WCI #350: Paula Pant & Permabears

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.

White Coat Investor podcast number 350 Paula Pants and Perma Bears if you're looking to boost returns, lower taxes and build wealth, join the WCI monthly Real Estate Opportunities list for tips and strategies to maximize your real estate returns. And for introductory to exclusive investment opportunities, expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Our quote of the day today comes from John Jacob Astor who said wealth is largely the result of habit. I think that's the truth. Just like maintaining a healthy weight is the result of thousands of decisions made over years, wealth is also the result of thousands of decisions made over years. Thanks everybody out there for what you're doing. You know, I had a colonoscopy yesterday and I'm pleased to report that I have the colon of an 18 year old. No polyps, no tumors, no diverticuli even so, I'm thrilled about that. Ten years before I got to go through that prep again. Thank you so much to the gastroenterologists and the CRNA and the nursing staff that helped me get that screening exam done. And I suppose I ought to thank my wife for scheduling it for me. I'm apparently three years late, but it turned out I didn't need it anyway, right? So there you go. At any rate, all of you out there, whatever you're doing, whether you're scoping for dollars or whether you are taking care of cancer patients or whether you're an attorney or a small business owner, whatever you're doing, thanks for what you're doing. I know it's not easy and a lot of times it's thankless work, but it's important work. It makes the world go around and you're touching the lives of other people. All right, today we're going to be talking with one of our KeyNote speakers for WC Icon24. If you want to come to WC Icon24, you still can. I mean, we could probably figure out a way to get you in there in person if you want, but most people who are signed up at this point, I mean the things in a couple of weeks are going to be coming virtually. So we're offering a code today just for you that'll get you $100 off. $100 off. The conference. The virtual version, right? The online version. All you have to do is put in the code virtual. When you sign on, you can register@wcievents.com you get all the content, even if you're not able to catch it as it runs live. We bottle it all up for you. We provide it to you in the form of an online course. You get CME for it, so you can use your CME dollars to pay for it. And this promotion, this a hundred dollars off deal, this lasts through the 22nd. So if you're listening to this podcast on the day it drops, you got five days to sign up for the virtual conference. You can still sign up after that, but you don't get the a hundred dollars off. Again, that code is virtual. You go to wcievents.com to sign up. You know what a lot of people do? They come virtual one year, just kind of test the waters and then all of a sudden next year we see them in person. So maybe that's you. If so, we'd love to see you. Either way, thanks. For those of you who have been filling out our annual survey, this helps us guide the content we produce and provide for you. It helps us to determine which advertisers to partner with and which ones not to. We are guided by the feedback from the WCI community and the main way we have of getting that feedback and we get it in bits and pieces throughout the year. But the main way we get that is is via our annual survey, whitecoatinvestor.com survey. That's different, by the way, from the surveys that you guys can sign up for and get paid for. That's MD survey. Or actually we're going to change it and add some more pretty links. I got a complaint about this. You can also get there with do survey or physician survey as well these days. So that's for those who want to do the paid surveys where companies pay you for your opinions. We're not paying you for your opinion about wci. That's not actually true. You do get entered in a drawing to get some WCI swag and the grand prize winner will get a free WCI online course. But that link to take our survey is whitecoatinvestor.com survey. Hope that's clear. All right, our guest today is awesome. She's been on the podcast before. She's going to be a speaker at wcicon this year. Let's get Paula Pant on the line. My guest today on the White Coat Investor podcast is Paula Pant. Paula is the founder of Afford Anything. This is a blog, it's a podcast, it's online courses. She is a renowned motivational speaker and actually will be doing a keynote for us this year at wcicon, the Position Wellness and Financial Literacy Conference. Welcome back to the White Coat Investor Podcast, Paula.

Oh, thank you so much for having me here.

You know, we're actually trying to get you to come speak speak at WCICON23, but you were busy doing something. You took some time off last year to do something unique. Can you tell us about that?

I did. I did. So the short answer is I did a fellowship at Columbia University, a one year fellowship in business and economics journalism. The long answer, to put that into a little bit of context, is that my first career, really only career that I've ever had, my first job out of college, I was a newspaper reporter. I worked at a print newspaper. It was called the Colorado Daily. I was a. I was there for a number of years. And when I left that newspaper, first to become a freelance writer and then eventually a content creator, a podcaster, the skills that I learned in my early days of working at a newspaper, traditional print newspaper, those skills were invaluable in giving me a foundation that I used as I was building Afford Anything, which is what I, I've been running for anything for the past 11 years. And so two things were happening at once. One was, you know, I was reflecting back on that and thinking, geez, if that work experience that I had so long ago, that was 2005 to 2008. Right. If that work experience that I had so long ago was so valuable, what would it mean if I could go refresh my skills mid career at the best journalism institution in the nation? Right. That was one thought. And the other thought, frankly, is I was just sort of burned out. And this is what I'm going to be talking about on stage at the conference. I was hitting burnout and I didn't know, do I need to exit or do I need to double down? Right. It had to be one of the two. I was not willing to stick with the status quo. It was going to be exit or double down, but I didn't know which. But I knew that if I took one year off, if I took a one year sabbatical, that would give me the space to figure it out.

So what did you figure out? How's that changed your approach to writing and blogging and teaching about personal finance?

Well, the, the main thing is it reinforced the idea that, that yes, I absolutely want to do this because when you. Within this fellowship, so it's a full time fellowship and they actually make you sign a contract pledging not to work during that year. And so I had to negotiate that with them. I had to go to them and say, hey, look, I have a podcast. I can't just ghost my audience for an entire year, but I've developed a plan. This is the precise number of episodes that are going to air during the time of this podcast. This is the percentage of those episodes that will be run from the archives. These are the percentage of those episodes that I will pre produce ahead of time and have in the hopper before day one. So I had to go and negotiate with them just to let you know, just for permission to continue to release the podcast. But outside of the podcast, I had to stop doing everything. Everything. And, and that was a contract that I had to sign and hold to.

Yeah, yeah. I noticed when I looked at your blog, there's a big year long blank on it.

Yes, exactly. Exactly. Yes. And it's because they pay for everything, right? And so in exchange for that money, they want your full time attention. And so in order to, to do that, you know, in, in order to devote that full time attention, I was, I was con. Contractually required to not do anything on, afford anything in my company. And what that meant was that for that entire year I had all of these ideas, things that I wanted to change, things that I wanted, ways that I wanted to improve afford anything. I had so many ideas and I was unable to execute on any of them. And that meant that by the end of the year I was chomping at the bit like, let's go, come on, graduation day, let's get here, let's go. So that was the biggest piece of it, the exit versus double down. That was answered.

Now we've got, I think there's 18 of us now working at White Coat Investor. And I know you have staff as well.

I do.

What did that mean for their lives for you to take a year off from the business?

The first semester was I think, a little bit, a little bit of a learning curve because I, we had prepped, basically we spent all of early 2022 prepping for the fact that I was going to be going into this one year academic program. And so we had spent months kind of setting the stage for that and setting the stage, you know, I kept saying, look, imagine I'm dead and you had to run this company without me. What would you do and that was the thought. I would present that thought exercise pretty much every day. I was like, what? What would you do if I was dead? Right? And that sounds nice in theory, but the reality was that when that first semester hit, there were still all of these. These little things, you know, the. The payroll system would glitch in some way or another, and they would want me to come in and handle it because they felt like as the owner of the company, that was something that I was supposed to do. And I was like, figure it out. You've got the passwords, you've got the login, you've got the account permissions. We did all of that already. You go in and figure it out, you know? And they were like, what do you. How can we figure out our own payroll glitch? And I'm like, well, that's. That's what. If I were dead, that's what you'd do, so don't go do it.

You know, that's really funny because the first job I gave to my first employee, who's Cindy, who's helping us record this podcast today, she's filling in for Megan, was figure out how to pay yourself. That was her first job when I hired an employee. So I outsourced that long ago. I haven't paid anybody in this company since 2014, I think.

Oh, fantastic. Fantastic. Yeah. That was one of the things that they were uncomfortable doing because they felt like that was crossing a boundary line. So those were the moments where, you know, they would call. I would get a call at 9pm and they'd be like, payroll's glitching. What do I. You know? So that was kind of the learning pains for the first semester. By the second semester, it was handled. By the second semester, I never heard from them.

I can really relate to your comment about having to either get bigger and do more or get smaller and do less. That is the way that we felt at the end of 2019 with WCI and after much thought, prayer, meditation, whatever, we decided to get bigger and we hired a whole bunch more people. We went from four or five part timers to now 18 of us, most of which are full time over the last few years. But I was completely burned out at the end of 2019, trying to run the business and create the content and all of that kind of stuff. So I can totally relate to your burnout as well as the journalism background. I don't have a journalism background, but our content director does. He used to write about boxing, actually, was what he spent most of his time on, but had this journalism background. And so him coming on board the last few years has really up the quality of a lot of our content in a lot of ways. So I think that's pretty valuable. And I suspect what you've learned in the last year, and not just the ideas you had from not being able to work, but what you actually learned about journalism is going to help you going forward. Sounds like a great year to me. It reminds me of my neighbor. I've got a neighbor that's a radiologist that basically is taking an unpaid sabbatical for the next year. I think he flew out to New Zealand yesterday. And you know, I'm super excited to hear from him in a year about, you know, what he learns about himself and what he's able to accomplish and do during the next year. But taking a year off is pretty common in academia, but those of us that work in the corporate world, that work in the private practice world is not very common at all. And maybe we ought to think about ways to do that more often in our lives.

Yeah, you know, and I find for me at least it helped a lot to take that year off in the context of a defined structured program with a very definitive start and end date and a very definitive goal. You know, if I had simply taken the year off and sat on a beach somewhere, I don't think I would have gotten as much out of it. I know I would not have gotten as much out of it. For one thing, the sitting on a beach somewhere can actually be a very lonely, very isolating experience unless you have already have a strong community built there. And then for another thing, if there's anything that you particularly want to learn, it's on you to self motivate to do that. You have no sources of feedback, no mentorship, no guidance, no accountability. And then the third piece of it is simply the people that you meet. You know, being at a journalism program at Columbia University, I mean, we were having dinners every Tuesday with some of the most just incredible names, I. E. We had dinner with Jamie Dimon, CEO of JP Morgan Chase. You know, it was a 12 person dinner. And that, that level of access I never would have been able to have on my own. And so for me, taking that year off in the context of doing something really structured with a group, I think was a huge piece of it. Whereas I think if I had simply taken that year off to, to read books on my own, it, you know, those other dimensions would not have been there.

So how did it affect your burnout? How long did it take before your symptoms of burnout were gone, you think?

Hmm, that's a great question. I'm not sure they ever fully abated, but I do think, I do think they morphed. You know, in academia. Academia, it's inherently a very social place. You go to the same building every day, and inside of that building you have your fellow students, you have your professors, you know, you have the same cast of characters who show up to a physical building, the same physical building every single day. And so you have these collisions in the hallways. I imagine working at a hospital or working at a medical center must be similar to, though, although I've never done that. And so there's a certain camaraderie that forms when you have that frequent unplanned in person interaction. And that is something that you don't get when you're working, when you're doing a lot of solo, deep, focused work in front of a computer screen all day, which is what content creators or podcasters often do. So I think that there were a lot of, of what I thought was burnout that was actually just isolation. And that went away pretty rapidly as soon as I started the program. And it informs the way that I hire and grow now. You know, now from this point forward, I'm only hired, I live in New York City. From this point forward, I'm only hiring people who live in New York City. Unless it's, you know, if It's a contractor, 1099 contractor for a very specific thing that's different. But anybody full time, W2, full time employee, they must live in New York City. Even if they don't come into the office every day. Even if it's a hybrid arrangement, seeing somebody two days a week is drastically different than seeing them zero days a week.

Very interesting. Yeah. I mean, we've got about half of our staff here in Utah and the other half spread across the country. But we make a pretty significant point to get together. And it's not cheap when everybody lives all across the country. But if you don't get together, you don't form that camaraderie and those shared experiences that later you might be on Zoom or joking around online or whatever, but you've got that shared experience, you know, each other's partners, you, you know, you've, you've partied together and you've done things together. And I think that's pretty important to build that in any company. But it's interesting to think about it in the setting of burnout, of reducing burnout by Having that camaraderie and that interaction at your daily work.

Right.

Well, I thought it was interesting to see your first blog post back. And I thought it was interesting because it's a subject I've thought about and I've talked about in the past. You wrote a little post recently specifically about Robert Kiyosaki, but generally about perma Bears. Can you share your thoughts on those subjects with us?

So I think in the world of finance, you hear a lot of people who have this Chicken Little attitude, the sky is falling. And, you know, there's. There's that joke that you've predicted 17 of the last two recessions, right? Not, not you, but a person might predict 17 of the last two recessions. And I think where a lot of that comes from is that in the media, bad news travels faster than good. And there's a, you know, there's a good reason for that, right. If, if it's a sunny day outside and the butterflies are flying and everything is pleasant, I don't necessarily need to know that information to survive. If a grizzly bear is like, going, you know, parading through the door, I do need to know that information and I need to act on it and very. And quickly. And so, of course, you know, we, we are naturally inclined to pay attention to any negative news, any warnings, any threats, anything that might endanger us. And the way that, that plays out in the modern financial media is that you have these, these permit bearers who are constantly saying the market's about to crash, everything's going to come down, we're going to head into a deep recession, and the stock market is going to tank and housing prices are going to tank, and cash is. Robert Kiyosaki often says cash is trash. It's one of his favorite colloquialisms. Get your money out of US Dollars and put it into bitcoin and cattle and gold and silver. I mean, he says all, all of this stuff that, frankly, I think, I believe is nonsense. And I think that as a business person who's, you know, his job is not necessarily to be accurate. And what I mean by that is he is not held accountable for any predictions that he makes that are incorrect. There's no accountability. So his job is not to be accurate or to be accountable for his words. His job is simply to have the greatest number of eyeballs on his work. And he's done that very successfully. He has, what, somewhere in the neighborhood of three and a half million Instagram followers and two and a half million Twitter followers, he has the number one bestselling book in personal finance history, I believe. Or if not the number one, at least one of the, certainly the top five. He's done that better than, than almost anyone. But there's a distinction between those who are good at knowing how to command attention versus those who are deliberate and thoughtful in what they say. Right. So you know, the audience is best served by knowing that the loudest voices are the ones who are the most confident, not necessarily the ones who are the most accurate.

Why isn't that the truth? You know, and pessimism is so sexy, right? You sound so intelligent when you're pessimistic.

Right.

When you're optimistic, you sound like Pollyanna. Everything's going to be fine. Well, what about this and this and this and this and this, right?

Yeah.

But the truth is, if you look back at the history of the world, the history of, know, economic news, the history of investing, it should be titled the Triumph of the Optimists. Because the optimists were right.

Exactly.

You know, the optimists were right and they probably are going to be right in the future.

Exactly, exactly. You know, and what's interesting about this particular point in history is that the gulf between economic data and consumer sentiment right now, and by right Now I'm talking January 2024, right? The beginning of this new year. And this is a trend that really started in, at towards the end of 2023, we started really seeing this. The gulf between economic data and consumer sentiment is further apart than it has ever been. And the way that that's measured economic data, of course, is measured in all the tried and true ways. There's the jobs report, there's consumer spending. Right. When we look at all of the economic data, we see very, very positive indicators. In the month of December, the US grew another several hundred thousand additional jobs. Our unemployment is at a historic low, a 50 year low. And it has remained steadily at a historic low for several months. The stock market in 2023 performed at 23%. Right. We have all of this very, very positive economic data. And yet consumer sentiment, which is measured by, for example, the number of people on glassdoor.com who search for a potential job loss. They have not lost their jobs yet, but they anticipate that they will. And they have search queries that indicate that they are anticipating the risk of job loss. Right. That number has actually spiked. And there, there are a number of other kind of indicators of consumer sentiment that show that people generally feel pessimistic despite really strong economic data. And so there are a lot of theories as to why this is. I'll tell you two. The most popular theory is not the one that I necessarily think tells the full story, but the most popular theory is that it's due to inflation, right? The economic data is strong, but that data is K shaped. The stock market's on a tear largely because of a small handful of tech giants who have like Nvidia that have really skyrocketed. But that doesn't necessarily translate to wage growth. And particularly among the people whose wages have grown in an inflationary environment that's been a bit of a K shaped distribution. Right? And so you've got a huge segment of the population that just their wages haven't kept up with higher costs. And that's the reason that people feel so pessimistic. I think there's a lot of validity to that, but I think there's another element to that story as well. So what I would add is that you've got right now a situation in which existing mortgaged homeowners feel locked into the mortgage that they have because 80% of mortgaged homeowners have a mortgage that is 5% or lower. So four out of every five mortgaged homeowners feel locked in. They, they are disincentivized to sell their home. Meanwhile, due to the high interest rates on homes plus the price run up in housing that really peaked in 2020, people who have not yet purchased homes feel shut out of the market. So you have these two different classes of people. One, one potential homeowners and the other current mortgage homeowners, both of whom feel as though they don't have mobility. And when people feel that they lack mobility stability, they often feel pessimism. And so that's my, my hypothesis as to why there's such a disconnect between economic data and public sentiment.

You know, let me throw out a third hypothesis and see what you think of it. I don't want to get too political, but I'll tell you, I read left sided and right sided news sites and the idea that the economy is in a terrible state is far more common on right sided news sites right now. And obviously, despite the fact that the President actually doesn't have all that much to do with how the economy performs, people think the president does. And my theory is that the right sided media has an incentive to make you think the economy's doing worse than it is. And so they tend to promote and run more often pieces that say, suggest or highlight, you know, negative economic numbers and don't Mention the positive ones. Do you think there's much of that sort of a political effect on this phenomenon, or do you think it's mostly just an economic effect?

I certainly think it plays into it. I remember reading a study once, and I don't quite remember the details, but there was some study in which people generally were more pessimistic about the economy in years in which they lived under a presidency of the party to which they did not belong, the opposing party. And I remember that study showed. I'm sorry, I forget exactly what the details of the study were, but I recall that that was a study that looked at public sentiment across a number of nations, and they found that to one extent or another, it existed kind of internationally. But it's stronger that polarization, the polarized view of the economy is stronger in the United States than it is in several other countries.

That does not surprise me in the least. All right. You mentioned housing a little bit and how people feel locked into their homes. They can't move, they can't take a new job, can't go to a new part of the company country because they lose their 3.5% mortgage while other people are feeling locked out. But there's a lot of these people that are locked out that are wondering, should they hold off and wait until interest rates come down? You know, should they buy. Are housing prices going down? How much influence really should current interest rates have on the decision to buy a home?

So long as a person can afford it? Right. Never, never stretch your budget too thin. Never raid your emergency fund. You know, all of the tried and true personal finance principles. Right? Yeah. So long as you have the space within your budget to buy, buy. Now, there's a. That's for a few reasons. Number one is that there's an adage, marry the property, date the rate. Right. The property is what you will be holding onto for the long term. The rate is temporary. The rate is just something that you're going to have for a brief period in time until interest rates decline, at which point you can refinance. But at the point when you refinance, home prices are likely to be higher. And that's for a couple of reasons. Number one, we have and have had for many years a severe housing supply shortage in the US and that supply shortage is not going away anytime soon. Right. That housing supply shortage is only intensifying. So given the imbalance between supply and demand in housing, there is only upward pressure on houses over the long term. You know, quarterly, there might be some fluctuation but over the long term, there's only upward pressure. In addition to that, when interest rates decrease, home prices are likely to increase. Because basically the simplest way to say it is if you're waiting until interest rates drop, then everybody else is waiting alongside you. Right? You're not the only one who had that idea. Everyone else is also waiting. And that means that when interest rates drop, that pent up demand will start to enter the market and you'll be competing against all of those people for those homes. And when there's a lot of buyer competition in the market, what happens? Home prices rise. You know, if you RECALL Back in 2020, there was intense competition between home buyers, right? I would, home would get listed and I would, I'd hear this all the time from my audience. The moment that a home goes on the market, it immediately gets five offers on the day that it's listed and it goes under contract that night. You know, I'd hear that anecdotally, I would hear that all the time. And if you want data to back it, that data comes from average days on market. Right. So the metric called average days on market in 2020, that, I mean average days on market is measured city by city. But in Boise, for example, Boise, Idaho, it went to as short as eight days, which is unheard of. Right. That metric of average days on market right now is just, I mean it's sprawling, it's so long. Right. Houses just linger on the market, they languish there. There's very little competition from other buyers. It is a great time to go in as a buyer because you're going to face very little competition. You're probably going to be able to negotiate harder, ask for more concessions, request more contingencies. Right. You're in a much stronger negotiating position because you might be the only offer or you might be one of two offers. And that's likely not going to be the situation when everyone dives back into that housing market, that when that pent up demand starts getting realized.

You know, it's interesting. The current 30 year mortgage rate is, you know, seven, seven and a half percent right now. My first mortgage in 99 was 8%. You know, people are acting like these are super high mortgage rates. I'm like, these are far more normal than what we've experienced the last five or ten years. This is kind of where mortgages are supposed to be 6%, 8%. Ish. That's exactly basically where they're supposed to be. So if you can't afford the home at this mortgage rate, you Gotta ask yourself if you can afford the home at all, you know?

Yeah, precisely. This is historically normal, but people's memories are fairly short. And the memories of the last 10 years dominate.

Yeah. Although the Fed has called for an interest rate cut or two, at least on the short term rates that they control in the next year. I wouldn't expect them to go back to 3% anytime soon.

Oh, no.

And you may never see 3% again the rest of your life. So if that's what you're holding off for, you may be out of the housing market forever. So still, you don't want to buy a house if you're only going to be there for a year and a half, you've got to be in there long enough that the appreciation will make up for the transaction costs. But if you're going to be someplace for three to five years, your job's stable, your family's stable, it's time to buy. I agree with you. Okay, different subject, but also very current. Bitcoin spot ETFs are likely to soon hit the market. In fact, they're probably going to be approved before this podcast even runs on the 18th. Should that change what people think about investing? And I always put investing in Bitcoin in quotes. Should that change what people think? The fact that they can get it in a spot ETF form now?

So there's really one thing that is changing dramatically and what that one thing is. So let's back up a second and look at the risks that are associated with investing in bitcoin when you're investing in any type of stock. Speculative asset. And let's actually back up further. An asset, any asset gains value in one of two ways. There's the appreciation on the asset and then there's the income stream that that asset produces. So a share of Coca Cola stock ideally will appreciate in value over time and also has a dividend that it pays. A rental property, same thing. Ideally, it'll appreciate over time. And it also has an income stream of rental income that it pays. Now, you have this class of assets that don't produce any type of income, Right. Art is one of them. If you invest in a painting, there's no income stream that comes from that painting. But people who invest in paintings or who invest in art do so because that's a speculative investment. Bitcoin is very much the same way. It's purely a speculative investment. It is worth whatever other people are willing to pay for it. There is a limited supply of it, which is why some people believe that it will be worth more than the price at which they bought it. For the risk associated with buying a speculative asset, that does not change. But what does change with the introduction of a Bitcoin spot ETF is that the risk associated with failure of the underlying institution and the risk associated with theft of the asset from nefarious actors, those two risks get significantly reduced. Right. Before, it used to be the case that, you know, if you, if you were buying Bitcoin directly, you would have to store it either in cold storage. Cold storage is a piece of hardware that you have that you hold in your hand, right? You have to store it in this little piece of hardware that you can easily lose. You can accidentally throw it in the trash, you can pack your boxes when you're moving and not know where you kept it. And boom, now you just lost a hundred thousand dollars because you misplaced this tiny, tiny little piece of hardware, right? That risk is no longer present. Now, if you didn't want to put Bitcoin in hold Bitcoin in cold storage, your other alternative would be to hold it in a crypto brokerage or on a crypto exchange. But then what happens when that institution collapses?

Oh, come on. They have an excellent track record, Paula. None of those institutions ever go out of business.

Yeah, exactly, exactly, exactly. You know, so if, if the, all of the people who were depositors, when those institutions collapsed, they lost their deposits. There's no FDIC insurance for a bitcoin exchange or a cryptocurrency exchange. Right? So the risk of loss from the collapse of the underlying institution, or the risk of loss through theft such as hacking, or through loss of hardware that is abated through a bitcoin spot etf, you now have the same level of security that you would have if you were buying any type of speculative asset in the form of an ETF through a major brokerage like Fidelity or BlackRock.

Yeah, it's certainly going to be more convenient to buy it. I mean, now in your IRA, you don't need a self directed IRA to go buy Bitcoin. You can just buy the ETF, you know, super easy. It takes 30 seconds online and you own Bitcoin. Maybe it ends up in 401Ks and 529s and HSAs is one of the options. So I think the convenience of buying it becomes easier. But those who, the sophisticated investors who are going to buy Bitcoin, I feel like they've already bought it. What this may do though, is draw in a lot more unsophisticated investors. And maybe that will push up the price of Bitcoin in the long run. Certainly in the short run, it's come up in anticipation of this event. But I don't know exactly what's going to happen to the price of Bitcoin in the long run due to the creation of these spot ETFs.

Right, right. You know, it's interesting because in other countries, in Canada and in Germany, you can already buy Bitcoin as an etf. So, you know, opening up the US Market will certainly open up. You know, as you said, open this up to a lot more buyers. And I hope that those buyers will only use a very, very small percentage of their portfolio, if anything at all, 1%, 2% of their overall portfolio. I hope that most of those buyers don't go anywhere beyond that.

And the truth is, you've been able to buy Bitcoin in ETF form for a long time. I mean, they've got these futures ETFs that essentially buy Bitcoin futures contracts and they've got ETFs that, you know, only by companies that are involved in producing bitcoin, you know, miners and companies that own a lot of bitcoin. So it's not like you couldn't kind of find something to invest in that's somewhat correlated with Bitcoin, but not nearly as correlated as an ETF that's actually buying bitcoin, which is what these new ones are. So it'll be interesting development to watch. Like the rest of the bitcoin saga. I plan to watch it from the sidelines.

Exactly, exactly.

All right, different subject. Lots of people, upon becoming financially literate, they discover that their family and friends and co workers are doing things that, let's call them suboptimal. They're suboptimal financially and they feel like they should do something about it. What should you do about the fact that your parents or your siblings or your co worker is not investing in a particularly wise way or is making other personal finance mistakes?

Well, the first question that I would ask is this suboptimal thing, is it associated with spending and lifestyle or is it associated with investing related decisions or decisions related to the team of advisors or decisions related to insurance, for example, or other forms of protection? And the reason that I differentiate between the two is if you feel as though people are spending suboptimally, but it's the lifestyle and spending is suboptimal, I probably wouldn't say anything. I mean, that's how they choose to spend their Money. That's the lifestyle that they have. It's really not, I think, anyone's place to comment on whether somebody wants to buy a new car versus a used car or a big house versus a small house. Right. But where. Where I would at least test the waters as to whether or not I would step in is if I knew that somebody was, for example, really overpaying for a bunch of different insurances that they just didn't need, or if they had somebody who they thought was a trusted advisor without realizing that that advisor is not actually a fiduciary and is really just, frankly, a commissioned salesperson, you know, who is acting in the guise of an advisor. If I were to see something like that, then I would pipe up, but do so in a way in which, you know, I think. I think the. That deference to authority. Right. Give them a book and don't make them read the whole book, because they won't. But put a bookmark or put a sticky pad, sticky note in the exact section of the book that pertains to their situation and say, hey, why don't you read this? You know, check that. I think you might be interested in that. Check that out. And that way it's not you. You're not the one saying it, the book is saying it. Same thing with a podcast. Send them the podcast and send them the exact timestamp of where a particular discussion starts. Because you know, they're not going to listen to the whole episode and say, Hey, 35 minutes, 51 seconds. Start there. Listen to that, that part where they discuss annuities. You know, I just thought you might be interested in that.

And you'll either hear back from them. Thank you, thank you, thank you so much. Or you'll never hear back. And you'll know where to go from there. You know, it's interesting to. The goal, of course, is to make them think it's their idea to make the change. And, you know, and that takes a fair amount of emotional intelligence, I think, to be able to do that rather than trying to convince them. Because nobody likes to be convinced of anything.

Right, Right.

Just like we don't like to be sold anything, you know. What about, though? You know, you mentioned you don't like to touch lifestyle issues. What if the lifestyle issues are going to come back and affect your financial life? You know, these are your parents and they're just blowing money left and right. And you know that you're going to now have to be supporting them in your old age. Does that cause you to want to say something a little bit sooner. And if so, is there anything that can be said?

Yeah, you know, for an example like that, I would sit down with my parents and say, hey, what's your plan? You know, let, let's model out your retirement. What's your plan? How, how do you plan to support yourself with this level of spending for this number of years? And particularly in presenting that as a question of how do you plan to pay for it, how do you plan to support it? You know, let's, let's spreadsheet this out, let's look at the numbers, let's run this through a retirement calculator. In doing that, often they will have the realization themselves, you know, to what you said, you want it to be their idea. If you just say, hey, mom and dad, you do not have enough safe for retirement. Right. If you're telling that to them, they're not going to hear it. But if you bring them to a calculator, bring them to a spreadsheet, you know, bring them to the tools, have them play with the tools, right? Heck, if they don't want to share their exact numbers with you, do a few hypotheticals on your own or tell them. Tell a story about a friend. It could be an imaginary friend. Hey, you know what? My friend, she's in her mid-50s and she just got divorced and these are her numbers. You know, she, she, I was on the phone with her the other day and she told me these numbers. Oh my goodness, look at that. Isn't that scary? Can you imagine? Hey, mom and dad, how are you doing? Right? So you tell them the story of a, a friend. Could be real friend, could be a fictional friend, it doesn't matter, right? But tell them the story of a friend. Present your quote unquote friend's numbers and let that be the on ramp to a discussion about how are you doing? Does this remind you of anything? What do you think? Do you have plans that would put you in a better position than my, than this other person?

Yeah, and I think the key is knowing them and understanding them and kind of what their triggers are. For example, my parents are very cheap. They're cheap, frugal, whatever you want to call it. They don't like paying for stuff they don't absolutely have to pay for. And after I became financially literate two plus decades ago, I was helping them, taking a look at their investments and realized they were paying somebody like 2% a year asset under management fee in order to pick stocks for them which were underperforming the market. And so I calculated out what they were actually paying, what they were actually getting, and looking at what their fees actually were made them sick. Especially when they realized that they could have done dramatically better just plopping it all into an index fund and buying all the stocks. And so I think it's important to understand what motivates them and taking advantage of that. I have my feet in two worlds. I go to the hospital, I see patients, I talk to doctors, you know, all the time. And then I have this other foot in the personal finance blogosphere. And I interact with other bloggers and podcasters and you know what I call Regular Joe Financial bloggers. They're not writing for doctors, they're not writing for high income professionals. And then talking to the people in my audience, I just shake my head when I see them struggling to cut their spending to an amount that should allow them to rapidly build wealth. Most of my audience is making 200, 300, 400, $500,000 a year more. And they really only need to be relatively frugal. They don't actually have to even be frugal. And then I go to these fire blogs and people are making half as much or less and they're saving 50% or more of it. What lesson do you think the doctors and other high income professionals can take from regular Joe Financial bloggers? Regular Joe, financially literate people in general.

You know what's tough about that question is that doctors have also had to make sacrifices, you know, throughout their 20s. The years spent in med school, the years of deferred compensation, of making nothing and studying, you know, hitting the textbooks and studying until 2am and then waking up at 9am and then all of the loans that follow. I don't know if that can really be compared to someone who's earning a full time salary at the age of 22 and has never done anything, you know, has never experienced adult life. Large sections of adult life in which they are a student and not earning an income and racking up a bunch of debt along the way. I mean, those life experiences are so different. Like if you have two siblings, but those two siblings have had extremely different career paths or extremely different life experiences. I wouldn't make it one of those why can't you be more like your sister kind of things, right? Because I think it needs to be honored that each person has made very different sacrifices and has made very different choices, and each one has different chapters in their life that are their chapters to shine. Right. For for some people, for the 22 year old who's straight out of college, lands a full time salary at the age of 22 and never goes back to school again and has all of their student loans paid off by the time they're 25. Maybe they spend from age 25 to 30 spending lots of flash, lots of cash. Like they buy their fancy cars, they go on their big trips, they stay at five star hotels. And then at 30, maybe they wake up and they're like, oh man, I should be saving more. And they, they find the fire movement and they drop their expenses down, you know, and they, they live on half of what they make. And like that person has had, they've had from age 25 to age 30 to just like be a goofball, right? They've, they've had those years to be a goofball and they've enjoyed that. And, and now they're ready to live on half of their income because they've gotten that out of their system, right? So you know, when you've got this other group of people who maybe they've never, they've never had those goofball years, right? Maybe that's something that, that's important to do at some point. Because if, if not now, then when.

Yeah, yeah, for sure. If you put it off till you're 60, 65, 70, there might not be a 60, 65 or 70.

Yeah, exactly.

It's a fair point. All right. Your brand is afford anything. The idea being you can buy anything you want, but not everything you want. I had a doc post on our WCI forum this week about what he really had were three financial goals. He wanted to put his three kids in private school, which turned out to be not as expensive as it is in a lot of places, which can be as much as $40,000 a kid a year. It was only $36,000 total for the three kids. He wanted to buy a home that was eight or nine hundred thousand dollars. And he also wanted to be Coast Fire, essentially not have to save anymore for retirement in five or eight years, all on an income of $250,000 and really nothing saved yet. Basically the numbers didn't work. He could not do all three of those goals and would have to choose between them. Probably couldn't even do two of them. What advice would you give to somebody in a situation like that? How do you decide which of your goals to prioritize?

Well, I would ask a couple of questions. The first question I have is why does he want to be Coast Fire? Because the notion of being Coast Fire is Fundamentally, it's a budgeting issue, right? When you're Coast Fire, you simply don't have to contribute any money into your retirement account, which, strictly speaking, that's just budgeting logistics. Either you set up. It's not hard to make. It's logistically not hard to make a retirement account contribution, right? You simply set up an automation and boom, you're done. It takes no time, it takes no effort. You set it and forget it. So if his goal is to be Coast Fire, my interpretation of the motivation behind that is that he wants to redirect that money towards something else. But what. And is there an alternative way to fund that? Whatever that. What is? Like, what does he want to redirect that money to? Does he even know? Or does he just like the idea of, like, checking the box on retirement? And if there is a particular thing that he wants to redirect that money towards, can that other goal be funded in some alternative way? So that's the first thing I would say about specifically the Coast Fire goal, because that, you know, private school is a service that you receive in exchange for money. A house is, you know, a product that you receive in exchange for money. Coast Fire is simply the way that numbers move around on spreadsheets. That doesn't really affect your lifestyle. So that's the. The reason that I hone in on that piece first. So, so let's see if we can pull Coast Fire off of the table or at least question the why underneath it, and find alternative ways to satisfy that why. And then the next thing that I would look at is between sending the kids to private school versus the home, there's urgency, right? There's. There's time and there's urgency. The kids are only going to be at their current. You know, they're only going to be young once. They're only only going to be in middle school, high school once, elementary school, middle school, high school once. This is a very limited time window that, you know, if private school is important to you, this is your only opportunity to send your kids to private school when they're 45. You can't be like, hey, Junior, now I'm ready. So I would prioritize that above all else. Because the window of time is so limited versus this $800,000 or $900,000 home. If necessary, he could live, he and his family could live in a cheaper home. I. I don't know what part of the country they live in. Maybe that would be very cramped. Maybe it would be way out in an inconvenient location, maybe it wouldn't be ideal, but he's got the rest of his life to have an ideal housing situation. You know, that's not something that has a time limitation on it in the way that educating his kids does. So that's how I would frame it.

You know, it was interesting as the forum explored these ideas. You know, the purpose for the house was to provide this great upbringing for the kids. So the house and the school was, you know, for the kids was the main justification for it. And it turned out as you explored it that the private school was kind of a non negotiable. And you know, the other two turned out, they were, you know, nice to have items and I think you just have to think about them that way when you, you have to run the numbers first of all and see what's actually possible. And two, figure out what's really your priority. And like you said, Coast Fire, if you're planning on continuing to work, what difference does it make if you hit financially independent at 5 years or 20 years? It really doesn't make that much of a difference if you're planning to work 20 years. Okay, we're starting to run out of time. We're excited to hear more from you at wcicon and get to know you a little bit there and, and hear about what you've done to overcome burnout, as well as how we can decide what to afford and what maybe we shouldn't try to afford. But right now you've got the year of something like 30,000 people that are going to listen to this podcast. High income professionals, mostly docs. What haven't we talked about today that you think they should know?

On the subject of figuring out what your priorities are, I think what I would like to really emphasize is that as you think through how to make decisions about your money, don't just think of money in a vacuum, think of all limited resources that you have. So money is a limited resource, time is a limited resource. Your energy and your cognitive bandwidth, those are perhaps the most precious. I mean, those are even more precious than time. Most of us have when we say that we don't have enough time, we have even less energy and attention. And so when it comes to prioritizing, think about the trade offs you make between all of those limited resources. Because often one can get traded for another. Some amount of money can get traded in order to buy back your time. And some amount of money can be traded in order to buy back your energy and your attention. Right? And they all work together. Right? Some amount of time can be used to save yourself energy. So I would when as you're thinking through your priorities, think about how all of those limited resources work together in tandem and make that. I mean, if you want to talk about comprehensive budgeting, try budgeting your energy, try budgeting your attention, and see where that takes you.

Great advice, Paula. If you want to learn more about Paula Pant and the work she's doing, you can find her website@affordanything.com or or better yet, come attend WCICON. She'll be one of our keynote speakers this year. You can still come virtually and you can sign up for that@wcievents.com Paula, thanks so much for being on the White Coat Investor podcast.

Oh, thank you for having me back on.

All right. I hope you enjoyed that interview as much as I did. Paula's great. You know, it's super fascinating to me that when you get out there into the financial blogosphere, the financial podcastosphere, the reputable online investing forums, everybody's saying the same things most of the time. Yes, there's a few areas of controversy, but for the most part, if you're going to reputable places, you should be hearing the same thing over and over again. And I pretty much endorse everything Paula said about the subjects we talked about today. And you'll find that most reasonable financial authorities, gurus, journalists, authors, bloggers, podcasters, whatever, are going to have similar opinions on these sorts of things. And that's because there is some truth out there. And you need to be a little bit careful not listening to the people who are just, you know, trying to get eyeballs, trying to get ears on their material and telling you whatever you want to hear or something that shocks you in order to get you to click on their article and, you know, sort out the truth out there. Because just because something's on the Internet doesn't mean it's true. For crying out loud, people, let's use a little bit of common sense as we sort through what's out there. Let's check it out in multiple places, see what other people that we've trusted on other subjects are saying about that particular subject, whatever the new and interesting subject of the day might be. All right? Don't forget, we've got our survey to do. Whitecoatinvestor.com survey. It does not take that long to do it. We read every word of it. I swear your suggestions are used. When we get multiple suggestions to do something or multiple negative feedback on something, we do make changes. And so we appreciate you sharing that and you'll be entered to get some WCI swag, including being entered for the grand prize drawing which is a WCI online course. Absolutely free just for a few minutes of your time filling out that survey. Whitecoatinvestor.com survey don't forget if you still want to come to WCICON24, you get $100 off using code VIRTUAL through the 22nd of January. Also thanks to those of you who have left us a five star review and or told your friends about this podcast. That really is how we spread the word about this recent one came in that said, excellent and thorough. This podcast is an example of a motivated physician getting substantial knowledge on a non medical topic and sharing it with everyone. He's altruistic and thoroughly engaged in this material. I find when he lacks information on topic he is not afraid to admit it and research it thoroughly to provide an accurate and actionable answer. His staff should be given significant credit for the success of this podcast as it clearly must take more effort than just one man can muster. Boy, that's the truth. A great combination for a podcast knowledgeable, altruistic host who surrounds himself with intelligent guests and a hardworking staff all keep it up the great work. Five stars. All right, well thanks. That's a great review. Very kind words. We appreciate the kind words. Makes us feel good to keep producing this stuff for you and we know it's making a difference because we're hearing back from you guys all the time and we thank you for that. We thank you for what you do on a daily basis. You deserve to get a fair shake on Wall street and we're here to give it to you. If you're looking to boost returns, lower taxes and build wealth, join the WCI Monthly Real Estate Opportunities List for tips and strategies to maximize your real estate returns and for introductions to exclusive investment opportunities. Expect educational emails that introduce you to syndicators, fund companies, online courses and online real estate platforms. Go to whitecoatinvestor.com reopportunities to sign up today. You can do this and the White Coat Investor can help. Keep your head up, your shoulders back. If you've got this, we can help. Thanks for being part of the White Coat Investor community. See you next time on the podcast.

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