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WCI News
Greetings! New year, new you. We started out the year by sending out this newsletter on the 2nd, instead of the 1st. Megan and I had better things to do yesterday than finish it up and we figured you had better things to do than read it. Then I woke up to 13 inches of powder, so that delayed it a bit too! But here it is! The big event for WCI last month was that we had a big company retreat. We're learning a lot (as we go) about establishing a great company culture and relationships as WCI staffers that do not live in Utah may soon outnumber those who do. It was really fun to get together with just about everyone and their partner in a much less stressful environment than WCICON. (Stressful for us, not you. WCICON will lower your stress. You can still register too. Keep in mind the last day to be able to book a room at the conference hotel [highly recommended] is January 25th.)
It's a new year and everyone is paying more attention to their finances so there are some opportunities and deals that we want you to know about. The first is our annual survey of white coat investors. Our content, products, advertisers, policies etc are primarily driven by you and your needs, but in order to meet them, we need to know what they are. Please take a few minutes to fill out the survey and you'll be entered into a drawing for free stuff.
The second is Expert Witness Startup School. If you have interest in this satisfying and potentially lucrative side gig, this online course will take you from soup to nuts. You'll likely more than pay for it with your first case. No, you don't have to sell out somehow in order to make money doing this. You can simply share your honest opinion about cases. You can buy between January 20th and January 30th and if you buy using our affiliate link above, we'll give you our 2021 Continuing Financial Education Course (with its CME) for free.
Third is Burnout Proof MD. You can insure against disability but you can't insure against burnout. This year long program and support community, however, is the closest thing I know of to burnout insurance. Based on feedback from you, the length has been extended and the price has been reduced. It still qualifies for more CME than you need each year. You can enroll today or come to a free webinar on January 12th and learn more. Sign up for a webinar reminder here.
Last, we're still trying to give away a copy of The White Coat Investor's Guide for Students to every first year medical and dental student. The task is not yet complete. I'm not even sure we're half done yet. Please encourage every first year you know to ensure that someone from their class has volunteered to pass the books out. That's literally all it takes to be a WCI Champion. Sign-up here.
Market Report
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Data sources: Morningstar and SPGlobal
Well, 2022 has come and gone. While accumulators were able to buy assets at prices not available for a year or two (or 5 in the case of Bitcoin), most investors were less than happy about their returns this year. December was a lousy month to end a lousy year. The big story of the year (and the month too) is that small, value, and international stocks seem to have overtaken the large, growth, US stocks. The pendulum has swung. They were still all losers, but relatively speaking, I'd rather lose 2% in value stocks than 33% in growth stocks. Cash, silver, and commodities were the only asset classes we track with a positive return for the year, and after inflation, it was only commodities. REITs have given back pretty much everything they made in an excellent year last year. My own personal 2022 returns were -9.92%, which feels pretty good in a market where stocks, bonds, and publicly traded REITS were all down more than that. Buoyed by private real estate, I bonds, and the G Fund, I reaped some benefits from diversification this year. The small value tilt helped limit the damage too. While we often focus on returns a lot, it was a great year to still be in the accumulation phase. Despite losing 10%, our retirement nest egg is 17% bigger at the end of the year than it was at the beginning. It doesn't hurt so badly when you think of it that way.
Best of the Blog(s)
Lots of great posts from across the WCI Network this month. Check them out!
- Secure Act 2.0: What Doctors Need to Know. Boring name, but the most important WCI post from 2022 for you to read.
- If You Forgot to File This 401(k) Form, Here's How to Avoid Massive Penalties. I was disappointed that this post was as popular as it was. Apparently a lot of WCIers with big solo 401(k)s didn't know about 5500-EZ.
- What's the Future of Cryptocurrency? These Fanatics Say It's Pretty Darn Bright. Down but not out?
- How to Hack a Zero-Based Budget as a High-Income Professional. Doctors budget too...or else.
- The G Fund (Finally) Gets Its Day in the Sun. TSPers celebrated with me this year.
- All the Money Mistakes I've Made (and How It Cost Me an Even Earlier Retirement). Perhaps the most popular post of the month. Who doesn't like reading about some other doctor's screw-ups?
- Is FIRE Really Just an Empty Goal? Does it really matter if you don't do anything with it? I've asked myself the same.
- 13 Lessons to Learn From Sam Bankman - Fried and the FTX Meltdown. The millenials now have their own
- A Net Worth Tracker That Auto-Updates Daily. Something useful (and free) from Physician on FIRE.
- No, You Didn't Travel For Free With Those Points and Miles. Don't forget to account for opportunity cost.
- Saving $50,000 a Month to Reach FI. Hope it doesn't take too long at that rate!
- Journal Club. Peter Kim makes some recommended 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.
- Efficacy of Peer-to-Peer Education for Emergency Medicine Resident Financial Literacy. Huge kudos to white coat investor Scott Rupp for getting this study done and published. Even more kudos for putting the program in place. Spoiler alert- If you teach financial literacy to residents, they will become more financially literate and take the steps they need to take to become financially secure. If you don't, they won't. If you are faculty in a residency program and there is not yet a curriculum in place at your program, please put it into place. Check out the financial literacy test at the end of the paper and see if you can beat the residents' scores.
- Not Everything is Lost. There is more to charitable giving than just money.
- Cox Proposed Tuition Freeze at State Universities. Popular Utah governor Spencer Cox actually gets it when it comes to the "student loan problem." It's not about more IDR and forgiveness programs, it's about reducing the cost to start with. And this in a state that already has some of the lowest tuition in the land. I have no doubt that the ability to get an inexpensive, high quality education contributes a great deal to the Utah success story. Now if we could just get more snow...
- Top 0.1%. How Much Wealth Does it Take? While I suspect it's a little lower now, at the end of 2021, it took $1.8 million to get into the top 10%, $10 million to get into the top 1%, and $38 million to get into the top 0.1%. Docs not looking so rich anymore, are they?
- Bogleheads Stay the Course. Kim Clark came to the Bogleheads conference this October and wrote this article in Kiplingers. Check out the first photo! By the way, you can watch this conference now (including my talks) for free.
- What Med Students Need to Know About Money. This one by Steph Weber on Medscape quotes lots of people you've heard from here at WCI.
- Average Medical School Debt. A nice summary article of the statistics about medical school debt these days.
- Crypto Was Always Smoke and Mirrors. This article highlights the great work done by psychiatrist James Block outing the FTX collapse. That reminds me, we ought to get him on the podcast. Shoot me an email if you have contact info.
- The Homeownership Society Was a Mistake. Preach it! Great article that I wish I had written myself. Except one part- rental units can still be great investments even without pricing people out of homes, they just need to sell at lower cap rates.
- The Four Effects of a Roth Conversion by Mike Piper. Anything by Mike Piper is succinct and high yield. This is no exception.
- Not One Out of 2,132 Mutual Funds Beat the Market. Jeff Sommers at the NYT reaches the same conclusion as everyone else. Again. Invest in stocks using index funds.
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:
- Peak Housing REIT - A great way to invest in single family homes without owning them directly or being exposed to stock market volatility. Minimum investment is only $25K.
- Origin Investments - Several available investing options with Origin right now including the IncomePlus fund we're invested in, an opportunity zone fund, a debt fund, and a ground up fund.
Although Katie and I have personally invested with both of these real estate sponsors and are pleased to introduce them to you, you still need to do your due diligence prior to investing with either. 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:
- Secure 2.0 is Out! Yet more discussion of the Secure Act 2.0. There were three threads on the forum at one point discussing it.
- How to Maximize Retirement Investments While Moonlighting. It's mostly about that Solo 401(k), but if you really moonlight a lot you could consider a personal defined benefit fund.
- Dipping Into My Emergency Fund. What is an emergency, really?
- Johns Hopkins vs. Full Ride at a Newer Med School? Money or reputation, nice to have this dilemma.
- What Do You Think is the Perfect Net worth to Retire as a Doctor? It's got to be either $4,324,612.17 or $2,482,943,74. Not sure which though.
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.
- #294 Finance for the Whole Family (Sponsored by CompHealth)
- #293 Life After Financial Independence (Sponsored by PearsonRavitz)
- #292 Workplace Retirement Accounts (Sponsored by First Republic Bank)
- #291 Tax Loss Harvest Before Year's End (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.
- #95 Emergency Doc is Back to Broke (Sponsored by Bob Bhayani)
- #94 ER Doc Pays Off Student Loans In 18 Months (Sponsored by CompHealth)
- #93 Dermatology Resident Dumps His Lease (Sponsored by Bob Bhayani)
- #92 Emergency Physician Gets Back to Broke (Sponsored by PearsonRavitz)
Not enough podcasts to get you through the month? Try these from Passive Income MD!
- PIMD Podcast #139 8 Ways to Protect Your Family's Future
- PIMD Podcast #138 The 4 Step Process to Dominate During a Recession
New Videos
Come check out the WCI Youtube Channel. 351 more of you subscribed this month, now more than 20,400! Please subscribe, like, and share!
Tons of new videos this month. Here are just a few of them:
- How To Do A Mega Backdoor Roth IRA
- What To Do If Your Employer Only Offers A Bad Simple IRA
- What Are Some Lessons Learned From The 2008 Housing Collapse?
Tip of the Month
I've spent a lot of time thinking about the Secure Act 2.0 this week. I wrote that big blog post about it that ran last Tuesday on Saturday morning (Christmas Eve). Then, while flying to Colombia on Christmas Day evening wrote two more blog posts about it that will run in coming weeks. As I write this section of the newsletter a few days before you get it, I'm sitting here in Medellin thinking about it even more.
On a side note, yes, we're having a great time, having had some fantastic street food at the famous Christmas light festival last night and planning a hike-in whitewater trip tomorrow. It did cost me 12,000 pesos to get an Uber back to the AirBNB though. ($3). Some lessons about inflation there somewhere.
Back to the Secure Act 2.0. I'm particularly impressed that the government wants you to save for retirement. Like really badly. They're seemingly bending over backwards to remove every possible barrier to using retirement accounts. Automatic enrollment will now be mandatory as will annual increases in savings rates (although employees can still opt out). Employers get more credits to start plans. Employers are now allowed to give you gift cards to bribe you to participate. Some contribution limits have gone up. Others have now been indexed to inflation. Hardship withdrawals are easier and there are more valid exceptions to the 10% early withdrawal penalty. The RMD penalty has been cut in half. There are now going to be "Starter 401(k)" plans and pension-linked emergency savings accounts. "Please, please, please save for retirement," the government says.
What's more, the government wants you to use Roth accounts. The cynic in me says that's because the government needs money now, but I think the Senate Finance committee really believes that most people (who are low earners) should be using Roth retirement accounts and they may very well be right. There are new Roth SEP-IRAs, Roth SIMPLE-IRAs, Roth matching contributions, Roth catch-up contributions, 529 to Roth IRA rollovers, emergency savings account to Roth 401(k) transfers and more.
All of these will have the effect of making it easier to save in retirement accounts. Given discussion of taxable account saving possibly being made less advantageous (higher dividend and capital gains taxes, elimination of step-up in basis at death) and actually becoming less advantageous (bonus depreciation now phasing out starting in 2023), the case for using retirement accounts is becoming stronger all the time. However, the one change I had hoped to see did not happen. Our retirement savings system is way too complex. It was a mistake to ever link it to employers. If they would just make IRA contribution limits $100K or so and eliminate all other retirement accounts this would all be a whole lot easier. They could still allow employers to put money directly in there if they want, but this 401(k)/403(b)/401(a)/457(b)/SIMPLE IRA/SIMPLE 401(k)/SEP-IRA/Cash Balance Plan craziness has really got to go.
One of the most impressive things about Secure Act 2.0 was how it flew under the radar. I wasn't even paying attention to it, and if I wasn't, I'm sure most of you weren't either. Then Wham! Here it is as a sidenote in the news the morning of Christmas Eve, lumped in with over a trillion dollars in spending and a dozen other laws. This is probably the largest revamp of our country's retirement savings system ever. As you read financial articles (including those at WCI) over the next year, keep in mind that many of them now contain significant mistakes because they were written before this law passed. If something doesn't sound right, double check it with new sources produced after Secure Act 2.0 passage. We'll update our stuff as fast as we can, but it won't happen instantaneously. To make it even more complicated, all of the changes start in different years. Some right now, others in a year or two, and still others next decade. So don't get mad at me in 2030 if you forgot to take out an RMD at age 74 (goes to 75, but not until 2033). Or wonder why you can't contribute $10K plus as a Roth catch-up contribution now that you're 60...in 2024 (that one starts in 2025).
Spend some time with the Secure Act 2.0. I know it came up all of a sudden over the holidays, but when it comes to continuing financial education, this post was clearly the most important one for you to read in 2022.
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
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