WCI #265: Physician on FIRE Q&A

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.

Hello, this is Leif Dahleen, aka physician on fire coming at you in place of the good Dr. Dali and Dr. Spaeth because it is Fire Week here at the White Coat Investor and I happen to know a few things about Fire, so I was asked to come on and guest host and I'm happy to do so. So today's podcast will be the Physician on Fire Q and A. We'll talk about health insurance, giving to charity, savings rates, 529s and tax loss harvesting to mention a few.

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 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.

Now the quote of the day comes from the esteemed Dr. William Bernstein, who has been at multiple WC Icon events in the past, including the recent gathering we had in Phoenix this winter in February. And he says investing is a game won by the most disciplined, not by the smartest. So keep that in mind. You don't have to be the smartest person on the block, but it does require some discipline to be a good and effective investor. Now I'll take a quick minute to thank you for the work that you do. Whether you work in a hospital, a clinic, maybe a dental office, courtroom, or even the side of the road. Just, you know, the world needs ditch diggers too. So thank you for whatever it is that you do. The WCI Scholarship is now accepting applications. Only professional students enrolled full time in a professional school located in the United states for the 2022-2023 school year who are in good academic standing are eligible. More information can be found at www.whitecoatinvestor.com scholarship now, since this is Fire Week, I'd like to talk a little bit about my fire journey. For those of you who don't know me and maybe haven't heard my story, I won't belabor it too much, but I'd like to talk a little bit about the why of my fire. And it wasn't that I was burned out necessarily, but there were a few things that kind of left me a little bit disillusioned with the career of medicine. So I did retire from my job as an anesthesiologist in in the summer of 2019 that was coming up on three years ago. Now. I have continued to write on this blog, Physician on Fire, that I started back in 2016, so I'm not completely retired, although this life that I've carved out for myself has me feeling much more free than the one that I had before when I was a practicing physician. So we're actually recording this episode in April well in advance because my family and I are heading out soon on another month long travel adventure. This will be the third month long trip that we've taken thus far in 2022, and we've got more lined up after enjoying a nice summer up north in Northern Michigan where we call home. But yeah, we spent the first part of the year in January. We took a week each in Athens, Greece, the island of Malta, spent a week in Sicily, and then finished up with a week in Rome. I got back just in time to join many of you at WCI Con 22, which was fabulous. Then we returned to the cold for a couple of weeks before going down to Florida for the better part of March. We also took a side trip from Orlando to fly to Medellin, Colombia, spent a week there, got to see a different culture, spend time in South America, and then this next trip we've got coming up will take us all over the place. We're going to drive out to see family in Boston, fly down to Texas, spend some time at the beach in Galveston. A cruise ship is going to take us from there down to Costa Rica, Panama, Colombia again, although Cartagena, this time on the coast, and then we'll have a few stops in the Caribbean and back up to New York City. We'll see friends there in the city, head to Boston, and then our car will be waiting for us. And we were going to road trip it back after doing some hiking probably in Acadia national park in Maine, we may end up spending a little time in Canada. We definitely will be driving back Through. Anyway, long story short, that's what fire life looks like for me now. But I said I was going to talk a little bit about what really led me to want to fire. I figured out that the money part was all set. You know, when I discovered financial independence in 2014, we had that. By the time I left five years later, we had much more than we would need. And now that comes into play a little bit later in today's episode when someone in a similar situation is asking about charitable giving. And so we'll talk about that some more. But what made me want to leave my position as an anesthesiologist? It really wasn't the day to day. I think I was pretty good at my job. I enjoyed the people I worked with, had a lot of great patients. The days usually went by pretty quickly. We were rather busy. It could be stressful at times, but for the most part it went really well. So I wasn't burned out by the day to day job in the or. I liked the people I worked with, had some really great patients. It was more bigger picture stuff that kind of got to me and had me thinking that I could do without this job. And, you know, there are really three things that stand out in my mind and they happened over the course of several years. But, you know, the first was I took a permanent job after doing two years of locums. I'm doing air quotes around permanent if you can't see this. But it turned out to be a job that at a hospital that was on very shaky financial ground. And that hospital ended up declaring bankruptcy. And I was the only anesthesiologist in the county. This was a small town in northern Michigan. And once there was no need for an anesthesiologist, I really had nowhere else that I could work, at least within a reasonable commute of where we lived, which, by the way, was probably, probably the nicest house in town. And it's one that we had built because I thought we'd be there for a good 20 or 30 years. It turned out to be three or four years altogether. And I had a baby and a toddler at home and we had to find a new place to live and work. And that was stressful and not fun for anyone, obviously. Now, as a thank you for the time I spent there, and that time included accepting a volunteer position on the board of trustees by agreeing to take over as the president elect of the medical staff. It's a bit of a misnomer because I was appointed to that position when the Current president elect left for another job because he could see the writing on the wall and I was too stubborn to see what he saw. So I stuck around to the bitter end at least as long as I could. So I was on that board for about 10 months. I had a non voting position. It was more of an observation type role until I would become the president of the medical staff, which of course never actually happened. But what did happen, one year and 364 days after the hospital officially went bankrupt, is that I was named as one of several dozen people in a lawsuit against basically anyone that had anything to do with the board of trustees over the last ten years or so. And we did have a directors and officers policy, an insurance policy that should have covered us. However, that policy did not cover us in the event of a bankruptcy. And so over the course of about three and a half years, I had a lawyer that I sent monthly checks to who was in on phone calls, writing emails following this lawsuit, which dragged on and on, like I said, for three and a half years until finally I, along with quite a few others, were dismissed because, well, there was no wrongdoing and we were being sued for breach of financial or fiduciary duty. But again, gosh, my role is minimal. But that didn't matter. I had a target on my back. I was an anesthesiologist and my name was on the board minutes. And I was going to be sued for millions. And I never thought that I would actually lose millions of dollars, but there was always that little specter out there, that little worrisome thing that I couldn't shake. And that's one of the reasons that I was an anonymous blogger when I started out. I didn't want my name out there declaring financial independence while someone else was trying to take it away from me. Now the third thing that happened, and this was a little bit later, I had settled into a new job in Minnesota. It was a great job, it was my last job and everything went well there. But this came from above. This was the American Board of Anesthesiology and their recertification process. So I finished residency in 2006 and was board certified as soon as you could be by passing the written exam right away and the oral boards the next spring. And so about seven years after that, 2013, 2014, I was told that I could go ahead and take the 10 year recertification exam. It's only offered twice a year and they encourage you to take it as soon as, as it's available to you because you can retake it if you happen to fail. Now, I didn't expect to fail, but I also didn't want to take that chance. So I skipped the summer testing period, but I went ahead and signed up for the winter testing period. So the second out of six potential opportunities over a three year period and I did well and I passed. And I got my letter and it said, you're good for 10 years. And then six or eight weeks later I got another letter and it said, never mind that exam you took, that won't count for anything. Thank you for your $2,100, we're going to start charging you $210 a year and you're going to take MOCA 2.0. That's maintenance of certification and anesthesia, the new thing that we've been testing for the last year. It's been in beta, but now we're going to roll it live. Well, you know darn well that they knew they were getting rid of the old plan and they went ahead and encouraged me to take the old test, spend dozens of hours, probably 100 plus hours studying, you know, all for a 200 question multiple choice exam that I finished in 100 minutes. It was just a huge waste of my time, my money, or I should say my hospital's money because I was reimbursed, but all for, not because they never planned to let it count for anything anyway. And it was just so very frustrating to know that I was sitting in a library studying, spending all this time when I could have been hanging out with my family and I would have been okay with the transition to this other program. But no, they wanted me to do both. Now, eventually a lot of us in the same cohort said, wait a minute, you just got this huge chunk of money you're going to charge us annually for 10 years. And they did acquiesce on that, but not on the question bank and all the other requirements of this newfangled maintenance or certification. So again, just to recap a few things that really didn't sit well with me was number one, having this permanent job taken away. And that's just the realities of medicine and it is a business. But then to be sued for doing what I thought was what I could do to try to help right the ship by at least participating in the board. And by the way, that was a volunteer position. I didn't get paid a dime. I skipped a lot of dinners at home and went in on evenings for these meetings. And it cost me, I think altogether about $14,000 in legal fees and three and a half years of stress. And then number three was the maintenance of certification, having the rug pulled out from under me after passing the exam and having account for nothing. So just realize that even though practicing a medicine can be very rewarding and if you see it as a calling, fire may seem like a non starter. But I would encourage everyone to try and focus on the financial independence part, not so much the retire early part, because FI certainly gives you options if and when you do want or need them. You know, I mean certain entities or employers, they see you as an asset, as a commodity, and maybe aren't thinking about you as a human being. And you know, no one cares more about you. So you take care of yourself and that means looking out for your mental and physical health, also your financial health, which is where I try to help people the most. So onto the reader questions. Let me reach into the mailbag here and let's see what we got for our first question. Okay, what do you do about health insurance between FIRE and Medicare age? It's a good question. It's a common question, right? Because Medicare starts at age 65. I retired at 43. That's a 22, 22 year gap to cover. That's a lot of ground. So what you do is you buy it, you buy healthcare. Tens of millions of people do this right? Now some of those people are self employed, some may not have a job by choice or not, but many people have to pay for their own health care coverage. So how do you do that? Well, the first question is do you want true health insurance? If yes, then you look for the best policy that makes the most sense for your family. If you're willing to pay for health care coverage that isn't necessarily insurance, there are other options that exist and that includes health care sharing ministries. Now I'm not a huge fan of those. They do work for some people, but they're not true insurance. There are annual and lifetime caps on the amount of coverage that they will provide you. They don't actually have a legal or true obligation to reimburse you for any healthcare needs that you have. And most of them have a religious affiliation and they'll take a moral high ground on what they will cover. So for example, certain immoral activities and the resulting health related consequences may not be covered. So think like anything related to alcohol abuse, accidents under the influence of alcohol or drugs, rehab to help get you or a family member, a child, out of issues with alcohol or drugs. Premarital sex can lead to other things such as pregnancies, and they can say, no, we don't believe this is fitting with what we want our members to be doing. And so if you have a few drinks and get in a car accident, if your son or daughter gets in with the wrong crowd, you could have incredibly high health care expenses that will not be covered or reimbursed. And that's just not enough of a safety net for what insurance is supposed to be in my mind. So I looked at those different policies, but I decided to go with true health insurance and to buy health insurance, well, you can use an insurance broker. There are people that will look around for you, see what they can find. There may be some kind of an association policy that a group policy that you would be eligible for. But I think most people Simply start@healthcare.gov that's the nation's healthcare insurance exchange. And your state may have their own exchange set up. And if you start@healthcare.gov it will send you there. So that's how I found mine. We're in our third year now with a high deductible bronze plan that has an HSA. We pay just over $1,000 a month for a family of four here in 2022. That's gone up a bit from 950 or so to 980 to now, I think 1050 roughly per year. You know, it's an expense that we will expect to continue to go up and we planned for that expense before I quit my job. So make sure you're thinking about that before you consider early retirement. But again, you just pay for it. Let's move on to another question. This one is on the speak pipe, so we'll go ahead and play that.

Hi, Dr. Dali. Thanks to your work and that of others like you, I've realized that based on our current financial plan, my wife and I are likely to have far more money than we will actually need for retirement. And we want to make use of the remainder of that. We plan to give heavily to charities, and as such, I wonder what the best plan going forward would be for, you know, maximizing these two goals. You know, if we put everything in retirement funds and then in taxable and then pull it out from there, I imagine we'll end up paying a lot more taxes than if we put money into things like donor advised funds up front as we earn, even in those earlier years. So I wonder if there's some sort of good way to do the calculus on that and plan in advance how much we would give to things like donor advised funds. Versus taxable for our retirement. I know that you give to charities quite a bit yourself and thought that you would have some interesting insights on this. Again, thank you for everything you do.

So Randall has too much money. Congratulations Randall. I really love where your head is at. There are so many charitable causes that can really use your help, both domestically and internationally. There are so many needs around this world, especially now with the situation in Ukraine. But there always have been and always will be lots of places where you can do good with your money. So I like that you mentioned donor advised funds. This is my 10th year now with using donor advised funds. And what I like to do is donate appreciated assets from my taxable account to the donor advised fund. And Dr. Dali does this as well. The two of us treat our donor advised funds differently though. He uses his as a pass through, puts money in and then takes it out by giving to charity. I use mine as more of an endowment or a mini foundation that we can give to en masse early on but then give from for life. And so I kind of look at it as a charitable nest egg and I can go ahead and maybe have a slightly higher withdrawal rate from that as I do with my own money. But something in the 5 to 10% per year range is what we aim to give from our donor advised funds which now have grown to something north of $500,000. So how much to give? Well, you know, you want to consider your marginal tax bracket and some people like to poo poo tax advantage giving like you're being greedy or something, even though you only get back 30 to 40 cents maybe per dollar that you give away. But I like to look at it as a way to make sure that the charitable organizations that you're supporting get the most money for every dollar that you actually part with. So, you know, look, look at your taxes and if you can maybe drop out of a marginal tax bracket into the next lower one by making grants to a daf, that is one way to, you know, look at the, you know, quote unquote benefits of giving some money away. And this does involve some tax planning that needs to be completed, completed before the end of the calendar year. Now also keep in mind there are limits, especially when you donate appreciated assets. So if you're going to donate, let's say a mutual fund or an ETF or an individual stock that you've owned, first, make sure that you've owned it for more than a year so that you can deduct the current value of it and not the value at which you bought it. But once you've owned it for more than a year, you can go ahead and donate it. And Your limit is 30% of your adjusted gross income in that year. So that most years that tends to be what we give is 30% of our adjusted gross income. And I choose whatever mutual fund in my taxable account has the highest percentage appreciation. And you can choose not only which fund or which stock to give, but which lots of that fund or stock. Okay. Now a common question is which donor advised fund should I use? There are many of them. I think some of the most common and popular are from Vanguard, Fidelity and Schwab. And they all, they work similarly. Vanguards, I'm not as much of a fan with, they don't like to send money electronically, which means money can end up in the mail. And I've had a check floating around for six weeks now because they didn't want to do an electronic funds transfer for a quite a large sum. Now Fidelity and Schwab, I've heard many good things about. I've been using Fidelity Charitable for five plus years and I find their website very simple to use. Both Fidelity and Schwab have lower minimum grants than Vanguard. $50 compared to $500. They both let you make smaller additions to your donor advised fund. I think Vanguard wants you to give at least five grand at a time. You don't have to do as much with Fidelity or Schwab. There is a newer one that I've now moved most of my money to and I shouldn't say my money because it's already donated. I cannot take it back. It can only be given to other to actual 501c3 charities. Right. So our donated dollars, most of them now lie with charity vest and they have lower fees. 0.5% as compared to 0.6% and it goes down from there. I think where we're at would be a quarter percent. But they're actually doing fee waivers for new enrollees right now. So the only fees you might pay are the expense ratios which across the board in any of the donor funds that I've mentioned are quite low, you know, 0.11 and below. If you go with index fund options, there are other options for donating. Obviously you can donate directly to charities and they get the money and they decide how it's invested or how it's used. You could consider a charitable foundation. These have higher costs to set up, higher costs to maintain. There are some advantages you, you can, for example, pay board members. Now that could be Considered an advantage or a disadvantage. I feel it may run counter to my charitable mission to actually pay people to be on a board for a foundation. But maybe that's part of your plan. You also have more flexibility in who receives the money. You can maybe choose an individual scholarship recipient, for example, whereas you can't do that with a donor advised fund. But personally, a donor advised fund does everything that I'm looking for. So I haven't looked too closely at what it takes to set up a foundation or any other type of giving vehicle. Now this next question comes from email. It says, I know you recommend saving 20% of your gross income for retirement. When I'm doing this math, may I include my annual employer 401k contribution and profit sharing in this 20%? Can I include my annual HSA contribution if invested? I've been omitting R529 kids accounts, et cetera, from our savings and net worth calculations. All right, there's kind of a lot there, but let me dissect it. Well, number one, you can include or not include whatever you want. It's your calculation. It's just your numbers. You're not really comparing it with anyone else. This doesn't go to the government. This is just for your own purposes. And as far as recommending 20% of your gross income as being saved for retirement, I think that's a good start. Personally, I think that if you can find a way to live on about half of your take home pay, so half of your net after taxes and use the other half to either pay off debt and or invest, that's a great way to achieve financial independence. And you should have it within 15 to 20 years on average, give or take. If you can live on half of your take home pay. But either way, as far as the calculation, I believe that any kind of match that you get from your employer or profit sharing should be included in both the numerator and denominator, the top and bottom of that fraction in that calculation. Okay. Because it's compensation that you're being given and you're saving 100% of it, it's going right into a retirement account. So I built a savings rate calculator that does this. You can find that at my website, physicianofire.com there's a calculator's option in the menu so you can use that that will automatically do what I said, which is put that match or profit sharing in both the top and the bottom of that calculation. As far as HSA contributions, 529 contributions you know, like any other money that you invest, that's money set aside to cover a future expense. So I actually include those in my savings rate. And I would. I would also encourage you to count 529 money in your net worth calculation because it is money that you have and you will be spending it later. You know, just like I'm counting the million plus dollars that we're sitting on to build a house as part of our net worth. It will become part of our house eventually, but I don't include the 529s and I don't include the house in our retirement nest egg numbers. So that's kind of a different calculation. You've got a net worth, and that's pretty well defined. What goes into that and what doesn't, Assets minus liabilities. But your retirement nest egg, you know, it probably shouldn't include the 529s. That money should be gone, you know, long before you're gone. The house, give or take, it depends the plan on living in that home forever. Do you plan to downsize, in which case some of the equity could be used towards retirement. You could also do a reverse mortgage. There are lots of options to tax equity in your house to live in retirement. So, yeah, I would go ahead and count what you've got in your net worth and then it's up to you what you include in your net worth and retirement nest egg calculations. Another question. I have a $30,000 inheritance that I just received. I'd like to use it for my future in parentheses, hopefully child. But I don't currently have a child, so I don't think I can use a 529. Okay, this goes on for quite a while. I'll pause here just to say that you actually can start a 529 now and you can put it in your name, and then you can change the beneficiary from you to your child and the future. Once you have a child now, as you say, you hope to have a child in the future, and there is no guarantee. We all know that. So there is some risk there that you could have money in a 529 that you don't have another use for. Now, if you have, let's say, nieces or nephews that you'd be happy to give that money to or someone else that could use it, or you might use it well, then you might consider starting a 529 even now. But there is some risk there. You might end up having to take that money out with penalty if Things don't go according to plan. Back to the question. I also don't want it to sit in savings earning nothing. I obviously have a long term time horizon on this. I was thinking of putting it in an I bond until the child comes, then transferring to 529 at that point, which I would assume would involve taxes. Well yeah, understand that I bonds are limited to $10,000 per person per year and if you have a partner, well you could each do $20,000 in 2022 and another $10,000 next year. But then that money is locked up for one year from the time that it's put in. And when you withdraw it, if you take it out within five years of investing it, then you owe three months of interest back when you take it out. If you wait the full five years, leave it in the I bond, you can take it out penalty free. Maybe a decent option. But again recognize the limitations there she continues. I could also just put it in VT Sax. That would be the Vanguard Total Stock Market Index Fund and pay capital gains when I transfer it to a 529. Time for Horizon for this child is hopefully one to three years if it all works out. Could you help me think through this? Thanks in advance for your help and all you do. So I think this last one is a reasonable option. Investing in the stock market. You know, some people prefer taxable investing to 529 investing, especially if your state doesn't give you any incentive to invest. Now also remember that money is fungible, right? So you can invest $30,000 now into an index fund. And when you have the child you can open a 529 and put $30,000 into it from ongoing cash flow from money that you're earning as a physician or whatever your job is. So it doesn't necessarily have to be the same. $30,000. Now if it makes you feel good to mentally account for that $30,000 as the inheritance is being used to pay for college, that's great. But you can invest in the market and invest in the 529. And it doesn't necessarily have to be this dollar has that job, right? So you do have options. I think probably the smartest is to wait to open the 529 until you have that child. Especially if you don't get any great incentive from your estate like a state tax credit or deduction for any 529 contributions. Next we have a question from the Speak Pipe. Let's go ahead and play that.

Hey Dr. Dalle, thank you for all that you do. I've benefited greatly from all your advice over the years. I'm a rural FP and work for a district hospital. I make around 400 per year and have both a 403B and a 457 account with my employer. My employer matches about 4% up to around 11,000 per year. Right now my accounts have about 825,000. With the two accounts combined, the issue I have is with the fees. The company advisor charges about a 1% fee. The platform he uses adds 0.4 and then the funds he has to choose from add 4 to 7. So this all essentially adds up to me paying about 1,400 per month just to manage the amount that I have now. And this will continue to increase as I add more. Right now I'm adding around 50, 60,000 per year into each account. So over time, lots, lots and lots of lost revenue. With the 1400 per month, I would love to take the 825 out to manage on my own. For example, with the Vanguard IRA where I would management fees would be around 0.05 to 0.1 range versus the 2/plus percent I'm paying now. But I can't do this without leaving my employer and I really don't want to do that right now. I checked with the HR advisor, our accountant with the hospital as well as my advisor, and they all say I can't do an in service rollover. Is there anything I'm not thinking of? Would it be possible to leave my employer for say a month and roll this over and then restart employment? I know there are a number of issues with that personally, but I'm wondering if this or if there's anything else I'm not thinking of. Thanks.

Okay, so on Dr. Dali's behalf, you're welcome for all of his advice over the years. And I want to say, hey, great job on the salary as a family practitioner. That's really impressive. And it does show the power of geographic arbitrage in medicine, which it tends to be opposite of many other professions where you can actually make more money in rural America than you can in the big cities. But let's go back to your question. You want to know how you can deal with these fees? My suggestion? Lobby for a better plan. I mean, Those fees of 2% are egregious and there are plenty of retirement plans for HR to choose from. I know you've talked to them, but have you talked to them about maybe ditching what you guys have for an option now and finding a better option because there are so many. You may not want to fly solo on this. Try to get some other employees that are stuck in the same plan to complain with you, start making some noise and maybe start a petition if you have to. Educate your fellow physicians, tell them why this is a bad deal and maybe put together a presentation to explain the role that investment fees play over a long period of time with a large sum of money like the 800 and some thousand dollars that you've got, you know, maybe you could give a presentation at a medical staff meeting to show how you are all basically getting fleeced. So I personally wouldn't forego putting away any money in these tax advantaged accounts. The 403 and 457 in general, they're pretty good 457B. It would depend on what your withdrawal options are and whether or not this is a governmental or non governmental. I'm guessing non governmental plan given these outrageous fees of approaching 2% it sounds like depending on what you're invested in. So you said you wanted to maybe invest some money with Vanguard? Well, go ahead and do that. I'm guessing hoping that with a $400,000 salary that the retirement accounts are not the only place that you're investing. So just because you're maxing out a 401, I'm sorry a 403B and 457 or 401K, just because you're maxing those out doesn't mean that you can't go ahead and invest in low cost index funds with Vanguard or Fidelity or Schwab or wherever you might find them. So as far as maybe quitting and then rejoining and then trying to roll it over in between, you know, there could be some unintended consequences there that I can't imagine that would be worth it. You would want to have that really well thought out, planned out and it still might come back to bite you. So that would not be my first choice, but I suppose that could be an option. Here's a question from the email. I'm an orthopedic surgeon in Florida and wanted to ask what happens after tax loss harvesting? Let's say I sell vtsax. That's the total stock market index fund from Vanguard to book a loss and buy Vfiax, the S&P 500 fund. I am mentally bothered by having this S&P 500 fund in my portfolio. How soon can I exchange it back to VTSAX? Does it follow the usual 30 day wash sale rule and can I exchange it back in 30 days. Well, Ortho surgeon in Florida, there's a simple solution. Stop being mentally bothered by owning an S&P 500 fund. Ask yourself why this bothers you. I'm no psychiatrist, but you know, vtsax and vfiax are very, very highly correlated and will give you very similar results. I believe about 82% is identical. And it's just that the S&P 500 fund is missing the mid caps and small caps that make up the other 18% of VTSAX. So if it bothers you that much, just go ahead and buy some extended market index. You know, that's the fund that holds those mid caps and small caps. The call letters are V, E xax. Get yourself some of that and maybe you won't be as bothered, I'm not sure. But one of my kind of basic rules of tax loss harvesting is never trade into a fund that you would not be comfortable holding indefinitely. So if the stock market bounces back in the month after you sold any particular asset, as you know, at a loss, you know, if you sell the one that you exchange into and realize a gain a month later, well, you could negate the benefits of the tax loss harvesting. So before you start and make that trade, be comfortable with what you're buying and understand that that could be your portfolio for years until you decide to either sell it or donate it or do something else with it. You can have what I would consider to be effectively a three fund portfolio. Without owning exactly three funds, you're still going to get a return very similar to a three fund portfolio. Even if you own 10 funds that are US Stock Market International stocks and bonds. Right. So let's take a question from the Facebook group. We've talked about tax loss harvesting and index funds. What about index bond funds? I continue to lose money in bond funds and would like to tax loss harvest. What are potential tax loss harvesting partners for bond funds at Vanguard or at Fidelity? Well, you must have a lot of money in a taxable account invested in bond funds to be considering tax loss harvesting them. So you know, as bond yields rise, you're going to find that owning bonds, especially any corporate bonds, any basically any non municipal bond funds, is rather tax efficient in a taxable account. Now that hasn't mattered as much the last five to 10 years because yields have been so low. But in a rising rate environment you're going to see higher bond yields. And bonds are notoriously tax inefficient in a taxable account. So I know that Dr. Dali has a post that says bonds belong and taxable, but that's qualified with stating that it's only in this low interest rate, low bond yield environment that that's really true. So personally I would take the opportunity to exit from any like total bond fund, corporate bond fund you might own in taxable and either buy municipal bonds in that taxable account or buy, you know, similar bond funds in your 401k or an IRA some tax advantage place where I typically recommend and personally hold my bond allocation.

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Now I'd like to make a quick call out to any potential conference speakers that would like to speak at WCICON 23 in Phoenix next year which will be held from March 1st to March 4th of 2023. You can apply to speak to the audience at www.wcievents.com. i better get on that actually, I didn't realize we were already looking that far ahead. Good for you Dr. Dali. So please leave this podcast a five star review and tell your friends about podcast too. I'd like to read one recent review that was left on Apple Podcasts and I quote if you are a high income earner, there's no better place to start and maintain financial literacy. I started from knowing nothing to feeling quite competent just by listening to the podcast alone. Also recently they added Dr. Spaeth as a co host and she's been a great addition to the team. End quote. Now where's my co host? I didn't get a co host. Dr. Spaeth, are you too good for me? Well anyway, wasn't that fun? Come visit me sometime@physicianonfire.com you can also find me on Facebook, Twitter and Instagram. Just search for physician on fire. I've also got a few Facebook groups. Now, one is for medical doctors only. That's Physicians on Fire. Plural, Physicians on Fire. I've got a group for dentists. That's Dentists on Fire, aptly named. And another group for all comers, simply known as Fat Fire. So head up, shoulders back, arms resting comfortably at your sides, feet about shoulder width apart, knees unlocked. That's it. You're looking good. You've got this. And we can help.

The hosts of the Y Code Investor podcast are not licensed accountants, attorneys, or financial advisors. This podcast is free entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.