Financial Priorities as a New Medical Resident – Podcast #220

Intro:
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. Here's your host, Dr. Jim Dahle.

Dr. Jim Dahle:
This is White Coat Investor podcast number 220 – Financial priorities as a new resident.

Dr. Jim Dahle:

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Dr. Jim Dahle:
All right, welcome back to the podcast. Last time we talked about financial priorities for new attendings. This week we're going to talk about financial priorities for new residents.

Dr. Jim Dahle:
But before we do that, I want to thank you for what you do. It's been a hard year for all of us. We're still seeing lots of COVID out there. I think we're up 30% or 50% here in Utah. People took out their masks and are pretending everything is normal, and apparently, there are consequences for that. Hopefully, it doesn't go crazy and people keep getting vaccinated, but it's still a treacherous environment. It's a difficult job.

Dr. Jim Dahle:
We all remember 18 months ago going to work wondering if we were going to bring something potentially deadly home to our family. And it's been really stressful last month. A lot of docs have retired or thought more about retirement or when their incomes dropped last year, got real serious about passive income and trying to find other ways to earn and diversify their income. It's been a stressful year. So, thanks for what you do.

Dr. Jim Dahle:
Our quote of the day today comes from Phil DeMuth who said, “Especially for young high earners, retirement accounts are a money machine. This is one of the few hiccups in the tax code that favors the high net worth. So, take advantage of the opportunity”. And I totally agree.

Dr. Jim Dahle:
Hey, for those of you who aren't yet high net worth, maybe you're in medical school or dental school or whatever. We have a White Coat Investor scholarship. It's only for professional students that are ruled full-time in a professional school located in the United States for the 2021/2022 year. And you have to be in good academic standing. Yes. We're actually going to call your school and check and make sure you're in good academic standing. But we're talking medicine, osteopathic medicine, podiatry dentistry, law, pharmacy, optometry, physician assistant school, nurse practitioner schools, CRN school, anesthesiologist assistant school or veterinary medicine school.

Dr. Jim Dahle:
We'll also consider physical therapy and occupational therapy students if the program leads to a doctorate degree. Yes, I know the post title says a medical school scholarship, and honestly, most of our applicants and winners in the past were working toward MD and DO degrees, but all of these degrees are eligible to apply.

Dr. Jim Dahle:
You can apply at whitecoatinvestor.com/scholarshipapplication. You have until the end of August to get your application in. And that application basically consists of an essay. This year the essay has to be on one of two topics. It has to be either financial or it has to be an inspiring story. And you have to choose which one you're going to apply under because we're giving out five grand prizes to each one and basically splitting the pot between 10 winners. But that'll probably be a shoot close to $7,000 apiece. It's a nice scholarship and it really helps reduce your debt during school.

Dr. Jim Dahle:
We need some judges though. We expect hundreds of submissions and since the WCI staff won't be doing any screening so we can eliminate all possible biases. We're going to need a lot of judges.

Dr. Jim Dahle:
So, if you are a working or retired professional, not a student or a resident and would be willing to read and rank 10 to 20 essays in a timely manner at some point in September, please, please, please send us an email to [email protected] with the words “Volunteer Judge” in the subject line. And we'll get you enrolled. You can be a judge in the contest and you can read some of the old winners, their essays on the website. And it's a really inspiring time all around, both students and judges and the WCI staff enjoy this every year. It's one way to give back to the community.

Dr. Jim Dahle:
All right, onto our subject for today. Financial priorities as a new resident. They're a little bit different than what you're worrying about as a new attending, but as you're coming out of medical school, as you're starting your residency, it's July 22nd when this podcast is dropping. Lots of you started about a month ago, and now you're starting to get into the groove of going to work and being a doc every day. It’s still frightening, right? But there are a few financial chores you do need to take care of during residency and don't drop the ball on these.

Dr. Jim Dahle:
The first one is going and getting disability insurance in place, unless you have some spouse or something that you're able to rely on if you get disabled, you need disability insurance. So go see one of our independent agents that we recommend on the White Coat Investor site and get this critical insurance in place.

Dr. Jim Dahle:
It's not that complicated. It's not that hard. It's a little expensive I understand, but I assure you, residents get disabled all the time. Doctors get disabled all the time. You are not invincible, bad things can happen. And if they do, you need some money to live on. And you're probably going to want more than social security is going to pay you. The way you get that is by buying disability insurance. They're probably only going to sell you a benefit of perhaps $5,000 a month but that's still way, way better than nothing.

Dr. Jim Dahle:
Also, if anybody else depends on you, now's the time to buy term life insurance. Same people that sell you disability insurance can usually sell you a term life insurance. We've got a few people that specialize in that also on our recommended page on the website.

Dr. Jim Dahle:
Term-life is pretty cheap. You can get millions of dollars in coverage for only hundreds of dollars a year, especially if you are young and healthy when you buy it. So, get some life insurance in place. Don't leave your family hanging if something happens to you. Yes, residents do die from time to time. I'm sorry to hear it, but it does happen.

Dr. Jim Dahle:
I think I added up the numbers once. It was a two-figure number a year of residency to die in the United States, but residents do die. And you need to protect your family from that.

Dr. Jim Dahle:
The next thing is getting a budget. You are no longer living on loans. You are now living off an income. You get a certain amount of money each month. If you're like most residents, it’s totally predictable, right? Unless you're moonlighting or something, you know exactly how much you're getting each month. It makes it really easy to set up a budget.

Dr. Jim Dahle:
Make sure it's a budget you can live with. If you've never done a budget before you might want to use some software, like You Need a Budget software or Dave Ramsey's Every Dollar software, or you can just do it with a pencil on a piece of paper, or you can use Excel spreadsheets like Katie and I have done for the last 22 years.

Dr. Jim Dahle:
However it works for you, but basically, you need to give every dollar a name. If you got $4,000 coming in, you need to write down how much it's going to taxes, how much it’s going to your health insurance, how much it's going toward your rent, how much is going towards groceries and all that stuff. If you have no idea what to put in each category, look at what you spent last month. You can look at the bank account records, credit card records, whatever, and your receipts, and then adjusted as you go.

Dr. Jim Dahle:
It usually takes people about six months of making monthly budgets to really figure their budget out. And that's okay if you fail from time to time. But what you want to do is get used to knowing where your money is going. That’s a very powerful thing, especially in the beginning of your financial life. Because then once you know where it's going, you can decide if that is aligned with your priorities or not. And if it's not, you can start changing where your money's going and reach your financial goals that way. So, start budgeting.

Dr. Jim Dahle:
The next priority for a resident is to invest something. You don't have to invest a lot, but I want you to get in the habit of investing something each month. I don't care if it's $100 into a Roth IRA, invest something every month. And get used to how mutual funds work and how retirement accounts work and how you put in buy and sell orders.

Dr. Jim Dahle:
So as you start making the big bucks in a few years, this will all be something you've already got years of experience with. In fact, maybe the first thing you ought to look at is go look at your employers offered retirement accounts. Go into the HR office and ask if residents are eligible for any retirement accounts and actually read the documents they give you. Find out if there is a match.

Dr. Jim Dahle:
It might be if you put a couple of grand into residency 403(b), that you'll actually get paid a couple grand more. That's right. Part of your salary may be dependent on whether you save for retirement. So, find out if there's a match offered and what it's going to take for you to get that. That is the best investment return you can get. It’s to acquire the free money that you would otherwise be leaving on the table.

Dr. Jim Dahle:
As you get close to getting out of residency, start paying attention. Talk to the residents. When you're a PGY2, if it's a three-year residency, talk to those PGY3s about where they got jobs, how much they're getting paid, what you're really worth. Figure out what you're worth, and then make sure you get your contract reviewed as you go into the interview process, your last year of residency.

Dr. Jim Dahle:
Make sure you have a written plan in place by the end of residency. Know where your first 12 months of attending paychecks are going. I want a plan where you are still “living like a resident”, but where you really know where that money is going to go, because that year is so critical in your financial life. That first year out of residency, you really want to have a plan in place for it. So, get that in place.

Dr. Jim Dahle:
But mostly remember that the point of residency is to learn how to be a good doc. It's not to try to get rich as a resident. If you're trying to get rich through some real estate scheme or some crazy options scheme, or you're trading Bitcoin as a resident, this is not the point. You will eventually build wealth as an attending. It is far easier to do so on an attending income than on a resident income.

Dr. Jim Dahle:
So, don't deprive yourself so much that you're mad and you feel deprived. And yet your spouse is mad at you because you're not spending any money. It's okay to spend some money in residency. You don't have to save at all. I don't even tell residents they have to save 20% of their gross income like I tell attendings. But getting in the habit of saving something and know where your money's going and make sure you have those critical insurances in place. I hope that's helpful.

Dr. Jim Dahle:
Okay. Let's take a question from email. This one says, “You spoke about Mega Backdoor Roth. If you're already at your max 403(b) contribution, and your employer has brought you up to the $57,000 or $58,000 limit, can you still participate by adding beyond that then rolling over to a Roth, or is this only for people who can't hit the max with their employer's contribution combined?”

Dr. Jim Dahle:
Yeah. You wouldn't be able to. It's $58,000 total. That includes your deferred contributions or your Roth contributions and it includes your employer's match, any profit-sharing contributions and it includes any after tax a.k.a. Mega Backdoor Roth contributions. All of that has to total to $58,000 or less. So, between your $19,500 and your employer puts in another $38,500. No, there's no room left for you to put in a Mega Backdoor Roth contribution.

Dr. Jim Dahle:
All right, let's take our next question about DFA ETFs off the Speak Pipe. And by the way, if you'd like to leave a Speak Pipe question, you can do so at whitecoatinvestor.com/speakpipe.

Speaker:
Hi Jim. I was just wondering your thoughts on the new DFA ETFs in comparison to similar Vanguard ETFs.

Dr. Jim Dahle:
All right, short and sweet question there. My thoughts on it. Well, I like DFA. I think they're good guys. I think they run a pretty good mutual fund company. Their expense ratios are not as low as Vanguards. They're a for-profit company. They're not run at costs like Vanguard is. So, that's one strike against them.

Dr. Jim Dahle:
The other thing you need to know about DFA is they have a huge focus on small and value stocks. That's just kind of what the focus of the company is on. And so, when small value does well, DFA looks really good. When small and value does poorly, DFA looks really bad.

Dr. Jim Dahle:
For example, when I started my kids 529s, I think I mentioned on the last podcast that I invest in very aggressively. Actually, 50% of their 529s are in small value stocks. But the way the Utah 529 works is they only let you put 25% into each of those funds. So, I actually had to split them. I put 25% into the Vanguard small value fund and 25% into the DFA small value fund.

Dr. Jim Dahle:
And so, I have essentially for the last decade plus been running a head-to-head comparison of DFA small value against Vanguard small value. And the Vanguard small value is still ahead over that time period, although more recently, small value has done better, the DFA fund looks a lot better over the last year or so.

Dr. Jim Dahle:
But basically, if you want more small value tilt to your portfolio, I think there's a lot of benefit to DFA because their funds are smaller and more valued. If that's not a big thing for you, if you don't really believe in this small value premium, you're more of a total stock market investor, then you probably don't want anything to do with DFA and you want to keep your costs low and just stick with Vanguard.

Dr. Jim Dahle:
The ETFs at DFA are pretty new, it’s their new thing. They finally realized that, “Hey, everybody's buying ETFs. Maybe we should have ETFs”. But I'm sure they're going to do a fine job with their ETFs. They've done a fine job with their mutual funds. But just like in the post I wrote I don't know how long it's been. It's probably been eight or nine years since I wrote DFA versus Vanguard on the blog. At the end of the day, it basically comes down to whether you want that small value tilt or not.

Dr. Jim Dahle:
The other thing to know about DFA is to get into their mutual funds, you have to have a financial advisor. And so, that was a big strike against them. If you didn't want to have a financial advisor. The ETFs, I presume anybody can buy without any sort of permission. And so, I guess if you want DFA funds, but you didn't want to pay for a financial advisor before, maybe using their ETFs is one way to get access to those funds. I haven't looked at them super closely, but that's what I expect you to find when you look closely at the DFA ETFs.

Dr. Jim Dahle:
All right, let's take a question from Jay.

Jay:
Hello. My name is Jay. I have a question regarding whole life insurance. I know that overall whole life insurance is really a bad idea. And unfortunately, I was suckered into this a long time ago, and I've only realized over the last year or two that I could probably have better use for my money. Especially many years ago.

Jay:
My question really pertains to when is keeping the whole life account worth it. Right now, my premiums are around $9,000 a year, but it returns about $13,000 in cash value. And that will obviously continue to rise over time. So, when I look at that yearly return on investment, it's pretty good from here forward understanding that the life of the actual policy has been pretty poor.

Jay:
With that being said, and once again, I know that I've made a mistake. Probably in retrospect, I would certainly not have opened this account, but now it seems to have a pretty good return. I only have house debt remaining at this time. I'm 35 and I work in a relatively high-paying specialty. And any thoughts that you would have on whether or not I should keep this account or not would be something that I would definitely be interested in listening to. Thank you for any of your time.

Dr. Jim Dahle:
All right, Jay, I think your conceptual understanding of this is absolutely correct. I think your understanding of some of the details is not quite correct. But you're right. It's a separate question of whether you keep a whole life policy versus buying the whole life policy originally.

Dr. Jim Dahle:
Because due to the commissions and the way these things are structured, they're almost always terrible investments for the first 5 or 10 years. And after that, they are okay investments. It’s kind of the way it works. This is assuming it's a good policy designed well, which unfortunately, most of them are not. Some of them are poor policies all the time that are designed to just maximize the agent's commissions.

Dr. Jim Dahle:
But you're right that after the first few years, a lot of the crummy returns are now water under the bridge. So, you should make that decision going forward from here. Now, this is where the details matter. And you got to get the details. The way you get the details is you request from the agent or from the company an in-service illustration, in-force illustration, if you will. And what that tells you is what the projections and guarantees are going forward from here.

Dr. Jim Dahle:
And then once you have that, you can calculate your expected return, both on the guaranteed scale, as well as the projected scale and decide if that's worth it to you or not to keep.

Dr. Jim Dahle:
I have a great blog post on this. It's called “How to evaluate your whole life insurance policy?” and it walks you through the steps of doing that. And when you see that, you will realize that there is more to it than just looking at your premiums and the increase in cash value in a given year.

Dr. Jim Dahle:
Because remember that $9,000 you're talking about and that $13,000, you're talking about, that $13,000 didn't come from the $9,000. That $13,000 increased cash value came from the $9,000 minus the cost of the insurance plus the return on the cash value you already have in there. You can't ignore that cash value in your return.

Dr. Jim Dahle:
So, when you do the return calculation, you have to look at, “Okay, what did I have in there? And what did I add to it? And how much will it be worth? And what is the return on that?” And you have to calculate the return on that. It's not just going, “Shoot, I'm going from $9,000 and I'm getting $13,000 for it. That's a great return”. Well, that sounds good. Except for the fact that you might be ignoring the fact that you've already got $50,000 or $100,000 already in that policy tied up. That if it wasn't in that policy would be building maybe even greater returns.

Dr. Jim Dahle:
Now obviously that's one issue. The other issue is you've got to look at what else you have to do with your money. If you've got 7% student loans and you're putting all this money into a whole life insurance policy that you're expecting 3% returns out of in the long run, that's a stupid move, right? That's not smart.

Dr. Jim Dahle:
So, if you're not maxing out your retirement accounts, if you have credit card debt, if you have a car loan, if you have maybe even a mortgage since lots of mortgages are about what you expect out of a whole life insurance policy, if you have student loans, this is not a great investment.

Dr. Jim Dahle:
Now this all assumes you don't have some need for a lifelong death benefit, which most people don't. Most people get sold these things as an investment, as some sort of alternative retirement account. And so, I'm assuming that that's how you're evaluating it.

Dr. Jim Dahle:
If for some reason you have a need for a lifelong insurance death benefit, then it’s a different question, right? And maybe you want to be looking at whole life policies and guaranteed universal life policies. But for the most part, doctors just get suckered into these by their friend that's working for Northwestern Mutual for the summer like I was, and you end up with a policy that maybe you regret buying and you're just trying to decide whether it's going to be a good investment to hold on to it going forward.

Dr. Jim Dahle:
Well, the other downside of holding onto these things is every year you look at it and you kick yourself for that mistake you made. I know I did that for a few years after I realized my purchase of a whole life insurance policy was kind of dumb. And you know what? Now that I don't have that policy anymore, I never have to worry about that. So that's one nice benefit of dumping the policy.

Dr. Jim Dahle:
And if you do have a better use for your money, even if it's just buying a Tesla, maybe you want to pull that money out and just be done with the whole life policy. Just make sure if you still have a life insurance need that you get some term life insurance in place before you cancel the policy.

Dr. Jim Dahle:
All right, let's take our next question from Michael about everybody's favorite tax form – form 8606.

Michael:
Hi, this is Michael. I had a quick question about form 8606, IRS form 8606 nondeductible IRA contributions. I have been doing my taxes on TurboTax for, I don't know, almost a decade now. And unfortunately, that 8606 form was never triggered on TurboTax and I'm learning about it so I haven't filed it at all.

Michael:
My records go back to maybe 2015/2016. I'm looking at them for nondeductible contributions. I'm trying to figure out what's the best way to remedy this with the IRS. I've heard mixed things, whether or not I do need to do amended returns, or I can just submit the form 8606. I've had no distributions. I've had no conversions to Roth or anything. It's just straight-up recording of non-deductible contributions to my IRA for let's say the past five years or so. Any assistance would be greatly appreciated. Thanks.

Dr. Jim Dahle:
Well, that's a bummer. Here's the deal. You want to get credit for your five years or whatever of contributions, but you can actually only go back and amend your tax returns for the last three years.

Dr. Jim Dahle:
So, what I would do is I would go back and refile my 2018, 2019 and 2020 taxes. That's a 1040-X. The main part you got to fill out there is part three, where you explain why you're filing a 1040-X. It's just a paragraph explanation and includes a form 8606 with each of those.

Dr. Jim Dahle:
In the first one, I would add the basis in there from all the contributions you've made that are nondeductible. If it's $5,000 a year for three years, maybe on that 2018 one you put $15,000 as your basis. Keep careful records of your basis so if you get audited on that point, you can actually prove that that is your basis. But I think you can fill that first one out with your full basis. And then when you fill out your 2019, obviously your basis will go up by $5,000 or $6,000 or whatever you put in there. And then 2020, same thing.

Dr. Jim Dahle:
Now, what are you going to do with all that? Well, I presume you're going to convert it at some point. So, you probably ought to convert that in 2021. And of course, add 2021 one's contribution to it before you do that. And then when you report your 2021 8606 next year, which you want to be sure to do, of course, you not only report the contribution for 2021, but also the conversion of all that money.

Dr. Jim Dahle:
Now you're going to owe taxes obviously on any earnings you have from those non-deductible contributions. You'll owe taxes on that in the year you convert them. So that'll be 2021 but you won't owe taxes on just the contributions. If you never got a deduction for them, you shouldn't pay taxes on those conversions. If they audit you, you need to be able to prove that that really is your basis.

Dr. Jim Dahle:
And as far as filling out the tax forms, I would go back three years and file amended returns and then go from there. And I would bet that you don't end up with an audit on this point. It's just not that complicated and it's pretty easy to do it. If you're unsure how to do it, maybe you hire an accountant to help you file these 1040-Xs even if you want to continue doing your taxes yourself going forward.

Dr. Jim Dahle:
All right, our next question comes off email. “How do I save an equivalent amount towards retirement when my current employer's 401(k) is structured much differently than my future employer's 401(k)? My current employer contributes a 4.5% match to my 401(k). I get that because I contributed the max to my 401(k) $19,500 each year. My current employer also contributes a 10% nonelective contribution toward my 401(k).

Dr. Jim Dahle:
My future employer contributes only a 2% match to my 401(k), but it also offers a Mega Backdoor Roth option up to 10% of my base. Unfortunately, not my bonus or stock units, but I'll max it out to 10% of my base”.

Dr. Jim Dahle:
Well, why do you care is what I would ask? I don't think this is a very good question. Not that they're dumb questions, but I want you to think about this one because I don't think you really care about the answer to this.

Dr. Jim Dahle:
You're asking “How do I save an equivalent amount into the 401(k)?” Well, if you really want to save an equivalent amount, say you go from a crummy retirement plan to a really good one that lets you put lots more money in it. Why would you only want to put the same amount you were putting in the old one? Or let's say you go from a really good one to one that doesn't let you put much in it. You're not going to be able to put the same amount into that as you could the old one, but you'll probably want to take whatever you can and save it in a taxable account or a backdoor Roth above and beyond that.

Dr. Jim Dahle:
So, I'm not sure this is a question you really need to answer, I guess is my question. But if you want to contribute to them to know exactly the same amount, well, you got to add up everything that got contributed to the one before, which is your $19,500 plus 4.5%, plus the 10% nonelective contribution. You can add up whatever that is. I don't know how much you make, but add up whatever that is. $28,000 – $30,000, something like that.

Dr. Jim Dahle:
And then you can look at what the second one is. Your $19,500 plus 2% of whatever your income is now and then 10% as a Mega Backdoor Roth. And you can compare those amounts. Just remember that a Mega Backdoor Roth contribution, assuming you can convert it to a Roth, is actually worth more than the tax-deferred contributions in the prior account, in the old 401(k).

Dr. Jim Dahle:
So, you have to actually make some sort of tax adjustment there for the fact that it's after-tax dollars going in there. If you really cared about the answer to this question. But I'll bet when you sit back and think about it, you don't care that much.

Dr. Jim Dahle:
The real goal is to take your overall income and your overall amount being saved towards retirement and make sure you're putting enough away for retirement to reach your financial goals. So, if you're trying to save the 20% that I recommend to most physicians then if you can only get 15% to the 401(k), then another 5% needs to go somewhere else, either a Roth IRA or into a taxable account or whatever. No matter what the 401(k) allows.

Dr. Jim Dahle:
So, learn about your 401(k)s, try to max them out and try to save above and beyond those. But I would worry about when you switch employers, to make sure you're getting the exact same amount of the 401(k), because if you're almost surely not going to be able to, something's going to change a little bit. I hope that's helpful.

Dr. Jim Dahle:
All right. Speaking of retirement plans, our next question is on cash balance plans. So, let's listen to that off the Speak Pipe.

Speaker 2:
Hi, Dr. Dahle. I'm a general dentist and my wife is a family physician. I started dental practice late in 2020 and has done quite well. Now I expect to make around $650,000 to $850,000 a year. My wife does about $200,000. My accountant advisors are telling me to open up a cash balance plan, which according to their actuary, I can put in around $300,000 for 2021 because I can double up my first year. Then I put in $150,000 a year into the pension plan.

Speaker 2:
They're also advising me to utilize the index universal life insurance with a low death benefit so I can use it almost like a Roth IRA down the line. It costs me $50,000 a year for 10 years. The funds in the cash balance plan are being invested in a large capital management fund. My wife and I live like residents and plan to use only about $80,000 to $100,000 to live on. The rest will be invested and tithed. Does what my advisors say make any sense? And do you see any red flags? Thanks so much.

Dr. Jim Dahle:
Wow. You are killing it. Nice work. That's pretty awesome income for your first year in a general dentistry practice. Maybe I will send you a guest post about how you did that. I bet a lot of your peers would be super interested in learning that.

Dr. Jim Dahle:
You guys obviously have a great income. Now you've got to be smart about how you use it and convert it into wealth. Now you're already doing the first thing right, which is living on a relatively small percentage of it. And so, you're saving a whole bunch of money and that's going to build wealth very quickly, no matter what you put it into. But there are obviously some things better than others that you can put it into.

Dr. Jim Dahle:
Now, I am actually a fan of cash balance plans who are also called defined benefit plans. I'm surprised you can put that much into it because it sounds like you're pretty young, just not that far into practice, but the actuaries can run the numbers for you and they can tell you how much you can put in. And if they say you can put $150,000 in, you can probably put $150,000 in.

Dr. Jim Dahle:
But I would get a second opinion. We have people on the White Coat Investor website that are listed there, that can give you a second opinion on this matter. They are under the “Retirement Account” and “HSA Help” tab. If you go to our recommended tab, scroll down to “Retirement Account”, and there are people there that can help you with cash balance plans.

Dr. Jim Dahle:
I'd get a second opinion from them. It’s definitely worth it when you're talking about these sums of money to really understand what your options are. One reason why I think a second opinion is really important for you is because what they're doing inside that cash balance account does not sound great. I don't like this asset management firm that is seemingly a little squirmy. I'd much rather see those funds invested in low-cost index funds inside the cash balance plan.

Dr. Jim Dahle:
I especially don't like the fact that they're also hocking an IUL policy to you. That is almost surely not a great idea for you and probably a mistake to buy that. So, I really don't like it when doctors get advice from people who are hocking their insurance plans. I think you probably need at least a second opinion if it's not somebody else totally designing this plan for you, as far as the cash balance plan.

Dr. Jim Dahle:
But no, I'm not against cash balance plans. I think they're a good idea. That's a pretty big amount to be committed to putting in there, even at your income. You may not want to have that much committed to it. Maybe you want to invest more into mutual funds in a taxable account or in real estate or something like that. And being locked into putting a quarter or a fifth of your income into the cash balance plan every year might be a little much. But I like the concept of you having a cash balance plan and using that to really save yourself a lot of money on taxes.

Dr. Jim Dahle:
I don't like the IUL. I'd stay away from that. I have yet to see one that I liked quite honestly. I'm sure there's some niche scenario where it worked out well for a doc but I think routinely for a 35-year-old doc, I think someone's just trying to make a big commission off you quite honestly.

Dr. Jim Dahle:
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Dr. Jim Dahle:
If you are a student, professional student, med student, dental student, whatever, whitecoatinvestor.com/scholarshipapplication is where you want to go. Apply for the WCI scholarship, we give them out every year. We give away thousands of dollars. It's one of our ways of giving back and promoting financial literacy in schools across the nation.

Dr. Jim Dahle:
If you'd like to judge for that, please email [email protected] and we'll get you on the list to judge. You can't be a resident, you can't be a student, but if you're a professional or even a retired professional, you can be a judge for the White Coat Investor scholarship. No, it doesn't pay anything but you get to be part of something that's pretty awesome.

Dr. Jim Dahle:
Thanks for leaving us a five-star review and telling your friends about the podcast. Our most recent one came in from Kaluta, who said, “The ultimate physician financial resource, both entertaining and informative. Dr. Dahle delivers information that every physician should be eagerly consuming. There's both basic and advanced material to be learned that Dr. Dahle and his guests break it down well”. Five stars.

Dr. Jim Dahle:
All right, keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast.

Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney or financial advisor. So, this podcast is for your entertainment and information only and should not be considered official personalized financial advice.