WCI #90: An Interview with Physician on Fire and Passive Income MD

This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.

Here's your host, Dr. Jim Dahli. Welcome to White Coat Investor podcast 90 an interview with Physician on Fire and Passive Income MD. The White Coat Investor is proud to.

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All right, our quote of the day today comes from 21 pilots who said wake up, you need to make money. And I think that's a great show. But that's our great song. But that's the line that stands out the most to me in it and it's a reminder that you know what, that's where money comes from, is work. And you got to get out there and get it done. Sometimes. If you haven't checked out the White Coat Investor Facebook group, be sure to do that. It is growing rapidly. I think we've got 12,000 members in it and tons of great discussions going on in the Facebook group. So it's open to all high income professionals, but not financial professionals other than the sponsor of the group for that month. And so you can get in there and ask your questions in a reasonably private manner. I mean, obviously any Facebook group with 12,000 people in it isn't that private, but it's a great place to get some quick questions answered and get inspired to take control of your finances. Speaking of you, thanks so much for what you do. Your work on a daily basis is changing lives and I know sometimes people aren't thanking you for it, so I wanted to do that today. Thanks for what you do. It is hard work. It took a lot to get there and I know a lot of you feel a little bit burned out on it and so realize that there are people out there that appreciate what you're doing and recognize the sacrifices you're making. Today we have two awesome people on the podcast that should need no introduction. The Physician on Fire Passive Income md. We're basically going to be answering your questions today, and so let's get into it. All right, we've got our two favorite guests back on the podcast today. We have the blogger behind Physician on Fire and the blogger behind Passive Income MD back here on the White Coat Investor podcast. So we're looking forward to answering your questions today and going over them and maybe even giving you each of our different opinions. Some of these questions are pretty funny, but we'll try to keep a good mix of questions in there, so there will be something that you find interesting. First of all, though, I want to welcome both of these guys to the podcast. They're now officially out of the closet. Not that closet, but the anonymous blogger closet. And so welcome Leif of the Physician on Fire and Peter Kim of the Passive Income MD blog. Welcome to the show, guys.

Thanks, Jim. Happy to be here.

Hey, great. Thanks for having me too.

First of all, let's have each of you kind of give us a little bit of an update on what you're up to and any new projects you've got going that you want our listeners to know about. Let's start with you, Leif.

Yeah. So, gosh, the last few months of 2018 were really busy for me. I was working more than full time in October and November, covering a medical leave and a military leave in a group of five. So that was a challenge. And the holidays and everything else just kept me very busy. And I'm happy that 2019 is here. Things have slowed down. I'm back to working part time. I've got time to kind of get caught up on things that I've neglected with the blog. As far as what's new there, it's pretty much status quo. I'm continuing to publish a post every Tuesday, a guest post every Thursday, one from either of the two of you on Saturday, and my ever popular Sunday best roundup from some of the best stuff I find online on other sites every Sunday.

Now, what he says when he. What he means when he says status quo is that the Physician on Fire blog is literally almost the same size as the White Coat Investor blog. Just comparing the blogs, not everything else we're doing. So it really has grown substantially in the last year or two and is really impressively grown.

Six million page views last year, which is. It's a. That's a big number.

Yeah. Pretty awesome. Pretty awesome, for sure. You're affecting a lot of lives and helping a lot of people. Although I think if you keep Working like this, you know, back and forth to full time. We're going to rename your blog Physician Off Fire.

Yeah, right. But that's. That's a. That's an exciting thing I can mention. August looks like it'll be my final date of actual work as an employee here in Northern Minnesota, so I'll maybe be done completely with anesthesia later this summer.

Pretty awesome. Pretty awesome. I know there's a lot of docs out there that would love to be in your position to at least have the option to do that. All right, Peter, let's talk about what's going on over at Passive Income md.

Yeah, it's been an awesome year, as you. You might have seen on my post, that kind of recapped the whole year. I mean, it was an amazing year for the blog. Tremendous growth a lot due to the partnership with you guys. So thank you so much. And yeah, it was a learning year just in terms of how to run the business, how to kind of get the information on the site that I want to get up there. I spent a lot of the time in the later part of the year since I did come out on the blog, I think it was around August, just really kind of interacting with the community and figuring out what the community really wants to see on the site. I spent a good amount of time, especially here in my local area, getting together with people, and I thought that was awesome. And I hope to kind of continue to grow that across different parts of the country. We talk about it on our Facebook group, Passive Income Docs, about kind of having these get togethers. And I think it's a huge thing because it really helps to kind of feel connected to a community of people that are doing different things, and you get motivated by hearing what other people are doing. So that's what I spent a lot of my time on in the latter part of the year. And as opposed to Leaf, I actually ended up spending a lot less time at work. I've been intentionally trying to cut down my family, and I got to take a few vacations, which was really nice. And the funny thing though, as you know, Jim, is that when you spend less time at work a lot of times with your free time, you know, part of the time from your family, you end up spending more time on the blog and your other businesses. So that's kind of what ended up happening. I think, again, we made some tremendous strides with Passive Income md with my other company, Curbside Real Estate, that has been growing as well, keeping me busy and really just hanging out with family as much as I can.

Yeah, I don't think all my listeners realize this, but Passive Income MD is, is not your only side gig. You've got a whole bunch of it going. You're a passive income machine over there. And so it's been fun for Leif and I to get Passive income from Passive Income md. But what's most impressive is just watching how you've kind of handled all these businesses and juggled them in your life along with your practice and your family. So congratulations on doing that. I think you mentioned in your post that you had 7x your income this year compared to the year previous. I know there's a lot of business owners and a lot physicians, frankly, who would love to do that with their income. So congratulations on doing that with the blog. Anyway.

Great, thanks. I mean, again, it's not really all my work. It definitely had a lot to do with the partnership with you guys and just really kind of awesome, awesome readership base that's just been really committed to helping me grow this thing.

Yeah, keep up the great work there. And I did hear or read on your site that you were maybe going to have a podcast of your own in 2019. Still on the docket?

Yeah, I think so. I mean, that's something that I put on as a goal as last quarter, and I failed at that. But I think sometime in this year, I mean, Jim makes it look so easy, right? But I know it's not. He makes it look easy. You just pick up and do a podcast, but not everybody can do that. So it's in the works. I think. I have a few other projects that I'm trying to get going in the beginning of the year that I can't quite talk about yet. But I think towards the latter part of the year, hopefully a podcast will be out there.

All right.

Looking forward to hearing it. Certainly we can use some more voices in that space. There's dramatically fewer podcasts than there are bloggers blogs out there talking about physician finances, that's for sure. All right, so you guys kind of both became unanonymous this year. How has that changed things? Have you been surprised at the differences it made or lack of differences? You want to take that one first leaf and then Peter.

Yeah, I'll go with the lack of differences. I guess at first nobody at work knew about this, and then I think it was when Business Insider published a picture of me with an article that I wrote about our weekly spending and people at work saw that. And if you commented on it and now people know I have this site, I don't think they spend much time reading it. I've had a few questions here and there about finance stuff, but, and I remember telling Peter before he went public that, you know, you think it's a big deal because it's a huge deal to you, but to most people it not a big deal at all. And for better or worse, probably for worse. But most people aren't going to read much of your site even if they know you well in real life. So I haven't seen many changes and that's quite all right with me.

Yeah, for me, I think the downside was much better than I probably imagined. I kind of had like a doomsday scenario in my head. Oh my gosh. If I came out, all these things might happen. And like Leif said, really not much happened in terms of downside. I mean, a few people at work, you know, figured it out. If anything, there's been a lot of upside in the fact that I've been able to kind of get out there and really interact with people. And I think that's part of the whole mission of the site and why I wanted to have the site in the beginning was to be able to talk to people and kind of just get excited about this whole thing. And being anonymous was keeping me back. And so being out in public has really allowed me to kind of get out there and talk to people on a personal level and not feel like I'm hiding behind some veil here. A couple of things have been pretty cool. Is that. Yeah, I mean, people have been excited. I mean, I've had some people reach out to me who are at school, classmates of mine, you know, residents, you know, co residents, as well as at least some colleagues in my hospital. But I mean, a lot of them have been excited by the fact that I know you guys actually. So.

Leif, you got to tell the story you told, I think first on Twitter about meeting with your 401k person.

Oh yeah, yeah. So I'm going to be retiring, which is really strange for a 43 year old person to be doing. But I sat down with the Transamerica rep and you know, started talking about what my future plans were. And she asked if I had any other sources of income. And I said, well, I do have this website that I write for and yeah, we'll probably earn enough there to cover our expenses going forward. And she said, who are you? Like white coat investor, physician on fire? And I was like, well, the second one, she's like, what no way. Oh, my gosh. She's like, I gotta tell my husband. Her husband's a doctor. So that was a lot of fun. She made me feel far more popular than I really am, I think. But, yeah, it was cool.

Yeah, you're Internet famous. Internet famous. That's right. That's the word. All right, let's get into some reader and listener questions. Let's start with some questions from Facebook first, from Lance Castle, who asked what is more efficient, putting money into the Vanguard Total Stock Market Fund or putting money into a passive crowdfunding real estate investment? You want to take that one, Leif?

Sure. And the answer is going to be the passive index fund. In terms of tax efficiency, you know, you pay taxes on the about 2% of qualified dividends that come from that each year. And then you may pay capital gains on the, you know, well, capital gains taxes on the gains later on when you sell, depending on what tax bracket you're in when you do that. So index funds are quite tax efficient, and crowdfunded real estate investments tend not to be. There are some where you can do a 1031 exchange. So if you have an investment property with capital gains built in and you sell, you may be able to roll that into another investment without paying the capital gains taxes at that time. So, yeah, I think it's a pretty easy answer. I'd be curious to hear Peter's take on that, too. I know you have more experience with crowdfunded real estate investments than I do.

Yeah, I think for the most part, you're right. When it comes to kind of putting your standard money into those things, I think the Vanguard Index fund is going to be a lot more tax efficient now. The cool thing is crowdfunded real estate has now become huge, kind of huge catch all term for all sorts of real estate investments. So when it comes to crowdfunding real estate, really, a lot of it now has to do with kind of the ability to put it online and kind of get it out to lots of people. So it can mean all sorts of investments, whether it's like a debt where you are kind of putting in money for a fix and flip, or you're kind of investing some of these syndications, or it might even be some of these funds. And so some of the opportunities that are out there now, because people, especially businesses, have realized that this is a great way to get. Get the word out about their investments, is that there are more and more options for people in that crowdfunded space, how they want to invest. There are options for people to invest, using some of their retirement accounts to invest in some of these crowdfunded opportunities or some of these funds or some of these syndications. And those can be quite tax efficient because those are kind of sheltered within those tax advantaged accounts. And so there are opportunities for people depending on what they want. But again, some of these, the classic crowdfunded investments, like these quick six month or 12 month debt deals, those are just taxes, ordinary income. So you're right, there's really not much tax advantage there.

Yeah, I think you really have to get into the weeds to really answer that question. I mean with index fund it's really easy to tax loss, harvest it for instance, and you can reduce some of your ordinary income with that. It's easy to donate shares to charity and kind of flush those capital gains out of your portfolio. And then of course with the crowdfunding stuff, it really matters whether it's debt or equity. Debt is incredibly tax inefficient. But with equity you can, that depreciation is passed on to you and you can use that to reduce the, you know, how taxable that income is. I think it's a little bit harder with crowdfunded real estate to do exchanges though than if you own the entire property yourself. And so I don't think it's quite as tax efficient as a total stock market fund. But that shouldn't be your only question when you're choosing an investment to put in your taxable account, you know, which I think is probably the underlying question here. All right, let's move on to the next one. This one I actually had several times from people, they really want the answer to this one. And I've got a pro con post planned on this coming up in a few months. But this one let's give to Peter first, investing in REITs versus actual real estate. Can you give us your thoughts that?

REITs versus actual real estate, I tend to think of those as two pretty different entities. When you're investing in REITs, it's definitely more of a passive type vehicle, whereas investing in your own rental properties, it's considered passive income, I guess in terms of taxes, but really it's running a business. I think the potential, again, when it comes to a lot of these tax benefits, I think owning your own real estate is extremely powerful. There's so many different ways to work that business, not only to kind of meet your goals when it comes to income, when it comes to kind of being smart with your taxes, I think those are two really separate things. With Two different ultimate. It kind of depends on your goals. Now, I don't see any reason why you shouldn't do both. Or you can do both. You know, I personally invest in, you know, multiple different asset classes, even within real estate, whether that's owning your own properties, whether it's having REITs. But again, I think they're two really separate entities. And you have to look at kind of your own goals and your own really your own disposition and time and how you want to use your resources to kind of get there. It's kind of a. Sorry, it's kind of a vague answer, but it's really hard to compare those things, really. Apples to oranges. I mean, apples to apples.

As a follow up to that question, Ashish Doshi in the Facebook group asked how do I get started investing in real estate if I have zero interest in actively managing a property? What do I give up in terms of tax benefits by using these other real estate investments like REITs or crowdfunded real estate?

Oh yeah, there are definitely ways to get invested in real estate without being an active manager. I mean, I all these crowdfunded opportunities, these syndications, these funds, these REITs are completely passive beyond the original or initial kind of due diligence. That's probably where it sounds like the reader really wants to be, in that kind of space. I would say if they're not really interested in actively managing, and what I mean by actively managing is that you have to manage a manager. I mean, I particularly never manage any of the investment properties myself. I always have a manager. But that does involve kind of following exactly what they're doing and kind of being over them. I would say they probably should be in the space where they're in some syndications or funds or in that REIT space. And there are definitely a lot of opportunities. Now, you do give up some of those tax benefits, and especially when, when you're trying to figure out how you want to, you know, do something like depreciation or things like that, there are definitely some offsets that you give up on, but at the same time, it depends on what you're. That's not the reason you should be investing in rental properties for, particularly the tax benefits only. You know, if your time is what matters to you and really you don't want to be involved in that kind of growing that business of owning your own real estate. Definitely. I would think of more in terms of some of those passive investments like I mentioned, syndications, funds and REITs.

All right, let's turn to Physician on Fire for this one. Leif Brian Patrick writes White Coat investor and physician on Fire seem to disagree on whether to keep bonds in a taxable versus a tax advantaged retirement account. I'd love to hear you guys discuss the pros and cons of both. I'm not sure that's actually an accurate representation of my opinion on it. I think the biggest focus I've had on this topic is to get people to realize that it's not just a question of tax efficiency, that the amount of the return actually matters too. You have to look at both of those factors. And so when bond yields are really, really low like they were two or three years ago when I wrote a post called Bonds Going Taxable, it's possible that putting your bonds in your tax protected account isn't actually the right move for you. What are your thoughts on that topic?

Well, I think the most important thing to understand when looking at this are the tax ramifications of where you do own your bonds. So when you argue that bonds go untaxable, you're talking about having a municipal bond, municipal bond fund in a taxable account and that saves you on federal income taxes, on the yield, and if you have a fund for your particular state in which you live, also the state taxes and that's a great advantage. And a total bond fund or a corporate bond fund is not very tax efficient. And if you're going to own that type of fund, you want to own it in a tax advantaged account like your 401k or IRA. So yeah, I read the post. Bonds go in taxable and follow the math and it makes sense. But again, it's going to depend on where the particular yields are at the time and what fund options you have available. Now in my 401k I have the total bond fund, Vanguard's institutional version of that. So to me that was a no brainer. It's simple. Bonds are kind of boring. I think that was in one of the similar questions. Bonds are boring. How do I understand them? And I've read a book on bonds, I've looked at all my options and, and to me it made the most sense just to buy that total bond fund and put it at 10% of my portfolio. And now you know the difference between owning muni fund and taxable and having the total bond or corporate bond fund in a tax advantage account, it's going to be a very small difference in your total return. We're talking just a few basis points here and there. As far as the big picture, probably doesn't make a big difference to you?

Yeah, I agree. It's a relatively minor effect, number one. Number two, it often gets mixed up in the municipal versus taxable bonds question. And what a lot of people need to realize is that as interest rates go up, it starts making more and more sense for your bonds to be in a tax protected account. And so it's only a very low interest rates that it makes sense to even think about taking your bonds out of a tax protected account. All right, let's go on to some of the questions from Twitter. This one from Brian Keynes who asks where to invest cash. And I think he's talking about money that you want to keep in cash, not, you know, other investments. Peter, you want to take a stab at that?

Oh, you think the owner, the reader, is asking where to keep their cash?

Yeah, I think they're asking Money market fund or CDs or high yield Savings. I think he's asking, where do you have your cash right now? Where are you keeping it?

Okay, I can just tell you. I can just tell you where I keep it. I mean, again, I keep cash on hand. I like to keep very little cash on hand. I think that's the answer. But when I do keep cash on hand, that's really me saving to possibly put in a bigger investment like a rental property. That's currently what I'm doing right now. I have actually a decent amount of cash in a, just in a regular savings account, High Yield Savings Account, online, actually. Mine's an ally. But the reason I like putting it there is that it's, I want it completely liquid. I want it to be in a position where I can actually use it and utilize it right away. And so I am actually saving towards, you know, buying another investment property this year, hopefully. And that's where I put it. Again, I don't, I don't mess around with anything else.

And I can speak to this because I am also saving to build a building, build a house. And so over the last year, I haven't really invested much of my income. I've kept it in cash. And, and for much of the year I was also in the Ally Savings account online, which was paying up to 2% by the end of the year. And then I looked at Vanguard's money market funds and they're actually giving now 2.3, 2.4%. And some of them have some tax advantages. For example, that the Treasury Money Market Fund is state income tax free for most states. And I think California might be one that's not you might be half taxed or something there. I think there are two states where it wasn't tax free. But I'm in Minnesota and I pay a 9.8 or 9.85% income tax on state income above 250,000. So it made sense for me to move my money from Ally at 2% to the Treasury Money Market Fund, the USXX at Vanguard for the 2.3% and the Advantage of no state income tax on that money. So that's where I'm at right now.

Awesome. I'm gonna take a look at that. Cool.

Thanks.

Yeah, it's. It's good times, I tell you. Paying taxes on physician on fire income in Minnesota and paying taxes on passive income MD income in California. I'm really looking forward to doing that California income tax return this year. But my cash is actually in the Vanguard Municipal Money market fund. You know, it's totally tax free. The yield is lower. I think it's 1.4 maybe, but it's totally tax free for federal state taxes. And so that's where my cash is right now. Previously was at Ally bank, but basically when the after after tax yield of that municipal money market account became higher than what Ally bank was offering this year, I just switched over. I've still got the Ally bank account and it's really easy to switch money back and forth if, if those yields change again.

Yeah, there was a crossover point. It did make sense for a long time to be with Ally. They. I think Vanguard's money market fund paid as little as 0.01%.

Yeah, it was pathetic for years, I don't know, six or eight years. It was just pathetic. And I think I wrote a post early on on the blog about, you know, basically why I'm leaving. Anyway, it's back. It's not one nice thing about interest rates going up. You can actually make money saving again now.

Yeah.

All right. This question comes from Dr. McFrugal. It's a student loan question, but it's less on the actual student loan management than on Philosoph says. If you're pursuing public service loan forgiveness and you made 60 qualifying payments toward the 120 and started a public service loan forgiveness side fund, basically a sum of money you could use to pay off the loans. If something happened to public service loan forgiveness and now your side fund is the same size or greater than your loan balance, what would you do? Would you continue to pursue public service loan forgiveness or would you just pay off the loan balance? You want to start with that one Leif?

Yeah, I would definitely keep pursuing pslf. You know, money is fungible, so you may have this side account, that's your taxable account where you could pay the fund balance off. But assuming that things continue with PSLF and it's not taken away or we're grandfathered in, if we're already in the program, you're still going to get that benefit and then you'll have a really nice retirement account in taxable of money that you were setting aside. So that's just a bonus of, you know, taking that approach and building up that side account is that you may get to keep it and have it all for yourself someday.

What do you think, Peter? Do you agree with that?

Yeah, I think so. I mean there's very little downside to it unless you're, I guess you're staying at a job exclusively because you're, you know, for that trying to hit that 10 year PSLF and you've wanted to pursue other things. Otherwise I don't see any downside to kind of staying in it and keeping that loan balance growing and yeah, using that in the future however you want.

Yeah, I agree. I mean you've always got the fun there. If something happens to it and you don't get public service loan forgiveness, you can pay it off. So that was the whole point of having the side fund and not necessarily to pay it off. If Public service loan forgiveness looks like it's still working, you know.

Yeah, it's a just in case fund.

Yep, exactly. Alright, this one comes from side Hustle Scrubs, one of the physician financial bloggers out there. Name a post each of your colleagues wrote that you wish you had written yourself. You want to start with that one, Peter?

Yeah, I'll do one for each of you guys, I think. Leafs One of my favorite posts that got me thinking so much was the one about geographic arbitrage or why the Great Plains are so great. That made me think, I mean, that's somebody that, you know, there's a lot of people in my state and my situation think about, I mean we are, you know, I'm on the coast, I'm in Los Angeles and you know, we make X amount and the cost of living is extremely high and it becomes quite difficult. And so the kind of concept of geographic arbitrage is something that I think everyone needs to kind of take into account. I mean, there are other factors and that's the reason why I'm not moving. But it really got me thinking about, you know, even within my own area, you know, Can I do some mini geographic arbitrage even close to where I am, you know, whether moving to a different county, whether to do these kind of things and really take advantage of that whole, you know, changing cost of living with the, you know, the different incomes. And I thought that was awesome. And, you know, I know that, you know, Leif has done an amazing job kind of really just honing in on that concept. And I know that if you Google geographic arbitrage, I think, Leif, I'm not mistaken, you're number one. Is that right?

Yep, yep.

Yeah, that's right. So that's been a powerful post, and I kind of point people to it all the time when they start. People in California here all the time with my colleagues. Oh, man, I want to live or I want to work somewhere else, because it's just. Is the cost of living is too much. I kind of tell them, hey, read that post on geographic arbitrage. Kind of. You're right. It's kind of that mindset.

And now all your friends are leaving you.

Yeah, yeah. Hey, some of them are. And I know it's tough. It's tough living here. You know, we have a. We're. People ask us all the time, you know, why don't you move? And. But, you know, we have our family here. We have a lot of different things here. And so we built our life in our community. And I couldn't imagine leaving it, but for financial reasons. But, yeah, I think that's that. And for. For your post, I mean, I came up with two. One for you, Jim, is I think one of my favorite posts of all time is the one Stop Money Shaming each Other.

Well, I was. I kind of wrote it in your defense, so I'm not surprised you like it.

I think that's why it's my favorite. I kind of wish I had. I kind of wish I had the guts to write that myself, but, you know, I thought that was a powerful kind of statement to kind of again, put it out there to tell people that we should be kind of sharing. We should be sharing each other's successes and really not putting each other down for it. I think that we have a lot to learn from each other. I'm still constantly learning, and I don't think I write the things I do to kind of put necessarily the spotlight on myself so much or kind of say, I'm doing these amazing things, and here I am living this amazing life by myself. I mean, a lot of it has to do with the fact that I'm trying To share what I'm doing and really say that really, at the end of the day, I'm not anything special and anybody else can do this. And that's just kind of the difference is that I've started to take some of these steps and here, here's what I'm learning. And so I love that post. And you know, of course, yeah, it felt nice to feel supported.

You mentioned another post.

Those two posts. Okay, stop funny shaming each other. Your geographic arbitrage for Leaf Alif.

You want to answer that one?

Yeah. Yeah. I'll start with Peter and when he was a very new blogger, I think some of his very first posts were these true doctor stories where he has people that have been on. On television, have competed on some of the, I don't know, Survivor or some other programs. Yeah. And I was like, wow, that's really cool. Like he's connecting with these people that are not just Internet famous, but television famous. You know, I guess living in LA does have its perks. Like you mentioned. And most recently you had ZDogg, Maryland on there with how YouTube is helping change healthcare as we know it. So, yeah, I think it's really cool that you're able to connect with these, you know, physician celebrities in the way that you have. So that's my favorite, I guess, series. I'll just go with the Zdogg one since probably most people listening to this will have heard of ZDoggMD as a very cool post and a neat series that you do. And Jim, one that really resonated with me fairly recently was a post you wrote called six Tips for those who have Enough. And, you know, and that's kind of where I'm at and I'm working through, you know, what I want to do with my life and my money and all of that. And, you know, you talk about the guilt side of things, you talk about spending a little more, taking time off, working less, taking care of your health and your body. And all those things are really like, right. What I'm wanting to do right now. And so I could have written something similar. But you wrote it very, very well.

Yeah, you know, I. I think the ones that I would choose are the ones that I wish I'd written myself. I see you guys publishing them, I'm like, oh, why didn't I write that? But I think the one that's. That I'm going to take from Peter's side is the list of physician side hustles I think is excellent. I don't know that it's necessarily a post so much as it is a page on the site. But it's easily found there under his extra income tab. And for Leaf it is the step by step guide to doing a Roth IRA at Vanguard. And in fact that's going to be our segue into our next question. One of the one of the listeners asked what is going on with Vanguard Roth IRAs this year? Why is it taking so long to get our money in there? You want to talk about that one, Leif?

Sure. Yeah. That's interesting. It actually started coming up last year. I had some people talk about a stuff 7 day hold which just doesn't happen when I do my backdoor Roth. And what I've come to realize is that Vanguard is no longer offering what they call a mutual fund account, whether it's in taxable or your IRA or whatever. They only offer a brokerage account which has some advantages. It allows you to buy non Vanguard funds, it allows you to buy any kind of ETF or individual stock and it has a settlement fund. Whereas a mutual fund is really just you buy Vanguard mutual funds and that's it. And there's no settlement fund. I still have the old mutual fund account for my ira and by virtue of not having a settlement fund, there's no place for the money to settle. So one day I make a contribution to the ira, the next day I convert it to Roth and it lets me select which fund I want it to go into that's already in the Roth account. So it's really easy and straightforward and it takes two days. But a lot of people are running into trouble. I know you did, Jim. I know other people in my Facebook group have had the same issue where they have what Vanguard calls their brokerage account for an ira. And the money, if it's coming by electronic bank transfer from an outside bank, even if it's been connected and you've used it many times, they'll make you wait up to seven days to actually invest that money in the Roth ira. So Jim, maybe you can explain a little more on your side because I know you transferred your money from a Vanguard taxable account with from your money market fund and still had to wait at least a couple of days.

Yeah, it was a little bit of a pain. It's kind of disappointing. I agree. The change happened when they stopped having mutual fund accounts and changed to these brokerage accounts. I mean there's no legal reason for this to happen. It's just Vanguards crummy customer service basically in that respect. I mean, some Mutant. Some companies have a backdoor Roth IRA button that you just click on. You know, this doesn't have to be this hard, but the bottom line was, you know, it's not a trouble, it's just a delay. Basically. You know, on the second I put in the contribution to the traditional ira and for whatever reason, they wouldn't let it settle until the 4th. And then once it settled, I was able to convert it to a Roth ira, but the conversion had to go from the money market fund, who was in. In the traditional IRA into a money market fund who was in. In the Roth ira. And then it wasn't until the next business day, which was the following Monday, that I could actually take it out of a money market fund and move it into the actual index fund that I was investing it in. But the problem was the stupid market went up over 3% in the meantime. So I'm really not happy about it. I lost, I don't know, 100 bucks, couple hundred bucks because Vanguard couldn't get their act together. And so that's weird. It's kind of frustrating. But it, to be fair, it could have worked the other way. I mean, the market could have dropped and I would have been glad that there was a delay. But, you know, it's just frustrating because that's not something they have to do. And so I think you're gonna have to redo your nuts and bolts post.

Yeah, I write about it. I just revised it the other day.

Yeah, I saw you.

I wrote a little bit about that, how that's affecting people. I know Fidelity has a five day wait. Most people are experiencing something similar there. So it's not specific to Vanguard necessarily, but I didn't actually make mine until the third. We were traveling and we're at a wedding on New Year's Eve. And so the second wasn't a good day for me, but I was able to make my contribution on the third and buy into, oh, I should say convert to Roth and buy my refund on the fourth. So I went from the third to fourth and was done. So if Vanguard gives you a little pop up saying please transition to our new and improved better brokerage account, I wouldn't do it.

I kind of wish I had Grandfather did right now.

And I expect they will kick us all out of those eventually. But if you have a mutual fund account, keep it.

Yeah. Okay. Let's take another question from Twitter. This one comes from the frugal physician who just. We just published a guest post over at White Coat Investor from her. But she asked a complex question. I had to actually look up the answer for. I'm going to give it to Peter. He might know it without looking it up, but I had to look it up. Can you do a 1031 exchange for sale of a rental property? If you buy a duplex and live in one part and rent out the other.

Oh, Jim, you're going to have to tell me what you found out.

I didn't know.

I mean, this is, as far As I know, 1031 exchanges, I've definitely looked into quite a bit. Now, for those who aren't familiar with 1031 exchanges, it allows you to do a sale of a rental or income or rental property and take that purchase and move that into another purchase without. And defer your capital gains and not going to pay it on the spot. With the sale of that initial property, you're able to take it to the next one and defer that till to who knows when. I think the simple answer when it comes to these kind of things is no, you can't take a rental property, 1031, into a rental property that you actually use for personal use. As far as I know, you can't do that. Now, there are some other rules around it that sometimes, you know, I mean, things that happen in life where you might buy a rental Property, do a 1031 in exchange to a property, something happens to you, and you might have to go live in it. And I think these circumstances and things do happen in people's lives. Now, I think a lot of it has to do with intent. If the government sees that your intent was to do that initially, then I think that kind of negates the 1031. Now, if it happens by circumstances somewhere down the line, as far as I know, then it doesn't really negate the 1031 exchange. There are ways to kind of make sure that that happens, that you document things up front, as far as I know, to show that this. Your intent is not to make this happen. Some people say there needs to be some sort of waiting period just to make sure, to make sure it doesn't look sketchy. But I think that the general answer is no, you. You're not supposed to do that.

Well, I actually found something slightly different. I think everything you said is right. You know, if you move into a property and you stay there for two years, then you get. It gets treated basically as a residence. If you move out of something and you rent it out, then it gets treated as a rental property. And of course, there's advantages Both ways. Right. If it's a residence, you can exempt up to $250,000 in capital gains. I think that's doubled if you're married. If it's a rental property, of course, you can do the exchange thing. But what happens if you're living in half of a duplex and sell it is you treat the half you are living in as a personal residence, and you treat the half you are renting out as a rental property. So it's actually two sales as far as how you treat it tax wise. So I thought that was interesting. I learned something looking that one up.

And if you've got capital gains, then you know, having it as a residence is a good thing. If you've got capital losses, having it as a rental property is a good thing.

Yep.

We took some pretty big losses on a house we sold, but I had been renting it out, and so I was able to take out some of those losses from our ordinary income that year. That's a big chunk of money.

Yeah, we did that. We did that as well. All right, the next question on Twitter comes from another physician, financial blogger, physician philosopher, who asks if you were making a personal finance curriculum for trainees, name the three most important topics it must include. And I responded to him. Student loan management, student loan management, and student loan management. So he called me out on that, and he said, I agree, that's most important. Maybe I need to add a qualifier. All three of you must answer, and you can't repeat a prior choice. Think a lecture series here. So let's have. Let's have. You start with this one, Leif, and then Peter, and then I'll see if I can come up with three more that you guys haven't come up with.

Well, we're talking about trainees. So these are people who will be starting their first real jobs and making real big bucks for the first time soon. So I would actually talk about budgeting and relative frugality. I don't actually budget, but, you know, just talk about savings rates and. Did I just name three things? Anyway?

I'm not sure. That might just be one. Frugality. All right, there's. There's one is frugality. What are your other two?

Well. Oh, I supposed to do. I thought we were just doing one.

Heck no, man. You got to come up with three on your own.

Okay, well, investment management. So learning how to do some basic, simple DIY investing. And all three of us have some pretty good lessons on that, as does the physician philosopher. He's got a Good sight, too. And is a good writer and believes in a lot of the same principles that we do. Number three, student loan management.

All right. Yeah, you got the easy one. All right, so he said frugality, investment management, student loan management. What can you come up with, Peter?

I mean, I've given a few lectures to some of the residents and trainees in. In this area, and the. The biggest topics always come up, of course, student loan management. So I can knock that one off right off the bat. That's easy. How to manage your student loans, and that's your particular situation. Number two is insurance. That tends to come.

Insurance. I agree.

Yeah. I mean, whether it's disability, life, whole life, and, you know, that's kind of what you built a lot of your sight on initially. Right. And so that's a lot of the discussion that needs to happen. Understanding all these different type of insurances, how much to get, when to get, that sort of thing seems to be a big topic. And then the last one, kind of what Leif mentioned, I would probably call it more like understanding cash flow is kind of the general term that I like to call where you under. That's, you know, it's about budgeting income, expenses. A lot of those topics kind of branch into how to make additional income to increase your cash flow. Investments would be somewhere in there, talking about real estate, talking about your stocks and the market, and that would be the main thing.

No more. I'm not going to have anything to name. All right, so we'll give you real estate, real estate insurance. And what was the third one you said? Oh, cash flow planning. Okay, so what's left for me? Well, I would say a written financial plan. You know, if a resident can just hit the ground running with a plan for their first 12 paychecks, I think they're way ahead of their peers. So I think having a written financial plan and becoming financial literate during residency is pretty big. I think another topic that is really helpful for people to hear, believe it or not, is asset protection, and mostly to reassure them that the chances of them actually losing personal assets in a malpractice suit is really, really low. And a lot of doctors just have a lot of fear about that. And I think that starts in training, and it affects the way you train and the way you practice. And I think actually realizing just how low those numbers are of actual outcomes that are above policy limits is really helpful for people to hear at all stages of their careers. What else would I add in there? I think I would probably add something about retirement accounts, you know, getting their match, if there is one in the residency program, using Roth accounts during residency, etc. I think those are pretty important topics for trainees. All right, let's, let's go on to the next one. This one's for the other end of the spectrum. Let's send this one over to leif. I'm almost 72 and my required minimum distributions are at 3.8% from three IRA wrap accounts, one SEP wrap account, several hundred thousand in each. I also have a roth less than $100,000 and an Ohio National SEP that guarantees market returns are 8%. I'm still working part time in Texas. Should I fire my advisor?

Well, I wouldn't fire an advisor based on the 288 characters we can squeeze into it. That would not be fair to the advisor. That does sound complicated and complex, possibly unnecessarily, but I don't know a lot of the details there. I'm curious about this Ohio national set that guarantees market returns or 8%. That sounds too good to be true, which means it almost certainly is. So there's something that we're, we're not getting.

Right? It's almost assuredly some sort of equity indexed annuity or something. The problem here, I mean, I agree it's just a tweet, it's hard to know much, but wrap accounts almost always have fees that are too high. And any, you know, it sounds like there's some sort of a random insurance product here that's probably designed to be sold, not bought. So there's a very good chance that this listener needs to fire their advisor and get some real financial advice. But what they really need to do is go get a second opinion from a fee only financial advisor on what is going on. And I suspect they're probably going to move on once they do that.

I like that idea. Second opinion. And he's still working part time at 72 and is taking RMDs. You've probably got plenty of money would be my guess. But again, we don't know based on other than it says several hundred thousand in each of three or four accounts.

Okay, here's a question from Arman Jadidian on Twitter. Could you discuss some of the negative press that surfaced relating to index funds last month? I believe the concern was that index funds were becoming too popular and having some negative impact on the economy.

Yeah, I saw the headlines, you know that Bogle wrote in the Wall Street Journal and then a lot of other people kind of sensationalized the headline and saying Bogle sounds a warning, but what he's really talking about is if a few companies own say 30 or 50% of the US stock market, then they can start to control those companies, you know, the U.S. stock market. And that's not a good thing. But yeah, I think it was a big headline and I think that there will be an issue if 80 or 90% of people are indexing, but I don't think that's going to happen. People will always want to beat the market. And if there does become a situation where so many people are blindly investing in index funds that other funds are better able or more easily able to outperform them, then people will start to switch the other way and problem ought to correct itself.

That's exactly right. I think it's a self correcting problem. I mean, clearly part of the issue is Vanguard has become huge. I mean it is too big to fail. You know, I mean if Vanguard runs into a problem, the government's going to have to prop it up. Same with Fidelity and some of these other companies, you know, and so I think that's part of it. But I think there's an underlying concern there that what if everybody indexes? Well, the truth of the matter is you need a very small percentage of the invested money to be actively managed to keep the market efficient enough that indexing is the right move when it comes to investing in stocks. And that number is probably a lot smaller than most of us think. It's certainly smaller than 50%, because bear in mind, it's not so much where the assets are held as how the assets are traded. And most of the trading going on is being done by actively managed funds, even if they only have a minority of the shares of the stocks. You know, just because the index fund traders aren't trading all the time, they're much more passively held. And so I think it's, I think it's a lot of it is much ado about nothing, to be quite honest. And I think we've got to have a far higher percentage of assets and index funds before that's really going to have an effect on fair pricing of the market. Just because that's not where all the trading is happening and it's the trading that determines the prices. Okay, next question. This one from Jet Set Rehab Education, I think that's also a blogger. I think that's a physical therapy blog or physical therapy podcast rather. 529 is for college savings. The pros and cons and which funds you like. Do you have a 529, Peter?

I do.

Why don't you talk to us about that?

Yeah, we have a 529. And my wife and I, we've talked a lot about how we want to manage our college savings. I think her parents never had a 529 plan for her. My parents never had for me. And so this is kind of new for us to figure out exactly how this works. And we've learned a lot about it. We spent a lot of time. California doesn't have the greatest 529 plan. So I think we are invested, if I remember in Utah. I think if I remember or is in Nevada, I have to look back at it right now. But we don't spend a lot of time. I'll be honest with you. We do do our kind of like a minimum, minimum investment into our 529s. We have talked about kind of front loading it to kind of take maximum. The better the benefit of having that, you know, invested as long as possible. At the same time, I'm also not necessarily a huge fan of 529s. Meaning that I don't want to. I can't. I don't want to rely 529s only to kind of, kind of have all the savings ready for my kids when it comes to college investing. So one thing that I've done also on the, on the other side is that I've. I bought a property. Actually I bought a property with the intent that this will be part of the college savings for my kid.

You'll pay for college with the income or by selling the property?

No, but possibly by selling the property or possibly by the income as well. I think there's a couple of different options for that and I've read a couple of different things online about it. I'm not saying this is the only way to do it, but it's one way that I'm diversifying. Apart from just the 529, I think a lot of people just put all their money in the 529. That's it. Right. That's their hope. The hope that 529 will get them where they want to be. I don't think that necessarily always will be the case. So I've also kind of sectioned off, kind of allocated some other funds towards other things to kind of pay for college. Now I think there's a possibility that some of these investments may do quite well with some of these rental properties down the line. Appreciates I have different options. Exactly how I want to do exactly how I want to spend those funds. And so I do invest in the 529. My wife and I do. We're not super aggressive about it. And we've also again found other places that we want to use the other vehicles that we use to invest for our kids. College.

Yeah. So pros and cons of 529. The pros is all the growth is tax free in some states. Not California, unfortunately, but Utah. We get a state tax break when we put the money in. So that's another pro. There are some very low cost 529s. Like the Utah one is one that's really low cost. So you pay very little for fees. I mean, I guess the fees you do pay are a downside, but they're not very high. And then it's kind of set it and forget it. You know, you can even use kind of a target retirement kind of approach for it. We've invested ours very aggressively. It's half in small value stocks and half in international stocks. So you can imagine the last couple of years it hasn't been doing awesome, but we're funding it pretty well and there should be quite a bit of money in there. Our intent was, was never to pay for all of their education with that 529. It's just kind of our philosophy on it, but we invest it pretty aggressively.

Do you have any sort of worry? I mean, I would say worry, I guess a good problem to have of kind of overfunding that.

No, no. I mean, you just change it to their kids is my plan, if that happens.

Right.

Change it to the grandkids, change the beneficiary. How about you, Leif? How are you using 529s?

Yep. Yeah. A year ago I was able to brag that we had two, six figure, 529 plans. And now I can brag it. We have two very high five figure five plans for one for each of my kids. Yeah, the benefits are there. It acts similar to a Roth IRA as long as you use the money for education. And for many of us, with the added bonus of a state income tax break when you put the money in. So I'm happy to be funding those. And you know, I think, yeah, I think overfunding is not a huge issue. You can always pay the 10% penalty and then I think tax on the gains if you do end up wanting to get the money back. So that ends up not being ideal, but you can use it on yourself. You know, you can name yourself as a beneficiary and learn culinary cuisine in Sicily and pay for your housing and your tuition or something like that. People talk about doing that. So there are also.

There is a list of approved institutions I think you have to use.

Yeah, I didn't notice. Yeah, I wasn't sure about money that you might have never thought about doing, but most likely I would let my kids kids use whatever's left over.

I mean, there is a new added benefit that I heard that with the 529, you're able to fund some private education as well, right?

Yep. K12.

Yeah.

Yeah. So I think that is added benefit that actually does make it a little bit more attractive to us. At this point, we're not going the private route. We've gone public. But I think having that kind of option as another out for your, for your funds does make it a little bit more attractive for us.

Yeah, I like Peter's approach, too. I wrote a post about that, I don't know, five or six years ago about using real estate for college. I think it's a far better idea than using whole life insurance for it. But one idea I had was buying a condo down in the college town. And, you know, not only does that give your child, you know, some equity that appreciates between now and when they go to college, but it gives them free rent when they're there and also gives them a job, you know, the opportunity to find tenants and to manage those tenants that are living in that condo with them, you know, roommates or whatever. And that sort of a situation never got around to doing it. But something I think about every now and then, and certainly it is a way that you could save up for college. And the nice thing about it is if you change your mind, well, it's just in a taxable account. You can do anything you want with it with no penalty. Okay, next question. This one also on Twitter from who I think is asking about our marriages is what's going on here? How do you handle household work, cooking, cleaning, etc. Division of labor, what's outsourced, etc. You want to start, Leif?

Sure. Yeah. I do most of the cooking. I would say my wife prepares salads and I prepare most of the meals unless I'm on call and then I'm probably not home for dinner anyway. My wife definitely does most of the cleaning. And as far as raising our children, that's not exactly 50 50, but we both do quite a bit with our kids. So it just depends on the day. Depends on what's happening in my life and hers. But we both contribute. And I mean, to be honest, my wife does the bulk of the household work. I do the bulk of the income earning.

Yeah, I think we're just the opposite as far as cooking and cleaning. She does most of the cooking, I do most of cleaning. So how about you, Peter? You're in a little bit unique situation. You're in a two doc family.

Yeah, we're two doctor family. And we've kind of talked quite a bit about what we like to do and what we're interested in. And we are fortunate to be in a situation where we can outsource a lot of the stuff that we don't enjoy. And so when it comes to cooking and cleaning, we actually outsource pretty much all of it, or most all of it. We do have. We have a nanny that helps us actually do some cooking as well. And so we actually. Neither of us actually really enjoy it. We like spending time with our kids. We like taking our kids out, kind of playing with them, doing these kind of different things, kind of showing them new experiences and that sort of thing. So that's kind of where we spend a lot of our focus on. But we've outsourced, again, those things that we kind of don't enjoy doing, which is the cooking and cleaning. And the cool thing is in this area especially, there are some really great resources for it. And so we don't even, you know, sometimes like, you know, even going to get the groceries and things like that. Again, we live in an amazing area where you can just literally with a few clicks, you can get all the groceries that you want. And so I'm all about, you know, using your time efficiently and effectively. I've talked about outsourcing using different types of assistance and these kind of things. And, you know, some people have accused me of being kind of lazy when it comes to that kind of stuff, but I. I tend to not see as being lazy, but more like more using your resources, how you want to use it. And so. And your time, which I think is extremely limited. So, you know, when it comes to the. Especially taking the kids and this kind of things, I think my wife takes primary responsibility when it comes to making sure the kids are, you know, things in school and these kind of things. And I'm, you know, primarily the income driver, but, you know, we do split a lot of that and, you know, we outsource the rest.

Yeah, awesome. Awesome. Three different. Three different pathways there. No right answer. All right, A specific question for physician on fire Are you going to work Locums after your current job?

I will keep my license and credentials for at least a year or two. I was just asked last night by one of my colleagues who curls with me if I was going to keep my privileges at the hospital. I said, yeah, I'll hang on to them as long as it's easy enough to do for at least a year or two. Because I know situations come up where they need a little help. And if I was going to do Locums anywhere, I'd just as soon come back to the place where I'm very familiar with it.

Yeah, for sure. All right, a question for you, Peter. What percentage of your real estate portfolio is directly owned real estate and what percentage is syndicated?

Yeah, I had to go back and I actually saw that question, which is cool. I'm glad I got some advanced warning. But I decided to kind of take a look at my current portfolio and see where everything is invested. And it looks like at this point about 75% is in terms of equity or in terms of equities in our own rental properties. And 25% of what I allocate towards other types of real estate investments is in our own funds, syndications, other sort of crowdfunded opportunities.

All right, here's one for you, Leif, on insurance, disability, life insurance, how much, what type and when can you ditch it?

All right, start with disability. Do you want true, Owen? O. I had that. I got it in residency through MetLife and then when I finished residency I increased the, the amount that I could receive as a benefit and increase my premium and I dropped it about the time I realized I was financially independent. And that was at age 39, about four years ago. And yeah, I was self insured at that point. As far as life insurance, we're all going to have the same answer. Term life. And I was probably, well, I know I was a bit, a bit underinsured. I had a $1 million ten year policy and I would probably change that up if I were to start over again. But I got this back when I was just out of residency and again, I stopped paying on that once I realized that my family would be just fine without me.

Gamble, gambled and won there, huh? Gambled in one.

Yeah, a little bit.

All right, I agree with you. I just dropped my disability insurance last month. Wrote a blog post about it. I'm probably going to drop life insurance in another year or two. It's so much cheaper than disability. I figured, ah, we'll just make sure hold on to it. One, one or two more years. Okay, another question, physician on fire about craft brewing. Beer making inputs can vary greatly in price in different years, especially the hops. Do you adjust for that by using different recipes, such as more IPAs when hops are cheap?

That's a funny question. There was a hop crisis like back maybe seven or eight years ago, and I know some breweries really did struggle and they were paying triple or quadruple what they normally pay. You know, that's how commodities work, I guess. But no, I haven't made much. You know, I don't, I don't brew on a massive scale. I do five gallons every once in a while. So if I have to pay a dollar per ounce or $3 per ounce on the hops, it doesn't really affect my bottom line.

All right, here's a question for everybody. What are the areas of the largest financial planning disagreements between the three of you? I sat on this one and I couldn't really think of any real disagreements. Anybody else think of something you can point out?

It's different approaches, right? We have different approaches to how we, you know, how we invest our money and how we approach where we're living and all and you know, how we approach work and everything else. So obviously Peter goes from the passive or semi passive income approach with a little heavier real estate allocation than we do. I think, Jim, you're kind of somewhere in between with. But your investment philosophy and mine are very similar. I think you have done a little more, like I said, in real estate, crowdfunded and otherwise.

Yeah, I think it's all the same strategy, just different tactics, same questioner. And this is MPMD from the White Coat investor forum, actually, who asks, says White Co investors made a big splash in this space and the network only increases that influence. What percentage of doctors do you think are reachable with your collective message? What percentage do you think are immune to it and will always live in financial ignorance and, or frustration doing stupid doctor tricks? You want to take a stab at that one, Peter?

That's a good question. It's funny, just even in my own network, I guess we, we do sometimes live in, you know, since I'm in this world, I just tend to think. Everybody knows who you are, Jim. Right, everybody knows. And you know, in fact, I think they should know about, well, the White Coat Investor. They should know about the site and Physician on Fire and what, what the message is. To be honest with you, I tend to find, I guess it kind of goes different by age group, but I would say maybe in my own hospital, it seems to be about somewhere between 10 and 20% people actually know, maybe 10%. And I was actually kind of shocked at that. I mean, the good thing is there's a good and bad to that. The bad is not enough people know about it. But the good is there's still a lot of people that are out there to reach. And so your mission is you still got a big mission ahead of you, and we all do. I think that. I mean, but even the people that I talked to and mentioned about it, to be honest with you, half seem really interested in finding out more. And they'll go on the website and kind of look and say, hey, this is. Is amazing. And then half will just, it'll just bounce right off of. So I tend to find like, I would think that most visit 50. 50 is kind of where I would put it, where 50%, like, even if you put it in front of. They're not, they're not going to care about it. But out of the 50%, you know, a lot of them just don't. Haven't had the opportunity to see it. They're so busy, they're kind of, you know, nose to the ground type thing that they don't even know those resources are out there. But yeah, I mean, it's up to us to kind of continue to spread the word.

Yeah, the percentages we've reached are definitely much higher in the younger docs than the older docs. It's, it's a minority, a small minority in docs in their 50s and 60s for sure. But, you know, students and docs in their 30s, it might be more than half that have kind of heard of this message. And so, you know, I think some of them don't really listen to it or follow it, but, you know, but they can't say they've never had any sort of, you know, knowledge about it. I think a large percentage of at least us medical students have at least had some minimal exposure to it, I think at this point. Or else they just have, they just have their head in the sand, you know.

Yeah, I mean, people are better connected to it now because through, I mean, Doximity obviously has been pushing a lot of this content and some of these other sites. And so everyone seems to be pretty well connected through there and through on Facebook, especially the younger generation. So a lot more of them are seeing it.

Yeah, I think you have to have a reason to become reachable.

Right.

Like you may be reachable, but you don't care until you have a reason to care. So, you know, for some people it's it's career burnout. For others it's just realizing what fees they're paying or being faced with. Here are your fund options in your 401k, choose one. And they say, well, I don't, I don't know. Right. So I have to have a reason to actually seek this information out and then hopefully once they discover it, then they'll stick around. But yeah, our reach is probably out of, I think there are about a million licensed physicians in the country. You know, we reach a pretty small percentage of them.

Yeah. Another question here from the forum, this one from Sale Dog and it's for physician on fire and he's already answered most of the question. But it talks about retiring and leaving medicine and you know, refers to the strife of the decision making process to give up your skills and your license. Have you felt strife as you kind of stare into the end of your career as a physician and how has that been to deal with?

I've done my best to mitigate that by going part time over a year ago now and seeing what it's like to not work for a few weeks at a time. And as I mentioned, I'll keep the ability to continue working here for at least another year or two until I decide that, that I'm okay without it. You know, I don't know. I've never gone more than a few weeks without actually doing this job. So I just take it one year at a time.

Yeah.

But yeah, I mean, I can't do like one or two weeks a year and feel comfortable in a procedural based specialty. So for sure, I know that's not an option.

I'm not sure that's any different for a knowledge base specialty, quite honestly. You need a certain minimum practice to really. Or you shouldn't be doing it, you know. All right, Another question from nachos31 on the forum, this one also for Leaf. What was your reaction upon hearing that White Coat Investor opened a donor advised fund? And I just wrote the post about doing this and it'll run in a few weeks. But what's your reaction?

I'd like to take some credit for it because we did do our pro con where you argued against it and I argued for it. But I know when you write those you could easily write either side. And so I like that you'll be highlighting some of the less talked about advantages which is being able to really easily make anonymous donations and also like you mentioned earlier, flushing out some of those capital gains so, yeah, I think it's pretty cool. And I hope we can convince more people to be more generous and charitable with their money once they've reached a point of having enough.

Yeah, you'll see my post on it coming up on the blog. But I was pretty impressed with how slick it was and just how convenient it was. But between, between that I'm with Vanguard Charitable. Yeah. And between that and the anonymity, it's great. Is it even slicker at Fidelity? I know the minimums are lower.

It is. But it's also much easier to do the recurring. I don't know. I mean, they're both pretty simple, but Fidelity's got a leg up there.

Was it easy to take Vanguard assets and move them into the. The Fidelity daf?

I haven't done it yet. What I've done is moved because I have both. So I just move Vanguard funds to the Vanguard daf and then I donate from Vanguard DAF to Fidelity Charitable.

Yeah. The other thing I found is my fees are very slightly cheaper at Vanguard just because I only have to keep money in there for basically one month a year and pay AUM fees on $15,000 for one month, whereas there's a hundred dollar minimum at Fidelity. And so it was slightly cheaper at Vanguard too. But it's, you know, basically it's about the same, just lower minimums and lower amounts you can donate at Fidelity.

And its ratios at fidelity are like 0.015. So one and a half basis points on their big index fund. But yeah, Vanguard is like 0.0607. Maybe it's 0.04 now. I don't know. It always goes down the race to zero.

Yep. Hopefully they get there soon rather than later. All right, this one for you, Peter. How mean is white coat investor behind the scenes? Nachos31 wants to know.

Where does he get that or he or she get that idea? I don't know. Jim. I think my impression of Jim is exactly. Not a lot has changed from the time because I knew you as the wicon investor prior to getting to know you. And now I feel like I've gotten to know you now as a business partner and a friend. I think you're one and the same. I think the person you present yourself as on the site and all this stuff is the same person that you are in person. I think you've got your principles, you stick to them. You know what, you know, you're very clear about it. And I think. I don't know where the mean word comes in. But I think that even with the whole stop shaming each other, I think you're very, you're not afraid to be vocal about what you feel, and I think that's a good thing and I think people need more of that. So thanks.

That's very kind of you. All right, a question for me from Vagabond md, who's written a bunch of guest posts for For Leaf and very active on the White Coat investor forum. He asked what are your favorite hiking trails in the state of Utah? They're all canyons and most of them are unpublished and I'm not going to put them out in public. So. Have you ever been to Snow Canyon State Park? Yes, I have. Oh, and one here for. For Leaf. What is your favorite style of beer and are there injuries associated with curling?

I like Hoppy Beers. IPA is my go to. And curling. Yeah. Actually, you can slip on the ice and a friend of a friend is apparently in the ICU with probably a head bleed right now after slipping and falling on the ice at another club just this week. So, yeah, you got to be a little bit careful out there. It's ice. You know, you work in the ER gym, you know that people slip on ice, right?

That's right.

Break their bones. We actually had a lawyer in our club fall on his face and he had to have, I think tens of thousands of dollars worth of dental work. And you know, you don't want that to happen to anyone, but especially a lawyer. But I'm sure, I'm pretty sure that went through insurance and was taken care of.

Yeah.

Yeah. Leif, tell how people. I'm just curious how, how hard is curling from your opinion? I mean, I think whenever, I don't know, I've had friends who've watched the Winter Olympics.

I think he's asking, is curling a real sport or is it a drinking game?

I play a lot of other sports that maybe not because they're sports either, but I think I get a lot of people that say, hey, I, you know, I should just go learn curling so I can make it into Olympics. So, I mean, you've been doing it for.

Compare it to bowling. You can compare it to shooting pool. Like it's not difficult to do. It's very difficult to do really well, you're taking a 44 pound stone and sliding with it and throwing it 150ft away at a target that you want to hit within a couple inches. So, you know, it's easy to do. It's not that easy to do.

Well, gotcha all right, here's another one for Leif from BMAC on the forum. If I recall, physician on fires in his early 40s with two children. That's right. Right. And is budgeting roughly $20,000 a year for health insurance. This seems like one of the most difficult items to plan for over 20 years or so until Medicare. I'd like to know what his thoughts are with regard to its impact on his early retirement.

Yeah, he's right on all accounts as far as my age, two kids and the budgeting for insurance being difficult. You know, one option we're looking at and be looking at pretty closely here in the coming months are the healthcare sharing ministries, which, you know, if that's the best option for us, we might be spending less than $10,000 a year initially. But they don't cover everything and they're not true insurance. You know, they don't cover like say, you know, God forbid if one of our kids ends up with a substance abuse problem. They don't cover that because that's, you know, not a moral thing to do. Illicit drugs. Yeah. So I'll be looking at catastrophic plans. I'll be looking at the plans on the exchange and plans that we can.

Buy in the open market.

I've over saved. I still have some income coming in. And it is a challenge, though. Absolutely. And if health insurance starts costing 30, 40 or $40,000, I mean, a lot of people aren't going to be able to afford, well, retirement or insurance or.

Any of it or to get health care in the first place.

Place.

I mean, if the average household income is 60,000 and health insurance costs 40, it's just not going to work.

No.

Right. So something's got to change. But yeah, my main plan, like I said, is to budget a lot for it and to have more money than we actually need to cover even that high expense.

Yeah. All right, we got two questions from Ann. I think she wants an answer from all of us on these. Let's start with the first one. How often do any of you get writer's block while thinking up your next post? And think, ugh, I wish I could just go see some patients today instead of thinking up something new to write about. Peter, you want to start?

Yeah. Coming up with topics is actually not a difficult thing for me. I mean, I've got a running list. There are things that constantly happen in daily life where I'm like, ah, that would be good to know about. And I think a lot of the things that I write about are things that I'm trying to figure out myself. Not sorry that I know always well myself, but sometimes actually, I mean, the topics are easy. Sometimes actually sitting down and actually writing the post, it doesn't necessarily come naturally to me. I mean, I feel like a lot of times when I see your guys writing, I'm like, man, they, yeah, writing comes really naturally to those guys, you know, but for. I definitely think it's a skill that I've been working on and it's not always easy. But yeah, there are some times where I'm like, ah, I'd rather just talk about this with somebody personally face to face. And so I do run into it quite a bit. I'll just tell people that writing the content for a blog, like, even for me, it's not always easy, you know, particularly for me. But so I do. There are times where I'm like, man, this is not. This is. This is kind of difficult. So I do get. I do run to that quite a bit.

What do you think, Leif?

Yeah, I've got a big, long list of posts that I would like to write. So writer's block is a problem. And if I wasn't feeling up to writing, my thought would definitely not be, I wish I could go see some patients today. I wish I could go to play and do something fun.

Well, that too.

Those things are completely separate and I don't need to write the post. Like, if I were in a position where I'm like, I don't want to do this and there's this other thing going on, I'm gonna go. So then a post doesn't get published. It's. It's optional. Even though I have stuck to a schedule pretty rigorously now for a couple of years.

Yeah, this is rarely an issue for me. I've been months ahead on posts for years now. And so when I don't feel like writing, I don't write. And sometimes I go weeks without writing anything. And so, you know, and other times I'm writing three posts a day for a week, you know, and then I'm months ahead again, you know. Yeah, I can't do that. But, but finding contents, not hard. I mean, just look at this. You know, I put out a message saying, what questions you want me to ask the Physician on Fire and passive income MD you know, and here we've got this list of 80 questions, half of which would make a good blog post. And so there's no shortage of content. That's. That maybe I worried about that a little bit in the beginning, but certainly did not have that issue at any point during my blog's history. All right, same. Same questioner from Ann. She asked, if you'd all been in the same class in med school together, what would your dynamic have been? Like, close friends, barely knowing each other, competitors. What do you think, Peter? You want to take that one?

I would definitely say competitors. People who know me know that I'm not a. I don't really have a. I mean, I get competitive in certain sports and all that, but when it comes to academics and all that stuff, I was never the guy known to be extremely the gunner or competitive. But, yeah, I was. I say, in my med school class, I felt like I got to know a lot of my classmates pretty well. So I think we definitely would have, especially when it comes to topics of, like, if we got. If we found out that we're all interested in kind of like business or entrepreneurship. Oh, we don't talk about that.

Of course, none of us were in med school. Right.

That's the thing.

Right.

I mean, that's the funny thing. And so, you know, I hung out with a lot of guys that were into, you know, a lot of sports and watching that, and it sounds like, you know, Leaf definitely, you know, you know, the football thing. Right. We would have probably bonded a lot over football and. Yeah, I mean, I'm into some of these now. Gotten into a little bit of these winter sports and stuff like that. Skiing and snowboarding, that sort of thing. And Jim probably would have bonded over that. I don't know. What else do you guys think?

Well, I'll tell you what. I. My med school, the competition was pretty downplayed. It was a pass fail school. It was pass fail in honors, and I don't really feel like there was ever really any competition except for the other people going into your chosen specialty. And so while I am a very competitive person, I love competition just for the sake of competition. That mostly plays out at the foosball table in med school. And so I think that's the only place I was really competitors with anybody.

I was one of the foosball champions in my school, too.

Oh, there's no doubt. There's no doubt. We would have known each other then.

I think we should play sometime.

I know that Jim and I would have been good friends because the way we set up our anatomy lab is you had your body buddies, and those are the people you spend hours a day with all, you know, the entire first semester, and it was alphabetical. And so everybody else. There you go.

That's right. That's right.

And we share the first same five letters of our last names.

Yeah, we would, we would have been good friends from week one. Yep, for sure. Okay, this one from slcob who asks, I feel like I know white coat investor and physician on fire more than I know passive income. So for passive income, what's your comfort zone on how much debt to equity ratio you use for your rental properties?

Yeah, that's a good question. I don't like to over leverage my properties. I like to get them to a point where there's at least even cash flow, if not a little bit of cash flow. I feel a little bit more comfortable kind of being in that position where I'm not, especially when, you know, the property goes on unrented or it's vacant. I'm paying a huge, huge fee and I haven't, haven't saved up anything in terms of some sort of reserve fund. So I will go kind of as far as necessary to kind of reach that point. So obviously here in LA and Los Angeles, the properties that I've invested in, to kind of meet that point, you have to put in a little bit more in terms of a down payment, have a little bit of less debt on the properties. And so I think on some of these properties here I've been, I think the down payments have been closer to 35, anywhere from about 35 to 40%. So there's a little bit less debt on those. Whereas some of these other properties that have invested in, let's say in the Midwest, I'm very comfortable going at a lower, having a lower loan of value kind of somewhere going in the 20, 25%, whatever the bank will allow me to do the lowest.

Very nice. And another question, this one for Leif, same questioner. Do you think your volunteer work would keep your skills up enough to return to work if you desired? How much time would you need to work to not lose the skills?

Yeah, I'd have to volunteer quite a bit more than I do now. Last year we went to Honduras for a week and did a medical mission and I was able to bring my kids with me and my wife and that was really great. We're going back again in May of this year and you know, I think it's a great thing to do, but I would probably have to do it on a very part time basis, but a lot more than I really care to do and plan to do so. And just like when we talk about locums, I'd either have to do it a fair amount at Least a third time to half time or not at all.

Yeah. Okay, let's get this last. Well, let's do a couple more questions here. Let's do this one, this one from Hatton, one on the Forum. What was your greatest financial mistake?

I bought too much house or built too much house when I got my first permanent doctor job. And when we sold it, I lost a quarter of a million between the value of the home and the realtor fees. So, like I said, I did get some of that back on my tax return by having it be a rental property. But, yeah, I just. I learned that, you know, job security isn't what it used to be in the position world. And not to buy too much house.

Yeah, for sure. How about you, Peter?

I think my biggest one was that I let my father manage my Roth ira. There was a point where, I think it was back in. In the mid-2000s, where my father, he was part of this investment club. He's a physician, by the way. He was part of an investment club. And they were talking about a bunch of different hot stocks. And he came to me and he said, okay, you're going to miss out if you don't invest in this stock. I think he was like, what different retirement account. What different stock accounts do you have? And I mentioned, oh, this or that, and I have my Roth ira. And he's like, okay, I think you should go heavy in this one stock. And I said, all right, I don't really know much about it, but if you're that confident, here you go. Just, you know, I'll do what you say. And I. I sold all my holdings and put it in a Canadian construction company. And at that time, I had a lot of tech stocks. I had Google, I had Apple. I had a lot of those stocks. And then, of course, yeah, that thing went from. Yeah, I lost. I think it was about 80% of the value. It was. Of course, the big crash started happening in retirement, and I freaked out and I just basically sold it. And so my Roth IRA took a huge hit at that time. And so that's kind of something. Looking back, that's where I tell people, look, don't follow the hot stock tips. I know. Don't let your family tell you what to do. Don't necessarily follow their advice when it comes to the hot stock tips. And so that's probably my biggest. Here's the thing. I have a. I always kept it aside, kind of like a tracker for what my Roth IRA could have been. And so I had to stop looking at that.

Yeah, you should quit doing that for sure. That would drive you crazy.

I stopped.

That would make a great blog post, though.

Yeah. I don't know if I still have that. I've got to look for it. I stopped looking at that. I wonder if I kept that tracker on Google Finance, but, oh, man, it was. Yeah, it is painful to look at, I think.

And my biggest financial mistake by dollar value, not necessarily something I regret or a life mistake, but certainly a financial loss, was having the military pay for med school. I went to a cheap med school at a time when interest rates were very low. I could have come out of med school with probably $70,000 in debt and paid that off by Halloween. You know, coming out of residency and so exchanging four years of my life to avoid a $70,000 debt was probably my biggest financial mistake by dollar value. But it was a great opportunity. I got a chance to serve my country and hadn't made a lot of great, you know, relationships and connections and had a lot of great experiences. And so I don't know that it was a life mistake, but finance wise, yeah, it wasn't a good move, for sure. All right, let's do one last question here. I think we're about out of time. All right. I'd love to hear an argument about who has the best sense of humor. It's not a financial topic, but it comes across in your posts. I do appreciate the funny pictures and references that give the post a lighter air is one of the things that keeps me following these blogs and not some others. The answer is certainly not me. I am not known for being funny. I always wanted to be funny, but I'm not funny. So it's not me.

It's not me either.

It's not me.

It's definitely Leaf, I think. Yeah, I think Leaf comes across as his humor comes across really, really well in his posts.

I think I do well with the written word in person. I will say, Jim, you have. You have a lot more personality than I thought maybe you would. I listened to your podcast. Wow. Wow.

I'm apparently better in live than I am than I am in writing.

Well, your initial stuff, now you've changed a lot in the last few years. Your writing has taken on more personalities and you definitely see more of that. But the first couple years, your posts were pretty dry. They were. And going back to the question about you being mean, you would get arguments with people and a little bit adversarial in the comments. And so I can see where people might get that impression, which is pretty funny, but no. So when I flew out to meet you for the first time time, we had not spoken on the phone, we had only emailed and I only had, you know, what you write on the website to know you by. And I actually thought you were much more personable in person than I expected. So, so, so there is that.

Oh, that's interesting. Well, thank you very much, Peter Kim, a Passive Income Maryland, and Leif Darlene of the Physician on Fire for being back on the White Coat Investor podcast. We'll have to do this periodically. I think people really like these podcasts and so we'll do it again in a few months or later this year at some point. Thank you very much.

It was a great chat as always. Thank you.

All right, cool. Thanks guys. That was fun.

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