August Newsletter - How to Stay Rich

It's one thing to get rich. With a large income and smart retirement planning, physicians and other high earners can certainly get to that point after a few decades (or less) in the workforce. It's an entirely different thing to stay rich. A divorce could cut your wealth in half. A gargantuan lawsuit could wipe you out. Somebody or something could seize your money. There might not be a foolproof plan to protect all of your assets that will keep you in the wealthy category. But having a plan to stay rich isn't as difficult as you might think. We'll talk about it more below in August's financial tip of the month.

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ANNOUNCEMENTS

	WCICON24 Speakers Announced – Prioritize your financial well-being and take steps toward the life you envisioned with the support of this team of expert speakers at WCICON24. Join the White Coat Investor community in Orlando on February 5-8, 2024. See WCICON24 Speakers
	WCI Scholarship – Apply before August 31! We're also looking for volunteers to judge submissions. Over $70,000 awaits the 10 grand prize winners. See All Scholarship Details
	Bulk Book Discounts Available – Thanks for discussing money and encouraging financial literacy. Save on orders of 25+ books and even more on orders of 100+. Email your order or questions to books@whitecoatinvestor.com
	Trusted Mortgage Lenders – For top-notch support and guidance, use lenders vetted by WCI staff and thousands of white coat investors over the years. Go to our recommended list for Doctor Mortgages or Conventional Loans & Refinancing
	Physician Real Estate & Entrepreneurship Conference – Join host Dr. Peter Kim of Passive Income MD in Los Angeles from September 21-23 and learn from Dr. Jim Dahle and other great speakers about both passive real estate development and entrepreneurship acceleration. Sign up for PIMDCON

MARKET UPDATE

Data sources: Morningstar and SPGlobal Fed raised interest rates again, but inflation has been moderating and they have been signaling they may not have to raise rates much more. This had a downward effect on bonds, but they now have the highest yields we have seen in years. Cash is now yielding 5.19%. Silver was the big winner for the month, but stocks and real estate weren't bad places to be. Both had solid returns and are getting close to having made up for 2022. Bonds and Bitcoin both down for the month.

REAL ESTATE OPPORTUNITIES

DLP Capital – An impact investment company focused on creating great returns for investors while doing good for the world. All funds are evergreen, invest in critical workforce housing, and pay preferred returns before DLP takes any management fee. $100K investment minimums are back for a limited time. MLG Capital – Founded in 1987, MLG Capital invests via a series of funds that target both geographic and asset-class diversification. MLG Capital has consistently delivered attractive, tax-efficient returns throughout its 35-year track record of success. The MLG Private Fund VI is now open for investment. Please consider these introductions and be sure to do your due diligence prior to investing in any real estate investment opportunity.

FINANCE FUNDAMENTALS

10 Timeless Financial Principles for Doctors

1. Insure Well Against Financial Catastrophes 2. Create a Budget and Spend Intentionally 3. Save 20% of Gross Income 4. Live Like a Resident for 2–5 Years Post Training 5. Don't Mix Insurance and Investing 6. Negotiate Your Contracts Well 7. Use Tax-Advantaged Accounts 8. Pay Cash and Avoid Debt 9. Follow a Reasonable Investing Plan 10. Stay the Course Having a high income by itself won't guarantee the "good life" you've envisioned. If you're feeling overwhelmed with your financial life, check out WCI 101. This email series breaks down the basics into easily digestible, bite-sized pieces. Sign up for WCI 101

BEST OF THE MONTH

Best of WCI 7 Major Changes to Public Service Loan Forgiveness – The Public Loan Service Forgiveness program has gotten some tweaks; our student loan expert shows how you could potentially qualify easier for PSLF. The Buckets Strategy for Retirement – When figuring out the best way to spend down in retirement, the idea is to minimize the Sequence of Returns Risk. The Buckets Strategy can help. The One Portfolio Better Than Yours – Columnist Rikki Racela knows one thing for sure: his portfolio is better than anybody else's. Should Doctors Be Organizing and Striking for Better Pay and Work Conditions? – A passionate roundtable discussion with four physicians, including Jim, that talks about whether docs and unions should actually mix. NewRetirement Review: An Online Retirement Calculator on Steroids – Jim tries out a fancy retirement software product. I'm Too Old to Be Training – Columnist Charles Patterson, after a few years as an attending, began a fellowship. He's older than just about all of his colleagues but also maybe a little wiser. A Neurologist's Road to Becoming a Bitcoin Maximalist: Why Bitcoin Is Not the Next AOL – The last few years have made this neurologist a Bitcoin believer. And yes, he knows you think he's probably bonkers. Is the Cost-of-Living Rider on Your Disability Insurance Policy Worth It (in Times of High Inflation)? – With inflation rearing its ugly head, two disability insurance experts break down whether a COLA rider on your policy is worth it. 5 Ways to Weather the Storm of Infertility – Guest writer Dawn Baker details her own struggles with infertility and everything she didn't know beforehand—emotionally and financially. How to Think About a Tax-Deferred Account – Some people misunderstand what a tax-deferred account really is. Jim writes about how it can affect your asset allocation and retirement spending decisions.

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. #323 – When Is the Right Time to Invest in Real Estate? (Sponsored by Laurel Road) #322 – Questions from Students and Residents (Sponsored by Pattern) #321 – The Family Board Meeting with Jim Sheils (Sponsored by SoFi) #320 – Investment Accounts (Sponsored by SoFi) The Milestones to Millionaire Podcast has short episodes celebrating your accomplishments. #123 – Family/Sports Medicine Doc Becomes a Millionaire and Finance 101: 4% Rule (Sponsored by SI Homes) #122 – Orthopedic Surgeon Hits $4 Million Net Worth and Finance 101: Taxes (Sponsored by WCI Insurance Recommended List) #121 – Couple Creates Their Own Financial Plan and Fires Their Financial Advisor (Sponsored by 37th Parallel) #120 – Career Military Doc Takes on Retirement (Sponsored by Pattern) The Passive Income MD Podcast #169 – Physician's Tools of the Future: Harnessing the Power of AI #166 – How I Revolutionized CME Education Forever

Best of the Web Every month we recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles. This Company Made Billions by Surprise Billing ER Patients – Michael Hiltzik argues Envision got exactly what it deserved. What Happened? An Analysis of the Multifamily Meltdown – Meltdown might be too strong of a word, but we think this is one of Paul Moore's best pieces. It's a good illustration of the risks of real estate investing, including passive private real estate investing (what Paul does). An ETF Proposal for the 4% Rule – Allan Roth and John Rekenthaler got together and proposed a new mutual fund that does nothing but ladder TIPS. How Long Should EM Residency Be – Not many specialties have residencies of multiple lengths like EM does. Why did it take so long to study this? Burned Out, Doctors Turn to Temp Work – Via Doximity and the WSJ, this article suggests locums right out of residency is becoming more common. The Moral Crisis of America's Doctors – Doximity and the NYT tell you how terrible your job is and then suggest that maybe it could get better by forming a union or cutting out insurance companies. Ohio Plastic Surgeon Loses License – If you need your state medical board to tell you not to post on TikTok (and/or live stream) while operating, don't be surprised when they come down pretty hard on you. Take those reprimands seriously the first time. Acclaimed Memphis Hand Surgeon (and WCIer) Shot to Death – This one really affected us here at WCI, especially once we realized the doc had just opened an email from us the day before. Our condolences to all who knew Dr. Mauck. We didn't know him well, but he was definitely one of us. Rest in peace. 23 Medical Boards Make Changes to Support Physician Well-Being – Great news! It's ridiculous that docs cannot seek mental health care without severe professional consequences. Responding to Patient Online Reviews Can Be Risky – Do it yourself or don't do it all: this is not the task to delegate to your 19-year-old front desk staff without comprehensive training. The Problem with Valuation – Nick Maggiulli argues that maybe valuations will now be permanently higher. Maybe he's right. Whether it's true, it should motivate you to save more. The Credit Card Competition Act – Congress is considering a move that might kill credit card rewards. You'll probably still come out ahead in the long run, though. Let's be honest: you're paying for those rewards via higher prices.

TIP OF THE MONTH

By Dr. Jim Dahle, WCI Founder I'm a firm believer that you really only need to get rich once. That can happen in a lot of ways. Maybe you get a big inheritance or win the lottery. Perhaps you start a business that ends up being very successful. Maybe you build a real estate empire. Maybe you simply plod along for a couple of decades socking away a big chunk of a high income and investing it wisely. Perhaps you got lucky in real estate in the Bay Area and then moved to Indiana and bought a similar house but had $3 million left over. For our purposes today, it doesn't matter how you got rich. It's really all the same once you're there (although you're not necessarily the same person when you get rich quickly vs. slowly). The topic for today is how to stay rich.

The solution to this is to consider all of those things that could turn your financial fortunes upside down. Then, one by one, protect yourself as best you can from them. Divorce might be the most common way to lose a lot of wealth. Cutting your net worth and your future income in half is a great way to obliterate wealth and the means to produce it again. Treat that marriage like the most important thing in your life or it is unlikely to last. That's not just good relationship advice; it's good financial advice. If you do end up getting divorced, get a good attorney. I'm amazed at how many doctors I run into who really did not get a square deal in the divorce. It's one thing to cut your wealth and income in half. It's much worse to cut it by 75%. A massive lawsuit is another great way to go from rich to poor. While those who have read my asset protection book know there is no such thing as a "bulletproof" asset protection plan, it is surprisingly easy to protect most of your assets from creditors in the event you had to declare bankruptcy due to an (admittedly very unlikely) huge judgment not reduced on appeal. It is surprisingly difficult to protect all of your assets, however. That's OK. You don't have to protect every dime to avoid going from rich to poor due to a lawsuit. Carry appropriate amounts of liability insurance, max out your retirement accounts, know your state asset protection laws, and be smart about how you title things. If you still have a lot of unprotected wealth, consider more expensive and complicated asset protection strategies, such as trusts. Bad investor behavior is another great way to lose your wealth. Buying high and selling low is surprisingly common. So are undiversified portfolios, market timing, and gambling on options and speculative assets. If most of your wealth is in a business or a few properties, take advantage of every opportunity you have to move it elsewhere. Businesses fail and properties drop in value all the time—sometimes never to recover. Overleverage is another great way to go broke. I'm amazed to see that a high percentage of real estate investing gurus have gone bankrupt. If you're already rich, stop taking risks you don't need to take so you can make money you don't need and impress people you don't care about. Deleverage. Nobody ever went bankrupt without debt. Macroeconomic tragedies can also wipe out a lot of wealth. Whether it is confiscated by Bolsheviks, destroyed by bombers, or ravaged by hyperinflation or economic collapse, sometimes the world comes after everyone at once. Invest in international stocks. Consider having a small amount of your assets in other currencies—or even cryptocurrencies or precious metals. Hard assets may have some advantages in some situations over "paper" assets. Store a little extra food and extra cash. Start a garden. Buy some farmland. Keep a current passport. Vote carefully. The world may look very different in 30-60 years than it does today. Insure well against true financial catastrophes. Injuries, illnesses, disability, death, liability, and property loss can all wipe out large amounts of wealth. If you're already rich, you may not need disability and life insurance and perhaps you can self-insure a lot of your property, but be smart about your insurance plan. Take enough risk in your portfolio to keep up with inflation. Even moderate inflation over a long time period can devastate a portfolio and, particularly, a fixed income. Delay Social Security. It's the best-priced, inflation-adjusted annuity out there. Have some of your bonds be inflation-indexed. Stocks, well-managed real estate, and small businesses you control are likely to have long-term returns that beat inflation. A large chunk of your portfolio needs to be invested in those assets. Be careful about your spending and how many other people you are supporting. It's not hard to spend your entire income and more, no matter how large the income. Seventy percent of lottery winners go broke within just a few years, and one-third eventually declare bankruptcy. You don't get a pass on math. Saying "no" isn't easy, but saying "no" to a few things or people now sure beats saying "no" to everything later. I hope you all have the opportunity to be rich eventually. Most importantly, I hope you develop the habits and knowledge necessary to stay that way once you are rich. The White Coat Investor

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