, who said nearly all CFPs are actually asset managers and no wonder it pays more. Many financial planners dispense with a financial plan altogether, which is just a loss leader as far as they are concerned. So make sure if you're hiring a financial planner because you need a financial plan, that you are actually paying them for the financial plan and not just for asset management, where you're likely to get what you pay for. All right, let's talk for a minute about buffered ETFs. Warren calls in with this question.

Hi Dr. Dali. I have a question about buffered ETFs. So I'm currently saving three years worth of expenses in case I choose to do an early retirement at age 57, which is two years from now. I am eligible for a sizable lump sum or pension at age 60, which is why I want the three years. I already have most of the money saved in a high yield online bank and a mixture of short and intermediate term bonds. However, with the yields being so low, I hate the idea of my money sitting there losing steady ground to inflation. What do you think about buffered ETFs as a solution for this specific problem? Thanks for your podcast. That has helped me tremendously.

All right, buffered ETFs. What's a buffered ETF? Well, they're generally linked to the S&P 500 index and then they provide some sort of downside protection. So these sorts of products are really common. They're common in the insurance space in particular. You know, we're talking about annuities, index linked annuities, we're talking about index linked universal life policies. And the basic theory is the same with all of them. The idea is to have your cake and eat it too. You know, so they're really attractive because this is what we all want, right? We want high inflation, beating returns, but we don't want to take any more risk than actually putting our money into a savings account. And the truth of the matter is you can't get doesn't exist, okay? The higher the returns you want, the more risk you've got to take. You want to beat inflation, you got to have money and things that beat inflation. And for the most part that means, you know, stocks, real estate, those sorts of risky assets that can go down in value. So you have to ask yourself for a given goal, what's more important, the return on your principal or the return of your principal. And when we start Getting into time periods like 1, 2, 3 years, the return of your principal starts mattering more than the return on your principal. That doesn't mean you can't take any risk at all. But it maybe means you don't want to have it all in risky assets. So you've got to decide how much risk to take. And maybe that's a balanced fund that's mostly bonds. Maybe that is, you know, a balanced fund that's mostly stocks. You got to ask yourself, well, what are the consequences of loss and when do I really need the money? How definite is that date? And that's kind of the trick with short term investing. You know, for example, if I've got to make a tax payment, I got to make an estimated tax payment in four months. I'm not taking any risk with that. That's going to sit in my high yield savings account until that tax bill is due. It might even sit in my checking account just because I don't care so much about the return on the money as the return of the money. But if you're saving for a house down payment in three or four years, maybe five years, you don't really know when it's going to happen. Well, you can probably put some of that into equities, real estate, et cetera, make sure it's liquid enough for your needs. But you can take some risk, especially if the value of those assets goes down, isn't a big deal. But the problem is these people selling products, whether it's buffered ETFs or annuities or universal life policies, you know, they're trying to cash in on that desire of yours to have a higher return without taking higher risk. And for the most part, you're paying too much for the benefit you're getting. You're taking on more risk and you're not being appropriately rewarded for doing so, or you're simply just giving up too much of the return to limit your risk. So not a big fan of these sort of structured kind of investments. I think you're better off with plain vanilla investments where you can see exactly how much risk you're taking. And if you want to take some risk, that's fine, add a little risk in. But I don't think you need to go to these sorts of products. And when you look at the names of the companies that are putting these things out, you know, it's not necessarily companies you would normally go to to invest, you know. So keep that in mind. I would, as a general rule, avoid these buffered ETFs I think they're a product made to be sold, not bought. Did you know that the White Coat Investor not only has a podcast and a blog, but several books that will help you on your way to financial independence? These books cover topics such as asset protection and minimizing your taxes to keep more of your hard earned money. They discuss plans for insurance, housing spending, student loan elimination, investing and estate planning. You can learn how to become a millionaire within five to 10 years of leaving residency and how to invest in a sensible, low cost and effective manner with or without the assistance of a financial advisor. There's even a book geared directly toward medical and dental students so you can start optimizing your finances early in your professional journey. Find the book that is right for you at the WCI store, at shop.whitecoatinvestor.com or on Amazon. You can do this and the White Coat Investor can help. Don't forget about our sale. Everything in the White Coat Investor store is 10% off this week through the 29th. Our courses are 10% off. There's a discount on bulk book orders. It's good again through the 29th. And don't forget about the swag bag deadline of December 1st for WC Icon 22. You're going to want the cool T shirt we're putting together for it. You're going to want the books from the keynote speakers and it's the same price if you register before December 1st or after December 1st, but if you register before you get the swag bag, so make sure you do. Thanks for those leaving us a five star review and telling your friends about the podcast. A recent one came in from SN Chowdhury who said very informative. Every person who wants to have a decent retirement should follow this podcast. Five stars. Thanks for that review. Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast.

My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney or financial advisor. So this podcast is for your entertainment.

And information only and should not be.

Considered official personalized financial advice.