WCI #99: How to Break Up with Your Financial Advisor

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 99, a discussion with three attendings.

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Thanks so much for what you do. It's important work that you do. It does make a difference. There are people who are counting on your knowledge set and it's not just your patients. It's also your peers. When they send you patients, whether you're in the er, whether you're in clinic, whether you're a consultant. They really do rely on the expertise you've developed over decades. And so thank you for that. If you haven't heard, the new White Coat Investors Financial Boot Camp book is out. You can get it now on Amazon. It's great. It's getting great reviews. Thank you. For those of you who have been leaving five star reviews for it on Amazon, it is really a work that we put a lot of effort into. Started out as you know as emails that went out when you signed up for the White Coat Investor newsletter, but it's dramatically expanded from that. The chapters are three or four times as long as the original emails were. They include anecdotes from readers, their own personal experiences as White Coat investors that learn this stuff and applied it in their lives. And it's got a lot of appendices, even a long glossary that is probably one of the best things out there to learn. Financial literacy, basic financial literacy, all these terms that you should know. I've got a 15 page glossary at the back of the book that just reading that is worth the price of admission. Also, if you haven't heard, WCICON 20, the physician wellness and Financial Literacy Conference is on. You'll be able to register starting in July. But if you need to save the dates, it is March 12 through 14, 2020, with travel days on either side of that. It'll be three days of classes the 12th through the 14th. We'll have a reception the night of the 11th, and you'll probably need the 15th Sunday to get back home after all of that, given that it's in Las Vegas, way on the west side of the country. But I hope to see as many of you as possible there. It's probably going to fill up pretty quickly, so we'll give you plenty of notice of when a registration is going to open, but make sure you don't miss it. This is not going to take a month to fill this conferen. I hope it lasts longer than 45 minutes to fill, but it's entirely possible that the conference could be full that first evening that registration opens. Our quote of the day today comes from Jack Bogle, who said, I favor the All Market Index Fund is the best choice for most investors. Don't look for the needle, buy the haystack. I miss Jack already. It's only been a couple of months since his passing, but he really was a giant of the industry. Today we've got three attendings we're going to bring on here. I think we might even have a couple toward the end of the podcast as well. Kind of like we did with our last episode, where we just brought on regular listeners and tried to answer their questions in a little bit more of a lively discussion than just leaving a speak pipe question. So let's get to our first one. So our first guest today is Paul. He is a dentist. He's about my age, in his early 40s, and has a lot of unique challenges and a lot of unique interests that I think would be worth the discussion on the podcast today. So for the next 15 minutes, we're gonna be talking with Paul. Thank you for being on the podcast today.

All right. Thank you for having me, Jim. I appreciate everything you do.

Now, let's talk a little bit about this. You own your own practice, correct?

As a dentist, I'm a 50%.

50% owner. Okay. And what's. Let's talk about that for a few minutes. What are some of the challenges you've had with being an owner and how that's been difficult?

Well, I would, I feel that similar to the medical world, you know, we're trained to kind of have a skill. And that skill set isn't necessarily how to run a business, how to hire, how to fire, how to market. And in The. In the dental world, it's a little bit similar to, say, plastic surgery is that. And I hate to say this, but your teeth are elective. You know, if people want to take care of their teeth, they can live without them. So with that, I think that poses a unique position in that we have to have patients that value our service and value their teeth. And so. And it's a fine line where that you're walking between being a healthcare, you know, oral health provider and also running a business. When I got done with school in 2003, I just worked for a couple of different offices to find what I like to do, where I like to live in the Seattle area. And then I joined a practice with a senior partner. And I thought. And that has been integral to my development as a business owner, along with my clinical skills too. And I feel that there are people out there who will jump right in and buy a practice, and that's great for them, but there's potential pitfalls and challenges that it's nice to have someone who's kind of been through it with you to help you kind of along the way and be your mentor.

So how did you learn this stuff? How did you learn how to be hr, how to hire somebody and fire somebody and be a marketer and market the practice on social media, etc. How'd you learn all that stuff?

So I would say the majority of what I've learned was from my. My business partner and he. And our practice has some senior members. Like our front office has been with us, you know, 20, 25 and 30 years, three of them. So they themselves kind of helped, guided, guide me in regards to, like, hiring and firing. And I still think it's a work in progress. It's, you know, what questions to ask, how to ask them, what can't you ask? How do you find the right person to fit onto your team? And we're fortunate that we can choose. And I think maybe sometimes in your world, you can't choose who you work with, and that can pose lots of challenges.

Yeah, it's one big downside of emergency medicine, for sure. The hospital gets to, you know, they're the boss for all the nurses and techs and, and all that.

Mm. Mm. And I. And what I've tried to do, you know, once you reach a certain point in your clinical career, not that you can't continue to learn new things, which I. I do, but it. My focus has been more towards the business aspect of it, you know, and I know I follow like certain, like podcasts about entrepreneurs and, and maybe some books that I, you know, I look for books say, okay, maybe I can read a book and help supplement that. But there's no like cookie cutter like here. Read this, you know, blog and then you'll be the perfect boss. I think this evolving door or of like, you know, what, what will work for you. And I think that we've found is that as a practitioner, you start in and I see, and I'm fortunate as a general dentist that I see a lot of people on a regular basis and you start to get to know them and you can their personality types and how do you approach them to kind of do what you want them to do. And same with your team members, you get to know them and you can say, how do I talk to this person? How do I not talk to this person so that we can kind of get the best out of them. And I think that's the key to being a good leader is like everyone, you can't treat everyone the same. You have to have to, you know, figure that, you know, figure that out. And a lot of it's like trial and error. That's been my experience.

What about choosing the benefits that are offered to yourself and to the other people in the, in the practice? Was that all set when you came in or have you had to make decisions about, you know, 401ks and HSAs and insurance and that kind of stuff?

You know, that's a great question. And now in the last. So it was set when I, when I joined. So I practiced here as an associate. So I worked for my business partner for 10 years before I purchased half of the practice, which was five years ago. So I've been here 15 years. And so there was a lot of things that, that was already in the, in the works. But in the last three years, I've had more of an integral role in choosing the benefits and, and which is great. It's been a learning curve. You know, as a small business, when you go to buy say like, you know, we all have medical coverage and we go to purchase a plan for the office, we don't get a deal by any stretch of the imagination. It's pretty expensive. You know, if you're Microsoft and you have 50,000 employees, you have a lot more clout to negotiate with, you know, of benefits. And, and for us, it's, we're kind of victim to, to whatever the market's going to bear. Practicing in, in the downtown area, we find that we have to have a good benefits package to have Good employees, good salaries. And then so, so we choose like, I mean, our 401k plan is actually a work in progress. Right now we're looking at doing a 401, a different 401k, which I'm starting to research now. HSA was something we just added last year, which I'm finding is great as a, you know, like a ira, you know, like not a backdoor ira, but, you know, something, a place that you could park. Park some money to and invest it, which I think the employees are kind of finding that beneficial too. With that being said, I'm also finding I have three little kids with some medical needs. And so I've used, you know, the qu. One of my questions was, should I leave it and just pay cash or should I use it for the, for the, for the medical. For what they need?

Yeah, well, it turns out those are both great uses, right? Those are great uses of an hsa. I mean, either spend it on healthcare and retirement or spend it on healthcare now are clearly the two top ways to spend it. You know, you can just take it out at 65 and buy a sailboat with it, but then you'll owe taxes on it. You won't owe any penalties after 65, but you will owe taxes. So ideally it'll be spent on healthcare, ideally in the last year of your life, but you just don't know what your healthcare expenses are going to be later. And certainly using it on healthcare expenses now is not a bad thing to do if you decide to leave it in there to compound, you know, in a tax protected way, you ought to keep the receipts for everything you're spending now because all that can come out later. You just got to have the receipts to, to justify it. So there's several ways to skin that cat. Nobody really knows exactly what the best one is.

And I mean, we also don't have a predictor of like, how the laws might change either.

Right, right.

So they could potentially change that down.

Although, you know what? I. I think if that does change that ability to save receipts, I think you're gonna have time to pull all the money out using the receipts you have. You know, I mean, that sort of thing doesn't happen in a bubble.

Right? That's a good point.

But it sounds like. Let's move a little bit more into some of your personal financial challenges here. Now, by owning part of the practice, I assume that dramatically increased your income versus being an associate. That's the usual story.

So it did.

So that's always helpful to have a Higher income, but you're still dealing with some debt as well. When you came out a long time ago, see, 15 years ago you had $185,000 in student loans and $30,000 in credit cards. In that time you've paid off the credit card debt. You still have a little bit of student loan debt. Share your thoughts on why you've decided to still have that. Is that based on the low interest rate?

Well, so that's, you know, I did, you know, I wish I would have met you, you know, 15 years ago. So I did what any person who's kind of had years and years of school. I decided I'm going to reward myself. So first thing I did was when I graduated, I two things. When I was in school, I was surrounded with some kids, some classmates who parents were paying their way and supplementing. So I spent money as if I had it and I didn't. So when I graduated with all that credit card debt, that was not because of living and not because of school. It was because of me following the Joneses, I guess, and my girlfriend, who's my wife now. At the time when I graduated and I had like six credit cards and I was paying the minimum payment, I had no idea how much debt I had. And then when I brass tacks, you know, when I graduated and I started looking at it and my wife, then my then girlfriend Rebecca said what the hell?

So she's. It wasn't me that changed you, it was her. It sounds like she kicked me, you.

Know, kicked me in the keister and she said, listen, you know, she had no debt, no student debt, car, no car debt, no credit card debt. You know, she used credit cards to pay for something and paid it off. So the first thing I did the first six months was I paid off all my credit card debt. The second thing I did was I had private loans and I had, I had some Stafford, you know, subsidized loans, government loans. And I took all my private loans and I actually paid them off with like, I don't know if it was a one year interest free credit card or like two year, I can't quite remember. And I just, so I knocked and that was about 45,000. So I knocked the 45,000 of the private student debt off of there within, I think it was two years. Once I paid off my credit card within the first six months. Then I decided to buy an engagement ring. So that. And then I made the doctor dental mistake and I thought I'm going to buy myself a nice car. And I did.

What was it?

I bought myself a BMW 540.

Sounds like a nice car.

It was, yeah. And. And I put a bunch of money into it for fun. And I regret that now.

Are you listening, listeners? I want to make sure everyone heard that.

Yeah, exactly, exactly. If I could pass that on to anyone who will listen. And I'm like, I was so done. I could have, you know, I could have spent $20,000 on a decent car, you know, and then, and my wife stopped me, so I was going to buy the BMW M5. And it was used, it wasn't brand new, so I was a little smarter. And she's like, this is stupid. Why would you buy a used car for 60,000? So then I, so I was like, okay, we'll buy this 540 for like 38,000. And then I put a bunch of money into it to make it an M5. So I, that's, that's why, probably that. And then my wife Rebecca, who's a dentist, decided to go back to school. So she went to community college to do prerequisites, and then she went to dental school. And so I paid while I was working. I paid for her student, so she has no student debt.

That was probably really smart though, right? To cash flow, that. I mean, that's not a bad move. That's a good.

I think that was smart. So I think those. And then we bought a, we bought a house and, you know, a small starter house. And, and I had like, and this was back when loans, they, like, you couldn't do a jumbo loan. You had to have two separate loans. And one of the loans was higher interest on the house. I paid that loan off first because it was the highest interest that I had on anything. So I think those were the reasons, you know, if I wipe out that car and all the money put into the car, I probably wouldn't have any student debt. But it's, it's like a weight on my shoulders. Like, I look at it and then I'm always thinking like, okay, it's 2.75% and I owe right now like 28,000. You know, I pay more than my minimum payment. But then I'm like, well, should I take the difference that I'm paying and should I put it towards investing or should I, you know, I pay more on my mortgage every month. Should I take that money instead? And yeah, I don't know, it's just this constant, like, toss up and like you said earlier, like, buying into the business, my salary went up or like oh, my go to salary didn't go up but, but my dividends did. But I, you know, I have a $20,000 a month nut that is my, my business loan. So like you know, not 240 grand off every year of my, of that. And I think that's where kind of the difference between like owning my business and someone maybe in the medical world who might, their starting salary might be a lot more than W2. And then they don't have a business loan in the background. So on paper I look like I earn a good living because I do first of all probably earn a good living. But a significant portion of that goes towards my, my business debt. So I don't have, I don't keep, I don't pay myself more and I keep a reserve in my business account for business emergencies. Like kind of just like home, like a home. Like your personal. I have a reserve for personal too.

Right. Yeah, that's definitely a difference between dentists and most physicians. Just because few physicians are going out and buying a pract anymore. You know, a lot of dentists, they come out, they've got four or five hundred thousand dollars in student loans, they've got a four or five hundred thousand dollar mortgage and then all of a sudden they've got a $500,000 or a million dollar, you know, practice loan. And so it really ends up being a lot of debt very early on and sometimes they become a little bit numb to it.

Totally. And I think that's.

And then yeah, you always end up with this dilemma. Right. Pay off debt or invest that never goes away until you're debt free. Basically. You may always have that. Dilemm, this is interesting. I see here in your notes that your wife, you put her through dental school, she's a dentist, not working a lot right now, doing mostly. Sounds like a stay at home mom thing.

Yep.

Tell us about the discussion you guys had with regards to that. Was that.

Yeah.

Was that a, you know, did you look at the finances behind her? Was it mostly what she wanted to do that made the decision or how'd you make that decision?

Well, so when.

So because I had like I had, I have, I was established in my practice. Even though I was working for my partner, I. And my income was at a certain level. It didn't make sense. Like when. So we have twins that are six now and then we have a three and a half year old. And so when Rebecca was pregnant with our twins, her where she was working, which was kind of far, she was like 50 miles away from where we live and what she was earning. It just, we thought, like, you know, who should stay home or should neither of us stay home. And she had, before we had kids and before, you know, she went off to school, we had that discussion, like, if you want to have a family, would someone, you know, one of us stay home? And she was a staunch believer in. And her mom is a nurse and her dad's a contractor. So. So they worked, they were full time workers and she wanted to be home. And I think that based on our twins and some of their medical challenges and now in school, some challenges, I don't know, I can't imagine. And I know people do it. I couldn't imagine both of us working full time then managing some of the medical, managing some of the school stuff, because that in itself with three kids is just a lot of work. And I respect my mom. We have four kids in my family. I don't know how she did it stay at home, but I just, it's a lot of work and, and she seemed to have a better temperament than myself to stay home. And, and so that's kind of, that was kind of the discussion. We talk about financial. And she still moonlights. But she finds that I love, I love, love dentistry. I'm really into it. It's a great career and I enjoy it. Maybe she doesn't quite love it like I do, so it was easier for her to step away. But I think for you, like, if you think there's, there's going to be like a lot of physicians marry other physicians and dentists marry other dentists. I think that when you look at the financial outlay to like go to school, you know, the potential debt and then not to use it, there's some guilt. She has some guilt for sure. She's like, ah, you know, why did. I should. I have not done this, you know, in the. I don't. There's no right or wrong answer. That's a tough one for sure. I'd say for people.

Yeah. You know, you're in a high cost of living area, but you made a killing on your house. You bought a House in 2012 and it's more than tripled since then. Yeah, yeah. You borrowed some. Not a ton for it, but borrowed some on it. And, and that's really paid off. What do you, what are your thoughts on that? You know, seven years down the road, what do you think about that decision and how you made it? Did you make the right decision? Did you just get lucky? What happened there?

I Think it was Ozlock. Okay. Track back 2012. My wife, six months pregnant with our twins. And we lived and we had like a. Our last house or mortgage was a lot less expensive. Could we have had our twins in our house? Yes. It was not in a great neighborhood. And it really came down to we'd been looking, we'd look, and we couldn't find anything. And finally I get a phone call, and Rebecca's like, I'm pregnant. I'm not going to move when the babies are born. I found a house and we're buying it. That's how really she was just like, pregnant. She's like. And so we. And it was a neighborhood and, you know, there was a. It was closer to her parents. Her parents were really close to them, and they help a ton. It's in a really quiet neighborhood. And it was maybe not my ideal choice, like home, but the location, I love the location. So I think it was a lot of luck because in 2012, you know, the market wasn't the absolute bottom, but, you know, it was still kind of low, lower than it is now because it's been kind of gangbusters. So that was, I think, the luck. Luck of it. But on the flip side, then we had a house that we still had a mortgage on, and we kept it, and we had renters for a little while, and then the renters trashed that house. So then we. Rebecca was like, managing it, which was like a new mom with twins managing that. And so then we sold that house. So we didn't lose. We came out as a wash. But at the same time, you know, if we would have kept it, woulda, coulda, shoulda. That house itself has, like, doubled. But I. I think it was just a little luck. Yeah, I think that the. The market, you know, Amazon's in Seattle. There's like the average, you know, the average salary that. That the tech workers are making, you know, it's like Silicon Valley. It's kind of driven the market to go up like crazy. So I think that's. That was just fortunate, you know. Now, now what's happened is a lot of tech companies are kind of landed in Seattle because they all poach talent from each other. And so they find that people, like, might move to a city, want to stay in the city, but if they can't get a job, they move out of the city. So. So we're finding that, like, it's like a miniature Silicon Valley here, but it's also made it. So that's hard to hire people because it's too expensive. It's really expensive to live. And so where there's like a, a dearth of talent to hire for your team because they can't afford to live in the city and they have to commute really far. So with that great economy comes lack of infrastructure. Infrastructure and a lot of traffic.

Now you've got some, some significant expenses both living in that high cost of living area as well as with the special needs child.

Yep.

You know, between the medical bills and the specialized school for that.

Right, right.

But. But you're, you're basically killing it here. You've got a great income.

Right.

You, you're a multimillionaire. You know, you've got good savings, you got a whole bunch of home equity now.

Right.

And, you know, but it sounds like you still struggle with the classic thing that most docs are struggling with. Do you pay off debt or do you invest?

Right. Yeah, I'm at that. Am I saving enough? You know, when I was just like, you know, and so I, I bought your, you know, hiring or firing your financial advisor? Because I currently have a financial advisor who's at UBS who charges me a 1% and I have like 11 accounts or something crazy. You know, it's like 35293 Utmas, you know, I have two IRAs, you know, a 401K. I've got like a, like a taxable account.

Are you describing my portfolio or yours? It sounds very similar.

And my hsa, you know, so, yeah, so I have all these accounts and I've got one guy who is used, who's like managing. That's 401k, that's separate. But he's giving me some advice on it. And I'm like, I look at my account and I'm like, what the frick am I in? I'm like, is it. I'm like, should I be in this for like my kids? I mean, that's probably a whole separate topic to discuss. But I'm in the process of like, educating my. Kidding myself more on how to manage all of that and decide, you know, because I listen to Paul Merriman quite a bit, who is actually on your podcast.

Yeah, I think he's up there by you somewhere.

Yeah, he's in Bainbridge Island. And so. And I think that he just, you know, it just makes me wonder like, you know, if you have save a half a percent here, save a quarter percent, how it, you know, he always talking about numbers, like how it compounds over 40 years of investing. And so it just Made me think like, you know, I need to do this. And I'm just trying to get the, all the find the right learning tools and then manage it myself. Which is what you've talked about, too.

Well, the nice thing about that course is even if you choose not to manage it yourself, you're far better after taking it at recognizing good advice and recognizing when you're getting it at the right price.

Sure.

And so, you know, the title of that is deliberately provocative, you know, fire your financial advisor. But I think a lot of people taking it change financial advisors is what they end up doing, which is, which is a good thing too. You know, I mean, it's, it's the course. Although it's one of the most expensive things we sell here at the White Coat Investor at, you know, the regular price is 499. It's dramatically cheaper than paying a professional for financial advice. And so it, you know, I think it's helped a lot of people and gotten a lot of great feedback on it, but I don't know that there's a right answer here. Right. I mean, you got a big practice loan. What was the interest rate on Your practice loan? 3.8 5.85. And that's what your mortgage is at too, right?

Yeah.

And it's a pretty decent sized mortgage. So you got decent mortgage, you got decent practice loan, you got, you know, a lot of investments. I guess my recommendation for someone in Your situation is 20% of gross for retirement. So, you know, just take your gross income, multiply it by 20%. That should go toward retirement. Whether that, whether you have room for all that in your retirement accounts or not is a different question. You know, some of that might be in a taxable account just because you've maxed out your retirement accounts. And then above and beyond that, whatever you can cut out of your, you know, out of your budget, throw that at one or the other loan. Okay. You know, I don't know. I guess I'd probably lean a little more toward the mortgage. I think I'd probably pay down your mortgage before the practice loan because, you know, the practice loan is going to be 100% deductible, whereas there are some situations where your mortgage might not be. And plus, if something terrible happens, at least you've got a home paid for for your family.

Right.

You know.

Yeah.

So. And in your case, the interest rates are the same and the mortgage is a little bit smaller. So I think I'd probably lean toward that.

But. Okay. Yeah, like right now I'm looking At my, you know, my principal and interest and I throw enough, I throw X, you know, I throw more, I throw another 800 or something towards the principal so that like my principal and my interest now are kind of same every month. That was just like, okay, yeah.

I don't know that there's any magic to it whether you do it each month or whether you do it when you have a little bit extra and you throw a big chunk at it. There's no real magic to how to do it. But the bottom line is you just got to throw a lot of money at it, you know, and eventually it does go away. And more of those payments go toward principal than interest. And you'd be surprised when you really focus on something and make a goal of when you're going to be done with it, just how quickly you might pay it off. I mean, our home we bought with a 15 year mortgage and paid it off in seven and probably, probably could have done it in six, you know, but you're just surprised, you know, maybe next year your practice has a really good year and you have a little more income. You throw all that toward the mortgage and before you know it you're like, wow, this thing's almost gone.

You know, right now let's throw a little curveball because now I'm faced with buying the other half of the business this year because my partner is going to retire at 65. So, so I, which I'm planning to do because I feel like it's a, it's knowing the practice and you know, it's a, it's a, it's a, it's a good business. So then my business debt will kind of double. Yeah, yeah, it's gonna double.

Well, I mean, it's one of those things, you know, if it's a good business and you can get reasonable terms on the loan, you know, it can make sense to borrow that much money. Even though it seems insane to have, you know, these seven figure practice loans out there. I know if it is also dramatically increasing your income, it's a good investment. That said, when you start getting into these realms that, you know, I say you dentists, because it's almost always a dentist that has this sort of debt.

Right.

Boy, I tell you what, that would be a major priority to be throwing a lot of money at that and get it paid down. For me, yeah, I just would not be comfortable with these million dollar two million dollar practice loans. So I think I'd probably lean toward living more frugally and really putting a lot of money at those things you mentioned. You're putting 240,000 dol a year at it now. And you know, they don't last that long when you're putting those sorts of payments at it. And maybe when you, when you, you know, double your debt, maybe you can double the payments too. And. Yeah, and although it's a ton of debt, if you can pay it off in five or six years, that's probably a good investment.

Yeah, yeah, I feel like certainly better.

Than borrowing a bunch of money to go buy, you know, a Tesla.

Right, right. And you know, I was just listening to your podcast the other day, and you're talking about, I think that the two docs who were like the surgery center. And one of their advices were like, if you're going to buy into a surgery center, look at who the productive people are, because if one of them will walk out the door, then it significantly hampers the business. On the flip side, for myself, my business partner and I are both equally productive. So not only is it taking on that debt is also if he walks out the door, which he hasn't 100% said he's not going to work back part time, but I have to replace his productivity too. So, you know, that is, you know, something that I have to consider and weigh, and I feel like I'm weighing and I'm going to do it. But I think that this difference between myself and, say, someone who's going to buy in to a practice or start from scratches that like my business partner, he started everything from scratch and kind of grew it, is that he didn't have the same kind of debt that I'm looking at.

Right.

And the other day he's like, you know, I probably would look to find a partner sooner than he found. You know, I bought in when he was 60. 60, so I don't think I'm going to potentially wait till I'm 60 unless, like, everything was rolling along okay just to kind of have someone else to have skin in the game and offset that significant debt.

Yeah, for sure. If someone else comes and buys in, all of a sudden you get to wipe out a whole bunch of your debt too.

Right?

Yeah. And. And maybe in some ways that's better than hiring associates, even though you'd get a portion of what the associates are generating.

Exactly.

They don't have qu much skin in the game to create businesses to succeed.

Right, right. And they tend to, you know, it's not necessarily rolling door, but someone who doesn't have skin in the game, they Might, you know, stick around for three years and then move on or five years or whatever is there. And that causes some down. Downturn on the practice. Right. So every time you, you find a new provider, you know, like the patients have to meet them, you know, there's some time to get them to ramp up their productivity.

Yeah, for sure. Well, I appreciate you being on the podcast. I think we better cut it off here. If I go this long with all three of the people I have on today, this is going to be a very long edition, which isn't terrible. People can listen to it over two sessions. But oh yeah, it does make it. I get start getting the stink eye from the people who do the prepping of the.

Oh yeah.

Of the notes because it gets to be a big old chore. So we better cut it off here. And I appreciate you being on the podcast. I think a lot of people will find this segment interesting.

Yeah, great to know. Appreciate having me on. Thanks so much.

Okay, our second guest here is going to remain anonymous. He is a surgical subspecialist in the military, will actually be leaving soon. Sounds like about a year from now or so, but has lots of kind of intricate financial questions and issues he's dealing with. Welcome to the show.

Hey, thank you very much for having me, Jim. Really excited for this.

You're very welcome. So I thought we'd start kind of at the beginning, kind of go through your financial life a little bit with a little bit of a fine tuned comb, fine toothed comb and see what we can improve. It sounds like about three months ago you got really interested in personal finance and investing and are really trying to make some improvements on what's actually a pretty good job you've done so far, despite, you know, a few minor issues here and there.

No, thank you. I think without a, without a true plan, we've bumbled through it pretty well. So certainly putting some money to savings. And we've had a financial advisor that we'd like to leave and we should and we can certainly get into that.

You know, thank you so much for your service. To start with. It is no small commitment to be willing to sign up to go anywhere in the world ten years from now. You know, when you signed up for this a long time ago, you had no idea what the military was going to be doing when it came time for you to be on active duty. But it sounds like the last three or four years have probably been better deployment wise than the four years I was in from 2006 to 2010. We had a pretty hot ops tempo back then.

Yeah, it has. Thankfully, we've been able to stay stateside more, and certainly that's been a welcome benefit for my wife and me. And having a young son, that's been great. And of course, thanks for your service as well. And, you know, overall, my training in the military has been phenomenal. And the HP sp program was a good program, kept me out of debt. I certainly got my money's worth on the front end with my medical school, and I thought my training was phenomenal. And it's been a great experience in payback as well.

Yeah. So happy to hear people that are happy with it because I ran into so many docs in the military that didn't understand it going in or had something bad happen to it. And I think a lot of people are kind of like you and me. We go in there and nothing really bad happened to us. And we had a reasonably good experience, came out debt free and had a chance to serve our country even if we only spent, you know, four years on active duty.

Yeah, I completely agree there are some frustrations here and there, but, you know, welcome to everything.

Yeah. Okay, well, let's talk a little bit about some of the issues with what your financial advisor has told you in the last few years. I mean, I'm going through this list of what you sent me and I'm like, wow, that's terrible. That's terrible too. Oh, that's terrible too. So what have. What have you noticed? I mean, you're our second caller today on this show. There's three different docs we've got on today, and the first one, as well as you have both taken the fire your financial advisor online course. And what was it as you went through that that you realized maybe your advisor hadn't been telling you accurately?

Sure. Well, first off, thank you for putting it together. That is an excellent course. We have been so happy with that. And, you know, it got my wife and I focused in the same direction, which was great. You know, anything that is measured tends to get better. So as we pay attention to things and go through, we can focus our energy at that each section. And also the importance of a budget has been. Has been great on there too. But from the financial standpoint and the assets, you know, we never were told about an individual 401k. And my wife runs her own company. She's an entrepreneur. She's been on a 1099 for about eight years. And that was never a conversation since we joined, since we hired our financial Advisor back in 2014. And so we're under a 1% assets under management fee. He sold us term life insurance, tried to sell his whole life. He's actually a family friend, so leaving, that's a little extricating. It is a little tricky. But you know, that was one thing. I brought up thrift savings plans a couple years ago because amazingly, through all of residency I had zero financial lectures and I really mentally didn't have the bandwidth for it and I wasn't interested. And so I didn't know anything about tsps. And I brought them up a couple years ago to him and he had really said not to get involved in those because they already had a Roth, which. They're different accounts. That doesn't make any sense. And then the other thing that has been really frustrating. Well, two things. One, my wife already has a whole life policy from an insurance company and we have a term life policy on her as well. And the last thing was we just never really made a real plan with him. We didn't want to lose our money. We probably weren't as involved as we should have been to put the risk forward. And that's on us. That's absolutely our fault. But we, we never really got to make a lot of a plan. It seemed much more to be about insurance and paying down debts.

Well, I suppose that's what you get when you go to an insurance agent for financial advice. But you know, it's I find most interesting here as you list your holdings on the notes you sent to me is just that the lack of a plan here. You know, there's no overriding plan. And I think you've looked at it to see, well, what do I actually own? And you figured out what you own here, but it doesn't sound like anybody started with any overall arching plan and then pick pieces to fit the plan. I mean, you've got $18,000 Roth IRAs with 12 holdings in each of them. I mean that's at most $1,500 per holding, you know, on average. And so it just looks like just a hodgepodge of investments thrown together across the whole spectrum there.

You're right. And the other thing is, I think we're flip flopped. We have more money in our taxable account. So we have 78,000 in our taxable account. We have 13 holdings there as well. And so we have more there than we do in our tax advantaged retirement account.

And it sounds like most of the holdings are high fee, actively managed mutual funds.

Absolutely. In the taxable.

Yes, yeah, yeah, well, kind of disappointing for those who don't know what a thrift savings plan is. This is the military or the government 401k. It's got rock bottom expenses, it's got some excellent index funds in it. It's clearly where the investing should have been taking place over the last few years rather than, you know, in a taxable account. I suspect the way your Asset under management agreement was written up is that your advisor got paid based on what's in the taxable account in the IRAs and not based on what could have been in the tsp. Is that correct?

That probably is. But you're going to get me on being a novice there too, because I really don't know.

Yeah, yeah, well, I suspect that's the way it is. Obviously conflicted advice that ends up being bad advice for you guys, unfortunately. The good news, you're debt free. Your income is about to go up dramatically as you leave the military and you certainly have plenty of room, plenty of time to write this ship. And it's not like you don't have anything, right. You're coming out of the military with, with a decent little nest egg and, and ready to get going on, you know, your financial life. So the hard part, of course, in this sort of scenario is breaking that advisor relationship. You know, when, you know somebody's giving you crummy advice for years, especially when they're a family friend, how do you break up with them? And have you given any thought to that? Have you started that process at all?

We haven't started it with them because we wanted a plan in place. And that was part of your financial advising course, is to be able to go through the aspects that involve our financial advisor and then how to get ourselves out really, so we don't get talked back into something we don't want to do. And so we would plan for the Roth IRAs to open Roth IRAs at Vanguard and have Vanguard pull the money over and then we can get an asset allocation in a bit. But passive index funds, Total Stock Market index, Total Bond Funds International, that's.

Yeah, those Roth IRAs are the easy part because you can liquidate all those investments for no tax cost. And once you're at Vanguard, it probably won't be that much of a commission cost either. But some of those funds might have a commission. It may be cheaper to sell them before transferring them. It might be cheaper to sell them once they get to Vanguard. So it depends on what the holdings are. But I'll bet you could probably negotiate with Vanguard to, to waive those fees once you move them over, but that's worth talking about before you move them. It might be cheaper to liquidate and move cash than to. Than to move the assets in kind in the IRA and then liquidate them. In fact, they might. They might not even let you move them in kind inside that account. You'll have to check with them.

Okay, check with, with Vanguard.

Yeah, check with. I'd check with Vanguard and just say, can I move these over in kind and then liquidate, or do I have to liquidate before I move them? And, and look at both options. If they allow both options and look what the fees would be, maybe you can save yourself a few hundred dollars in commissions there to sell funds.

Okay. And then the elephant in the room here is the taxable account, because we have 13 holdings. They're all in things that we really don't want to stay in. Now, over the four and a half years, right now we're at 78,000. We've had about 4,500 in unrealized gains, so a total investment growth of 6%. And so if we liquidated that entirely, then we would pay about $684, which you can call a stupid tax. And that's fair, and I think we're okay with that. But how would you recommend getting out of those taxable account investments?

Well, I mean, I think you've got a good handle on it. Right? A lot of people ask that question, and they don't have the information that you've already gathered. Right. You know that you've got $4,500 in unrealized gains. You know what your tax bracket is going to be. You know what the actual cost of getting out is. You've looked at the holdings and you've decided you don't want any of them. And so at that point, it's pretty simple. You sell it all, you know, and reinvest it in what you want to be invested in. It's going to cost you the commissions, you know, for those trades, whatever they might be. And it depends on where the money's held right now, how much those are going to cost. Again, this is the same thing. You want to check with Vanguard, see what they're going to cost to sell if you move them in kind to Vanguard and then sell them versus selling them and then moving cash. But $684 for stuff you don't want to be in, I think that's a good deal. I'd probably just pay that and move it and simplify My portfolio. Now, if you told me, you know, your basis was $20,000 and the value was 78,000, I might look at those holdings a little more closely and say, well, can I build my portfolio around some of this stuff? But your basis is so close to the value, I don't think I'd do that. I think I just buy what I wanted to buy in this case and eat the tax cost.

Okay, so talking with Vanguard from the brokerage end regarding the taxable accounts can be helpful.

Yeah. All you're trying to do is minimize the commissions to sell, right?

Right.

Because it can, especially mutual funds. The commissions can be like $50 a sale. And so you bring over 13 holdings, and if it costs you $50 a piece, that's 650 bucks. That's as much as you're paying in taxes, right?

Yeah.

So it might be cheaper to sell them at the old place. Vanguard might. If you move your money there and you tell them, I'm moving my taxable account, I'm moving my Roth IRAs, and I'm a doctor, maybe they'll say, okay, we'll give you 12 free trades, you know, and let you get out of these mutual funds without getting nailed for that $650, you might be able to save yourself a little bit of money.

Okay, so recommending to actually talk with our financial advisor about asking them to liquidate it on their end is probably not something that's going to work.

Well.

I mean, you. The writing's on the wall, right? I mean, eventually your friend's going to find out you're not going to use them as an advisor anymore. And the way to approach this is to say thank you very much. We didn't know much. We didn't have much interest in this stuff back when we came to you. You helped us to have some say, you know, point out whatever positive you can find in this situation and, and, you know, and then to say, we've decided to go a different direction and they understand that. I mean, they get fired all the time. Right. Just because it's your first time doing it doesn't mean it's their first time being fired. So I would not, you know, because it's a friend, I would probably say something to it. If it wasn't a friend, I might not even talk to them. I'd, you know, when they get the request for assets from another company, they kind of know what's going on. So.

Sure. No, there, there are. We absolutely want speak with him. And he got us going in a direction and paying attention. And there's a lot of worth in that, too.

Yeah, for sure. Okay, so let's move on to your next question. You want to talk a little bit about dollar cost averaging versus lump summing, right?

So clearly the market's done great over the past month and a half. And so throwing a bunch of money in at one time might make sense now, but as we go along, I think dollar cost averaging makes more sense. You know, what do you think about that relating to contributing to a 401k over the course of a year or something like that?

Well, here's the deal with dollar cost averaging, right? What most of us do is not really dollar cost averaging. What we're doing is periodically investing. We just invest when we have the money, we get our paycheck, we invest, we get our next paycheck, we invest. Right, and you get kind of the same effect from dollar cost averaging, right? Over time, the months the market is down, you buy more shares, and the months the market is up. And over time, your average, you know, price per share that you paid is a little bit lower. But that's not really what dollar cost averaging in dollar cost averaging is what you have now after you sell this taxable account, right? You got $78,000 in cash sitting there. And the question is, do you invest it all today or do you spread it out over, you know, three months or six months or a year in case the market goes down? And since most of the time the market goes up, the best thing to do in that situation most of the time is to just invest it all on day one. And given that it was all invested now, you know, it's all invested right now before you sold it. It's really not a significant change. So that's what I would encourage you to do. What a lot of people are trying to do, they're like, well, I'll feel terrible if the market goes down next week. Well, that's true. But this is a small percentage of what you're going to put into your account over your financial life. You know, it's really a relatively small sum compared to that. Even though right now it represents your life savings, if you consider your future earning potential, this is a small chunk of money. And so I would not spend a lot of time lying awake worrying about what happens the week after you put the money in. I just put it in and forget about it and take a look in six months, you know, and then I think that's the way to go. Mathematically, that's the right way. To go behaviorally, if it makes you feel a little better to put it in over three months or something, you're probably not going to do that much damage, you know, not going to lose out on that much in gains. But in three months you're still going to be fully invested, which is exactly what you'd be now. So you're really just postponing the inevitable. So I generally encourage people to just invest the lump sum when they have it and then as you make money to invest, as you go along.

Okay, sounds great.

Okay, your next issue. You want to talk a little bit about Admiral funds versus exchange traded funds at Vanguard now, Right.

Because we with the change in getting into Admiral funds and because I'm relatively new to this, I may miss a few things. So please correct me with the change in making it easier to get in with a lower cost. I think it's 5,000. It doesn't seem to make as much sense to look at some of the ETFs and with my wife's solo 401k, we can get those through E Trade because that's where we opened that. And certainly at Vanguard we can get them as well.

Yeah, I mean, exchange traded funds are nice. They're a different share class at Vanguard. Vanguard had investor shares, Admiral shares and ETF shares. The Admiral shares and ETF shares had about the same account expense ratio and the investor shares were a little more expensive. But you get into them with just one to $3,000. Whereas you need a $10,000 to get into the Admiral shares. Well, they changed that recently. So I think the minimum to get into Admiral shares is now 3,000. Basically the investor shares are just kind of going away. I mostly use mute traditional mutual funds, but it's not like exchange traded funds are wrong. Right. These are both good investments. There's not a big reason to go with one over the other in a taxable account. I think the exchange traded fund version is still slightly more tax efficient. This is despite the fact that these are two shares of the same fund at Vanguard, it matters a lot less than at other places just because Vanguard has the ability to flush some of those capital gains out of the fund when exchange traded fund units are created and destroyed. But that's kind of a complexity of exchange traded fundamentals funds. What you really need to know as a consumer is that they're very slightly more tax efficient than the Admiral shares. So if that's worth the hassle to you to go through buying and selling when the market is open and putting in, you know, Orders and dealing with the bid ask spreads and all that, then I think that's fine. Honestly, I just use the funds. It just doesn't, it doesn't matter that much to me. And that's not going to be the difference in whether I reach my financial goals or not. And so I don't spend a lot of time worrying about, about it. But certainly if you're into that sort of thing and putting in orders, I think, you know, I think exchange trade funds are fine, particularly at Vanguard.

I'm a big fan of simple. So as long as, as long as my wife and I agree, I think we'll be heading toward the admiral funds.

Looks like your next question is a little bit about asset location, where to put your bonds to put them in the Roth IRA or the 401K. And this is one of those questions that doesn't always have the same answer to everybody and can be incredibly complex. Certainly if the investment you want to use to invest in bonds is the total bond market fund, taxable bonds, basically you want to have those in some sort of a tax protected account, whether that's a Roth account or whether that's a tax deferred account. But the truth of the matter is if you actually adjust those accounts on an after tax basis, it doesn't matter which one you put it in, whether you put it in Roth or whether you put it in a traditional IRA or other tax deferred account. The fact is though, that most people don't do that. Most people don't tax adjust their accounts. And so what they do is they tend to put things with high expected returns like stocks into their Roth accounts and things with lower expected returns like bonds into their tax deferred accounts. And what they're really doing is kind of fooling themselves into taking a little bit more market risk on an after tax benefit basis. By doing that, you're putting more, more stocks in the portfolio by putting the stocks into Roth and the bonds into a tax deferred account. And so you're really just taking on a little bit more risk. And yes, you expect a little higher return from that over the long run, but that's what most people do. Most people put, you know, stocks and other high expected return assets into their Roth accounts and bonds and low expected return assets into their tax deferred accounts. But it's not a free lunch, that's for sure. You're taking on more risk when you do that now. One.

Well, thank you. And that certainly clears up that issue. One additional question with the bonds is related to doing to what percentage should be tax exempt bonds versus a total bond index fund. I have through some of the books that I've read recently, there seems to be a concern about having, you know, if you have a 30% bond allocation, having all 30% in a tax exempt bond fund. Is there really a concern there or do you know?

I don't think so. I mean, if you look at the default rates on municipal bonds, right, everyone's always like, oh, you know, Illinois is going to default or whatever. The truth of the matter is these defaults are very rare in municipal bonds. Are they higher than Treasuries? Yes, they're higher than treasury, but they're way lower than corporate bond defaults. And so I don't think it's a huge concern to have a big chunk of your bonds in muni bonds. I still prefer funds for muni bonds. A lot of people buy in individual muni bonds. You don't sound like the kind of person that wants to deal with that kind of hassle to me. And I don't want to deal with that kind of hassle either. So when I buy muni bonds, I buy them in a Vanguard municipal bond fund. But if you, you know, feel strongly about having municipal bonds in your portfolio, then obviously you want to hold those in a taxable account. If you are okay just owning basically Treasuries and mortgage bonds and corporate bonds, then total bond market would work just fine. But obviously a typical doctor in a typical doctor tax bracket doesn't want to be owning that in a taxable account. That's something that needs to go into a tax bracket protected account. So lots of different ways to slice bonds. Honestly, it's more important that you pick something reasonable and stick with it than exactly how much you put into corporates and how much you put into Treasuries and how much you put into municipal bonds. This is not going to be the interesting part of your portfolio.

Fair point. Got it.

Okay, let's talk a little bit about your life insurance. You have a term policy with Guardian. A 20 year and a 30 year. It sounds like two and a half million dollars total. That seems very reasonable. Guardian usually isn't the cheapest term life insurance company out there. I think you probably own that because you bought it from a guardian agent. It may be possible that you can still buy cheaper insurance from a different company and it's probably worth pricing out and seeing. But after a few years, at a certain point, you're better off with the policy you bought a few years ago from Guardian than anybody else. And so you just, you'll have to price it out again and see if it's competitive to what you can buy today going forward. And if it is, I just stick with it. If it isn't, maybe it's worth trying to get something a little cheaper and saving yourself, you know, a few hundred dollars a year, maybe in premiums.

Yeah, I think that's reasonable. And I certainly have looked around at some of the term policy costs, and they are a little cheaper. I think my wife and I have a lot that we're trying to work on right now.

And I.

And it's hard to add that in at this moment, but that's something we'll circle back to. I think the, you know, we. Something that, you know, we are looking at is that my wife has two life insurance policies on her and she bought a whole life policy back when she was 21 and interning for a insurance company. And so our cost basis there is 47%.

We'll let the listeners guess which insurance company that is.

Very true. It's kind of like we're stepping in all the potholes along the way. But the cost basis again is 4700. The cash value is 3900, and we pay about $48 per month. What would be some recommendations to do with her whole life policy given that we have a term policy on her?

Well, I mean, the term policy provides the insurance you need. It sounds like. Correct. You don't feel like you, you need more insurance on her. So here's the deal. This thing doesn't matter. I mean, we're only talking about four grand here, and we're only talking about $48 a month. If she really loves this thing, which, you know, having interned at an insurance company, she can keep it, you know, going forward from here. The return probably isn't terrible. I mean, she's already had it for. For 20 years. You can get an in. In service, what do you call it, proposal. Not a proposal, but illustration that you can calculate the return going forward and decide that's worth it to me or that's not worth it to me and make your decision based on that. But if you decide you want out of it, now is as good a time as any to get out. I mean, you've only got an $800 gain in it. You'll owe ordinary income tax rates on that. This year is probably the best year for you to pay it since you get out of the military next year. And now's the time to Pay all these taxes and, you know, so now's as good a time to get out if she doesn't want it. But the way you decide whether you want it or not is to get that in service illustration and. Or in force illustration, a lot of times, it's called. And actually calculate out your return going forward. And if it looks like, well, going forward, you're going to make 5 or 6%, well, shoot, you know, maybe that's a decent thing to hold on to. If you calculate it out going forward and you're like, well, we're still only going to make 2% on this. And our return in the past has been, you know, 1%. I don't really want this thing. Now is a good time to jettison it. It's not like you're going to owe a whole bunch of money in taxes on this one. It's. It's barely worth more than. Oh, no, it's still worth less after 20 years. It's still worth less than what you paid for it.

Yeah, we're still coming. We're still a little underwater on it. But your point is?

She's. She's. Yeah. How long have you. How long she had it? 15 years now.

Yes.

Yeah, 15 years and still with a negative return. Sounds like an awesome policy. You know, I mean, it's hard to get excited about this stuff when you hear these stories over and over and over again. I mean, chances are. Chances are this isn't a very good policy, Right? This is some tiny little policy like the one I bought when I was in medical school. You know, here it is 15 years later, and you're still not broken even, I don't know, get out of this thing. This is a joke, you know.

Well, it provides for an entertaining conversation.

Yeah. I mean, really, when are you gonna break even on this thing? 20 years, 30 years? I mean, this is pathetic. Anyway, that's. That's what I do with that. I'd get that out of my life. Just so you don't look at it every year and kick yourself about it. So. Okay, you want to talk about REITs briefly?

Yes.

I mean, REITs are one of those things. I own REITs in my portfolio. A lot of people own, you know, REITs in their portfolio. We see this as a way to kind of add real estate to the portfolio. You know, if you've only got three or four asset classes in the portfolio, this is a cheap, easy way to add real estate to the portfolio without having to buy syndicated investments or invest directly in property. It does have Moderate correlation with the overall stock market. So when the stock market drops, REITs usually go down in value much more so than, you know, direct real estate. But it's also very liquid and very hassle free and there's something to be said for that. Certainly there is some diversification value there in tilting the portfolio toward REITs, but I don't know whether it's going to work out well for you because I don't know what their future returns are going to be. And so I think it's a reasonable asset class to add to a portfolio. But it's kind of an individual decision. Whatever you choose, stick with it for the long term because REITs will have their day in the sun and they will have bad times as well when the returns are terrible. Like in 2008 when I lost 78% of the money I had in REITs from peak to trough. So they can be pretty volatile too.

Well, that's good to know. And yes, I think because of the asset classes we would like a little bit in there, but obviously only about a 5 to 10% holding. A quick question on mortgage. Do you think it makes sense to pay down part of our current mortgage where we have about 400,000 left on it and we're still paying a little bit more in interest compared to the principal. So we pay about 890 in interest and about 870 in principal a month. And if we put say 50,000 toward that mortgage, it really only brings the interest down that we would pay over the next few years by about $1,800. You know, as it's about 1 8, 50,000 would be about one eighth of the mortgage to the principal and we would pay about, and that would reduce our interest rates by about 1 8. Looking at a calculator we did last night and we actually plan to sell that home over the next couple years. Do you see that there's an additional benefit to doing that versus taking that 50,000 and putting it in the market?

What's your mortgage interest rate?

Currently it's 2.7% until eight years and we're in our fifth year.

Okay, and are you, are you able to deduct that?

Yes.

So that's all fully deductible interest.

Yes.

So really it's even less than that.

Right. Because with our taxes we still didn't even beat the standard deduction this year.

I mean, I mean here's the deal. This is a place you can put money and make, you know, 1.8% on it. That's the way to look at it now, given that you can put money in, you know, a Vanguard money market fund and make 2.2 on it right now, it's hard to get super excited about paying this down, even if you're planning on using the money for a down payment on your next house in a year or so. And so it's hard to get super excited about paying down that sort of debt. Now if you get into the position that we were in. You know, we had a 2.75% mortgage we paid off, but we also had like no other uses for money other than just investing in a taxable account. And that was at a time that interest rates were basically nothing. And so we looked at it as, hey, here's a chance for us to make 2.75% on our mortgage and to be debt free. And it was a luxury we could afford. And so we did it, we paid off our mortgage. But earlier in my career we probably wouldn't have done that. We probably would have invested on the side. Certainly if I wasn't maxing out all possible tax protected options, I would not have paid off that mortgage. Right. I mean, it was really came down to am I going to buy some muni bonds in this taxable account or am I going to pay off the mortgage? And at that point it just, just didn't make sense to have the mortgage anymore in our lives. So the way to look at it is you get a guaranteed return investment at the after tax rate of your mortgage. That's what you're looking at. And if that looks attractive to you, then pay it down. If that doesn't look attractive to you, then invest it elsewhere. But you know, without knowing what the market's going to do in the next year, it's impossible for me to give you the right answer to what you should do in the next year. But if I thought I needed that money for a down payment a year from now, I would not put it in in stocks, I'd just keep it in cash. You know, it'd be in a money market fund, or I'd pay down the mortgage with it, one or the other.

Well, that's great food for thought. Thank you.

Let's see, you had one other question about analysis paralysis about which funds to use in your accounts. I think that really comes down to your asset allocation. You know, once you have the plan written up, this is the asset allocation we want. You know, whether it's this much in US stocks, this much in REITs, this much in small stocks, whatever, then it's really easy to choose investments once you have that plan. You basically go pick an index fund that invests in that asset class and that's it. That's really all there is to it. And so Instead of having 12 holdings and an $18,000 Roth IRA, you end up with one or two and you diversify out in the 401 and in the taxable account and that sort of stuff. And in the end, maybe you have five asset classes in your portfolio and it took eight holdings to get it, you know, across all those different accounts. But it's really a relatively easy thing to do. You just go to each individual provider, for example, this individual 401k at E Trade, and you decide, well, we'll just use, you know, iShares ETFs, or we'll buy Vanguard ETFs and pay the commissions or whatever you want to do there. You know, they're all pretty similar when you are looking at very low cost, broad, diversified index funds.

Yeah, that sounds great. And we're getting a lot closer to actually having that in place. And your course was really helpful in allowing us to. Or helping us to focus really in a direction. So thank you for that.

That's good.

Do you.

Go ahead.

I apologize. I was gonna say, do you have. For somebody who is. Or two people who are getting ready to do this on their own, do you have any, you know, hacks or words of wisdom in terms of an organizational standpoint of keeping track of everything and. Or some programs that you may have used that you found helpful?

You know, the program I find most helpful is Microsoft Excel. I just put stuff in a spreadsheet. I use spreadsheets for all kinds of stuff, and they're really, you know, the simple functions of a spreadsheet are super easy to use. And so I think it's good for a do it yourself investor to get used to using spreadsheets. Now, other people have found some success using things like Mint or Personal Capital, those sorts of things that will pull all your stuff in and give you an overview. I prefer having a little bit more control over it and not a huge fan of having an aggregate service having all my logins, even though so far it seems like it's been a pretty safe thing and they have lots of security safeguards. Thus far, I've just been looking it up individually and updating my own spreadsheet from time to time and using that. So I think either way is fine. Just what works for you is the main thing. However, you can keep track of Stuff and implement your plan. This always seems really hard the first time you do it. And then you'll look back a year from now and go, man, there was ever a time I didn't feel capable of doing this myself, you know, and you'll be appalled that you ever actually paid somebody to do this for you, you know?

Well, I hope I feel that way. There is some trepidation.

You know, when I talk to people, most of the time they say my confidence was about a year behind my knowledge, that they just. It took them about a year to realize, oh, yeah, I really do know what I'm doing. And. And if you have the interest, you can develop the knowledge and the discipline you need to be a successful do it yourself investor. If you're just not interested at all, you're far better off finding a good financial advisor that gives good advice at a fair price. And it's not like you have to go completely cold turkey, right? There are still financial advisors you can go pay by the hour to look over your portfolio, look over your plan, say to does this look okay? What would you tweak? But a lot of us do it yourselfers are so cheap. We'd rather go to an Internet forum, you know, the White Coat Investor forum or the Bogleheads Forum, and post our portfolio there and get that kind of stuff for free.

You know, there's a ton of. A ton of help on that.

Yeah, there's a lot. A lot of people out there that will help you. And it's okay to hire a professional, too. You just got to make sure you're getting good advice at a fair price, which it sounds like you probably paid too much before and got a bunch of lousy advice. So, unfortunately, that situation is far more common than the opposite.

Well, this has been really helpful. Thank you so much for your time.

You're very welcome. Thanks for coming on the podcast today.

Absolutely.

All right, we better. We're over an hour on this podcast already, so we better wrap it up. I was going to put actually three interviews in here, and you'll probably caught a few references to that during the podcast. I've decided to cut it to two. We're going to push the third one back to a different podcast. Still recording it in just a few minutes, but by the time you hear it, it'll be a week or two later and, you know, retitle our podcast. It was going to be an interview with three attendings, but we're going to call it a discussion with a dentist and a military doc and put the third one off to the next episode. It's still going to be some really great stuff though, so make sure you come back and hear that one.

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My dad your host, Dr. Dahl, is a practicing emergency physician, blogger, author and podcaster. He is not a licensed accountant, attorney.

Or financial advisor, so this podcast is for your entertainment and information only and.

Should not be considered official personalized financial advice.