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Should I teach residents about active investing?

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  • Avatar Complete_newbie 
    Participant
    Status: Physician, Small Business Owner
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    Joined: 01/03/2017

    WCI, whats the source of that chart? Thanks for sharing.

    #107442 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 4529
    Joined: 05/13/2011

    WCI, whats the source of that chart? Thanks for sharing.

    Click to expand…

    https://us.spindices.com/documents/spiva/spiva-us-year-end-2016.pdf

    Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
    Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011

    #107443 Reply
    Avatar Roentgen 
    Participant
    Status: Physician
    Posts: 73
    Joined: 03/02/2018

    Marko-ER,

    DFA, as I understand it, simply operationalizes the Fama-French three-factor model of market anomalies in a way that allows advisors to build portfolios along those lines.  Maybe four factors now, not three?  In any case, because they at least have a basis in some sort of evidence base, I suppose “indexing with a twist (and higher cost) is a fair enough characterization.  But the evidence is backward looking, and we all know that true market anomalies, once identified, disappear as people take advantage of them.  I’ve read a lot of discussion about whether these anomalies will persist, and whether the “anomalies” are actually reward for unrealized risk, but that’s a whole ‘nother discussion.

    IMO, Vanguard, TIAA, and DFA are the only players that I’d recommend working with to anyone, and of the three, Vanguard is the clear winner.  TIAA I suppose is going to capture most medical training program investment options.  DFA I presume is mostly only available to “regular” investors – I guess not what I think of first when I put myself in the trainee role.  I suppose if I knew nothing else, and someone said their advisor used DFA funds, then I would be more likely to give that advisor the benefit of the doubt, but I’d still “trust but verify” what actually happens once they are handling my investments.

     

    #107469 Reply
    Avatar Roentgen 
    Participant
    Status: Physician
    Posts: 73
    Joined: 03/02/2018

    Zaphod,

    The beauty of me presenting is that I have nothing to gain from these presentations.  I’m a full time doc, this is my avocation, not vocation.  Leaves me free to have more of a bias if I can back it up with facts.  I’m not licensed as an advisor with the state, I don’t hold any FINRA license, I don’t have a broker-dealer or insurance company to answer to.  My only motivation is A) I wish someone would have done this for me, and B) I passionately HATE seeing our professional confrere’s get manipulated and abused by an industry that most certainly has not taken a hippocratic oath.  Although a fiduciary standard would at least be a start.

    #107477 Reply
    Avatar Roentgen 
    Participant
    Status: Physician
    Posts: 73
    Joined: 03/02/2018

    WCI,

     

    When you give these talks, how many hours do they give you?  And would you be willing to write here what topics YOU feel important enough to include?  Its so hard to predict what is important to them, and then balance it against what you know should be important to them but isn’t yet.  But if you only had one hour, two hours, three hours, or four total hours, what are the must-includ topics for those time frames?

    Appreciate anything you are willing to share.  And thank you to everyone who has shared so much already.

    #107482 Reply
    Avatar wideopenspaces 
    Participant
    Status: Physician
    Posts: 1137
    Joined: 01/12/2016

    I just gave a lecture to residents about personal finance. Several forum members gave me the slides they used when they taught. It was very helpful. We covered student loan management, insurance, and investing and stressed the importance of living like a resident. I kept it basic but it still took 2 hours to get through. The residents have very basic knowledge of these subjects. I wouldn’t do more than mention that active investing is a thing that will lose you hundreds of thousands of dollars over your lifetime and to invest in low cost index funds. You’re not going to get any pushback because I highly doubt most of them are currently investing or know anything about investing. Just my $0.02 🙂

    #107485 Reply
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    SerrateAndDominate SerrateAndDominate 
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    Status: Physician
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    Joined: 02/01/2018
    Splash Refinancing Bonus

    I just gave a lecture to residents about personal finance. Several forum members gave me the slides they used when they taught. It was very helpful. We covered student loan management, insurance, and investing and stressed the importance of living like a resident. I kept it basic but it still took 2 hours to get through. The residents have very basic knowledge of these subjects. I wouldn’t do more than mention that active investing is a thing that will lose you hundreds of thousands of dollars over your lifetime and to invest in low cost index funds. You’re not going to get any pushback because I highly doubt most of them are currently investing or know anything about investing. Just my $0.02 ????

    Click to expand…

    In my reply box, that emoji is HUGE

     

    I agree with the superficial approach and cover things that are more urgent.  If you have more time, definitely dedicate a chunk of time to passive vs active.  For me, I’ve found that learning general terms and building confidence in what was once a very foreign material was the biggest hurdle.  Now, I enjoy filling in the pieces.  One of the most crucial things you can teach your residents is that while daunting at first, this stuff isn’t that bad.  If they could all handle renal physiology equations in first year med school along with all the other stuff we’ve been thrown our way, this isn’t that bad.  I tell my coworkers that nobody will care about your finances as much as you so you better not expect an advisor to.

    Earn everything.

    #107487 Reply
    Zaphod Zaphod 
    Participant
    Status: Physician, Small Business Owner
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    Joined: 01/12/2016

    I gave a presentation to senior residents at our national meeting, I think I had 20 minutes, plus q/a. It seems daunting and you cannot cover everything, but the trick is that you introduce concepts, not try to bring them fully up to speed in 30 mins on avoiding mistakes, student/debt management, investing, and insurance, etc…Its best to hit the very high impact points and then of course point them in further high yield directions at the end to further their newfound knowledge.

    You could probably talk for hours on end about student loans and the various programs. None of that is important however, nor will anyone actually remember details. Concepts and fundamentals are whats important. If you drill them for hours with the minutiae for sure they wont recall and they wont be too excited for the next one. If you’re in an academic environment you can make it a series which I think is best, even for the basics.

    Active/passive, I agree with WCI, its way too easy to punch holes in that, and wouldnt spend much time on it. Discuss it like an evidence based thing, evidence based investing says the key to maximizing your returns are diversification, passive low cost funds/advisors, appropriate asset allocation, saving a high percentage of income, etc…etc…

    Its easier than you think, just give yourself a time limit, make your presentation and then try to give it in that time. It will be way too long ofc. Then ask whats actually important which boils down to just a few things. Make a slide or two max on each, then move on. Resist the desire to get into the weeds, its entirely not useful and will bring more questions than clarity. You’ll still have a ton of questions at the end.

    #107499 Reply

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