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WCI News
I didn't go on a trip this month and I thoroughly enjoyed it. It's amazing how much time you have to spend with your spouse, kids, hobbies, and work when you take the 7-10 days you normally go on a trip and spread it around throughout the month. Too bad I spent most of it shoveling snow. (Which we're very grateful for given our drought.)
We're into final preparations for WCICON in Phoenix in one month. There is actually still in person space, although our room block is now gone. Obviously you can register virtually at any time. I've been preparing my presentations on spending in retirement and finding your place on the real estate spectrum. I'm pretty excited about all the other presentations planned, but mostly I'm planning to avenge last year's pickleball defeat. Truly my favorite conference ever.
Andrew (StudentLoanAdvice.com) and I have also been preparing our annual medical/dental student webinar. This is the presentation we'd give if we were flying out to talk to you at your med school. Except you don't have to buy us a plane ticket and a hotel room. Seriously, we can't come speak at 200 med schools every year, but we can do this, so we will. By the way, 100 schools have not yet ordered their free box of WCI books.
WCIers have totally gotten into the paid survey business this winter. I think it's because Rikki Racela told everyone he made $30K doing it last year. Global, MDsurveys and more. Check it out if you could use a little more cash to spend, invest, or pay off debt.
Market Report
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Data sources: Morningstar and PGlobal
Hope nobody bailed out of their investments at the end of 2022 because 2023 is bouncing back with a vengeance. Even Bitcoin came roaring back, although as usual no one knows why Bitcoin does what it does. Double digit returns for some stock asset classes and REITs. Riskier and longer term bonds rebounded nicely (although still with terrible returns over the last year). Only two of our tracked asset classes have negative returns over the last five years (and no Bitcoin is not one of them now that January 2018 is not included in the last five years). Interestingly, TIPS have outperformed regular treasuries by over 1.5% a year over that time period. TIPS do work in times of unexpected inflation, they just only work in the long run! Riskless long term asset, but quite volatile in the short term.
Best of the Blog(s)
Lots of great posts from across the WCI Network this month. Check them out!
- The White Coat Investor's Most Controversial Articles Revisited: Looking Back at Our Biggest Fights Josh and I had fun with this one.
- Examples of Physician Budgets - From the Frugal to the Extravagant Dr. Spath had one of the most popular and controversial posts from the month.
- The 4 Rules I Followed to Get Wealthy Worry about the $30,000 decisions, not the $3 ones.
- Why Wealthy Charitable People Should Not Do Roth Conversions Nobody but me cared about this insight that was a pretty big deal to me.
- 10 Changes to Know About IDR Plans for Your Student Loans Andrew weighs in on the latest in student loan world.
- State of the Blog 2023. Another year filled with success, but also with a few challenges and headwinds.
- Is Congress Trying to Take Away Your Credit Card Rewards? A funny way to phrase this one.
- The Truth About Buying a Foreclosed Home and 10 Other Ways to Provoke a Migraine, Part 2 Message same as part 1, don't buy a foreclosed home until the tenant is gone.
- Does Your Savings Account Yield Round to Zero? If your cash is at a local bank, you're doing it wrong.
- I Asked the AI Bot That's Taking the Internet By Storm for Financial Advice - Here's How It Went Guess what is going to be writing all of our future content?
- Journal Club - Peter Kim selects from the best of the internet.
- The PoF Portfolio in 2023 - You've read his words, now find out where he really keeps his money.
- A 2023 Update on My Passive Real Estate Investment Returns - What do all these private syndications and funds really make? Here is Leif's update.
- Post FI Notes 023: Freshly FIREd at 57 - How old can you be and still call it FIRE? Even 67 might still be FIRE for a doc.
Best of the Web
Every month I recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles.
- Should We Look Down on Physicians Who Retire Early? I was quoted in this one by Jules Murtha.
- Money Mistakes Med Students Make and How to Avoid Them. This one too by Roni Robbins.
- Personal Financial Well-being of Family Medicine Residents and Residency Curricula. A Cera Study. Love seeing WCIers get published, just like last month.
- Why Every Physician Should Own a Timeshare. I keep meaning to get Cory on the podcast to hear more about this hot take. Until then, this post will have to do.
- My Experience With Check Fraud. Mike Piper had a $5 check turned into a $2,157 check. Learn from his experience.
- Security Hardware for Vanguard, Fidelity, and Schwab Accounts. Still not paranoid enough about fraudsters? Read this one from Harry Sit too.
- The Art and Science of Spending Money. Another masterpiece by Morgan Housel. I hate that guy because his writing makes mine look so bad.
- Life Lesson from 1,000 Years. 40 pieces of advice 90 year olds would give their 32 year old self.
- Same Old, Same Old. A potpourri of investing insights from Adam Grossman. I particularly enjoyed the points about tax planning and crypto.
- How to Find Clarity When You're at a Career Crossroads. If you feel angst about what you're going to do when you grow up like I do, you may enjoy this one.
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 - Exposure to single family homes, no multi-state tax returns, low minimum investment...what's not to like?
- MLG - Massively diversified exposure to multi-family housing, a choice between depreciation or no multi-state returns, and a long track record demonstrate why MLG is on this list. Now raising for Fund VI.
- Wellings- Self-storage and mobile housing is an interesting, but potent, combination of real estate sub asset classes
- DLP - A company so great that I invest with them on both the equity and the debt side. A platinum sponsor at this year's WCICON too.
Katie and I have personally invested with all four of these sponsors and are pleased to introduce them to you, but you still need to do your due diligence prior to investing with them. Please consider these introductions and not recommendations. Still, while stocks, bonds, and publicly traded REITs were all down sharply in 2022, our personal returns from these specific investments ranged from 10-19% (except Wellings who we just started investing with and which hasn't started paying distributions yet on our investment.) While past performance is no indicator of future performance, it's nice to take a victory lap every now and then.
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:
- Should I Use a Physician Mortgage Loan or Not? Do you have a better use for your money?
- Does It Make Financial Sense to Go to Med School? Depends on the alternative I suppose.
- Is It Wise to Buy a New $25 - $30K Car? The best forum questions are those without a right answer.
- 2023 Investment Strategy: Index Funds With High Tax Bill or Real Estate? How much is simplicity worth?
- Bond = James Bond? Nope, Treasury and Municipal! Help Please! Individual munis? Why or why not?
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.
- #298 Leaving a Bad Financial Advisor (Sponsored by CompHealth)
- #297 A Wealth of Common Sense with Ben Carlson (Sponsored by All Global Circle)
- #296 Charitable Giving and Bonds (Sponsored by locumstory.com)
- #295 Your Money or Your Life with Vicki Robin (Sponsored by PearsonRavitz)
The Milestones to Millionaire Podcasts (all accessible at this link) are short podcasts celebrating your accomplishments! Lots of professional variety this month.
- #99 Doc Pays Off Student Loans 8 Months Into Attendinghood (Sponsored by All Global Circle)
- #98 Entrepreneur Takes New Product to Market (Sponsored by MLG Capital)
- #97 Doc Pays Off $360,000 of Student Loans and Hits Millionaire Status (Sponsored by Bob Bhayani)
- #96 Periodontist Pays Off $780,000 of Debt (Sponsored by CompHealth)
Not enough podcasts to get you through the month? Try these from Passive Income MD!
- PIMD Podcast #142 Why Physicians are Turning to Side Hustles
- PIMD Podcast #141 5 Ways You Can Invest in Real Estate Without Being a Landlord
New Videos
Come check out the WCI Youtube Channel. 456 more of you subscribed this month, now more than 20,800! Please subscribe, like, and share!
Tons of new videos this month. Here are just a few of them:
- What if I Can't Live Like a Resident?
- What is a Turn-Key Investment in Real Estate?
- What is a Condo Exit in Real Estate?
Tip of the Month
What is a High-Low Agreement?
At the end of the day, most malpractice suits do not go to trial. Of those that do, doctors win the majority of them. Despite those odds, doctors involved in malpractice lawsuits generally want three things:
- Just to have the thing over
- Avoid being reported to the National Practitioner Data Bank (NPDB) out of fear of having to pay more for insurance, not being able to get credentialed at hospitals, or not being able to get a job
- Avoid having to pay any money out of pocket
The data is quite clear that while the likelihood of paying out of pocket is extremely low (I calculate it at about 1/10,000 years of full-time emergency medicine practice), it is not zero. And when you are involved in a lawsuit with damages that are higher than your policy limits, that "not zero" factor starts to keep you up at night. Insurance companies, plaintiffs, and plaintiff attorneys also have incentives that cause them to not want to gamble on the outcome of a jury trial.
As mediation fails due to one or more parties being unwilling to settle and it appears that a lawsuit is headed to a trial, an offer of a "high-low" agreement often appears from one party or the other. The purpose of a high-low agreement is to decrease the consequences of losing the jury trial lottery. It's not just the odds of losing that matter, it is also the consequences. With a high-low agreement, all sides give up a potential huge win in exchange for minimizing their downside.
For example, let's say there is a lawsuit with $5 million in damages. The doctor is carrying a $1 million policy but has $2 million in unprotected personal assets. Her attorney estimates that she has an 85% chance of winning the trial and paying nothing. She really doesn't care if she gets reported to the NPDB. She has no reports in there right now and is only planning to practice for two more years and won't have to recredential during that time period anyway. She does, however, really care about not losing a dime of her $2 million brokerage account. So much so that they had already offered a settlement of $400,000 to the plaintiff, but the plaintiff turned it down.
So as they move to trial, her attorney approaches the plaintiff's attorney with a high-low offer. Perhaps the offer is that if the plaintiff wins the trial, they are limited to just $1 million, i.e. policy limits, but if the plaintiff loses, they still get a settlement of $200,000. The plaintiff's attorney knows that the odds are against the plaintiff to win anything, and he has already put $80,000 worth of time and effort into the case. So this is pretty attractive to him from a business perspective. If he can convince his client that a $200,000 bird in the hand is much better than a $3 million (or likely $1 million after appeal) bird in the bush, they can go to trial knowing that there will not be one big loser and one big winner, but everyone will get something attractive to them. The plaintiff with the losing case still gets six figures and gets to put a black mark on the doctor in the NPDB, the attorney gets paid for his time, the doctor ensures she loses no personal assets and can still go to trial to "prove" she followed the standard of care, and the insurance company still has the chance to save $800,000 in payout.
This is a high-low agreement. If you are involved in a malpractice case with big damages that appears to be headed to trial, you might consider offering one or accepting one. The thing I like best about a high-low agreement is that is really reveals just what malpractice lawsuits are all about—money. Nobody gets their loved one or health back after a lawsuit. Nobody goes to prison. It's simply a potential exchange of money, and it usually isn't even the doctor's money that is involved.
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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