Blog Review: The White Coat Investor
This is my first blog review. As you might suspect, personal finance and investing blogs have been a major influence in my own journey towards financial independence. So much so that I decided to start my own blog documenting my personal progress towards FI and share what I am learning with others along the way.
Of all the blogs I have read, the blog that has influenced me the most and played the largest role in my financial decisions is The White Coat Investor. I first found the blog during a period I was struggling and looking for answers for not just my financial future, but my life (you can read about that here). I can honestly say that the content in the blog has had a major positive impact on me, my life now, and my future plans. I feel like I owe a special thanks to Jim Dahle for all he has done for not only me, but all those who want to improve their financial situation and take their financial destiny into their own hands.
One of the main reasons I think I have really connected with this blog is I have a lot in common with the author, Jim Dahle, even though we have never met or spoken in person. We are both physicians, returned missionaries and members of The Church of Jesus Christ of Latter-Day Saints, love personal finance, and get fed up with some of the misinformation and salesman out in the world of investments and retirement planning. Given the similar backgrounds, much of what he has to say applies directly to me and I trust the information more.
With that, here is my review of the The White Coat Investor.
Overview
The author of The White Coat investor, Jim Dahle, is an emergency medicine physician in Salt Lake City, Utah. He started the blog back in 2011 after he grew sick and tired of financial professionals ripping him and others off.
The following is what he lists as the three-prong mission of The White Coat Investor:
- To help those who wear the white coat get a “fair shake” on Wall Street (i.e. boost financial literacy among high income professionals)
- To feed my entrepreneurial spirit (build something larger than ourselves, create jobs, and make a few bucks ourselves)
- Connect our community with the “good guys” in the financial services industry (thankfully there are a few of them out there)
As a subscriber and regular reader of the blog, I think it is pretty safe to say he has done a great job in accomplishing these three goals.
For those that are familiar with The White Coat Investor (WCI) today, it has grown to become more of a mini empire than just a blog. In addition to the blog, the WCI network includes a monthly investing newsletter, financial bootcamp 12 week email course, podcast, videocast, 2 books, Fire Your Financial Advisor online course, online forum, annual live conference, Twitter feed, Facebook group, and WCI Network of other blogs including The Physician on Fire, Passive Income MD, and The Physician Philosopher. There is even a WCI scholarship.
Other than the blog, I have found the podcast to be the most beneficial to me. It is on my list of a dozen or so podcasts that I listen to on a regular basis when driving in the car, mowing the lawn, or working out. If you enjoy listening to podcasts, this is one you should definitely consider adding to your list.
As the name The White Coat Investor implies, the blog and content are aimed towards doctors. This has expanded over time to include other high income professionals as well. That isn’t to say you can’t get benefit from the blog if you aren’t a doctor or other high income professional. However, I think it’s important to know that the content focuses more on financial planning and investment strategies relevant to high earners, as opposed to some more basic financial topics like getting out of debt and credit cards, as do other personal finance blogs.
Things I Like
While there are far too many helpful posts and topics, including disability insurance, student loan refinancing, public service loan forgiveness, and more on the blog to write about, here are some subjects covered on The White Coat Investor that I really like or have been particularly helpful for me:
Live Like a Resident
Anyone who has read the WCI blog or listened to the podcast is familiar with this mantra: live like a resident. For those that are less familiar with medical training, residency is the stage that comes after medical school where a physician learns their future specialty through essentially on the job training. Residents are expected to work very hard, for very long hours, for very little pay (at least compared to their future doctor salary). So although they have the M.D. degree, they are forced to live a relatively frugal lifestyle.
However, for most physicians this drastically changes after they complete residency and start getting those much larger doctor paychecks. Many fall prey to the temptations of lifestyle inflation and spend all that extra money on items they have gone without for all those years of medical training, such as a big new house, luxury vehicles, and fancy vacations. The problem is that most new physicians have a significant student loan burden that gets put on the back burner while they enjoy this new “financial freedom.” Rather than paying off their student loans and saving a substantial portion of their income, the elevated lifestyle has a tendency to continue year after year. And once you are living this way, it is extraordinarily difficult to cut back. This is one of the reasons doctors are notoriously poor with finances. You can see how easy it is for anyone to fall into the trap of living paycheck to paycheck, even with a higher income.
Dr. Dahle advocates a different approach. He recommends that right out of residency training, physicians still continue to “live like a resident.” If a physician continues to live a lifestyle they are already accustomed to, they can use all or most of the extra money from their new larger paychecks to aggressively pay off their student loans and then save for future financial goals like saving for a home down payment, a college education for their kids, and/or retirement.
I really like this idea because of the philosophy behind it: live below your means. We all have heard how important it is to live within your means. However, if you really want to build wealth and accelerate your progress towards financial independence, you need to live below your means, and if possible far below your means. The difference can then be used to aggressively pay down any debts, and once that is accomplished it can be saved and invested.
It doesn’t matter what job you have or what your salary is, if you can find a way to live below your means, and then save and invest the difference, you will build wealth.
Backdoor Roth IRA
The Roth IRA is one of the best tax advantaged accounts you can have. I have written about it in several posts, which can be found here. However, as your income increases, you become ineligible to contribute directly to a Roth IRA. This is a problem that most physicians and other high income professionals run into. In 2020 the income limit for any direct Roth IRA contribution will be $139,000 for single filers, and $206,000 for those married and filing jointly.
However, for those that run into this problem you can do what is called a backdoor Roth IRA contribution. This is accomplished by making a non-deductible contribution to a traditional IRA, and then converting it to a Roth IRA. Huh? How in the world do you do that? Sounds complicated. That’s what I said when I first heard about this. When I started working as a neurosurgeon in 2014 with a higher salary, my financial advisor at the time recommended I do this. When I asked how, he said you simply open an IRA, make the contribution, and then convert it. Huh? I never got any specific or detailed instructions. I had no idea what to do, so it never happened.
In 2018, when I started to get serious about my finances, I decided to take the bull by the horns and figure out how to do this. As most of us would do these days, I started doing google searches on how to open an IRA, how to do a backdoor Roth IRA, etc. The best source I found, hands down, was on the WCI blog. The two best posts for this are the Backdoor Roth IRA Ultimate Guide and Tutorial and 17 Ways to Screw Up A Backdoor Roth IRA. The guide takes you through every part of the process, step by step, including how to fill out IRS form 8606. The second post shows you the ways to make sure you don’t mess up.
If you are ineligible to contribute directly to a Roth IRA and are interested in learning how to make a backdoor contribution, I can’t recommend this source enough.
Learning how to do my own backdoor Roth IRA contribution not only helped me with what would otherwise be a relatively daunting financial task, but gave me the confidence to research and do other financial things on my own.
Opinions on Whole Life Insurance
The debate of term vs whole life insurance rages on in the world of life insurance and personal finance. Most of us have been pitched some form of whole life insurance, or one of its variants, at some point or another. And when someone is trying to sell it to you, they usually do a pretty good job of making it sound pretty amazing. Remember, that’s their job, to sell the product.
Many physicians and non-physicians alike end up buying some form of permanent life insurance. The vast majority, however, end up regretting the purchase and surrendering the policy, losing money in the process. Why is that?
Before you commit yourself to a product you will be paying for and attached to for your ENTIRE LIFE (thus the term whole life), I would recommend you read the posts about permanent life insurance on the WCI blog. These include The Statistic Whole Life Salesman Don’t Want You to Know, What You Need to Know About Whole Life Insurance, and 10 Reasons People Regret Buying Whole Life Insurance. He also has a series of 7 posts called Debunking the Myths of Whole Life Insurance.
Almost more fascinating than the actual posts are reading the comments in response to them, many from those in the insurance industry. It gets pretty heated and the lists of arguments go on and on, and can get very technical with all of the details and minutiae. In my opinion, if it was such a good investment it would be more simple, more transparent, and you wouldn’t have to try and defend it with jargon no one understands. But what do I know, I’m just a neurosurgeon. I personally like Warren Buffet’s advice: don’t invest in anything you don’t understand.
To be fair, if you are considering some type of permanent insurance product, you should research information from those on the other side of the fence on this topic. Preferably from someone that does not benefit financially from it. You can probably guess where I sit in regards to this debate, but I recommend you decide for yourself.
I’m really glad information like this is available, especially to physicians who are so heavily targeted by insurance salesman, to give a different opinion from what they are hearing from the person trying to sell them the product.
Lists of the “Good Guys”
Part of the WCI mission is to connect physicians and other high income professionals with the “good guys” in the financial industry. This includes financial advisors that charge flat fees and fair rates, insurance agents that sell fair products, good deals for student loan refinancing, and the best rates for home mortgage loans. Recommended providers of these and other services can be found under the “Recommended” tab in the main menu. In all honesty, I haven’t used this resource yet myself, but it is very valuable to know it is there and I would definitely consider those on this list in the future if the need arose.
“Thank You” on the WCI Podcast
This last point may seem a little silly or stupid to some, but I have actually found that I really like it and its been quite meaningful to me. It is actually applicable to the WCI podcast, not the blog.
At the beginning of each podcast, Jim takes a minute to thank those who wear the white coat for what they do. Being a physician himself, he understands the years of training and hard work, not to mention the student loan burden, that goes into becoming a physician. He also understands the day to day stresses and struggles we face with poor patient outcomes, difficult patients, increasing administrative oversight and tasks, an inefficient electronic medical record, and dealing with insurance companies. Despite this, many of us may go for days with no one saying thank you for what we do as physicians. So to just hear one person acknowledge what goes into this job and say thank you does actually mean a lot, even if it is from someone you don’t even know.
Things I Don’t Like As Much
If you can’t tell already, I’m a huge of fan of The White Coat Investor, so it is hard to find any criticisms. But if I had to say one thing, I would say that as time has gone on, the blog and the WCI network seems to be growing bigger and bigger, making it feel more like a business and less like a personal blog. There are many more guest posts and less of Jim Dahle’s posts week to week. It also seems that that the number of advertisements in the blog seems to be growing as well. And that it is ok. I understand that this actually is a business and I am very happy for the success Dr. Dahle has had, and for the number of people he is able to reach and help with the WCI network. I just happen to like the personal feel of a blog, which to me seems to be fading a little with time.
Who Would I Recommend This For?
The White Coat Investor blog contains a significant amount of useful information for anyone interested in increasing their financial literacy. You don’t have to be a high income professional to get a ton of value from the content. However, there is definite bias towards high income professionals and I think it is important to understand that up front.
If you are a high income professional of any sort, I would highly recommend the blog.
If you are not a high income professional, but are in a good financial position and want to learn more about slightly more advanced investing topics such as portfolio management, tax strategy, real estate, and asset protection, then I would highly recommend the blog.
If you are just starting your financial journey, don’t know many financial terms, and still have some consumer debt, I would recommend you hold on diving too deep into this blog yet, and save it for when you are in a stronger financial position.
Thanks for reading. I hope you are doing well in your progress towards reaching FI. If you have any questions or comments that might help other readers, please list them below. In the meantime, keep working towards Freedom Through FI!
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