Podcast #115 Show Notes: How to Fix Your Investing Mistakes

Unlike our typical shows where we answer questions people have pre-recorded, this episode will be a bit of a back and forth with a listener who had a lot of questions.  She actually heard about the white coat investor in 2012 but it was overwhelming to hear how many investing mistakes she had already made since finishing fellowship the year before. “Oh my gosh. This is so overwhelming. I am so not ready to hear how many mistakes I’ve made already.” Of course, I was recently out of my fellowship, which I finished in 2011 and I think I made all the mistakes that you talked about.

But she felt like at the time she didn’t really want anyone to tell her what to do with her money. She had waited a long time to get where she was at and didn’t want someone telling her she can’t drive a nice car or live in a nice condo or wear fancy clothes. I am sure many of us can relate with that feeling. Since then she joined a private practice that promised good money but it turned out you couldn’t have any semblance of work-life balance in order to make that money. And her overhead in the private practice was a lot of money. Also during this time, she had a son. All these things made her regret not taking care of her finances earlier.

Since 2015, she has been on a mission to control her finances and describes it in phases:

  • The first phase was getting rid of credit cards and store cards, making sure she is paying the balance on credit cards every month, opening a 529 for her son, and getting some life insurance in place since she already had disability.
  • Phase two, she paid off her cars including the one her nanny drives, took a new job, using geographic arbitrage, and doubled her salary. She created a self-directed 401(k) and a Self-Directed Defined Benefit Plan, and is maxing out an HSA  and a backdoor Roth IRA, and is doing some real estate investing. Very impressive what she has done in the last few years since she decided to start paying attention to her finances.

But she is missing one key element that could answer many of the questions she asks in this episode. It is a written investing plan. 95% of people out there are in the same boat. They come to me with a question of, “Should I buy this fund or this fund?” I’m like, “For what? What’s the plan? What’s the goal?” Without the goals and a plan, it is hard to get your finances organized and on track for your goals.

We talk about how you can create a written investing plan in this episode. We discuss how to set reasonable goals and what should be your next level in personal finance. I answer her questions about paying less in taxes, hiring your children, adding locums to your schedule, setting asset allocations, and understanding a defined benefit plan. Whether you are just starting out in your journey to understanding your finances or you have listened to all 114 podcast episodes before this, I think you will find something valuable you can apply to your financial life in this episode.

lower s corp taxes

This episode is sponsored by Alexis Gallati of Gallati Professional Services – Alexis is not your typical tax advisor. With over 15 years of experience, she has been helping physicians all over the country save money on their taxes. As the spouse of a busy physician, she understands the burden of high tax payments physicians incur during their lifetime. Not only will she create a high level strategic tax plan for you, guaranteeing money in your pocket, but Alexis will proactively work with you throughout the year to maintain your tax plan, prepare your annual tax returns, and represent you in case of an audit. The investment in her tax planning services is a fixed-price agreement and her tax maintenance packages are a flat monthly fee. If you’re tired of complex tax jargon and giving away most of your paycheck to the IRS, visit Alexis’ website at www.GallatiTax.com today to schedule your free initial consultation.

WCI Financial Boot Camp Audible Book

If you’ve been waiting for the audible version of the White Coat Investor’s Financial Boot Camp, it is out on Amazon. You can go pick it up, listen to it in your car. If you like podcasts, you probably like audible books. If you’re trying to find something to listen to on those days when the White Coat Investor Podcast doesn’t come out, you might find that Financial Boot Camp fits that bill just fine. It’s actually cheaper than buying the paperback book just because of the way that audible forces us to price our products but, that’s good for you if you like listening to books!

WCI Scholarship

The White Coat Investor Scholarship competition is heating up again. This is an essay contest for medicine, osteopathy, podiatry, dentistry, law, pharmacy, optometry, physician assistant, nurse practitioner, CRNA, veterinarian students. We will also consider physical therapy and occupational therapy students if the program leads to a doctorate degree.

Submit your essays to scholarship at whitecoatinvestor.com and they will be judged by independent judges who are all readers and listeners. We are giving away over $90,000 this year in cash and prizes to the 10 winners. Last year our 65 judges had 740 essays to read. We still need more judges as well. If you would like to be a judge, put the words “volunteer judge” in your email and send it to [email protected] and we will have you read somewhere between 10 and 20 essays in September and then tell us which ones you think are deserving of winning the scholarship. Judges just need to be professionals, either current or retired.

We are super thankful to the sponsors of the scholarship. Some of them have been doing it for several years now. We are grateful to them. Our platinum sponsors, who contributed $6000+ to the scholarship this year are: Larry Keller (Physician Financial Services), Bob Bhayani (Dr Disability Quotes). Splash Financial (student loans), W. Ben Utley (Physician Family Financial Advisors),  Alexis Gallati (Gallati Professional Tax Services). Please support those who support what we’re doing. If you need people, these guys have been used by tons and tons of White Coat Investors with exceptional feedback. If you’re looking for someone that can help you if you’re in need of these services, you need to look no further than these sponsors.

How to Fix Your Investment Mistakes

No high income earner is really more than 10 years away from financial independence. You have plenty of time to fix any investing mistakes. If you start this journey later than most, like our guest today, you start cranking up that savings rate, putting a ton of money away, cutting your expenditures and within a few years you have built a great nest egg. You just have to be a little bit more extreme about how much you save and how much you spend and how much you earn and do a little bit better job than the person that came out of residency at 29 years old. Even with starting late, our podcast guest today is in a really good position to fix her mistakes with an income of $496,000 and a savings rate of 48%. She does still have student loans at a low rate and two mortgages. But she has a net worth of just about a million dollars. She needs to get a written financial plan, fix the investing mistakes, and stay the course.

People come to me and ask, “Should I buy this fund or that fund?” I’m like, “For what? What’s the plan? What’s the goal?” Any time you’re putting together an investing plan, you start with your goals. What am I trying to accomplish? For this doctor, she is trying to be able to retire 10 years from now. You run the numbers, you see how much you have to save each year and about what kind of a return you need to get on that money, taking into account the money you have so far. You look at the accounts you have available to invest in and then you come up with an asset allocation. What percentage do you want in US stocks? What percentage do you want in bonds? What percentage do you want in international stocks? What percentage do you want in real estate?

Once you have that blueprint, you pick the investments to match. If you do that first, picking the investments is very easy. For example, if you need a US stock allocation, you use the total US Stock Market Index Fund. It’s really easy. Whereas if you don’t have that underlying planned, you find yourself grabbing a little of this and a little of that, you end up with a collection of investments, which is what our podcast guest has done.

Written Investment Plan

There are three good ways to come up with a written investing plan. I’ll list them out in range from amount of effort that you have to put into it as well as expense.

  1. The cheapest but most time-consuming way is what I did. You basically read a bunch of books. You participate in internet forums. You read some blog posts and you draw up your own investing plan. That is how I came up with mine. It’s very cheap as far as money goes but can be very time-consuming. The nice thing about it is by the time you get there, you really understand it well. There are so many totally free resources to get help with any questions you have, as you design your investing plan. You should not feel like you have to do this all on your own and you can constantly bounce questions off these smart online communities of people that can help you refine your plan as you go. It is important to pick something reasonable and stick with it for the long term.
  2. The second way is to do something like my online course, the Fire Your Financial Advisor Course. It costs $499 and 7-8 hours of your time to walk you through this process.
    The idea is to get a shortcut from reading all those books and spend all that time online that I did and help you write your own financial plan to help you be financially literate and write your own financial plan.
  3. The third option is hiring a financial planner. It will cost you probably somewhere between $2,000 and $5,000 to hire a good financial planner to help you draft up an investing plan. You don’t have to keep the advisor long term. You can implement and maintain it yourself, but that is what it is going to cost to draft it up originally. That is the least amount of effort and time to put in but the most amount of money.

I don’t care which of those you do, but I think you need to do one of them and just get a written investing plan and then it becomes much easier to select the investments.

Without a written financial plan this doctor had a “freak out” a few months ago where she had some money in her qualified retirement plan just sitting there. She just started randomly buying some mutual funds and ETFs. We went over what she had bought.  Her self-directed solo 401(k) at Fidelity, which is where mine is now, is about a $367,000 account. It is about $9,000 in a Fidelity Emerging Markets Index Fund, $10,000 in the Fidelity 500 Index Fund, $10,000 in a NASDAQ Composite Index Fund, $36,000 in cash and about $285,000 in a short-term rental. Obviously, this is heavily weighted toward one asset.

First of all, I’m not a huge fan of 500 Index Funds. The reason why is because they are just large cap stocks. I think a much better choice in those situations, assuming it’s available and still available at low cost, is to use a Total Stock Market Index Fund. If it’s at Fidelity, the one I’d like there is just their new zero percent expense ratio total stock market fund. If they let you buy that, I would buy that. I suspect you may end up with same problem I had with my self-directed solo 401(k) at Fidelity. They didn’t let me buy it. What I ended up doing was just buying the Vanguard ETF for their total stock market fund. The ETF version by Vanguard that you can buy anywhere. I just bought it at the Fidelity Brokerage. The NASDAQ Index Fund is probably an investment I’d just get rid of because it is a tech heavy fund. Sometimes people hear an index fund, they’re like, “Oh, the NASDAQ is an index. The S&P 500 is an index. I should buy a fund that follows that index.” The NASDAQ fund is more like an investment that ends up in your portfolio when you’re just collecting investments rather than starting from a well-designed plan. The truth is when you’re picking index funds, the first thing you choose is what asset class do I want to invest in and then what index do I wanted to follow.  A written financial plan will help with the organization of this.

Her HSA has $36,000 in it and nine different investments. My HSA is twice that size and I have one investment in it. It just doesn’t need to be this complicated. In her backdoor Roth IRA there is just one investment though she owns both the ETF form and the regular mutual fund form. I’d probably pick one or the other and stick with that. A written investment plan will help you simply.

Defined Benefit Plan

This doctor has a defined benefit plan that is the most unique defined benefit cash balance plan I’ve ever seen. She has a Fidelity Select Medical Tech fund, a real estate ETF, Fidelity Tech Fund with Select Software and IT services, Fidelity Information Technology Index Fund, and some syndicated commercial real estate in it. This was so unusual for a cash balance plan that I bounced it off Konstantin Litovsky with Litovsky Asset Management.  He wondered if it was even legal, could she put this stuff in a defined benefit plan? We went back and forth a little bit and in the end, he thought, “Well, it probably is legal but this introduces so many problems. I’m not sure I would do it even if it was legal.”

Most of these defined benefit cash balance plans have a fairly conservative mix of investments. An aggressive one might be 60% stocks. In hers, all the mutual funds are high-flying tech funds. There are no bonds, no fixed income other than $1,000 of cash. It is very risky investments and the problem with that is when there’s a shortfall. For example, there is a big market crash, you have got to come up with the cash when you go to close this thing or maybe even year-to-year to make up those shortfalls because you’re the owner of the business.
That’s not necessarily a terrible thing as long as you have the cash to do it because it basically gives you the chance to put more money into a tax-deductible vehicle. It’s not a terrible thing to have to do that, but it could cause a cash flow problem if you don’t have the money to do it.

When she creates a written investment plan, assuming her plan includes some bonds or some less aggressive investments, this is probably the account to have them in because there are consequences to poor performance. This is why most people’s cash balance plans are invested less aggressively than their 401(k).

The other issue here is the real estate. They are individual properties. The first is a strip mall in Houston. The other is student housing at the University of Houston. I’m not terribly worried about them as an investment. I have similar investments that have performed as well as expected sometimes, sometimes worse, sometimes a little bit better. I’m concerned about them as an investment in the defined benefit plan. The reason why is because they are typically fairly illiquid. You have an investment you have to hold for five years. What happens if you want to close this account in two? I wouldn’t put any more illiquid investments into this account. I’m not sure that there’s a great way to rectify what is already done other than hold these for three to five years.

The other investment she has in her defined benefit plan is some land. Obviously, that is a pretty unique thing to have inside any retirement plan at all. I think most people doing that have that real estate basically in their taxable account, not inside a qualified plan but if you’re going to try to put it in a qualified plan, I would pick your 401(k) profit sharing plan over this defined benefit plan. I think that’s a bad place to have it for all the reasons we’ve talked about. It’s not liquid. It’s high risk. I don’t know how easy that’s going to be to move it out.

Mr. Litovsky also said that non-liquid assets that aren’t traded on a public market, have to have an independent audit performed on their value periodically. He thought it was probably annually. He wasn’t 100% sure but, obviously, if you have to start doing audits on all these properties every year, that starts adding up as far as getting a value for them because I think the actuaries are going to need a value of what it is worth each year. That might mean you have to pay for an appraisal on the land for instance, which is going to start adding up over the years. She needs to talk with the administrators or this plan about the investments she has put in this there and what to do with them.

Simplifying Your Investment Portfolio

Having a complex investment portfolio is a lot of work. You really have to start with a plan. Write down the percentage you want in each asset. For instance, a basic investing plan might be 25% US stocks, 25% international stocks, 25% bonds and 25% real estate.

If that’s your goal, then you can go to that HSA and say, “Okay, well, the money in my HSA I’m just going to have it be part of the allocation for international stocks.” You put the whole HSA in Vanguard’s Total International Stock Market Index Fund. That is really easy to keep track of.

Then, you look at these other accounts and your solo 401(k) you might just have a little bit of your international stocks in there, you might have all of your bonds in there and you might have a good chunk of your real estate in there, for instance. When you go to the defined benefit plan, you might have some bonds and some US stocks in there. As you start a taxable account, you may have some real estate and some US stocks in there.

Across those four or five accounts, you might only have four or five or six holdings. It’s just a matter of having one or two or maybe three, if it’s a big account of your desired holdings in each account. It’s just a matter of sitting down with a spreadsheet and mapping it out, what the easiest way to do it is and over the years you’ll find as the accounts change in size relative to each other, that you’ll have to make adjustments, but that’s basically the process.

If you need help creating a written investment plan and/or simplifying your investments, as this listener does, I would not hesitate to pay some money to an advisor to help you draw up a plan. The big concern with paying advisors are these huge asset under management fees that go for 30 or 40 years. That is how it adds up to millions of dollars. Paying somebody a few thousand dollars to help you sit down, clean up your mess, and understand what you’re doing is not going to keep you from reaching your goals. It’s probably going to help you reach them. I would not hesitate for a minute to go hire someone.

Next Step in Personal Finance

Once she gets these accounts cleaned up this listener wonders what should be her next step in her personal finances?  She will have her student loans paid off this year and wonders what to tackle next. Is it the mortgages? Opening a taxable account? Investing more in real estate? So many options, it can be unnerving to choose. There are many different directions you can go but the truth of the matter is, there doesn’t have to be a next level. A lot of people think they need to make their life more financially complicated and in reality, given her income and her savings rate, even with a very basic investing plan, she is going to do very well just staying on the path she is on right now. You don’t have to make investing particularly complicated.

Remember on the podcast a few weeks ago, Allan Roth, whose website is literally called Dare to be Dull and he would argue that investing should be incredibly boring, said that it just doesn’t need to be complicated, that there doesn’t need to be another level. I would caution you against feeling like there has to be.

For all of us at a certain point as we become financially literate, as you learn the stuff that we talk about on the podcast and on the blog, eventually you start listening to it and go, “I already know that. I already know that. I already know.” That’s a good thing, right? There is not this unlimited, endless learning process. Yes, you continue to learn things now and then but basic financial literacy is something that you eventually acquire and don’t necessarily need to keep taking it to a new level.

That said, her underlying question what’s the most reasonable goal to set for yourself to do next (paying off mortgages, student loans, investing in taxable account) is something that we all struggle with. The pay off debt versus invest question is the most common one I get in my email box. I’ve written four or five blog posts about it over the years and the answer is always, it depends. It depends on what your goals are. It depends on what the interest rates are.

For example, her student loans are a pretty low-interest rate, 2.625%. If those are 8%, it should be a huge priority in your financial life. There’s a lot of things you wouldn’t want to do before paying off 8% loans or 15% credit card loans. At 2.625%, percent a reasonable person can go, “Well, I’m going to max out my retirement accounts before I pay that off,” or “I’m going to pay a mortgage off,” or “I’m going to invest in real estate before doing that.” It’s not crazy to carry that around.

That said, student loans are one of those things I think it’s a good idea to get them out of your life. I usually recommend people pay them off within two to five years of coming out of residency or fellowship and obviously, she is past that point and needs to get them out of her life.  There are a couple of benefits of doing that. Not only are they not hanging over your head anymore, which gives you a little bit more career freedom sometimes, but it also improves your cash flow. All of a sudden you now need less money every month to live and that frees up money to either spend on something fun or to save or to pay off other debts. It improves your cash flow.

Even if the return on paying that off quickly is only 2.625%, I think the cash flow benefits are worth something as well. As far as the other mortgages, I think what I would look at is what her goal is with them. When do you want to not have a mortgage? Have you thought about that before? If it is in ten years then you now run the numbers. How much do you have to pay toward the mortgages each month or each year in order to have them paid off in 10 years? Now your goal is actionable.

Paying Less in Taxes

This doctor’s next question was about any strategies to pay less taxes. This is something I see a lot of doctors focus on. The truth is, I’d rather pay more in taxes and I’ll tell you why. If I pay more in taxes, it means I made even more money because the way the tax code is set up, except in a few very minor places in the tax code, when you make more money, yes you pay more taxes, but you have more left over after tax. While it’s good to pay less in taxes, it’s also can be good to pay more in taxes. I think we need to be careful not to ask “what can I do to pay less in taxes” as often as we tend to do as doctors. What we should be asking is how can I have more money left over after taxes. That is a very different question because the easiest way to just reduce your tax burden is to go halftime. You’ll pay dramatically less in taxes if you just cut back on how much you work but most people don’t want to do that. If you could increase your income from $500,000 to a million dollars a year, you’d be paying a lot more in taxes but you’d still be coming out ahead after paying them.

The main strategies for doctors to pay less in taxes are saving money in retirement accounts, but this listener has kind of maxed out those options. Getting married would move you from filing as head of household to married filing jointly and obviously, that would change your taxes as well but that’s much more of a lifestyle change than it is a tax play. Those are some of the things that would reduce taxes. With your investments, you can be very cognizant of taxes. For example, making sure that the investments you hold in a taxable account are very tax-efficient like stock index funds, like municipal bond funds, like equity real estate, those kinds of very tax-efficient kind of investments.

Then, of course, you can take advantage of strategies like donating appreciated shares to charity and tax loss harvesting, those sorts of strategies to pay a little bit less in taxes but those are really on the edges. The big things you can do are usually what business you go into, how you structure it, and whether you’re maxing out retirement accounts.

She is paying taxes as an S-Corp and it may be worth sitting down with a tax advisor and really going over distributions and salary carefully because there is significant room for tax savings there. The reason why is you don’t pay payroll taxes on the distributions. Now, in her case, that’s just going to be a Medicare tax but it’s still 2.9% on those distributions. Anything you call distribution instead of W-2 income, you save 2.9 percentile. If you can do that on $300,000 worth of income, that might save you close to $10,000 in taxes.

The other thing you have to be cognizant of when setting that figure though is you have to pay yourself enough salary to justify your retirement account contributions. You don’t want to go too low either especially in her case where she has not only an individual 401(k) but also a personal-defined benefit plan. The less you call salary, the less you can put into those plans, which not only affects taxes this year but affects the taxes on your investments going forward. It can be complex and that is probably where sitting down with a tax person and really having a discussion about your salary and distributions can help.

She wondered if it was worth learning personal and business taxes and doing your own taxes to save on CPA fees. She pays $3600/year. I don’t feel like doctors have to do their own taxes particularly in a complex tax situation like hers. But that said, $3,600 a year does seem a little on the steep side to me. I think it’s probably worth shopping around a little bit and seeing if you can find somebody that’s willing to do it for less. Then I would go to the person doing it now and say will you match it if you are happy with what they are doing now.

Working Locums

This doctor was interested in doing locums work to keep skills fresh and earn a little more income. She took a job where she gave up some skills and some high acuity and it turns out she misses a little bit of the critical care action and the thought process that goes into when somebody is critically ill. If she is planning on practicing medicine for at least another ten years she doesn’t want to be the out-of-touch, not well-read, not skilled physician over those 10 years. That is the main reason she started looking into some locums opportunities to try out some different hospitals at a slightly higher trauma level than where she currently is.

In addition, of course, locums pays really well because oftentimes it’s a hospital that is really in need of support and they’re willing to pay for it. It’s a way of maximizing her time as well. Rather than doing one 12-hour shift at an X rate, I could do the same 12-hour shift in a different state at a rate of Y and it would essentially pay for or be the equivalent of one and a half shifts where she currently is.

I think there are a few factors that have to go into this decision. Number one is the rest of your life. While you may be making 50% more an hour while you’re working in Iowa instead of Arizona, you’re also gone when you’re not working. It’s a fair amount of time away from your family. Is that the life you want, adding it on to what you are currently doing?

Now, replacing some of what you’re doing now might be a better option, cutting back on your hours and replacing them with locums work.

The fun thing about locums is you can go do it, see what it’s like, see how much it bothers you to be away from your family for a few days, see how much you’re really getting paid after everything is said and done, see whether it’s really filling that gap you’re feeling of keeping skills up. Then you can just drop it. Just don’t sign up for a six-month spell. Sign up for a few trips and if you hate it, you hate it. If you love it, well you can do more of it. It’s not like this is a huge career decision.

The only huge part might be cutting back on your regular gig. Maybe you do a couple of trips first before you cut back on hours at all to see how it goes.

Ending

Let us know how you like these types of episodes. We can do more of them if you like them. If you would rather have me interviewing experts, we can do more of that. If you prefer me just answering individual questions that you guys send in, just give us feedback in the comments and we’ll try to incorporate your feedback and give you the show that you’re looking for.

Full Transcription

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.

lower s corp taxes

WCI: Welcome to a White Coat Investor Podcast number 115, how to fix your investing mistakes. This episode is sponsored by Alexis Gallati of Gallati Professional Services. Alexis is not your typical tax advisor. With over 15 years of experience, she’s been helping physicians all over the country save money on their taxes.

WCI: As the spouse of a busy physician, she understands the burden of high tax payments physicians incur during their lifetime. Not only will she create a high level strategic tax plan for you, guaranteeing money in your pocket, but Alexis will proactively work with you throughout the year to maintain your tax plan, prepare your annual tax returns and represent you in case of an audit.

WCI: The investment in their tax planning services is a fixed-price agreement and their tax maintenance packages are a flat monthly fee. If you’re tired of complex tax jargon and giving away most of your paycheck to the IRS, visit Alexis’s website at www.gallatitax.com today to schedule your free initial consultation.

WCI: If you’ve been waiting for the audible version of the White Coat Investor’s Financial Boot Camp, it is out on Amazon. You can go pick it up, listen to it in your car. If you like podcasts, you probably like audible books.

WCI: If you’re trying to find something to listen to on those days when the White Coat Investor Podcast doesn’t come out, you might find that Financial Boot Camp fits that bill just fine. It’s actually cheaper than buying the paperback book just because of the way that audible forces us to price our products but, hey, that’s good for you if you like listening to that sort of stuff.

WCI: The White Coat Investor Scholarship competition is heating up again. This is an essay contest essentially. Medical students, dental students, law students, several other professions can submit their essays, their applications, if you will, to us and they’ll be judged by independent judges who are all of you, readers and listeners, and then we’re going to give away over $90,000 this year in cash and prizes to the 10 winners. This is a pretty awesome thing we do each year. It’s gotten bigger and bigger each year.

WCI: Last year we had 740 essays to read, which is good because we had like 65 judges. If you want to apply for it, you have to be a full-time student at a brick and mortar school, professional school. The professions that are allowed to enter are slightly changed this year but it includes medicine, osteopathy, podiatry, dentistry, law, pharmacy, optometry, PAs, nurse practitioners, again brick and mortar schools, CRNAs. We’ll also consider physical therapy and occupational therapy students if the program leads to a doctorate, okay? You can send those in.

WCI: We need judges as well, just like you send the applications into scholarship at whitecoatinvestor.com. If you would like to be a judge, put the words volunteer judge in your email and send it to [email protected] and we will have you read somewhere between 10 and 20 essays and then tell us which ones you think are deserving of winning the scholarship.

WCI: We’re super thankful to the sponsors of the scholarship. While Katie and I make a huge contribution each year to the scholarship and we’re paying for all the administrative costs as well as given out all the boxes of books to the winners and free online courses, we’ve got some very important sponsors that have agreed to help us and to spread this word. Some of them have been doing it for several years now. We’re grateful to them.

WCI: I just wanted to mention the platinum sponsors. These guys contributed $6,000 or more this year to the competition. These include Larry Keller of Physician Financial Services, Bob Bhayani at Dr. Disability Quotes, Splash Financial, the student loan refinancing, Ben Utley who is a financial advisor Physician Family Financial Advisors and our sponsor of our podcast today, Alexis Gallati of Gallati Professional Services. Thank you guys for sponsoring the scholarship. Please support those who support what we’re doing.

WCI: If you need people, those guys have been used by tons and tons of White Coat Investors with exceptional feedback. If you’re looking for somebody that’s proven that can help you if you’re in need of those services, you need to look no further than those sponsors.

WCI: Thank you so much for what you do. I suspect if you’re like most of my listeners, you’re on your way to or from work, maybe you had a bad day, maybe have a bad day ahead of you and if you do, I hope you remember that there’s at least one person out there who’s appreciating what you are doing.

WCI: I was recently in Honduras and saw what medical care can look like when there aren’t all the resources that we have and it can be pretty sad sometimes but what I was impressed with was the dedication of those delivering the care who are truly trying despite of severe lack of resources to provide the best care that they possibly can and I know you’re doing the same thing. We’ve got a pretty special episode today. Let’s get into it.

WCI: We’re here today with a special guest. Our guest is going to remain anonymous. She is a physician and just by way of a little bit of background, she’s 47, graduated medical school at 32, not quite the traditional pathway, came out of residency at 35, worked for a year then went into a lengthy fellowship until 39. That was in a very high cost of living area and then took a first job in a lower cost of living area in a private practice but notes that as a big mistake. Doctor, welcome to the show.

Doctor: Thank you for having me. It is such a pleasure to be here.

WCI: It’s going to be fun. We try to do this every now and then. Unlike our typical shows where we go answer questions people have pre-recorded, we’re hoping to have a little bit of back and forth here and answer some questions and have a little bit of follow-up questions that we can answer.

WCI: You mentioned in your correspondence to me that you first heard about the White Coat Investor in 2012, which was when almost nobody had heard of The White Coat Investor. Tell me what you thought about the message back then and why you kind of reconnected a few years later.

Doctor: Yes, I’ve heard about you and I looked into it a little bit and I thought, “Oh my gosh. This is so overwhelming. I am so not ready to hear how many mistakes I’ve made already.” Of course, I was recently out of my fellowship, which I finished in 2011 and I think I made all the mistakes that you talked about.

Doctor: I rented an apartment that was on par with New York City prices because I felt like, “I could afford it in New York, I can afford it in Arizona.” I leased a very fancy car because I felt like, “Well, I need a doctor car now that I’ve officially arrived.”

Doctor: I did a lot of things that, in hindsight, I felt like at the time I didn’t really want anyone to tell me not to do them because at age 39 I felt like, “Wow, I’ve waited a really long time to get here and I don’t want anybody to tell me that I can’t drive a nice car or live in a nice condo or wear fancy clothes.

Doctor: I wasn’t really ready to hear the message, which is regretful now that I’m 47 and I’m trying to digest everything that you have to say and what others have to say on some of the well-known financial Facebook groups.

WCI: What happened in the last five or six years do you think that kind of changed your mindset?

Doctor: That’s a really good question, quite a few things actually. The first is that I came out of fellowship and I joined a private practice group with this promise really that there was really good money to be earned in this particular practice and coming out of fellowship I guess I didn’t really know what questions to ask in the interview process but I was surprised to learn that if you wanted to work an average number of days and have some semblance of a work-life balance, you were probably not going to make the big money that this practice could offer. Those that were making the big money were working 24, 27 sometimes 30 days a month.

Doctor: I realized probably into my second year, I was in this practice for about five and a half years, into my second year I realized I felt a little bit like I had been duped and that I was lucky to bring home 180 to 200 working anywhere from 15 to 17 shifts a month or days a month.

Doctor: I also, I started doing the math back then and I realized it was costing me almost $200,000 to contribute into the function of this private practice group, the overhead, if you will. That’s when I started to realize that I needed to figure out a different way because $200,000 a year is a lot of money to just give away to the management of a practice.

WCI: Yeah, sure, it seems like a lot of money I think to most of our listeners. You did something else that is a little bit unique in that you became a single mom by choice, which turned out to be fairly expensive. Can you tell us a little bit about what that costs?

Doctor: Yeah, absolutely. Probably not unlike too many of your listeners, women who get into their late 30s because they’ve been focusing on their career, there’s quite a few of us out there that have become single moms by choice and that is the accepted vernacular for that and of course when you don’t have a partner, you have a lot of expenses.

Doctor: You have not only expenses related to procuring a sperm donor but there’s a lot of testing, a lot of medical procedures and then a lot of medications to go through with the IVF portion of having a baby.

Doctor: I think my first year ended up being about almost $120,000. When I look back on it, I’m actually quite surprised that I was able to scrape that together in a year’s time and I remember my reproductive endocrinologist kept saying, “I’m going to cut you off at some point,” and he would say, “I know you can afford it but at some point you’re going to get to an age where if we cannot get you a baby, I will cut you off.”

Doctor: I had a lot of respect for his ethical considerations in my journey but boy, I did not want to give up. It took about a little over a year and I finally was pregnant with my now son who’s almost 5. Although it set me back financially on this course of being somewhat financially independent, I wouldn’t take it back for all the money in the world, of course.

WCI: You mentioned that since 2015, you’ve been on a mission to control your finances and you described it in phases. Your first phase was getting rid of credit cards and store cards, making sure you’re paying the balance on credit cards every month, opening a 529 for your son, getting some life insurance in place. You already had some disability, it sounds like.

WCI: Then, in 2016, you moved into phase two, where you paid off your cars including the one your nanny drives, took a new job including some geographic arbitrage and doubled your salary, turned yourself into a PLLC being taxed as an S-corp, created a self-directed 401(k) and rolled over your other retirement accounts, created a Self-Directed Defined Benefit Plan, which we’re going to talk a lot about later, maxed now to HSA doing a backdoor Roth IRA, doing some real estate investing and starting up another side business. Very impressive what you’ve done in the last few years since you decided you were going to start paying attention to this stuff.

Doctor: Thank you so much. That’s so nice to hear because I feel like I’m always behind in everything because of course, the average physician doesn’t start their practice at age 39. Once I got it out of my system to drive the fancy car and wear designer clothes, I saw the light and I realized, especially after my son was born, it was very easy to reprioritize literally everything in my life.

Doctor: A lot of those changes came about from meeting with an attorney to put together my trust and my medical power of attorney, my financial power of attorney and then she recommended a financial advisor and said you should maybe meet with the financial advisor and talk about getting some other ducks in a row.

Doctor: That was actually the first time this financial advisor went through all of my information and just said, “Even though you’re paying off all your credit cards every month,” she said, “Just simplify. Get rid of all the store cards. Get rid of all this stuff that’s coming in and just streamline your finances.”

Doctor: She talked to me about term life insurance, thank goodness. I moved forward with term life insurance through her. I also rolled over quite a few of my previous retirement accounts mostly from random jobs that I’d had in my 20s and early 30s. It wasn’t until about three years later that I realized a decent fee involved in that management situation but she was also the first person to mention to me this concept of defined benefit plan and at the time, I didn’t have the income required to really participate in that plan but it got cataloged in my mind somewhere that if and when I ever could get to a point of having a higher income, it might be something worthwhile.

Doctor: I credit her for prodding me along in the right direction and I have always been someone who has always contributed the maximum amount to any retirement account that was corporate-sponsored through whatever company I was working for at the time. It was important for me to continue that and also to build on that as I was becoming a slightly higher earning professional.

WCI: You did something very specific to increase your income. You’re calling geographic arbitrage. Tell us what you did that made your income so much more substantial than now you felt like you could invest.

Doctor: Yeah, absolutely. It’s funny, I’m using a term that I heard on your podcast and I didn’t know that that’s what I was doing and I didn’t seek out to really do it but I was winding down at my private practice job really realizing that I did not want to pay for that much overhead when I was paying for an office that I seldom used.

Doctor: I started looking around at different opportunities in my specialty, which is pulmonary critical care and there was an opportunity to live in a resort town also in Arizona. It wasn’t a huge move but the salary or the amount of money I was going to take home was going to be well over $200,000 more than I was making in the Phoenix and Scottsdale area.

Doctor: My son was getting a little bit older and I thought, “I’m just going to do this and I’m going to see what happens.” I was very happy to learn that there’s a terminology for it and that’s what I did. I moved a couple of hours away from the big city, took a job in a community hospital that needed good doctors to provide good care to an underserved area. I felt pretty good about that.

Doctor: I knowingly and willingly gave up some of my skillset because I’m practicing in a lower acuity facility but I felt like the trade-off was worth it especially at my age, I’m not 34 wanting to be on the cutting edge of medicine. I’m now 46 at the time wanting to do good work and also wanting to secure my own financial future. I just decided to go for it.

WCI: Okay, let’s get a little bit into your numbers then we’ll get into your questions and see how many of them we can answer today. Let’s just start at the top, what is your income now approximately?

Doctor: Yeah, I’ve been doing this for a couple of years now and my PLLC is bringing in about $496,000 give or take.

WCI: Okay, so approximately half a million dollars of income and you’ve got some student loans at 2.625%, that’s always nice to have them at a low rate. About how much do you owe in student loans still?

Doctor: I owe about a hundred and just under 180.

WCI: Okay and you’ve got a couple of mortgages, one on your primary home and one on a rental house. About how big are those?

Doctor: Combined, they are just about a million.

WCI: Okay and your current monthly expenses are about $15,000 a month but that also includes, it sounds like, that mortgage on the rental property.

Doctor: That’s correct.

WCI: Okay and about how much of your income do you save about? What’s your savings rate? Have you calculated that?

Doctor: I have. I started calculating that in 2016 and I’ve worked my way backwards a few years. In 2014, I was at 19%, 2015 I was at 27%, 2016 was 24%, 2017 was 30% and I’m on target by the time I file my corporate tax return for 2018 to be at 48%.

WCI: Okay, so you’re obviously a great saver and looking at what you’ve put away for retirement, it looks like you’re closing on $700,000 there. You’re doing great and many, many respects here. A lot of docs will look at that and go, “Wow, she’s doing awesome.” Congratulations on that.

Doctor: Thank you. That’s really nice to hear. At 48, I feel like or 47 I feel like, I wish I should be much, much further along but it’s nice to hear that.

WCI: Right but when you add in the value of your home, the value of your rental house, the value of your retirement portfolio and you subtract out your student loans and your mortgages, you’re probably pushing a million dollar as far as net worth goes, correct?

Doctor: Very close, yeah, I’m in the 800 range and my goal by 2020 is to hit a million.

WCI: That will be exciting to be a millionaire. Make sure you celebrate that. That’ll be wonderful. All right, let’s talk about some of the questions you sent in that you wanted to talk about on the podcast today. The first one I’ve got was a question of what’s the next level of personal finance? What did you mean by that question?

Doctor: Well, I’ve been on this very fast course to do everything I can within my power to have a little financial security and at this point, this coming year, I plan on paying off my student loans. All I’ll have after that is mortgage whether it’s one or two, I’m not sure about and I’m just wondering what’s next? Is it a after tax account? Is it looking at different ways to reduce tax burden? Is it seeking out professional real estate status so that I can grow my portfolio with real estate? I feel there’s so many options out there and it’s a little unnerving to figure out where to go next.

WCI: Well, I think a part of it is that there are so many different directions you can go but the truth of the matter is, there doesn’t have to be a next level, right? A lot of people think is they got to complicate things, make their life more financially complicated and in reality given your income and your savings rate, even with a very basic investing plan, you’re going to do very well just staying on the path you’re on right now. I mean, you don’t have to make investing particularly complicated.

WCI: Our guest on the podcast a couple of weeks ago and you haven’t heard this one as we’re recording it because I just recorded it an hour ago, about a couple of weeks ago on the podcast, we had Allan Roth, whose website is literally called Dare to be Dull and he would argue that investing should be incredibly boring, that it just doesn’t need to be complicated, that there doesn’t need to be another level. I would caution you against feeling like there has to be another level.

WCI: For all of us at a certain point as we become financially literate, as we learn the stuff that we talked about on the podcast and on the blog, eventually you start listening to it and go, “I already know that. I already know that. I already know.” That’s a good thing, right? There’s not this unlimited, endless learning process, right? Yes, you continue to learn things now and then but basic financial literacy is something that you eventually acquire and don’t necessarily need to keep taking it to a new level, a new level, a new level.

WCI: That said, your underlying question what’s the most reasonable goal to set for yourself to do next versus paying off mortgages, student loans, investing in taxable account is something that we all struggle with.

WCI: The pay off debt versus invest question is the most common one I get in my email box. I’ve written four or five blog posts about it over the years and the answer is always it depends. It depends on what your goals are. It depends on what the interest rates are.

WCI: For example, your student loans are pretty low-interest rate, 2.625%, right? If those are 8%, it should be a huge priority in your financial life. There’s a lot of things you wouldn’t want to do before paying off 8% loans or 15% credit card loans. At 2.625%, percent a reasonable person can go, “Well, I’m going to max out my retirement accounts before I pay that off,” or “I’m going to pay a mortgage off,” or “I’m going to invest in real estate before doing that.” It’s not crazy to carry that around.

WCI: That said, student loans are one of those things I think it’s a good idea to get them out of your life. I usually recommend people pay them off within two to five years of coming out of residency or fellowship and obviously, you’re past that point but you’re also planning to pay them off in the next year. I think that’s reasonable just to get them out of your life.

WCI: A couple of benefits of doing that not only are they not hanging over your head anymore, which kind of gives you a little bit more career freedom sometimes, but it also improves your cash flow. All of a sudden you now need less money every month to live and that frees up money to either spend on something fun or to save or to pay that on other debts. It improves your cash flow.

WCI: Even if the return on paying that off quickly is only 2.625%, I think the cash flow benefits are worth something as well. I would get rid of the student loan and I’d do it pretty quickly but as far as your other mortgages, I think what I would look at is what your goal is with them. When do you want to not have a mortgage? Have you thought about that before?

Doctor: I have actually and that’s part of the reason I’ve let those student loans go for so long is because they’re so low but I’m finally feeling like I would like to get that noose off my neck. The mortgages, because I tend to move around a lot. I’m sort of waiting until I feel a little bit more anchored in a primary house and can feel like I’m there for the next 10 to 15 years and I feel like that is the point what I would say I’m going to work really hard to get this paid down and paid off.

WCI: It doesn’t sound like there’s any driving strategy there for you to really get rid of them quickly. You’re okay carrying that debt it sounds like to me.

Doctor: It’s true. I’m strategy-less. Just sort of letting them be there. Yeah. I’ve often felt like in 10 years I would like to have the freedom to retire and obviously if I’m carrying $5,000 a month in mortgages, that’s probably not very likely. If that remains my goal over the next 10 years, then I would say I’d be more interested in paying them off before I get to that age.

WCI: Okay. Well, that makes it pretty easy, then you’ve now got a 10-year plan basically. Now, you just run the numbers, how much do I have to pay toward these each month or each year in order to have them paid off in 10 years and whether they’re on a 15-year mortgage or a 10-year mortgage or a 30-year mortgage it doesn’t matter, you can always pay extra toward them such that they become essentially a 10-year mortgage.

Doctor: That’s a great idea. I should do that.

WCI: Yeah. All right, let’s move on to your next question. Your next question was, are there any other strategies to pay less taxes? Well, this is something I see a lot of doctors focused on that they want to pay less in taxes.

WCI: The truth is, I’d rather pay more in taxes and I’ll tell you why because if I pay more in taxes, it means I made even more money because the way the tax code is set up except in a few very minor places in the tax code, when you make more money, yes you pay more taxes, but you have more left over after tax. While it’s good to pay less in taxes, it’s also can be good to pay more in taxes. I think we need to be careful not to ask that question as often as we tend to do as doctors. What can I do to pay less in taxes?

WCI: What we should be asking is how can I have more money left over after taxes and that’s a very different question because the easiest way to just reduce your tax burden is to go halftime. You’ll pay dramatically less in taxes if you just cut back on how much you worked and obviously you go, “Well, duh, I don’t want to do that,” but that’s really the way you pay less in taxes is you make less money. If you could increase your income from 500,000 to a million dollars a year, you’d be paying a lot more in taxes but you’d still be coming out ahead after paying them.

WCI: The main strategies for doctors to pay less in taxes are saving money in retirement accounts, which it sounds like you’re already maxing all of those out including defined benefit cash balance plan. I don’t think you’re going to find a lot more there for saving taxes. It sounds to me like you’ve kind of maxed out those options.

WCI: It doesn’t sound like you’re planning on getting married anytime soon, that would move you from filing as head of household to married filing jointly and obviously that would change your taxes as well but that’s much more of a lifestyle change than it is a tax play. Those are some of the things that would reduce taxes.

WCI: With your investments, you can be very cognizant of taxes. For example, making sure that the investments you hold in a taxable account are very tax efficient like stock index funds, like municipal bond funds, like equity real estate, those kinds of very tax-efficient kind of investments.

WCI: Then of course, you can take advantage of strategies like donating appreciated shares to charity and tax loss harvesting, those sorts of strategies to pay a little bit less in taxes but those are really on the edges. The big things you can do are usually what business you go into, how you structure it, whether you’re maxing out retirement accounts, those sorts of things are usually the low-hanging fruit.

WCI: Speaking of your business, you’re paying taxes as an S-Corp, how much are you paying yourself as salary and how much of it is distribution?
Doctor: I have to plead a little ignorance. I rely on my accountant to tell me. We have a year-end meeting and he tells me exactly how much we’re counting towards the W-2 income and how much we’re counting towards distributions.

Doctor: There’s been a little bit of a range in the three years that I’ve been doing this. In 2016, W-2 income, which included some of my private practice work was about 165 and the distributions were about 60,000. In 2017, things were a little different and the W-2 was about 182 and the distributions were 139. Then in 2018, we bumped up to 204 on W-2 and distributions and I might be wrong on this, but the distributions were calculated at like 1,400, the K1 distributions. I’m not exactly sure where that number came from and I may have just looked at my taxes wrong.

WCI: It sounds to me like it’s worth sitting down with that tax advisor and really going over this question carefully because there is significant room for tax savings there and the reason why is you don’t pay payroll taxes on the distributions.

WCI: Now, in your case, that’s just going to be a Medicare tax but it’s still 2.9% on those distributions. Anything you call distribution instead of W-2 incomes to have salary, you save 2.9 percentile and if you can do that on 2 or $300,000 worth of income, that might save you close to $10,000 in taxes.

WCI: The other thing you have to be cognizant of when setting that figure though is you have to pay yourself enough salary to justify your retirement account contributions. You don’t want to go too low either especially in your case where you have not only individual 401(k) but you also have a personal-defined benefit plan. The less you call salary, the less you can put into those plans, which not only affects taxes this year but affects this taxes on your investments going forward.

WCI: It can be complex and that’s probably where sitting down with your tax person and really having a discussion about that number because more than anything else you do, that number is going to affect how much you pay in tax.

Doctor: That’s exactly right and that’s actually what we do at the year-end meeting. We try to maximize my contribution to my solo 401(k), the profit sharing and then we maximize with my third-party administrators. We kind of calculate what can actually go into the defined benefit cash balance plan as well.

Doctor: Truthfully, it’s more complex than I’ve sort of been able to wrap my head around in the last few years, but I feel like each year we do this. I’m gleaning a little bit more information and I feel a little bit more comfortable with it.

Doctor: Nevertheless, I do feel like I’ve been advised reasonably well by those people, my CPA and my third party administrator because they all know that my goal is to put away as much as I can in retirement. I feel like they are helping me try to get there.

WCI: Good. That brings us into our next question, which is, is it worth learning personal and business taxes and doing your own taxes to save on CPA fees of $3,600 a year?

WCI: Well, I don’t feel like doctors have to do their own taxes particularly in a complex tax situation like yours. I would not feel like, “I’ve got to figure out a way to save that 3 or $4,000. That said, 3,600 a year does seem a little on the steep side to me. I think it’s probably worth shopping that around a little bit and seeing if you can find somebody that’s willing to do it for less.

WCI: Then, what I would do is I would go to the person doing it now and say will you match it, because it sounds like you’re happy with what’s happening. I think you may just be paying a little bit too much but you’re not going to get your taxes done for $300 a year. It’s not going to happen. Could you cut a thousand off? Quite possibly, you quite possibly could. I think that’s just a matter of shopping it around.

WCI: All right, let’s move on to your next question, which was essentially about obtaining professional real estate status, which is a great way to decrease the taxes on your real estate investments. It really can make a big difference. The problem with it is there’s a very high bar to get over to qualify for that and that bar is 750 hours a year.

WCI: Now, I am a half-time emergency doc at this point and I work 750 clinical hours a year in the ER so I cannot imagine putting that much time into real estate. I mean, if you want to put that much time into real estate, I think we should be talking about your career and what you want to do with your career. I don’t think this is a tax playwright. I mean, 750 hours, that’s the equivalent of 8-hour shifts a month. It’s not an insignificant amount of time, you would be happy to put in your real estate.

WCI: For someone that is a single mom with a five-year-old and a full-time gig in perhaps the most demanding time-wise specialty out there, I’m not sure that’s a great idea for you to go for a professional real estate status.

Doctor: Right. I don’t think it would be very feasible certainly at this point in my career where I’m working 15 to 17 shifts a month.

WCI: You’re not thinking about changing careers. You still want to keep practicing medicine. You don’t want to go do real estate. Is that correct?

Doctor: That’s correct. Yeah. No, I love what I do. I want to keep doing this for at least 7 to 10 more years and then after that, if real estate is still of interest, I might seek out more opportunities in that regard while I’m scaling back my clinical hours.

WCI: Okay. Let’s talk a little bit about your next question. This is about hiring your son for modeling and/or office work. You’re talking about paying him 5 to $8,000 a year and open a Roth IRA for him and wondering whether I saw any hiccups with that process.

WCI: Well, as many listeners know, I hire my kids to be models. They model and their picture show up on The White Coat Investor website and they get paid very well for that. I mean, the go-in rate for child models is about $100 an hour. You can pay them very well for that sort of work. When they are working for a business that is not incorporated like yours is and like The White Coat Investor is, you can pay them and they do not have to pay any payroll taxes if the only owners of the business are their parents.

WCI: That is a great way to take what is essentially your business income and make it their personal income where they don’t make enough to pay taxes anyway and you don’t have to pay payroll taxes on it and then put it in a Roth IRA where it’s never taxed again. I mean, it’s a fantastic tax break.

WCI: The biggest issue with it, however, is you have to treat them like a real employee. You have to collect the forms. I think it’s an I-9 form that proves they’re in the country legally. You have to fill out their W-4s. You have to send them W-2s and W-3s every year. I mean, you have to treat them like a regular employee. That’s issue number one. It can be a little bit of a pain to do all that paperwork issue.

WCI: Issue number two is you have to pay them a reasonable amount, which means it’s the same amount you could pay the neighbor’s kid to do the same work. If you’re asking them to come in and do office work and they’re 5 years old, that might be a little bit of a hard sell to the IRS.

WCI: I mean, I’ve had three, 5-year-olds already and I’ve got a 4-year-old now, they can’t do much office work that has very much value. I would not expect to be able to come up with 5 to $8,000 a year worth of value out of a 5-year-old. I think you’re probably stretching it there.

WCI: Now, if you want to pay them for some modeling time, I think that’s pretty high yield as far as child employment goes of a very young child like that but make sure you cross all the T’s and dot the I’s and even then, I don’t think you’re going to get anywhere near the amount where you can max out a Roth IRA and be able to justify that to the IRS. A little bit of caution there but it can be, yeah, it can be a great tax break, just stay within the lines.

WCI: Okay. Let’s talk about your thing about doing some locums work to keep skills fresh and maybe earn a little more than you are currently. Tell me about that thought process and why you’re thinking about doing some additional work?
Doctor: I think the real thing for me is when I initially took the current job that I have now, I thought I would be okay giving up some skills and some high acuity. It turns out I miss a little bit of the critical care action and the thought process that goes into when somebody is critically ill.

Doctor: If I’m planning on practicing medicine for at least another 10 years, I think, well, I don’t want to be the out-of-touch not well-read, not skilled physician over the next 10 years. That’s one main reason why I’m looking into some locums opportunities to try out some different hospitals, may be at a slightly higher trauma level than where I am currently.
Doctor: I think it’s nice to have that collegial experience with doctors in different regions. I know that the practice in New York was very different than the practice in Arizona. I feel like there’s a lot to be gained from working with physicians in other geographic regions.

Doctor: In addition, of course, I think we all know as physicians that locums pays really well because oftentimes it’s a hospital that is really in need of support and they’re oftentimes willing to pay for it. It’s a way of maximizing my time as well rather than doing one 12-hour shift at an X rate, I could do the same 12-hour shift in a different state at a rate of Y and it would essentially pay for or be the equivalent of one and a half shifts where I currently am.

WCI: Well, I think there’s a few factors that have to go into that decision. Number one is the rest of your life. You’ve got a 5-year-old and this is like the magic years of childhood is age 5 to age 10. You got to ask yourself, “Well, how many of those do I want to miss?” Because yes, while you may be making 50% more an hour while you’re working in Iowa instead of Arizona, you’re also gone when you’re not working. You’re sleeping there, you’re eating there, you’re there for several days et cetera. It’s a fair amount of time away from your son.

WCI: Now, you’ve got the practical issues nailed down and that you’ve got a nanny. You at least got the resources to have someone watching your son while you’re gone, but you’ve got to ask yourself is that the life I want, which I would argue to me against adding it on to what you’re doing now.

WCI: Now, replacing some of what you’re doing now might be a better option. Might it increase your income a little bit? It might but mostly you’d be doing it for all those other reasons you’re looking at doing some locums work. Is that a possibility in your job to cut back on hours there and replace them with locums work?

Doctor: It is and you’re very astute. That is exactly what I was thinking of doing is scaling back to my minimum required shifts and supplementing with some locums.

Doctor: I’m actually not interested in working more. I’m just interested in working smarter. I would hold on to the minimum required shifts at my current job and just look for other ways to make my additional shifts more worthy of the time sacrifice as you said away from my kid.

Doctor: That’s a lot of what it is for me right now is everything in my life has to be really worth it to step away from my home and my son. I think a lot of single moms by choice really feel that way because every time he’s not with me he’s with someone else and I would much rather be with him. That’s a big part of the driving force from all of this. This is why I am spending a lot of time getting my personal finances in order.

WCI: Here’s the fun thing about locums though, you can go do it, see what it’s like, see how much it bothers you to be away from him for a few days, see how much you’re really getting paid after everything’s said and done, see whether it’s really filling that gap you’re feeling of keeping skills up and building collegial relationships.

WCI: Then you can just drop it. Just don’t sign up for a six-month spell. Sign up for a few trips and if you hate it, you hate it. If you love it, well you can do more of it. It’s not like this is a huge career decision.

WCI: The only huge part would might be cutting back on your regular gig. Maybe you do a couple of trips first before you cut back on hours at all to see how it goes. Then if you’re like, yeah, this is great, then you go in and start talking to the main gig and seeing if you can reduce hours there.

Doctor: That’s a great idea, really great idea. Yeah.

WCI: Let’s get into these next couple of questions. They’re somewhat related and they’re driven a little bit by anxiety, I think. You ask, “How does someone who started making money so late get on track especially after spending numerous years making much less than I’m worth and spending a small fortune on having a child?” It’s true. I came out of residency at 31. I wasn’t quite traditional but I was close to it. You came out of fellowship at 39. There’s eight years there and maybe a couple of years messing around with the fancy cars and clothes.

WCI: The truth is, I mean, look at the Physician on FIRE. Nobody’s ever really … No doctor anyway has ever really more than 10 years away from financial independence. There’s no reason any doctor listening to this podcast cannot retire in 10 years if they really want to.

WCI: The way you do it is doing exactly what you’re doing, you start cranking up that savings rate, putting a ton of money away, cutting your expenditures and within a few years, it’s amazing what you can build. You’re not starting from zero, you’re starting with a net worth of $800,000 and talking about being at least able to retire 10 years from now.

WCI: You’ve got a massive head start on that person going for FIRE in 10 years. Rather than feeling anxiety, I’d say, “Okay, I figured out what you have to do when you start late.” You just have to be a little bit more extreme about how much you save and how much you spend and how much you earned and do a little bit better job than the person that came out of residency at 29 years old. I think you’re doing the right things there.

WCI: I would not let, and this is your follow-up question, I would not let all the podcasts and blogs and Facebook groups that motivated you to make these changes give you anxiety. Remember the people on these forums, The White Coat Investor Forum and the Physician on FIRE Facebook group, the people who are out there telling their stories are the superstars of Physician Finance. These are the top 5% and you got to realize that you are way ahead of the average physician.

WCI: If you look at the statistics, if you survey physicians about their net worth, these are doctors in their 60s, about their net worth, one in four has a net worth under a million dollars in their 60s. You’re going to be way above that on the pathway you’re on at this point.

WCI: I would not beat yourself up based on the fact that there’s some yayhoo in a Facebook group who’s got a net worth of $8 million at 40. It’s just not the standard path that doctors take and you are ahead of the standard path that doctors take. I have some reassurance about that.

Doctor: Well, thank you. That actually does alleviate a lot of anxiety. I think the more you have this language floating in your head of financial independence and rate of return and all the other terminology, it does create a tremendous amount of anxiety. I can see it on some of the Facebook posts and feeds where I do feel like I’m not alone and certainly by the level of questions on some of the Facebook groups, it’s very clear that I have learned a lot in the last couple of years, but there is a fair amount of anxiety of thinking, “Wow, some people are really ahead of me.” Thank you for your kind words.

WCI: When you’re wondering whether you need some reassurance or a kick in the pants, you got to realize you already got the kick in the pants. That’s what you got in 2015 when you started throwing away the credit cards and you started going, “Okay. I don’t need to drive a fancy Audi,” that’s when you got the kick in the pants. You’re now four years past that. I’m not sure the kick in the pants is what you need at this point. I think you said your savings rate this most recent year was 48% or something, right? You already got the kick in your pants. At this point, you need to be reassured that you don’t have to go crazy on this stuff.

WCI: All right, another question you mentioned was about a freak out you had a few months ago where you had some money in your qualified retirement plans, but it was just sitting there. You felt like you had analysis by paralysis and so you just started randomly buying some mutual funds and ETFs.

WCI: Let’s go over some of what you’ve actually got in your account. She actually … For the listeners, she sent me a list of what’s in her accounts. Let’s go over some of these investments and just have to have a discussion about it.

WCI: For example, the self-directed solo 401(k) at Fidelity, which is where mine is now, this is about a $367,000 account at least it was when you first sent this to me, about $9,000 in a Fidelity Emerging Markets Index Fund, $10,000 in the Fidelity 500 Index Fund, $10,000 in a NASDAQ Composite Index Fund, $36,000 in cash and about $285,000 in a short-term rental. That’s in the solo 401(k).

WCI: Obviously, this is a heavily weighted toward one asset there but let’s look at each of these individually. First of all, I’m not a huge fan of 500 Index Funds. The reason why is they’re just large cap stocks.

WCI: I think a much better choice in those situations, assuming it’s available and still available at low cost, is to use a Total Stock Market Index Fund. If it’s at Fidelity, the one I’d like there is just their new zero percent expense ratio total stock market fund. If they let you buy that, I would buy that. I suspect you may end up with same problem I had with my self-directed solo 401(k) at Fidelity and that they didn’t let me buy it.

WCI: What I ended up doing was just buying the Vanguard ETF for their total stock market fund, just VTI, it’s total stock market, the ETF version run by Vanguard but you can buy it anywhere. I just bought it at the Fidelity Brokerage and that’s what I have for that fund in that account for me.

WCI: The NASDAQ Index Fund is probably an investment I’d just get rid of. The reason why is it is a tech heavy fund. It’s got a focus on these tech stocks. Sometimes people hear an index fund, they’re like, “Oh, the NASDAQ is an index. The S&P 500 is an index. I should buy a fund that follows that index.” The truth is when you’re picking index funds, the first thing you choose is, well, what asset class do I want to invest in and then what index do I wanted to follow?

WCI: Nobody that’s really sitting down and designed a portfolio from beginning from where they should be goes, “Oh, I want to have this tilt toward tech stocks. I’ll use the NASDAQ fund.” It’s more like an investment that ends up in your portfolio when you’re just collecting investments rather than starting from a well-designed plan.

WCI: Have you written down a desired asset allocation, the percentages you want to have in each type of asset class?

Doctor: I haven’t. I’m so embarrassed because I literally just freaked out and started buying stuff. I think as we go through this list, you’ll see that there’s a lot of duplication probably in some of the funds that I’ve chosen. That’s my next mission is to figure out how to reprioritize where I have my retirement money and how I’m investing it.

WCI: Yeah, you’re the classic person that doesn’t have a written investing plan. I don’t say that to poke fun of you because this is 95% of doctors out there or most people have. They come to me with a question of, “Should I buy this fund or this fund?” I’m like, “For what? What’s the plan? What’s the goal?”

Doctor: Yeah.

WCI: Any time you’re putting together an investing plan, you start with your goals. What am I trying to accomplish? Well, in your case, you’re trying to be able to retire 10 years from now. You run the numbers, you see how much you have to save each year and about what kind of a return you need to get on that money and you take into account the money you have so far. You look at the accounts you have available to you invest in and then you come up with an asset allocation. What percentage you want in US stocks? What percentage you want in bonds? What percentage you want in international stocks? What percentage you want in real estate?

WCI: Then, once you have that blueprint, you pick the investments to match. If you do that first, picking the investments is very easy. For example, if you need a US stock allocation, you use the total US Stock Market Index Fund. It’s really easy. Whereas if you don’t have that underlying planned, you find yourself grabbing a little of this and a little of that, you end up with a collection of investments.

WCI: I think there’s three good ways to come up with a written investing plan. I’ll list them out in range from amount of effort that you have to put into it as well as expense. The cheapest but most time-consuming way is what I did. You basically read a bunch of books. You got to participate on internet forums. You read some blog posts and you drop your own investing plan. That’s how I came up with mine. It’s very cheap as far as money goes but can be very time-consuming.

WCI: The nice thing about it is by the time you get there, you really understand it well. The thing is there’s so many totally free resources to get help with any questions you have as you design it.

WCI: The White Coat Investor Facebook group, you can ask questions on. The White Coat Investor Forum, you can ask questions on. You can go see the Bogleheads and within a matter of hours, you’ll have 20 opinions on your portfolio.

WCI: There’s lots … You shouldn’t feel like you have to do this all on your own and you can constantly bounce questions off these smart online communities of people that can help you refine your plan as you go.

WCI: In the end, everyone’s plans’ a little bit different and that’s okay. It’s just important to pick something reasonable and stick with it in the long term. That’s the first way is to draw it up yourself.

WCI: The second way is to do something like my online course, the Fire Your Financial Advisor Course. That’s basically designed for $499 in about 7 or 8 hours of your time to walk you through this process.

WCI: The idea is to get a shortcut from reading all those books and spend all that time online that I did and help you write your own financial plan to help you be financially literate and write your own financial plan. That’s the point of that and $499 is obviously a lot more money than doing it for free. You can go and borrow in some books from the library, but it’s way cheaper than the third option, which is going to hire a financial planner. That will basically cost you a probably somewhere between $2,000 and $5,000 to hire a good financial planner to help you draft up an investing plan.

WCI: Now, you don’t have to keep them long term. You can implement it yourself and maintain it yourself, but that’s what it’s going to cost to draft it up originally. That’s the least amount of effort and time to put in but the most amount of money.

WCI: I don’t care which of those you do, but I think you need to do one of them and just get a written investing plan and then it becomes much easier to select the investments, does that make sense?

Doctor: It makes complete sense. Actually your program is actually on my list of things to do because I could very easily hire someone to do it for me, but I really want to understand what I’m doing and I really want to understand what goes behind the process. I think nobody will manage my money better than I will because nobody’s going to care about it as much as I will.

WCI: Yeah, the other nice thing about that course despite its name Fire Your Financial Advisor is the whole first section of it, it teaches you how to interact with the financial advisor and get good advice with a good price. Even if you decide to hire somebody, tacking on another $499 to really learn how to use them, I think is still a worthwhile use of have your money.
Doctor: For sure.

WCI: I wanted to talk a little bit about this other and looking at your HSA it’s very similar, right? I mean, you’ve got an HSA here with only $36,000 in it and you’ve got one, two, three, four, five, six, seven, eight, nine different investments in it. When my HSA is twice that size, I have one investment in it. It just doesn’t need to be this complicated. What’s this percentage of your portfolio? It’s less than 5% of your portfolio. You don’t need eight holdings in it.

Doctor: It was just a panic.

WCI: Right, right. I can see you’re like, “I got to do something.” What you put together, you got some small cap growth index, small cap value index, mid-cap growth index, value index. There’s nothing crazy here. None of these are really bad investments. There’s just, you look at and you go, “There’s no underlying plan here whatsoever.”

Doctor: Exactly.

WCI: Your backdoor Roth IRA looks a lot better. It’s just one investment. It’s interesting though you own both the ETF form and the regular mutual fund form. I’d probably pick one of the other and stick with that.

Doctor: Yeah. I had no idea what I was doing. I just thought, let me just get some of each. I didn’t even realize they were the same thing, to be honest.

WCI: Yeah. Well, I bet you’ve noticed a performance is very similar.

Doctor: Yes.

WCI: Okay. I wanted to talk about this defined benefit plan here. You have probably the most unique defined benefit cash balance plan I’ve ever seen, which worries me.

Doctor: Oh.

WCI: When I look at it, you’ve got this Fidelity Select Medical Tech fund, which is a fairly, risky type mutual fund in it. You’ve got a real estate ETF in it. You’ve got another tech fund Fidelity Select Software and IT services in it. You’ve got another Fidelity Tech Fund, the Fidelity Information Technology Index Fund in it. Then you’ve got some syndicated commercial real estate in it as well.

WCI: This was so unusual for a cash balance plan that I bounced it off Konstantin Litovsky with Litovsky Asset Management who said, “Is this even legal? Can you even put this stuff in a defined benefit plan?”

WCI: We went back and forth a little bit and in the end he thought, “Well, it probably is legal but this introduces so many problems. I’m not sure I do it even if it was legal.” I want to explore with you a little bit about your, I mean, you didn’t set this thing up by yourself. Somebody helped you with this about what their thoughts were on a couple of things. One, putting this real estate in the plan and two, just having such a risky asset allocation in the plan. Have you had those discussions with whoever set this up for you?

Doctor: I haven’t. I hired a company, a third-party administrator to create this plan for me and the only request I had of them was that I wanted it to be self-directed similar to my solo 401(k) because at the time I thought, “Well, I really want to get into some real estate holdings.”

Doctor: They did the paperwork with that in mind. It is a checkbook control, self-directed defined benefit plan. I’m not sure that they are in-the-know on every investment that I have in it. They will be come September because most of these I just purchased within this calendar year, but so far they’ve said it’s all legal.

Doctor: They just need to know what kind of dividend and interest I’m earning throughout the year so that they can readjust the actuarial data and give me numbers for the following year on how much I can contribute.

Doctor: By all means, correct me if I’m wrong, because I feel like I’m definitely stumbling through this process on a year-to-year basis. If you have found out something different, then I’m more than happy to hear about it.

WCI: It’s just very unusual. Most of these defined benefit cash balance plans have a fairly conservative mix of investments. Forty percent stocks may be … An aggressive one might be 60% stocks.

WCI: Now look at yours and all the mutual funds are high-flying tech funds. Not only are they all is basically all the stocks in real estate, there’s no bonds, there’s no fixed income in here other than $1,000 of cash, but it’s very risky investments and the problem with that is when there’s a shortfall. For example, there is a big market crash, you have got to come up with the cash when you go to close this thing or maybe even year-to-year to make up those shortfalls because you’re the owner of the business.

WCI: That’s not necessarily a terrible thing as long as you have the cash to do it because it basically gives you the chance to put more money into a tax-deductible vehicle. It’s not a terrible thing to have to do that, but it could cause a cash flow problem if you don’t have the money to do it to really put a lot of money in there.

WCI: Right now, it’s not a huge plan. It’s only about a quarter million dollars total but if that were $1.5 million total plan and had a massive loss that you had to make up, as the business owner in a short period of time, that could cause you some real problems.

Doctor: Honestly, now that you’re saying that, I do remember them telling me that at the beginning but that I needed to keep the plan whole and I would be responsible if the plan didn’t do well as a whole to make up the difference. Yeah, I should probably look into that a little better.

WCI: Yeah. Assuming your plan when you draft it up include some bonds or some less aggressive investments, this is probably the account to have them in.
Doctor: Okay.

WCI: Because there are consequences to poor performance. Then, this is why most people’s cash balance plans is invested less aggressively than their 401(k).

WCI: The other issue here is I look at this real estate. It looks like you’ve got some syndicated commercial real estate, syndicated student housing real estate. Is that through, who are those through?

Doctor: They’re both through VAM. I think they’re called VAM Commercial.

WCI: All right. Is it a single property or is it a fund or a REIT or what is it exactly?

Doctor: They’re individual properties. The first is a strip mall in Houston. The other is student housing at the University of Houston. These are all relatively new to me. The whole idea of them is also new but I figured while I’m at the beginning of this phase of wanting to invest and I thought I could probably afford $75,000 just to see what exactly happens in these types of syndicated real estate deals.

Doctor: The first one, the commercial strip mall has actually paid out its first dividend and they’re very close to their target numbers. They had estimated about 8% and we got about 7.7% for the first dividend check. I’m hopeful.

WCI: I’m not terribly worried about them as an investment. I’ve similar investments that have performed as well as expected sometimes, sometimes worse, sometimes a little bit better. I’m concerned about them as an investment in your defined benefit plan.
Doctor: Oh.

WCI: The reason why is, these are typically fairly illiquid. When can you get your money back from these? What’s the earliest you can?

Doctor: I think they’re both three to five-year hold.

WCI: Now, you have an investment you have to hold for five years. What happens if you want to close this account in two?

Doctor: I haven’t thought that far ahead to be honest.

WCI: Yeah, I don’t think I would put any more illiquid investments into this account. I’m not sure that there’s a great way to rectify what you’ve already done other than hold these for three to five years, keep the account for three to five years and not do it again.

Doctor: That’s really good. I really didn’t even think about that. Yes, you’re right. That does lock me into this.

WCI: The other investment you’ve got in here, you just listed as land and this is a quarter million dollar account and over half of it is in land. What is this property?

Doctor: It is a third of an acre in a resort town in Arizona and my thinking, well, initially I was purchasing the land because I wanted to build out on it and do short-term rental like Vrbo or AirBnB, but because I didn’t have enough liquid to contribute and make my defined benefit plan whole for 2018, I decided to create an LLC and capture the value of the land in the defined benefit plan, which may or may not have been a big mistake. I’m not really sure but the idea was to build on the land and use it for short-term real estate.

WCI: Obviously, that’s a pretty unique thing to have inside any retirement plan at all. I think most people doing that have got that real estate basically their taxable account, not inside a qualified plan but if you’re going to try to put it in a qualified plan, I would pick your 401(k) profit sharing plan over this defined benefit plan. I think that’s a bad place to have it for all the reasons we’ve talked about.

WCI: It’s not liquid. It’s high risk. I don’t think that’s a good place for it. I don’t know how easy that’s going to be to move it out. If this is all relatively new, I wonder if you can go to Fidelity and say, “Hey, I really wanted that in my 401(k) and not in the defined benefit plan. Can we just move it over since I did it a couple of months ago?”

WCI: I don’t know, maybe they’ll let you. I’m not … I’m skeptical though. I’m skeptical that they will. I think that you might be stuck with all of these until you disposition them. I think that’s worth a discussion with your plan administrator folks in talking about these investments and what you really ought to have inside that particular account.

Doctor: Yes, good advice. I really need to spend a little more time understanding the ins and outs of it for sure.

WCI: I’m also told by Mr. Litovsky that non-liquid assets that aren’t traded on a public market, an independent audit has to be performed on their value periodically. He thought it was probably annually. He wasn’t 100% sure but, obviously if you’ve got to start doing audits on all three of these properties every year, that starts adding up as far as getting a value for them because I think the actuaries are going to need a value of what it’s worth each year and so that might mean you have to pay for an appraisal on the land for instance, which is going to start adding up over the years.

WCI: I think you really need to talk with them about the investments you’ve put in this plan and what to do with them.

Doctor: That is good advice. I will do that today actually.

WCI: I think we’ve covered all the questions you sent me. Are there any others that you’ve come up with while we’ve been chatting today?

Doctor: I guess my big question would be, if you take out my defined benefit plan, which is clearly a mess, as I’ve just discovered, is there anything I can … What should I do to consolidate some of these investments and make them more diversified or less diversified or fine-tuned, because as you mentioned, my HSA account is just a shotgun approach of random things and it’s a lot to keep track of. Every few months, I kind of look through it and create spreadsheets and look to see what each one of them is doing. That’s a lot of work.

WCI: Yeah, it is a lot of work to have a complex portfolio. I totally agree with you. I don’t even want to tell you how many different accounts I have to keep track of and that’s why I try to keep the investments simpler inside of those accounts because I might have a bunch of accounts that all hold the same investments. It’s a little easier to keep track of than having eight investments in each account.

WCI: You really have to start with a plan. You have to start with, what am I trying to invest in? Write down the percentage. For instance, a basic plan might be 25% US stocks, 25% international stocks, 25% bonds and 25% real estate.

WCI: If that’s your goal, then you can go to that HSA and say, “Okay, well, the money in my HSA I’m just going to have it be part of the allocation for international stocks.” You put the whole HSA in Vanguard’s Total Stock Market index fund.

Doctor: Okay.

WCI: Total International Stock Market Index Fund rather. Instead of the eight holdings you have in there, you now have one. It’s really easy to keep track of. Your Roth IRA again, is relatively small and you could go, “Okay, we’ll have our international stocks in there too.” Your only holding in there might be the Vanguard Total International Stock Market Index Fund.

WCI: Then, you look at these other accounts and they’re larger. Your solo 401(k) is quite large. As you might just have a little bit of your international stocks in there, you might have all of your bonds in there and you might have a good chunk of your real estate in there, for instance. That might be what’s in that account.

WCI: When you go to the defined benefit plan, you might have some bonds and some US stocks in there. As you start a taxable account, you may have some real estate in there, you may have some US stocks in there.

WCI: Across those four or five accounts, you might only have four or five or six holdings. It’s just a matter of having one or two or maybe three, if it’s a big account of your desired holdings in each account.

WCI: It’s just a matter of sitting down with a spreadsheet and mapping it out what the easiest way to do it is and over the years you’ll find as the accounts change in size relative to each other, that you’ll have to make adjustments, but that’s basically the process.

Doctor: Okay, that’s very helpful, especially when compared to my previous process.

WCI: Once you do it once or twice, you’ll be going, “Duh, of course that’s the way you do it. Why wouldn’t I do it that way,” but until somebody actually tells you to do it that way, most people don’t, most people end up with what you have, which is a collection of investments.

Doctor: Right, right.

WCI: The good news is, you’re saving a lot of money. You’ve invested in something reasonable, right? You’ve paid attention to your cost. You just really need an overarching plan is what you need.

Doctor: Okay. Yeah, well I am excited to get started. I’ll call that my next phase or next level of investing, which is cleaning up my current tax deferred accounts and making them a little bit more streamlined.

WCI: Yeah, and if you need help, I would not hesitate to pay some money to an advisor to help you draw up a plan. You know, the big concern with paying advisors are big, huge asset under management fees that go for 30 or 40 years. That’s the big concern. That’s how it adds up to millions of dollars.

WCI: Paying somebody a few thousand dollars to help you sit down, clean up your mess, understand what you’re doing, that is not going to keep you from reaching your goals. It’s probably going to help you reach them.

WCI: I would not hesitate for a minute to go hire somebody. I mean, you’re paying somebody almost four grand to do your taxes every year. It shouldn’t be a big deal to pay somebody a couple of grand to help you draft up a plan and help you get it implemented and go from there. They can certainly provide plenty of value in a situation like yours.

Doctor: Right. Thank you. This is just amazing talking to you and kind of walking through my personal information. I really appreciate it.

WCI: Well, I appreciate you coming on and being so willing to talk about your information even though, we obviously kept your name anonymous, there’s going to be a few people that will recognize your voice and got to hear all about your personal financial life and so that takes a lot of guts to put that all out there. I appreciate you coming on the White Coat Investor Show.

Doctor: It’s my pleasure. Thank you so much for doing what you do and I love that you start your podcast that way because oftentimes, I am driving home from work or to work and I love hearing you say the thank you’s at the beginning of each show. It’s really nice. It’s nice to talk to you.

WCI: It’s interesting, a lot of people say that and I’ve had a few people say, “You should quit saying that.” Oh. I just can’t win sometimes.

Doctor: No, I love it.

WCI: Thank you.

Doctor: You’re welcome. Thank you.

WCI: Thanks so much and thanks for what you do. Okay, that was great. We’ve done a few of those. Send us your feedback. Let us know how you like those types of episodes. We can do more of them if you like them. If you would rather have me interviewing experts, we can do more of that.

WCI: If you prefer me just answering individual questions that you guys send in, just send us feedback by Twitter or Facebook or email or whatever and we’ll try to incorporate your feedback and give you the show that you’re looking for.

WCI: We want, particularly the podcasts, we consider your show. It’s not me writing about what I want to write about on the blog. It’s mostly answering your questions and we let the listeners drive what shows up on the podcast. Be sure to send feedback after episodes and let us know what you think.

WCI: The easiest place to leave them might even be the comments on the podcast notes. If you haven’t checked these out, Cindy puts tons of work into these and they’re really awesome now.

WCI: We have podcast notes are published the same day the podcast goes live, which is Thursday each week. There’s a full transcript of the show on the website. There’s links to all the stuff we mentioned in it and even a brief summary of it. It’s a great place to go. Give us a little bit of feedback on those comments and we’ll try to make this better and better all the time.

lower s corp taxes

WCI: This episode of the podcast was sponsored by Alexis Gallati of Gallati Professional Services. Alexis is not your typical tax advisor with over 15 years of experience. She has been helping physicians all over the country save money on their taxes.

WCI: As a spouse of a busy physician, she understands the burden of high tax payments physician’s incur during their lifetime. Not only will she create a high level strategic tax plan for you, guaranteeing money in your pocket, but Alexis will proactively work with you throughout the year to maintain your tax plan, prepare your tax returns and represent you in an audit.

WCI: The investment in her tax planning services is a fixed price agreement and her tax maintenance packages are a flat monthly fee. If you’re tired of complex tax jargon and giving away most of your paycheck to the IRS, visit Alexis’s website at www.gallatitax.com today to schedule your free initial consultation.

WCI: Be sure to check us out on Facebook, join the Facebook group. There’s over 22,000 members of it now and it’s got some great information in there and some great opportunities to help other people. Head up, shoulders back, you’ve got this and we’re here to help. I will 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 is not a licensed accountant, attorney or financial advisor. This podcast is for your entertainment and information only. This should not be considered as official, personalized financial advice.