ACEP webinar: An Evening with Dr. James Dahle of The White Coat Investor

dr. Dahle thanks for spending the evening with ASA and members and offering up some advice now you're very welcome it's wonderful to be here I got this earlier today should I contribute to force 57 be on top of my fourths Oh 3b what are the advantages and disadvantages of the 457 B well first let's start with a little bit of a disclaimer most the people listen to this probably aren't in Utah and I'm not actually licensed to do anything outside of Utah and even in the Utah I'm only authorized to you know practice medicine and drive so just bear in mind I am NOT a financial adviser I am NOT an accountant I am NOT an attorney and so this entire presentations for your information and entertainment only make sure if there's something that doesn't sound right to you that you look it up and check with the reliable source and double-check it all right but as far as 457 B's these are this is a common question among physicians particularly academic positions because a lot of academic positions will offer you both a 403 B which is very similar to a 401 K and a 457 B which is not at all similar to a 401 K it has similar limits to a 401 K and a 403 B but it has one big difference and that difference is that it is not owned by you it is owned by your employer so while it that offers great asset protection from you for you because it's not your money somebody Sue's your employer or your employer goes bankrupt that money is available to their creditors so the governmental ones are usually pretty stable and the non-governmental ones are problematic you really want to be careful and make sure it's a stable employer if you're going to use that one excellent I have a question here that says when I did my contribution to the traditional IRA through Vanguard I had to wait six business days before I was able to make a conversion to my Roth IRA this was confirmed twice with the Vanguard customer service representatives is this normal it was pretty normal this year a lot of people had that trouble I think I had to wait two days in the past I've only had to wait one but I had one year I think they made me wait four or five days it's really not that big wait a week between the contribution and the conversion step for a backdoor Roth IRA so I wouldn't spend too much time worrying about it I mean basically you just leave it in the money market fund there for a few days and you make a dollar too of interest and then you roll the extra dollar to of interest into the Roth IRA and yo tax is on a dollar it's no big deal so I wouldn't sweat it too much but obviously if the market goes up in that first week that's kind of lame that you couldn't get it into the investment right away well here's what we have it says once a day once a physician retires how do you plan to take out the funds from which from which account first taxable or non-taxable as IRAs rnd 870 at 70.5 what happens once a physician is no longer saving money but instead taking out the money well in general the general rule in this sort of scenario is that you spend the taxable money first and then you leave the retirement accounts to compound in a tax protected way as long as you can that includes both Roth IRAs and tax deferred or traditional accounts so the general rule is taxable first but it's nice to have options in retirement this allows you to take advantage of tax diversification you've got some money from taxable some money from your tax-free or Roth account and some money from your tax deferred account what that essentially lets you do is choose your own tax rate in retirement so the typical strategy at least once you burn through the taxable money is to take out tax deferred money up to the top of the next bracket and then above and beyond that if you want more income or more money to spend in retirement you use the tax-free or Roth money above and beyond that and so that's the general strategy starting at age 70 and a half you have to start taking out required minimum distributions from 401ks and any tax deferred accounts like IRAs and that works out to be at age seventy three point six percent of the account which is about how much you want to be spending anyway so it's not that big of a deal they have to take those out because that's about what you ought to be spending from the account anyway unless you want to just die with a ton more money than you have so it's our md's people have a lot of fear of them but it actually isn't a bad way to just spend your money in retirement you might have already sort of answered this it's kind of part 2 the last one with respect to social security if the physician makes money and the spouse does not when is it best to take social security money assuming delaying results in a higher return of the money is not essential for the spouse who doesn't make money in the spouse who does but as two years older well this is actually a very complex situation if you're healthy and you're single or you're divorced or whatever the usual answer is to take it as 70 just because that gives you the maximum amount of a longevity protection basically the risk that you'll run out of money because the longer you wait the higher the payments are so the general rule in that situation is wait till 70 however if you are married and you're both going to be getting a benefit of some kind which you generally are either your own or your half of your spouse's the strategy is not nearly as clear-cut and can be a lot more complicated the best resource I know to help answer that question for your individual situation is a little book called Social Security made simple it's written by Mike Piper it's a hundred pages and you don't even have to read the whole thing you can just pick the chapter that answers your question so I'd recommend picking that up it's five or six dollars on Amazon it's no big deal Social Security made simple but a lot of times it does make sense for the lower earning spouse to take money earlier than the higher earning spouse and for the higher earning spouse to wait until age 70 to take that money let's take a little bit of a break from the the routine here and ask how you got started in this and how did you become an expert we're almost to seven so I think we're about to like 66 people right now how'd how did you get into this sure I think the real answer is I got sick of being ripped off about halfway through residency I think I had been already been ripped off by just about every type of financial professional there is a realtor mortgage lender a recruiter a financial adviser and insurance agent you name it I'd had a bad experience with them and when I had that happen again with the financial advisor in residency I realized if you don't start learning this stuff they're just gonna keep happening your whole career and so I decided I'd go across to a used bookstore that was by my house there in Tucson Arizona and start reading books so I started getting books and started reading them I read a lot of terrible books terrible financial books that are out there but I did find a few good ones and as I went along I realized this stuff isn't nearly as hard as medicine and I also found it interesting and so over the next few years online I asked questions and answered questions and found after a few years that I was doing a lot more helping and I was being helped and just realized that that wasn't really the best way for me to help the most amount of people out there and I realized that nobody was teaching this to doctors so in 2011 I started the white coat investor which is a blog which has since grown into the most widely read position specific personal finance and investing website in the world and you know obviously it's grown in a lot of other things webinars and podcasts and video casts and we have a live conference I've got a couple of books I've written and an online course and go out and do speaking events and do all kinds of things mostly just to try to get this information into the hands of those who really need it which are doctors and the interesting thing about learning this stuff is the first few things you learn are so high yield better easily pays for your time and effort taking a look at it and so that's kind of a passion of mine it turns out just as much as I love medicine I like helping doctors and other high-income professionals quit doing dumb stuff with their money we hear this question a lot especially because I work with the young physicians section what are a couple of mistakes that young people make particularly as soon as they get out of residency and then they start you know making a pretty good paycheck what are a couple of things that you would advise against for those graduating residents know you're just teeing that up for me that's my that's my specialty here one of the biggest mistakes people make even earlier than that is having the wrong kinds of insurance or not having enough of it so one of the big things if I can talk people today into doing anything it's go get some disability insurance if you rely on your income for your living expenses you need disability insurance if you haven't bought it yet go buy it basically your first month of internship is about the time to buy it so that's number one if you don't have enough insurance go take care of that if anybody else is relying on you you also need a big fat term life insurance policy and I'm not talking about a couple hundred dollars and dollars I'm talking about a few million dollars one to five million dollars that sort of an amount is the typical amount a doctor probably ought to be carrying early in their career so once you get beyond the insurance one of the biggest mistakes doctors make particularly emergency physicians who often only really have one raise in their entire life as they leave residency and become an attending is they just grow into their income way too fast and sometimes beyond it I'm amazed how many doctors by the time they graduate from residency have two car loans and a big fat mortgage payment and then they realize they got to start making real payments on their student loans and so all of a sudden from beginning to their career they're just swamped with debt payments because they're simply spending too much money and they never carved out anything in the beginning of the career to build wealth to pay off the student loans etc so my very best advice if I can put it into one phrase that I can give to any doctor the secret to wealth as a physician is live like a resident if you'll just spend the first two to five years of your career living a lifestyle somewhat similar to residency give yourself a 50% raise even right that'd be huge in corporate America but if you can live on 50 or 75 thousand dollars a year and earn the 300 or 400 or 500 thousand dollars in many emergency physicians are earning and take the difference there and use it to build wealth you can wipe out your student loans very quickly you can catch up to your college roommates as far as retirement savings and you can save up a down payment on your dream house so really the key is that first year out of residency if you can just get that started right so much just goes great for the rest of your financial life and that will make up for almost any other financial mistake you ever make we just got a question from one of our attendings in the in the webinar it says what's the number one book that you would suggest for a newbie investor I think the best book to start with is not written by me actually I have a couple of books out I have the white coat investor doctors guide to personal finance and investing that's the one that came out in 2000 14 and the one published less than a month ago which is the white coat investors financial bootcamp they're excellent books either one of them will help you a great deal but the one I recommend to people that aren't sure they can get through a financial book is written by a neurologist William Bernstein it's titled if you can it's free it's 16 pages long that's it you can get through that if you just Google right now if you can PDF it'll pop right up and you can have that read by the time this presentation is over now to be fair that book does recommend you read five other books it's divided into five or six chapters and each chapter one of the homework assignments is go read another book but in 16 pages it encapsulates a very viable investing strategy that you would do well to follow the rest of your life investing really can be that simple excellent I have a 1 here that would came in and in advance can you compare the ultimate benefit of putting monies into a taxable account paying the taxes up front versus a tax deferred account an IRA where the tax is ultimately paid at a higher earned income rate upon withdrawal you know this is an area of confusion that a lot of people have they they start thinking well what if I have to pay all these taxes when I take the money out but they forget about that huge tax break they had when they put the money in I think one of the best ways to understand retirement accounts is to first think about a tax-free or Roth account when you put money into a Roth account that money is never taxed again all the earnings throughout the years are not taxed and so it grows quicker than money does in a taxable account that has that drag from the constant taxes each year as it pays out dividends and other capital gains distributions then when you take the money out in retirement it comes out tax-free that's a Roth IRA a Roth 401 K a tax-free account now the best way to think about a tax deferred account is that it is really two accounts the first part is all yours it's just like a Roth account it's a tax-free account second part of the account is a government account it's the government's money and it's money that you are investing on their behalf for the next 10 20 or 30 years so if you think about it that way you realize that that money you pay in taxes when you take the money out of that 401 K or IRA was never your money in the first place it was government money and a lot of times because we're often in a higher tax bracket during our peak earnings years than we are in retirement we even get some of that government money transferred into our part of that account and so I think if you have that mindset about it you won't stop for a second and think that it would be smarter to invest in a taxable account until after you have maxed out all available tax protected accounts that includes backdoor Roth IRAs that includes health savings accounts that includes 401ks and 403 bees and 457 bees and if you have a side gig an individual 401k and maybe if your if your employer offers it or your partnership offers it a defined benefit or cash balance plan so all of those are superior tax wise much superior to investing in a taxable account it's not that a taxable account is a bad thing if you need to invest more money for your goals retirement or college or any other goals that's not a bad place to put it but bear in mind it is not as good as using your 401k excellent here's one that just came in when people refer to having bonds in their portfolio or people generally genuine generally referring to a total bond market fund I think there's a lot of variation in what people are referring to right I mean obviously there are lots of different ways to invest in bonds you can invest in a bond mutual fund you can buy individual bonds particularly with Treasuries that's relatively easy to do if you go to Treasury Directgov you can buy them straight from the government so a lot of people that are building a Treasury bond ladder or who buy individual Treasury inflation-protected securities will go there and buy those directly sometimes people will even hire a broker to help them choose individual muni bonds but I think that's a level of hassle that's probably not worth given how cheap it is just to go to Vanguard and buy a municipal bond index fund for instance and so it depends you know a lot of people do use a bond fund like the total bond market index fund that's not a bad fun but a lot of times they're using something different I don't actually invest in the total bond index fund I have a little bit different strategy for my bonds but it's not like that's a bad one the truth about investing is you need a reasonable strategy that you can stick with for the long term and you don't want to be bouncing back and forth between a bunch of different reasonable strategies you'll probably move from one just as soon as it starts doing better than the other and vice versa it's far more important that you stay the course so long as the course is reasonable than which exact course that you're on here's one who someone obviously already knows you says I know dr. Dolly has multiple pages of information available on why one should not get a whole life policy if he did sum it up and a few points what would it be the reasons why a whole life policy is probably not a good idea for most doctors are that it is a combination of overpriced unnecessary insurance and a low return investment that's the best way to sum it up now there are dozens of ways to sell it and all kinds of things you can do with whole life insurance but most of the time there is a better way to do those things a better product to use to meet those needs for example if you're trying to save for college a 529 is almost always better than using a whole life insurance policy you're saving for retirement your retirement accounts and even a taxable account is usually better if you need a life long death benefit for some reason a guaranteed universal life policy is usually better the life insurance that most of us need though is term life insurance which is perhaps 1/10 the cost of whole life insurance and so it's just not a product that most of us need unfortunately we often get kind of sold a policy that we probably wouldn't have bought if we really understood how it worked and it's not the same decision whether to dump a policy you already have as to buy one that you haven't yet bought and the reason why is because the poor returns on those are heavily front-loaded and so you know it might take you five 10 15 years to break even on a policy once you've broken even the return on your investment might not be too bad from there going forward because those first five or 15 years are already water under the bridge so it can be a complicated question if there's any day so ever in your mind that this isn't right for you though don't buy it there is plenty of time it is not something that every physician should have because they're a physician don't let anybody convince you of that what about annuities especially ones with the floor a lot of people try to sell you an annuity because it has a floor at the stock market crashes then you'll be safe what do you think of those yes there are a lot of bells and whistles that can be added both to cash value life insurance and to annuities as a general rule they are overpriced you're simply paying too much for the benefit in order to put that floor underneath you you're giving up too much of the return to get it that's the usual issue with these certainly a physician that is relatively early in their career has no need for that stuff because they can just hold on to the investment and more than likely they are going to be able to recoup their investment over the course of the next 10 20 30 years and come out way ahead than if they had been paying an insurance company to try to hedge some of that stock market risk for them okay does a pre-owned you might not know this when you may we'll see does a pre-existing diagnosis of depression impact ability to get disability insurance or do I need to go through GSI absolutely it could impact that for sure any medical condition you've had could impact it will it keep you from being able to get it at all probably not it might cost you a little bit more money you might have a mental / nervous limitation on the policy in that you know instead of paying until 65 it might only pay for 24 months if you were disabled due to that depression but what you should do is go see an independent disability insurance agent one that can sell you a policy from any company and compare what is available to you and they can kind of shop you informally they can say this person has depression they take Prozac they've never been hospitalized etc etc and they the person on the other end of the line can actually tell them yeah they probably shouldn't apply formally with us they're going to get a rating if they do that this is how we would treat that and a different company might treat it totally differently but in that process you can also look at a GSI policy guaranteed standard issue policy these are policies that if you're super healthy and have no bad habits you usually have a little bit higher cost than a standard policy but if you have some sort of medical condition and your employer your institution offers a GSI policy that's often the best policy for you you know if you've got diabetes and you've already had a heart attack and you want to get disability insurance you're gonna be far better off with the gsi policy but with a little bit of depression it's hard to say you just have to compare and run the numbers the best thing to do is to work with an experienced independent insurance agent that can help you do that awesome I have a couple of IRA questions here's one that came in in advance as my husband and I both set up a Roth IRA and residency and now we're above the salary threshold to contribute this person would like recommendations on what they should do with that account now the current retirement plan is a 403 B through the employer this person is gonna start a new job in the fall that also has a 403 B well I've got some great news for you it's called the backdoor Roth IRA it used to be prior to 2010 that a physician couldn't do a lot of things with IRAs because of their income they weren't allowed to deduct traditional IRA contributions as long as they had a plan available to them at work they were not allowed to make direct Roth IRA contributions because they made too much money and they were not allowed to do Roth IRA conversions because they made too much money in 2010 Congress changed one of those three rules and they allowed high earners to start doing Roth conversions and what that opened up is what is now called an indirect Roth IRA contribution or a backdoor Roth IRA contribution which despite the name is totally legal Congress knows we're doing it the IRS has said it's okay but the way it works is you make a contribution to a traditional IRA this contribution is non deductible because you make too much money and you have a retirement plan at work and then the next day or a week later in the case of one of our earlier listeners you move that money from the traditional IRA to the Roth IRA that is a Roth conversion that is a taxable event but there's no taxes due because that money has already been taxed you didn't get a deduction when you put it in the traditional IRA so now when you move it to the Roth IRA you can do so tax-free and so the bottom line is even after you're an attending you can keep making a roth IRA contribution for you and for your spouse you just have to do it through the backdoor by putting in a traditional IRA first and then moving it to a Roth IRA here's a here's one from a resident it's a it's actually a compliment it says my husband uses fidelity I wasn't sure how to divvy up the portfolio I went with your advice and went aggressive stocks I divided it between large cat medium gap and small gap index funds the 5-year performance was good I chose them because of those published numbers so kudos there that's great although I'd be careful choosing your investments based on past performance there's a reason why every mutual fund prospectus is required to contain the words past performance does not indicate future performance now the stock market has done particularly well the last ten years and so any past performance numbers you look at over the last five or ten years that involve investing heavily in stocks are going to look pretty good but having been an investor in 2008 I can assure you the stocks go both up and down and so you when setting your asset allocation your mix of stocks to bonds to real estate to other assets make sure you do not pick something that is more aggressive than you can hold in a 2008 like scenario it's a little bit like the price is right you want to get as close to your risk tolerance as you can without going over because if you go over what weapons is you're lying awake at night and your spouse is asking you why'd you lose all that money we were gonna use to remodel the kitchen and all of a sudden you find yourself selling low which is a financial catastrophe you would be much better off being a little bit less aggressive the whole time and not panicking in a market downturn then you would go in ultra aggressive so you really just have to know yourself but I caution people to really err on the conservative side until they pass through a bear market now a lot of us recently did I mean if you were paying attention in December the market dropped 20% in December and if you were able to sleep through that and able to keep investing and so on and so forth then you're probably okay with what your asset allocation was but if you found yourself lying awake at night on Christmas Eve and you weren't listening for the reindeer you might want to rethink that asset allocation and now that the markets recovered this is a pretty good time to dial the risk back a little bit here's another IRA question this person says I like the roth is the Roth IRA a good IRA to fund out of residency or would you reckon you recommend a Roth 401k or a traditional solos form okay I'm not sure exactly what we're talking about out of residency during residency the general rule is that you want to use Roth accounts just because you're in a relatively low tax bracket and then when you're an attending you generally want to use tax deferred accounts particularly after that first year where you're half year resident half you're attending but after that you want to be using tax deferred accounts if at all possible just because you're now in your peak earnings years but if for some reason a Roth account is right for you the first thing you look at is your employer's account if they are offering you a match if you put money in the Roth 401k they give you some money in that 401k you want to make sure you get that match that's free money not getting that is like leaving part of your salary on the table but in general after the match I prefer a Roth IRA to a Roth 401k just because the expenses are usually a little bit lower I have a few more investment choices I have a little more control over and so you know obviously I would try to do in both I try to max out both your Roth IRA and your employer account but if you have to choose I'd probably choose the the IRA over the employer account once I've got the match got it yeah we're getting a lot of questions we'll go quickly here okay what are your thoughts on practicing in a rural community in terms of cost of living potentially higher income etc I'm a medical student newly matched I've had a goal of practicing rural but wonder what insight you might have thanks for everything you do well I tell you what I am amazed how many doctors there are living in California and I know I saw a few names here in the question list that I recognize people that I interviewed with for residency actually who practice in California so know there's a few of you out there but an expensive area like the bear yeah where doctors may not get paid anymore sometimes even less than similar professionals and you have a high tax burden and you have a high cost of living it's definitely a much steeper road to climb to financial success than if you live in one of the flyover States like I live in where taxes are lower cost of living is lower and oftentimes physicians are paid more particularly if it's not a very desirable place for emergency physicians to go to it can be amazing how much money you can make as an emergency physician and so I'm you know I I think it's if you find a place that you are happy living in that doesn't have a high cost of living that has a low tax burden go there you know by all means it's like what I tell medical students you know if they find themselves in love with orthopedics and Pediatrics equally pick orthopedics it's gonna pay you three times as much but if for some reason you are in love with California or DC or Manhattan and that's where you want to spend your life a physician still makes enough money that if they manage it wisely they can still have a very nice financial life there you just got to realize that that you can really put some wind at your back by moving to some of the lower cost of living areas would you recommend converting traditional IRA money to Roth in order to take advantage of the expanded 24 percent tax bracket that's a good question it really depends it depends on a lot of your financial scenario obviously if you think you're going to be taking money out in retirement at some level higher than 32 per than 24 percent and you can convert now at a tax rate less or then or equal to 24 percent then that makes sense you know but Roth conversions are one of those things that it really depends on the rest of your financial picture yes it depends somewhat on what future tax rates are going to be but more that depends on you and so I can think of scenarios where it would make sense to do a Roth conversion at 24 percent and I can think of scenarios where it would not make sense to do a Roth conversion at 24 percent the devil is really in the details there and unfortunately we don't have any here's a long when it came in before the webinar started it says I haven't seen much in posts about medical reimbursement plans for a small business something my CPA recently told me about when I heard I have a high deductible health plan and what I can tell it's great for us since we have a small business with just family as employees that's organizes the C Corp all of our out-of-pocket expenses and health insurance costs are deductible as business expenses much better than on the 1040 personal side curious if this is something relatively new and if there are any gotchas to look out for any guidance on how big a pot to accumulate in the HSA is appreciated - we are both 60 and the plan for now is just to keep accumulating but I wonder about when it could be too large and cause an inheritance tax burden for my hairs okay so there's two or three questions in there let's talk about the first one to start with this is the idea of a health reimbursement account or an HRA they're often called the problem with these accounts is that they make it so you can't use a health savings account and so the typical use for this is for employees so what you do is you basically the employer gets a high deductible health plan and then uses an HRA to can basically convert that high deductible health plan to a low deductible health plan so let's say the deductible is 25 hundred dollars and so they install an HRA which will pay everything from $250 to $2,500 and so basically now your deductible is $250 so it's a great benefit for employees they love it right they now have basically a really nice health insurance plan and sometimes that's a cheaper way for the employer to go rather than getting a lower deductible plan they're better off with a high deductible plan than an HRA the problem is they are not compatible with HSAs most of the time the only ones that are are limited HRAs that you can only use for you know optometry sometimes dental that kind of a thing but you can't use it for your main health care expenses and so that doesn't really work very well as far as using it with an HSA now if the right health care plan for you is not a high deductible health plan then an HSA plan might not make sense for you but if it does then for sure use the HSA a health savings account is probably your best investing account out there and the reason why is it is triple tax-free just like a 401 K you get a big fat deduction when you put the money in for a family this year it's seven thousand dollars for a single person that's thirty five hundred dollars that basically is not taxed at all but being put in an HSA and then as it grows its tax protected just like a Roth IRA or a 401 K when you take the money out as long as you spend on health care it comes out tax-free just like a Roth IRA so it's a triple tax-free account it's a wonderful way to invest in fact there's no reason to not max it out if you are eligible to use it each year and the reason why is because after age 65 you can take the money out penalty free and use it on anything you want you can buy a sailboat with it if you want and pay no penalties now you will have to pay taxes on it if you use it for a sailboat instead of health care expenses but that's no different than your 401k so what its worst it's as good as your 401k so feel free to max that out each year it really can't get too large now you do want to use it for health care during your lifetime if at all possible it's not the greatest account to inherit because it's all taxable taxable income to your heir the year you died so you definitely this is money you want to spend they would be much better off getting your Roth IRA even a traditional IRA or a taxable account or your house or something else this is something you probably ought to try to spend during your lifetime but I wouldn't hold back funding it all the estimates of how much money you're going to spend on health care and retirement are quite high and chances are very good you're gonna run through that money at some time during your time here's somebody moonlighting during residency and asks how should they use the extra money well you know the typical issue for a resident isn't that they don't have any uses for some extra cash usually the problem is they have too many uses and not enough cash so it depends on what you know your highest priority uses it's hard to say here are a few options though a lot of residents are still carrying credit card debt and car loans and consumer debt you know if that's eight ten twelve fifteen percent that's a pretty high priority so that's probably what I do first with any extra money I had another great option anytime you're moonlighting and basically getting 1099 income that you're an independent contractor is to open an individual 401k and in residency that can even be a Roth 401k you can put the money in there you know after-tax basically and have it never be taxed again so that's another great use for it you can use it for a Roth IRA you can also use it to pay down student loans if you are planning on paying down your student loans yourself rather than trying to go for a government forgiveness program that's also a good use of your money maybe saving up a downpayment toward your dream house might be a good use of it if you're already owning a house in residency maybe you want to pay down your mortgage with it there's lots of good uses for it you know even just saving up a real emergency fund that a lot of interns don't have when they first start out there's there's hardly a bad use for it you know I mean it's probably even okay to spend a little bit of it right I mean a you got to have moderation in all things a little bit of balance in your life I rarely run into somebody who doesn't have a good use for their money you know usually by the time you're having that problem you're already financially independent what are your thoughts on investing in equity options for real estate crowdfunding companies can you review the benefits of the rei TS well there's a lot of things mentioned in that question let's start with the last one rei TS or REITs or real estate investment trusts there are lots of different ways to invest in those probably the easiest way is to go to Vanguard and buy shares in their mutual fund the Vanguard REIT index fund it's very very cheap very broadly diversified very liquid and I think it's a reasonable place to start with any sort of real estate investing that's a fund I invest in I don't get paid any money by Vanguard to be a shill forum for that something I've invested in for a long time the downside of that particular fund is it moves up and down with the stock market somewhat it's moderately correlated with the stock market so some people prefer investing in real estate in other ways you know whether that is buying properties directly and managing them themselves or hiring a manager sometimes it's doing syndicated real estate where you hire a syndicator basically puts together a hundred investors and they buy a you know an apartment complex and basically share the economies of scale with that sometimes there are some of these companies especially since the 2012 JOBS Act that are basically raising money and doing crowd funded investments and these are essentially syndications you know where they bring a bunch of investors together online and they CH put in five or ten or twenty thousand dollars toward an investment and then the manager runs the investment one of the newer things were seeing are some of these private REITs put together by these same companies such as realty mogul or fundrise these kinds of companies and they are basically offering a REIT that you can buy in and buy out if it provides a little bit more liquidity than those syndicated investments it gives you a little more diversification because I might have 10 or 15 properties in there instead of just one and of course with the new tax law there's a slight tax break there for investing in a REIT basically 20% of your REIT income is now a deduction and so that helps a little bit but they're terribly tax inefficient already inside your taxable account those are all reasonable ways to invest in real estate I've done all of them I don't know that one of them's necessarily better than the others you're really on a spectrum from how much control you want to have over the investment and how much hassle you're willing to put into it you know the least hassle least control option is to go to van garden buy the wreath index fund the most hassle most control option is to buy the house down the street rent it out and manage it yourself and everything else is kind of in between and just depends on how much hassle you're willing to deal with to have more control over the investment here's a question we can probably roll into one somebody wants to know what is your personal bond strategy and someone else asks if you do any market timing well I don't do any market timing that's an easy one basically I have a written investment plan and we just follow it we've been following it since 2004 when I was a resident and certainly worked well you know seven years out of residency my wife and I were millionaires now we're financially independent I'm only 43 years old and basically medicine is optional for me and not just optional because I got this business on the side this white coat invest your business but optional because I've saved up enough money they don't have to work anymore and so you don't need a complicated plan if you've funded adequately you know any reasonable simple plan that you follow if you fund it with a decent percentage I usually recommend 20% of gross of a physician's income is going to be adequate so don't feel like you have to make it complicated and have some crazy market timing scheme most of the data shows that market timing is expensive and ineffective and so I would caution against that the first part of the question was my personal bond strategy was in isn't necessarily the best strategy but what I do is I split my bonds 50/50 between nominal bonds or regular old bonds and Treasury inflation-protected securities those that are indexed to inflation and some years the nominal bonds do better and some years the tips do better it just depends but that's been my strategy for the last 15 years and we're basically still following it you know if I could go back in time I'd probably pick something different because now I know what happened but you know that's the strategy we're using because we feel like it's a good know-nothing strategy that's worked well for us I happen to have access to the government Thrift Savings Plan from when I was in the military and so a good portion of my nominal bonds are actually in the TSP G fund which is basically a money market fund on steroids you know bond yields with money market risk but that's not accessible to most investors and so it's hardly something I can recommend across the board can you explain how tax gain and loss harvesting works once you switch to a similar fund can you later tax loss harvesting by selling and moving your investment back to the original fund okay so let's talk for a minute about tax loss harvesting the idea behind tax loss harvesting is to get a loss that you can use on your taxes without actually changing your portfolio in any significant way so you're just harvesting the loss to use on your taxes so the way this might work let's imagine last December first you bought ten thousand dollars worth of the total stock market index fund at Vanguard and then come Christmas Eve you'd lost a bunch of money you'd lost a couple thousand dollars on that by that point and so what you decide to do is let's exchange it for the Vanguard 500 index fund which is very very similar the correlation between those investments is 0.99 but they are different investments they are not substantially identical those are the words the IRS substantially identical and so you can switch one for the other and what you've done there is you booked a two thousand dollar loss and you can use that now against your taxes each year you can use up to three thousand dollars in capital losses against your regular earned income above and beyond that you can use it against your capital gains and also carry any losses you have forward for example I booked about eighty thousand dollars worth of losses last December and I only got to use three thousand of them this year I think I offset some capital gains I had maybe another three or four thousand and the rest I'm going to carry forward and use in my taxes next year and maybe I'll be able to carry them forward for a decade and so it's pretty useful for reducing your taxes now the downside of it is you know aside from the hassle having to put in those trades is that it lowers the basis on investment so when you eventually do sell it you end up paying taxes on more of it than you would have otherwise you still come out ahead but may it's not a free lunch for sure the only way to get the free lunch is to die if you die your heirs get a step-up in basis or to donate those shares to charity which is always a great tax strategy if you're giving you charity anyway give them appreciated shares that neither you nor the charity have to pay taxes on them so if you can combine those two things tax loss harvesting with the donation of appreciated shares it's really a powerful way to invest very tax efficiently now the questioner also asked about tax gain harvesting now this is kind of a different strategy not one used by attending physicians very often but occasionally there is somebody a child or college student or maybe a resident even where you are in the zero-percent capital gains bracket and you can literally harvest capital gains with no tax consequences and what you're doing there is basically raising the basis of your investment and so when you later sell it when you're in a higher tax bracket you then won't have to pay taxes on it and so that can be a good strategy too but it's one you employ in a very different year than when you're employing tax loss harvesting now the other part of that question was what about exchanging back and the only rule about exchanging back is you got to wait 30 days so in my example where you bought total stock market on December 1st and you exchange it for a 500 index fund on December 24th you got to wait till January 24th or 23rd whatever 30 days is before you go back to the total stock market index fund this year that might not have been a great move because by that point the market had already recovered and so when you exchange into a fund you'd better make sure it's a fund you're willing to hold for a long time because you might be stuck there or else have to pay a lot of capital gains which are basically gonna wipe out the losses you just harvest it so make sure you're swapping into a fund that is not substantially identical that still has pretty high correlation with the original fund and that you're happy holding indefinitely excellent is there a way an employed position with w2 with access to a cash benefit plan can take advantage of the $1.99 a deduction if he or she can lower income enough when incorporating help an employed physician does not qualify for the $1.99 a deduction this is the qualified business income deduction if you don't have business income you don't qualify now if you are an independent contractor and your income is low enough you know this is talking about doctors because doctors are a specified service business if your income is low enough and you are self-employed you can take that deduction but bear in mind there's a few caveats one if you're in a partnership like mine and your payments are guaranteed income payments you know they show up on box 4 of your k1 those don't count as qualified business income only ordinary business income does so a lot of partnerships are scrambling to see if they can you know change their business structure around a little bit change their payment structure around a little bit to get practicing physicians this this deduction but in a lot of cases like my partnership they just weren't able to do it and so our partners aren't getting that deduction let's find a lot of them wouldn't qualify for it anyway because they make too much money but there's a few people that kind of got hosed because we weren't able to do that but having a cash balance or a defined benefit plan isn't going to help in that situation if you're an employee if you are a business owner and you can use it to lower your income to less than 300 well four hundred fifteen thousand is the end of the phase-out range for married people if you can use that retirement plan to lower your overall taxable income into that range you may be able to qualify but it's still got to be business income it can't be employee income that doesn't count here's the money who has a high income six hundred plus also a high saver maxing out profit-sharing in 56k currently 37 K pre-tax through group and Roth 19 K individual typically you recommend pretext for 401 K would you still recommend pretext for the 19 thousand portion with profit share well here's the deal there are some exceptions to the general rule the general rule is use a Roth account as a resident and you use a tax deferred account as an attending one of the exceptions is for a supersaver if you're just saving a ton of money and you're gonna be in a very high tax bracket in retirement because you're saving thirty or forty or fifty percent of your income that is probably an exception to use a Roth account during your peak earnings years but bear in mind you're pretty unique physician most physicians I have to talk into saving twenty percent of their income and that's really a difficult thing for them and you know what those kinds of levels I think you're far better off using a tax deferred account so I don't have enough information to really answer that question for you I have a post on my website called should you do Roth 401k contributions which goes through those exceptions I think that's worth spending some time on and really looking at your situation and how long you plan to work and how long you continue you plan to continue to save as much as you are and you may come to the conclusion that not only do you want to do Roth 401k contributions but you might want to do Roth conversions even during your peak earnings yours but that's unique most physicians are going to find they want to use tax deferred retirement accounts throughout their peak earnings yours here's somebody who says I have the opportunity to invest in a non-qualified deferred compensation plan they saw it as an extension of the 401k once you maxed out your work 401k but with the NQ DC is basically an over funded whole life policy the company is stable I don't think we will go under taking an investment with it I know what your stance isn't whole life but your take on this as a way to get more tax deferred money well here's the way I look at it if somebody else is going to buy me a whole life insurance policy I'll take it but I'm not going to use my money to buy it and so that's kind of how you have to look at these every one of them's individual and you know it's interesting because if your employer is paying all the premiums well there's only one loser in that scenario all right the agents selling this plan to the employer really made out like a bandit and since you're not putting anything into it you're making out like a bandit even if you might rather have a higher salary rather than that particular benefit and they only loser there's really your employer because they probably could have gotten a lot more bang for their buck by doing something different with the money so I'm not a huge plan of them I certainly wouldn't recommend employers go out and put these in place but if your employer is going to pay all or most of the premiums for you you know why look a gift horse in the mouth it's not that a whole life insurance plan has no benefit whatsoever worst case scenario when you walk away you cash it out and you take the money you know and so I wouldn't necessarily be against using it if it's already in place but there's no way I'd be putting that in place for my business here's another 1099 says if given the choice of w-2 or 1099 is there any benefit of turning on in terms of deductions as this recommend it altered by the new pass-through deduction okay well let's talk a little bit about this a w-2 means you are an employee you're somebody's employee and you're paid accordingly the employer has to pay half of your payroll taxes and they usually provide you some benefits if you are paid on a 1099 you were an independent contractor you are self-employed you are in business you can incorporate or be in a partnership or whatever but even if you don't do anything and they just hand you a 1099 you are by definition a sole proprietor and when you are a sole proprietor you file Schedule C every year with your taxes and on Schedule C you put all of your business income and all of your business expenses okay those are the best kinds of tax deductions you can get the great thing about a business expense is you don't pay any payroll taxes on it you don't have to itemize to get it you know you don't it's great it's the best type of deduction there is whereas if you're trying to get another deduction as an employee sometimes you can't deduct it at all and that's why I have a lot of employees have a CME fund right the employer provides the CM II fund because that makes it deductible to the employer but an independent contractor can just pay for that sort of thing pre-tax already and so yes there's a lot more things you can deduct when you are an independent contractor but bear in mind that doesn't mean that getting paid on 1099 is always better than being paid on w2 because you also have to play it pay the employers half of your payroll taxes the Social Security and Medicare taxes and you have to buy all your own benefits so I think in general for an emergency position you should expect to be paid about 10% more if you're being paid on a 1099 versus a w-2 you know so if you were making 350 on as a w-2 I would expect to be paid 385 as a 1099 and those are going to be about equivalent so there's a lot that goes into it you can run the numbers yourself but that's kind of the general rule of thumb excellent there's probably no way we're gonna get through all of these and they just keep coming in but we'll keep going for another another 20 minutes or so should we have any bonds at presidents in the 401k retirement fund we're back to a Roth when we're not going to use the money for at least 22 years till we hit 59 and a half so this is a mid-30s position well here's the question right what did you do in 2008 with your investments you know and the chances are if you're in your mid-30s you weren't even investing in 2008 and so you have no idea what your risk tolerance is so question number one is can you tolerate the volatility of a hundred percent stock portfolio and I really don't think you know that for sure until you've invested through a nasty bear market Warren Buffett's mentor Benjamin Graham said you should never have more than 75 percent of your portfolio in stocks or less than 25 percent of your portfolio in stocks and I think that's a reasonable general rule the reason why is twofold one it helps moderate the volatility of the portfolio it makes it easier to hold it when money is going down or when you know the value of stocks is going down and unless you've been in that situation it's hard to comprehend it is not an intellectual exercise like looking at graphs are on the internet or looking at them in a book you know when the markets aren't doing anything particularly interesting it is an emotional exercise it is something you feel in your gut you're basically looking at money that you could have used for a new truck or for a kitchen remodel or for a very nice time in Fiji and it's gone it's really gone it's like you're stuffed money down a rat hole and it's totally gone and that starts hitting you in your stomach so don't overestimate your risk tolerance I would recommend you have at least a little bit of bonds until you've gone through a bear market and know how you react in a bear market the other thing to keep in mind is there is no guarantee that stocks are going out form bonds over the next 22 years is it likely sure it's likely but there's no guarantee and so I think it's reasonable to hedge that bed a little bit and put at least a little bit of your money into bonds maybe 10% maybe 25% something like that that's not gonna cost you a lot out of the returned apartment it will cost you something if stocks do what they've done in the past and outperform bonds but it probably won't cost you all that much and it will likely help you sleep better at night and who knows this might be one of those you know decades where bonds outperform stocks it does happen from time to time here's somebody who is finishing a fellowship entering private practice and has some money from a 403b from residency what should this person do with that cash okay if you are entering attending Hood this year I mean you're still a fellow then what you ought to do is when you leave fellowship just convert it all to a Roth IRA and the reason why is you're only going to have half of an attending salary this year the other half is going to be a fellow's salary and so it's a relatively low income year for you and a great year to do a Roth conversion so that's what I do what I try to do beforehand is I try to just use the Roth 403 be available in residency and fellowship rather than converting it once you become an attending that's probably the next best thing another option if you just don't want to pay the taxes if you can't you know if you don't have the money or just don't want own for whatever reason is you can just roll it into your next 401k be careful however with what used to be the default option which was rolling it into an IRA if you just roll it out of that 403 B into an IRA and leave it there it's going to cause you some complications with the backdoor Roth IRA process due to what's called the pro rata rule basically it says you've got to empty out your IRA as including SEP IRAs by December 31st of the year you do the Roth conversion so just be aware of that that that's not really a good move for doctors to move money from 403 B's and 401 KS into a traditional IRA here's someone who says in the current economy which one would you prioritize paying a home loan at 4% interest or keep investing in a brokerage account after maximizing a retirement account okay so this is a crystal ball question right if the markets gonna go down in the next couple of years you should pay off the debt if the market is gonna go up you should invest it in you know in stocks I don't know which of those is gonna happen so I can't answer your question and so I think you just need a written plan and follow your plan whatever your plan might be if you're really not sure what to do just split the difference invest half of it and use the other half to pay down debt but the only way to know the answer to that question is to know what the future holds and not only do I not know what the future holds but I know that neither does anybody else and so don't go looking for a guru that can predict the future everybody's crystal ball is cloudy nobody knows nothing and once you realize that it frees you up to concentrate on what really matters in becoming financially successful that's getting your income up carving out a big portion of it to invest getting rid of your debt and investing that money in some sort of reasonable way and staying the course with that plan and you can quit focusing on all what's G gonna do next month and what's Apple gonna do and what's the stock market gonna do and what are interest rates going to do because that is not only information that you don't know but it's unknowable did you go into real estate personally yourself early when you started getting interested in finances no I didn't go into real estate all that early I guess my first real estate investment was kind of an accidental landlording situation like many people who bought a home in 2006 and needed to move in 2010 or so we couldn't sell our house we ended up being long-distance landlords from another state which was pretty unpleasant and not very profitable and so I that wasn't too early that was four or five years out of residency before I was starting to do any real real estate investing above and beyond a REIT index fund since then I've gradually converted more of my portfolio to real estate I've got about 20% of my portfolio in real estate now and I've invested in a lot of different ways in real estate but I wouldn't say it's something that you have to do early on but also I wouldn't say it's something you can't start doing early on it really depends on your interest some people have percent of their portfolio in stocks and bonds and 80% in real estate while other people may have you know 80% of their portfolio in stocks and bonds and 20% in real estate I wouldn't even feel like real estate is mandatory I think it's an optional asset class that you don't have to invest in as a physician with a reasonable savings rate you can avoid it completely and still be very financially successful for self-employed private practitioners and sole proprietorship doing well financially would you consider SCP IRA bunk and rather go for self-employed for Allen K to get back to a Roth is it too late to open a 401 K for 2018 thanks for everything you do okay so this is the classic solo 401 K or individual 401 K versus SEP IRA question a SEP IRA is generally inferior for doctors for two reasons one you need more income to max it out and two it keeps you from doing a backdoor Roth IRA due to that pro rata rule that said it has a couple of advantages one it's pretty easy to open it's a little bit less paperwork than a 401 K both to open it and to maintainer and two you can open it after the end of the year a solo 401 K you have to open by December you don't have to fund it by December but you have to open it by December a SEP IRA you can open on April 14th and fund it and so what a lot of people do when they realize they've missed the deadlines is they open a SEP IRA right now for 2018 they fund it then they open a solo 401 K for 2019 and they roll the SEP IRA in there and that takes care of both issues it allows you to use the benefits of both of those accounts but in general going forward you probably don't want to be using a SEP IRA one word of warning vanguards individual 401 K does not accept SEP IRA rollovers so if you're doing that strategy you might want to look somewhere else like fidelity or etrade to open your individual 401 K here's a couple planning to marry soon says as a newly matched dual position couple which is better repay or pay oh that gets complicated but assuming you both have loans the right answer may very well be repay the reason some people use pay is because one of them is going for public service loan forgiveness so what they do is they file their taxes married filing separately and they try to keep the person going for public service loan forgiveness income very low so their payments are very low so there's more money left over to be forgiven but in that sort of a situation where you have a dual income couple it's probably worth paying two or three or four hundred dollars to a student loan specializing advisor to get advice on your student loans because it could make a difference of tens of thousands of dollars you know the easy answer when you're married to a non earner or when you're single is to just do repai but once you have dual earner situation it becomes pretty complicated pretty quickly and it's worth getting some advice to decide which retirement accounts to use how to file your taxes and which student loan payment program to be in here's a tricky one should higher earners like physicians use a CPA that costs around $2,000 to do taxes or just do it yourself are you a greater danger of IRS tax audit if you just do it yourself well here's the deal you want to make sure it's done right so either way make sure it's done right if you're gonna do it yourself right that's okay you just saved yourself two grand for most physicians they don't enjoy tax preparation and so you know it's a little bit painful to do that I don't mind it as much but you know what sometimes it's a pain for me to I prepare my own one benefit of doing that that I've learned over the years is this taught me the tax code you know I'm able to talk to you about the $1.99 a deduction because I just spent some time going over how to get it you know earlier this morning and the reason why is because I do my own taxes I don't feel like you have to do your own taxes to learn the tax code but I think it's important that you pay attention to what your tax preparer is doing when they hand you back your forms don't just sign them and send them off look at them understand what's going on and how income and deductions flow from one form to another and I think that's a worthwhile lesson to learn and one benefit of preparing your own taxes is you simply realize how the tax code works and you live your life a little bit differently in a way that lowers your tax bill and increases much you can invest and spend and give so no right answer there nothing wrong with hiring a CPA make sure they're doing a good job obviously but don't feel like it's something that you can't do yourself it's not that complicated most of you have a much less complicated financial life and tax situation than I do and sometimes it's really not that hard especially if you're just a w-2 employee with a couple of deductions it's just not that hard to do your taxes since robo-advisor manages taxable accounts have mostly been created during the bull market do you think it will be able to do you think it'll manage well in a bear market assuming already maxed out tax protected accounts okay so here's the deal with the Robo advisor all the Robo advisor is is a company that for a low fee will make sure you have a reasonable investing plan that's it that's all the Robo advisor is you know they basically take the investment management service that you would get from a financial advisor and they commoditize it at a low price and so what do you mean will that do well well what are you invested in it doesn't really matter that you're using a Robo advisor it matters what the underlying investments are if you chose a very conservative way to invest and the market does terribly you'll be sitting well if you chose a conservative way to invest and the market does great then you won't will you won't have done as well with that I on the other hand if you chose to invest aggressively through that Robo advisor and the market does well you know you'll be sitting pretty if the market tanks and you were invested aggressively you're not going to do great but little of that has to do with the Robo advisor especially if you choose one with a very low cost structure the main problem with Robo advisors they usually don't manage all your money for doctors they usually only manage I our A's and your taxable account and so here's the way I look at it you've probably got two or three other accounts you probably have some 529s and you probably have a taxable account somewhere and you probably have a 401k and maybe your spouse has a 403 B and if you're gonna hire a Robo advisor to manage two of those accounts who's going to manage the other ones if you can manage the other ones yourself you don't need the Robo advisor for your IRA and your taxable account if you're going to hire a financial advisor to manage those other accounts and why not just have them do all the accounts you know and so they I think the percentage of people for whom are advisor is right is actually a pretty low percentage of people well breaking up is hard to do even in finances here's someone who says how do I say goodbye to my financial adviser who I've worked with over several years well it sounds like you've already made the decision to fire them and hopefully it's not your brother-in-law those are the hardest ones to fire right cuz part of the gig for a lot of these you know I should put advisors in quotes because a lot of market advisors they're just salesmen but part of the gig they do is they get in with you they become your friend and they make it difficult to be fired and so that's that's part of the strategy realize that also realize that even though it's your first time firing a financial advisor it's not their first time being fired in fact the worse and advisor they are the more likely they are to get fired all the time the truth of the matter is you probably don't even have to talk to them if you don't want to you'll have to look at the contract you sign with them you may have to give them notice and if you do you can shoot them an email but what a lot of people do is they just go to wherever their assets are going to be held Vanguard for instance and they fill out the paperwork and Vanguard pulls the money from the old financial adviser and you don't even actually have to talk to them so the first thing to do is figure out what you're going to do going forward you know there's no rush to fire them figure out where you're going to do either get a written investment plan and place yourself or hire your new financial adviser and then move the money there's no big rush just because you've been getting kind of crummy advice it's okay to spend a couple of months learning a little more about investing and getting a written investment plan in place and then move the money when you know what you're doing but how do you fire them you just pull the assets away from them most of the time that's it if you do if your contract says you got to give them notice or tell them to stop transacting on your benefit I'll shoot them an email or give them a call you know a typical approach I would take is say thanks you know I appreciate what you've done for me over the years I really didn't know anything about this when I first came to you so I appreciate you taking care of the basics but I'm kind of ready to move in a different direction now and so that's why we're moving the assets away and you know let them down easy this isn't the first time they've heard it though I assure you with an inheritance or a lump sum would you generally place the proceeds in your predetermined allocation or would you dollar-cost average I'm not a big fan of dollar-cost I are averaging the reason why is the right thing to do most of the time is to just invest the lump sum and that's because the market goes up two-thirds of the time now of course it goes down one-third of the time so if the markets gonna go down you should definitely dollar-cost average in fact just wait till the market goes down and put the money in but obviously your crystal ball is cloudy just like mine and you have no idea what the market is going to do in the future and so the most likely thing that's most likely to earn you the most money is just lump summat but if you feel like you just can't do it well feel free to dollar-cost average it but don't drag it out over multiple years get it in there within a few months and and then stick with it but the truth the matter is if you're hesitant to invest the money in all at once you probably have too aggressive of an asset allocation maybe you ought to dial that back a little bit it also is a little bit easier when it's a relatively small amount of money compared to your overall portfolio for example let's say you have a couple million dollars and just inherited a hundred thousand dollars that's probably not going to bother you much emotionally to just invest that right into your asset allocation on the other hand if you have a hundred thousand dollar portfolio and you just received a two million dollar inheritance that's probably emotionally going to be a little bit harder if you put it all into the market right now and the market drops twenty percent this month like it did in December and so maybe you need to care a little more about emotionally how you're gonna react to that and either dial back the asset allocation or invest it over a few months either ones fine but keep in mind what you're doing right you're just kind of using dollar cost averaging as an emotional crutch in reality you probably ought to just dial back your asset allocation a little bit and invest it all tomorrow and we have time for a couple more at that hour went fast it says here I still have about three thousand five hundred dollars a month left over if I'm looking to save twenty percent of my gross income after four or three be 457 bagged or raw would you suggest the next step be a taxable account or a solo 401k with a side business well if I had a site if I had site income I'd use a solo 401k before I used a taxable account for sure no question in my mind the reason why is you get not only that additional tax protection which will boost your long-term returns but you also get additional asset protection in most states and so for sure max out everything that's available to you you and as far as retirement accounts before you invest in a taxable account the only real reason to use a taxable account when you haven't maxed that stuff out is if there's an investment that you can only get in a taxable account for example maybe you're buying into a surgical center or a priest and needy or some real estate deal that you can't put into a IRA or 401k you know those are kind of reasons that you might want to consider investing in a taxable account before you've maxed out your retirement accounts but most of the time you want to max out everything you can before you go to a taxable account I think we have time for one more let's go with let's go with the question that just came in a couple of minutes ago I have a Roth and about three hundred thousand in a traditional IRA maxing out 56k pre and post tax should I still change the T IRA to 401 K and use the blackfoot Roth I think he's talking about the backdoor Roth not the blackfoot Roth if he is talking about the Blackfoot Rob I have no idea what that is but yeah so the strategy a lot of people do in this situation is they roll the traditional IRA into the 401 K that eliminates the pro rata issue with the backdoor Roth IRA and so once you've gotten rid of the money in that traditional IRA you can go ahead and do it backdoor Roth each year by putting $6,000 into that traditional IRA and moving it to a Roth IRA and so yeah that's a reasonable strategy you know if you're 65 or something you're only gonna work one more year or maybe it's not worth the hassle but you know if you're 50 and you're gonna work for another 15 years sure might as well there's there's a lot of benefit to doing a backdoor Roth IRA for 15 years we're about at a time that was a lot of fun I think based on the all the questions that came in and all the questions that we actually didn't get to I think we're gonna have to ask you back yeah we may have to do this again certainly in the meantime if people have burning questions there's a lot of ways they can get them answered we have a white coat investor subreddit for those who like to be unread it we also have a white coat investor forum on the white coat investor comm site where you can ask questions a lot of people answer them there we also have a private Facebook group the questions like these get answered on all the time and you can get on there and ask those questions you can even shoot me an email if you like my email is editor at white code investor comm and so far in eight years I've gotten back to everybody to send me a question you know I don't know that I'm be able to keep that up forever but so far I've been able to answer your questions individually too so I don't feel like there's nobody out there to help you there's a whole community online of people that want to help you become financially literate and financially successful so you're certainly not alone out there

Channel: The White Coat Investor

Views: 786

Rating: 5 out of 5

Keywords: 457(b) accounts, Bonds, Annuities, Roth IRA, Tax loss harvesting, 119A deductions, HSA, WCI, doctor mortgage, 401k, physician mortgage, solo 401k, jim dahle md, estate planning, IRA, physician finance, high income, White Coat Investor, tax loss harvesting, doctor side gig, investing, med student, 457b, millionaire, physician investing, personal finance, 457 plans, Roth 401k, dr. Jim Dahle, disability insurance, jim dahle, student loan, asset allocation, doctor finance

Id: uqTkrmtQ4Tc

Length: 70min 58sec (4258 seconds)

Published: Sat Mar 30 2019