I have had a lot of financial success in life. There are plenty of people who make more than me and have more than me, but I enjoy more income than I ever expected and am rapidly approaching “enough” with regards to net worth. I've had a lot of people comment “how fortunate” I've been in life. That's true, I have been fortunate. But only a portion of my success comes from good fortune. A certain amount of it was essentially guaranteed by decisions I made. There is also a third portion that comes from simply putting myself into a position where I was waiting with open arms when fortune smiled upon me. Let me try to explain.
Luck
First, let's talk about the luck I had that had little to do with anything I ever did. I was born into a slightly richer than average middle-class family in the greatest economic powerhouse the world has ever seen to two parents who stayed together, valued education, and wanted their children to have a better life than they had. I was taught to work, be thrifty, and avoid debt from a young age. In a society filled with sexism and racism, I hit the jackpot — I'm both white and male. I have a relatively quick mind and a relatively healthy body. All that is pure luck (or a blessing, depending on your religious persuasion.)
Good Decisions
Second, let's talk about the decisions I made that resulted in financial success that had very little to do with luck.
- I decided to get good grades in junior high and high school.
- I chose to go to college.
- I chose to go to the cheapest college I was accepted into (and the cost was further lowered with an academic scholarship.)
- I chose to go into medicine. I learned early in my college career what it took to get into medical school and I did all that stuff, from spending extra time on the classes that mattered most, to spending time and money doing MCAT prep, to ensuring I had adequate service, leadership, health care, and research experience, to applying to schools that were actually likely to take me and was accepted into enough that getting in really was not a matter of luck.
- I spent time getting to know myself and what was important to me such that I chose the perfect specialty for me, with a combination of interesting work, a lifestyle compatible with my desired life, and a great income, at least on an hourly basis.
- I learned about personal finance and investing early in my career, when it could do the most good.
- I saved a large percentage of my income by choosing to spend dramatically less than my peers.
- I fully utilized every tax-advantaged account available to me, including accounts considered by many at the time to be creative–Backdoor Roth IRAs, spousal Roth IRAs, Stealth IRAs, Individual 401(k)s, Defined Benefit/Cash Balance Plans, Health Savings Accounts, Multiple 401(k)s etc, and took advantage of the best ways to use a taxable account (using capital losses against my regular income and flushing capital gains out through charitable giving.)
- We put off having children until we could afford to pay for them without borrowing money aside from a mortgage.
None of that required any sort of luck and a large percentage of my success can be attributed to it. Lots of people say, “Oh, he got lucky with WCI.” Remember we were millionaires before WCI ever made any money. That first million was almost all brute savings carved out of a below average doctor income.
Letting Fortune Smile Upon You
Finally, let's talk about the subject of this post- the stuff I consciously did hoping that fortune would smile upon me, but which I didn't really have full control over.
- I married a great woman. She works hard, is thriftier than I am, and isn't nuts. I'm not really sure what she sees in me, but a great deal of my success came from being smart about choosing a life partner. Now, a lot of that is obviously not fully in my control, but I did and continue to do what I can to ensure success.
- I invested in risky assets. If all you ever invest in is CDs, savings accounts, bonds, and whole life insurance, there is little opportunity to get lucky. At the beginning of 2016, nobody would have predicted that small value stocks would have gained 25% that year. But I invested in them. And that risk paid off. I've invested in real estate. Sometimes it has worked out poorly, but other times I have done quite well with it. Overall, I've done much better by putting myself in a position to get lucky.
Fortune Favors The Bold! The author's wife high on Pingora, Wind River Range, Wyoming
- I started a business. I did all I could to make it successful. I poured a lot of time and effort into it. I had set parameters that dictated when I would leave it and move on to something else if it wasn't working out. I paid attention to what was working and what wasn't, and did more of the stuff that worked and less of the stuff that didn't. Was I lucky that I was really the first into the niche? Sure. Was I lucky that what I was passionate about happened to monetize well? Absolutely. Was I lucky that revenue sources that didn't exist when I started the blog later popped up allowing me to incorporate them into the business? Of course. But I put myself in fortune's way.
- We bought our “big doctor house” in 2010. It turned out that was a pretty good time to buy a house. Appreciation over the last six years has been 48%, or about 6.7% a year, way more than the historical rate of appreciation of housing. More than a couple hundred thousand of our net worth can be attributed to that decision. Was it lucky that was the year that buying a house made sense for us? Of course. At the time, it didn't feel like real estate was going to start going up anytime soon, and would probably go down further before going up. But we could afford it, so we put ourselves in a position to get lucky and it paid off.
- I joined a democratic emergency medicine group, paid my sweat equity, and was made a partner. Our partnership faces lots of business challenges, and sometimes things don't work out well. But when they do, it can mean large sums of money are delivered straight to my bank account. If I had chosen “the safe road” of being an employee, I would get what the contract stated–no more and no less.
How To Get Lucky
Now let's turn to you. What can you do to put yourself in a position to get financially lucky? Here are 10 suggestions:
1. Get yourself a financial education
Not only will you quit doing the dumb things, but you'll better recognize opportunity when it knocks.
2. Own your home
That doesn't mean to buy a home before you're ready, but when the time is right in your life, get yourself into the position where you get the equity. Think about someone who chose to be a life-long renter in San Francisco 30 years ago and what they might have had.
3. One House, One Spouse, One Job
This obviously represents an ideal, but changing any of those three things is very expensive, so do it as seldom as you can.
4. Own your job
Sometimes it does make more sense for you to be an employee. But keep your eyes open for those times when it makes more sense to be an owner.
5. Own your side gig
What? No side gig? See number six.
6. Get a side gig
The more passive the better. Write a book. Buy an income property down the street. Write some software. Blog. Design a medical device. Go on the lecture circuit. Whatever. It might springboard you into a second career, but if nothing else, should provide a little bit of extra income. And you never know, you might get lucky like I did.
7. Own stocks
Yes, stocks might be overvalued. Of course, I can't remember a year during my investing career, aside from 2009, when there wasn't someone saying stocks were overvalued. But owning shares of legitimate, profitable businesses puts you in the position to get lucky when they do well.
8. Own real estate
Real estate is a business too, just like the stocks of publicly traded companies. Don't over-leverage yourself, but recognize that 90% of the people out there who are “really rich” (we'll call that having more than the typical doctor retires with) did so through the ownership of investment real estate.
9. Marry smart
I'm not saying marry for money, but for most of us, who you marry is entirely within your control. You don't have to marry someone that is lazy, or crazy, or seriously ill, or a spendthrift. You don't have to marry a low earner, someone with a lot of debt, or someone with a lot of family members who will be depending on them (and thus you.) I'd rather be happy than financially successful, but it is a lot easier to be happy when you are financially successful. Wouldn't it be great if you can find someone that can help you to be both?
10. Keep your lifestyle set such that debt is not a big part of your life
If you have big debts (think a dentist with $500K in student loans, a $500K mortgage, and a $500K practice loans), get them under control as soon as possible. Don't underestimate the behavioral effects of debt in favor of the mathematical effects of leverage. While you don't want to be an extremist, those with little debt generally have better cash flow and more cash with which to get lucky.
What do you think? What have you done to put yourself into a position to get lucky? How much of your success has come from luck, how much from good decisions, and how much from a combination of the two? Comment below!
gwrvmd
Warren Buffet also gives major credit to being a white male born in America
Luck favors the prepared mind
Your story seems to be a combination of hard work and luck, and more of the former. Almost all successful people have some form of luck or some inherent advantage. But that doesn’t mean an unlucky person can’t become successful.
It’s much easier said than done, but just focus on improving your own personal situation from year to year instead of comparing yourself to others. Some people are just born fortunate or have the Bank of Mom and Dad fueling their efforts. But you can’t worry about that. It’s just wasted energy. Focus on your own personal situation and improving it in any way you can.
I also must add my objection to the white male stereotype. While this may help in some respects when encountering someone who is a racist sexist, you have provided no proof that this helped you specifically, which is what this post is about right?. If you think being male confers an advantage, perhaps you should read The Economist’s edition last year entitled “The Lesser Sex”. Of course, a male was on the cover. I won’t go into the statistics supporting their thesis, but It would be silly to come out of reading that article thinking a male has a leg up in our society or is “lucky”. Regarding race, it is much more nuanced than your broad brush would paint it. Who is more disadvantaged – the poor white person in rural America, or the non-white from an upper middle class (or higher) background? Who is more likely to benefit from affirmative action, get into a better school, or get a scholarship because of their race? Which one of those categories of people would you be so “lucky” to be born into? I doubt your answer is the former.
I know this wasn’t the main point of your article, but to mention something so political in an offhand way without citing specific evidence – either personal, in other posts, or otherwise – just seems like you’re placating a narrative. And a questionable one at that.
I agree it wasn’t the main point of the article but I also don’t understand the comment. The average MCAT for black students is 27, white is 29, meanwhile asian is 33. Seems like the deck is stacked against WCI in a sense. Scholarships follow a similar pattern, and I would guess residency placement does as well. I understand being lucky you were born to middle class parents and went to good schools, but I don’t see how being white helps much in the medical field.
A smart kid I know just finally got into school on his 3rd application cycle with a 3.6x and 30 MCAT. If he were a URM, schools would be all over him. Instead he’s asian and apparently schools have decided they have enough of “those” race.
I think you’d enjoy a blog post I saw recently which makes an important point. Even with all their historical advantages and perhaps even bad things they did, white, straight American males are also largely responsible for much of what is right with America.
It’s easy to see why this is such a polarizing issue when reasonable people feel so strongly about such different positions on it.
Indeed it is polarizing. I’m just not sure it needed to be mentioned, or why some think it’s “obligatory” to be mentioned when there is clear evidence to the contrary (as well as in support of your statement I’m sure). I try to stay away from any posts that say one race is at fault, doing well, is disadvantaged, or responsible for much of what is good/bad in America. Too often they’re used in a way to bolster a biased position while ignoring the counter opinion. Check out the Economist article. I think you’ll come away from it with a different perspective on the luck of being male. As for the luck of being white, there are objective cases to be made on both sides. CB (above) highlights one of them to the counter opinion. The broad brush statements don’t help to solve anything IMO. Point out a racist, a racist act, a sexist, or a sexist act and let’s go target that person/act. But to say the system is rigged for/against someone doesn’t help anyone solve a problem. It just stokes anger, guilt and a focus on race, which is part of the problem anyway IMO.
I read The Economist article “The Weaker Sex” about the plight of males, especially blue collar males, at your urging.
It didn’t change my view that I wouldn’t want to start over as a minority or as a woman and see how I would end up. That said, I am not a blue collar male. I do remember envying some of them who made > $130,000 a year with a high school education at GM back in the day when I was making similar money. Things change. Medicine has changed a lot too.
I’m going to leave this alone now because I’ve learned you can’t change anyone’s mind on this type of polarizing issue.
People believe what they want and they have their own reasons. I choose to teach my children that racism and sexism exist. I have three daughters. I’ve tried to teach them how to overcome sexism: be a college educated, fully independent, strong minded woman who is aware of the problem, but don’t go around with a chip on your shoulder. Excel, do your best, and do more work than your peers.
That teaching may have the opposite effect that you are going for. It may lead to a chip on their shoulder. I have 4 daughters and do NOT teach them that sexism exists. I want them to do their very best with no perceived barrier in their way, that way they have no excuse.
“To each, their own.”
“I have opinions of my own, strong opinions, but I don’t always agree with them.”
This is going in a direction that isn’t going to solve anyone’s problems- I’m fairly certain of it.
I was hoping we would discuss the merits/demerits of owning/resting a home, purely from money perspective and not emotional – for example Jim’s example of San Francisco has many opposite examples, Detroit anyone? That can really help and be in alignment with the mission of helping the people who wear white coat get a fair shake.
Whether or not race had anything to do with it, you’ve worked extremely hard, created a useful product and service, and we are all benefiting from it. Thank you.
Good article. We’ve been accused of being ‘lucky’ as well, and I absolutely agree that we are… but at the same time, we put ourselves in a place to be lucky, and have both worked really hard, as in well over 100 hours per week hard. From our first home purchase in California at the bottom of the real estate slump in 1994, to our solid careers (non-medical), to my wife’s full scholarship for her Masters degree, to buying into a business. It did not go according to plan, and these opportunities stretched us financially further than we had planned for. However, we have always had backup plans, and we made it work. I don’t expect we’ll ‘retire’ until we’re 60, unless some further luck comes our way, but when we do we should be able to replace 100% of our current income from retirement savings and 75% of SS combined.
3 Lines in this:
1. “We bought our “big doctor house” in 2010”. It was a great year to buy. I too bought in 2010 and stretched beyond what I thought I should, as I was confident the market was about to turn around. That was one educated guess/gamble that has paid off big.
2. “I’m not really sure what she sees in me” Referring to your wife….clearly she is actually crazy 😉
3. “At the beginning of 2016, nobody would have predicted that small value stocks would have gained 25% that year. But I invested in them. And that risk paid off.” Where was the blog post on that??? Did I miss that one???
Good post and thanks
https://www.whitecoatinvestor.com/evolution-of-the-white-coat-investors-portfolio/
https://www.whitecoatinvestor.com/the-new-wci-asset-allocation/
Great discussion, but reality should creep into the debate. The medical biz is about numbers. The 3.5 plus to get into medical school, the 30 plus MCAT score, the double 230’s plus to land the residency that pays the big
bucks. It’s the 500k “Doctor House” in Utah or the 1.5 million plus “Doctor House in Marin County, California.
Females are now 50% of the medical school class, but arguably denied ready access to the Orthopedist residency and Chief Medical Officer slots. It’s not about race or gender, but family economics and values, including hard work among other factors that also plays a role topped off with luck in life’s casino.
The debate continues about numbers. Cut folks off Medicaid so bucks can be freed up to reduce taxes mostly
for folks who already have a high incomes and so on. A primary care Doc can possibly own a Doctor House in
Utah, but not in high priced locations if it’s that important. Is a 400k+ sub specialist work more important and valued than a Doc in the trenches earning half as much. Apparently so in this country based on the income pecking order. There is a class divide in America and likewise in medicine. It has a lot to do with the elitism covered in previous discussion. The real bottom line is that medicine currently offers steady work to its
practitioners with duties that can be both interesting and of value to society. That should be enough rather
than bragging about the road taken to get there. Live simply, travel widely, save wisely and live life to the
fullest.
I am a brown male — born and raised in the USA but with a “foreign” name (South Asian/Middle Eastern) and a “foreign” religion (Islam).
It’s just ridiculous to see people NOT acknowledging the role that race and gender play in this country. I read the Economist article referenced by ENT Doc, and it’s not relevant in this discussion.
All else being equal, white men are still able to get better jobs and higher pay than minorities and women in most fields (not universally of course, but nothing is). The article states that near the end.
Men in general often have advantages over women. The culture of this country requires women to find some delicate balance between the assertiveness expected of a man but the feminine traits expected of a woman. When women take on the purely assertive or authoritative role often associated with men, both men AND women often react negatively to them.
As a male, I’m almost positive I’ve benefited from some of this in ways without even knowing, despite my “foreign” background. I have to acknowledge that at times I’m a bit stubborn and overbearing — that’s better tolerated for men than women in the US.
So when all else is equal, being white and male is easier in this country than being black and female — I’m not really sure why that’s a debate.
WCI largely succeeded on his own merits (being born into a middle class family that instilled hard work/education was likely the more lucky thing than than his race), but the wheels are still greased a little easier for certain groups.
Thank you. I agree with you, sir.
The issue is complex. There are quotas at Med Schools now and a certain percentage of minorities need to be accepted. The white males that had superior MCATs and GPAs who were passed over for the less qualified minorities probably didn’t feel too much white privilege. A fellow resident with me who attended Johns Hopkins told me he worked as a tutor for a significant number of the minorities and would watch as they slowly dropped out of school. I’m not suggesting that women and minorities can’t make it as doctors, I’ve worked with many smart and capable people in both camps. I am saying that there is reverse discrimination in the selection process and being a white male is not necessarily an advantage.
After hundreds of years of white males having this advantage, it is humorous to watch some squirm when folks try to even the playing field, give minorities a boost and allow them to raise THEIR children in this “upper middle class” lifestyle where THEIR children will have these advantages. Your comment is the kind people find infuriating. In the vein of “you’ve got to be kidding”.
With all due respect as I’m sure you view yourself as a good and kind person, get a soul check. There are medical schools where black graduation rates exceed whites [what are they doing right?]. And it doesn’t take a brain surgeon to know that the same problems causing academic difficulties at pre-medical school education may leak into this environment. It may take generations to repair this damage. We are going to have to work at this and we will not listen to this crazy talk.
Prepare yourself for a lot of frustration if you think this is “unfair”. Because believe me, we do not intend on ceasing our efforts at a more equitable world.
I am hopeful this will benefit our society in a myriad of ways. We have to create a vision of the world we want to see, and I would like to see a world where, if anyone tries hard, they have a chance at success. A chance at the dream.
https://harpers.org/archive/2017/06/where-health-care-wont-go/ about my state’s pocket of tuberculosis outbreak, discusses U Alabama Tuscaloosa’s “Rural Health Leaders Pipeline, a medical education program that aims to build patient-doctor trust by recruiting and training students from communities like Marion, in the hope that they will return home and spend their careers providing primary care where it’s desperately needed…”
“When Wheat started the pipeline, in 1993, it was a summer program for high-school seniors from Alabama’s rural towns. They lived on campus in Tuscaloosa and took college-level chemistry and a writing seminar. The students met physicians, received support from peers and mentors, and were exposed to the steps for admission to medical school — all the advantages a child growing up in a city would have. “The farm kid who’s so rural he gets dizzy when he merges onto a four-lane highway? That’s the kid I want,” Wheat said. Several years in, to increase the number of black participants, he added an extra curriculum for the summer after high school that was aimed at minority students.
“As the kids got older, Wheat made arrangements to secure their path in becoming physicians. If a student continued successfully in the pipeline and earned a minimum score on the Medical College Admission Test — lower than that required of other applicants — he or she would be guaranteed admission to the University of Alabama School of Medicine. Other rural students could apply to enter the pipeline for medical school by meeting the same academic standards. Wheat couldn’t secure free tuition, but these students were prioritized by the state for scholarships.
“Since the program began, about 120 pipeline students have graduated from Alabama’s medical school. The first doctors entered into practice in 2004, and more than half have gone on to work in rural areas, compared with only 7 percent of their classmates. Studies have found that the addition of a single primary care physician to a community causes the local economy to grow by at least a million dollars per year; Wheat estimates that his program has delivered $320 million to poor rural towns — by generating medical revenue, creating employment, and revitalizing businesses.”
Like THAT!!!
Although to be fair, the cited article doesn’t discuss what happened and the economic cost of those who didn’t get into medical school slots because they were reserved for the rural students. The benefits weren’t free.
Yes, but state schools have a mission to serve the state and keep doctors nearby serving the greater good. The students with “better” grades from the city who go into derm are more likely to get into Harvard than the one from rural Alabama who only wants to work in a FQHC. And the student from the rural area likely had a worse pre-college education. There is no absolute hierarchy of who “deserves” admission. If you are considered qualified, then the school can weigh things besides grades that may make you a better fit than the person with a better Step 1 score.
Absolutely. It’s the school’s/admission committee’s prerogative who they admit, and they can choose as many “soft” characteristics as they like as long as they can get those students to pass boards and get into residencies. Occasionally a legislature will come along and apply some pressure, but for the most part the school can do whatever they want and if they prefer someone whose essay says “I want to work in small town Southern Utah” to someone with an MCAT score 2 points higher, they are free to take that person.
That’s why the smart applicant not only studies hard for the MCAT, but also raves about how much he wants to be a rural/urban/underserved FP. Weird how often that changes in med school, isn’t it?
If you read the whole article (might have to pay) it mentions two rural docs. One older white guy happy to live on 600 acres and see 2 bald eagles the morning he was interviewed- real country doc type- accorded some space and respect by the folk white black rich poor in Marion he does home visits etc. for. Another young black woman has no privacy, folks knocking on her door 24/7, everyone thinking she’s rich (she is compared), crap school for her kid, who’s bugging out as soon as she’s done her payback time. Too bad she didn’t marry a local with 600 acres? Don’t think it was her home town she returned to- would that have helped?
I know my cousin the county sheriff (going on 40 years now?) hoped I’d return to rural SD (only summered there as a child, never lived there all year) to practice. I figured by the time I gave free care to all my relatives in the county I’d have no time for any paying patients… and my husband’s first visit was during Missouri Mississippi river floodings and water rationing etc- as he said “I never knew I’d have to specify I wanted running water and a working telephone in houses where we visited.”
With all due respect, the statement “economic cost of those who didn’t get into medical school slots because they were reserved for the rural students. ” is just another way to word the prior poster’s statement re: quotas. It is an inability to understand that as a citizen of the world, to set up the system so it encourages participation and everyone has a CHANCE to win and thrive is the most equitable and successful way to do it. The statement was not harsh but had the underlying whiff of white male privilege. That is what it looks like. I’m not trying to be inflammatory, just trying to help you understand that what you say may not come off sounding like what you mean. And I am SURE that Lebron clearly understands what I am saying. Your statement was mild, just a whiff (which gives PERMISSION to the ogres), but I get to hear the brash overt statements nearly daily. You probably don’t hear the worst of them as they wouldn’t say it to you. I do.
Shouldn’t we all want to have the most qualified students get the spot instead of trying to socially engineer what our biased views think the country should look like? Why even have a student list their sex/race on the application? I guess it would come out in the interview, most of the time.
Under the section for tax advantaged accounts, I don’t understand what “using capital losses against my regular income and flushing capital gains out through charitable giving”. Do you mind explaining?
You can tax loss harvest your losses. So if you buy shares for $10,000, and they drop in value to $7,000, you sell, buy something highly correlated to them but not “substantially identical” (like S&P 500 for Total Stock Market Fund) and then subtract that $3,000 loss from your earned income.
If you give to charity anyway, might as well gift appreciated shares. Say you bought shares for $10,000 and they appreciate to $20,000. Give those shares away instead of cash and not only do you get the $20,000 deduction for doing so, but you avoid paying the $2,380 in capital gains taxes on the gain.
From Lebron James, after a racial slur was recently painted on his house (something unlikely to happen to me):
“No matter how much money you have, no matter how famous you are, no matter how many people admire you, being black in America is tough,” he said.
“We got a long way to go for us as a society and for us as African Americans until we feel equal in America.”
Thanks for sharing this. It is an open, painful wound which must be actively tended to heal.
I would say marrying the right person is underrated as a reason for success. Being in a stable, loving relationship with someone who shares your values is hard to put a price on. Divorce is a financial weapon of mass destruction.