WCI #432: 529s and Spending for College

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.

This is White Coat Investor podcast number 432, brought to you by Laurel Road for doctors. Laura Road is committed to helping residents and physicians take control of their finances. That's why we designed a personal loan for doctors with special repayment terms. During training, get help consolidating high interest credit card debt or fund the unexpected with one low monthly payment. Check your rate in minutes plus white code. Investors also get an additional rate discount when they apply through LaurelRoad.com WCI for terms and conditions, please visit www.l LaurelRoad.com WCI that's www.l LaurelRoad.com WCI LaurelRoad is a brand of KeyBank NA Member FDIC. All right, welcome back to the podcast. We got a cool thing coming up. This thing drops on August 14th. I'm recording it in late July. But on August 19th, five days after this drops, we have something pretty special. We're calling it Financial Crash Course. I'm going to spend an evening with you and we're going to help you to get stuff figured out that you're still working hard on. While you didn't become a doctor to get rich, you worked far too hard not to be financially successful. Too many physicians are still living paycheck to paycheck, stressed about money and unsure how to turn a high income into real wealth. So Next Tuesday at 6:00pm Mountain, I'm hosting a free Financial Crash Course to help change that. This is a live experience. Okay. We'll walk through how to become debt free within five years of residency and set yourself firmly on the path to multimillionaire status. We're going to cover what actually matters, what to do next with your money, how to invest with confidence, how to reduce your tax bill legally, how to protect your wealth through insurance, estate planning and asset protection. Most importantly, how to actually use your income to build a life you love. Okay, register now. Whitecoatinvestor.com crashcourse if you can't make it live, we'll send you the replay to everyone who registers, but it's going to be a presentation and it's going to be a lengthy Q and A session afterwards. If you attend live, you'll get a free bonus Download a financial plan template that will serve as your personal roadmap to building wealth. And to top it off, we're giving away five free enrollments in the fire your financial advisor attending course. That's a 799 value. You've done the hard work to earn this income. Now let's make sure it's working for you. So join us live next Tuesday, August 19th. Register@WhiteCoatinVestor.com CrashCourse okay, let's get into your questions. This podcast is driven by you, so we want to spend our time helping you and dealing with what you're dealing with. So let's get started into some of this stuff. Why don't we start today with a question off the speak pipe, and I think maybe we'll do a little bit of a deep dive about this one. This one comes from Steve. Hi Jim, this is Steve from Texas. We appreciate all the information about saving for college over the last several years on the podcast. However, I wonder if you might do.

A podcast episode on spending for college.

For example, what's the process of spending down to 529? Do you just pay the bills and.

Withdraw the money and keep the receipts, or is there something more complicated than that? Also, what would you recommend for those.

Of us that have a diversified savings plan for college, in that we plan on using 529 personal savings earmarked from.

Our brokerage account and cash flow? Is there any benefit to doing one.

Before the other, or is it best just to liquidate the 529s first because they're least flexible?

Thanks for all that you do.

Okay, let's talk about 529s. I guess I haven't spent a lot of time talking about spending them down. I'm actually spending down a lot of 529s. I think I'm spending down eight 529s right now. As you may or may not be aware, Katie and I have established 529s for all of our nieces and nephews as well as our children. So we now have two kids in college and a number of their cousins as well in college. We've got only two so far out of college. One spent their whole 529, one did not. So we've got a fair amount of experience in spending from 529,000s. Here's the way our process works. When the kid has an expense that's 529 eligible, and I have to educate each of them about what 529 eligible expenses are. A lot of them try to send me transportation expenses, for example. Nope, not eligible. The most recent one was a deposit on an apartment, the deposit is not a 529 eligible expense. The rent is, but the deposit is not. So I said, that one's not coming from your 529. Sorry. So assuming it's an eligible expense, they text me and say, hey, Uncle Jim or dad, I need $529.30. And I Venmo them $529.30. When I log in to my529.com, which is the Utah 529, where we have all of these established, go to their account and withdraw 529.30 and transfer it to my bank account. And then they send me a receipt. They usually email the receipt because it's easier for me to save it on my computer. And I save it into a file on my computer for my 2025 tax files. And I label it 529 expenses. And I label it with the date and their name. And so I've got it in there if I ever get audited. But you got to have receipts to cover all your 529 withdrawals, or they're not eligible withdrawals and you'll end up having to pay tax and penalty on them. So you do need to keep track of those receipts in case of audit. And you need to make sure it's only being spent for eligible expenses. But you have the whole year to take the money out, right? So if you wanted to let it ride until December and then add it all up and pull the money out in December, you could do that, but you can't wait till the next year. This is not an HSA where you can save the receipts for decades and then pull the money out all at once. That's not the way it works. It's got to come out in the year it's spent. And I find it easiest to just take it out when they spend it. And so I encourage the nieces and nephews to spend my money first right before they go to their parents money, if any, before they use their own money. I'm like, it's an eligible expense. Let's drain this 529. If you drain your first year or your first two years, fine, no big deal. But if you get to the end of college and you still got money in here and you're not going to grad school, I'm going to make you the owner. And then you got to deal with the withdrawal issues. And obviously you can transfer up to $35,000 to a Roth IRA over a number of years. And Maybe that's what the one that's overfunded right now will end up doing. As far as my children's ones go, they're probably all going to be overfunded and we'll end up just changing the beneficiary to the grandkids for those. But that's our process for spending down to 529. Now if you have other assets you're planning to use to pay for college, you may need a little bit more complicated plan for paying, right? Certainly I would prioritize use of the 529, but it really comes down to what are the other assets, right? If they got scholarship money, obviously you're going to use that first. If they're working, you know, you may want to use their earnings for stuff that's not 529 eligible. You know, like those apartment deposits or transportation expenses or traveling. They want to do those sorts of things. That's what my kids tend to use their earnings for, is fun stuff. And then for anything that qualifies for actual 529 money, they use the 529. If you're also using your savings, the question is, well, how do you balance these two? Well, you probably want to use the $529,000 in a way that it's empty by the time they're done with their education because it can't be used for other things. You can change the beneficiary, obviously, but it can't be used for other. But there's also the fact that 529 money grows tax free as long as it's used for education. And so you might want a balanced approach where you take a certain amount out each year if you're also using your taxable account or your own cash flow. But I probably tend to lean more toward front loading the 529 withdrawals and then making it up toward the end, but that's up to you. It certainly would be reasonable to spread the 529 withdrawals out over the entire educational period to try to maximize the benefit of that tax protected growth. If you're using loans as well, you may want to use the 529 money to make it so you're only using the loans with the best possible terms. Now let's say for instance, you're using it to pay for medical school, right? So maybe you take out the maximum amount of federal loans which now with the new one big beautiful bill act is $50,000 a year. And then at least once it's fully implemented and then when you need money above and beyond that, you take it from the $529,000. Maybe that's your approach. So that would be reasonable to do as well. But as far as it goes for saving for college, there's basically four pillars of paying for college, right? There's your college choice, which is surprisingly important. A college education is a lot like a marriage. It basically costs what you're willing to pay, right? If you want to pay $100,000 a year for your college education, there is a school in this country that will take your money. On the other hand, you can go to the local community college and it probably costs you $2,000 a year and you live at home, right? A college education would be very inexpensive. State schools, especially for the kids of doctors that tend to do well in school due to good genetics, and their tiger parents tend to qualify for scholarships at state colleges and oftentimes can go for relatively low price. So school selection is very important. Then of course there's savings, right? What you saved in advance for college, that's usually in a 529. Maybe it's in an education savings account, aka a Coverdell, but most of the time these days it's in a 529. Then there's the kids contribution, right? And that might be the scholarships they earn, the money they earn during the summers, they work during the school years, or money they saved up during high school or something. That's their contribution. I think it's a good idea to have them have some skin in the game as well. And finally, there's your cash flow. There is no requirement, especially for a high income professional who's still going to be working while the kid's in college, to save it all up in advance. You don't have to do that. You're making 20, 30, $40,000 a month. Some of that can go toward paying for college so you can cash flow a lot of this. And so those are the four pillars of paying for college. I hope that most white coat investors are not using borrowed money to pay for undergraduate educations. Now I get it. If your kid goes to dental school or your kid goes to med school, some of that might need to be borrowed. I think they ought to be borrowing it, not you. But as far as undergrad goes, I think between your cash flow and your savings and good school selection and their contribution, you ought to be able to get through debt free. For the most part. We tend to invest our 529 aggressively, much more aggressively than we invest even our Retirement money, despite the fact that we need the money sooner. And the reason why is that you have to consider not only the likelihood of market downturn causing you to have less money, but the consequences. So if there's a big nasty bear market and our 529s get whacked, that's okay because we could cash flow their college educations, we wouldn't have to touch that 529. We could use some cash and and pay for this year and give the market some time to rebound and maybe pull a bunch of that money out their senior year. But the benefit of investing aggressively is you tend to get the higher returns over the long term. And dialing that aggressiveness back in the last year or two before they get to college, when that account's as big as it's going to get, hurts you the most. So I prefer to leave it aggressively. And the cool thing about that is those accounts all benefited from being invested aggressively in 2023 and 2024 when the market went crazy. Right? And so we've always invested our 529s aggressively, 100% stock. And in fact we tilt them pretty significantly to both international and small value stocks. Now, that wasn't so awesome when US large cap stocks were doing awesome, but that international tilt is sure paying off in 2025. So the point is, you don't have to invest these things. It doesn't have to be 100% cash the day they start colle turn 18. Right. That money's still not going to be spent. Some of it until they're a senior probably that's three years away. So it doesn't have to all be in cash by then. You can be relatively aggressive. You need to consider not only the possibility of a market downturn, but also the consequences of it. And the more dire the consequences, the more conservative you ought to be with that money. Maybe it's worth discussing with the kid as well. Okay, our quote of the day today comes from Warren Buffett, who said, be fearful when others are greedy, and greedy only when others are fearful. The truth of the matter is, if you use a static asset allocation and always invest when you get the money so that you're not trying to time the market, you're not trying to dollar cost average, some lump sum you got. This works out pretty well because even when markets are down, you're still investing. Because it's your habit. You invest every month, and when markets are up, you invest every month. So you don't have to worry so much about the big bad behavioral problems in investing, which is fear of loss and fear of missing out. But when you set your asset allocation, you probably ought to balance those two things, right? You want that asset allocation or mix of investments that perfectly balances your fear of loss, especially during a market downturn, and your fear of missing out, especially during a market upturn. You're looking for something you can stick with long term. It really doesn't matter that much what your asset allocation is, whether you can stick with it or not. Long term is far more important. All right, let's answer some questions from the email. In an episode you discussed that changing the beneficiary of 529from the current beneficiary to a new beneficiary of a younger generation is treated as a gift and depending on the amount, potentially triggers a gift tax using up a portion of the unified gift estate tax exemption. However, you do not specify whether this is treated as a gift from the current owner of the 529 or from the current beneficiary of the 529. I'd appreciate hearing your thoughts on this, as it seems like you could make a case for either. The best article I could find on this comes from Michael Kitces, and we'll include the link in the show notes. Michael concludes that the correct treatment is that this is a gift from the current beneficiary to the new beneficiary, which is absolutely true. That is how it's treated. While I see his logic to a point, this still bothers me. How can someone involuntarily and non discretionarily trigger a tax reporting requirement for someone else? Taking this logic to the extreme, imagine a bitter divorce. Under it, one spouse, the owner of a 529 could repeatedly switch the beneficiary of the 529 back and forth between their ex spouse and a common child, triggering an arbitrarily large gift tax liability. Love to hear your thoughts on who has the gift tax filing obligation when the beneficiary of the 529 changes is the owner of multiple 529 plans for our children. Loving marriage, though bitter ex spouse scenario above was purely hypothetical on pace to be somewhere between moderately and clearly overfunded. I'm interested in making sure transfers to future generations are handled properly. Okay, well, the way it's written is the current beneficiary. That's who the gift tax applies to. Right now you can probably, if you're not that overfunded, deal with the gift tax limits right this year. I think it's $19,000. Could be $20,000 goes up every year. Lately it's been going up about $1,000 a year. But you could move $19,000 a year from the kid to the grandkid and within a few years you ought to have the 529 emptied. So you can work around this. If your 529 isn't like $400,000 overfunded, even if it is, you're probably splitting it between multiple grandkids, right? So maybe you can still work it out where you can make the transfer over a few years and not have to deal with the gift tax issues. Keep in mind, gift tax for most people is just a tax return. It's not an actual tax. You don't actually pay anything. You're just saying I'm going to use up some of my estate tax exemption. Well, with the one big beautiful Bill act that's now $15 million in 2025, if you're married, it's $30 million. Okay? So unless you're going to die with more than $30 million indexed to inflation, so 30 million in today's dollars, you're not going to have an estate tax. So you don't have to pay any gift tax. You're just using up some of that exemption. So it's really not that big a deal. Even if you had to use $400,000 of it, you're probably not getting to your estate tax limits anyway. No big deal. Make sure your state doesn't have some weird estate tax thing going on as well. There's about a dozen states or so that do have an estate or inheritance tax and you ought to be aware of those laws as well as you're changing beneficiaries. But yeah, it's a little weird. I don't think when Congress put 529 is in place that they really thought through everything with regard to 529 laws, including hypothetical situations like this bitter divorce scenario proposed in the email. I would think if you're really switching back and forth a whole bunch and trying to use up their $15 million exemption, that you could go to court and, you know, argue against that. That that was obviously crazy and I think you could get out of that sort of a thing. But you know, it seems a little bit bizarre because who are you trying to hurt, right? If you're in a bitter divorce, do you really want to hurt your kid? You're not hurting your ex spouse, you're hurting your kid. So I don't know why you'd be interested in doing that anyway. Most people don't hate their kids just because they got divorced, but that is the way it works. It is a gift from the current beneficiary to the next generation and uses up their gift tax exemption if you're given more than $19,000. These are true first world problems we're talking about here, right? This is not something the average American deals with. And so I don't think Congress cares all that much that this is the way the law is written. But that's the way it is, so be aware of that. All right, everybody, if no one's told you thanks for what you do today, let me be the first. I know a lot of us, a lot of you listening to this podcast had a rough day at work today. For whatever reason, I don't know, somebody died, you made a mistake, somebody was mean to you. I don't know what happened. Right? Maybe a patient vomited on you or threw something at you. I have no idea. What you're doing is important. Not everybody tells you thank you, and I know it matters what you're doing. So keep your head up. Work's important. That's why they pay you a lot to do it. Let's manage your money well so you don't have to do it forever. And you can do it on your terms soon. But in the meantime, thanks for all the hard work you're putting in. Okay, we gotta talk more about student loans. We're gonna be talking a lot about student loans and maybe I need to spend some more time with andrew@studentloanadvice.com so I have all the answers down to all these questions you guys are asking me. A lot of stuff has changed with student loans since the One Big Beautiful Bill act came out. I'm still catching up personally. Right. And trying to get all the answers right because for the last three and a half years, the answer was, well, just stay on student loan holiday and we'll figure it out when it ends. Well, it's all ended now or it's ending soon or it's going to end over the next three years or so. And so it's time to get stuff sorted out. Highly recommend a consult with Andrew. If you have any sort of a complicated student loan situation, you can book that@studentloanadvice.com and it's well worth your time. It's one flat fee. It gets you an hour with Andrew. He goes over your stuff in advance and then you get like a year of sending them Follow up email questions all for one flat fee. So I think it's a pretty good deal for those of you with complicated student loan situations. But let's listen to Samantha's question.

Hi Dr. Dali, I really appreciate everything you do for the white coat investor community. I've benefited immensely from your podcast and all the information you've provided. I'd like to ask you a question regarding student loans. I've been honestly having trouble keeping up with kind of what to do with my student loans. I was hoping you could spend a little time going over kind of what the options are currently based on the kind of new changes and also regarding PSLF for a little background. My situation is that I have worked for 501 institution for the past eight years and am on track for PSLF. I think I'm currently in the save forbearance and I'm really not sure what my best option is. I haven't recertified my income since I was in training. I now have an attending level income and I not sure I fully understand what my options are and what the implications are. Would appreciate any guidance you could provide. Thank you.

Okay, the first guidance I would give you is go book a consult with Andrew. Right? This is well worth your time. Right? You're probably looking at hundreds of thousands of dollars being forgiven. Spending 600 bucks or whatever it is. I think it's 600 bucks now@studentloanadvice.com is well worth your money. That is a good investment for you to manage your student loans. Exactly right. One little tip could be worth tens of thousands or even hundreds of thousands of dollars. So don't be afraid, don't be pennywise and pound foolish. If you need a consult from someone who really knows this stuff in and out, get Andrew on a call and get it sorted out. He was on just three episodes ago, episode 429. We kind of went over all the new changes. Obviously we didn't walk through every possible scenario for every possible borrower. But I think as an overview, PSLF didn't change. PSLF is still there. Your plan is pslf. You should still go for pslf. You've been at this employer for eight years or whatever, maybe including residency and you only got two years left. You should still go for pslf. Right now it's just a question of getting those last whatever number of payments you've got. And maybe it's just 24 more or maybe it's 36 or whatever. However long the save forbearance has been going on now there's a big dilemma right now in this space with the save thing because there's all these people that have been on save and the Biden administration tried to put save in and as soon as the Trump administration came in they're like, what is this? This is way too generous. We're getting rid of this and it's been tied up in court and it's a mess. It looks like save is not going to be around. It's certainly not going to be around long term. The only question is, are you going to be able to buy back those months of payments that you didn't make under SAVE or somehow get credit under them? And nobody's really sure. And so the dilemma is, do you switch now? Probably to ibr, although I think a few people are switching to pay even though pay is going to go away in a few years. Do you switch to IBR now and make sure the payments you're making now are counting, or do you stay and save for a few more months and hope that that buyback is going to happen and potentially be behind buy a few months in payments and have to wait longer to get your public service loan forgiveness? But if it all works out and you can get the buyback, then maybe you pay a little bit less over time from staying in save until it's really completely done and nobody really knows the answer. I think Andrew is mostly recommending that people go to IBR now and bird in the hand rather than two in the bush kind of philosophy, but those are the main things. Now there's basically four categories of people out there. People that qualify for old Ibrahim, people that qualify for new ibr. These are most current borrowers, people who are in school now, and people that haven't started medical school yet. And depending on which of those categories you're in, your options are going to be different for your income driven repayment programs. For people who haven't even started medical school, probably half their loans are going to be private. Well, maybe not. Depends on how expensive the medical school is. So they're not going to be as eligible for PSLF as current borrowers are and those currently in medical school are. Their only option when they come out of school is going to be this RAP program, right? Which is probably higher payments for most people and so less money left to forgive. Overall, basically it's less generous than the program for all of you current borrowers has been for the last 10 or 15 years. So that part's actually relatively easy to sort out. The people who haven't even started medical school yet. It's the other groups that are much more complicated and the ones who are most much more likely to benefit from a consultation with a pro about it. But I think that's the dilemma you're facing. I think there's a lot of people in this bucket with you, Samantha. You can certainly commiserate with people, especially on the White Coat Investors subreddit. This is being talked about in multiple threads every day. If you can't figure it out on your own what the best thing to do is, I just book a consult with Andrew. I think it's well worth your money. Even if you're on a resident income, I think it's worth your money to have that consultation. Too many of us become so fee averse that it ends up costing us more money in the long run than the fees would have come. And that peace of mind is worth something too. Okay, let's take a question from Travis here.

Hi Dr. Dali and the rest of the White Coat Investor team. My name is Travis Nixon. I'm a dentist, practice owner and educator at the University of North Carolina School of Dentistry. I've been following both the blog and more recently the podcast since 2013 and can't imagine where I'd be in my financial literacy without the amazing content from your group. While I'm passionate about financial literacy, I'm also equally as passionate about practice management and clinical excellence and teach an optional seminar class study club at the dental school to third and fourth year dental students. Our group is now in its third year and has grown from 27 to over 70 students, or roughly 40% of the students from the two classes. I frequently share your principles with these students, but would love to step it up a little bit this coming year. Are there any ways in which we could partner together to make even more of an impact on these young practitioners? Such as a live seminar, a quick phone call to the group, or any other materials? I realize that providing your book may not be possible since they are not first year students. Thank you so much and keep up the great work.

Travis, thanks for leaving a speak pipe. You know you can always email me. You don't have to leave speak pipes to communicate with me. Those are mostly for messages we're going to use on the podcast. So we're going to use your message without your contact information just to talk a little bit about financial literacy. Here's the deal with financial literacy. I would love to come out to every medical and dental student in the country, every school. Give them all a great Lecture and teach them all eight week course. It would be awesome. I can't do that for a few reasons. One, I don't have the time. Two, there's no way I'm spending that much time on a plane and in hotels and in Ubers. I hate it. So I'm not going to do it. And the truth is most schools will not pay me enough that I'm willing to actually get on a plane, come speak to you. So here's what we do instead. From White Coat Amasser. First of all, we encourage people like you to do what you're doing. And you're doing fantastic work and I thank you for it. And we try to recognize people like you doing this through our Financial Educator Award that we give out every year. So to all of Travis's students, you should nominate him for that award and we should give him some recognition and encourage this sort of behavior. If there were one person like Travis at every medical school and dental school and residency in the country, White Coat investor wouldn't have to exist. It really wouldn't. And that would be pretty awesome. So that's kind of the main thing here. And so we try to support people like you, Travis, in doing what you're doing. We have slides. If you go to that Financial Educator Award post we do every year, and it's under WCI plus on the main Whitecoatinvestor.com page, you can get a set of slides you can use to give a financial talk to. There's a version for students, a version for residents, a version for attendings. So we provide those slides to you. I try to update them every year. You can modify them as needed. If you don't even want to give me credit for them, I can live with that. That's fine. Another thing we do is we do a student webinar. I'm told I'm not supposed to call them student webinars because apparently calling something a webinar makes fewer people come to it. I don't know why, but it's basically the talk I would give at your dental school or your medical school if you flew me out there to come speak to you. And I usually wrangle in andrew from studentloanadvice.com to help me with the student loan section. And then we stick around afterward, just like I would stick around if I was standing in that classroom giving a talk at your dental school until everyone's had their questions answered. So we stick around for an hour or more afterward and just answer your individual questions. So we do that once a year. And that's kind of the substitute I have for going around to 400 different schools and giving a talk at all of them. It's really funny. Sometimes I get these invitations from schools or residencies and they're like, we'll put you up in a hotel room. No payment for my time whatsoever. Won't even pay my airfare. But they'll put me up in a hotel room. So I'll come out and talk to them and I don't know, maybe they think I need a new entry on my CV more than I do or something. But I'm not coming out there just for a hotel room. I'm sorry. My time's worth more than that. And frankly, I don't like traveling that much. So. Not going to come out and give all those talks. If you want to pay me to come out, we'll come out and we'll give you a talk. But that's how we limit how many of these I do a year is we just charge for them. So I end up doing about a dozen of them a year. Okay, what else do we do? We have the Champions program. We try to give a copy of the White Coat Investor book, the student book guide for students to every first year medical and dental student in the country, free. We're giving these away. It costs us six figures every year to give these away. Right. It's a lot of value of books that we're giving away. And all you have to do is be a first year, volunteer to pass them out for your class and we'll send you enough for everybody in your class. So if you're at an institution like Travis is, find a first year and encourage them to volunteer. And we'll get those out. And if you do that, well, by the time they get to Travis's class in their third or fourth year, they've all got a copy of the book. Right. They might not have read it, but it's probably on their shelf at home. Most people probably aren't throwing it away. And then they can use that as whatever the textbook for the course or a resource that they can use. If you're relatively well to do and you got 10 students or 25 students or whatever, you got 77 students or whatever I think Travis has this year, you can buy them a copy of the books. We'll give you a bulk pricing. If you're buying 25 plus copies of them, we'll give you bulk pricing on copies of the student book or any of the other books. Just contact us@booksowhitecodeinvestor.com and we'll give you discount copies of them. But we cannot run a course at every medical and dental school in the country. So if you want me to speak, you got to pay me to come speak. Otherwise, there's a webinar once a year, the free books and all the resources that we can give and encouragement we can give to people like Travis for what they're doing. Thanks so much, all of you out there. I know there's a whole bunch of you out there, and I appreciate the lectures you're giving, the little side talks you give to a handful of residents or students at a time. It really does make a difference when people hear this financial literacy stuff from people they respect who are teaching them other stuff anyway. So please continue to incorporate that into your practice as you go. Okay, let's talk a little bit about politics. Everybody loves politics. You know, I did an AMA recently on Reddit. AMA is Ask Me Anything. It's this thing that Reddit does where you just say, hey, I'm here for a day or two and you can ask me anything and I'll answer your questions. And the interesting thing, when we announced this is all anybody wanted to talk about was Donald Trump. And I'm like, you know, I'm kind of a financial resource guy. This is the White Coat Investor subreddit. But if you, if this is really what you guys want to talk about is the President, I guess we can do that. But for the most part, we try not to get into politics too much here at the White Coat Investor. And the main reason why is actually a business reason. We figure whatever political position we take, and politics, of course, is where reasonable people can disagree if we all agree on it, it's not politics. So any position we take, approximately half of our audience is going to disagree with us. So we try not to take positions because we don't want to tweak you off and make you not become financially literate because you don't like whatever our political position is. So we try not to talk about politics as much as we can. Obviously, it does have some influence on your finances, particularly when things like the One Big Beautiful Bill act gets passed, that's going to change things in your finances, how you manage your taxes, maybe how you manage your investments. So I got this email. It says, the elephant in the room, so to speak. Or maybe this was a comment on a blog post. Everything in this post is true, and hopefully we're all following written financial plans, but when is it time to revise a written financial plan in response to drastic, likely persistent economic policy changes? Say nothing of the immense current and likely long term professional and economic disruption to anyone in a university research setting, which applies to many WCI readers. And a similar comment thank you so much for taking the time to reply. I suspect that many of us who would never sell a diploma are nonetheless thinking of diversification in new ways right now. Nothing else. Do I tilt my forthcoming after tax investments a bit more into international stocks or bonds, canned goods? Legal fees for dual citizenship? During your admirably brief response time, a friend of mine found out that a $500,000 federal grant on which she is the primary investigator, which had already been issued to her university, is being canceled. No one even knows what that means when the money has already been partially spent for the academic medical research sector. It's a real life, real time confiscation scenario. If nothing else, obliteration of research funding will lead to circumstances that meet the when to revise a plan criteria you offer, and with which I agree. For many readers, the question may be less Do I sell the dip? No, obviously you don't. But given that I have to revise my plan, do I just cut luxuries as much as possible until to build more toward bond funds for now or what? Boy, the anxiety out there anytime anything happens in Washington is pretty impressive. And I think it gets better over time for each individual investor, because it always feels like this time is different. It felt like it was different in 2008 when money market funds were highly likely to break the buck and the global currency markets were melting down. You think it feels different now? You should have seen 2008. It felt like that in 2000, I'm sure when the tech meltdown happened, it felt like that in 2020 when we all felt like we were going to not only die, but bring home a virus that was going to kill our family. It felt like that in 2022 when interest rates went up 4% in just a few months. But yet the right answer has always been to tell yourself this too shall pass. And that's not always true. In the late Bronze Age in the Eastern Mediterranean, it didn't pass. Or czarist Russia, but even the Great Depression worked out okay eventually for a buy and holder, especially if you owned bonds. Okay, so when your personal situation changes when your personal situation changes, not general economic and political changes, but your personal situation changes, it's appropriate to change your plans, right? You get married, somebody dies, you or your spouse Die, you get divorced, you or your spouse gets disabled, there's a serious change in your earnings, there's an earlier retirement date, your kid turns out to have a lifelong disability or something. And it seems more reasonable to cut luxuries than to change an asset allocation in the middle of a market meltdown. For sure. Right? But that's basically it. Your asset allocation as originally designed should incorporate the possibility of risks showing up. Okay? The risk of a change in presidential administration, a risk of a bear market, a risk of US Stocks underperforming international stocks. These risks have always existed. They just happen to show up this year. Right. And so that's not a reason to like change your plan. If you change your plan every time there's new economic and political news, at a minimum, you're going to be changing your investing plan, your asset allocation every four years. And you're probably going to regret it because most changes end up being kind of performance chasing. You end up, you know, selling low and buying high. It's just not a good recipe. What works is sticking with a plan long term for decades. When I look at the changes we've made in our investing plan over the last 21 years, they are minimal changes. Number one, they're like tiny percentages of the plan and none of them really change the amount of risk we were taking. At one point we added a little bit of peer to peer loans. We had those for a few years, then we phased them out of the portfolio. At another point, we slightly increased our real estate allocation and ended up with some private real estate investments when they became available to us due to our level of wealth. And we did a few simplifying changes. Right. I used to have some dedicated mid cap holdings and we ended up just having more in small cap for that small value tilt that we have in our portfolio. They're minor changes. It's been 21 years. We're basically using the same plan I wrote as a PGY2 resident. Same plan. We're still following it. You don't have to change it every four years. In fact, the more you change it, the less likely you are to be successful. So pick a reasonable plan. You can stick with it long term. Use a static, unchanging asset allocation, rebalance to it periodically, every year or so is plenty. And stay the course in market downturns, whether they're due to a pandemic or a tech meltdown or the emergence of AI or interest rate changes or a global financial crisis, whatever it is, threats of war in Ukraine or the Middle East. Right. There's always going to be this sort of stuff happening. And if you let it bother you, if you sit there and wonder, should I change my asset allocation? Every time you read CNN or Fox News, it's going to drive you nuts. This finance stuff is not that hard. Write down a reasonable plan, follow it, fund it adequately, and guess what? In 15, 20, 25 years, you're a multimillionaire and you don't have to work for money. This stuff's not that hard. You can do it. Thousands and thousands of white coat investors before you have done it. We highlight them on the Milestones to Millionaire podcast all the time. You can do it too. It's not that hard, right? Live like a resident for a few years. Knock out your student loans if nobody else is going to pay them off for you. You know, put 20% of your income toward retirement. You know, use tax protected accounts as they're available to you. Have a reasonable amount of risk in your plan. Use index fund, right? If you're going to invest in something like real estate, make sure you're doing it the right way for you. Limit how much you're putting into Japanese yen or bitcoin or gold or platinum or whatever cool little diversifying thing you want to have. And you know what? It's going to work. It's going to work. It's not that complicated. You can do it. All right? This episode was sponsored by Laurel Road for Doctors. Laurel Road is committed to helping residents and physicians take control of their finances. That's why we've designed a personal loan for doctors with special repayment terms during training. Get help consolidating high interest credit card debt or fund the unexpected with one low monthly payment. Check your rate in minutes. Plus white coat investors also get an additional rate discount when they apply through LaurelRoad.com WCI for terms and conditions, please visit www.l LaurelRoad.com WCI that's www.l LaurelRoad.com WCI. Laurel Road is a brand of KeyBank NA member FDIC. All right, don't forget the financial crash course. It's August 29th at 6pm you sign up for that@WhiteCoatinVestor.com Crashcourse. Who's it designed for? Well, attending kind of level professionals or anybody who will eventually be an attending level professional. So I hope to see lots and lots of you there. Thanks. For those of you leaving 5 star reviews for the podcast, it really does help us to get new listeners and help more people. A recent one came in from JH tellers who said good for all high earners. As a son of a white coat, I've used the material from this podcast to help my father better his understanding of his financial assets while growing my own personal knowledge. Keep up the good work. Five stars. Appreciate that. Also appreciate those of you telling people about the podcast, the blog, the website, the books, whatever. Word of mouth is an important way that we can reach more white coat investors. Help them be successful. Because I truly believe that financially successful, financially comfortable, whatever you want to call it, doctors are better doctors. They're better physicians. They're better parents. They're better partners. Keep your head up and your shoulders back. You've got this. We're here to help. Send us any questions you have@whitecoatinvestor.com speakpipe. We'll get them answered on the podcast. See you next time.

The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your 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.