Featured Business
Laurel Road is committed to serving the financial needs of doctors, including helping you get the home of your dreams. As a digital banking platform and brand of KeyBank, Laurel Road provides secure home loans, competitive rates, and a simplified online process—with a tailored mortgage options for eligible physicians, dentists, and residents as soon as you match.
Visit Laurel Road to learn more and get 1-1 assistance from a trusted Mortgage Loan Specialist when you check your personalized loan and rate options.
With Laurel Road Mortgage Financing, eligible physicians have access to:
- 0.25% mortgage rate discount for WCI readers1
- As low as 0% downand no Private Mortgage Insurance required2
- No processing fee – a value of $1,0953
- Competitive interest rates and up to $650 off closing costs4
WCI News
The big news is that as you're reading this at home, hundreds of us are in sunny Phoenix at WCICON23. If you would still like to join us virtually, we'd love to have you. In fact, we'll bribe you to sign-up today by throwing in an additional online course from a prior conference (with Bill Bernstein and Jonathan Clements) absolutely for free.
We're getting ready to wrap up the WCI Champions program for the year. This is where we give a free WCI Student Guide book to every first year medical and dental student in the country, distributed by their class champion (who also gets some WCI swag.) The deadline for 2022-2023 is March 17th. Thousands of med students will not be getting their book unless someone from their class steps up and signs up to pass them out.
Speaking of students, we did our annual student webinar last month. It's the talk I would give you if you had me come out to speak to your med school class. You can still watch it, totally free.
Want something else free? How about the Leverage and Growth summit put on by PIMD founder Peter Kim? Get inspired by hearing the stories from dozens of successful entrepreneurs and other doctors doing interesting stuff with their careers.
There are non-financial risks to physician wealth that you may not have thought about, like burnout and divorce. We put a program in place last year to help with burnout and this year we've partnered with popular WCICON speaker Kate Mangona, MD to provide a program to help with marriage. This eight week class designed specifically for physician couples is called Making Marriage Work. If you're feeling like your spouse is just a roommate, this will be worth the investment.
Market Report
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Data sources: Morningstar and SPGlobal
After a fantastic January, February was mostly bad news for investors. Interestingly, small growth stocks are now leading other stocks for the year. While Bitcoin was nearly flat for the month, its volatility becomes evident when you consider it's year to date and 5 year returns are the highest yet its 1 year return is the lowest. Commodities now have negative returns over the last year, somewhat surprising given what inflation has been. So much for a great inflation hedge. Maybe that asset class is only good as the rate of inflation increases.
Best of the Blog(s)
Lots of great posts from across the WCI Network this month. Check them out!
- When Everything Click into Place: How Foreign Travel Can Make You a Better Doctor One of our most popular and well-received guest posts we've ever had.
- Functional Longevity: What Use Is Retirement If You Can't Move and Think? Anthony Ellis argues that health is at least as important as wealth when planning for retirement.
- The Nuts and Bolts of Investing. Boring! But important. If you want to know how Jim Dahle invests, this is where we tell you. No, what they invest in hasn't changed, but where they invest keeps changing every year. If your taxable to tax-protected ratio is growing, you should probably read this.
- What to Do About a Wealth Tax. It's not really theoretical anymore; it might be in your state legislature right now.
- The Changes to Roth Accounts Because of Secure Act 2.0. No, I still haven't found a company offering a Roth SEP IRA yet, but it's coming.
- Exceptions to the One House, One Spouse, One Job Rule. It's still good practice, but it's not dogma.
- A Candid Conversation with My Physician Spouse About Burnout, Guilt, and Resentment. Alaina Trivax tackles the issues every physician couple has or will face.
- A Dental Career Reimagined. Tyler Scott debuts as a new WCI columnist.
- Top 4 Tips to Help Navigate Real Estate Investing in the Current Market. Peter Kim shares thoughts from a recent conference he attended.
- Why Do Financial Advisors Do Crap Like This? Loved this one by Leif Dahleen. Why or why? Incompetence or Greed? Neither looks good.
- FIRE Crossroads 036: FI at 45 With a One Fund Portfolio. You don't need a complicated portfolio to quit working for money.
- Skiing on a Budget. I'm pretty sure the helicopter is out.
Best of the Web
Every month I recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles.
- Why Medical Schools Don't Teach Business and How It's Costing Physicians. Curtis Graham weighs in on KevinMD.
- I'm the Nouveau Rich. We bet a lot of us who grew up in a more humble situation can relate to this Bogleheads thread. It unfortunately got locked (not our fault), but it's still worth a read.
- Why Are Americans Dropping Their Life Insurance Post COVID? Note that this is NOT the title of the article. Scroll down to the third section of the article for this discussion and some gobsmacking statistics about the uninsured. Please get some term life if anyone else depends on your income. Please. We're begging.
- How the Wealthy Save Billions in Taxes by Skirting a Century Old Law. Two writers at ProPublica finally learned about tax loss harvesting and are outraged. But they did do a really nice job of explaining how to do it and why "substantially identical" doesn't actually mean what you would think it means.
- Berkshire Hathaway Annual Letter. We don't know how much longer Warren Buffett will be around, but we're going to miss him. Loved this quote: "The disposition of money unmasks humans. Charlie and I watch with pleasure the vast flow of Berkshire-generated funds to public needs and, alongside, the infrequency with which our shareholders opt for look-at-me assets and dynasty-building." Some more great gems on page 9.
- State Tax Exempt Treasury Interest From Mutual Funds and ETFs. We hate that this isn't on the 1099-DIV you get from your brokerage. Vanguard fund owners can get the info you seek here.
- Social Security and Safe Spending Rates. Man does Mike Piper hit it on the head when he says SWR research is super useful right up until the point that you retire. Jim will be talking about that tomorrow at WCICON in his keynote.
- I Bond Interest Confusion. Now I know why my calculation for my I Bond return last year was less than 6%. The last 3 months of interest don't show up for the first five years.
- The 10 Most Important Things Allan Roth Tells His Clients. You're not going to like # 1.
- Doctors on Humble Dollar! Dr. Bill Yount is in the big-time now! If you feel like you're behind in this game, let Bill show you how he recovered from the near mental breakdown he suffered at his financial awakening at 50. It involved selling the boat, but you know what they say about the two best days of a boat owner's life.
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:
- Mortar Group - A New York City based syndicator, here's your chance to own a piece of the Big Apple.
- SI Homes - Like having the control of completely owning your investment properties but not seeing deals in your local area? Consider a turnkey investment with SI homes.
While we are pleased to introduce these companies to you, you still need to do your due diligence prior to investing with 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:
- 2023 Backdoor Roth IRA Home Base - We really do want to help you with your Backdoor Roth IRA questions. But don't kid yourself if you think you're the first one with your particular question.
- Intern Buying Disability Insurance - Making money? You need DI.
- Is My Mom's IRA Growing Appropriately? - Depends on fees, discipline, and an appropriate asset allocation
- Focus on Debt or Invest in My Mid 20s? - Most of wish we'd been able to do either in our mid 20s!
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.
- #302 Where to Store Your Money (Sponsored by Cerebral Tax Advisors)
- #301 I Will Teach You to Be Rich (Sponsored by SoFi)
- #300 Introduction to the Secure Act 2.0 (Sponsored by Locumstory)
- #299 Grab Your Slice with Monica Scudieri (Sponsored by CompHealth)
The Milestones to Millionaire Podcasts (all accessible at this link) are short podcasts celebrating your accomplishments! Lots of professional variety this month.
- #103 Anesthesiologist Pays Off $369,000 in Four Years (Sponsored by 37th Parallel)
- #102 Psychiatrist Reaches Half Million Net Worth (Sponsored by All Global Circle)
- #101 General Dentist Buys Private Practice (Sponsored by InCrowd)
- #100 Millionaire Status Achieved (Sponsored by 37th Parallel)
Not enough podcasts to get you through the month? Try these from Passive Income MD!
- PIMD Podcast #146 5 Things To Reduce Risk In a Passive Real Estate Deal
- PIMD Podcast #145 How to Launch Companies and Disrupt How Healthcare is Delivered, ft. Renee Dua, MD
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 Much Depreciation Can I Expect From Investing in Real Estate?
- What is the Investment Period & What Are the Goals of the Peak Housing REIT?
- What is the Pro Rata Rule and How Does it Apply to Me?
Tip of the Month
Sometimes I forget that not every white coat investor knows the ins and outs of my favorite investing account, the Health Savings Account (HSA). Today I thought we'd go over the most Frequently Asked Questions (FAQs) I get about them. Test yourself, how many of them did you already know the answer to? 9 or 10 is an A, 8 is a B, 7 is a C, 6 is a D. If you got 5 or fewer, it's time to brush up on HSAs!
FAQ # 1 What is the Contribution Limit for an HSA for 2023?
If you are single, you can contribute $3,850 to an HSA in 2023. If you are a family (two spouses, or a parent and a child), you can contribute $7,750. Starting at age 55, there is an additional $1,000 catch-up contribution.
FAQ # 2 What is the Last Month Rule?
The last month rule means that if you become eligible to use an HSA (i.e. your only health insurance plan is a government-designated High Deductible Health Plan [HDHP]) by the last month of the year, you can make a full year contribution to an HSA. However, that does require that you remain eligible for the entire next year.
FAQ # 3 What is the Tax Treatment for an HSA?
An HSA is the only triple-tax-free investing account. You get a tax deduction equal to the contribution. Then it grows tax-protected like retirement accounts. Then, so long as you spend it on health care, it comes out tax-free. If you do not spend it on health care, you must pay a 20% penalty plus taxes on the entire withdrawal. Starting at age 65, that penalty goes away (but the taxes do not.) Thus, an HSA can be used as a "Stealth IRA" after age 65.
FAQ # 4 Can an HSA Be Invested?
You might be surprised how low the percentage is of people who have their HSA invested in anything other than low yield cash savings account. Like any other investing account, an HSA can be invested in mutual funds and other investments. However, your HSA provider may not allow you to do so or may have special requirements to do so, such as a minimum balance left in cash or an annual fee.
FAQ # 5 Where Is the Best Place to Open an HSA?
The best place to invest an HSA is clearly Fidelity. No fees, excellent very low cost index funds, the option to buy Vanguard ETFs with minimal commissions, and all backed by a household name. However, when it comes to actually using your HSA to pay for health care, or at least to save your health care receipts for later tax-free withdrawals, you may want to consider using WCI Affiliate Partner Lively. Fees are still very low (i.e. free) and investment options are excellent via TD Ameritrade (recently acquired by Schwab), but where Lively outshines Fidelity is in their functionality to upload and save receipts.
FAQ # 6 My Employer Picked Someone Else. What Should I Do?
You do not have to actually use your employer's chosen HSA Provider. You can make your contribution to any HSA. However, if you use the employer's designated HSA you may benefit from two nice features. The first is an employer contribution, if any. The second is that payroll deductions that go directly into an HSA are not subject to payroll taxes (Social Security and Medicare.) So most people whose employer provides an HSA do use that HSA. However, once a year you are permitted to do an HSA rollover. So once you save on payroll taxes and get that employer contribution, you can simply roll it over to Lively or Fidelity. Remember that a rollover is when you actually take possession of the money in between the two HSA custodians. If you have them transfer it directly (and you should), you can do that as frequently as you like. I wouldn't want to deal with the hassle more than once a year, but maybe paperwork hassles don't bother you as much as they do me.
FAQ # 7 What Other Rollovers Are There?
You can do a one-time, IRA to HSA rollover (or transfer). However, it takes the place of your regular annual contribution and you must still be eligible to make that contribution. But it does allow you to move money from a "double-tax free" IRA to a "triple-tax-free" HSA. Note that while contributions can normally be made to an HSA until April 15th, any IRA to HSA rollovers count as a contribution in the year of the rollover and cannot count for the prior year.
FAQ # 8 Do I Have to Take Money Out of the HSA in the Same Year it is Spent on Health Care?
No. In fact, many people deliberately spend taxable money and let their HSA continue to compound tax-free. They save the receipts for health care to allow them to pull the money out tax-free decades from now. Note that this is very different from a 529 plan, where the withdrawal and the expense must be in the same calendar year. Saved receipts, of course, are not adjusted for inflation. Should you save receipts and leave that money in the HSA or just spend from it as you go along? That depends on how much hassle it is for you to save receipts, whether your heirs are savvy enough to use those receipts should you die early, the size of your HSA, and your plans for that HSA when you die. Tax-free compounding is obviously valuable, but HSAs are best spent on health care and ideally will be used up by the time of your death. Given that excess amounts can be used as a Stealth IRA, there is little reason not to max this account out every year that it otherwise makes sense for you to use a HDHP. Don't get an HDHP just to get an HSA if it makes sense for you to have a plan with a lower deductible.
FAQ # 9 What Are the Estate Planning Ramifications of an HSA?
An HSA is fully taxable (but penalty free) income to your heirs in the year of your death. Thus, it is just about the worst way to inherit money possible. If you are not able to spend your entire HSA before your death, consider leaving it to a charity (that will not have to pay taxes on it.) Because an HSA is the worst account to inherit, it is the best one to leave to charity.
FAQ # 10 Is My HSA Protected From Creditors if I Have to Declare Bankruptcy Due to an Above Policy Limits Judgment Not Reduced on Appeal?
While exceedingly rare, it is possible to have an outstanding malpractice judgment. Asset protection law is highly variable state to state, but as a general rule HSAs do not get much asset protection in bankruptcy. Notable exceptions include Florida, Indiana, Kentucky, Minnesota ($25,000), Mississippi, Montana, Nebraska ($25,000), Oregon, Tennessee, Texas, Virginia, and Washington State. More details can be found in The White Coat Investor's Guide to Asset Protection.
How did you do? Hopefully none of those FAQs were new to you, but if they were, at least now you're up to speed on all things HSA.
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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