Why Finding Your Zone of Genius Reduces Physician Burnout

Transcription – WCI – 460

INTRODUCTION

This is the White Coat Investor podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011.

Dr. Jim Dahle:
This is White Coat Investor podcast number 460.

Today's episode is brought to us by SoFi, the folks who help you get your money right. Paying off student loans quickly and getting your finances back on track isn't easy. But that's where SoFi can help. They have exclusive low rates designed to help medical residents refinance student loans. That could end up saving you thousands of dollars, helping you get out of student debt sooner.

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All right, welcome back to the podcast. I hope you enjoy the podcast. I'm grateful for you out there. I have had a surgery recently. I'm recovering from surgery again. I had a little revision done on my wrist, and I'm grateful not only to my surgeon, but numerous White Coat Investors. I got a whole bunch of second and third and fourth opinions, sending my CT around and ended up having a removal of my distal pole of my scaphoid in my hardware. And hopefully that gives me a little better outcome on my wrist long term.

But I had a great experience, and I was pretty amazed. By post-op day one, I was on Tylenol. By post-op day three, I was on nothing. So, wonderful experience for healthcare interaction, and got to use my HSA. So that's always wonderful. But thanks for what you're doing out there. If nobody said thanks for it, let me be the first today.

 

QUOTE OF THE DAY

Our quote of the day today is about leadership, a topic we'll be addressing during the podcast. This one comes from Jack Welch, who said, “Before you are a leader, success is all about growing yourself. When you become a leader, success is all about growing others.” I love it.

WCICON is coming up. For many of you, it's getting to be later, I suppose, and a lot of you that are going to be coming in person have already committed to come in person, I'm sure. You still can come in person if you can arrange your schedule or if you happen to already be in the Las Vegas area. We'd love to have you in person.

But a lot of you who are signing up at this point are coming virtually. And we're having a sale on our virtual version of the conference for WCICON26 between the 23rd of February and the 25th of March. If you use code WCICON100, we'll give you $100 off the virtual version of the conference.

It's not too late to come in person though. Our hotel is sold out, but we've got another one. It's right down the street. No problem attending that. You've all been to medical conferences where you couldn't be in the conference hotel. It's still well worth coming to the event. Just because you're not sleeping in the same building, you're going to the presentations. That's okay. It's still going to be a wonderful experience and we encourage you to come. Check that out, whitecoatinvestor.com/wcicon, or you can go to wcievents.com and sign up. We'd love to have you.

All right, great interview today. This interview is actually going to be with one of our speakers from the conference, a fellow by the name of Rutherford Pascal. And I'm just getting to know him, but I think you're going to like what you hear in this interview.

 

INTERVIEW WITH RUTHERFORD PASCAL

Dr. Jim Dahle:
My guest today on the White Coat Investor podcast is Rutherford Pascal. He's a certified John Maxwell leadership trainer, coach, and speaker. He's going to be a speaker at the Physician Wellness and Financial Literacy Conference in a few weeks from now. So, we're excited to have him on, get to know him a little bit better.

He's also the founder of Glass Walls Leadership, where he trains people to be leaders and delivers not only dynamic keynote presentations like we're hearing at the conference, but does transformative leadership training and impactful coaching to unlock unprecedented growth and elevate leadership skills to new heights. Rutherford, welcome to the podcast.

Rutherford Pascal:
Hey, thanks for having me on. Excited to talk to you.

Dr. Jim Dahle:
Yeah. I don't know that you're a well-known name in the physician financial space, and I'm curious what caused you to apply to be a speaker at the conference.

Rutherford Pascal:
I'm not a well-known name in my house. I think one of the things I talk to people about is leadership. And the hardest person, the hardest thing to lead is yourself. And if you think about how do you grow to be a great leader from a financial perspective, from a growth perspective, you have to lead yourself first.

There's things I call bright lines. Bright lines just means boundaries. And there's things that are exciting that really fit who you are and who you want to be. And really what I talk about is understanding and finding your genius and thinking about your genius and really architecting your life around that genius, around those things to make yourself financially successful and just successful in every shape, matter, and form. There's financial success, but there's also the success of doing the right thing for people, patients, and society. And that's part of what we talk about, too.

Dr. Jim Dahle:
Yeah, accomplishing that mission, that purpose, the reason you're on the planet.

Rutherford Pascal:
That is exactly correct.

Dr. Jim Dahle:
Exactly. All right. Well, the talk you submitted is called Transformative Leadership: Unleashing Potential for Wellness and Financial Mastery. Talk to us a little bit. The purpose of the conference, obviously, people who want to be a little more financially savvy, they're excited to come and talk to other people because there's nobody they can talk to in their lives about finances. But at the conference, they can talk to everybody there about their finances.

But also a lot of people at the conference are getting to mid-career and facing some wellness challenges. They're feeling the stress of their workplace, of their profession. They're feeling burned out. The burnout rates in medicine hover around 50% these days. What are they going to learn from your talk that's going to help them deal with those challenges?

Rutherford Pascal:
I'm going to break things down into three areas. It's really about this thing I call the PID system – Preparation, Intentionality, Differentiation. And if you think about burnout, if you think about financial mastery, if you prepare well, if you actually plan for your day, let's think about burnout. If you plan your day, month, week, quarter, year, whatever you do, in a way that you give yourself deep work time. If you've read the book by Cal Newport called Deep Work, spectacular for that. You do your time blocking was something you can use for that.

But then you put time in where you're not working, where you are actually resting your mind, your body system. So, it's really about the preparation, but that's also intentionality. You have to be intentional about what you do, how you do it, when you do it.

Sometimes you do more by doing less. You do more by greater focus on a task, skill, or something, or whatever you're doing, but you spend less time doing it, if that makes any sense. You give yourself this deep work, this time to focus. But then you also give yourself plenty of rest to recharge and reload, and typically by not thinking about it.

It's that whole thing of being prepared, but being intentional. And that intentionality will help curb, if not completely eliminate burnout. Preparation and intentionality will do that because you won't be doing things on a consistent basis on a hamster wheel, where you feel like, “Oh, I'm doing the same thing over and over.” You're going to figure out exactly “Where do I operate best? Where is my greatest and best use?” Either give this task tool to somebody else, or it's now down at 90th on the prioritization list instead of everything being a priority, and that's when you go crazy.

That's really what I talk to you about. I talk to people about how to think, how to think about what they're doing. And if you put those rules in place, those bright lines which I talked about, through preparation, through intentionality, you're not going to burn out. You're going to master yourself on a financial basis because you would have architected your life and what you're going through, not for today, but for weeks, quarters, years.

Dr. Jim Dahle:
Now, one of the challenges that I think leads to burnout, particularly for employee physicians, is they find themselves in an environment where they don't have as much autonomy as they would like. This idea you put forth, which is excellent, that you operate only at your highest and best use. You find somebody else to take care of those little tasks.

Well, when you're not in charge of hiring that person, when you're not in control of having that person, sometimes those tasks all load up on you. Any thoughts on how to manage that conversation with an employer, with the supervisor, etcetera, to receive that level of support to make sure you're operating, practicing at the highest level of your license, for lack of a better term?

Rutherford Pascal:
That is a spectacular question. I don't know if I said this. I spent 35 years in pharmaceuticals. 35 years in front of physicians, talking to them. I know that there's different organizations that demand, I was going to say require, I'll say demand a certain type of time commitment. But what I've seen is how different people work within that time commitment, because they're asking you to get specific tasks done.

But again, it's the mental or mindset framework of how you do this. In some of those situations, you can talk to your organization about timing. How much time do I have to do this? And they will oblige as long as they're getting what they want. And if that's not the case, they're mandated on where you're seeing a patient every seven minutes or you're working from this, they mandate the number of patients you're going to see a day. Then it's just about how can I do this to be more efficient with my work? What tools am I not using that I should use? There's always a way to become more efficient within those constructs. There's always somebody within the organization that is managing their time well and is not getting burned out and is still following the rules of that organization.

And I think it's talking to those people or it's figuring out for yourself, “How can I do this in a way that satisfies everybody, my company, the patients I see, the staff, in a way?” I will tell you, I've led teams for my entire career. And I always tell people there's always five ways to do things. There's five answers. Some of them are answers you don't want. There's always five answers. And people have to challenge themselves to think about, “Huh, I could do that. I should do it that way.”

And I'm not giving you a direct answer because every situation is different. You have to look at your situation and say, “Instead of having my assistant or nurse come in after, why not have them come in with me?” It's things like that, you can adjust and change that might help the situation, might curb burnout, might curb some of the things that are restricting the physician from being happy and productive in their course of the day.

Dr. Jim Dahle:
I wonder if it helps to be able to speak the same language as your boss. The boss might be focused on throughput numbers or whatever. And sometimes they just don't realize that having doctors doing relatively menial tasks is a terrible use of that time. I find myself in the emergency department doing things that certainly you don't need an MD to do. Bringing patients blankets, bringing patients something to drink, those sorts of things, just because I come out of the patient's room and I can't see anybody, there's nobody else around to do it, so I go and do it.

And sometimes, especially in my particular situation, the hospital is not my employer, but if it was my employer, I ought to be thinking about the cost to them of me and my time and my expertise to be taking patients blankets. Maybe they're not getting the bang for their buck that they'd like to be getting out of that. And just being able to talk to them in terms of what they understand and really every sort of discussion looking for more support is a negotiation. You're really moving into negotiation with your manager or your supervisor and I'm not sure a lot of physicians realize how often they're entering into negotiations in their lives and in their daily career work.

Rutherford Pascal:
You bring up a great point. I told you I wrote this, my book is the PID System – Preparation, Intentionality, and Differentiation. Even if the employer has these mandates and has these things and you're seeing an inefficient way of working, you talked about speaking the same language.

Typically, the language is money. That's a typical language. In a hospital, they could want infection rates decreased. They could want success in certain types of surgeries, whatever they're known, for increased. They want a heat of scores. Whatever it is. And if you're right, you're spot on. If you're speaking in their language, they will listen and they could change because you said, “Hey, what if we had one person that was in charge of water, blankets, et cetera, that came in and their job was every single time a physician walked out, they did this.”

That would give me more time to be more efficient. I could see two more patients a day. But I'm going to tell you, if you say I'm going to see two patients today. And if you multiply by the number of physicians, even if it's one patient or a half a patient, I'm going to see a half a patient a day more. They're going to say, done, because that's what they're looking for. So if you're bringing solutions in that way and speaking their language, that is absolutely what you can do and should do.

Dr. Jim Dahle:
Let's circle back to something you said earlier. You talked about inserting rest time into your schedule. Let's talk about that. What does that look like? Is it literally a blank on your Google calendar or do you put, “I'm going to doom scroll on my phone for 15 minutes here at the end of my lunch hour?” Does it have to be a planned activity or is there literally a blank in the schedule? What does that look like to insert deliberate rest into your schedule?

Rutherford Pascal:
Great question. And it differs for everybody. Let me tell you some options. It basically is how do you recharge yourself? And some people could recharge by listening to opera, listening to music, listening to hard rock, whatever. It could be music. Let's make it a general term. It could be walking around the building, walking up and down the stairs. It's whatever recharges you. It could be spending, okay, I'm going to spend 10 minutes in quiet reflection. I could be meditating. It doesn't matter. It's you. There's nothing that's universal. You have to figure out.

I'll just tell you. What I do when I'm in this room in my office and I'm working for an hour or two hours straight on something, whatever, I will get up and go in to the other room and I will put on a show that I've seen the episodes 400 times, which is typically Law and Order. I've seen every episode like at least four or five times. And for 10, 15 minutes, I'll watch it. It's mindless. I don't think about the last two hours, but it gets me prepared. My mind blanks and I'm ready, re-energized for the next two hour block, whatever that is.

So, it's really about who you are. And by the way, I do that, I don't do that all the time. Lots of times I walk because that also resets my time. So it just depends on weather, on situations, on where I am, on what I'm working on. But I will tell you, if you think about people who are successful, they reset their mind.

And by the way, it could be going and taking three deep breaths. What I'm talking about is simple. I'm giving you 10, 15 minutes, but it could be just like going to reset your mind, take three deep breaths and come back. It's all different and it's not universal.

Dr. Jim Dahle:
One of the ideas you talked about, you mentioned it earlier, is this idea of genius. Somebody's zone of genius. What is a zone of genius and how can somebody figure out what their zone of genius is?

Rutherford Pascal:
So, what kind of physician are you?

Dr. Jim Dahle:
I'm an emergency doc.

Rutherford Pascal:
Let me ask you, when a patient comes in, there's certain things that happen to the patients, you diagnose probably all of them. I'm going to say equally. I'm just going to say that. But there's certain things that happen and maybe it's a gunshot, whatever it is that you not only love doing, love meaning that you see it and you know exactly what to do. You're excited about doing it and you're better than the next emergency physician. Because it doesn't matter. We do the same thing. We're better. You don't have to be modest. You know there's certain things that you do better than another emergency physician. Am I correct?

Dr. Jim Dahle:
I think most people feel that way. Yeah. They've got a few things that they love. Everybody loves reducing nursemaid elbows. That's the greatest thing in the world because you have these parents come in that they're totally worried and there's almost nothing wrong with their kid. And what is wrong with their kid, you can fix in about a second and a half. And they just think you're the genius. And it's literally super easy and super rewarding and takes no time and no time to document. If I can have a whole clinic of nursemaid elbows lined up for the rest of my life, I would die happy. It’s wonderful. But at the end of the day, unfortunately, most of the work you get to do as an emergency physician is not necessarily what you're particularly good at, nor what you enjoy.

Rutherford Pascal:
What do you enjoy? Tell me the surgery that walks in that you enjoy. When I say enjoy, let me define it. When it's enjoy, it might be slightly difficult. It might be unique. You might get one case every month. And then when you say, “Hey, I'm glad this came in on my shift versus somebody else's shift.” Does that make sense?

Dr. Jim Dahle:
Yeah. Everybody loves a good foreign body. No matter what orifice it's been inserted into. It's just a lot of fun and rewarding to get out. And you usually can get it out. And so you're able to help that patient. When you look for charts that people maybe fight over a little bit, often it's a foreign body chart.

Rutherford Pascal:
That's what I'm talking about. Everybody has a zone of genius within a profession. It's just something that they're great at. A zone of genius, I'll explain it this way. There's a lot of people that are not analytical and that they don't want to work on a spreadsheet at all. They see a spreadsheet, they break out in hives.

There's other people that they see a spreadsheet or they see code and they'll get lost in it for a long period of time. And all of a sudden, it’s “I've been working on this for four hours. Oh my God.” That becomes your zone of genius where time goes away. You're thrilled to be in it. There's nothing else that's happening in the world because you're so deep and you're so good at it. And it interests you so much that you can spend time and you could do it over and over again. It never gets boring and it never gets old. And your results are fantastic at it.

There's certain people that you would trust doing your taxes and you would trust doing construction in your house. And there's other people who have come to your house that have done construction that you would never let back in your house again.

Dr. Jim Dahle:
Absolutely. I think everybody's got a list of those people.

Rutherford Pascal:
Yeah. You talk to those people, that's their genius. They see a problem, they solve it, they love it, they're involved. And there's other people that they do it, but they're mediocre at it. They haven't found their zone of genius because that person should be doing something else that they're great at. Or doing another part of that skill career that they're great at. That's their zone.

When I talk about people's zone of genius, it's when they've found the things that they are great at. Let me go back to the emergency physician situation. Do you know when emergency physicians started to rise in popularity?

Dr. Jim Dahle:
You mean when the ER TV show came out?

Rutherford Pascal:
That's exactly what happened. It became because they saw the energy. Because some people like every case is different, every case is unique. So, that as a class of physicians, those types of physicians, they like that. They want that challenge of something new. And it comes in just adrenaline. That's happening on a regular basis. That adrenaline, that is a zone of genius that other physicians don't want. That's what I'm talking about.

Dr. Jim Dahle:
It's interesting because sometimes when we're younger, we think we want to do something or we dream about doing something. I saw somewhere in some interview you did that your dream was to play center fielder for the Mets. But what happens sometimes is people get their dream. In high school, they wanted to be a doctor. And so they go to college and they go to medical school and they do a residency and they come out of the training pipeline and they do it for a year or two and now they're 35 years old. And they're like, “Oh, I don't like this as much as I thought I was going to like it. I'm now the center fielder for the Mets and I hate fly balls.”

What advice do you have for that person that's realized relatively early in their career and maybe still with hundreds of thousands of dollars of student loans hanging over their head, but they don't like this?

Rutherford Pascal:
I got to tell you a real story. I was working for this big company, one of the customers I was calling was pediatricians. I was talking to this pediatrician about a medication I was talking to him about and he invites me to this room. He's doing a simple thing. And he walks out and he goes, “Oh, I hate kids.” And I went, “Did you not know this? Did you understand this when you chose to be a pediatrician?”

It was the crying. He goes, “I didn't understand. I didn't know they would cry that much.” I said to him, “You should probably think about doing something that doesn't involve kids, maybe it's adolescents or do something else.” By the way, I swear to God that happened. What happens is life changes and interest changes.

Dr. Jim Dahle:
Yeah. You change, you're a different person at 35 than you were at 20, much less 15.

Rutherford Pascal:
That's exactly right. The truth is there's very few people who know exactly what they want to be at 8, 12 and 15. Doctors are some of those types of people who typically want, but even a lot of doctors don't know exactly what specialty they want. Now some people do, “I want to be a brain surgeon.” There's some people, typically it's because of some history, their families, something happened that they want to do that. And they haven't investigated 100% of what it is and what it entails. The good, the bad, the dirty, it's like anything else you got to figure out what's the worst part of the position.

Dr. Jim Dahle:
And make sure you're okay with that.

Rutherford Pascal:
Exactly.

Dr. Jim Dahle:
Yeah. The homeless drug seeker of your specialty. Yeah, exactly.

Rutherford Pascal:
Yes, exactly. Find out what the worst part is. By the way, I talk to people about that. What do you hate? When you go interview people or do an internship, talk to people, “What is the worst part of a job?” Don't ask one person. Ask five different people. And if the same answer comes up 50, 60 minutes at a time, that's probably the worst. And then if you can live with that, then you know you could fit. If kids crying is going to be a big deal, you should switch. You should go do something else.

You can always change. You can always adjust. By the way, you can do this upward instead of going lateral, you can go up. You can go in a specialty. You can get another thing to grow higher. So be even more specialized. If in fact, you're a genius at what you like, you could go across. I've known doctors who started as internists and gone to another specialty three, five years later, because it's not what they expected and they don't like it.

So you have that opportunity to do that. If you don't, then every day you're unhappy. You theoretically can work for 30 to 50 years. If you find out in the first 10 that you do not like this position, the next 20 years are going to be hell.

Dr. Jim Dahle:
And they're your best 20 years of what remains of your life. That's the worst part of it.

Rutherford Pascal:
It's your best 20 years. It's better for not only you, but it's better for your patients, your nurse, the staff, if you are happy. And it's way better not only for your constitution, but the patients, because the joy you'll have doing what you want will filter into the people that you work on and work with. And it's going to be much better. It's going to be much better for everybody concerned.

Everything's individualized, but generally, if you hate your position, if you think you're not at your best use and you don't love what you're doing, some adjustments is probably the best way to go. And I'm going to go back to the zone of genius because I believe in that.

Now, typically people change careers seven times. Seven times. From 24 to 57, seven times. This is not unusual, this is fairly normal. It's not that you failed, it's that you didn't find out exactly what you were great at early, or you did find it out and then you said, “Okay, I'm going to change it.” So, there's always a change.

Dr. Jim Dahle:
It's just more painful in medicine. I don't think it's seven times for most people in medicine because the training pathway is so long. You've committed such a huge chunk of your life to learning how to do this. And now you found out you liked blogging better than being an emergency doctor. Who knew that was coming? Nobody knew.

Rutherford Pascal:
To that point, think about your emergency doctor and you want to be a blogger or a writer or professor. You could probably transition during the work. Instead of being an ER doctor for 100% of the time, maybe you can do it for 50% or 30%. And then you can do what you love and grow that into that. And plenty of doctors have done that. My message would be go towards joy.

There might be a short financial cost, mental. There could be a short workload cost because you might be preparing for the next career while still doing that one because you want to transition to be sure.

But the long-term gain, if it's exactly what you want, you'll be so happy if in fact you've figured out what your zone of genius is. And by the way, it might be less money, but if you're happier, I know a lot of people who are so happy and they decrease their salary by 30 or 40% and they would do it over again because you have to live with yourself and other people have to live with you. So, you want to make sure you're doing things that are great for you and great for the people around you.

Dr. Jim Dahle:
Now, you spend a lot of time talking about and teaching leadership skills. There's a few people out there that want to be a leader, but in my experience, it's not that many people. And yet we need more good leaders than we actually have. Why is it important for someone who doesn't necessarily want to be a leader to develop leadership skills?

Rutherford Pascal:
It's how you define leadership. If you define leadership by having three to 30 people under you, that's one way of defining leadership. If you have 10 ER physicians, no different rank, they're all the same, but that person's a leader because of not only what they say, how they say it, how they do things, that's also a leader. You don't need people under you to be a leader. It's how you present yourself, how you are.

By the way, you always lead as a physician. You have nurses, you lead them. You have technicians, you lead them. As a doctor, you're always leading. Tell me if I'm wrong. There's very few situations where there's not somebody around you in the environment where your voice doesn't play an oversized role. In that situation, doctors are leaders 100% of the time.

Now, there's going to be people who are quiet, who don't speak up and say, “I think we should do it this way.” There's other people going to be like, “I think we should do it this way.” Those are people who are leaders. There's other people who are quiet leaders who don't say anything, but their actions speak louder than their words. They're leaders too, because that's part of leadership. Because you don't have to be the loudest voice in the room. And I'll be frank with you, the loudest voices in the room are typically not the best leaders.

Dr. Jim Dahle:
Yeah, there's some truth to that. So, can it be taught? Is leadership just innate? Is it just charisma? Or can you teach it?

Rutherford Pascal:
Charisma is part of it. There's a lot of charismatic people who are not great leaders because they use their charisma for ill. Or they use their charisma for certain situations, but they don't care about the entire situation. There's a lot of successful leaders who you wouldn't call charismatic, by the way.

I don't know if you're a football fan, but the person who won the Super Bowl this year, Mike McDonald, he's the head coach of the Seattle Seahawks. No one would ever call him charismatic. And as a matter of fact, he himself said, he, at the beginning of the year, apologized to his team for not speaking the way he should about the team to reporters and other people. He goes, “I have to be a better speaker.” But what kind of a leader is he? He's a spectacular leader. But he's not charismatic.

Leadership's about influence. How can I influence, or how do I influence somebody to do something the way that I think it should be, the way that's best for my patients, the way it's best for my team, the way it's best for whatever? What do I do? And that's why I'm saying, you don't have to have the loudest voice. If your actions influence others, you're a leader. It's about influence. It's nothing else, nothing more.

And people put way too much emphasis on somebody who is charismatic. I understand it. It's what we're used to. It's what we see. But the really, really effective leaders, people follow them, because they make that person feel special. They have some type of foresight as far as what direction people should go, and because that person's been correct, they've helped other people, people follow them wherever they go. That's when you understand real leadership is when somebody says something and people start walking in that direction.

Dr. Jim Dahle:
It's interesting, this phrase “influencer” has this negative connotation. Now when my children are asked what I do for a living, they're like, “Oh, he's an influencer.”

Rutherford Pascal:
You are.

Dr. Jim Dahle:
And my kids tell them all the time. And I kind of cringe a little bit when I hear that. But the truth is that is what I'm trying to do here at the White Coat Investor. I'm trying to influence people to manage their money a little bit better and be a little bit less burned out and be a better parent and a better physician and a better partner. That's really what we're doing. We're trying to influence people. And maybe it would be less offensive if we called it “leader” instead of “influencer.”

Rutherford Pascal:
It would be much less offensive because there are people who have a platform and they use it for good, and there are people who have a platform and they use it for ill. And we hear about the people who use it for ill. And the influencer negativity came from those people. They got famous or wealthy for having no skill or talent.

When your daughter or son say, “My dad's an influencer”, that's a really positive statement. You might say, “Oh, I don't want to be an influencer.” But the context around how that's being placed on you is very positive.

Dr. Jim Dahle:
This company you founded, you called it Glass Walls Leadership. Tell us what you mean by glass wall. Everyone's heard of the glass ceiling. Tell us what a glass wall is.

Rutherford Pascal:
You're correct. Everyone has heard of glass ceilings. Glass ceilings are what people put on you to mute your growth. There's a glass ceiling, I can only go this high. I can be a second line leader, but I can't be a third because somebody says I can't.

Glass walls are what we put on ourselves. We construct these walls like “I can't do this. I'm not good enough.” What I will say to you is nothing great has ever been accomplished without a rational belief. Nothing, nothing great. If you think about when you were 13 and you said to somebody, your friend, hey, I'm going to be an ER physician. And your friend said, “No way, you're not that smart.” To them, to people, that was irrational, “He's irrational, he's never going to be a doctor. He's never going to be this, he can't do this.”

This belief you have to have in yourself is single-minded. It has to be that way. When every single thing that's ever been accomplished greatly like this phone, that was irrational 10 years ago. This phone was irrational in the 1970s. This is more powerful than Apollo 11. This thing in my hand, when that was first told, people thought, “A personal computer in my pocket? Crazy, irrational.”

That's the glass walls that people put around themselves. They want to be hyper rational. They want to conform to what everybody else has done. This is how you do it, this is how you proceed, this is how you grow.

And as I said, there's many different ways. If we as a society thought like that, there would never be open-heart surgery, there would never be all these different things that happen in the medical space because there was somebody that was so irrational about how they were thinking. There's things that you do now. How long have you been an ER physician?

Dr. Jim Dahle:
20 years, a couple of decades since I got out of training.

Rutherford Pascal:
Tell me, give me one or two things that you do now to a patient that walks in that you couldn't do 10 years ago.

Dr. Jim Dahle:
Well, one of the things that's definitely changed the practice of emergency medicine is the availability of MRIs. You can just get MRIs almost willy-nilly now, whereas when I was a resident, it took an act of God to get an MRI. Sometimes you admitted people to the hospital just so they could get an MRI at some point while they were in the hospital. And now I order it like I'm ordering a trivial lab test and a couple hours later, I've got the results. That's certainly been practice changing for a lot of emergency physicians, I think.

Rutherford Pascal:
That's a great thing you said because that is life-changing. Not only for the patient because now with that MRI, you can diagnose correctly. And it's probably going to be able to be treated and get out faster. You're saving, the MRI costs a lot of money. It's not inexpensive, but it saves more than it costs. To not only the patient, but to the hospital. Because that patient, instead of staying there for five, seven, eight days, you can figure out with the MRI exactly what to do. They can get treated and leave, hopefully within a day or two.

Dr. Jim Dahle:
Yeah, for sure. Well, our time is getting short, but you've got the year of 25,000 or 30,000 high-income professionals, most of them doctors. What have we not talked about today that you think they need to know today?

Rutherford Pascal:
I think maybe just to double down on what we talked about with intentionality. What you're talking about with the financial mastery and you're talking about burnout, people don't think they're in control. Even though you work for an employer, you still have some control. And you can always control how you think. You can always control how you respond and act. And within that control, you can make your life better and the lives of the people around you better. And especially in what you do, the patients better.

What you're doing is showing people how much control they have to make themselves not burn out and to create a better financial life for themselves. They have control. They need to get rid of the glass walls they have around themselves, understand they can do for themselves to make themselves and their family, their staff, their patients better. They are in control.

Dr. Jim Dahle:
Awesome. Well, we've been chatting with Rutherford Pascal. He is going to be one of dozens of awesome speakers at WCICON, the Physician Wellness and Financial Literacy Conference. You can still sign up for that. You can still come in person, even. You can sign up at wcievents.com.

There's a virtual version of it, of course. You can sign up halfway through the conference if you want and start watching the conference at that point virtually. You sign up for all of that at wcievents.com. Thank you so much, Rutherford, for coming on the podcast.

Rutherford Pascal:
Hey, thanks. You were spectacular. Appreciate your questions.

Dr. Jim Dahle:
Okay, I hope you enjoyed that. Not necessarily hardcore finance information today, but you know what? We can't do that all the time. You guys just don't want to hear about 101 ways to screw up a backdoor Roth every episode of this podcast, now do you? No, there's a lot more important stuff to talk about out there besides just the hardcore finances.

And at the end of the day the greatest thing you can do for your financial career is to stay in your career. Longevity. You have to optimize for longevity and decreasing your burnout, increasing your ability to influence events around you can make you much happier. And the longer you can stay in that career, the more works out for you financially. Not only do you have more time for your investments to compound, you have more income that you can save as you go through. You delay social security longer and your social security benefit is larger. All kinds of wonderful things happen when you're able to work longer, not only to the people you're helping with your work, but to your finances.

 

SPONSOR

Dr. Jim Dahle:
As I mentioned at the beginning of the podcast, SoFi could help medical residents like you save thousands of dollars with exclusive rates and flexible terms for refinancing your student loans. Visit sofi.com/whitecoatinvestor to see all the promotions and offers they've got waiting for you.

SoFi student loans are originated by SoFi Bank, N.A. Member FDIC. Additional terms and conditions apply. NMLS 696891.

Don't forget about the discount off the virtual version of WCICON. Use code WCICON100 when you go to whitecoatinvestor.com/wcicon, and you can get $100 off the virtual version of the conference. And while you might not experience all the fun we get rubbing shoulder to shoulder in person at the conference, you do get all the content and there's a lot of value in the awesome content that gets put together for this conference every year.

Thanks for leaving five star reviews. A recent one came in from FIMD who said, “Fantastic. Great, reliable resource for the fundamentals of personal finance.” Five stars. We appreciate that review that helps get the word out.

For everybody out there in White Coat Investor land, I hope you're having a great day. I hope you're having a great week. I hope you're making progress toward your financial goals. You can do this. There's a whole community standing here trying to help you do it.

Keep your head up and your shoulders back. Don't give up. You're going to get there. We'll see you next time on the podcast.

 

DISCLAIMER

The White Coat Investor podcast is for your entertainment and information only and should not be considered financial, legal, tax, or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.

Transcription – MtoM – 263

INTRODUCTION

This is the White Coat Investor podcast Milestones to Millionaire – Celebrating stories of success along the journey to financial freedom.

Dr. Jim Dahle:
This is Milestones to Millionaire podcast number 263.

If you're a high-income physician, you already know how hard you work for every dollar. The question is, how much of it are you actually keeping after taxes? Gelt is a tax firm focused on proactive tax strategy, guided by expert CPAs and optimized via in-house AI tools.

They work with physicians and practice owners to use the tax code more intelligently, so your entity structure, deductions, and income timing all work together to help you keep more of what you earn.

As a White Coat Investor listener, visit whitecoatinvestor.com/gelt to book a free strategy intro and receive 10% off your first year with Gelt. It's time to start using your tax plan as a lever for growth.

Few updates. By the way, we have a new partner for property and casualty insurance called Rate Insurance. We launched this back in February. And this is an even better option for getting your home auto and umbrella insurance and making sure you're not overpaying for it.

If you're not shopping your rates each year, you're probably overpaying. Rate Insurance will search 100 plus top carriers to help you find the best rate for your property and casualty insurance. Go to whitecoatinvestor.com/rate.

This is the Milestones to Millionaire podcast. It's all about you. We're trying to serve you here. We're trying to highlight what you're doing. If you would like to be a guest on the podcast, if you want to celebrate one of your milestones and use it to inspire others to do the same, sign up at whitecoatinvestor.com/milestones.

We're also combining these episodes with Financial Bootcamp episodes. Now, Financial Bootcamp also stands on its own. This is a separate podcast we have now to get people up to speed, even though all they want to do is listen to podcasts, we put all the basics into podcasts. But we're going to include one of those episodes on the back of a lot of these Milestones episodes as well.

And today, after we finish, stick around, we're going to talk for a minute about health insurance. It's actually pretty amazing how little doctors know about health insurance. But first, let's do a pretty awesome interview with a White Coat investor that has accomplished some pretty awesome goals.

 

INTERVIEW

Dr. Jim Dahle:
Our guest today on the Milestones to Millionaire podcast is Jefferson. Jefferson, welcome to the podcast.

Jefferson:
Thank you, and thank you, Jim, for all of the work that you do for this community.

Dr. Jim Dahle:
It's our pleasure. It's wonderful to be here with you, but let's introduce you to the audience. They all know me already, but they don't know who you are. Tell us what you do for a living, how far you are out of school, what part of the country you're in.

Jefferson:
Nurse anesthetist. I work up on the Canadian border in the upper Midwest, and I'm in a few different critical access hospitals. 12 years out of school, I've worked in a few different practice environments, but this one I think is the most fun for me, being the only anesthesia provider in the county, oftentimes, is a responsibility and exciting, and it's something that I really like doing.

Dr. Jim Dahle:
And married, children, partner?

Jefferson:
Yeah, I'm married for about the same period of time. A little bit longer, actually. We have a 13-year-old and an 11-year-old.

Dr. Jim Dahle:
Your spouse works?

Jefferson:
She does. She works in the public schools. The majority of our income comes from the anesthesia income. She's decided not to get too involved in the public education machine, if you will. She stays kind of on the periphery.

Dr. Jim Dahle:
Okay, fair enough. You've accomplished really a couple of milestones today. Tell the audience what milestones we're celebrating with you today.

Jefferson:
Well, we recently hit a million dollars in our workplace retirement accounts.

Dr. Jim Dahle:
Congratulations.

Jefferson:
That was just in the last month or two, actually since I signed up to be on the podcast. The bigger one that looms in my mind is back in about September, we decided to manage our own finances. We had been with a resale financial advisor and we decided to move on from there and move our money into a different brokerage so that we could manage our own money.

Dr. Jim Dahle:
I want people to get this message out there. The important part of this message is once you sign up to come on this podcast, you actually get wealthier. So, that's the key point here.

Jefferson:
Yes, we had one comma before. Now we have two commas in that account.

Dr. Jim Dahle:
Okay, well, that's pretty awesome. Congratulations on being a millionaire.

Jefferson:
Thank you.

Dr. Jim Dahle:
As a kid, did you ever think you'd be a millionaire?

Jefferson:
Oh, no way. 20 years ago, I didn't think I'd be a millionaire. My hometown is a university town and I never thought I'd be able to own a house and now we will probably get to it, but we own more than one now. And part of that is, what's the term you use? Geographical arbitrage, it's cheaper to own a house here.

Dr. Jim Dahle:
You're not in San Francisco, you say?

Jefferson:
No.

Dr. Jim Dahle:
Okay, give us a rundown. What's your net worth look like? How much is in various types of retirement accounts and how much is in various kinds of investments and your home and that sort of stuff?

Jefferson:
It breaks down to, we have about $1.8 million in assets and about $200,000 in debt. One million is in the retirement accounts, like I mentioned. And then we have about $300,000 in various cash and rainy day funds. And then we have about $450,000 of real estate valuation minus $150,000 in mortgages. About $300,000 in equity in those homes.

Dr. Jim Dahle:
Some of these are investment properties?

Jefferson:
We have a house, it gets complicated, but we have two.

Dr. Jim Dahle:
Sounds like you've got multiple homes to me. That's what it feels like this is going.

Jefferson:
Let's put it this way, Jim, I drive a lot because these hospitals are an hour or two apart. And I like to be involved in lots of different places. But the main hospital where I work is about an hour and a half from home. We have two houses in our hometown. And then I did buy a house in the town where I work most often as well.

Dr. Jim Dahle:
Okay, but is one of them in your hometown you're renting out?

Jefferson:
We do rent it out, but we also use it for personal uses. We use that as a guest house.

Dr. Jim Dahle:
It really is a combination of a consumption asset and an investment. Okay.

Jefferson:
Yeah.

Dr. Jim Dahle:
All right, and your mix of investments, when you are talking about your traditional investments, what's your asset allocation?

Jefferson:
Yeah, I just looked at it this morning. We have about 82% equities and 18% bonds at the moment, a mix of domestic and international.

Dr. Jim Dahle:
Very nice. Okay, now some point last fall, you decided you didn't want to use the financial advisor you had been using. Why not?

Jefferson:
Well, I will say this podcast and others, they've given me the confidence to do that. And so, I want to express once again, my appreciation for that. But the main thing is, I didn't think he did a bad job, but I did feel like he had mixed incentives.

We ended up triggering the pro rata rule while I had him. And that kind of opened my eyes a little bit. And his suggestion was to open a solo 401(k). But at the same time, I still have a workplace 403(b) at a W2 job where I work occasionally that takes incoming rollovers. And so, I didn't really see the point in spending money to set up a new account when I already had the mechanisms to roll that money over from SEP IRA.

And then the other thing was, we had a variable universal life policy, which…

Dr. Jim Dahle:
That this advisor sold to you?

Jefferson:
Yes, yes. And so, we cashed that out because I realized that it wasn't ever going to get better. That waiting it out wasn't going to make it better. And so, we took the money out of that. And we're not going to look back on that, except for learning opportunity.

Dr. Jim Dahle:
Okay, you were essentially getting bad advice. You had mistaken, like I did, you'd mistaken the commission salesperson for a real financial advisor that just gives you advice for fees.

Jefferson:
Yes.

Dr. Jim Dahle:
All right. Well, typically I've found people's confidence lags their knowledge by about a year when it comes to doing stuff yourself. Did you find that was true for you?

Jefferson:
Yeah, I would say that the confidence definitely lagged the knowledge. I started learning about personal finance in earnest when we paid off our student loans and suddenly we had $3,000 to $4,000 a month that was no longer going towards loans. And it didn't really occur to me until that point where that extra money was there that there may be better ways to use it than others. And so, it was at that point, we took on a financial advisor, but I've been listening to personal finance the whole time, but really was more reactive and learning about certain aspects of it.

Dr. Jim Dahle:
What was the hardest part about going from being an advised client to being a do-it-yourselfer?

Jefferson:
The hardest part really was divesting of the assets that were left behind because he had a larger number of funds that he had invested our accounts in, probably 10 or 12 per account and figuring out how to move those into… I kind of had a feeling of what funds I wanted them to put them into, but it was a little bit of work figuring out which ones were short-term and which ones were long-term capital gains and whether I should hold on to any of them or whether I should just bite the bullet and move them all over at once.

Dr. Jim Dahle:
Was there a significant taxable account as well where you had to deal with legacy investments? Or it sounds like most of the money was in retirement accounts and you could just sell them without any consequences.

Jefferson:
Most of them were in retirement accounts. We did have a brokerage account with him and that was really the one that took the most attention to move over. Although I will say 529s are kind of a pain to move over also.

Dr. Jim Dahle:
Okay. Well, what advice do you have for somebody else out there that's going, “You know what? Maybe I'm not getting great advice either. I'd like to try DIYing it.” What should they do before they fire their advisor?

Jefferson:
Don't go to the advisor in the first place. Prevention is cure. Well, I think learn what you need to learn to move and then don't wait any longer. If you know that's what you want to do, just do it. I sat on it for longer than I should. If we had moved on it sooner, we would have done better.

Dr. Jim Dahle:
Did you come up with a written investment plan at some point in the process?

Jefferson:
Not in any formal sense. I had an idea in my head of what allocation I wanted once we'd moved everything over. We're sort of still working on it because this was September and taxes are due and we're kind of figuring out for 2026 what that's going to look like.

Dr. Jim Dahle:
What did your spouse think when you said, “We're going to do this on our own?” I'm guessing the fact that you're on this podcast is that you're the driving personality when it comes to money in the couple. That might not be the case, I don't know, but I'm curious what reaction you had from your spouse in this process.

Jefferson:
We've been married a long time and she's supportive, but I would say, I think that there was an element of, “Well, you wanted help with this.” The reason we took that financial advisor on was because I wanted another set of eyes looking at our finances and do you really want to take on another project?

My goal in all of this is to keep it as simple as possible. I want it to be easy if anybody else ever has to take this over. I think she's coming around to it, but you're right, I do most of the maneuvering of our finances.

Dr. Jim Dahle:
Okay. Well, you guys have done a great job. You've obviously saved a substantial sum of money, you've invested it, your money's grown. What would you say were your secrets to success in becoming millionaires?

Jefferson:
Well, I learned about the White Coat Investor podcast about 15 years ago from a friend who worked in tech. I didn't start listening regularly until about five years ago. And I would say be proactive, not like me, but be proactive when I didn't learn about finance until we'd paid off our student loans. And I didn't learn about the variable universal life until we had already paid what we were going to pay for it.

Being proactive. I know you send literature to med students, and I think that's a really good time to start thinking about this. I think that we overall, yeah, I think we have done a good job. We started investing early, even as we were paying off our student loans. And that was kind of a toss-up because they weren't super high interest rates, you know. And so, we were able to do both at the same time. Don't sweat the small stuff, just put some money away and keep doing it.

Dr. Jim Dahle:
Yeah, that's good advice. You've worked hard, you've got multiple jobs, it sounds like. You went someplace that is not that expensive to live. You've got essentially three homes for less than lots of people are paying for one home in other parts of the country. You clearly carved out a substantial portion of your income. I don't know if you told us what your household income has been over the last 12 years or so, but in order to get to a million bucks plus, you had to carve out a big chunk of that.

Jefferson:
We've been in the $300,000s for a few years now. Yeah, we're doing pretty good.

Dr. Jim Dahle:
But even just to carve that out, we're talking about 20%, 25%, whatever of your income going toward wealth building.

Jefferson:
Yeah.

Dr. Jim Dahle:
And so, you did all the things right. Made a couple of little tiny, maybe, slight course corrections. But overall, the truth is, if we just get the big things right, we can become successful like you have.

Jefferson:
I think that's right.

Dr. Jim Dahle:
All right, what's next for you? What's your next financial goal you're working on?

Jefferson:
I'm actually in a chronic pain management program. The hospital up here wants to institute a pain clinic here, and my colleague and I are up for it. That's the next thing. We're at a couple of small hospitals up here, and most of what we try to do is keep patients locally, because it's two hours to the next town. We want to provide services that they currently aren't providing.

Dr. Jim Dahle:
Yeah, will this be an additional side gig or a way for you to consolidate your jobs into one job or a boost in income? What do you expect the financial outcome of this is?

Jefferson:
Maybe a modest increase in pay, but mostly it keeps my brain engaged in terms of learning new skills. And one other piece of advice that I'd say is, go somewhere that you can use the skills that you want to keep using, and where you can learn new skills, because, well, I don't know, for me anyway, I always enjoy learning new things. And it has increased the size of our shovel to do that.

Dr. Jim Dahle:
Very cool. Well, Jefferson, congratulations on your success. You guys have done awesome, and you should be very proud of yourselves. We're proud of you. Thanks for being willing to come on the podcast and inspire others to do what you've accomplished.

Jefferson:
Thank you, Jim.

Dr. Jim Dahle:
All right, as I mentioned at the beginning, this is a fun interview to bring you guys on. You've become millionaires. You've fired your financial advisors. You've paid off your student loans. You've paid off mortgages. You've become a decamillionaire. You've gotten back to broke. Whatever your milestone is, we'd love to celebrate them with you, because they're all individual. You all have a unique pathway.

Some of you do geographic arbitrage, like Jefferson. He's in a little tiny town in the Midwest. Some of you are in downtown San Francisco. Some of you are in DC, or you're in your hometown or wherever you are. Your pathway is different. You have different challenges, but you also have different strengths. So, apply your strengths to overcome your challenges and reach your financial goals.

This is a single-player game. Just because you're a CRNA and you're not a millionaire yet does not mean you're losing this game. But if you're not making progress toward your goals, it's time to get a written financial plan in place and start moving toward those goals.

All right, I told you at the beginning we were going to talk about health insurance. Let's do that.

 

FINANCIAL BOOT CAMP: UNDERSTANDING HEALTH INSURANCE

Dr. Jim Dahle:
Understanding health insurance is surprisingly challenging, even for doctors who accept payment from health insurance all the time. But it's important to understand there's very important health insurance. First of all, the most important point is this is one of those financial catastrophes.

I fell off a mountain a year ago, and when I fell off, I got two helicopter rides. One was covered by the National Park Service. The other one was covered by my health insurance. My health insurance paid $44,000 for that helicopter ride. I hit my annual out-of-pocket maximum before I ever got to the hospital. And when something bad happens to you, whether it's a diagnosis of cancer or a diagnosis of some chronic disease, like MS or something, or whether it's trauma, like in my case, that bill can run up very quickly and put a huge dent in your financial resources or even keep you from being able to get the healthcare you need.

Health insurance is a critical type of insurance. You've got to have it. Don't go bare. There are some health insurance alternatives out there that might be worth considering, but you need some sort of coverage. Don't ignore this insurance you need to have.

But let's try to understand the different pieces of it. What's a deductible? Deductible is the portion that you pay. And sometimes there's a whole overall deductible per year for the policy. You pay the first $500, you pay the first $2,500. Sometimes there's a deductible for each doctor visit. Maybe you pay $50 every time you go see the doctor. Whatever. Every policy is a little bit unique, but a deductible is your portion to pay before the insurance company starts paying.

There are also co-payments. And this is like the payment you make to a doctor every time you go. If you got to pay $50 or maybe you got to pay 20% of the cost, that's the co-payment. And you not only pay your deductible before the insurance starts paying, but then you pay along the way with the insurance company. And then eventually you hit an out-of-pocket max. Once you've hit the out-of-pocket max, the insurance company is on the hook for the rest.

And like in my case, my ICU bill was $106,000. My helicopter was $44,000. I got a surgery on my wrist. I don't know how many thousands of dollars that was. But when you have all that happen to you in one year, you hit your max out-of-pocket and then you're not responsible for additional payments above and beyond there.

There are also another term that's thrown out there a lot called co-insurance. And all that is, that's the percentage of costs of your covered healthcare insurance that you pay after you've met your health insurance deductible.

It's a lot like a co-pay, but that's what co-insurance is. Just like your employer might make you pay 20% of the premiums for your health insurance, your insurance company might make you pay 20% of what it's paying or what the costs are until you hit your maximum out-of-pocket. But once you've hit your maximum out-of-pocket, that's all you pay for the year. Everything else is free.

Now, why is health insurance set up this way? Health insurance is set up this way so you have some skin in the game. If there were no deductibles, if there was no co-pay, if there was no co-insurance, there's nothing to keep you from just spending willy-nilly on everything.

The reason they put these in place is to help you to be a little bit wiser consumer of healthcare, to maybe think twice before you buy something that maybe you really don't need or even really want. But it not only keeps your premiums, what you pay for your insurance down, but it allows the insurance company to be able to make sure you have some skin in the game and that you're making logical decisions when it comes to what you're consuming.

But at the end of the day, when things get really bad, what you really need is that catastrophic coverage. You need them to take care of the amount above your out-of-pocket maximum.

So buy health insurance, understand how it works. Not only will it help you to be a wise consumer of health services, it'll help you to be a better doctor so you can explain how these things work to your patients.

 

SPONSOR

Dr. Jim Dahle:
If you're a high-income physician, you already know how hard you work for every dollar. The question is how much of it are you actually keeping after taxes? Gelt is a tax firm focused on proactive tax strategy, guided by expert CPAs and optimized via in-house AI tools.

They work with physicians and practice owners to use the tax code more intelligently so your entity structure, deductions, and income timing all work together to help you keep more of what you earn.

As a White Coat Investor, visit whitecoatinvestor.com/gelt to book a free strategy intro and receive 10% off your first year with Gelt. It's time to start using your tax plan as a lever for growth.

All right, that's it for our podcast today. Thanks so much for listening. We appreciate you out there. We appreciate what you're doing. Keep your head up and your shoulders back. You've got this. We'll see you next time on the Milestones to Millionaire podcast.

 

DISCLAIMER

The White Coat Investor podcast is for your entertainment and information only. It should not be considered financial, legal, tax, or investment advice. Investing involves risk, including the possible loss of principal. You should consult the appropriate professional for specific advice relating to your situation.

Dr. Jim Dahle:
A money market fund is a very low-risk investment, and the best comparison is a savings account. The level of risk is similar. It is considered a cash investment, which means the yield can change over time as interest rates fluctuate, but your principal generally does not. Unlike stocks or bonds, where values can go up and down, a cash investment like a savings account or money market fund is designed to maintain stability.

A money market fund is a type of mutual fund, similar in structure to a stock or bond mutual fund, but it invests in cash equivalents. Investors pool their money together to gain economies of scale, daily liquidity, and professional management. The fund typically invests in very short-term bonds, often lasting just a few weeks or months. Because these bonds are so short term, their value does not fluctuate much, which helps maintain stability of principal.

There are several types of money market funds. A prime money market fund invests in very short-term corporate bonds. A government or agency money market fund invests only in short-term government or agency securities. A Treasury money market fund invests exclusively in very short-term U.S. Treasury securities, which are generally exempt from state income tax. Treasury funds are considered slightly less risky than prime funds. There are also municipal money market funds, which invest in short-term municipal bonds. The income from these funds is typically exempt from federal income tax, making them attractive to investors in high tax brackets, even though the stated yield is often lower.

In practice, a money market fund works much like a savings account. You can put money in and take it out whenever the markets are open. Funds are typically linked to your bank account, and transfers usually take one or two days. Because they are safe and liquid, money market funds are commonly used for emergency funds, short-term savings, upcoming tax payments, or saving for a down payment within the next year or so.

The main alternative to a money market fund is a high-yield savings account. These are usually offered by online banks and typically pay much more than traditional local bank savings accounts. Most of the time, money market funds offer slightly higher yields than high-yield savings accounts, though there are periods when the opposite is true. One important difference is FDIC insurance. High-yield savings accounts are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor per bank. Money market funds are not FDIC insured, although they are covered by SIPC insurance, which works differently. Even without FDIC insurance, money market funds are still considered very safe due to their short-term holdings.

While it is theoretically possible to lose money in a money market fund, the likelihood is extremely low. There have been rare cases, particularly during the global financial crisis, when certain institutional money market funds experienced very small losses. For retail investors, the risk of a significant loss is very low. The bigger risk with any very safe investment, including CDs, savings accounts, and money market funds, is that returns may not keep up with inflation over the long term.

Opening a money market fund is straightforward. You can open a brokerage account at firms like Vanguard, Fidelity, or Schwab, link your bank account, and select a money market fund as your investment. Often, the default holding for uninvested cash in a brokerage account is a money market fund. While it is not as convenient as a checking account for everyday transactions, it is an excellent place to keep cash that you do not need immediately but still want to keep safe while earning a competitive yield.