The WCI December Newsletter -- You Can't Protect It All, and That's OK

Featured Business

This newsletter is sponsored by Bob Bhayani at Dr. Disability Quotes.Com. He is a truly independent provider of disability insurance planning solutions to the medical community nationwide and a long-time WCI sponsor. Bob specializes in working with residents and fellows early in their careers to set up sound financial and insurance strategies. A reader sent us this feedback:

"Bob and his team were organized, patient, unerringly professional and honest. I was completely disarmed by his time and care. I am indebted to Bob's advocacy on my behalf, and on behalf of other physicians, and to you for recommending him."

If you need to review your disability insurance coverage to make sure it meets your needs, or if you just haven't gotten around to getting this critical insurance in place, contact Bob Bhayani at Dr. Disability Quotes.Com today by email at info@drdisabilityquotes.com or by calling 973-771-9100.

WCI News

There are about 500 people coming to WCICON in person this year, but we're not sold out yet for what is going to be the best WCICON ever. While you can still register for quite a while, we're coming up against the swag bag deadline. It just takes time to print and ship the books (especially to the virtual attendees) that go in there. You need to register by December 5th if you want to get one. It includes three great books from keynote speakers and lots of other fun stuff. Register for WCICON23 today!

I did speaking gigs at the annual medical staff meeting for Davis Hospital and to most of the dentists in the Logan, Utah area at an educational dinner put on by Sterling Orthodontics. I'm also speaking tonight virtually to a group at Queens Hospital in Hawaii. I might be doing this all wrong, going in person to the cold, snowy places and virtually to the really sweet places. Either way, it was great to meet so many of you.

We had a great reception to our free Real Estate Masterclass. That is evergreen and can still be taken at any time. CFE week (the week of Thanksgiving), as usual, saw lots of you picking up books and taking courses. I spent the week mostly working shifts but also put together a special project we hope to roll out in a couple of months. It's something we've never done before but I think you'll love it.

Market Report

Data sources: Morningstar and SPGlobal

What a great month for stock and bond investors, especially those of us who have stuck with our small value tilts and international stocks despite years of underperformance. Look at that 28% difference in year to date returns for growth and value stocks. Moderating inflation and interest rates helped bonds regain a little bit of lost ground too. Precious metals also had a great month. In fact, the only losers this month were commodities (minimally) and BTC after two crypto exchanges went bankrupt. I even saw an article that said we're out of the bear market and into the bull market, but I have no idea what they're using to justify that. The overall US market is up 14% from this year's lows though.

Best of the Blog(s)

Lots of great posts from across the WCI Network this month. Check them out!

1. How to Add Adventure to Your Life This was a fun post to write, but its final form was much different from the original post which probably came across as too much of a humblebrag. However, lots of people asked to see what was cut out of it.
2. My Financial Plan Calls for Me...Being Hung by My Fingernails??? I'm a big fan of written financial plans. Here is columnist Rikki Racela's. Always useful to see someone else's to take what you find useful from it.
3. I Bonds and TIPS: Which Inflation-Indexed Fund Should You Buy Now? I thought this was one of my best posts this month, but I guess bonds are too boring, even the inflation-indexed ones in a time of high inflation.
4. A New Way of Doing Business (and Saving Tons of Money) In My Retirement Anthony Ellis is one of our newest columnists. People have long requested more columns for those in or approaching retirement. Here you go.
5. My Solution to Overcoming Burnout: Diversify My Income WCI Ambassador Disha Spath likes the multiple streams of income approach.
6. Real Estate K-1s - Here's What My Depreciation Really Looks Like A fantastic post for anyone considering buying private real estate syndications or funds. This post doesn't exist anywhere else on the internet.
7. How to Build an Investment Portfolio for Long-Term Success This is less a blog post and maybe more a short book, but if you don't know how to build a real portfolio that will bring you financial success, this might be the most important link in this newsletter.
8. Can't Stand Jim Cramer's Stock Picks? Now You Can Make Money Betting Against Him You can tell from Josh's writing that his background is journalism, but we hope his columns bring some levity and new perspective two Sundays a month.
9. Discounts For Doctors and Healthcare Workers in 2022 An oldie but goodie, updated for 2022.
10. The Case Against Using Public REITs for Portfolio Diversification This is a good example of why we have columnists at WCI. Francis Bayes and I obviously disagree on this one. Not the facts, but how to interpret them when building a portfolio.
11. Top 5 Ways to Take Advantage of a Strong Dollar Physician on FIRE penned this one. I like his #1 (which we did), but we actually spent more money on #3!
12. Ether to FI: Halfway to FI? (A Networth Update) Part of an ongoing series at Physician on FIRE. This is an investor trying to reach FI in just ten years. Now halfway there.
13. The Journal Club Peter Kim's latest journal club at Passive Income MD shows what he is reading.

Best of the Web

Every month I recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles.

1. When to Stop Buying I Bonds or Cash Out and Buy TIPS. One of those great technical articles The Finance Buff excels at. TIPS yields are higher than I bond yields. What should you do about it?
2. World Population in Extreme Poverty. This isn't even an article. It's a single graph. But it's worth looking at if you're feeling pessimistic about the progress the world is making. 100 years ago 74% of the world was in extreme poverty. Now it's only 10%. We're winning the war on poverty.
3. Highest Taxed Income In America, and Everyone Seems Happy to Pay. This one from an accountant about a subject that has been all over the news lately.
4. 2022 Bank of America Private Bank Study of Wealthy Americans. Lots of nuggets in this. Especially about the attitudes of younger people toward traditional investments. They might feel differently if they have money in FTX of Block.FI.
5. Crypto Company BlockFI Declares Bankruptcy. Speaking of which...hot off the presses, the crypto meltdown continues. I don't want to say I told you so, but I do hope everyone took my advice and at least limited their investment to 5% of their portfolio. Who knows, maybe BTC will rebound and be worth $100K next year. It's done that sort of thing before.
6. CMS Finalizes 4.5% Physician Pay Cut. Sorry to be the bearer of this news if you have not yet heard it. All the more reason to become FI so you don't have to care about stuff like this anymore.
7. The Wrong Americans Are Buying Electric Cars. I enjoyed this one. We talk about Teslas around here all the time but it should go without saying you're not saving the planet more by buying two of them to rub with a diaper in the garage.
8. Jeff Bezos: Does US Style Philanthropy Exist in UK? Apparently the tradition/obligation of wealthy people donating large amounts of their wealth to charity is a very American thing says the BBC. Per capita, the US gives 9X what the English do. Attitudes about it are very interesting.
9. Biden Wants Your Retirement Savings to Go Woke. This one from Fox News gives the right wing perspective on the new trend to put ESG investments in your 401(k). I guess everything can be politicized, but it does make it harder to point out the problems with that sort of investing.
10. Effective Altruism Committed the Sin It Was Supposed to Correct. The downfall of FTX impacts more than crypto. We'll try to balance out the Fox article above with this one from the Atlantic.
11. Boglehead "Sheepdog" Passed Away this month. One of his greatest contributions to the forum was this thread where he showed vulnerability in the 2008 Global Financial Crisis. Interesting to think of online comments are part of one's legacy.
12. Doomster in Chief. Anytime Bill Bernstein writes something, I always try to read it. This one about Dr. Doom, Nouriel Roubini. Pessimism is sexy. It sells subscriptions and gets eyeballs. It sounds intelligent, but it usually ends up being wrong. The history of the world should be triumphed "The Triumph of the Optimists."

Real Estate Opportunities

If you have interest in real estate investing, you should make sure you're signed up for our free monthly real estate newsletter too. It provides real estate education and introduces accredited investors to private real estate investment opportunities. Examples include:

1. Southern Impression Homes/JAX - This group focuses mostly on turnkey investing, and they also have a debt fund that has been providing nice returns. Better hurry if you want to invest in it though, it closes December 30th.
2. Real Estate Masterclass This is a free, three session mini-course we put together
3. Origin Investments - I've been invested with these guys for years. The first fund I bought with them will have gone round trip by this time next year.
4. No Hype Real Estate Investing This is our main real estate course. It'll take you from knowing nothing to getting started in real estate the right way, whether you want to invest directly or passively.
5. DLP Capital - We love this company's evergreen funds and "you get paid before we do" approach.
6. Wellings Capital - Interested in something besides multifamily? This fund offers self-storage and mobile housing investments.

Although Katie and I have personally invested with many of our real estate sponsors and are pleased to introduce them to you, you still need to do your due diligence prior to investing with any of them. Please consider these introductions and not recommendations.

Great Stuff from the Forums

The WCI Forum, subreddit, and Facebook Group continue to be great places to get some help with your questions. See these great topics that people are discussing now:

1. For Those That Did PSLF - Is It Worth It in the Long Run? I'm curious if anyone said no.
2. Saving for the Forgiveness Tax Bomb Yes, there are other forgiveness programs besides PSLF. No, they're not tax-free.
3. Cash Out 401(k) vs. Rolling It Over to Traditional IRA None of the above please, at least for anyone interested in a Backdoor Roth IRA.
4. Young Adult Housing in Difficult Rental Environment: Rent or Buy? As hard as buying a house is these days, renting isn't much easier in many areas.
5. Some Love for Target Date Funds As long as you don't have them in taxable!

New Podcasts

Be sure to check out the podcast if you haven't yet. 30,000-40,000 are listening to every episode. If you'd like to leave a question to be answered on the WCI Podcast, record it here.

• #290 Thankful on Thanksgiving (Sponsored by PearsonRavitz)
• #289 Is It Tacky to Talk About Money? (Sponsored by DrDisabilityQuotes.Com)
• #288 Real Estate Q&A (Sponsored by First Republic Bank)
• #287 House Hacking With Ayush Gupta (Sponsored by DrDisabilityQuotes.Com)

The Milestones to Millionaire Podcasts (all accessible at this link) are short podcasts celebrating your accomplishments! Lots of professional variety this month.

• #91 OBGYN Builds Wealth (Sponsored by CompHealh)
• #90 Orthopedic Surgeon Builds Wealth By Living Like a Resident (Sponsored by Bob Bhayani)
• #89 Pediatric Hospitalist Pays Off $270,000 in Student Loans (Sponsored by PearsonRavitz)
• #88 Sports Medicine Doc Pays Off $287,000 in 2 Years (Sponsored by CompHealh)

Not enough podcasts to get you through the month? Try these from Passive Income MD!

• PIMD Podcast #135 Find Investment Opportunities in a Recession
• PIMD Podcast #134 5 Financial Hurdles to Be Grateful For

New Videos

Come check out the WCI Youtube Channel. 345 more of you subscribed this month, now more than 20,000! Please subscribe, like, and share!

Tons of new videos this month. Here are just a few of them:

1. 3 Ways Doctors Get Paid
2. How Do I Move Past a Huge Financial Mistake?
3. Tax Loss Harvesting Walk Through

Tip of the Month

I've been thinking about asset protection this week, not sure why. Maybe it's because of a case I heard about recently where there was a clear error with a terrible outcome. I also once had a partner who left clinical medicine not long after selling a company (he was also an entrepreneur). While he definitely wanted to spend more time rafting, climbing, and spending more time with the kids, a major motivation for him to leave medicine was the constant threat of lawsuits hanging over his head. Besides the sleepless nights and painful days associated with lawsuits, he simply didn't want to risk losing the financial assets he had spent his entire life working to obtain.

So when I became financially independent, I also considered leaving clinical medicine. Although I had looked into asset protection many years before (long before we had any real wealth), being financially independent and still wanting to see patients pushed me to take a much more in-depth look at asset protection. This more in-depth research confirmed my prior understanding that it was exceedingly rare for a physician to lose any personal money in a lawsuit. Even when there are above policy limits judgments, they are generally reduced on appeal to policy limits. In fact, I calculated my personal risk of paying out of pocket to be about 1 in 20,000 years of practice. And even when there is a judgment that is not reduced, the amount above policy limits is usually relatively small, not a "clean you out" type of amount. I wrote all about this in The White Coat Investor's Guide to Asset Protection.

However, even with a tiny risk, it still seemed prudent to take the simple, effective, inexpensive asset protection options available to me. Good malpractice insurance is worthwhile. So is a big umbrella policy. Exemptions and other asset protection laws are highly variable by state, which is why a large part of the asset protection book is a listing of the individual state laws. What I discovered looking into these laws for every state is that while it is very hard to protect EVERYTHING in the event that you have to declare bankruptcy, it is also very hard to lose everything. Most people will be able to keep a big chunk of their assets, even if they have to declare bankruptcy to get out of a massive above policy limits judgment. And if you find that you have a lot of assets that are not protected by the cheap, easy stuff, there are relatively reliable asset protection techniques that don't require too much hassle or expense to set up or maintain. If you have enough to be worth protecting, paying to set these up won't be a problem.

In most states, retirement accounts are completely protected. Cash value life insurance and annuities are also protected in some states. You may also have your home equity protected by a large homestead amount in a state like Florida or Texas, by a tenants by the entirety law, or by an asset protection trust. There are very few states where one of these three options isn't available. 529s and HSAs might be protected too. And if you are fortunate enough to find yourself with a large taxable account, you can look into irrevocable trusts that have you or your spouse as the beneficiary. There is debate over how well they work, but if the primary reason you're setting a self-settled trust up is for estate planning purposes or business purposes, then the asset protection benefits are just icing on the cake anyway. You never really know if it will work until you go to court, and these rarely go to court (because above policy judgments are so rare). But the likelihood of them working no better than no protection at all seems low.

If I were successfully sued and had a crazy $100 million judgment against me that was not reduced on appeal, I would definitely lose some money. But it's probably only 5% of what we're worth. It wouldn't change our lifestyle in any way.

• Retirement accounts: Untouchable
• Home equity: In an irrevocable domestic asset protection trust (Utah homestead exemption sucks and no TBE titling here)
• Small businesses: In an irrevocable spousal lifetime access trust
• Taxable account: In an irrevocable spousal lifetime access trust

We'd still lose what's in our checking and savings account, some of our I Bonds, perhaps our cars, and maybe some of our real estate investments if the creditor is patient. But that's about it.

It's hard to lose everything, but it is also hard to protect everything, and that's okay.

Thank you for being part of the WCI community. Your work is important and we hope for your financial and professional success.

Jim

James M. Dahle, MD, FACEP
Founder, The White Coat Investor

We only want to send you emails that you actually want. Use these links to fine tune which emails you get

Subscribe to the monthly newsletter (Unsubscribe)
Subscribe to the weekly blog post digest (Unsubscribe)
Subscribe to all the blog posts (Unsubscribe)
Find out about real estate opportunities (Unsubscribe)

I don't want ANY emails from WCI ever again | Change email address | P.O. Box 520421, Salt Lake City, Utah 84152