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Dec 12, 2017

The White Coat Investor (AKA Jim Dahle, MD) talks debt, investing, philanthropy, investment philosophy, and investment strategies for different stages of your career.


Key Links from this episode


When Jim was an intern, he didn't know much about finance. His education started with this book


Books Jim recommends as foundational reading to understand personal finance


White Coat Investor advice for a medical student

  • Try to spend as little as possible. Every dollar you spend in medical school is going to be 3 dollars you pay back later
  • This is they time you're expected to be poor. Be frugal
  • Your specialty choice has a huge effect on your future financial life. Pick the one you will be able to work at the longest that makes you the happiest.


Advice to a young doctor

  • The year that matters most in your financial life is your first year as an attending physician. That year sets habits.
  • In med school and residency, have a plan in place for your first 12 attending paychecks.
  • In the first few years after residency, live the lifestyle of a resident while earning like an attending. This can lead to rapid savings and loan repayment
  • Embrace the habit of saving
  • Calculate your annual savings rate/what you're putting toward retirement. Amount of annual savings divided by gross income. That number should be around 20%
  • Look at your purchases from the point of view, "Will this make me happy?" The is the essence of budgeting: attaching your values to how you spend your money
  • Each month, review where your money is going. Is that where you want it to be going? If it's not, make some changes.
  • Don't buy on credit. Spending your money on payments is not what you want to be doing


Financial Advisors

  • Most doctors want or need a good financial advisor
  • The problem is that what we want is just to have a 'money guy' that takes care of all the money and we don't have to pay attention to it
  • To make sure you're getting good advice at a fair price, you'll need at least a basic level of financial education (or at least get a second opinion)
  • Be aware of the fees your advisor is charging. Expect at least 4 figure amounts


Starting residency. Buy or rent?

  • Buy a home when you are in a stable professional and social situation
  • there are high transit costs. It costs about 15% of the value of the home to make the 'round trip in and out of the home.About 5% to get in and 10 % to get out. If you're not there long enough for the home's appreciation to make up for that 15% loss, you're probably going to come out behind
  • Homes appreciate about 3% per year
  • If you're in a 3 year recency, changes are you won't break even
  • White Coat Investor recommends most residents NOT buy a home and rent


New Attending. Buy or rent?

  • There is a good chance you will change jobs in the first few years
  • This is not the most stable professional time
  • Make sure the job work for you before you buy a house
  • Rent for the first 6-12 months
  • You should still be living like a resident during this first  year
  • Buy a home when you are in a stable professional and social situation


The "Point of Enough"

  • If you don't define it, it will always seem like a number that's twice what you have
  • Take how much you spend in a year and multiply it by 25. When you have that in assets, you have reached finically independence.


Real estate investing

  • Owning actual property is to the only way to do it. Other options include.....
  • The easiest way is the REIT. Real Estate Investment Trust index fund.
  • Syndicated real estate


Pay Down Debt vs Invest in the Market

  • Doing either one will increase your net worth (unless the market tanks)
  • Focus on what percentage of your income is going toward building wealth rather than what compartment that wealth building is going into
  • Student loans have a few negative aspects: You can't deduct the interest when you're an attending; student loans tend to have high interest rates. Try to get rid of student loan debt within 2-5 years after residency


Jim's Ideas on Giving/Philanthropy

  • Good for the soul
  • Develops a stewardship mentality
  • Giving money away sends a message to the subconscious that you have enough - you can give some away and still be OK
  • It keeps you connected to the rest of the world
  • It can make your portfolio more tax efficient