WCI #253: What to Do with Extra Money and Life After Covid

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 253, the super bonus Episode.

If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief Financial Officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this and the White Coat Investor can help.

Welcome back to the podcast. This is the first one we're recording since WC Icon and I have an apology to make to you. I'm really, really sorry, but I undersold WC icon 22. It was awesome. We had such a fun time down there. The staff had fun, the speakers had fun, the attendees had fun. It was great. It really was a spectacular experience. Not just a conference, but an experience. It was seriously the best conference I've ever been to. I'm so proud of the team that put it together. Now I didn't do a lot on that. I prepared a couple of talks, three talks I guess. But for the most part our conference team took care of that. And that consists of Katie, our Chief Product officer, as well as Chrislyn, who's our conference director, and our newest hire, our assistant in the products division, Morgan. They did an awesome job. The speakers did a great job. The AV team did a great job. The hotel staff did a great job. It was really fun. We had three tracks going of speakers. We had a basics track, an advanced track, we had a wellness track. And the fun part as this conference has gone forward over the years is that more and more people are coming for the wellness component.

In the beginning I thought that was.

Just how we were going to allow people to use their CMA dollars to pay for the conference. But more and more people every year are coming for that wellness conferen. And it was really fun because at about 4 o' clock each day we'd knock off and go do something fun. Whether that was putt, putt golf or playing pickleball or having some social activities or going out to the lazy river and floating around the pool. Whatever it was, it was awesome. It was awesome to be able to look forward to that at the end of the day and really have a wonderful time away from our practices. For many of us, away from our families. Although a lot of people brought their families and just to rejuvenate after two years in the pandemic, to be back in person and to be outside eating lunch in the sun in Phoenix. It was a really awesome experience. I hope those of you who missed it this year will be able to come and enjoy it with us next year. No, we're not selling tickets yet. We probably won't be doing that until October, but I seriously undersold that. It was a pretty spectacular conference. It was really fun. If you are interested in getting the content from the conference, you can still get that. You might not be able to get the full experience that we all had down there in person, but if you want the content, you can still get that. You just go to whitecoatinvestor.com CFE2022 and we packaged it up into an online course that's available now and you should be able to get that all right, let's take a question here off the speak pipe to get started. This one comes from Jared and he wants to know what to do with extra income. What a great problem to have.

Hello Dr. Dali, my name is Jared. I am a practicing general early career internist, about six years post residency practicing in a large metropolis in the southeast and I have a question about what to do with extra income after we combine two physician incomes. My fiance is a family medicine physician, roughly 5 months post residency residency. Her base is 180k. My base is 250k. Both of us with incentives have the option to make much more. We are very fiscally responsible people with very little debt other than I have a home mortgage that has about 400k left on it and we both have student loans that are on trajectory to be forgiven in several loan forgiveness programs. I have the Public Service Loan Forgiveness and she has the National Health Service Service Corps. We anticipate that we'll probably only have to use about 25% or less of her income. What say you? What your what are your recommendations about what to do with the extra money for two early career rare physicians moving forward to plan their future? Thank you for everything that you do. The white coat investor has been a tremendous godsend to me, my fiance and so Many of us, we appreciate it.

All right, You've done a great job figuring out a plan for your student loans. You're done a great job spending less than you earn. Those are pretty important parts of a financial plan. But what I'm not hearing is that you actually have a financial plan. This should never really be a question of what you do with extra money. I have a variable income every month. Sometimes there's extra, sometimes there isn't, but it all goes the same place because the plan tells me where the money goes. And so it sounds to me like you need a plan. You start your plan with goals, right? When you want to retire, how much you want to have to retire, et cetera. And you work backward to determine how much you need to save toward retirement every year, how much you want to pay for your kids, colleges or whatever.

Work backwards.

How much do you need to save.

For that each year?

Right. And if you're on track for all of your goals, then there's two things you do with the extra money. Either spend it and go have a great time. And I recommend you do that with at least some of it, or you give it away. And I also recommend you do some of that. But for the most part, most people are just still muddling around because they don't have clear cut goals and they don't have a clear cut financial plan of what they do with the money they have every month. And it sounds to me like that's the situation you're in. So you need a financial plan. If you are a hobbyist, if you're into this stuff, if you like reading financial books, if you participate on lots of Internet forums, the WCI forum or the WCI subreddit, you're answering other people's questions in there. Maybe you can write your own financial plan. Lots of people do. That's what I did. It works fine. If you need a little bit of help with that, take our fire your financial advisor course. There's also an option of that that you can use CME funds to buy that includes some wellness material, but that will take you step by step and help you write your financial plan. And the last alternative, of course, is to hire a financial planner to help you write a financial plan. We have a list of recommended planners on the website under the recommended tab. But however you do it, you need to sort that out. Okay. And for a lot of people, they're just trying to figure out where to put their retirement savings. That's what they mean when they ask this question. And basically, the way you do that is you look at your employer provided plans, 401s, 403s, 457B's, 401s, whatever they're offering. You know, if you're self employed, a Solo 401K, a backdoor Roth IRA for you and your spouse, maybe an HSA. And if you need to save more than that for retirement, you just do it in a regular, non qualified brokerage taxable account. If that's the question you're asking, then you just look at everything that's available to you and everything else goes in taxable, whether you're investing in mutual funds, whether you're investing in real estate, whatever. But it sounds to me like you need to get a financial plan in place. And then this question you won't have every month for the rest of your life. You just follow the plan and that the plan accounts for what you do when you get money and you plug it in toward your goals. All right, so we're going to be talking about our survey in a few minutes, but a lot of people said about the podcast, they just skipped the first five minutes. So I decided to put lots of great content into the first five minutes. So those of you who skipped it, well, now you're going to have to go back and listen to it. But I do have to tell you about our sponsor for the episode. Otherwise we're probably not going to have a podcast without sponsors. Have you ever considered a different way of practicing medicine? Whether you are burned out, need a change of pace, or are looking to supplement your income, locum tenens might be the solution for you. Not sure where to start. LocumStory.com is a place where you can get real unbiased answers to your questions. They answer basic questions like what is locum tenens? To more complex questions about pay ranges, taxes, various specialties, and how locum tenens can work for you. Go to locumstory.com and get the answers. Speaking of surveys, we had recently published on the blog, on March 4, we published a lot of the results from the survey we did. And I want to thank those of you who filled it out. We had over 3,000 people fill it out, many of whom were podcast listeners. And it was really interesting what we learned. We learned a lot about our audience. Okay, you guys range from 20 to 89 years old. 84% of you are actually married. More of you are men than women, and most of you are out working. About 13% of you are still in training, and 8% are retired. Only about 71% of you are physicians. Another 8% are dentists. And a big surprise for me, 8%.

Of you are pharmacists.

So a big pharmacist contingent out there, among many other professions. Most of you are employees. You know, really, only about a quarter of you own your jobs. We Learned that only 48% of you have a written financial plan. So just like our questioner at the top of the hour, many of you still need to get a written financial plan in place. Please do that. We're trying to help you. We're trying to give you the resources to do that. But it's amazing how much easier your financial life goes once you have a written plan in place. I cannot emphasize that enough. We asked about household incomes. We learned that about 9% of you have a household income under 100,000. I assume most of those are probably still in training, that about 21% of you have an income of between 100,000 and 250,000. That 42% of you have an income between $250,000 and $500,000. And about a quarter of you have an income of 500,000 to a million. And just a small sliver making seven figures a year. We asked about your net worth and found that about 15% of you still have a negative net worth. And another third of you are not millionaires. But 20%, 19% are between 1 million and 2 million. Another 16% are between 2 and 4 million. And that looks like about 7% are between 4 and 6 million. And about 10% of you are worth at least $6 million. So a pretty big chunk of pretty high net worth people in the white coat investor audience. But what's interesting about that, despite, you know, people making pretty good money in this audience and having quite a bit of wealth, people don't spend all that much. And in fact, it looks like only about 20% of you. Actually, it's less than that. Shoot. It's only about 8% of you spend more than $300,000 a year. The vast majority of people are spending much, much less. And in fact, about 40% of our audience is spending less than $100,000 a year. 19% of you are financially independent, and most of you are not really interested in a super early retirement. About a 30. About. Looks like about 70% of you don't want to retire before 50. Actually, it's more than that. It's about. That's 85% don't want to retire before 50, and about 11% want to retire between 40 and 49. Only about 43% of you do your own taxes. 99% of you own stocks. 76% of you own stock own bonds. 56% of you own real estate. And here's an interesting statistic. 18% of you own some type of crypto assets. Only about 7% of you regularly use a financial advisor, although another 16% use one occasionally. Most of you, about 3/4 of you have disability insurance policy. 70% of you have a term life insurance policy. About 10% have a whole life insurance policy. We discovered that 18% of you have experienced career burnout at some point that had a significant impact on your work and Life. And another 44% have had burnout that occasionally impacted your work and life. And if we currently ask who's burned out, we see that it is 57% of you are feeling at least some burnout that occasionally impacts your work and life. So a pretty high percentage there and I guess I'm not surprised. That number has inched up in every survey I've seen throughout the pandemic. What can I tell you? Your social media use more Facebook than anything else. 58% of you use Facebook, 51% use YouTube, 39% use Instagram, 23% use Twitter. It's interesting. We ask you how you find how you found WCI originally and many of you don't remember, but a fair number, it was a referral from a friend. About 29%, another 34% just wandered in off the Internet. And about 12% you either bought the White Coat Investor book or it was given to you. About 83% of you read the blog, 69% listen to the podcast, 68% read the monthly newsletter, and about 50% have read the original White Coat Investor book. It looks like 92% feel like you can always trust the recommendations from White Coat Investor, and less than 1% feel like you can't trust those recommendations. So I guess there's always going to be a few we can't make happy, but I'd say that's a pretty good vote of confidence. It's interesting. We asked you what you liked about WCI and you guys made me cry. You said so many nice things. Honesty and trustworthy and consistency, non biased, practical, motivating, intelligent, transparent. That was really nice of you guys to give that. But I also appreciate the negative or the constructive feedback that you guys gave and there's lots and lots and lots of that and we appreciate it because we're going to make changes based on a lot of that. You know, a Lot of people wanted me to do more, wanted me to work more, wanted me to interact more wherever they are, you know, make more podcasts, make more content, send them more emails, spend more time with them on the White Coat Investor forum or on the Facebook group. And obviously I only have so much time in my life that I can dedicate to the White Coat investors. So as much as people want that, they don't necessarily, should not necessarily expect to get that. What else did we have? Well, we had people complained about the Facebook group. You know, anytime you get 75,000 people together in one group, there's always going to be a few people that might rub you the wrong way. And so we had people asking for less moderation there and people asking for more moderation there. I'm not sure exactly what the right answer there is. On the same token, we had lots of people asking for longer blog posts and people asking for shorter blog posts. And so it's a good mix of what people want and it's not always the same thing. But we got a lot of need, a lot of great feedback that we can incorporate into the podcast. I think we're going to be looking at perhaps a new theme for the podcast. A lot of people commented they thought podcast had too many ads on it. Which I think talking about our own products here at the White Coat Investor is viewed by a lot of you as ads where we didn't really view that before. So we're going to be a little more careful about that. But we're obviously still running a for profit business here. We can't do it without any ads at all. So if you're expecting that, I wouldn't. It's interesting as I look at all the sources I use for news and information out there, one by one, they're all going to a subscription model. Think about the newspapers you used to read. You used to be able to read the websites free, but they couldn't make enough to pay their reporters and their staff just from display ads. And so they've gone to subscription models. Well, we're not planning to go to subscription models anytime soon here at the White Coat Investor, but we do have 15 staff members to pay and we got to make payroll. And the only way to do that is to have ads sell you stuff. Have you come to the conference, those sorts of things. All right, appreciate you filling out the survey. If you want more details on that, see the blog post. It's on the blog. It ran on March 4th and we'll have a lot more details there. About that, if you're interested. All right, let's take another question off the speak pipe. This one's about locums, which is interesting given that that was our sponsor today was locumstory.com.

Hello, Dr. Daly. Thank you very much for all you do. I'm a full time teaching faculty and my question is whether I should disclose to my current employer that I intend to do locum jobs during the days that I am off work or during my vacation period. Thank you very much for answering my question.

Okay, this is a legal question. This simply comes down to your contract. Read your contract. There are a lot of academic docs out there that are required to disclose something like this or might not even be allowed to do it. If you are in either of those situations, you better follow the contract or you're going to be legally liable for whatever the penalties in the contract are. But if there's nothing like that in your contract, you can do what you want on your own time. Now, to be an honest person, to have integrity, you need to make sure you are not stealing from your employer. Right. However they are defining that full time work is for you, you need to make sure you're giving that to the employer and not stealing time from them to work on something else. But so long as you're doing that, you can use your free time to do whatever you want. All right, let's do our quote of the day. This one comes from an article in JAMA in 1915. That's right. It read, the physician is not in business. He is not a traitor. He cannot judge when a bargain is truly a bargain. Here lies the whole trouble. He is not suspicious, not on his guard. His attitude is one of sympathy with, not suspicion of his fellow man. And I don't know if that's changed in the last hundred years at all. All right, thanks for what you've been doing. If no one's told you, thanks for the difficult work you do yet today. Let me be the first. But we want to do more than that today. We have a video that's been made that we're sharing all over our social media channels today. And the reason today is because March 10, 2020 is the day we reached 1000 COVID 19 cases in the United States. And so it seems like a good day to be talking about this, but I'm going to be bringing on an ICU nurse who spent a lot of time in a Covid ICU in the last couple of years with pretty significant effects on her physical and mental health. And she's put together a video that I want to share with you. Now, if you want to watch it, you're going to have to watch it on the YouTube channel or one of our social media channels. But we'll play the audio here as part of the podcast today.

All right, next on the White Coat Investor Podcast, we have a very special guest. Welcome to the podcast, Scotty Peterson.

Thank you.

Scotty was an ICU nurse for the majority of the pandemic. She's currently a first year CRNA student. And she did something really cool recently in that she made a video. And we're going to play this video here on the podcast. Obviously, if you're just listening in your car, you're only going to get the audio. You'll have to go to the YouTube channel if you actually want to watch the video. But we're going to play this in just a minute. It's something she put together that I think a lot of us that have been going through the pandemic can really relate to because we felt like we're in a war zone for the last couple of years in a lot of ways. And at the beginning, it felt like we had lots and lots of support from the community. And toward the end, maybe it didn't feel like we had so much support from the community. And in fact, a significant proportion of the community really didn't like a lot of the public health and other healthcare things that we were trying to do. So it's been a tough couple of years. And this video I think a lot of us will be able to relate to. But before we play that, I wanted to talk with Scotty a little bit about what was going on in her life that made her decide to make this video. So can you tell us a little bit about that, Scotty?

Absolutely. So I have been an ICU nurse for a little over seven years. My last year at the bedside was spent in Covid ICUs over 2,500 hours, as I've calculated. And in that time, I only saw one of my patients make it home. At one point, I couldn't figure out why I was still alive and they weren't. So I started to do writing as a way of surviving being in those rooms. Which brings me to the video. The video is just me reading something I had written during that time. I never really expected to read it out loud, to be honest. I've always been a fairly quiet person. But when you're alone in a room with a dying patient days in and days out for over a year, things change. The rhythmic movement of a mask you're hoping keeps you safe. It also silences you. It silenced me to the point where, for the first time in my life, I wanted to be heard. I have wrestled for months with what sharing this part of my experience with the public actually looks like. But at the end of the day, I remembered why I got into healthcare in the first place, and that was to help people. And for almost two years, despite all of my knowledge and experience, there was nothing I could do but watch people die. So maybe with this video, I can start to heal myself by helping others do the same.

Awesome.

That's a great introduction.

Let's go ahead. Let's go ahead and play the video now, and then we'll talk a little.

Bit more after we play it.

Healthcare heroes, they proclaimed as we tightened the drawstrings of our scrubs. Pushing fearfully through the doors open only to the essential, we rushed into the unknown. But we are not the heroes or heroines of the story. We are not here to be glorified. We did what we had to do. We did what we were trained to do in school. We learned advanced airway assessment and management. We were buried in knowledge of pharmacology and physiology. But no one could teach us how to move forward when our education and experience was simply not enough. From the head of the bed, amidst the chaos, we heard their last words. We watched them fight, knowing our interventions were so likely futile. Someone's parent, child, family, friend. They were our patients. We did what we were trained to do, to try and save the so many in the end, left only holding a hand, drawing cold, we all have experienced loss that lingers long after we step away from the bed. We watched through windows when our tubes, lines and machines were just not enough. We suffered with the suffering we gave to the grieving. We perished in part with our patients. While laughter has replaced the chorus of pans and wooden spoons, our mask did not protect the most vulnerable parts of us. Witnessing the joy of a country breaking free from lockdown, we struggle to keep our emotions locked in. We are sad, we are angry. We are distressed and destroyed. Just because we are still breathing does not mean we have survived. At times, the bravado of our profession can mask the bravery it takes task for help. These last few years, we have silenced so many. Now it is time to come out of our own silence. Stepping away from the bed, peeling off the layers of our own mask, we can tell their stories now, interwoven with our own. The skill to admit that we are not. Okay. The skill to ask for help. The skill to say, you are not alone. The skill to reply, me too. For those we couldn't save these last few years. Let us save each other. Together we fought, and together we can heal.

All right, Scotty, that.

That video is really touching. I mean, I think it sums up.

The experience of pretty much every ICU nurse in the country to start with, but also a lot of docs, hospitalists, intensivists, emergency docs, even people who are seeing Covid as outpatients now. They're not having exactly the same experience you had where a majority of patients didn't make it out of the icu. Many of them saw less sick people. You know, the sickest ones obviously get. Get concentrated into the icu, but I think a lot of people can relate to that. What do you think the path forward is for all these people that were traumatized by the pandemic? By dealing with such a large volume of intensely sick people and sometimes opposition from society for what we were doing? What's the path forward from here?

I think that regardless of discipline, I think we all share a lot of the similar experiences. I think we also historically operated on a tough it out mentality. I used to say if I wasn't the one assigned to a hospital bed, I was doing just fine, even on days when I absolutely wasn't doing fine. I think we need to redefine what doing okay looks like and stop comparing ourselves with each other and understand we're all probably fighting very similar battles at this point. Point we're just fighting them differently. I think we spent so much time suffering in silence, but there is no way we're going to heal silently. So we need to start talking not only to each other, but then also to people in positions of leadership. I think we reach them better if we're all saying the same thing, because our echo will be much louder in the bigger scheme of things. I think we need to start addressing why diagnosed and debilitating psychological injuries resulting from this pandemic or other trauma in the medical field is not recognized institutionally by lni. It is not recognized as an injury. I personally and I know others have had to empty out their entire savings account to pay for leave and the medical treatment they needed. We, many of us, felt we were treated as expendable. For years, we were asked to do the impossible on days we weren't in hospitals, calls and texts for help. We received every moment that we were outside of the doors, and our duty became our disease. I think that many of us spoke up more than once and absolutely nothing changed for well over a year. And at that point, for so many of us, it was too late. We are now suffering the consequences of those choices that weren't ours to make. So I think that if institutions start taking responsibility for the part they played in our injuries and help us get the treatment we need, it's the first step getting us back through those doors. And I think national staffing shortages will continue to be a problem until we truly acknowledged how and why we got here in the first place.

One of the lines you use in the video is talking about we're not okay. We're not okay.

Yeah.

Do you think that's all right for us to not be okay?

I think not being okay looks different for every person. And I think that you can't offer yourself completely to your patients or to provide the best care unless you have found a way to care for yourself. I think that's how good medical care happens, is from people who themselves are healed first. That's how we heal other people. So now I don't think it's okay that we're not okay.

Now. A lot of I was a military.

Doc for four years with the Air Force in a pretty High Ops Tempo 2006-2010. Lots of people were deploying.

Afghanistan, Iraq was going on.

Both. A lot of our service members came back with ptsd. Quite frankly, they saw terrible things. They had terrible things happen to them. How would you compare and contrast the experience that particularly ICU nurses have had over the last couple of years to that of a returning service member?

Well, I have struggled, but I most recently have come to a point where I'm able to own my diagnosis and I am diagnosed with ptsd. My psychiatrist who diagnosed me a year and a half ago actually worked with service members prior to her practice. Now, it took me a really long time to understand carrying that diagnosis because I didn't go to war and I didn't feel like I suffered the same trauma that those individuals did. But at the same time, there are weeks where I can't leave my apartment because I am scared. I have not been able to go into a grocery store for almost two years. I have lost most of my family and friends because it is really hard to make connections. I wake up many nights screaming or crying because I so vividly remember my experiences from the last two years. I startle easily. I can't hear a helicopter or siren without panicking quite a bit because to me, for a year, those helicopters and sirens meant somebody else was coming to me to die. And I'm not sure how to heal. I think we're all figuring it out as we go, but I think there's a lot of shame carrying that diagnosis and what it looks like. But I don't think people think it looks like me. And so if I have to be the first one to really get out there and say, I, I have ptsd, this is what it looks like. Maybe it'll help others own their diagnoses as well.

I would say your experience is extremely similar to that of a returning service member. Not only did you see all kinds of people around you dying, but you had that constant fear that you were next. There was no reason you couldn't die from the same thing they were dying from, which is exactly what our service members are facing when they're out there.

Being shot at or being blown up.

With IEDs or whatever. And so I guess I'm not surprised at all to see what may be the next epidemic, which is an epidemic of PTSD among healthcare workers, particularly those who worked with the sickest patients. I don't think that's a surprising outcome at all. It should have been an expected outcome. I think, and you're right, that we all need to be working on this, both with peers and colleagues, as institutions and as society. I mean, in the beginning of the pandemic, people were clapping as you went to the hospital. You were the only ones leaving home for a few months. Did you feel that change partway through the pandemic? And how did that affect how you felt about the work you were doing?

I think I quickly, and I can speak for probably a lot of my colleagues, quickly felt invisible. We were put into these rooms where we couldn't leave for 2012-16 hours just based on what we were doing in the critical care units, our own units didn't know that we still were employed by the institutions administration. I didn't hear from for an entire year. I heard more gratitude from the restaurant down the street in a year and a half than I did from my own leadership. I. I think that we all became so invisible, and I became closer with my patients and their families on Zoom than I was with my own. Sorry.

That's okay.

Scotty, I want to thank you for being willing to be so vulnerable, to being willing to make that video to start with, to be willing to come on the podcast to tell people about why you made it. You've been through a lot, and if nobody said thank you to you for what you've done the last couple of years. I want to thank you on behalf of our 30 to 40,000 listeners. What you've been doing, we appreciate it. It's meaningful work. It matters. And we hope that you can start feeling better soon.

Thank you so much.

All right. That was a really touching video for me, and that's why I wanted to bring Scotty on the podcast, talk a little bit about her experience, because I know a lot of you have been having the same experience. And whatever you're feeling after the trauma you've gone through in the pandemic, whether you are feeling burnt out, whether you are having ptsd, whether you are feeling suicidal, whatever it might be, I want to encourage you to get help. There is help out there. There are people that want to assist you. If it's burnout you're dealing with, I want you to make sure you're aware of our coaching services. Whitecoatinvestor.com coaching we put together a new program this year called Burnout Proof MD in partnership with the Happy md, and that's helping a lot of docs to basically promote longevity in their own careers and enjoy their careers more and be able to stay in them longer and thus be more financially successful. You know, it's very interesting. You cannot by insurance against burnout. You can buy disability insurance, you can buy life insurance, but you can't buy burnout insurance. And so if you're feeling a little bit crispy, maybe getting a coach going through a burnout program, reading a burnout book might help you to rekindle that love you have with your career and remember why you went into it in the first place. All right, let's do some corrections. Okay, here's one. I don't know when I said this or whether somebody else said it. I don't know. I think this is from a discussion I had with this show on a recent podcast about cooking classes in Italy with 529 funds. Apparently, there are some cooking classes in Italy that qualify for 529 funds. At the University for the Studies of Gastronomic Science in Italy, Basically, the place you go to check is studentaid.gov if the program, if the school is listed there, you can use your 529 in order to pay for it. So lots of interesting stuff there. It's an approved list of international schools that are eligible for Title IV student aid, essentially, which means they're eligible for 529s. All right, another correction. Here's one from a recent episode on Travel Hacking. I think Fisha misspoke or gave wrong information about the Chase card and she corrected it subsequently in the show notes. But we should probably correct it out loud on the podcast as well. Chase has a 524 rule, meaning you can't get more than five cards in any 24 month period. And I think she said it was five cards in five years. So it's five cards in two years, not five cards in five years. Oh, here's another one. I learned something from this Correction in episode 250. I think I used the term Immaculate Conception to mean virgin birth. I said the immaculate conception rate in the ER is about 15%. And I'm not Catholic, but Catholics. And maybe many of them don't even know this, but I was told by a Catholic attorney who wrote in by the name of Andrew that these are not the same thing. The Immaculate Conception is actually the doctrine that Mary was preserved from original sin when she was conceived in the womb of her mother. So Mary is the Immaculate Conception, not Jesus. That's the virgin birth. So if you didn't know that, like me. Well, you learned something about religion today on the podcast. All right, let's take another question off the Speak pipe. This one's about selling stuff from an old advisor. Thanks, Mike, for this great question.

Hi, Dr. Dalley, this is Mike from Chicago. I've recently moved all of my money and assets from Merrill lynch, where it was managed by a financial advisor, over to Vanguard. My advisor had me in dozens of positions that I want to sell out of so that I can consolidate to low cost index funds like he would recommend. What should be my strategy to most tax efficiently sell out of these positions in regards to the short and long term capital gains and losses. Any help would be appreciated. Thank you.

All right. Anytime you fire a financial advisor and move your assets away, you should have a plan in place before you do it. You're usually better off leaving it there until you have your plan fully developed of what you're going to do. And that includes how you're going to deal with these legacy assets, these legacy investments that you have from the old advisor that maybe you don't want anymore. But the bottom line is you want to have as ideal of a portfolio as you can while balancing the tax consequences of changing your portfolio. That's what you're trying to do here. So anything you own inside an IRA, 401, et cetera, there's no tax consequences to selling it and buying it what you actually want and buying what you actually want. So do that inside an IRA, 401K, HSA, whatever. If it's in a tax protected account, sell it, buy the index funds, you're good. Then you need to look at each of the other assets in there and look at the cost basis, how much the gain is going to be. Okay, Anything that has a loss you can sell right now, you might as well, right? Book the loss. You can use that against your taxes, you can use that to offset some of the gains. Anything without much of a gain, you can sell that as well. But if you've got some stuff with really low basis with big gains that's going to cost you a lot in tax to change, then you've got to be a little bit more careful. First, make sure you're not reinvesting into that investment, whatever it is, you know, make sure the dividends are going to cash instead of into that investment. But you want to look at each of them and decide, well, do I want to build my portfolio around this or do I want to bite the bullet, pay the tax and move on? If you've got a bunch of losses from something else, well, you can take out that many gains as well if the gains aren't that big. If we're talking about moving over a $20,000 portfolio with $4,000 in gains, well, maybe you just bite the bullet and you pay the taxes, no big deal. But if you're moving $4 million over there with all kinds of gains, then you probably want to build more around that portfolio. And that's fine a lot of the times, as long as not too much of the portfolio is in any one stock or whatever. If you've got a spread across 10 or 15 different stocks, then maybe just new money goes into index funds and you hold onto those stocks. Another great thing you can do with these is if you give to charity instead of giving cash, give appreciated shares, right, Neither you nor the charity will pay the capital gains taxes. You get the same deduction you would get otherwise. It's a great way to flush legacy investments out of your portfolio. Obviously this assumes you're giving to charity anyway. If you're not giving to charity anyway, that's not a good move. You're not going to come out ahead there because you're giving away more than you're getting in a deduction. But it's a great way to get rid of those capital gains if you are charitably minded. It's particularly convenient if you use a donor advised fund to move those assets out. I want to address a review that we got on the podcast, it said, overall, this podcast is the best for higher income earners, by which I mean regularly salaried folks in the higher tax brackets, and not just those who wear a white coat. Almost all of the advice he gives is excellent and in your best interest. Except the amount of cheerleading promotion he does for real estate in all its forms. No, real estate is not some kind of magical investment nirvana. For some it might make sense, but it amuses me that he advocates for passive investing and everything else. But somehow it's okay to invest in all kinds of active private real estate deals. As long as you take that with a pinch of salt, you should be good. So let me do a little response to this. The first one is don't confuse ads for recommendations, right? For 11 years I've been trying to get Vanguard to buy an ad on the white coat investor, and thus far I've been completely unsuccessful. Okay? So keep that in mind. Just because we have advertisers doesn't mean that that's necessarily the same thing as we recommend we put your money in, right? If you went simply by what ads are, you'd have all your money in things like real estate and none of your money in index funds. Because nobody that sells index funds buys ads. That ought to tell you something. Number two, real estate is a great asset class, right? There's a lot of great tax benefits to is a great source of return. It is less correlated with your stocks. There's a lot of great benefits to investing in real estate. Number three, I certainly do believe in passively invested publicly traded real estate. 85% of my portfolio is in index like and index funds. My portfolio is 60, 20, 20, 60% stocks, 20% bonds, 20% real estate. And in that 20% segment, that's real estate, 5%, a full quarter of it is in the Vanguard REIT index fund. That was a fantastic investment. In 2021 it made 40%. I certainly believe in it and I invest in it. A fourth point. Most real estate is not publicly traded. And because of that, it's a much, much less efficient market than publicly traded stocks and REITs. Your location matters, your skill and your expertise and your experience matter. Don't assume that truisms from a very widely watched, publicly traded, very efficient market necessarily apply to every other market out there. Number five, private real estate should also, at least in theory, carry an illiquidity premium. And I've seen that when some of my real estate investments went from private to public, they had a big boom basically in value as they went public and the yields dropped to what other similar publicly traded investments were yielding. Broadmark was a fund I owned that ended up going public and basically got a 20 or 30% bump as soon as it went public. And I waited until that before I sold it when it was yielding exactly the same as other publicly traded similar real estate debt funds. So hope that's helpful to explain why we talk about real estate on the podcast, why we talk about it in the blog, our newsletters, why they advertise with us. You don't have to put all your money in real estate by any means. In fact, I view private real estate as completely optional to your portfolio. But has it helped my portfolio sure has, and I think it's a reasonable asset to include in your portfolio. Alright, here's another question. This one's a little more personally About Me via Email I'd like to know from Dr. Dali if he could only practice emergency medicine or run WCI do finance, which would he choose? I'm just curious. I guess this is dependent on his current location, on his timeline. Well, the truth is for me, I go back and forth, right? Some weeks I'm like, boy, I wish I could just do medicine. Other weeks I'm like, I am sick of being in the er. I wish I was just doing wci. And all of the time I'm wishing I was doing less of everything. But some things I like about emergency medicine, it allows you to leave your work at work, right? I've always got something hanging over my head with wci that's not the case for emergency medicine. When I send my patients out, walk out that door, nobody's calling me, nobody's paging me. And I really like that. I also like going into work and not knowing what I'm going to be doing that day. Maybe it's the ADD person in me, but I really enjoy that. Sometimes it's slow, sometimes it's super busy. And I like not knowing what I'm going to be taken care of. When I go into work, I get to see my friends there. I get to be social. And when I think about my career, what my career is is medicine, when I spent more than a decade training to do it. So that's what I look at as my career. But there's other things I like about White Coat Investor. I can reach a lot more people, I can help a lot more people. I can work from home. I get a chance to work with my wife and some of my best friends that work here at the company. Eventually I started making more money at White Coat Investor. That wasn't the case for the first few years, but now I make more money at White Coat Investors, so that's a nice bonus. And indirectly, by helping you, perhaps I'm helping more patients by helping you to be more financially stable and allow you to concentrate on your patients and your practice and your families and to not have to rush through patients, et cetera. Maybe I'm affecting more patient care indirectly than I am directly. I also find it fun to be an entrepreneur and create more jobs. Although it's stressful sometimes thinking about the fact that I need to make payroll. It is really rewarding to be able to create not just jobs, but good jobs, you know, that people count as the best job they ever had, which I think is pretty cool. So lately I felt more like dropping White Coat Investor, to be honest. But it would certainly be much less complicated to drop my clinical work. It always surprises people when they find out that I'm still seeing patients for some reason. But I guess, you know, I didn't cut back on my clinical work because I didn't like doing my clinical work. I just needed more time for White Coat Investor. All right, here's another request by email supply A bit more full disclosure about the ways in which WCI's religious affiliation biases investments well, this is an interesting one. I don't think there's a lot of biases there, but let me see if I can think of some. You know, the main religious group that comes to me with concerns about investments is Muslims. Followers of Islam have a prohibition against basically charging or paying interest. And so that obviously affects a lot of investments. It affects how they can invest in real estate, how they can get a mortgage, what stocks they might be willing to own, what companies they might be willing to own, et cetera. I'm not Muslim though, so that doesn't really affect how I invest, and I don't think it causes any sort of a bias in what I recommend. I am, however, fairly anti debt, and that probably has a religious bias to it. I'm probably more against debt than maybe the average secular person is. As long term followers know, Katie and I don't have any debt. We paid off our mortgage in 2017 and we kind of like that feeling. We don't plan to go back. Another aspect that our religious upbringing gives us is we support charity a lot. We give a lot of money to charity and we do that via Donor Advised Fund, as you heard on this podcast before. And so that certainly has some biases to it. You know, for example, I worry a little bit less about getting a lot of capital gains in my taxable account. And the reason why is because I know I'm going to flush a whole bunch of them out by giving to charity. So you know when that's a great way for me to get earnings because I never pay taxes on it. And so maybe that biases me a little more against income and a little more toward capital gains. That's about all the biases I can think of that my religious affiliation provides with regard to investments. But I don't know, maybe somebody can think of something else. Feel free to write in about it and I'll try to mention it. I try to at least disclose biases when they can't be eliminated. All right, let's take a question about a 10:35 exchange from Sherene Sharon. Sherene. Not sure which one it is, but it's on the speak pipe. Let's take a listen.

Hi Jim, this is Sherene from Florida. In 2020, I did a 1035 exchange of a variable universal life policy to a low cost annuity at Fidelity. The account has grown and is almost back to basis. I've been considering my options, which are to leave the money in the annuity or to surrender the annuity and transfer the money to my brokerage account. The total expense ratio of the annuity is 0.37, which includes the fund expense ratio and the Fidelity fee for the annuity. Is there any benefit in leaving the money in the annuity? Is it protected better from creditors in that annuity, should that ever be an issue? My brokerage account has mostly very low cost index funds, so even the 0.37 expense ratio of the annuity seems high to me. Also, when I surrendered the vul, I had to pay a large surrender penalty. Should I expect to pay a surrender fee if I surrender the annuity? Thank you in advance for answering my question.

Okay, first, let's do a little bit of background information for people who don't know what the heck you're talking about. A lot of people that buy a whole life insurance policy or a variable universal life insurance policy or an indexed universal life insurance insurance policy that they then realize they don't want feel really bad surrendering it and paying what a lot of people call stupid tax. So they try to make lemons out of lemonade. And the way they do that is they exchange the cash value they have in that life insurance policy into a low cost annuity such as the one she's referencing at Fidelity. And that allows you to then let that cash value grow inside that annuity, back to basis, back to the amount you paid in premiums for that life insurance policy. And then you can surrender the annuity and walk away. Essentially you got a certain amount of gains tax free by doing that. Now you paid some expenses and you had some hassle with regards to the annuity, but you basically got some tax free gains. And that was the whole point of the exercise. And so people surrender it when it grows back to basis and walk away and just invest in a taxable account. Now, when you're trying to decide whether to invest in an annuity or whether to invest in a taxable account, there's a few things you have to consider. Investing in a taxable account has lots of benefits. Okay? You can take advantage of long term capital gains rates, which you can't do in annuity. When you take money out of an annuity, it comes out at ordinary income tax rates. All your gains do anyway. You get qualified dividends rates. But again, when money comes out of an annuity, you pay at ordinary income tax rates. However, an annuity grows in a tax protected way. You don't have to pay taxes every year when you're buying and selling stuff in there. You don't pay taxes when you are, you know, get a dividend distribution every year. You don't pay taxes, you don't pay anything until it comes out. And over long periods of time, that tax protected growth can potentially, if fees are low, can make up for the difference between ordinary income tax rates and capital gains rates. So in a very long time period with very low expenses, it's possible you can come out ahead using a variable annuity. So that's one thing to consider when you decide whether to keep that annuity. The other thing to consider is your asset protection situation. And these laws are always state specific. But in Florida, where Shareen lives, annuities are 100% protected from creditors. Your taxable account is not. So you would get additional asset protection if you left that money inside the annuity. So that's another benefit of the annuity for her. Now, whether that's worth it or not, obviously the risk of you being sued above policy limits is very, very low. But a little extra protection in the event you got some $10 million judgment against you and had to declare bankruptcy, it's always nice to have a little bit of extra protection. So difficult decision for you. Given your state and the low cost of your annuity, you may want to keep it. You can use it for particularly tax ineff efficient asset classes like REITs or TIPS or something like that. But it's up to you whether you keep it or not. In my case, as I mentioned earlier, I donate most of my gains to charity and so I end up being able to invest very tax efficiently inside a taxable account. And so an annuity is a little less attractive to me than it might be to you. And of course, if you're in a state that protects annuities from creditors, it might be even more attractive to you. So only you can make that decision. But those are the factors you ought to be thinking about.

If you're like most doctors, nobody taught you anything about personal finance or investing during your undergrad, professional school or residency. Even though your family and perhaps even your business rely on you to be the Chief financial officer, you have never been given the tools to succeed. Enroll in WCI Financial Bootcamp, a free educational email series, and learn to convert your high income to wealth. You will learn the basics of investing, saving, insurance and more. Your high income alone will not lead to financial success, but as always, we want to help you on your financial journey. Go to whitecoatinvestor.com financialbootcamp to sign up today. You can do this, and the White Coat investor can help.

Now, I mentioned the conference at the top of the podcast. You know, if you want to speak at that conference, we'll probably take applications for speakers in June. You can probably sign up for the next conference in October. But in the meantime, you can still get the content from this conference. And we're actually offering a special deal on it. Okay, the CFE 2022 course includes everything from that conference. All the content, the stuff that was just virtual, the stuff that was streamed, the stuff that was just at the conference center itself. All of that is in this course. Now, everyone who attended the conference, whether in person or virtually, gets this course for free. But if you weren't able to attend, you can still buy it and you can use your CME dollars to do it. It includes 17 hours of CME, but the sale on it only goes through March 14th, so you got what, five more days? If you're hearing this the day it drops and we're selling it at an early bird price, it's 10% off. The regular price is $7.79. The early bird price from now through March 14th is $6.99. All you have to do is go to whitecoatinvestor.com CFE2022. You don't need a code until March 14th. Everybody gets that price, so go check it out. All right, thanks. For those of you who are leaving us five star reviews and telling your friends about the podcast, our most recent review said awesome Financial podcast five stars. Thank you Dr. Dali and Dr. Spath. I thoroughly enjoyed the addition and perspective from Dr. Spath. Excellent financial podcast with incredible content and actionable tips. It has transformed my life. I will continue to recommend it to friends and family. Thank you. Kevbot. I hope you're not a bot. I hope you're a real listener. Based on the review, I think you are. But for the rest of you, thanks so much for leaving us five star reviews. It helps your colleagues find the podcast. Keep your head up, shoulders back. You've got this. 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.