July Newsletter - The 'Guaranteed' Path to Physician Wealth and the 5 Ways to Fall Off It

Building a plan that gives you a comfortable retirement doesn't have to be so difficult. In fact, most white coat investors can and should use what will turn out to be a much simpler and more reliable method to ensure that they have enough money to last after they stop working. The plan doesn't require sophistication, but you do have to be disciplined. We'll explain exactly what we mean and go into further detail below in July's financial tip of the month.

SPONSORED BY

At SoFi, we believe that when medical professionals can take better care of themselves, they can take better care of their patients. And when their finances are in order, it has a ripple effect on everyone—which is why we're proud to offer quality student loan refinancing services* tailored to doctors, dentists, and residents like you. As a medical professional, you're eligible for: Exclusive rate discounts starting at 4.24% APR (with all discounts).^ $500 welcome bonus when your loan funds, in partnership with The White Coat Investor.† Flexible rates and terms that you can choose from based on your financial needs. Plus, as a resident, you're eligible for monthly payments of just $100 per month while still in school.** There's a reason that SoFi has over 5.5 million members. Learn more now. See Full Terms Here

ANNOUNCEMENTS

	EVERYTHING Is on Sale – This includes courses like Fire Your Financial Advisor and No Hype Real Estate Investing. All online courses have a money-back guarantee and many are CME-eligible. Don't miss the chance to grab your WCI books and merch before the sale ends July 10th. Use Code: WCISUMMER23 and Get 20% Off Everything
	Optimize Your Credit Card Benefits – Choosing the right cards allows you to maximize convenience while saving money, earning free travel, and getting cash back. Just don't carry a balance on them! See the Best Credit Cards for Doctors
	Protect Your Income with Disability Insurance – The most expensive risk you face is losing the ability to work. One in seven doctors get disabled during their career, making the right disability insurance coverage a critical part of your financial plan. Insure Your Income Today
	WCI Medical School Scholarship – A huge thank you to all scholarship sponsors. Platinum Level Sponsors ($8,000 or more): Physician Financial Services, MR Insurance, SoFi. Gold Level Sponsors ($1,500 or more): Contract Diagnostics, WealthKeel LLC, Fox and Company Wealth Management, Insuring Income, Physician Agreements Health Law, DI4MDs. Apply before August 31st! See All Scholarship Details

MARKET UPDATE

Data sources: Morningstar and SPGlbal June was a great month for stocks with almost 7% for US stocks and over 4% for international stocks. Bitcoin is back. While still far from its last high, it has almost doubled in value this year Bonds muddled along this month, mostly negative. One interesting thing to notice is that corporates have outperformed treasuries by almost 4% in the last year. REITs also back in the black for the year. Mixed feelings about the higher interest rates. While it's nice to get paid something on our cash, higher interest rates are not necessarily good for our business and we're sure those of you borrowing money feel similarly.

REAL ESTATE OPPORTUNITIES

37th Parallel – A private multifamily acquisitions and asset management firm that provides a vertically integrated investment platform (funds and single-asset investments) for investors seeking tax-advantaged income and equity growth. Discounts are available for White Coat Investors. RealtyMogul – A real estate investing platform providing investors the opportunity to diversify their portfolios by investing in institutional-quality commercial real estate deals. RealtyMogul members can also invest into two non-traded, Real Estate Investment Trusts (REITs) – the Income REIT and the Apartment Growth REIT. Please consider these as introductions and be sure to do your due diligence prior to investing in any real estate investment opportunity.

STAFF ADVENTURE

Zion Narrows – Dr. Jim Dahle rappels and floats down the Virgin River.

Zion National Park has become ridiculously popular in the last decade, to the point where the hassle of the crowds and the adventuring permits has kept me away for years. However, our big snow year provided an opportunity in June that has not been possible for the last two years. The Zion Narrows may be one of the most popular and spectacular hikes in the American West. Getting a permit to hike it top to bottom is no small feat, and thousands of tourists a day hike up into it from the bottom (which requires no permit). However, the truth is that the Zion Narrows is a river, and hiking it is the equivalent of walking on slippery bowling balls submerged in 6-12 inches of water for 16 miles. Not exactly a pleasant experience, despite the views. When the river flows above a certain level, the park service will no longer give out hiking permits or allow tourists to hike up into it from the bottom, but it will allow boaters to float the narrows with an easily obtained permit. While we were not able to float the whole thing, we turned a 12-hour hike into a four-hour hike plus a two-hour float, and we met 200 very jealous tourists standing on the shore at the end of the hike. Dr. Feinauer and I went down early to get the permit and then spent the evening before descending Pine Creek Canyon (see the photo of him rappelling). We wanted to thank the psych resident visiting from the Dakotas for picking me up while hitchhiking back to the top. You should have seen her double-take when she found out what her hitchhiker does for a living.

BEST OF THE MONTH

Best of WCI Student Loan Forgiveness Blocked by the Supreme Court. No surprise given the current tilt on the Supreme Court (and even moderates agree this was a pretty big executive overreach.) The good news is the 3 1/2 years of 0% interest rates and $0 payments was far more valuable to most of you than just knocking $10K off your debt burden. The 7 Risks Retirees Face (and What to Do About Them): The financial risks you face once you are no longer generating earned income are no joke. You need to understand what they are and have a plan to deal with them. The Moderate-Income Physician: Columnist Charles Patterson is a moderate-income physician. As he writes, though, what you do with your money is far more important than how much you are bringing in. Getting Better at the 5 Money Activities: The five money activities you need to engage in include earning, saving, investing, spending, and giving. Here's what being good at them looks like and why it matters. A Pain in the Butt — My Dental Disability Story: Columnist Tyler Scott recounts his disability insurance journey and describes what he did right and what he did wrong. What Are the Most (and Least) Stressful Medical Specialties?: Different medical specialties can make vastly different amounts of money. But the daily stress levels between specialties are also highly variable. Was Becoming an MD/PhD a Good Financial Decision?: Columnist Francis Bayes has finally graduated from his MD/PHD program. So, were the last eight years of his training actually worth it? A Winning Hand: Meet the Lawyer Who's Making Huge Money at the Poker Table: WCI Content Director Josh Katzowitz talks to an attorney-turned-poker-player who's won four tournaments in the past 16 months and who's made $400,000 while doing so. Teaching Your Kids About Investing with The Stock Game: Using The Stock Game as a tool to teach your kids might be a controversial topic. But here's why it worked for this guest writer's family. The Power of Focus in Your Financial Life: Even if you do not believe there is GREAT POWER in focus, you must admit that there is SOME value in focusing on one goal at a time. How much is that power of focus worth? How Can I Make My Terrible Doctor Job Less Terrible?: Auntie Marge Explains It All: Columnist Margaret Curtis unveils her new persona, Auntie Marge, and tells us why your job needs you as much as—or more than—you need your job.

New Podcast Episodes Be sure to check out The White Coat Investor Podcast if you haven't yet. 30,000 to 40,000 are listening to every episode. If you'd like to leave a question to be answered on the podcast, record it here. #319 – Wholesaling and Flipping Real Estate with Jamil Damji (Sponsored by SoFi) #318 – 1099 Income and Locums Docs (Sponsored by Laurel Road) #317 – Financial Planning for a Child with a Disability (Sponsored by Cerebral Tax Advisors) #316 – Roth Contributions and Conversions (Sponsored by SoFi) The Milestones to Millionaire Podcast has short episodes celebrating your accomplishments. #119 – Doc Pays Off Student Loans in 30 Months (Sponsored by InCrowd) #118 – Pathologist and Anesthesiologist Get Back to Broke (Sponsored by WCI Insurance List) #117 – Paid Off Student Loans and Bought a Car with Cash (Sponsored by SoFi) #116 – Family Physicians Start Direct Primary Care Practice (Sponsored by SoFi) The Passive Income MD Podcast #164 – 3 Ways to Find Money to Invest #161 – From Physician to Entrepreneur: Navigating the Career Shift

Best of the Web Every month we recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles. How to Invest If You're Sitting On A Pile of Cash Right Now: Sick of us telling you to get an investing plan? We'll let Ben Carlson do it. Breaking Point: The 5 Reasons American Doctors Are Dreaming of Walking Away From Medicine: A typical complainy-pants article about the woes of medicine, but this one ends with a threat! Why I'm Going Back to Medical School: As a perfect juxtaposition to the prior article, Shiv Gaglani (who founded, grew, and then eventually sold former WCI partner Osmosis) after his MS2 year is headed back to school. Despite the problems in medicine, it's still pretty awesome. Waiting Periods on 401(k)s Can Be Costly for Workers: You know that one-year waiting period? What if you change jobs every year or two? The Liabilities of Success: There is often a cost to success, and maybe not one that you should be willing to pay if you want a happy life. The Housing Market Lottery: Less than one-third of homeowners owe 50% or more on their homes. Sometimes it's better to be lucky than good. How Doctors Buy Their Way Out of Trouble: Over the last decade alone, at least 540 doctors and healthcare practitioners collectively paid the government hundreds of millions of dollars to negotiate their way out of trouble via civil settlements—then continued to practice medicine without restrictions. Medical Students Aren't Showing Up for Class: Medical students are experts at learning. Who knew that medical school classes were so low yield? A Physician's Typical Day as Envisioned by a Health Care MBA: What would you do for a pizza? 92% Think the Roth is a Good Idea, But Only 9% Should. We don't know about the numbers, but there are clearly people and times when tax-deferred is the right answer, despite the constant cheerleading from the Roth folks. How Many Doctors Have Financial Advisors (and which specialties)? Pretty fun poll Doximity did. I'm more interested in what's going on with the 47% that don't have advisors. Are they solid DIYers? Or are they just not doing anything?

TIP OF THE MONTH

By Dr. Jim Dahle, WCI Founder I have been teaching physicians how to use their income to build wealth for many years. There is an extremely simple reliable method that most can and should use. It does not require a great deal of financial knowledge or sophistication, but it does require a reasonable amount of financial discipline over the length of most of a career.

All a physician needs to do to have a comfortable, dignified retirement is: Save 20% of gross income for retirement Invest it preferentially using retirement accounts when possible Invest in a reasonable mix of broadly diversified, low-cost index funds Stick with the plan for 25-30 years even when markets do unexpected things If you do this, your retirement nest egg is highly likely to be large enough to provide the same lifestyle you have enjoyed during your working years throughout a lengthy retirement. Of course, there are no guarantees in life, but this is about as close as it comes when we're talking about planning for retirement. A simple example illustrates the point. Consider a doctor making the equivalent of $300,000 in today's dollars throughout a 30-year career. The doc saves 20% ($60,000 per year) and earns 5% real (after-inflation). How much will they have after 30 years? It'll be $4 million. $4 million x 4% = $160,000. Given that the tax rate on that $160,000 will be dramatically lower than the tax rate on the doc's salary of $300,000 (really $240,000 once you subtract out the $60,000 they are saving), this will be a very similar amount of spending money. Once they start collecting Social Security, the physician actually will likely be able to spend more than they could during their career. Easy, peasy. No need to have highly leveraged investments. No need to build your own real estate empire. No need to dabble in entrepreneurship or even to own your practice. Just work, earn, save, invest, and wait—and you'll retire a multimillionaire. So, what could derail the plan? Well, there are a number of things, and unfortunately, all are very common. #1 Inadequate Savings The most common reason doctors don't reach this level of financial success is that they don't save enough money. I said 20%. Five percent isn't enough, and 10%-15% probably isn't even enough. The goal is 20%. And if you want to retire after less than 25-30 years, you need to be saving even more. #2 Late Start Another common problem is that people have their financial literacy awakening at mid-career or even later. If they've been saving something, perhaps they can salvage the situation. And truthfully, with Social Security, 25 years is probably enough time. But if you start saving at 55 instead of 35, this plan isn't nearly as guaranteed. #3 Divorce Cutting your assets and your future income in half is a major financial catastrophe. With hard work and solid financial discipline, you can probably recover from one divorce. I'm not sure the same can be said about a second one. While divorce is sometimes completely out of your control, do all that you can to maintain and even strengthen the most important of relationships. #4 Dumb Investing Habits You do not need huge investment returns for this plan to work. The returns that the market has provided in the past and that it will likely provide in the future will be adequate. However, the investor matters more than the investment. Stock picking, market timing, selling low in market downturns, speculative investments, fraud/scams, and bad high-priced financial advice can all result in your investment returns performing too poorly for this plan to work. It's not complicated to invest in index funds and stick with them through thick and thin. But it's not necessarily easy. It's OK if you want to invest some of your money into other investments. Real estate and small businesses can often provide a higher return than you might get with publicly traded investments. But limit how much of that portfolio is invested into speculative investments like precious metals, options, or cryptoassets. #5 Shortened Career This "guaranteed" pathway also requires you to continue to work and earn for a full career. There are a few things that might keep you from doing that—such as disability, death, and burnout. While you can insure against disability (disability insurance) and untimely death (term life insurance), there is no such thing as burnout insurance. You need to optimize your career for longevity and maximize your own wellness. While malpractice can be insured against, there are plenty of career-related risks that your malpractice policy does not cover, including: Sexual misconduct Criminal acts Inappropriate alteration of medical records Medicare fraud Being unable to remain credentialed due to being a "difficult physician" Your ability to earn money at a high rate is valuable. Protect it. There is a nearly guaranteed pathway to physician wealth, but it's harder than you might think to get on it and stay on it. You can do it, though, and if you need help, the WCI community will be with you every step of the way. The White Coat Investor

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