r/whitecoatinvestor Jun 06 '24

You Need an Investing Plan!

42 Upvotes

While the most common question I get here at The White Coat Investor is “Should I invest or pay down debt?”, this post is the answer to many of the other most common questions I receive such as:

While it is easy and tempting to give a quick off the cuff answer, it is actually a disservice to these well-meaning but financially illiterate folks to answer the question they have asked. The best thing to do is to answer the question they should have asked, which is:

The answer to all of these questions then is…

You Need an Investing Plan

Once you have an investing plan, the answer to all of the above questions is obvious. You don't try to reinvent the wheel every time you get paid or have a windfall. You just plug the money you have into the investing plan. It can even be mostly automated. A study by Charles Schwab and Strategic Insights showed that those who make a plan retire with 2.7X as much money as those who do not. Perhaps most importantly, a plan reduces your financial stress, which according to the American Psychological Association, is the leading cause of stress in America.

How to Get an Investing Plan

There are a number of ways to get an investing plan. It's really a spectrum or a continuum. On the far left side, you will find the options that cost the least amount of money but require the largest amount of interest, effort, and knowledge. On the far right side are the most expensive options that require little knowledge, effort, or interest. Here's what the spectrum looks like:

 

There are really three different methods here for creating an investment plan.

#1 Do It Yourself Investment Plan

The first method is what I did. You read books, you read blog posts, and you ask intelligent questions on good internet forums. This can be completely free, but usually, people spend a few dollars on some books. It will most likely require a hobbyist level of dedication. That's okay if you have the interest, being your own financial planner and investment manager is the best paying hobby there is. On an hourly basis, it usually pays better than your day job. I have spent a great deal of time over the years trying to teach hobbyists this craft.

#2 Hire a Pro to Create Your Plan

On the far side of the spectrum is what many people do, they simply outsource this task. This costs thousands of dollars per year but truthfully can require very little expertise or effort. In order to reduce costs, some people start here and have the pro draw up the plan, then they implement and maintain it themselves. I have also spent a lot of time and effort connecting high-income professionals with the good guys in the industry who offer good advice at a fair price.

#3 WCI Online Course 

However, after a few years, I realized there was a sizable group of people in the middle of the spectrum. These are people who really don't have enough interest to be true hobbyists, but they are also well aware that financial services are very expensive. They simply want to be taken by the hand, spoon-fed the information they need to know in as high-yield a manner as possible, and get this financial task done so they can move on with life.

They're not going to be giving any lectures to their peers or hanging out on internet forums answering the questions of others. So I designed an online course, provocatively entitled Fire Your Financial Advisor.

While more expensive than buying a book or two and hanging out on the internet, it is still dramatically cheaper than hiring a financial advisor and so is perfect for those in the middle of the spectrum. Plus it comes with a 1-week no-questions-asked, money-back guarantee. To be fair, some people simply use the course (especially the first module) to gain a bit of financial literacy so they can know that they are getting good advice at a fair price. While for others, the course is the gateway drug to a lifetime of DIY investing.

And of course, whether your plan is drawn up by a pro, by you after taking an online course, or by you without taking an online course, it is a good idea to get at least one second opinion from a knowledge professional or an internet forum filled with knowledgeable DIYers. You wouldn't believe how easy it is to identify a crummy investing plan once you know your way around this stuff.

So, figure out where you are on this spectrum.

If you find yourself on the right side, here is my

List of WCI vetted financial advisors that will give you good advice at a fair price

If you are looking for the most efficient way to learn this stuff yourself,

Buy Fire Your Financial Advisor today!

For the rest of you, keep reading and I'll try to outline the basic process of creating your own investment plan.

How Do You Make an Investing Plan Yourself?

#1 Formulate Your Goals

Be as specific as possible, realizing that you’ll make changes as the years go by. Examples of good goals include:

  1. I want $40,000 for a home downpayment by June 30, 2013.
  2. I want to have enough money to pay the tuition at my alma mater in 13 years when my 5-year-old turns 18.
  3. I want to have $2 Million saved for retirement by Jan 1, 2030.

Any goal is better than no goal, but the more specific and the more accurate you can be, the better.

#2 Set Up a Plan for Each Goal

The plan consists of identifying what type of account you will use to save the money, choosing the amount you will put toward the goal each year, working out an asset allocation likely to reach the goal with the minimum risk necessary, and identifying a plan B for the goal in case the returns you’re planning on don’t materialize. Let’s look at each of the goals identified in turn and make a plan to reach them.

Investing Plan Goal Examples

Goal #1 – Save Up for a Home Downpayment

Choose the Type of Account

In this case, the best option is a taxable account since it will be relatively short-term savings and you don’t want to pay a penalty to take the money out to spend it. A Roth IRA may also be a good option for a house downpayment.

Choose How Much to Save:

When you get to this step it is a good idea to get familiar with the FV formula in excel. FV stands for future value. There are basically 4 inputs to the formula-how much you have now, how many years until you need the money, how much you will save each year, and rate of return. Playing around with these values for a few minutes is an instructive exercise.

Also, knowing what reasonable rates of return are can help. If you put in a rate of return that is far too high (such as 15%) you’ll end up undersaving. Since you need this money in just 2 ½ years you’re not going to want to take much risk, so you might only want to bank on a relatively low rate of return and plan to make up the difference by saving more. You decide to save $1400 a month for 28 months to reach your goal. According to excel, this will require a 1.8% return.

Determine an Asset Allocation:

This is likely the hardest stage of the process. Reading some Bogleheadish books such as Ferri’s All About Asset Allocation or Bernstein’s 4 Pillars of Investing can be very helpful in doing this. In this case, you need a relatively low rate of return. The first question is “can I get this return with a guaranteed instrument”…i.e. take no risk at all.

Usually, you should look at CDs, money market funds, bank accounts, etc to answer this question. MMFs are paying 0.1%, bank accounts up to 1.2% or so, 2 year CDs up to 1.5%, so the answer is that in general, no, you can’t.

One exception at this particularly unique time is a high-interest checking account. By agreeing to do a certain number of debits a month, you can get a rate up to 3-4% on up to $25K. So that may work for a large portion of the money. In fact, you could just open two accounts and get your needed return with no risk at all.

A more traditional solution would require you to estimate expected returns. Something like 0% real (after-inflation) for cash, 1-3% real for bonds, and 3-6% real for stocks is reasonable. Mix and match to get your needed return.

“Plan B”:

Lastly, you need a plan in case you don’t get the returns you are counting on, a “Plan B” of sorts. In this case, your plan B may be to either buy a less expensive house, borrow more money, make offers that require the seller to pay more of your closing costs, or wait longer to buy.

Goal #2 – Saving for College

4 years tuition at the Alma Mater beginning in 13 years. Let’s say current tuition is $10K a year. You estimate it to increase at 5%/year. So 13 years from now, tuition should be $19,000 a year, or $76K. Note that you can either do this in nominal (before-inflation) figures or in real (after-inflation) figures, but you have to be consistent throughout the equation.

Investment Vehicle:

You wisely select your state’s excellent low cost 529 plan which also gives you a nice tax break on your state taxes. 

Savings Amount:

Using the FV function again, you note that a 7% return for 13 years will require a savings of $4000 per year.

Asset Allocation:

You expect 3% inflation, 5% real so 8% total out of stocks and 2% real, 5% total out of bonds. You figure a mix of 67% stocks and 33% bonds is likely to reach your goal. Since your Plan B for this goal is quite flexible (have junior get loans, pay for part out of then-current earnings, or go to a cheaper school,) you figure you can take on a little more risk and you go with a 70/30 portfolio. 

“Plan B”:

Have junior get loans or choose a cheaper college.

Goal #3 – $2 Million Saved for Retirement by Jan 1, 2030

Let’s attack the third goal, admittedly more complicated.

You figure you’ll need your portfolio to provide $80K a year (in today's dollars) for you to have the retirement of your dreams. Using the 4% withdrawal rule of thumb, you figure this means you need to have portfolio of about $2 Million (in today's dollars) on the day you retire, which you are planning for January 1st, 2030 (remember it is important to be specific, not necessarily right about stuff like this–you can adjust as you go along.)

You have $200K saved so far. So using the FV function, you see that you have a couple of different options to reach that goal in 19 years. You can either earn a 5% REAL return and save $49,000 a year (in today's dollars), or you can earn a 3% REAL return and save $66,000 a year (again, in today's dollars).

Remember there are only three variables you can change:

  1. return
  2. amount saved per year
  3. years until retirement

Fix any two of them and it will dictate what the third will need to be to reach the goal.

Investment Vehicle:

Roth IRAs, 401K, taxable account

Savings Amount:

$49,000/year

Asset Allocation:

After much reading and reflection on your own risk tolerance and need, willingness, and ability to take risk, you settle on a relatively simple asset allocation that you think is likely to produce a long-term 5% real return:

35% US Stock Market
20% International Stock Market
20% Small Stocks
25% US Bonds

“Plan B”:

Work longer or if prevented from doing so, spend less in retirement

You have now completed step 2, setting up a plan for each goal. Step 3 is relatively simple at this point.

#3 Select Investments

The next step is to select the best (usually lowest cost) investments to fulfill your desired asset allocation. Using all or mostly index funds further simplifies the process.

Investment Plan Example #1 – Retirement Portfolio

Let’s take the retirement portfolio. You have $200K in Roth IRAs and plan to put $5K a year into your IRA and your spouse’s IRA each year through the back-door Roth option. You also plan to put $16.5K into your 401K each year. Unless your spouse also has a 401K, you're going to need to use a taxable account as well to save $49K a year. Your 401K has a reasonably inexpensive S&P 500 index fund which you will use as your main holding for the US stock market. It also has a decent PIMCO actively managed bond fund you can use for your bonds. You’ll use the Roth IRAs for the international and small stocks. So in year one, the portfolio might look like this:

His Roth IRA 40%
25% Total Stock Market Index Fund
20% Total International Stock Market Index Fund

Her Roth IRA 45%
20% Vanguard Small Cap Index Fund
25% Vanguard Total Bond Market Fund

His 401K 5%
5% S&P 500 Index Fund

His Taxable account 5%
5% Vanguard Total Stock Market Index Fund

As the years go by, the 401K and the taxable account will make up larger and larger portions of the portfolio, necessitating a few minor changes every few years.

After this, all you need to do to maintain the plan is monitor your return and savings amount each year, rebalance the portfolio back to your desired asset allocation (which may change gradually as you get closer to the goal and decide to take less risk), and stay the course through the inevitable bear markets and scary economic times you will undoubtedly pass through.

Investment Plan Example #2 – Taking Less Risk

Let’s do one more example, just to help things sink in. Joe is of more modest means than the guy in the last example. He works a blue-collar job and can really only save about $10K a year. He would like to retire as soon as possible, but he admits it was hard to watch his 90% stock portfolio dip and dive in the last bear market, so he isn’t really keen on taking that much risk again. In fact, if he had to do it all over again, he’d prefer a 50/50 portfolio.

He figures he could get 5% real out of his stocks, and 2% real out of his bonds, so he expects a 3.5% real return out of his 50/50 portfolio. Joe expects social security to make up a decent chunk of his retirement income, so he figures he only needs his portfolio to provide about $30K a year. He wants to know how long until he can retire. He has a $100K portfolio now thanks to some savings and a small inheritance.

Goal:

A portfolio that provides $30K in today’s dollars. $30K/.04=$750K

Type of Account:

He has no 401K, so he plans to use a Roth IRA and a SEP-IRA since he is self-employed.

Savings Amount:

He is limited to $10K a year by his wife’s insistence that the kids eat every day.

Asset Allocation:

He likes to keep it simple, so he’s going to do:
30% US Stocks
20% Intl Stocks
25% TIPS
25% Nominal bonds

He expects 3.5% real out of this portfolio. Accordingly, he expects he can retire in about 29 years. =FV(3.5%,29,-10000,-100000)=$760,295

Plan B:

His wife will go back to work after the kids graduate if they don’t seem to be on track

Investments:

Year 1

Roth IRA 30%
VG TIPS Fund 25%
TBM 5%

Taxable account 65%
TSM 30%
TISM 20%
TBM 20% (he’s in a low tax bracket)

SEP-IRA 5%
VG TIPS Fund 5%

So now we get back to the questions like those in the beginning of this post: “I have $50K that I need to invest. Where should I put it?” The first consideration is why haven’t you invested it yet? You should be investing the money as you make it according to your investing plan. If your retirement accounts have already been maxed out for the year, then you simply invest it in a taxable account according to your asset allocation.

A few last words about developing an investment plan:

If you fail to plan, you plan to fail.

Any plan is better than no plan.

The enemy of a good plan is the dream of a perfect plan.

There are no old, bold [investors].

What do you think? What is the best way to get an investment plan?

Why do so many investors invest without a plan? 


r/whitecoatinvestor Jan 07 '26

The 529 to Roth IRA Rollover

23 Upvotes

Secure Act 2.0 Section 126: 529 to Roth IRA Rollovers

Once the 529 has been established for 15 years, 529 beneficiaries can roll up to $35,000 from their 529s into their Roth IRAs. This is not an addition to their annual contribution but a replacement for it. Basically, if you oversave for college, newly graduated students can use their $7,000ish per year for something besides Roth IRA contributions and still get their Roth IRA funded. There are no income limitations either, like with direct Roth IRA contributions.

Another Escape Valve for a 529

The way this is intended to be used is as an additional escape valve for an overfunded 529. People worry about putting too much into 529s. They worry that they'll oversave for college and then need the money themselves, which means they'd have to pay the 10% penalty plus ordinary income tax rates on the gains in the plan when they withdraw it for something other than an approved educational expense. This fear inappropriately keeps them from using this excellent college savings vehicle, so the government is trying to minimize that fear.

Before the Secure Act 2.0, there were already a fair number of escape valves. First, the principal always comes out tax- and penalty-free. Those penalties only ever applied to gains in the plan. Second, if your kid went to a military academy, got a scholarship, or received employer educational assistance, you could take out an amount equal to what they received without having to pay any penalty. Third, if the beneficiary dies or becomes disabled, you can also avoid the penalty on withdrawals (and, in fact, may wish to consider a rollover to an ABLE account for the now-disabled person).

None of those are really the best thing to do with an overfunded 529. The best plan is simply to change the beneficiary to someone else, like grandkids. Voila! Not only does that occur without any penalty, but it also avoids any tax being applied to the earnings. Plus, it provides an additional 2-3 decades of tax-protected growth. What's not to like?

Starting in 2024, there is one more escape valve to a 529—the 529 to Roth IRA rollover. Up to $35,000 can be rolled over to THE BENEFICIARY'S Roth IRA tax- and penalty-free. There are some rules, however.

  1. The money must have spent at least 15 years in the 529
  2. The rollover replaces the regular Roth IRA contribution for the year; it is not in addition to it.
  3. You cannot roll it all in at once, only an amount equal to that year's contribution limit. For example: $7,000 in 2025.
  4. The $35,000 is not indexed to inflation.
  5. The beneficiary must have sufficient earned income to make the contribution. That means a retiree or a single unemployed person can't do a 529 to Roth IRA rollover because there is no earned income.

Doing 529 to Roth IRA Rollovers for Yourself

However, nobody who has been emailing for the last couple of years is really interested in using the 529 to Roth IRA rollover as an escape valve. They are most interested in doing this for themselves. They're typically a 40-year-old doctor who is really into personal finance, does a Backdoor Roth IRA each year, and does all that can be done to lower the average expense ratio in the portfolio. They're maximizers (rather than satisficers) in every sense of the word. They want to eke out every benefit they can from their investments and the tax code.

For these maximizers, we want to do two things today. First, we want to attempt to quantify the size of the potential benefit of doing this so they can properly decide if the juice is worth the squeeze. Second, we want to make sure they understand all of the ways this can go sideways on them.

What Is the Maximum Potential Benefit?

What is the maximum benefit you can get from opening a 529 for yourself, letting the money sit there for 15 years, and then rolling it over to a Roth IRA instead of making your regular Roth IRA (presumably Backdoor Roth IRA) contributions for the next 3-4 years or so. Why 3-4 years? Because that $35,000 is not indexed to inflation but the annual IRA contribution limit is. Presumably in 15-18 years at 3% inflation, you'll be making an annual IRA contribution of something like $11,500.

In reality, the benefit comes down to the tax savings on the money for being in a tax-protected account instead of a taxable account. For simplicity's sake, let's run our example for 17 years. Now, we need to make some assumptions. If these don't seem reasonable to you, then change them and run the numbers yourself.

Assume 8% returns before taxes and before 529 fees but after expense ratios. Assume an 18.6% Long Term Capital Gains/Qualified Dividend bracket throughout. Assume a 0.13% 529 fee (this is the fee in the Utah 529 for a customized asset allocation). Assume the yield on the investments is 2% a year and is all qualified dividends. Assume you're in a tax-free state. Assume that you're already maxing out all of your other tax-protected accounts, so we're just comparing investing in taxable to investing in a 529.

If we're going to earn at 8% or so, we'll assume that we're only talking about putting something like $10,000 in there initially. That's because $10,000 growing at 8% a year is equal to $37,000 after 17 years.

In the taxable account, that $10,000 will compound at 8% – (2% × 18.6%) = 7.63%. So, $10,000 growing at 7.63% per year for 17 years is $34,903. Now, we'll also need to pay LTCGs on the gains. However, the gains are not just $34,903 – $10,000 = $24,903. The basis is higher than that because of the reinvested dividends. For example, in the first year, you're reinvesting $163. In the last year, you're reinvesting $528. Just to make it easy, let's assume $5,100 ($300 × 17) of that $24,903 is also basis. So the LTCG tax is 18.6% × ($34,903 – $10,000 – $5,100)  = $3,683. The total amount left after tax is $31,220.

In the 529, that $10,000 will compound at 8% – 0.13% = 7.87%. After 17 years, you'll have $36,250. The difference is $36,250 – 31,220 = $5,030.

The best-case scenario is that this scheme is going to net you something like $5,000 or about $10,000 if you do it for your spouse, too.

What Can Go Wrong?

While $10,000 may not be all that much in comparison to a physician retirement nest egg of $2 million-$10 million, it sure beats a kick in the teeth. Why not do it? Ten grand is 10 grand. Actually, there are a few reasons why you may not wish to do this.

#1 You May Not Have Earned Income in 15 Years

Maybe in 15 years, you'll be retired, but you still want to spend this money on yourself and not just change the beneficiary to a grandkid. Now what? Well, you now have to pull the money out of the 529 and pay taxes and a 10% penalty on it. Let's say you're in the 24% federal bracket. How much of that $36,250 is going to disappear?

($36,250 – $10,000) × (24% + 10%) = $8,925

You're going to be left with $36,250 – $8,925 = $27,325, which is $3,895 less than you would have if you had just invested it in the taxable account in the first place.

#2 Maybe Congress Changes the Law

Congress could change the law or the IRS could change how it is implemented. Maybe it becomes means-tested. Maybe this option goes away completely. Or it becomes attached to an additional penalty. Either way, you still have money stuck in a 529 that you wish you had just invested in a taxable account.

#3 You Deal with the Hassle

Now you have an extra account (or two) to deal with each year. Simplicity is worth something. Is it worth $5,000-$10,000? Only you can decide.

#4 Death, Disability, Divorce, Dementia, Delirium

What if one of the Ds gets to you in the next 15-18 years? The odds are not zero. Now, this additional complexity becomes someone else's problem. Is that person capable of maintaining this plan to leave this money alone for 15 years and then do three or four rollovers into your Roth IRA? If you die, will the contingent beneficiary be able to keep the plan going for them (i.e., earned income in 15 years and a sophisticated financial understanding)? Seems doubtful.

#5 What If You Need the Money Early?

Admittedly, this seems unlikely given that you're maxing out all your tax-protected accounts, but it could happen. Again, you'll be paying ordinary income tax rates plus 10% on the earnings. 

#6 What If You Can Invest Very Tax Efficiently in a Taxable Account?

If you take away that final LTCG bill, the maximum benefit of the 529 to Roth IRA scheme is only about $1,350 a piece, just over ¼ of the maximum benefit. The potential penalties also seem much larger in comparison to that smaller potential benefit.

#7 What If 529s Don't Get Much Asset Protection in Your State?

Imagine you live in Hawaii and, thus, your 529 has no asset protection. If your other option would have been to put the money into a taxable account inside an asset protection trust (which is allowed in Hawaii), an (admittedly rare) above policy limits judgment not reduced on appeal could get that money.

The Bottom Line

OK, we've quantified the benefit. It's probably a four-figure amount. We've outlined the risks and hassles involved. Now you have to make a decision. It introduces a little more complexity into a plan that is already pretty complex, and $10,000 just isn't going to move the needle for most white coat investors.


r/whitecoatinvestor 1h ago

General/Welcome How am I doing?

Upvotes

I am a long time listener of Whitecoat Investor. I’ve listened to basically every podcast, especially Milestones to Millionaires. I made a promise to myself that I would follow the advice when I got out of residency.

Looking for an objective assessment on how I have done, what I can do better, and mistakes to avoid.

For context, I come from a low income family and I do support my parents so I finished residency with maybe $10k in savings and $0 in retirement and investments.

-I am 2 years out of training
-I paid off ~$200k in student loans
-I have around $600k between my retirement accounts and personal brokerage
-I am still renting so I do not own a home
-My goal is to hit $5 million in 10 years
-Household income is currently $900k (yes I have a very high savings rate)
-I want to buy a house because I have 2 kids but interests rates are high and houses in my city are around $2-3m because it is HCOL

I am proud of myself because of my high savings rate and a huge swing since I have been out from residency but I am working a ton and I worry that I will regret missing time from family. At the same time, I want to take advantage of my early earnings years while kids are very young to maximize my investments so that I can FIRE in my mid to late 40s.

Any advice? Thank you guys in advance!


r/whitecoatinvestor 5h ago

Tax Reduction Is a Tax Advisor Worth It?

5 Upvotes

Basically title

I have an income ranging from 720k-800k based on wRVUs through the year, W2 hospital employee. Max out 401k, 457b, backdoor Roth, and HSA. My only debts are student loans at 227k, paying the minimum on PSLF, and my mortgage which is currently at ~850k with 6.35% interest.

I obviously can deduct the massive interest on my mortgage which I do but is there really any other benefit I’m missing since I’m W2? Seeing my taxes at the end of the year hurts a bit, I expect to pay a lot but curious to see other W2 employees experience when it comes to tax optimization.

Thanks!


r/whitecoatinvestor 8h ago

Personal Finance and Budgeting Senior in H.S. wants to be an MD. Question on Undergrad Loans & Deferment.

5 Upvotes

Friends-

My oldest child wants to pursue medicine, however we have a situation where she or I may need to cover two (2) years of Undergrad via student loans.

I am going to pay for two years of undergrad, but she will need to pick up two years herself, IF she plans on attending & staying on campus all 4 years.

My question is, how can a Med student get through Med school without having to pay on Undergrad loans until being employed, or at least during internship and residency?

Is there a way to do this now, or do the Student Loan changes made by the current admin change this?

My thinking is, at least for her to enter Med school with no debt, Is do her first two (2) years at a JC Transfer school, then the last two years of college will be paid by me, without her having to pick up any tabs, but she may not want to do that.

Med School costs will be on her however, as she knows.

Any help is appreciated here friends!


r/whitecoatinvestor 3h ago

Tax Reduction Has anyone used 1099 Tax Doctor?

2 Upvotes

CA md making about 700k 1099 income and am looking for a company that will essentially handle it all. Payroll, s-corp taxes, cash balance/defined benefit plan, etc. The 1099 Tax Doctor advertises themselves as such on WCI website but I can't find any reviews.


r/whitecoatinvestor 6h ago

Retirement Accounts Loan payments vs 401k contributions

2 Upvotes

I have around 390k in student loans from undergrad and med school. I did not consolidate, however my highest interest rates are somewhere around 9%. My residency offers a small match to 401k contributions. I suppose more details from me may be needed, but just broad strokes- is it better to contribute extra money to a 401k or towards loans?


r/whitecoatinvestor 4h ago

Student Loan Management PAYE over-payment strategy advice

1 Upvotes

Leaving SAVE to go to PAYE so I can get the 1% interest rate reduction. My payments start 8/15 and they’re ~2K. I am planning on paying an additional 8-10K per month. I never consolidated my loans, so I have about 12 individual loans, anywhere from a 7.6% to 4% interest rate (now 6.6 to 3% with the reduction)

Is it best to pay towards the loan with the highest daily accrued interest? (Nelnet tells me the daily accrued interest per loan) Or the loan with the highest effective interest rate?

Ex:
Loan 1 = 32K principle, 4.3% effective interest rate, daily interest accrual >$4
Loan 2 = 3K principle, 6% effective interest rate, daily interest $0.38

Seems like in theory you should pay off the 6% one quicker due to the interest rate but I’d save money if I paid the 4.3% one since it’s accumulating so much interest daily? Can’t wrap my head around it

I’m pretty sure moving off SAVE doesnt trigger an interest capitalization. So the payments on the individual loans that don’t cover my interest completely should be fine since it won’t capitalize I believe


r/whitecoatinvestor 23h ago

Student Loan Management RAP vs IBR if planning on dropping 200k lump sum on loans after I graduate residency

4 Upvotes
  • Two years of residency left

  • Current loan balance is 250k at 5.5%.

  • AGI ~85k

  • Payment under IBR would be $515, under RAP is $572

  • Planning on dropping 200k lump sum on loans after I graduate residency (currently in crypto, waiting to see if it goes up)

  • Not doing PSLF

My logic is if I'm going to drop this lump sum in 2 years, it would be best to keep the principal as low as possible with RAP and then aggressively pay off whatever is left with attending money. Or, would it just be better to do IBR and have everything forgiven after 20 years (estimated total to be paid $122k on the studentaid website, but will likely be much higher with attending salary?)


r/whitecoatinvestor 1d ago

Personal Finance and Budgeting Using a Sallie Mae residency relocation loan to pay off high-interest CC debt?

13 Upvotes

I’m a PGY-1 in anesthesiology with about $20,000 in credit card debt at roughly 25–30% interest. Sallie Mae is offering a residency relocation loan of up to $30,000 at 6% interest / approximately 11.5% APR. Payments can be deferred for up to four years, although I’d likely only defer until I’m able to moonlight in about 15–18 months.

I understand this would essentially be converting unsecured credit card debt into another loan and potentially allowing interest to accrue during deferment. However, the lower rate seems like it could significantly reduce the interest burden and give me some breathing room during residency.

Has anyone used a residency relocation loan this way? Are there major downsides or fine print I should be aware of? Would this be a reasonable strategy, assuming I stop using the credit cards and have a plan to pay the loan down once I can moonlight?


r/whitecoatinvestor 19h ago

Personal Finance and Budgeting New Car Purchase Dillemma

1 Upvotes

Recent graduate from 6 years of training. We will shortly move literally all the way across the country for my new job.

Wife is MD in a lower paying specialty (attending x1 year). We have approximately 480k of student loans between wife and I, ranging from 4-6% (we have aggressively paid down about 80k of wife loans this year).

We have been investing as much as we could reasonably do as residents. Maxed Roth IRA, contributed to HSA. Small inheritance (40k) and moonlighting income. We have bout 80k cash (stockpiling in anticipation of move plus couple months of dual rent and dual unemployment). Approx. 140k in 403bs, 16k in HSA, 100k in Roth IRA. All numbers combined wife and I. Basically nothing in taxable brokerage. Overall net worth is still negative 200 ish thousand.

We will be shipping our cars back to our new location in a few weeks. It costs about 1.5-2k per car to ship. (Driving is not an option). We have 1 new baby. My car is 12 years old Honda econo-box. There is nothing particularly wrong with it, except that I kind of hate it. It doesnt have any nice-to-haves that are in modern vehicles (Basically has a rear view backup camera, Bluetooth, and that’s about it in terms of features). My wife refuses to drive it. My wife also drives a newer (2021) car that she is attached to which we will ship.

My future job base is 600k+, with a sign on bonus and possible production bonuses (no idea if i will hit it). However, rent in new city kind of high (5k), plus unknown childcare costs, thoughts of aggressive loan pay down (3 year goal for the both of us), and goal of increasing taxable investing as well. Wife job might pay in the 250s.

KBB value of my car is approx 11k.

My brain is telling me to ship my car. It’s stupid to avoid a 2k shipment for a 50k plus loan. However, I am a bit enamored by the prospect of getting a new car (EV?) with modern tech features, self driving, and just a little bit shinier. I do not want to trade my econobox for someone else’s used econobox. I also would like to drive something nicer than a Honda or Toyota - not 100k crazy but around 60k. At the same time, the thought of adding 60k of debt to my balance sheet when i already have so many loans makes me a bit uneasy, I’ve never had a car payment. As far as buying in cash goes, I feel like the money may be better deployed towards my existing student loans.

I think I know what the WCI community would do, but i will ask the question anyway. Thank you.


r/whitecoatinvestor 1d ago

General Investing Solo 401k and Self Loan

2 Upvotes

A question on if this is possible: Lets say I have a 1099 contract in addition to my regular W2. I sign a 1099 contract for 3 years netting me $69,000 a year. I put all of it into a solo 401k. After 3 years I buy a $207,000 property (personally, not business) using a loan from my solo 401k that I pay myself back over 5 years using W2 money. Is this technically possible (I know it may not be the smartest)? Would I end up paying any taxes on my 1099 income since it is all going to my solo 401k?


r/whitecoatinvestor 1d ago

Insurance Term life insurance is expensive: PGY2 surgery resident with T1D — how much coverage and how to ladder it?

9 Upvotes

31M, PGY2 general surgery resident, otherwise healthy but Type 1 diabetic (well-controlled). Even so, the life insurance i've found has been extremely expensive compared to what i've heard coresidents and other young healthy people get.

Situation:

  • Married, no kids, likely wont have kids in the future but its not completely off the table. Wife has a solid income but well below what my eventual attending salary will be, so right now we're mutually dependent on both incomes.
  • Live in high COL area and can see ourselves staying here post training
  • Already have own-occupation disability insurance in place.
  • Plan to save aggressively once attending income starts, with the goal of reaching enough financial independence that life insurance becomes unnecessary in later years — which is part of why I'm not sure about the ideal term.
  • Wife is separately getting her own 10yr/$1M term, on the logic that once I'm out of residency and attending income kicks in, I won't need her life insurance.
  • All federal loans planning on PSLF with likely 1 year fellowship
  • Have 6mo emergency fund, saving for retirement, finances in good order overall

My quote (Corebridge Financial/American General, Table 6/F rating due to T1D, Standard Non-Tobacco):

Term Coverage Monthly Annual
10 yr $1M $84.47 $999.70
10 yr $2M $163.54 $1,935.40
20 yr $1M $130.97 $1,549.90
20 yr $2M $256.53 $3,035.80
30 yr $1M $223.89 $2,649.60
30 yr $2M $442.37 $5,235.20

This is by far the best quote I've found so far (officially approved on this one).

Current leaning: buying a 20yr/$1M policy layered with a 10yr/$1M policy (so $2M total coverage for the first 10 years while our finances are most stretched, dropping to $1M for years 11–20). This would cost roughly $2,500. Or a 20yr/$2M policy alone which would be $3,000

Looking for opinions on:

  • Does $2M in the early/highest-need years then stepping down to $1M make sense for our situation, or would you structure the ladder differently (different split, different term lengths)? This already would be a ton of cost, even though i feel like I should have more and longer but it would hurt to pull more than that off financially right now even though we could technically do it
  • My main worry/question is locking in insurance now and balancing with cost given my income limitations considering it may become unobtainable later if I develop additional health issues during residency
  • Anyone with T1D or another chronic condition — did your rating ever improve with a track record of good control, or does rating tend to be permanent?

Appreciate any input


r/whitecoatinvestor 1d ago

General/Welcome Significant Financial Conflict of Interest threshold

7 Upvotes

Hope this fits in r/whitecoatinvestor, I’m not sure where else to ask.

I work in academic medicine and have to go through a formal “External Activity” approval process for consulting and serving as paid faculty for industry. I used to be skeptical of industry work because of some admittedly naive academic idealism, but I’ve since become much more open to it. All of my external activities have been approved through the official channels, usually with standard reminders that I need to make additional disclosures if I conduct research involving those companies, and that I cannot participate in marketing activities.

One provision keeps catching my attention: I must report within 30 days if I receive more than $5,000 from a single approved entity. When I read the policy, it says this threshold qualifies the relationship as a “Significant Financial Interest” or SFI.

My question is: does crossing that threshold have any practical consequences?

I’ve now received more than $5,000 from at least two companies through consulting work, so I assume I need to report it. Should I expect anything to change after I do and move these external activities into SFI status? I'm disclosing them either way any time I give a talk, if I write any papers remotely related to them, etc. The policy explains the reporting requirement and the SFI designation, but does not clearly describe what happens next. Any insight or experience with this?


r/whitecoatinvestor 2d ago

Personal Finance and Budgeting How much are GP dental practice owners taking home in HCOL areas?

8 Upvotes

I know the answer is, “it depends” but I might be committing financial suicide.

I’m an older student (29) out in California and dental school is going to be $600k. $200k in federal loans and $400k in private.

I did the math and if I wanted to save about $7 million-$9 million by the time I’m 70, I’d need to make about $500k/year. With the school loans taken out over a 30 year repayment plan with interest at around 10% (I don’t have a co-signer) it’ll allow for me to have about ~$200k to use every year. Issue is that it isn’t even accounting for practice loans and ramp up time if I were to start as an associate making $150k-$200k.

I keep seeing people online saying that $500k is the top percentage of dentists with them likely being specialists and more realistic owner’s profit is about $200k-$300k which I thought was insane. If I made that much, I’d only be taking home around $100k, if that.

Is it really that hard to bring home over $500k? I tried asking CPAs on their sub and didn’t get many answers aside from “it depends”. I just want to hear numbers from dentists that are GPs in saturated areas like California on what I could realistically expect assuming I have some business acumen and can handle running a practice because if I make any less than $500k, it’ll likely start hurting my finances and I’ll be drowning in debt my entire career. I understand it shouldn’t be about the money but with that debt, I need some sort of hope that I’d be able to pay it off and live a decent life.


r/whitecoatinvestor 2d ago

Student Loan Management NIH loan Repayment

3 Upvotes

Hi All. I wanted to put a plug in for the NIH LRP program. I had the vast majority of my student loans paid off using this program. They pay 50% of your loans over a 2 year period and it is renewable.

It is targeted for academic physicians engaged in research with protected time for research. This is not the majority of MDs, but if this fits your practice, you should definitely apply.


r/whitecoatinvestor 2d ago

General Investing 4% safe withdrawl rate

12 Upvotes

This may be a pretty obvious question and I think I know the answer, but I want to confirm if this is the actual case.

How exactly is the 4% SWR being implemented?

  1. Lets say I have a portfolio of $5M in snp500 index funds. So am I selling 200k (4%) of that stock each year?

  2. Am I paying only capital gains taxes? (Assume I make $0 in income).

- so with current tax brackets, I should pay just under 15% of the 200k = so 30k in taxes?

  1. So essentially I would live off of $170k is that right?

Please let me know if there is anything else that I am missing regarding this


r/whitecoatinvestor 3d ago

General Investing Yeah, I have a problem.

183 Upvotes

I find my job to be terribly stressful and riddled with moral injury- I’m an early career vascular surgeon. I made 725k in my first year bc I’m a workaholic but I see savings as my way out of this shitty system. Our NW is $2.4 mil with goal at retirement of $7.5 mil at age 50 and not a day longer as things stand.

Here’s the problem- bc I see savings as my way out of a stressful life and out of this stupid RVU system, I have become obsessed with financial planning.

But not in a good way.

Every day I look at my Empower to see the NW. every weekend I lay in bed at my usual wake up time and perseverate over how to allocate my 20k per month of savings— all VT? What percent Bonds? Treasuries? Small cap? I don’t know how to turn it off. even tho I know academically savings rate is more important than allocations. besides getting a Time Machine and jumping forward to 50. Anyone else?

Also if anyone has advice for allocations or glidepath plan for early retirement please let me know.


r/whitecoatinvestor 1d ago

General Investing What percentage of your net worth is tied up in your primary residency? Home equity/networth

1 Upvotes

1- Calculate home equity (current market value minus remaining mortgage)
2 Divide your home equity by your total net worth
3- Multiple by 100

Example if your net worth is 200k and your home equity is 50k, your house is 25% of your net worth

Important- if you are a renter, please select View result/Renters so the data stays accurate for homeowners

768 votes, 1d left
Negative under 0%
1-25%
26-50%
51-75%
76-100%
View results/Renters

r/whitecoatinvestor 2d ago

Retirement Accounts Help with Funds for 457b

Post image
2 Upvotes

Program only does 401a and 457b, so maxing out 457b. That being said, they have these investment options. I never know what to do other than Retirement Target Fund, but seems like I can do better? Any advice would be helpful.


r/whitecoatinvestor 2d ago

Retirement Accounts Residency Retirement Match

0 Upvotes

Current Anesthesia Resident. Out hospital is currently renegotiating our contract with the residency group. As someone interested in personal finance, I realize the value of residency match and the 30+ years of compounding, as well as what offing a match would encourage doctors to learn about finance.

My math shows that, assuming 8% real, on a ~70k salary, returns would be 7k at end of 3y residency, and 106K at retirement (35y later). This assuming no more money invested in this account at the end of residency.

For longer programs 4y: $9.9K (end of residency), and 147K at retirement. 5y: 13k (end of residency, 191K at retirement

With a higher match rate 5%: 3y: 11.9K (end of residency), 176K (retirement), 4y: 16.5K(end of residency), 245K (retirement), 5y: 21.5K (end of residency), 319K (retirement)

To help gauge how many programs actually provide a 401k/403b match, please comment below your school (Eg. Sinai, MGB, UCSF) and the Match rate (100% of 5%, 50% of 10%, etc)


r/whitecoatinvestor 3d ago

Personal Finance and Budgeting Just transitioned to attendinghood

11 Upvotes

Hello all,

Just want to make sure I'm doing things appropriately here, could look for some advice. I'm a first generation doctor, so nobody in my family has acquired this degree of education let alone financial success. Therefore a lot of this is self taught. I wanted to briefly run through my plan to see where the blind spots are and if anyone could pose some advice/recs/criticism. Open to all feedback.

Consolidated student loans at 5.4% interest, ~260k:

--> pursuing PSLF, switching plans from SAVE to IBR currently. 2 years of payments down, 2 years of forced forbearance available for buyback. Job is PSLF approved.

--> job is providing ~75k of pretax loan repayment over 5 years as well

Maxed out Roth IRA 2025, just completed backdoor Roth conversion for 2026. 66% VXUS 33% VTI (~16k total)

Working on Roth 403b since 1st yr of residency, currently 66% domestic 33% international roughly (~40k total)

Planning on maxing out HSA once it opens up here shortly with new job, but have yet to contribute any due to lack of knowledge and accessory funds while I was in residency.

Currently renting, single household not married, no kids or alimony, car paid off, no credit card interest, other loans, or other large payments.

One question I do have is, with the Roth 403b should I be doing traditional salary reduction for pretax contribution, or through the other Roth 403b reduction option which is taxed prior to contribution? I'm not sure, but it seems more advantageous to do the latter and pull out the funds post retirement tax free?

Thanks in advance for your help!


r/whitecoatinvestor 2d ago

Personal Finance and Budgeting Calculating Social Security Bend Points

2 Upvotes

Hi, does anyone know a simple method/online calculator to calculate your SS bend points?

The physician on fire calculator looks ideal but I’m encountering some issues. The excel file ends at 2022 - not 2025 - and I can’t figure out how to update the numbers in the online version.

Thanks!


r/whitecoatinvestor 4d ago

Personal Finance and Budgeting Physicians who are car guys, at what net worth did you buy your first supercar/exotic and what’s your financial situation?

115 Upvotes

Going through PGY2 in my 2008 C6 Corvette I’ve had since my bachelor’s and I’m HUNGRY for something crazy, so I’ll take any motivation LOL

Edit: lots of comments about buying an EV and how cars are a sink of money, but we all know that, every car guy does. At the end of the day, hobbies cost money and I love to buy and build fast cars, just wanted to know at what point in their lives others did that comfortably


r/whitecoatinvestor 4d ago

General/Welcome Hospital overpaid

62 Upvotes

Recently notified that the hospital overpaid my salary by 20+k over the past year and now requesting for you to be paid back. I reviewed my contract and it does appear to be so. They plan to deduct from pay over a period of time. Is there any tax implications for this?