[Editor's Note: Two years ago today, the US recorded its 1,000th case of COVID-19. Since then, nearly 80 million Americans have been infected by the coronavirus and more than 900,000 have died. It’s taken a toll on the country and the healthcare workers who have tried their best to combat the virus and to save the lives who have been infected by it. To mark the two-year anniversary, Scotti Rose Petersen has released an emotional video called “Together We Fought” that describes the bravery shown throughout and the mental struggle those essential workers have faced after more than two years in a pandemic. As she so eloquently puts it in the video, “We did what we were trained to do—to try to save so many. In the end, left only holding a hand drawing cold.” Watch the video here and remember all of the COVID victims, both living and deceased.]
Today, we cover an array of topics from what to do with extra income to locums to what to do when you fire your financial advisor. We go through some of the interesting results we got from the WCI survey. We had over 3,000 people fill out the survey, and we can't thank you all enough. We will be implementing what we learned and making changes where we can to better serve our audience! We have a special guest on the podcast today named Scotti Petersen. She worked as an ICU nurse during the pandemic and shares some of her story about being diagnosed with PTSD and how we need to heal and move forward together.
What to Do with Extra Income
“Hello, Dr. Dahle. My name is Jared. I am a practicing general early career internist about six years post-residency, practicing in a large metropolis in the Southeast. I have a question about what to do with extra income after we combine two physician incomes. My fiancé is a family medicine physician. Roughly five months post-residency. Her base is $180,000. My base is $250,000. Both of us, with incentives, have the option to make much more. We are very fiscally responsible people with very little debt other than that I have a home mortgage that has about $400,000 left on it. And we both have student loans that are on trajectory to be forgiven in several loan forgiveness programs. I have the Public Service Loan Forgiveness, and she has the National Health Service Corps.
We anticipate that we'll probably only have to use about 25% or less of her income. What are your recommendations about what to do with the extra money for two early-career physicians moving forward to plan their future? Thank you for everything that you do. The White Coat Investor has been a tremendous godsend to me, my fiancé, and so many of us. We appreciate it.”
You've done a great job, figuring out a plan for your student loans. You've done a great job spending less than you earn. Those are pretty important parts of a financial plan. But what I'm not hearing is that you actually have a financial plan. This should never really be a question of what you do with extra money. I have a variable income every month. Sometimes, there's extra. Sometimes, there isn't. But it all goes to the same place because the plan tells me where the money goes. It sounds to me like you need a plan. You start your plan with goals. When you want to retire, how much you want to have to retire, etc. Then you work backward to determine how much you need to save toward retirement every year, how much you want to pay for your kids' colleges or whatever. Work backward and decide how much you need to save for that each year.
If you are on track for all of your goals, then there are two things you do with the extra money. Spend it and go have a great time—I recommend you do that with at least some of it—or you give it away. I also recommend you do some of that. But for the most part, most people are just still muddling around because they don't have clear-cut goals and they don't have a clear-cut financial plan of what they do with the money they have every month. It sounds to me like that's the situation you're in. You need a financial plan. If you are a hobbyist, if you're into this stuff, if you like reading financial books, if you participate on lots of internet forums, the WCI forum, or WCI subreddit, you're answering other people's questions in there, then maybe you can write your own financial plan. Lots of people do. That's what I did. It works fine.
If you need a little bit of help with that, take our Fire Your Financial Advisor course. There's also an option to that, that you can use CME funds to buy, that includes some wellness material. But that will take you step by step and help you write your financial plan. The last alternative, of course, is to hire a financial planner to help you write a financial plan. We have a list of recommended planners on the website, under the recommended tab. However you do it, you need to sort that out. For a lot of people, they're just trying to figure out where to put their retirement savings. Basically, the way you do that is you look at your employer-provided plan – 401(k)s, 403(b)s, 457(b)s, 401(a)s, whatever they're offering. If you're self-employed, a solo 401(k), a Backdoor Roth IRA for you and your spouse, maybe an HSA. If you need to save more than that for retirement, you just do it in a regular non-qualified brokerage taxable account.
If that's the question you're asking, then you just look at everything that's available to you and everything else goes taxable, whether you're investing in mutual funds, whether you're investing in real estate. But it sounds to me like you need to get a financial plan in place. Then, you won't have this question every month for the rest of your life. You just follow the plan, and the plan accounts for what you do when you get money, and you plug it in toward your goals.
More Information Here:
Financial Planning for Doctors, You Need an Investing Plan!
WCI Survey Results
We recently published the results of the WCI survey on the blog on March 4. I want to thank those of you who filled it out. We had over 3,000 people respond, many of whom were podcast listeners. We learned some really interesting information. We learned a lot about our audience. You all range from 20-89 years old; 84% of you are actually married. More of you are men than women, and most of you are out working—about 13% of you are still in training and 8% are retired. Only about 71% of you are physicians. Another 8% are dentists and, a big surprise for me, 8% of you are pharmacists. A big pharmacist contingent out there, among many other professions.
Most of you are employees; really only about a quarter of you own your jobs. We learned that only 48% of you have a written financial plan. So, just like our question at the top of the hour, many of you still need to get a written financial plan in place. Please do that. We're trying to help you. We're trying to give you the resources to do that, but it's amazing how much easier your financial life goes once you have a written plan in place. I cannot emphasize that enough.
We asked about household incomes. We learned that about 9% of you have a household income under $100,000, I assume most of those are probably still in training. About 21% of you have an income of between $100,000-$250,000, and 42% of you have an income between $250,000-$500,000. About a quarter of you have an income of $500,000-$1,000,000. Just a small sliver of you are making seven figures a year. We asked about your net worth and found that about 15% of you still have a negative net worth. Another third of you are not millionaires, and 19% of you are between $1 million-$2 million. Another 16% are between $2 million-$4 million. It looks like about 7% are between $4 million-$6 million and about 10% of you are worth at least $6 million. A pretty big chunk of pretty high net worth people in The White Coat Investor audience.
What's interesting is that despite people making pretty good money in this audience and having quite a bit of wealth, people don't spend all that much. In fact, it looks like only about 8% of you spend more than $300,000 a year. The vast majority of people are spending much, much less. About 40% of our audience is spending less than $100,000 a year. 19% of you are financially independent, and most of you are not really interested in a super early retirement. About 85% of you don't want to retire before 50. About 11% want to retire between 40-49.
Only about 43% of you do your own taxes. 99% of you own stocks, 76% of you own bonds, 56% of you own real estate. Here's an interesting statistic: 18% of you own some type of cryptoasset. Only about 7% of you regularly use a financial advisor, although another 16% use one occasionally. Most of you, about three-quarters, have a disability insurance policy; 70% of you have a term-life insurance policy; about 10% have a whole life insurance policy. We discovered that 18% of you have experienced career burnout at some point that had a significant impact on your work and life. And another 44% have had burnout that occasionally impacted your work and life. If we ask who's currently burned out, we see that 57% of you are feeling at least some burnout that occasionally impacts your work and life. So, a pretty high percentage there. I guess I'm not surprised. That number has inched up in every survey I've seen throughout the pandemic.
For your social media use, you all use more Facebook than anything else—58% of you use Facebook, 51% use YouTube, 39% use Instagram, 23% use Twitter. It's interesting – we ask you how you found WCI originally and many of you don't remember, but for a fair number, it was a referral from a friend, about 29%. Another 34% just wandered in off the internet. About 12% of you either bought the White Coat Investor book, or it was given to you. About 83% of you read the blog, and 69% listen to the podcast. 68% read the monthly newsletter. About 50% have read the original White Coat Investor book. It looks like 92% feel like you can always trust the recommendations from White Coat Investor and less than 1% feel like you can't trust those recommendations. So, I guess there's always going to be a few we can't make happy. But I'd say that's a pretty good vote of confidence.
We asked you what you liked about WCI, and you all made me cry. You said so many nice things—honesty, trustworthy, consistency, non-biased, practical, motivating, intelligent, transparent. It was really nice of you all to give that feedback. I also appreciate the negative or the constructive feedback that you gave, and there's lots and lots and lots of that. We appreciate it because we're going to make changes based on a lot of that. A lot of people wanted me to do more, wanted me to work more, wanted me to interact more wherever they are. Make more podcasts, make more content and send them more emails, spend more time with them on the White Coat Investor forum or on the Facebook group. Obviously, I only have so much time in my life that I can dedicate to The White Coat Investor. As much as people want that, they should not necessarily expect to get that.
What else did we have? Well, we had people complain about the Facebook group. Anytime you get 75,000 people together in one group, there's always going to be a few people that might rub you the wrong way. We had people asking for less moderation there and people asking for more moderation there. I'm not sure exactly what the right answer there is. On the same token, we had lots of people asking for longer blog posts and people asking for shorter blog posts. It's a good mix of what people want. It's not always the same thing.
We got a lot of great feedback that we can incorporate into the podcast. I think we're going to be looking at perhaps a new theme for the podcast. A lot of people commented they thought the podcast had too many ads on it. Talking about our own products here at The White Coat Investor is viewed by a lot of you as ads where we didn't really view that before. We're going to be a little more careful about that. But we're obviously still running a for-profit business here. We can't do it without any ads at all. So, if you're expecting that, I wouldn't.
It's interesting as I look at all the sources I use for news and information out there—one by one, they're all going to a subscription model. Think about the newspapers you used to read. You used to be able to read the websites for free, but they couldn't make enough to pay their reporters and their staff just from display ads. So they've gone to subscription models. Well, we're not planning to go to subscription models anytime soon here at The White Coat Investor, but we do have 15 staff members to pay and we have to make payroll. And the only way to do that is to have ads and to sell you stuff and have you come to the conference. Those sorts of things.
I appreciate you filling out the survey. If you want more details on that, see the blog post. It will have a lot more details there if you're interested.
Locums
“Hello, Dr. Dahle, thank you very much for all you do. I'm a full time teaching faculty. My question is whether I should disclose to my current employer that I intend to do locum jobs during the days that I am off work or during my vacation period. Thank you very much for answering my question.”
Now, to be an honest person, to have integrity, you need to make sure you are not stealing from your employer. However they're defining what full-time work is for you, you need to make sure you're giving that to the employer and not stealing time from them to work on something else. But so long as you're doing that, you can use your free time to do whatever you want.
More information here:
Locum Tenens: What You Need to Know
Healing After the Pandemic with Scotti Peterson
I'm going to be bringing on an ICU nurse who spent a lot of time in a COVID ICU in the last couple of years with pretty significant effects on her physical and mental health. She's put together a video that I want to share with you. Now, if you want to watch it, you're going to have to watch it on the YouTube channel or one of our social media channels. But we'll play the audio here as part of the podcast today.
Scotti was an ICU nurse for the majority of the pandemic. She's currently a first-year CRNA student, and she did something really cool recently in that she made a video. It's something she put together that I think a lot of us that have been going through the pandemic can really relate to because we felt like we were in a war zone for the last couple of years in a lot of ways. At the beginning, it felt like we had lots and lots of support from the community, and toward the end, maybe it didn't feel like we had so much support from the community. In fact, a significant portion of the community really didn't like a lot of the public health and other healthcare things that we were trying to do. So, it's been a tough couple of years, and I think a lot of us will relate to this video. Before we play that, I wanted to talk with Scotti a little bit about what was going on in her life that made her decide to make this video. Can you tell us a little bit about that, Scotti?
“Absolutely. I have been an ICU nurse for a little over seven years. My last year at the bedside was spent in COVID ICUs, over 2,500 hours as I've calculated. In that time, I only saw one of my patients make it home. At one point, I couldn't figure out why I was still alive and they weren't. I started to do writing as a way of surviving being in those rooms, which brings me to the video. The video is just me reading something I had written during that time. I never really expected to read it out loud, to be honest. I've always been a fairly quiet person, but when you're alone in a room with a dying patient, day in and day out for over a year, things change.
The rhythmic movement of a mask you're hoping keeps you safe, it also silences you. It silenced me to the point where for the first time in my life, I wanted to be heard. I have wrestled for months with what sharing this part of my experience with the public actually looks like. But at the end of the day, I remembered why I got into healthcare in the first place. That was to help people. For almost two years, despite all of my knowledge and experience, there was nothing I could do but watch people die. So maybe with this video, I can start to heal myself by helping others do the same.”
That's a great introduction. Let's go ahead and play the video now. And then we'll talk a little bit more after we play it.
“Healthcare heroes, they proclaimed, as we tightened the drawstrings of our scrubs, pushing fearfully through the doors open only to the essentials we rushed into the unknown. But we are not the heroes or heroines of the story; we are not here to be glorified. We did what we had to do. We did what we were trained to do. In school, we learned advanced airway assessment and management. We were buried in knowledge of pharmacology and physiology, but no one could teach us how to move forward when our education and experience was simply not enough.
From the head of the bed, amidst the chaos, we heard their last words. We watched them fight. Knowing our interventions were so likely futile. Someone's parent, child, family, friend. They were our patients. We did what we were trained to do, to try and save so many. In the end, left only holding a hand growing cold. We all have experienced loss that lingers long after we step away from the bed. We watched through windows when our tubes, lines, and machines were just not enough. We suffered with the suffering. We gave to the grieving. We perished, in part, with our patients.
While laughter has replaced the chorus of pans and wooden spoons, our masks did not protect the most vulnerable parts of us. Witnessing the joy of a country breaking free from lockdown, we struggled to keep our emotions locked in. We are sad. We are angry. We are distressed and destroyed. Just because we are still breathing does not mean we have survived. At times, the bravado of our profession can mask the bravery it takes to ask for help. These last few years, we have silenced so many. Now it is time to come out of our own silence, stepping away from the bed, peeling off the layers of our own masks. We can tell their stories now interwoven with our own, the skill to admit that we are not OK. The skill to ask for help. The skill to say, ‘You are not alone.' The skill to reply, ‘Me, too.' For those we couldn't save these last few years, let us save each other. Together we fought, and together we can heal.”
Scotti, that video is really touching. I think it sums up the experience of pretty much every ICU nurse in the country to start with but also a lot of docs, hospitalists, intensivists, emergency docs, even people who are seeing COVID as outpatients. Now, they're not having exactly the same experience you had where a majority of patients didn't make it out of the ICU. Many of them saw less sick people. The sickest ones obviously get concentrated into the ICU, but I think a lot of people can relate to that. What do you think the path forward is for all these people that were traumatized by the pandemic, by dealing with such a large volume of intensely sick people and sometimes opposition from society for what we were doing? What's the path forward from here?
“I think that regardless of discipline, we all shared a lot of similar experiences. I think we also historically operated on a tough-it-out mentality. I used to say, ‘If I wasn't one assigned to a hospital bed, I would be doing just fine,' even on days when I absolutely wasn't doing fine. I think we need to redefine what doing OK looks like and stop comparing ourselves with each other and understand we're all probably fighting very similar battles at this point. We're just fighting them differently. I think we spent so much time suffering in silence, but there is no way we're going to heal silently. So, we need to start talking, not only to each other, but then also to people in positions of leadership. I think we reach them better if we're all saying the same thing, because our echo will be much louder. In the bigger scheme of things, I think we need to start addressing why diagnosed and debilitating psychological injuries resulting from this pandemic or other trauma in the medical field is not recognized institutionally by L&I. It is not recognized as an injury.
I, personally, and I know others, have had to empty out their entire savings account to pay for leave and the medical treatment they needed. Many of us felt we were treated as expendable. For years, we were asked to do the impossible. On days we weren't in hospitals, calls and texts for help we received every moment that we were outside of the doors, and our duty became our disease. I think that many of us spoke up more than once and absolutely nothing changed for well over a year. And at that point, for so many of us, it was too late. We are now suffering the consequences of those choices that weren't ours to make. I think that if institutions start taking responsibility for the part they played in our injuries and help us get the treatment we need, it's the first step of getting us back through those doors. I think national staffing shortages will continue to be a problem until we truly acknowledge how and why we got here in the first place.”
One of the lines you use in the video is talking about, “We're not OK. We're not OK.” Do you think that's all right for us to not be OK?
“I think not being OK looks different for every person. I think that you can't offer yourself completely to your patients or to provide the best care unless you have found a way to care for yourself. I think that's how good medical care happens is from people who themselves are healed first. That's how we heal other people. So no, I don't think it's OK that we're not OK.”
I was a military doc for four years with the Air Force in a pretty high ops tempo, 2006-2010. Lots of people were deploying and Afghanistan and Iraq were going on. A lot of our service members came back with PTSD. Quite frankly, they saw terrible things. They had terrible things happen to them. How would you compare and contrast the experience that particularly ICU nurses have had over the last couple of years to that of a returning service member?
“Well, I have struggled, but I most recently have come to a point where I'm able to own my diagnosis and I am diagnosed with PTSD. My psychiatrist who diagnosed me a year and a half ago actually worked with service members prior to her practice now. It took me a really long time to understand carrying that diagnosis because I didn't go to war and I didn't feel like I suffered the same trauma that those individuals did. But at the same time, there are weeks where I can't leave my apartment because I am scared. I have not been able to go into a grocery store for almost two years. I have lost most of my family and friends because it is really hard to make connections. I wake up many nights screaming or crying, because I so vividly remember my experiences from the last two years. I startle easily. I can't hear a helicopter or siren without panicking quite a bit, because to me, for a year, those helicopters and sirens meant somebody else was coming to me to die. I'm not sure how to heal. I think we're all figuring it out as we go. I think there's a lot of shame carrying that diagnosis and what it looks like, but I don't think people think it looks like me. And so, if I have to be the first one to really get out there and say, ‘I have PTSD, this is what it looks like,' maybe it'll help others own their diagnoses as well.”
I would say your experience is extremely similar to that of a returning service member. Not only did you see all kinds of people around you dying, but you had that constant fear that you were next. There was no reason you couldn't die from the same thing they were dying from, which is exactly what our service members are facing when they're out there being shot at, or being blown up with IEDs or whatever. I guess I'm not at all surprised to see what may be the next epidemic, which is an epidemic of PTSD among healthcare workers, particularly those who worked with the sickest patients. I don't think that's a surprising outcome at all. It should have been an expected outcome, I think.
You're right that we all need to be working on this, both with peers and colleagues, as institutions and as a society. In the beginning of the pandemic, people were clapping as you went to the hospital. You were the only ones leaving home for a few months. Did you feel that change partway through the pandemic and how did that affect how you felt about the work you were doing?
“I think I quickly—and I can speak for probably a lot of my colleagues—felt invisible. We were put into these rooms where we couldn't leave for 12-16 hours just based on what we were doing in the critical care units. Our own units didn't know that we still were employed by the institutions' administration. I didn't hear from them for an entire year. I heard more gratitude from the restaurant down the street in a year and a half than I did from my own leadership. I think that we all became so invisible and I became closer with my patients and their families on Zoom than I was with my own.”
I want to thank you for being willing to be so vulnerable and for being willing to make that video, to start with. To be willing to come on the podcast to tell people about why you made it. You've been through a lot. If nobody said thank you to you for what you've done the last couple of years, I want to thank you on behalf of our 30,000-40,000 listeners for what you've been doing. We appreciate it. It's meaningful work. It matters. And we hope that you can start feeling better soon.
“Thank you so much.”
That was a really touching video for me. And that's why I wanted to bring Scotti on the podcast and talk a little bit about her experience, because I know a lot of you have been having the same experience. Whatever you are feeling after the trauma you've gone through in the pandemic, whether you are feeling burnt out, whether you are having PTSD, whether you are feeling suicidal, whatever it might be, I want to encourage you to get help. There is help out there. There are people that want to assist you.
If it's a burnout you're dealing with, I want to make sure you're aware of our coaching services, whitecoatinvestor.com/coaching. We've put together a new program this year called Burnout Proof MD in partnership with the Happy MD. And that's helping a lot of docs to basically promote longevity in their own careers and enjoy their careers more and be able to stay in them longer and, thus, be more financially successful. You cannot buy insurance against burnout. You can buy disability insurance, you can buy life insurance, but you can't buy burnout insurance. If you're feeling a little bit crispy, maybe getting a coach, going through a burnout program, reading a burnout book might help you to rekindle that love you have with your career and remember why you went into it in the first place.
What to Do with Your Assets When You Leave a Financial Advisor
“Hi, Dr. Dahle. This is Mike from Chicago. I've recently moved all of my money and assets from Merrill Lynch, where it was managed by a financial advisor, over to Vanguard. My advisor had me in dozens of positions that I want to sell out of so that I can consolidate to low-cost index funds like you would recommend. What should be my strategy to most tax sufficiently sell out of these positions in regards to the short and long-term capital gains and losses? Any help would be appreciated. Thank you.”
Anytime you fire a financial advisor and move your assets away, you should have a plan in place before you do it. You're usually better off leaving it there until you have your plan fully developed of what you're going to do. That includes how you're going to deal with these legacy assets, these legacy investments that you have from the old advisor that maybe you don't want anymore. The bottom line is you want to have as ideal of a portfolio as you can while balancing the tax consequences of changing your portfolio. That's what you're trying to do here. Anything you own inside an IRA, 401(k), etc, there are no tax consequences to selling it and buying what you actually want. Do that, inside an IRA, 401(k), HSA, or whatever. If it's in a tax-protected account, sell it and buy index funds. You're good.
Then, you need to look at each of the other assets in there and look at what the cost basis is and how much the gain is going to be. Anything that has a loss, you can sell right now, you might as well. Book the loss. You can use that against your taxes. You can use that to offset some of the gains. Anything without much of a gain, you can sell that, as well. But if you've got some stuff with a really low basis with big gains that's going to cost you a lot in tax to change, then you've got to be a little bit more careful. First, make sure you're not reinvesting into that investment, whatever it is. Make sure the dividends are going to cash instead of into that investment. You want to look at each of them and decide, “Well, do I want to build my portfolio around this? Or do I want to bite the bullet, pay the tax and move on?”
If you've got a bunch of losses from something else, well, you can take out that many gains as well. If the gains aren't that big, if we're talking about moving over a $20,000 portfolio with $4,000 in gains, well, maybe you just bite the bullet and you pay the taxes, no big deal. But if you're moving $4 million over there with all kinds of gains, then you probably want to build more around that portfolio. That's fine a lot of the time, as long as not too much of the portfolio is in any one stock or whatever. If you've got it spread across 10 or 15 different stocks, then maybe just new money goes into index funds and you hold onto those stocks.
Another great thing you can do with these is, if you give to charity, instead of giving cash, give appreciated shares. Neither you nor the charity will pay the capital gains taxes. You get the same deduction you would get otherwise. It's a great way to flush legacy investments out of your portfolio. Obviously, this assumes you're giving to charity anyway. If you're not giving to charity anyway, that's not a good move. You're not going to come out ahead there, because you're giving away more than you're getting in a deduction. But it's a great way to get rid of those capital gains if you are charitably minded. It's particularly convenient if you use a donor-advised fund to move those assets out.
More Information Here:
10 Reasons I Invest in Index Funds
Medicine or WCI?
“I'd like to know from Dr. Dahle, if he could only practice emergency medicine or run WCI and do finance, which would he choose? I'm just curious. I guess this is dependent on his current location on his timeline.”
Well, the truth is, for me, I go back and forth. Some weeks I'm like, “Boy, I wish I could just do medicine.” Other weeks, I'm like, “I am sick of being in the ER. I wish I was just doing WCI.” All of the time I'm wishing I was doing less of everything. There are some things I like about emergency medicine. It allows you to leave your work at work. I've always got something hanging over my head with WCI. That's not the case for emergency medicine. When I sign my patients out and walk out that door, nobody's calling me, nobody's paging me. I really like that. I also like going into work and not knowing what I'm going to be doing that day. Maybe it's the ADD person in me, but I really enjoy that. Sometimes, it's slow. Sometimes, it's super busy. I like not knowing what I'm going to be taking care of when I go into work. I get to see my friends there. I get to be social. When I think about my career, what my career is, it's medicine. I spent more than a decade training to do it. That's what I look at as my career, but there are other things I like about White Coat Investor.
I can reach a lot more people with WCI. I can help a lot more people. I can work from home. I get a chance to work with my wife and some of my best friends that work here at the company. Eventually, I started making more money at White Coat Investor. That wasn't the case for the first few years, but now I make more money at White Coat Investor. So that's a nice bonus. Indirectly by helping you, perhaps I'm helping more patients by helping you to be more financially stable and allowing you to concentrate on your patients and your practice and your family, and to not have to rush through patients, etc. Maybe I'm affecting more patient care indirectly than I am directly.
I also find it fun to be an entrepreneur and create more jobs, although it's stressful sometimes thinking about the fact that I need to make payroll. It is really rewarding to be able to create not just jobs, but good jobs that people count as the best job they ever had, which I think is pretty cool. Lately, I felt more like dropping White Coat Investor, to be honest. But it would certainly be much less complicated to drop my clinical work. It always surprises people when they find out that I'm still seeing patients, for some reason. But I guess I didn't cut back on my clinical work because I didn't like doing my clinical work. I just needed more time for White Coat Investor.
When Does Religion Cause Bias in Investing?
“Supply a bit more full disclosure about the ways in which WCI's religious affiliation biases investments.”
Well, this is an interesting one. I don't think there are a lot of biases there, but let me see if I can think of something. The main religious group that comes to me with concerns about investments is Muslims. Followers of Islam have a prohibition against basically charging or paying interest. That obviously affects a lot of investments. It affects how they can invest in real estate, how they can get a mortgage, what stocks they might be willing to own, what companies they might be willing to own, etc.
I'm not Muslim, though, so that doesn't really affect how I invest. I don't think it causes any sort of a bias in what I recommend. I am, however, fairly anti-debt, and that probably has a religious bias to it. I'm probably more against debt than maybe the average secular person is. As long-term followers know, Katie and I don't have any debt. We paid off our mortgage in 2017, and we like that feeling. We don't plan to go back. Another aspect that our religious upbringing gives us is that we support charity a lot. We give a lot of money to charity, and we do that via donor-advised funds, as you've heard on this podcast before. That certainly has some biases to it. For example, I worry a little bit less about getting a lot of capital gains in my taxable account because I know I'm going to flush a whole bunch of them out by giving to charity. That's a great way for me to get earnings, because I never pay taxes on it. Maybe that biases me a little more against income and a little more toward capital gains. That's about all the biases I can think of that my religious affiliation provides with regard to investments, but I don't know. Maybe somebody can think of something else. Feel free to write about it. And I'll try to mention it and I'll try to at least disclose biases when they can't be eliminated.
1035 Exchanges
“Hi Jim. This is Shereen from Florida. In 2020, I did a 1035 exchange of a variable universal life policy to a low-cost annuity at Fidelity. The account has grown and is almost back to basis. I've been considering my options, which are to leave the money in the annuity or to surrender the annuity and transfer the money to my brokerage account. The total expense ratio of the annuity is 0.37, which includes the fund expense ratio and the Fidelity fee for the annuity. Is there any benefit in leaving the money in the annuity? Is it protected better from creditors in that annuity? Should that ever be an issue? My brokerage account has mostly very low-cost index funds. Even the 0.37 expense ratio of the annuity seems high to me. Also, when I surrendered the VUL, I had to pay a large surrender penalty. Should I expect to pay a surrender fee if I surrender the annuity? Thank you in advance for answering my question.”
First, let's do a little bit of background information for people who don't know what the heck you're talking about. A lot of people that buy a whole life insurance policy or a variable universal life insurance policy or an index universal life insurance policy that they then realize they don't want, feel really bad surrendering it and paying what a lot of people call stupid tax. They try to make lemons out of lemonade. The way they do that is they exchange the cash value they have in that life insurance policy into a low-cost annuity, such as the one she's referencing at Fidelity. That allows you to then let that cash value grow inside that annuity back to basis, back to the amount you paid in premiums for that life insurance policy. Then you can surrender the annuity and walk away. Essentially, you have a certain amount of gains tax-free by doing that. Now, you paid some expenses and you had some hassle with regards to the annuity, but you basically got some tax-free gains. That was the whole point of the exercise. So, people surrender it when it grows back to basis and walk away and just invest in a taxable account.
Now, when you're trying to decide whether to invest in an annuity or whether to invest in a taxable account, there are a few things you have to consider. Investing in a taxable account has lots of benefits. You can take advantage of long-term capital gains rates, which you can't do in an annuity. When you take money out of an annuity, it comes out at ordinary income tax rates—all your gains do, anyway. You get qualified dividend rates. But again, when money comes out of an annuity, you pay at ordinary income tax rates. However, an annuity grows in a tax-protected way. You don't have to pay taxes every year. When you're buying and selling stuff there, you don't pay taxes. When you get a dividend distribution every year, you don't pay taxes. You don't pay anything until it comes out.
Over long periods of time, that tax protected growth can potentially, if fees are low, make up for the difference between ordinary income tax rates and capital gains rates. In a very long time period with very low expenses, it's possible you can come out ahead using a variable annuity. So that's one thing to consider when you decide whether to keep that annuity. The other thing to consider is your asset protection situation. These laws are always state-specific. But in Florida where Shereen lives, annuities are 100% protected from creditors. Your taxable account is not. So, you would get additional asset protection if you left that money inside the annuity. That's another benefit of the annuity for her.
Now, whether that's worth it or not, obviously the risk of you being sued above policy limits is very, very low. But a little extra protection in the event you got some $10 million judgment against you and had to declare bankruptcy, it's always nice to have a little bit of extra protection. A difficult decision for you given your state and the low cost of your annuity. You may want to keep it; you can use it for particularly tax-inefficient asset classes like REITs or TIPS or something like that. But it's up to you whether you keep it or not. In my case, as I mentioned earlier, I donate most of my gains to charity. I end up being able to invest very tax efficiently inside a taxable account. An annuity is a little less attractive to me than it might be to you. Of course, if you're in a state that protects annuities from creditors, it might be even more attractive to you. Only you can make that decision, but those are the factors you ought to be thinking about.
More Information Here:
Jim's Response to a Podcast Review Re: Real Estate
I want to address a review that we got on the podcast. It said,
“Overall, this podcast is the best for higher-income earners—by which I mean regularly salaried folks in the higher tax brackets—and not just those who wear a white coat. Almost all of the advice he gives is excellent and in your best interest, except the amount of cheerleading promotion he does for real estate in all its forms. No, real estate is not some kind of magical investment in nirvana. For some, it might make sense, but it amuses me he advocates for passive investing in everything else, but somehow, it's OK to invest in all kinds of active, private, real estate deals. As long as you take that with a pinch of salt, you should be good.”
Let me do a little response to this. The first one is, don't confuse ads for recommendations. For 11 years, I've been trying to get Vanguard to buy an ad on The White Coat Investor, and thus far I've been completely unsuccessful. So, keep in mind that just because we have advertisers, it doesn't mean that that's necessarily the same thing as what we recommend, we put our money in. If you went simply by what ads are, you'd have all your money in things like real estate and none of your money in index funds, because nobody that sells index funds buys ads. That ought to tell you something.
No. 2, real estate is a great asset class. There are a lot of great tax benefits to it. It is a great source of return. It is less correlated with your stocks. There are a lot of great benefits to investing in real estate.
No. 3, I certainly do believe in passively invested publicly traded real estate; 85% of my portfolio is index-like and index funds. My portfolio is 60/20/20—60% stocks, 20% bonds, 20% real estate. In that 20% segment that's real estate, a full quarter of it is in the Vanguard REIT index fund. That was a fantastic investment in 2021. It made 40%. I certainly believe in it, and I invest in it.
A fourth point: most real estate is not publicly traded. Because of that, it's a much less efficient market than publicly traded stocks and REITs. Your location matters. Your skill and your expertise and your experience matter. Don't assume that truisms from a very widely watched, publicly traded, very efficient market necessarily apply to every other market out there.
No. 5, private real estate should also, at least in theory, carry an illiquidity premium. I've seen that when some of my real estate investments went from private to public. They had a big boom basically in value as they went public and the yields dropped to what other similar publicly traded investments were yielding.
Broadmark was a fund I owned that ended up going public and basically got a 20% or 30% bump as soon as it went public. I waited until that before I sold it, when it was yielding exactly the same as other publicly traded similar real estate debt funds. I hope that's helpful to explain why we talk about real estate on the podcast, why we talk about it in the blog, in our newsletters, why they advertise with us. You don't have to put all your money in real estate, by any means. In fact, I view private real estate as completely optional to your portfolio. But has it helped my portfolio? It sure has, and I think it's a reasonable asset to include in your portfolio.
Corrections
This is from a discussion I had with Disha on a recent podcast about cooking classes in Italy with 529 funds. Apparently, there are some cooking classes in Italy that qualify for 529 funds at the University of Gastronomic Science in Italy. Basically, the place you go to check is studentaid.gov. If the program and the school are listed there, you can use your 529 in order to pay for it. It's an approved list of international schools that are eligible for Title IV student aid, which essentially means they're eligible for 529s.
The second correction comes from a recent episode on travel hacking. I think Disha misspoke or gave wrong information about the Chase card, and she corrected it subsequently in the show notes. But we should probably correct it out loud on the podcast, as well. Chase has a 5/24 rule, meaning you can't get more than five cards in any 24-month period. And I think she said it was five cards in five years. So it's five cards in two years, not five cards in five years.
Finally, a correction where I learned something new. In episode 250, I think I used the term immaculate conception to mean Virgin birth. I said the immaculate conception rate in the ER is about 15%. And I'm not Catholic, but Catholics and maybe many of them don't even know this. I was told by a Catholic attorney who wrote in, by the name of Andrew, that these are not the same thing. He said the immaculate conception is actually the doctrine that Mary was preserved from original sin when she was conceived in the womb of her mother. Mary is the immaculate conception, not Jesus. That's the Virgin birth. If you didn't know that like me, well, you learned something about religion today on the podcast.
Sponsor
A lot of physicians have questions about locum tenens, and locumstory.com is the place for them to get real, unbiased answers to those questions, basic questions like, “What is locum tenens?” to more complex questions about pay ranges, taxes, various specialties, and how locum tenens works. And then there’s the big question: is it right for you? Go to locumstory.com and get the answers.
Quote of the Day
Our quote comes from an article in JAMA in 1915. It read,
“The physician is not in business. He is not a trader. He cannot judge when a bargain is truly a bargain. Here lies the whole trouble. He is not suspicious, not on his guard. His attitude is one of sympathy with, not suspicion of, his fellow man.”
And I don't know if that's changed in the last 100 years at all.
CFE 2022
If you did not get to attend WCICON22 but you want all of the awesome content, it is available as an online course. Each year, we call this course Continuing Financial Education. This year's course is CFE 2022. The early bird price on this CFE course is $699. That is 10% off and the sale will run from March 2-14. Be sure to get it on sale at whitecoatinvestor.com/cfe2022.
Milestones to Millionaire
#56 – We have two special guests on this episode that have been great financial educators among physicians for years! We have had many WCI readers tell us what a difference they have made in their financial lives. This dual physician couple takes us back to what it was like investing at Vanguard in the beginning, reminding us to make investing simple and always minimize costs. Their advice? Build a strong partnership with your significant other, pay off debt, and invest early and often. Make time to educate yourself and take responsibility for your own personal finances.
Sponsor: CrowdStreet
Full Transcript
Intro:
This is the White Coat Investor podcast, where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high-income professionals stop doing dumb things with their money since 2011. Here's your host, Dr. Jim Dahle.
Dr. Jim Dahle:
This is White Coat Investor podcast number 253 – The super bonus episode.
Dr. Jim Dahle:
Welcome back to the podcast. This is the first one we're recording since WCICON, and I have an apology to make to you. I'm really, really sorry, but I undersold WCICON22. It was awesome. We had such a fun time down there. The staff had fun. The speakers had fun. The attendees had fun. It was great. It really was a spectacular experience, not just a conference, but an experience.
Dr. Jim Dahle:
It was seriously the best conference I've ever been to. I'm so proud of the team that put it together. Now, I didn't do a lot on that. I prepared a couple of talks, three talks, I guess. But for the most part, our conference team took care of that. And that consists of Katie, our Chief Product Officer, as well as Chrislyn, who's our conference director and our newest hire, our assistant in the products division, Morgan.
Dr. Jim Dahle:
They did an awesome job. The speakers did a great job. The AV team did a great job. The hotel staff did a great job. It was really fun. We had three tracks going of speakers. We had a basics track, an advanced track, we had a wellness track, and the fun part is this conference has gone forward over the years is that more and more people are coming for the wellness component. In the beginning, I thought that was just how we were going to allow people to use their CMA dollars to pay for the conference.
Dr. Jim Dahle:
But more and more people every year are coming for that wellness content. And it was really fun because at about 04:00 o'clock each day, we'd knock off and go do something fun. Whether that was butt golf, or playing pickleball, or having some social activities or going out to the lazy river and floating around the pool, whatever it was, it was awesome.
Dr. Jim Dahle:
It was awesome to be able to look forward to that at the end of the day, and really have a wonderful time away from our practices. For many of us away from our families, although a lot of people brought their families, and just to rejuvenate after two years in the pandemic to be back in person and to be outside eating lunch in the sun in Phoenix, it was a really awesome experience.
Dr. Jim Dahle:
I hope those of you who missed it this year will be able to come and enjoy it with us next year. And no, we're not selling tickets yet. We probably won't be doing that until October, but I seriously undersold that. It was a pretty spectacular conference. It was really fun.
Dr. Jim Dahle:
If you are interested in getting the content from the conference, you can still get that. You might not be able to get the full experience that we all had down there in person, but if you want the content, you can still get that. You just go to whitecoatinvestor.com/cfe2022, and we packaged it up into an online course. That's available now, and you should be able to get that.
Dr. Jim Dahle:
All right. Let's take a question here off the SpeakPipe to get started. This one comes from Jared and he wants to know what to do with extra income. What a great problem to have.
Jared:
Hello, Dr. Dahle. My name is Jared. I am a practicing general early career internist about six years post-residency practicing in a large metropolis in the Southeast. I have a question about what to do with extra income after we combine two physician incomes.
Jared:
My fiancé is a family medicine physician. Roughly five months post-residency. Her base is $180,000. My base is $250,000. Both of us with incentives have the option to make much more. We are very fiscally responsible people with very little debt. Other than, I have a home mortgage that has about $400,000 left on it. And we both have student loans that are on trajectory to be forgiven in several loan forgiveness programs. I have the public service loan forgiveness, and she has the National Health Service Corps.
Jared:
We anticipate that we'll probably only have to use about 25% or less of her income. What are your recommendations about what to do with the extra money for two early-career rare physicians moving forward to plan their future? Thank you for everything that you do. The White Coat Investor has been a tremendous God sent to me, my fiancé, and so many of us. We appreciate it.
Dr. Jim Dahle:
All right. You've done a great job, figuring out a plan for your student loans. You're done a great job spending less than you earn. Those are pretty important parts of a financial plan. But what I'm not hearing is that you actually have a financial plan. This should never really be a question of what you do with extra money. I have a variable income every month. Sometimes there's extra. Sometimes there isn't. But it all goes to the same place because the plan tells me where the money goes.
Dr. Jim Dahle:
It sounds to me like you need a plan. You start your plan with goals. When you want to retire, how much you want to have to retire, etc. And then you work backward to determine how much you need to save toward retirement every year. How much you want to pay for your kids' colleges or whatever. Work backwards, how much do you need to save for that each year?
Dr. Jim Dahle:
And if you are on track for all of your goals, then there's two things you do with the extra money. Either spend it and go have a great time. And I recommend you do that with at least some of it, or you give it away. And I also recommend you do some of that.
Dr. Jim Dahle:
But for the most part, most people are just still muddling around because they don't have clear-cut goals and they don't have a clear-cut financial plan of what they do with the money they have every month. And it sounds to me like that's the situation you're in. So you need a financial plan. If you are a hobbyist, if you're into this stuff, if you like reading financial books, if you participate on lots of internet forums, the WCI forum, or WCI subreddit, you're answering other people's questions in there. Maybe you can write your own financial plan. Lots of people do. That's what I did. It works fine.
Dr. Jim Dahle:
If you need a little bit of help with that, take our Fire Your Financial Advisor course. There's also an option to that, that you can use CME funds to buy that includes some wellness material. But that will take you step by step and help you write your financial plan.
Dr. Jim Dahle:
The last alternative, of course, is to hire a financial planner to help you write a financial plan. We have a list of recommended planners on the website, under the recommended tab. But however, you do it, you need to sort that out. And for a lot of people, they're just trying to figure out where to put their retirement savings. That's what they mean when they ask this question. And basically, the way you do that is you look at your employer-provided plan 401(k)s, 403(b)s, 457(b)s, 401(a)s, whatever they're offering.
Dr. Jim Dahle:
If you're self-employed, a solo 401(k). A backdoor Roth IRA for you and your spouse, maybe an HSA. And if you need to save more than that for retirement, you just do it in a regular non-qualified brokerage taxable account.
Dr. Jim Dahle:
If that's the question you're asking, then you just look at everything that's available to you and everything else goes taxable, whether you're investing in mutual funds, whether you're investing in real estate, whatever. But it sounds to me like you need to get a financial plan in place. And then with this question you won't have every month for the rest of your life, you just follow the plan and the plan accounts for what you do when you get money, and you plug it in toward your goals.
Dr. Jim Dahle:
All right. We're going to be talking about our survey in a few minutes, but a lot of people said about the podcast they just skipped the first five minutes. So I decided to put lots of great content into the first five minutes. So those of you who skipped it, well, now you're going to have to go back and listen to it. But I do have to tell you about our sponsor for the episode. Otherwise, we're probably not going to have a podcast without sponsors.
Dr. Jim Dahle:
Have you ever considered a different way of practicing medicine? Whether you are burned out, need a change of pace, or are looking to supplement your income, Locum Tenens might be the solution for you.
Dr. Jim Dahle:
If you’re not sure where to start, locumstory.com is a place where you can get real unbiased answers to your questions. They answer basic questions like “What are locum tenens?” to more complex questions about pay ranges, taxes, various specialties, and how locum tenens can work for you. Go to locumstory.com and get the answers.
Dr. Jim Dahle:
Speaking of surveys, we had recently published on the blog on March 4th, we published a lot of the results from the survey we did. And I want to thank those of you who filled it out. We had over 3,000 people fill it out. Many of whom were podcast listeners. And it was really interesting what we learned.
Dr. Jim Dahle:
We learned a lot about our audience. You guys range from 20 to 89 years old. 84% of you are actually married. More of you are men than women, and most of you are out working about 13% of you are still in training and 8% are retired. Only about 71% of you are physicians. Another 8% are dentists and a big surprise for me, 8% of you are pharmacists. A big pharmacist contingent out there among many other professions.
Dr. Jim Dahle:
Most of you are employees, really only about a quarter of you own your jobs. We learned that only 48% of you have a written financial plan. So just like our questioner at the top of the hour, many of you still need to get a written financial plan in place. Please do that. We're trying to help you. We're trying to give you the resources to do that, but it's amazing how much easier your financial life goes once you have a written plan in place. I cannot emphasize that enough.
Dr. Jim Dahle:
We asked about household incomes. We learned that about 9% of you have a household income under $100,000, I assume most of those are probably still in training. About 21% of you have an income of between $100,000 and $250,000. That 42% of you have an income between $250,000 and $500,000. And about a quarter of you have an income of $500,000 to $1,000,000. And just a small sliver making seven figures a year.
Dr. Jim Dahle:
We asked about your net worth and found that about 15% of you still have a negative net worth. And another third of you are not millionaires. But 19% are between $1 million and $2 million. Another 16% are between $2 and $4 million. And it looks like about 7% are between $4 and $6 million. And about 10% of you are worth at least $6 million. A pretty big chunk of pretty high net worth people in the White Coat Investor audience.
Dr. Jim Dahle:
But what's interesting is that despite people making pretty good money in this audience and having quite a bit of wealth, people don't spend all that much. And in fact, it looks like only about 8% of you spend more than $300,000 a year. The vast majority of people are spending much, much less.
Dr. Jim Dahle:
And in fact, about 40% of our audience is spending less than $100,000 a year. 19% of you are financially independent, and most of you are not really interested in a super early retirement. About 85% of you don't want to retire before 50. And about 11% want to retire between 40 and 49.
Dr. Jim Dahle:
Only about 43% of you do your own taxes. 99% of you own stocks, 76% of you own bonds, 56% of you own real estate. And here's an interesting statistic, 18% of you own some type of crypto assets. Only about 7% of you regularly use a financial advisor, although another 16% use one occasionally. Most of you, about three-quarters, have a disability insurance policy. 70% of you have a term life insurance policy, about 10% have a whole life insurance policy.
Dr. Jim Dahle:
We discovered that 18% of you have experienced career burnout at some point that had a significant impact on your work and life. And another 44% have had burnout that occasionally impacted your work and life. And if we currently ask, who's burned out, we see that 57% of you are feeling at least some burnout that occasionally impacts your work and life. So, a pretty high percentage there. I guess I'm not surprised. That number has inched up in every survey I've seen throughout the pandemic.
Dr. Jim Dahle:
Let's see, what can I tell you. Your social media use, more Facebook than anything else. 58% of you use Facebook, 51% use YouTube, 39% use Instagram, 23% use Twitter. It's interesting we ask you how you found WCI originally. And many of you don't remember, but a fair number, it was a referral from a friend, about 29%. Another 34% just wandered off the internet. And about 12%, you either bought the White Coat Investor book, or it was given to you.
Dr. Jim Dahle:
About 83% of you read the blog. 69%, listen to the podcast. 68% read the monthly newsletter. And about 50% have read the original White Coat Investor book. It looks like 92% feel like you can always trust the recommendations from White Coat Investor and less than 1% feel like you can't trust those recommendations. So I guess there's always going to be a few we can't make happy. But I'd say that's a pretty good vote of confidence.
Dr. Jim Dahle:
It's interesting, we asked you what you liked about WCI and you guys made me cry. You said so many nice things, honesty, and trustworthy, and consistency, non-biased, practical, motivating, intelligent, transparent. It was really nice of you guys to give that. But I also appreciate the negative or the constructive feedback that you guys gave and there's lots and lots and lots of that. And we appreciate it because we're going to make changes based on a lot of that.
Dr. Jim Dahle:
A lot of people wanted me to do more, wanted me to work more, wanted me to interact more wherever they are. Make more podcasts, make more content and send them more emails, spend more time with them on the White Coat Investor forum, or on the Facebook group. And obviously, I only have so much time in my life that I can dedicate to the White Coat Investor. As much as people want that, they should not necessarily expect to get that.
Dr. Jim Dahle:
What else did we have? Well, we had people complain about the Facebook group. Anytime you get 75,000 people together in one group, there's always going to be a few people that might rub you the wrong way. We had people asking for less moderation there and people asking for more moderation there. I'm not sure exactly what the right answerthere is.
Dr. Jim Dahle:
On the same token, we had lots of people asking for longer blog posts and people asking for shorter blog posts. So it's a good mix of what people want. It's not always the same thing.
Dr. Jim Dahle:
But we got a lot of great feedback that we can incorporate into the podcast. I think we're going to be looking at perhaps a new theme for the podcast. A lot of people commented they thought the podcast had too many ads on it, which I think, talking about our own products here at the White Coat Investor is viewed by a lot of you as ads where we didn't really view that before. We're going to be a little more careful about that. But we're obviously still running a for-profit business here. We can't do it without any ads at all. So, if you're expecting that, I wouldn't.
Dr. Jim Dahle:
It's interesting as I look at all the sources I use for news and information out there, one by one, they're all going to a subscription model. Think about the newspapers you used to read. You used to be able to read the websites for free, but they couldn't make enough to pay their reporters and their staff just from display ads. And so they've gone to subscription models. Well, we're not planning to go to subscription models anytime soon here at the White Coat Investor, but we do have 15 staff members to pay and we got to make payroll. And the only way to do that is to have ads and sell you stuff, have you come to the conference. Those sorts of things.
Dr. Jim Dahle:
I appreciate you filling out the survey. If you want more details on that, see the blog posts. It's on the blog that ran on March 4th and we'll have a lot more details there about that if you're interested.
Dr. Jim Dahle:
All right, let's take another question off the SpeakPipe. This one's about locums, which is interesting given that that was our sponsor today, it was locumstory.com.
Speaker:
Hello, Dr. Dahle, thank you very much for all you do. I'm a full time teaching faculty. My question is whether I should disclose to my current employer that I intend to do locum jobs during the days that I am off work or during my vacation period. Thank you very much for answering my question.
Dr. Jim Dahle:
Okay. This is a legal question. This simply comes down to your contract. Read your contract. There are a lot of academic docs out there that are required to disclose something like this, or it might not even be allowed to do it. If you are in either of those situations, you better follow the contract, or you're going to be legally liable for whatever the penalties in the contract are. But if there's nothing like that in your contract, you can do what you want on your own time.
Dr. Jim Dahle:
Now, to be an honest person, to have integrity, you need to make sure you are not stealing from your employer. However, they're defining that full-time work is for you, you need to make sure you're giving that to the employer and not stealing time from them to work on something else. But so long as you're doing that, you can use your free time to do whatever you want.
Dr. Jim Dahle:
All right, let's do our quote of the day. This one comes from an article in Jamma in 1915. That's right. It read, “The physician is not in business. He is not a trader. He cannot judge when a bargain is truly a bargain. Here lies the whole trouble. He is not suspicious, not on his guard. His attitude is one of sympathy with, not suspicion of his fellow man.” And I don't know if that's changed in the last a hundred years at all.
Dr. Jim Dahle:
All right, thanks for what you've been doing. If no one's told you thanks for the difficult work you do yet today, let me be the first. But we want to do more than that today. We have a video that's been made that we're sharing all over our social media channels today. The reason today is because March 10th, 2020 is the day we reached a thousand COVID-19 cases in the United States. And so, it seems like a good day to be talking about this.
Dr. Jim Dahle:
But I'm going to be bringing on an ICU nurse who spent a lot of time in a COVID ICU in the last couple of years with pretty significant effects on her physical and mental health. She's put together a video that I want to share with you. Now, if you want to watch it, you're going to have to watch it on the YouTube channel or one of our social media channels. But we'll play the audio here as part of the podcast today.
Dr. Jim Dahle:
All right, next on the White Coat Investor podcast, we have a very special guest. Welcome to the podcast, Scotti Peterson.
Scotti Peterson: Thank you.
Dr. Jim Dahle:
Scotti was an ICU nurse for the majority of the pandemic. She's currently a first-year CRNA student and she did something really cool recently in that she made a video. And we're going to play this video here on the podcast. Obviously, if you're just listening in your car, you're only going to get the audio. You'll have to go to the YouTube channel if you actually want to watch the video, but we're going to play this in just a minute.
Dr. Jim Dahle:
It's something she put together that I think a lot of us that have been going through the pandemic can really relate to because we felt like we're in a war zone for the last couple of years in a lot of ways. And at the beginning, it felt like we had lots and lots of support from the community and toward the end, maybe it didn't feel like we had so much support from the community.
Dr. Jim Dahle:
And in fact, a significant proportion of the community really didn't like a lot of the public health and other healthcare things that we were trying to do. So it's been a tough couple of years, and this video, I think a lot of us will be able to relate to. But before we play that, I wanted to talk with Scotti a little bit about what was going on in her life that made her decide to make this video. Can you tell us a little bit about that, Scotti?
Scotti Peterson:
Absolutely. I have been an ICU nurse for a little over seven years. My last year at the bedside was spent in COVID ICUs over 2,500 hours as I've calculated. In that time, I only saw one of my patients make it home. At one point, I couldn't figure out why I was still alive and they weren't. I started to do writing as a way of surviving being in those rooms, which brings me to the video.
Scotti Peterson:
The video is just me reading something I had written during that time. I never really expected to read it out loud, to be honest. I've always been a fairly quiet person, but when you're alone in a room with a dying patient, days in and days out for over a year, things change.
Scotti Peterson:
The rhythmic movement of a mask you're hoping keeps you safe, it also silences you. It silenced me to the point where for the first time in my life, I wanted to be heard. I have wrestled for months with what sharing this part of my experience with the public actually looks like.
Scotti Peterson:
But at the end of the day, I remembered why I got into healthcare in the first place. And that was to help people. For almost two years, despite all of my knowledge and experience, there was nothing I could do but watch people die. So maybe with this video, I can start to heal myself by helping others do the same.
Dr. Jim Dahle:
Awesome. That's a great introduction. Let's go ahead and play the video now. And then we'll talk a little bit more after we play it.
Scotti Peterson:
Healthcare heroes, they proclaimed, as we tightened the drawstrings of our scrubs, pushing fearfully through the doors open only to the essentials we rushed into the unknown.
Scotti Peterson:
But we are not the heroes or heroines of the story, we are not here to be glorified. We did what we had to do. We did what we were trained to do. In school, we learned advanced airway assessment and management. We were buried in knowledge of pharmacology and physiology, but no one could teach us how to move forward when our education and experience was simply not enough.
Scotti Peterson:
From the head of the bed, amidst the chaos, we heard their last words. We watched them fight. Knowing our interventions were so likely futile. Someone's parent, child, family, friend. They were our patients. We did what we were trained to do, to try and save so many. In the end, left only holding a hand drawing cold.
Scotti Peterson:
We all have experienced loss that lingers long after we step away from the bed. We watched through windows when our tubes, lines and machines were just not enough. We suffered with the suffering. We gave to the grieving. We perished in part with our patients.
Scotti Peterson:
While laughter has replaced the chorus of pans and wooden spoons, our mask did not protect the most vulnerable parts of us. Witnessing the joy of a country breaking free from lockdown, we struggled to keep our emotions locked in. We are sad. We are angry. We are distressed and destroyed.
Scotti Peterson:
Just because we are still breathing does not mean we have survived. At times the bravado of our profession can mask the bravery it takes to ask for help. These last few years, we have silenced so many. Now it is time to come out of our own silence, stepping away from the bed, peeling off the layers of our own masks. We can tell their stories now interwoven with our own, the skill to admit that we are not okay. The skill to ask for help. The skill to say “You are not alone.” The skill to reply “Me too.” For those we couldn't save these last few years, let us save each other. Together we fought and together we can heal.
Dr. Jim Dahle:
Scotti, that video is really touching. I think it sums up the experience of pretty much every ICU nurse in the country to start with, but also a lot of docs, hospitalists, intensivists, emergency docs, even people who are seeing COVID as outpatients. Now, they're not having exactly the same experience you had where a majority of patients didn't make it out of the ICU. Many of them saw less sick people. The sickest ones obviously get concentrated into the ICU, but I think a lot of people can relate to that.
Dr. Jim Dahle:
What do you think the path forward is for all these people that were traumatized by the pandemic, by dealing with such a large volume of intensely sick people and sometimes opposition from society, for what we were doing? What's the path forward from here?
Scotti Peterson:
I think that regardless of discipline, we all share a lot of similar experiences. I think we also historically operated on a tough-it-out mentality. I used to say, “If I wasn't one assigned to a hospital bed, I would be doing just fine.” Even on days when I absolutely wasn't doing fine. I think we need to redefine what doing okay looks like and stop comparing ourselves with each other and understand we're all probably fighting very similar battles at this point. We're just fighting them differently.
Scotti Peterson:
I think we spent so much time suffering in silence, but there is no way we're going to heal silently. So, we need to start talking, not only to each other, but then also to people in positions of leadership. I think we reach them better if we're all saying the same thing, because our echo will be much louder.
Scotti Peterson:
In the bigger scheme of things, I think we need to start addressing why diagnosed and debilitating psychological injuries resulting from this pandemic or other trauma in the medical field is not recognized institutionally by L&I, it is not recognized as an injury.
Scotti Peterson:
I personally, and I know others have had to empty out their entire savings account to pay for leave and the medical treatment they needed. Many of us felt we were treated as expendable. For years we were asked to do the impossible. On days we weren't in hospitals, calls and texts for help we received every moment that we were outside of the doors and our duty became our disease.
Scotti Peterson:
I think that many of us spoke up more than once and absolutely nothing changed for well over a year. And at that point for so many of us, it was too late. We are now suffering the consequences of those choices that weren't ours to make. I think that if institutions start taking responsibility for the part they played in our injuries and help us get the treatment we need, it's the first step of getting us back through those doors. I think national staffing shortages will continue to be a problem until we truly acknowledge how and why we got here in the first place.
Dr. Jim Dahle:
One of the lines you use in the video is talking about, “We're not okay. We're not okay.” Do you think that's all right for us to not be okay?
Scotti Peterson:
I think not being okay looks different for every person. And I think that you can't offer yourself completely to your patients or to provide the best care unless you have found a way to care for yourself. I think that's how good medical care happens is from people who themselves are healed first. That's how we heal other people. So no, I don't think it's okay that we're not okay.
Dr. Jim Dahle:
I was a military doc for four years with the Air Force in a pretty high ops tempo, 2006 to 2010. Lots of people were deploying, Afghanistan, Iraq was going on. A lot of our service members came back with PTSD. Quite frankly, they saw terrible things. They had terrible things happen to them. How would you compare and contrast the experience that particularly ICU nurses have had over the last couple of years to that of a returning service member?
Scotti Peterson:
Well, I have struggled, but I most recently have come to a point where I'm able to own my diagnosis and I am diagnosed with PTSD. My psychiatrist who diagnosed me a year and a half ago, actually worked with service members prior to her practice now. It took me a really long time to understand carrying that diagnosis because I didn't go to war and I didn't feel like I suffered the same trauma that those individuals did.
Scotti Peterson:
But at the same time, there are weeks where I can't leave my apartment because I am scared. I have not been able to go into a grocery store for almost two years. I have lost most of my family and friends because it is really hard to make connections. I wake up many nights screaming or crying because I so vividly remember my experiences from the last two years.
Scotti Peterson:
I startle easily. I can't hear a helicopter or siren without panicking quite a bit because to me for a year, those helicopters and sirens meant somebody else was coming to me to die. I'm not sure how to heal. I think we're all figuring it out as we go. But I think there's a lot of shame carrying that diagnosis and what it looks like, but I don't think people think it looks like me. And so, if I have to be the first one to really get out there and say, “I have PTSD, this is what it looks like” maybe it'll help others own their diagnoses as well.
Dr. Jim Dahle:
I would say your experience is extremely similar to that of a returning service member. Not only did you see all kinds of people around you dying, but you had that constant fear that you were next. There was no reason you couldn't die from the same thing they were dying from, which is exactly what our service members are facing when they're out there being shot at, or being blown up with IEDs or whatever.
Dr. Jim Dahle:
And so, I guess I'm not at all surprised to see what may be the next epidemic, which is an epidemic of PTSD among healthcare workers, particularly those who worked with the sickest patients. I don't think that's a surprising outcome at all. It should have been an expected outcome, I think.
Dr. Jim Dahle:
And you're right that we all need to be working on this, both with peers and colleagues, as institutions and as a society. In the beginning of the pandemic, people were clapping as you went to the hospital, you were the only ones leaving home for a few months. Did you feel that change part way through the pandemic and how did that affect how you felt about the work you were doing?
Scotti Peterson:
I think I quickly and I can speak for probably a lot of my colleagues, quickly felt invisible. We were put into these rooms where we couldn't leave for 12 to 16 hours just based on what we were doing in the critical care units.
Our own units didn't know that we still were employed by the institutions' administration. I didn't hear from them for an entire year. I heard more gratitude from the restaurant down the street in a year and a half than I did from my own leadership. I think that we all became so invisible and I became closer with my patients and their families on Zoom than I was with my own. Sorry.
Dr. Jim Dahle:
That's okay. Scotti, I want to thank you for being willing to be so vulnerable, to be willing to make that video, to start with. To be willing to come on the podcast to tell people about why you made it. You've been through a lot. And if nobody said thank you to you for what you've done the last couple of years, I want to thank you on behalf of our 30,000 to 40,000 listeners, for what you've been doing. We appreciate it. It's meaningful work. It matters. And we hope that you can start feeling better soon.
Scotti Peterson:
Thank you so much.
Dr. Jim Dahle:
All right. That was a really touching video for me. And that's why I wanted to bring Scotti on the podcast and talk a little bit about her experience, because I know a lot of you have been having the same experience.
Dr. Jim Dahle:
Whatever you are feeling after the trauma you've gone through in the pandemic, whether you are feeling burnt out, whether you are having PTSD, whether you are feeling suicidal, whatever it might be, I want to encourage you to get help. There is help out there. There are people that want to assist you.
Dr. Jim Dahle:
If it's a burnout you're dealing with, I want to make sure you're aware of our coaching services, whitecoatinvestor.com/coaching. We've put together a new program this year called Burnout Proof MD in partnership with the Happy MD. And that's helping a lot of docs to basically promote longevity in their own careers and enjoy their careers more and be able to stay in them longer and thus be more financially successful.
Dr. Jim Dahle:
It's very interesting, you cannot buy insurance against burnout. You can buy disability insurance, you can buy life insurance, but you can't buy burnout insurance. And so if you're feeling a little bit crispy, maybe getting a coach, going through a burnout program, reading a burnout book might help you to rekindle that love you have with your career and remember why you went into it in the first place.
Dr. Jim Dahle:
All right. Let's do some corrections. Here's one. I don't know when I said this or whether somebody else said it. I don't know. I think this is from a discussion I had with Disha on a recent podcast about cooking classes in Italy with 529 funds. Apparently, there are some cooking classes in Italy that qualify for 529 funds at the University for the Studies of Gastronomic Science in Italy.
Dr. Jim Dahle:
Basically, the place you go to check is studentaid.gov. If the program, if the school is listed there, you can use your 529 in order to pay for it. So, lots of interesting stuff there. Yeah, it's an approved list of international schools that are eligible for title four student aid, essentially, which means they're eligible for 529s.
Dr. Jim Dahle:
All right. Another correction. Here's one from a recent episode on travel hacking. I think Disha misspoke or gave wrong information about the Chase card and she corrected it subsequently in the show notes, but we should probably correct it out loud on the podcast as well.
Dr. Jim Dahle:
Chase has a 524 rule, meaning you can't get more than five cards in any 24-month period. And I think she said it was five cards in five years. So it's five cards in two years, not five cards in five years.
Dr. Jim Dahle:
Oh, here's another one. I learned something from this correction. In episode 250, I think I used the term immaculate conception to mean Virgin birth. I said the immaculate conception rate in the ER is about 15%. And I'm not Catholic, but Catholics and maybe many of them don't even know this. But I was told by a Catholic attorney who wrote in, by the name of Andrew, that these are not the same thing.
Dr. Jim Dahle:
The immaculate conception is actually the doctrine that Mary was preserved from original sin when she was conceived in the womb of her mother. Mary's the immaculate conception, not Jesus. That's the Virgin birth. If you didn't know that like me, well, you learned something about religion today on the podcast.
Dr. Jim Dahle:
All right, let's take another question off the SpeakPipe. This one's about selling stuff from an old advisor. Thanks, Mike, for this great question.
Mike:
Hi, Dr. Dahle. This is Mike from Chicago. I've recently moved all of my money and assets for Merrill Lynch, where it was managed by a financial advisor over to Vanguard. My advisor had me in dozens of positions that I want to sell out of so that I can consolidate to low-cost index funds like you would recommend.
Mike:
What should be my strategy to most tax sufficiently sell out of these positions in regards to the short and long-term capital gains and losses? Any help would be appreciated. Thank you.
Dr. Jim Dahle:
Anytime you fire a financial advisor and move your assets away, you should have a plan in place before you do it. You're usually better off leaving it there until you have your plan fully developed of what you're going to do. And that includes how you're going to deal with these legacy assets, these legacy investments that you have from the old advisor that maybe you don't want anymore.
Dr. Jim Dahle:
But the bottom line is you want to have as ideal of a portfolio as you can while balancing the tax consequences of changing your portfolio. That's what you're trying to do here. So, anything you own inside an IRA, 401(k), etc, there's no tax consequences to selling it and buying it what you actually want and buying what you actually want. So do that, inside an IRA, 401(k), HSA, whatever. If it's in a tax-protected account, sell it by index funds. You're good.
Dr. Jim Dahle:
Then you need to look at each of the other assets in there and look at the cost basis how much the gain is going to be. Anything that has a loss, you can sell right now, you might as well. Book the loss. You can use that against your taxes. You can use that to offset some of the gains. Anything without much of a gain, you can sell that as well.
Dr. Jim Dahle:
But if you've got some stuff with a really low basis with big gains, that's going to cost you a lot in tax to change, then you've got to be a little bit more careful. First, make sure you're not reinvesting into that investment, whatever it is. Make sure the dividends are going to cash instead of into that investment. But you want to look at each of them and decide, “Well, do I want to build my portfolio around this? Or do I want to bite the bullet, pay the tax and move on?”
Dr. Jim Dahle:
If you've got a bunch of losses from something else, well, you can take out that many gains as well. If the gains aren't that big, if we're talking about moving over a $20,000 portfolio with $4,000 in gains, well, maybe you just bite the bullet and you pay the taxes, no big deal. But if you're moving $4 million over there with all kinds of gains, then you probably want to build more around that portfolio.
Dr. Jim Dahle:
And that's fine a lot of the time, as long as not too much of the portfolio is in any one stock or whatever. If you've got to spread across 10 or 15 different stocks, then maybe just new money goes into index funds and you hold onto those stocks.
Dr. Jim Dahle:
Another great thing you can do with these is if you give to charity, instead of giving cash, give appreciated shares. Neither you, nor the charity will pay the capital gains taxes. You get the same deduction you would get otherwise. It's a great way to flush legacy investments out of your portfolio. Obviously, this assumes you're giving to charity anyway. If you're not given to charity anyway, that's not a good move. You're not going to come out ahead there, because you're giving away more than you're getting in a deduction. But it's a great way to get rid of those capital gains if you are charitably minded. It's particularly convenient if you use a donor-advised fund to move those assets out.
Dr. Jim Dahle:
I want to address a review that we got on the podcast. It said, “Overall, this podcast is the best for higher-income earners by which I mean regularly salaried folks in the higher tax brackets, and not just those who wear a white coat. Almost all of the advice he gives is excellent and in your best interest, except the amount of cheerleading promotion he does for real estate in all its forms.
Dr. Jim Dahle:
No real estate is not some kind of magical investment in Nirvana. For some, it might make sense, but it amuses me the advocates for passive investing and everything else, but somehow, it's okay to invest in all kinds of active, private, real estate deals as long as you take that with a pinch of salt, you should be good.”
Dr. Jim Dahle:
So let me do a little response to this. The first one is, don't confuse ads for recommendations. For 11 years, I've been trying to get Vanguard to buy an ad on the White Coat Investor, and thus far I've been completely unsuccessful. So, keep that in mind just because we have advertisers, it doesn't mean that that's necessarily the same thing as what we recommend, we put your money in.
Dr. Jim Dahle:
If you went simply by what ads are, you'd have all your money in things like real estate and none of your money in index funds, because nobody that sells index funds buys ads. That ought to tell you something.
Dr. Jim Dahle:
Number two real estate is a great asset class. There's a lot of great tax benefits to it. It is a great source of return. It is less correlated with your stocks. There's a lot of great benefits to investing in real estate.
Dr. Jim Dahle:
Number three, I certainly do believe in passively invested publicly traded real estate. 85% of my portfolio is index-like and index funds. My portfolio is 60/20/20. 60% stocks, 20% bonds, 20% real estate. And in that 20% segment that's real estate, 5%, a full quarter of it is in the Vanguard REIT index fund. That was a fantastic investment in 2021. It made 40%. I certainly believe in it and I invest in it.
Dr. Jim Dahle:
A fourth point, most real estate is not publicly traded. And because of that, it's a much less efficient market than publicly traded stocks and REITs. Your location matters. Your skill and your expertise and your experience matter. Don't assume that truisms from a very widely watched publicly-traded, very efficient market necessarily apply to every other market out there.
Dr. Jim Dahle:
Number five, private real estate should also, at least in theory, carry an illiquidity premium. And I've seen that when some of my real estate investments went from private to public. They had a big boom basically in value as they went public and the yields dropped to what other similar publicly traded investments were yielding.
Dr. Jim Dahle:
Broadmark was a fund I owned that ended up going public and basically got a 20% or 30% bump as soon as it went public. And I waited until that before I sold it, when it was yielding exactly the same as other publicly traded similar real estate debt funds.
Dr. Jim Dahle:
So, I hope that's helpful to explain why we talk about real estate on the podcast, why we talk about it in the blog, and our newsletters, why they advertise with us. You don't have to put all your money in real estate by any means. In fact, I view private real estate as completely optional to your portfolio. But has it helped my portfolio? It sure has. And I think it's a reasonable asset to include in your portfolio.
Dr. Jim Dahle:
All right. Here's another question. This one's a little more personally about me, via email. “I'd like to know from Dr. Dahle, if he could only practice emergency medicine or run WCI, do finance, which would he choose? I'm just curious. I guess this is dependent on his current location on his timeline.”
Dr. Jim Dahle:
Well, the truth is for me, I go back and forth. Some weeks I'm like, “Boy, I wish I could just do medicine.” Other weeks, I'm like, “I am sick of being in the ER. I wish I was just doing WCI.” And all of the time I'm wishing I was doing less of everything. But some things I like about emergency medicine, it allows you to leave your work at work. I've always got something hanging over my head with WCI. That's not the case for emergency medicine. When I sign my patients out, walk out that door. Nobody's calling me, nobody's paging me. And I really like that.
Dr. Jim Dahle:
I also like going into work and not knowing what I'm going to be doing that day. Maybe it's the ADD person in me, but I really enjoy that. Sometimes it's slow. Sometimes it's super busy. I like not knowing what I'm going to be taking care of when I go into work. I get to see my friends there. I get to be social. And when I think about my career, what my career is, is medicine. And I’ve spent more than a decade training to do it.
Dr. Jim Dahle:
That's what I look at as my career, but there's other things I like about White Coat Investor. I can reach a lot more people. I can help a lot more people. I can work from home. I get a chance to work with my wife and some of my best friends that work here at the company. Eventually, I started making more money at White Coat Investor, that wasn't the case for the first few years, but now I make more money at White Coat Investor. So that's a nice bonus.
Dr. Jim Dahle:
And indirectly by helping you, perhaps I'm helping more patients by helping you to be more financially stable and allow you to concentrate on your patients and your practice and your family, and to not have to rush through patients, etc. Maybe I'm affecting more patient care indirectly than I am directly.
Dr. Jim Dahle:
I also find it fun to be an entrepreneur and create more jobs. Although it's stressful sometimes thinking about the fact that I need to make payroll. It is really rewarding to be able to create not just jobs, but good jobs that people count as the best job they ever had, which I think is pretty cool.
Dr. Jim Dahle:
Lately I felt more like dropping White Coat Investor, to be honest. But it would certainly be much less complicated to drop my clinical work. It always surprises people when they find out that I'm still seeing patients for some reason. But I guess I didn't cut back on my clinical work because I didn't like doing my clinical work. I just needed more time for White Coat Investor.
Dr. Jim Dahle:
All right. Here's another request by email. “Supply a bit more full disclosure about the ways in which WCI's religious affiliation biases investments.” Well, this is an interesting one. I don't think there's a lot of biases there, but let me see if I can think of something.
Dr. Jim Dahle:
The main religious group that comes to me with concerns about investments is Muslims. Followers of Islam have a prohibition against basically charging or paying interest. And so that obviously affects a lot of investments. It affects how they can invest in real estate, how they can get a mortgage, what stocks they might be willing to own, what companies they might be willing to own, etc.
Dr. Jim Dahle:
I'm not Muslim though. So that doesn't really affect how I invest. And I don't think it causes any sort of a bias in what I recommend. I am, however, fairly anti-debt, and that probably has a religious bias to it. I'm probably more against debt than maybe the average secular person is. As long term followers know, Katie and I don't have any debt. We paid off our mortgage in 2017 and we like that feeling. We don't plan to go back.
Dr. Jim Dahle:
Another aspect that our religious upbringing gives us is that we support charity a lot. We give a lot of money to charity and we do that via donor-advised funds, as you heard on this podcast before. That certainly has some biases to it. For example, I worry a little bit less about getting a lot of capital gains in my taxable account. And the reason why is because I know I'm going to flush a whole bunch of them out, by giving to charity.
Dr. Jim Dahle:
So that's a great way for me to get earnings, because I never pay taxes on it. Maybe that biases me a little more against income and a little more toward capital gains. That's about all the biases I can think of that my religious affiliation provides with regard to investments, but I don't know. Maybe somebody can think of something else, feel free to write about it. And I'll try to mention it and I'll try to at least disclose biases when they can't be eliminated.
Dr. Jim Dahle:
All right. Let's take a question about a 1035 exchange from Shereen. It's on the SpeakPipe. Let's take a listen.
Shereen:
Hi Jim. This is Shereen from Florida. In 2020, I did a 1035 exchange of a variable universal life policy to a low-cost annuity at Fidelity. The account has grown and is almost back to basics. I've been considering my options, which are to leave the money in the annuity, or to surrender the annuity and transfer the money to my brokerage account.
Shereen:
The total expense ratio of the annuity is 0.37, which includes the fund expense ratio and the Fidelity fee for the annuity. Is there any benefit in leaving the money in the annuity? Is it protected better from creditors in that annuity? Should that ever be an issue? My brokerage account has mostly very low-cost index funds. Even the 0.37 expense ratio of the annuity seems high to me. Also, when I surrendered the VUL, I had to pay a large surrender penalty. Should I expect to pay a surrender fee if I surrender the annuity? Thank you in advance for answering my question.
Dr. Jim Dahle:
Okay. First, let's do a little bit of background information for people who don't know what the heck you're talking about. A lot of people that buy a whole life insurance policy or a variable universal life insurance policy or an index universal life insurance policy that they then realize they don't want, feel really bad surrendering it and paying what a lot of people call stupid tax.
Dr. Jim Dahle:
They try to make lemons out of lemonade. And the way they do that is they exchange the cash value they have in that life insurance policy into a low-cost annuity, such as the one she's referencing at Fidelity. And that allows you to then let that cash value grow inside that annuity back to basics, back to the amount you paid in premiums for that life insurance policy.
Dr. Jim Dahle:
And then you can surrender the annuity and walk away. Essentially, you got a certain amount of gains tax-free by doing that. Now, you paid some expenses and you had some hassle with regards to the annuity, but you basically got some tax-free gains. And that was the whole point of the exercise. And so, people surrender it when it grows back to basics and walk away and just invest in a taxable account.
Dr. Jim Dahle:
Now, when you're trying to decide whether to invest in an annuity or whether to invest in a taxable account, there are a few things you have to consider. Investing in a taxable account has lots of benefits. You can take advantage of long-term capital gains rates, which you can't do in an annuity. When you take money out of an annuity, it comes out at ordinary income tax rates, all your gains do anyway. You get qualified dividend rates. But again, when money comes out of an annuity, you pay at ordinary income tax rates.
Dr. Jim Dahle:
However, an annuity grows in a tax-protected way. You don't have to pay taxes every year. When you're buying and selling stuff there, you don't pay taxes. When you get a dividend distribution every year, you don't pay taxes, you don't pay anything until it comes out.
Dr. Jim Dahle:
And over long periods of time, that tax protective growth can potentially, if fees are low, can make up for the difference between ordinary income tax rates and capital gains rates. In a very long time period with very low expenses, it's possible you can come out ahead using a variable annuity. So that's one thing to consider when you decide whether to keep that annuity.
Dr. Jim Dahle:
The other thing to consider is your asset protection situation. And these laws are always state-specific. But in Florida where Shereen lives, annuities are 100% protected from creditors. Your taxable account is not. So, you would get additional asset protection if you left that money inside the annuity. That's another benefit of the annuity for her.
Dr. Jim Dahle:
Now, whether that's worth it or not, obviously the risk of you being sued about policy limits is very, very low. But a little extra protection in the event you got some $10 million judgment against you and had to declare bankruptcy, it's always nice to have a little bit of extra protection.
Dr. Jim Dahle:
A difficult decision for you given your state and the low cost of your annuity. You may want to keep it, you can use it for particularly tax-inefficient asset classes like REITs or TIPS or something like that. But it's up to you whether you keep it or not.
Dr. Jim Dahle:
In my case, as I mentioned earlier, I donate most of my gains to charity. And so, I end up being able to invest very tax efficiently inside a taxable account. An annuity is a little less attractive to me than it might be to you. And of course, if you're in a state that protects annuities from creditors, it might be even more attractive to you. Only you can make that decision, but those are the factors you ought to be thinking about.
Dr. Jim Dahle:
Have you ever considered a different way of practicing medicine? Whether you're burned out, need to change your pace, or you’re looking to supplement your income, Locum Tenens might be the solution for you.
Dr. Jim Dahle:
If you're not sure where to start, locumstory.com is a place where you can get real unbiased answers to your questions. They answer basic questions like what is locum tenens to more complex questions about pay ranges, taxes, various specialties, and how locum tenens can work for you. Go to locumstory.com and get the answers.
Dr. Jim Dahle:
Now, I mentioned the conference at the top of the podcast. If you want to speak at that conference, we'll probably take applications for speakers in June. You can probably sign up for the next conference in October. But in the meantime, you can still get the content from this conference and we're actually offering a special deal on it. The CFE 2022 course includes everything from that conference, all the content, the stuff that was just virtual, the stuff that was streamed, the stuff that was just at the conference center itself, all of that is in this course.
Dr. Jim Dahle:
Now, everyone who attended the conference, whether in person or virtually, gets this course for free. But if you weren't able to attend, you can still buy it and you can use your CME dollars to do it. It includes 17 hours of CME. But the sale on it only goes through March 14th. So, you have five more days if you're hearing this the day it drops.
Dr. Jim Dahle:
We're selling it at an early bird price. It's 10% off. The regular price is $779. The early bird price from now through March 14th is $699. All you have to do is go to whitecoatinvestor.com/cfe2022. You don't need a code until March 14th. Everybody gets it at that price. So go check it out.
Dr. Jim Dahle:
Thanks for those of you who are leaving us five-star reviews and telling your friends about the podcast. Our most recent review said, “Awesome financial podcast, five stars. Thank you, Dr. Dahle and Dr. Spath. I thoroughly enjoyed the addition and perspective from Dr. Spath. Excellent financial podcast with incredible content and actionable tips that has transformed my life. I will continue to recommend it to friends and family.”
Dr. Jim Dahle:
Thank you, Kevbot. I hope you're not a bot. I hope you're a real listener. Based on the review, I think you are. But for the rest of you, thanks so much for leaving us five-star reviews. It helps your colleagues find the podcast.
Dr. Jim Dahle:
Keep your head up, shoulders back. You've got this and we can help. We'll see you next time on the White Coat Investor podcast.
Disclaimer:
My dad, your host, Dr. Dahle, is a practicing emergency physician, blogger, author, and podcaster. He’s not a licensed accountant, attorney, or financial advisor. So, this podcast is for your entertainment and information only, and should not be considered official personalized financial advice.
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