More than a half decade after reaching financial independence, there are plenty of lessons that can be imparted to those who might one day get there. Even if one doesn't ever reach that mark, these lessons can still be utilized. They're not only lessons about money. They're lessons about life. Let's talk about it below in January's financial tip of the month.

ANNOUNCEMENTS

	BOGO Free Online Course Sale – Start your year off right with a jumpstart on your financial education. With any online course purchase, get access to our CFE22 Course ($779 value), which includes 50+ hours of expert finance and wellness presentations and 17 hours of CME/CE credit, for FREE. Option to "gift a course" is available, and many are CME Eligible! Go to Course Sale
	WCI Annual Survey Is Open – Your honest answers and feedback help shape The White Coat Investor. Please take a few minutes to complete the survey by January 31st, and you will be entered into a drawing for free stuff. Start Annual Survey
	Financially Empowered Women Virtual Event – Led by Dr. Dawn Baker, join the FEW community for a virtual event on finding your unique work-life balance on January 17th at 6 PM MT. See details about event and Financially Empowered Women
	Enrollment Opens Soon for Expert Witness Startup School – Start a lucrative side gig with the experience, training, and education you use daily. Learn to translate your medical skills to the legal field by enrolling in the Expert Witness Startup School taught by Dr. Gretchen Green. Enrollment starts January 16th. Learn more about Expert Witness Startup School

MARKET UPDATE

Data sources: Morningstar and SPGlobal

2023 will be remembered as a great year in the stock market, although it was a good year to be investing in just about anything as stocks, bonds, real estate, and even crypto made money on average.
Microcaps and other small growth stocks had a particularly good December.
The market this year (and really the last 5 years) was led by large, growthy tech stocks once more, a multi-year trend that has remained persistent longer than many expected.
The fourth quarter was particularly good, with the stock market up over 12%.
The year end rally seemed to be mostly fueled by the Fed suggesting that they are likely to cut rates next year and the prospect of the much sought after "soft landing" seeming more likely than not.
Bitcoin was the big winner this year, although despite having great returns in 2023, it's still far from its previous high.

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.

Origin Investments – Founded in 2007, Origin builds, buys, and finances multifamily real estate projects in fast-growing markets. Offering private real estate funds which focus on increasing tax efficiency, enhancing portfolio yield, maximizing growth, and minimizing portfolio volatility. It's possible to get started with an investment of only $50,000.

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. Offerings include Private Funds (both Private Funds and Dividend Funds) and their newest investment vehicle, the MLG Legacy Fund.

Please consider these introductions and be sure to do your due diligence prior to investing in any real estate investment opportunity.

FINANCE FUNDAMENTALS

How to Do a Backdoor Roth IRA

1. Contribute to a Traditional IRA
Make a $6,500 ($7,500 if 50+) non-deductible traditional IRA contribution.

2. Leave the Money in Cash
Leave the money in cash, a money market fund, or a settlement fund.

3. Convert the Traditional IRA to a Roth IRA
Convert the non-deductible traditional IRA to a Roth IRA by transferring the money from your traditional IRA into your Roth IRA at the same fund company.

4. Invest the Money
Select an investment for the money in your Roth IRA. If you already have a Roth investment, you can simply add to it.

5. Beware of the Pro-Rata Rule
Get rid of any other SEP-IRA, SIMPLE IRA, traditional IRA, or rollover IRA money you have.

6. Fill Out IRS Form 8606 Correctly
Don't forget to do it, or there is a penalty.

IRA contributions for a given tax year must take place between January 1 of the tax year and April 15 (even if you file an extension) of the following year.

Looking for a step-by-step guide? Use these tutorials for Vanguard, Fidelity, and Schwab.

BEST OF THE MONTH

Best of WCI

What Real Wealth Looks Like – Truly wealthy people aren't just rich; they have control over their lives with money, time, and relationships.
A Financial Love Letter to My Wife (and the Realities of Living Like a Resident) – This guest post generated more controversy than we would have guessed. But the love letter is still a nice touch.
A Moderate-Income Physician's Approach to Alternative Investments – WCI Columnist Charles Patterson discusses whether alternative investments can help moderate-income docs "catch up" with higher-earning peers.
Why Doctors Get Paid More in the US (and Why Some People Hate It) – People keep saying that doctors are overpaid and it's why the healthcare system is so expensive. But here's why those arguments are baloney.
How I Failed and Then Mastered the Backdoor Roth IRA – Completing a Backdoor Roth IRA isn't a complicated process. But sometimes it's really hard to make yourself get started.
Underspending Can Be a Problem Too – There are five money activities to master during your life, and the hardest one might actually be spending the money you've earned.
4 Frugal Things I've Done Lately – You should spend extravagantly on things you care about and be frugal about things you don't. Here are some recent examples from WCI Content Director Josh Katzowitz's life.
Inherited IRA Required Minimum Distributions (RMDs) – When Congress changed the inherited IRA rules, it got awfully confusing when and if you needed to take RMDs. Let's set the record straight.
The Perspectives of an Older Investor vs. a Younger Investor – WCI Columnist Anthony Ellis (the older investor) goes head to head with WCI Columnist Francis Bayes (the younger investor) to see how they differ in their approaches to finance.
Charity: How to Give, Why to Give, and the Tax Benefits You Can Receive – Everything you need to know about giving to charity and why you should participate.

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.

#343 – How Do You Know If You Are Getting Good Advice at a Fair Price? (Sponsored by SoFi)
#342 – Captive Insurance (Sponsored by CompHealth)
#341 – How to Surrender One of Those Nasty Indexed Universal Life Insurance Policies (Sponsored by SoFi)
#340 – Choosing to Thrive with Stacy Taniguchi (Sponsored by CompHealth)

The Milestones to Millionaire Podcast has short episodes celebrating your accomplishments.

#143 – Emergency Doc Becomes Millionaire in 2 Years and Finance 101: How to Spend in Retirement (Sponsored by Cerebral Tax Advisors)
#142 – Emergency Physician Becomes Multi-Deca Millionaire and Finance 101: Cash Balance Plans (Sponsored by WCI No Hype Real Estate Course)
#141 – Doctors Pay Off Student Loans Before Even Finishing Training and Finance 101: The Importance of Saving (Sponsored by WCI Insurance Recommended Page)
#140 – Vascular Surgeon Lives Like a Resident and Finance 101: Car Insurance (Sponsored by WCI Surveys for Money)

Best of the Web

Every month we recommend (about) 10 articles from across the web. Thank you to those who send us suggested articles.

I Had a Stroke. Here Is What Has Changed – Dr. Dike Drummond explains that it is usually later in your life than you think it is. Thankfully, he had a pretty great outcome.
No One Is Promising You Can Keep Your Doctor Anymore – Politico's latest take on how lawmakers are viewing primary care and healthcare reform in general these days.
Rich Author, Poor Readers – This one isn't JUST about Kiyosaki. It's really about the problem with permabears and pessimism in general.
Broke Generation: 64% of Gen Xers Have Stopped Saving for Retirement – And it's not because they're FI. Gen X should be in their peak earning and savings years right now. Yet 22% have nothing saved for retirement, and 56% have less than $100,000. You probably don't feel as behind in your retirement savings now as you did 30 seconds ago, do you?
How I Learned to Spend Money on Love – This article argues that romance is THE thing to spend money on. Before it's too late.
Financial Advice for People with Disabilities – An interview Jim did that applies to some WCIers, their friends, and families. Here's another one he did with Doximity about physician unions. And one on why whole life insurance was his worst investment ever.
The Bogleheads Conference Videos Are Out – Jim has been in charge of Bogleheads University the last two years, and the videos are now available to you completely for free. Thanks to all the speakers and especially the Bogle Center board for this labor of love. It's unbelievable how many hours those guys put in this year for free.
Cognition and Financial Decision Making in Older Spouses – From Gerontology, it turns out that wives in particular become much more financially literate later in life because they have to. Make sure your financial plan includes provisions for your own senility. Kim Blanton comments on the study here.
Did Housing Unaffordability and Higher Interest Rates Finally Kill the Starter Home Myth? – This one is less about starter homes specifically and more about the idea that owning a home will always make you wealthier. We would have liked to see more on how the fact that nobody builds, buys, or lives in starter homes anymore is CAUSING the housing unaffordability crisis.
Gurus Gone Wild – Beware get-rich-quick schemes in all their forms. Guru-based investing is usually a mistake.
Which Financial Decisions Require Extra Attention and Which Don't – Great analysis from Harry Sit. Sometimes you can just wing it.
Is the Bond Market Wrong About Inflation? – Allan Roth gets most things right, including that TIPS are generally superior to nominal bonds due to their inflation protection feature and that most people underestimating that risk.

TIP OF THE MONTH

By Dr. Jim Dahle,
WCI Founder

We just completed our sixth year as financially independent people (who are still working and earning). These last few years have been wonderful. They allowed us to save more money and reduce risk further, treat ourselves to some pretty awesome luxuries, help a lot of other people, give more to charity than we ever expected, and leave much more of a legacy than expected.

However, those years have also given us a great deal of perspective we did not have before. We've learned four things that the newly financially independent (and probably everybody else) really ought to know.

#1 Money Is No Longer the Rate-Limiting Step

My major (Molecular Biology) was in the chemistry department. I spent many years learning about and utilizing the concept of a rate-limiting step in a chemical reaction. In a lot of ways, money is like oxygen. When you don't have enough, you can't think of anything else. (Trust me, I started descending for a scuba dive a couple of months ago with the valve on my tank closed and quickly learned the importance of oxygen.) However, when you have enough oxygen (or money), you don't even think about it. You certainly don't worry about it.

For the financially independent, the "rate-limiting steps" are now time and health. So, it makes zero sense to engage in any activities that make you wealthier before you have completed the activities that make you healthier. I exercise 5-6 days a week. That includes aerobic activities like running; resistance training (weightlifting); and fun stuff like skiing, hiking, or playing ice hockey. I step on the scale every day and make sure I'm fighting my weight battle "in the first 10 pounds." I am even trying to do preventive healthcare stuff (wish me luck at my first colonoscopy this week). I might even have a primary doctor soon.

#2 Relationships Matter a Lot

Doing a residency was like putting the rest of my life on hold. I didn't show up to extended family events. Friendships and hobbies were put on the back burner. Most of my time off was consumed by sleeping, and what little time was left was dedicated solely to my immediate family. After residency, most of us gradually start rebuilding "the rest of our lives." Financial independence provides the opportunity to do that in a big way. Most people who become FI cut back on the amount of time they work at least a little bit (some quit completely). The financially independent also use their wealth to buy time by outsourcing non-pleasurable activities such as shopping, cleaning, yard and driveway care, accounting, or even investing. That time can be used to improve key relationships in life.

#3 Legacy and Reputation Matter More

It might be just as much a function of getting older as becoming financially independent, but your attention turns to the next generation(s), the world around you, and how you will be remembered. Being financially independent (having enough) and not caring nearly as much about getting more money turns your attention to other things. That might be how your descendants and the world at large remember you. It might be the difference you are making in the world.

I've been in business now for a long time. Being successful in business really isn't all that complicated. You simply say what you are going to do and then actually do it. Amazingly, a large percentage of people don't get that. It must be harder than it seems. While there is little reason to hurt your employees or business associates before financial independence, there certainly isn't reason for it after financial independence. You can afford to be a little more generous with others. You don't need to give away the store, but you can certainly afford to treat others with integrity and generosity.

One of the greatest blessings of the way WCI has grown is that it has no investors, it has no debt, and its owners have never needed its income. This has allowed us the freedom to make long-term decisions that are in the best interest of the WCI community and the business itself. That's even more true now than it was a decade ago. Our financial goals have slowly changed from things we hope to buy to amounts to accumulate for our own retirement or our kids' college to amounts we hope to leave behind when we die to amounts we hope to give away before we go. Yours probably will too.

#4 Don't Lose the Game

Neurologist and financial historian Bill Bernstein famously said, "When you win the game, stop playing." People have been debating ever since exactly what he meant by that. But it's pretty clear that once you're financially independent, you certainly don't want to lose a game you've already won. Some investors do the equivalent of "pulling their goalie" with 5 minutes left in the game while they're up by two goals. Forgive the hockey analogy, but you usually only swap your goalie for another skater with < 2 minutes to play when you're down by one goal and hope that the extra skater will make the difference to tie up the game and force overtime.

Financially speaking, this is taking risk you don't need to take to make money you don't need to impress people you don't care about. An example would be taking $8 million of your $10 million and putting it into Ethereum. Another might be borrowing additional money against your home and real estate portfolio (increasing leverage from 40% to 80%) in order to own 100 doors instead of 50 doors. Or investing 50% of your money with one syndicator. While investing is a single-player game, the real point is to achieve your financial goals while taking as little risk as possible.

Whether you're financially independent already, soon will be there, or have a long way to go, internalize these four lessons from the financially independent.

The White Coat Investor