Charitable Giving and Bonds
Today on the podcast, Dr. Spath and Dr. Dahle answer your questions about two pretty different topics. First, they tackle charitable giving. They get into charitable gift annuities and donating appreciated stock, and they touch on if churches should have to be more transparent about how they use our donations. Then, they take a turn and get into all things bonds. I Bonds, muni bonds, TIPS, asset allocation, and what accounts to put your bonds in, to name a few. We also hear from a listener who attended WCICON last year and will be attending again this year. She shares her experience and why she recommends you all join us in Phoenix in March!
It's one of my favorite times of year. This doesn't run until the first week of January, but I'm thinking a lot about charity as we record it. We're going to be talking a lot about charity on this episode. We tend to back-load our charitable giving for December just because it tends to be more convenient for us. Especially nowadays, we've got to move money around a few places using a Donor Advised Fund. So, we end up doing almost all of our giving in December. Charity's very much been on my mind. We had our meeting with our kids a couple of weeks ago, and we actually did the physical allocating from the DAF literally yesterday. This was Katie's first time putting in all the orders to distribute that money from the Donor Advised Fund. We just got done doing a whole bunch of charitable giving.
We're going to let The White Coat Investor audience help with our charitable giving this year, as well. We're basically letting podcast listeners or blog readers answer a poll to decide some of the charities that we're going to support this year. You can go back and take a look at that post that ran on December 24. But let's get into some of your questions about charitable giving.
Charitable Gift Annuities
“Hi Jim, this is Chris from Oregon. My question is about charitable gift annuities. The way I understand them is they provide smaller payouts compared to a standard income annuity since a portion is going to charity, but they also allow for a portion of your premium to be considered a charitable tax deduction. If part of my financial plan at retirement calls for me to put some portion of my nest egg into an income annuity and it also calls for me to donate to charity, then would it make sense to accomplish both these goals by utilizing a charitable gift annuity? Or would it make more sense to separately purchase a single premium immediate annuity, for example, and separately donate the money to charity, for example, by donating appreciated shares in my taxable account or by donating a portion of my Required Minimum Distribution? I guess some of the answer depends on if I want to maximize leftover money to my heirs or if I end up having a complicated estate. But I'm trying to get a more general sense of the charitable gift annuity. Do these products make sense, or are they creating unnecessary complexity and expense?”
Dr. Disha Spath:
Let me just define what a charitable gift annuity is for anyone that doesn't know. Basically, a charitable gift annuity is where a donor signs an annuity agreement with a charity—a single charity—and makes a lump sum donation and then takes a partial deduction for it. The charity then invests that lump sum in an investment account, and the donor then receives payments on a fixed schedule with a fixed interest rate for the rest of their lives according to the annuity agreement. When the donor passes, the charity then receives the balance of the invested funds upon the donor's death. Basically, this is a good way to get a little bit of income in retirement and make that donation.
The downside of this is that it's a contract with one charity and it's not a trust. You're basically married to just donating to that one charity. The interest amount is fixed, and it doesn't adjust for inflation. Annuity rates vary with the age of the donors. If you're younger when you purchase this annuity, you might get a lower interest rate on your annuity just because you have a longer time that they have to pay out. This is in comparison to a charitable remainder trust. A charitable remainder trust basically is another large donation, but this time you make it to an irrevocable trust. That trust can then set up an income stream for you. After your death, any remaining funds in the charitable remainder trust are then distributed to the charity or charities of your choice. It can be multiple. Or you can pair this with a Donor Advised Fund. That way, your beneficiaries can continue to give out of that fund after your passing.
Dr. Jim Dahle:
There are so many options here. But you're absolutely right that the people for whom these work really well are people like you, Chris—people who want to give money to charity and want some sort of an income stream for them or for an heir, like a spendthrift kind of situation. That's the people who look at these sorts of things. There's kind of the two big categories: trusts and annuities. Annuities are typically done with smaller amounts of money. If you're only doing this with a few hundred thousand dollars, you might be more likely to use an annuity. If you're doing it with a few million, you might be more likely to use a trust. But there are a gazillion ways to set these things up. All of them, however, are essentially a split-interest gift. Part of it's going to either you or your heirs, and part of it is going to the charity. You get a donation deduction, a charitable donation deduction essentially for the portion that's going to the charity. But it's possible for this to work out better than not using this trust, better than just giving some money to charity and buying an annuity. This can work out better. If you have both of those goals in your life, it is worth looking at these things.
They are abbreviated CRATs, CRUTs, CLATs, and CLUTs. Basically, there are unitrusts, and there are annuity trusts. The UT stands for unitrusts. With the unitrusts, the income payments vary with how well the investments in the trust are doing. Think of it like a variable annuity. With an annuity trust, the payments are fixed. That's the difference between a unitrust and an annuity trust, the UT versus the AT portion. Then the other part of these trusts is whether they're leads, a lead trust, or remainder trust. The C always stands for charity. But the L stands for lead and R stands for remainder. So, CLATs and CLUTs vs. CRATs and CRUTs.
That letter refers to what the charity gets. If the charity's getting the money upfront and then the charity is giving you the annuity or giving your heirs the annuity, that's a lead trust. If the charity gets what's left in the end, that's a remainder trust. There are lots of different ways you can set this up. This is not a do-it-yourself project. This is something you go and see an estate planning attorney in your state to set this up if this is something you're interested in doing. The charitable annuity, as Disha mentioned, one charity is generally who's getting that, it's usually a smaller amount. I think always fixed, though, that may not actually be true. There are other options, too. You can just give the money to charity directly. You can put it in a DAF and give it to charity. You can start a foundation. You can start a charitable foundation and then give to the charity from there. You can get charitable life insurance.
You're giving the premium each year to a charity, and they are buying life insurance on you. So, when you die, they get a whole bunch of money. I mean, there are a million ways to solve this problem. It's just not straightforward at all. You've really got to consider your options. But I think this is something you ought to consider. If you're considering buying in and annuitizing some of your portfolio and you want to give some money to charity, you should be looking at all these options and look at them carefully because it's a big decision. It's usually a lot of money you're putting into something like this, and you ought to take your time with the decision.
What was this question specifically? Do you remember?
Dr. Disha Spath:
I think he asked should he do this instead of just a regular annuity? By definition, you're sharing your profits with the charity, so you're not going to get as much of a return from doing a charitable annuity as you would from a regular annuity. But in this format, you're combining the two, giving and having a set amount of income in retirement. I guess it really depends on what your goals are and how much you actually want to donate and how much you need to live on.
Dr. Jim Dahle:
Yeah, that's a good point. The general rule of charity is you do not come out ahead by giving money to charity. If you give the money to charity anyway, you have to be careful how you do it because it allows you to either have more money afterward or to give more to the charity. But you don't end up with more than you would otherwise have. But in your situation, I think I'd look pretty carefully at these charitable trusts—or charitable annuities—because you have both the goal of a stream of income and a desire to give to charity. That's who these are designed for. I think it's definitely worth looking into there.
He mentioned something about QCDs, qualified charitable distributions. For those who don't know what these are, these are something you give to a charity in lieu of your Required Minimum Distributions. Due to the weird way RMD laws have changed in recent years, you can start doing qualified charitable distributions at age 70 1/2, even though you don't have to start taking RMDs until 72. But basically, you take your RMD and give it to charity and then you don't have to pay taxes on the RMD and you can still itemize your deduction or you can still take the standard deductions. You don't have to itemize like you normally would for big charitable gifts.
It’s a real benefit there. If you are 72+ (or 73 beginning in 2023), you have an IRA you have to take RMDs from, and you give to charity, this is the best way to give to charity. You should give to charity using qualified charitable distributions every year. I help my parents to do that each year. It's really a pretty slick trick. Because if you have tons of deductions, fine, but a lot of times in retirement, people aren't paying a lot of taxes, especially if they're in a tax-free state, like my parents are. They may not be donating all that much to charity. They often have the mortgage paid off so there's no mortgage interest. They may not be in that expensive of a house, so the property taxes might not be much. In short, they may be better off taking the standard deduction—90% plus of Americans take the standard deduction. But with a QCD, you can still essentially get a charitable donation deduction, while still taking the standard deduction. It's really a slick trick.
More information here:
How Donating to Charity Is a Tax Advantage
You Want to Start Donating to Charity? Here’s How to Find the Motivation to Actually Do It
Should Churches Have to Be More Transparent with Charitable Giving?
“Hey Jim, thanks for all you do. This is AJ from Texas. I've heard you talk about charitable giving and picking charities based on their mission, transparency, and low overhead. I have previously donated a 10% tithe to my church. I have recently come to realize that there is no transparency in how my church uses this money. And there are mounting allegations that they're hoarding money in equity deals, stock market, and real estate. Do you give churches a pass on your criteria when it comes to charitable giving? Do you think churches should be forced to be transparent like other nonprofit groups? I’m struggling with this issue.”
Dr. Jim Dahle:
Great question. I don't know that I know the answer to that. Disha, what are your thoughts?
Dr. Disha Spath:
From what I know, most churches don't have to file to become a 501(c)(3). But they can, and when they do, they do have to file Form 990 with the IRS, and then they can make that public. So, they can make it more transparent. When they do become 501(c)(3), they kind of have to report what they're doing to the IRS. But they don't have to do that, I guess, if they don't want to. That would be a very good question to ask when you are joining a church and donating and tithing to them, I think, whether they do make their investments public.
Dr. Jim Dahle:
I guess the bottom line is if I were an organization and I had the option not to file something like that, I probably wouldn't file it. I don't know that I blame them for not filing that. All it does is open you up to criticism for however you're using the money. Obviously, not everybody's going to agree with how the money should be used. I don't know that I'd file it if I didn't have to.
Dr. Disha Spath:
They are required to file it if their gross receipts are greater than $200,000 in the year. I should have mentioned that. Or their total assets are greater than $500,000 for the year.
Dr. Jim Dahle:
That's going to be most big churches. But I don't know that there's a lot of information. I'm looking at this form. It's a few pages; it has 12 pages on it. But most of it's kind of balance sheet stuff. Form 990, you said churches do have to fill it out.
Dr. Disha Spath:
If they meet those income criteria, they have to fill it out and then they can choose to make it public is what I was reading. They don't have to.
Dr. Jim Dahle:
Oh, they don't have to. They just have to file it with the IRS.
Dr. Disha Spath:
Right.
Dr. Jim Dahle:
Same basic answer then to that.
Dr. Disha Spath:
Yeah.
Dr. Jim Dahle:
Should they? Well, I don't know. I don't know that I would if I were in charge of the church. But it's up to you whether you want to give to that church. Presumably, you're there because you believe in what they're doing, and you trust the leaders. I guess if that's not the case, well, why are you giving them tithe anyway? That's more of a philosophical religious question, I suppose, than it is really a financial question. It's really your call.
I know a few people that have become disillusioned with their religion or their church and they still feel strongly about paying a tithe. They've chosen to give the tithe to other charities that they feel like they support more than the church itself. Whether that counts in God's eyes, I'll leave between you and God, but I know a few people that have chosen to do that sort of a thing with their tithe money. But this is far more a religious question than it is a financial question. I don't know if there's any one right answer to that.
Dr. Disha Spath:
Yeah, I don't really want to get into the muck of what we believe religiously, but I'll say I don't belong to a church because of concerns like this.
Dr. Jim Dahle:
Politics and religion, you got to love them, right? We get into both of them here at The White Coat Investor podcast.
Dr. Disha Spath:
It's always juicy.
Dr. Jim Dahle:
Yeah. Good luck with your decision. I do know that a lot of big churches, their finances come out anyway, eventually. Somebody files a suit, and it ends up in the lawsuit information, and then the press picks it up. But whether you would make those exact same decisions that the church has made about what to do with the money, I guess I'll leave up to you. Some big mega churches might be buying private jets and have them sitting out on the tarmac behind the church. Others may be using it for various investments and then giving from those investments. There's quite a bit of variation there.
More information here:
How Much Should I Tithe to My Church?
Donating Appreciated Stock
Dr. Jim Dahle:
All right, let's take our next question from Mary. This one is about donating appreciated stock. This is a subject near and dear to my heart.
“Is it better tax wise to donate appreciated stock to charity or to use it to offset capital losses?”
Dr. Jim Dahle:
Short and sweet. Great question, Mary.
Dr. Disha Spath:
I'll let you take that one. It's your favorite topic.
Dr. Jim Dahle:
Yes! The answer is yes. Yes. Donate appreciated stock to charity instead of cash. If you're going to donate to charity anyway, donate appreciated stock. What do you mean offset losses? You don't want to offset losses. Use losses to offset gains. Better not to have the gains. When you donate to charity, you don't have the gains. If you've owned something for at least a year and it has appreciated and you're going to give money to the charity anyway, just give the appreciated stock or appreciated mutual fund shares directly to the charity. If you want to make it really easy, use a Donor Advised Fund.
If you're at Vanguard, you can open a Vanguard charitable account. Same thing with Fidelity. If you're at Fidelity, they've got their own DAF there. You move it from your brokerage account into the charitable account, they liquidate it a few days later, you get the full charitable deduction for the full value of that publicly traded security that you donated on the day you donated it. That's your charitable deduction. But nobody pays the capital gains taxes. You don't pay them. The charity doesn't pay them. It's a great way to donate to charity. So yes, you should donate appreciated shares if you're going to give to charity anyway.
Now, if you're not going to give to charity, obviously, you're not going to come out richer by giving to charity. But if you're going to give to charity anyway, use appreciated stock any time you can instead of cash. What that does is you're continually flushing out the capital gains from your portfolio. The basis of your portfolio goes up and up and up over the years. And that way when you actually do have to sell some shares in order to spend that money, you won't have to pay very much in taxes, because your basis will be so close to the value compared to if you never sold shares. Obviously, you should tax-loss harvest when you can, as well. This is great when you do have capital gains; you can use those losses against your capital gains. You can use up to $3,000 a year of them against your ordinary income. But you don't want to burn those capital losses for nothing that you don't have to use them for already. Save them up, you'll use them eventually.
Dr. Disha Spath:
Jim, is there a minimum that you can put into a DAF to start it?
Dr. Jim Dahle:
Each DAF has its own minimum. Vanguard is fairly high actually. I think it's $25,000. They only allow a minimum grant to a charity of $500. So, if you don't want to give $500 plus at a time and you don't have $25,000 to put in there, Vanguard is not your DAF. You probably want to look at Fidelity. I think Fidelity is like $5,000 minimum to open it and $50 per donation. It's not that hard to transfer money from a Vanguard brokerage to a Fidelity DAF. In fact, you could even put it into the Vanguard DAF and then have the Vanguard DAF make a donation to the Fidelity DAF if you want. There are lots of different options there. Since they're all registered charities, you can go from one to the other. If you're just trying to do small amounts, Vanguard may not be the best one.
Dr. Disha Spath:
Good to know.
Dr. Jim Dahle:
They are one of the cheapest ones as far as expense ratios if you're leaving money in there long term, but they're relatively high minimums.
More information here:
Tax Benefits of Donating to Charity
What Accounts Should You Put Your Bond Funds In?
“Hi Jim. I'm having trouble figuring out which account to put my bond funds into, either my tax-protected retirement accounts or my taxable account. I know you came out with a few different blog posts, one in particular a while back that talks about which bond funds are reasonable. And in some of those, you touch on the benefits of having them in one account vs. the other. But at the end of the day, I'm still sort of unsure about which one to put them in. Especially as time goes on, if I have a pretty large allocation in bonds as I get older and more and more percent of my portfolio in a taxable account, I don't want to end up filling my retirement accounts with only bond funds. I was curious if it was a reasonable thing to sort of divide up your bond allocation between your taxable and retirement accounts or what other way to do it. It seems like I'm sort of mostly taking my risk with stocks as opposed to bonds. I don’t know if that helps, but any advice would be appreciated.”
Dr. Jim Dahle:
Portfolio construction.
Dr. Disha Spath:
Yay! Your favorite.
Dr. Jim Dahle:
The questions with no right answers, right? We can talk about this stuff all day. If there are five blog posts on the blog about this and they're all 3,000 words long talking about the pros and cons, there's clearly not a right answer to the question. There are many ways to do this. A couple of things to keep in mind. One, there is a benefit to having your tax-protected to taxable ratio grow. So, more of your money is in tax-protected accounts than is in your taxable account. The way you do that is by having high returning assets in the tax-protected accounts, whether they are tax-deferred or whether they are tax-free, aka traditional and Roth. That's a good thing. That factor would lead you to put higher returning assets, aka stocks, into your tax-protected accounts.
The other factor you think about is tax efficiency. How much of your return is going to be income each year? How is that income going to be taxed? In that respect, a typical taxable bond—a treasury or a corporate bond, a mortgage-backed bond, those sorts of things—is not super tax efficient. They pay out basically their entire return each year in income. That income is taxed at ordinary income tax rates. Sure, treasuries avoid state and local taxes, but basically your ordinary income tax rates. Bonds are not tax-efficient vehicles. It turns out at really low interest rates, it doesn't matter all that much. As interest rates rise like they have in the last year, bonds in tax-protected starts being a better and better strategy.
However, there's always the option to use muni bonds, and more and more of my accounts are also becoming taxable like yours over the years. More and more of my bonds are ending up in a Vanguard muni bond fund because that's tax-free, at least federally tax-free, income that those bonds pay out. Now, obviously, they pay out a lower rate than your regular taxable corporates and treasuries, but if you're in a high tax bracket, you may still come out ahead like we typically do by using a muni bond fund. There's not a right answer there, but as interest rates rise, it becomes more and more beneficial to put those bonds into your tax-protected accounts. If your strategy is splitting the difference, I think it's perfectly acceptable. Ours are kind of split as well. Some of our TIPS are in taxable, some are in tax-protected. All of our I bonds are obviously in taxable. Our G fund is obviously in tax protected. Our muni bonds, they're all in taxable. That's where I'm at. I have a bunch of my bonds in taxable and some still in tax-protected. I can't criticize you if that's what you want to do because that's what I'm doing right now.
But back in the day when my taxable account was perhaps 10% of my portfolio, I didn't have any bonds in it. All the bonds were in tax-protected accounts then. It's a classic portfolio construction dilemma of when do you put bonds in taxable, and it sounds like you're kind of at that point where it's time to have at least some of your bonds in a taxable account.
Dr. Disha Spath:
I live in New York. We have a New York muni bond fund at Vanguard, so I just invest in that in my brokerage account, as well, along with the stock funds.
Dr. Jim Dahle:
Yeah, yeah. When you live in New York, you have to do whatever you can.
Dr. Disha Spath:
Exactly. Location dependent.
More information here:
What Is Asset Location? Tax Efficient Fund Placement
Should You Invest Extra Funds in Bonds?
“Hello. I'm a physician in California in my early 50s. We have our house almost paid off and anticipate doing so this year. My idea was to take the money that we normally would pay our mortgage with, about $3,500 a month, and invest that, figuring we haven't missed it for a long time and we are used to paying that, so we might as well invest it. My idea was to invest the money in either California municipal bonds or a California municipal bond fund since the money is free from both state and federal taxes and the tax equivalent yield would be pretty good and the money would be quite safe in those investments. What are your thoughts on that? The idea is that I'm saving this money outside of my pension because I would like to be able to access it earlier if I choose to retire, cut back, or take a sabbatical.”
Dr. Disha Spath:
If you want a safe investment, it sounds like a good safe investment to invest in. What do you think, Jim?
Dr. Jim Dahle:
Yeah, for sure. You're in California. There are lots of California muni bonds and you're paying a high state tax rate. If it doesn't make sense in California, it doesn't make sense anywhere to use a state-specific muni bond fund. I wouldn't lose any sleep at all about investing in that. Now, I'm not entirely clear and I don't think that Nate is either entirely clear on what the purpose of this money is. Because at the end, he rattled off two or three different things he could use this for. Is this money you're going to spend somehow different from your retirement money? This is money you're going to use to bridge until you get a pension or to pay for three or four years of early retirement or something that you're somehow treating as a different bucket than your overall retirement nest egg. If so, fine, think of it separately, have its own asset allocation. But if this is just going to be part of your retirement nest egg, well, you should look at your overall investing plan for your retirement money and then ask yourself, “I've got this $3,500 or $3,800, or whatever it was that was going toward the mortgage and now what should I use it for?”
It doesn't matter that before it went to the mortgage. The money doesn't care what it was going to be spent on. It's just like any other savings you have. It's just like any other windfall you have. It ought to go into your written investing plan according to how you invest all your money. It doesn't necessarily need to go someplace unique like into muni bonds if that's not what your plan is calling for already. I would spend some time thinking about what this money is really for before you decide how to invest it.
Dr. Disha Spath:
I think that's such an important point, especially in a market like this where bond buying goes up when the market is down. If you were actually looking at your portfolio and your written investment plan, most people should be buying stocks right now, not bonds, because your stocks are totally falling in value so that your written investment plan should lead you to buy something that's down. I think that's really an important reminder for us to all look at a written financial plan instead of just going for whatever's popular at the moment.
Dr. Jim Dahle:
Yeah, of course. Depending on what kind of bonds you're investing in, those might be down. But it was a terrible year for most bond fund investors. The people are calling it the death of the 60/40 portfolio. It kind of reminds me of that, what was it? Newsweek or something. In 1981 or 1982, they ran this headline, “The Death of Stocks.” This cover is famous, of course, because it was the mark of the beginning of the longest bull run in stocks that we've ever had in history. Obviously, buying bonds now, even the ones that kind of got hammered in 2022, you're getting a much better investment than you would've gotten a year ago buying those bonds. But there are some bonds that did just fine this year. If you stayed really short term, your bonds aren't down all that much. I bonds are way up this year. It depends on what bonds you own. Hopefully, you didn't own long-term treasuries because they got hammered over the course of 2022 as interest rates went up. But hopefully, they'll provide a better return going forward from here.
TIPS vs. I Bonds
“Hi, Dr. Dahle. It's anonymous in the Pacific Northwest. Thanks for continuing to answer questions from the White Coat community to empower us to take control of our finances. Now that interest rates are approaching more historically normal levels, there's a lot of interest in bonds. In particular there's been a lot of I bond hysteria, but I haven't heard people talk much about TIPS. Five-year TIPS auctioned in October had a coupon rate of 1.625% and will likely become more attractive as the Fed continues to increase rates. Could you talk about TIPS vs. I bonds as well as give your thoughts on how much of the fixed income portion of our asset allocation we should consider devoting to individual bonds vs. bond funds? Thanks.”
Dr. Disha Spath:
I bonds are treasury bonds that pay a fixed rate of interest as well as another layer of interest that varies with a current inflation rate as measured by the consumer price index. That inflation adjustment is made twice a year, and that I bond doesn't actually yield any income initially. You only get the income when you cash it out. You can do that after 12 months of owning it. If you do it within five years of owning it, you forfeit the last three months of interest. That's an I bond. TIPS is different. TIPS principal values are adjusted to incorporate for the current inflation rate, whereas I bonds receive an adjustment in their interest rates to reflect inflation. TIPS are adjusting the principal, which then varies at your interest payments indirectly. TIPS can be bought from the government at treasurydirect.gov but they can also be bought via a brokerage firm. Or you can also buy a TIPS fund or an ETF.
The advantage of TIPS is basically you don't have any purchase constraints. You can buy it at a brokerage. You don't have to go to TreasuryDirect. You can sell it on a secondary market, which makes it a little bit more liquid, but you do get semi-annual interest payments from TIPS. Actually, it can be an advantage if you're actually looking for income. The disadvantage is that you're going to have to pay tax on those income payments as well as inflation-adjusted payments. And you're going to have higher volatility due to the trading on the secondary market.
Dr. Jim Dahle:
TIPS and I bonds, I love them. I feel like I talk about them all the time. At the beginning of the year, I bonds were an awesome investment and then I think it was in May, they got even better. For a portion of this year (2022), I bonds were paying like 9.5%. As a safe investment, that's incredible. That's the best I bonds have ever been. They're not quite as good right now as they were then, but they're still paying like six something, because you get this fixed rate plus the inflation adjustment, and this year inflation was really high. They paid really, really well.
One cool thing about them is kind of like the TSP G Fund. You never lose principal. They are similar to a money market fund that way. When rates rise, that's usually a bad thing for bonds, at least in the short term, because the principal goes down. But that's not the case for a money market fund. That's not the case for a savings account. That's not the case for the TSP G fund. That's not the case for I bonds. It's a good thing when rates go up there for these sorts of investments. It actually is all good for them and their returns.
I like both I bonds and TIPS. I own both of them. I own TIPS both in mutual fund or ETF and directly at TreasuryDirect. When I tend to buy taxable, I tend to buy individual TIPS. Since they're all guaranteed by the US government, there's not like a benefit of diversifying. It’s not like there are multiple US governments. It's basically the same whether you buy them directly or whether you buy them in a fund. You're just getting some additional liquidity and some ease of use mostly by using a fund if you're interested in that. If you want to buy them in your 401(k), you're probably not going to be able to buy them as individual TIPS. You're probably going to have to use a TIPS fund if you want to do that. But either one is fine. There's not a right or wrong answer there.
The overall question I like that you asked is how do you decide how much of your bonds to index to inflation and how much do you not index to inflation? Because obviously, when inflation is lower than expected, the nominal bonds do better. When inflation is higher than expected, the inflation-indexed bonds do better. I think it's good to have both. I've always had both. I was never sure exactly how to split between them. I just did it 50/50. We've always had 50% of our bonds in inflation-indexed bonds, and the other 50% in some sort of nominal bond. Although for a lot of that, it's just been in the TSP G fund that I had access to since I was in the military.
Some people use them as their emergency fund. Now, obviously, you can't in the first year because you can't take the money back out. But after the first year, you can take the money out. The big downside of I bonds is you can only buy $10,000 a piece of them. You can buy $10,000 for you and $10,000 for your spouse and $10,000 for your LLC and $10,000 for your trust and that sort of thing. But it's kind of unwieldy if you're trying to invest a lot of money.
Dr. Disha Spath:
Yeah. TIPS are better for that.
Dr. Jim Dahle:
TIPS are better for that for sure. And right now, honestly, you had mentioned that in October, five-year TIPS had a yield of 1.6% or something. Right now, they've come down a little since then. I'm looking at the yield curve right now as of the 16th of December: five years are 1.47% and then it's pretty much flat. Ten years are 1.35%, 30 years are 1.4%. But compared to where TIPS yields have been, the real yields on treasury bonds have been for the last, I don't know, 5-10 years, this is great. You can guarantee that you'll beat inflation by 1.5% over any time period you want. This is about as attractive as TIPS have been in a long, long time. There was a time right when they came out in like 2000 when you could get 3% or 4% real on TIPS. I don't think we're ever going to go back to that. Maybe it was because they were so new and nobody really knew what they were, that the yields were so high. But if you ever see that again, back up the truck and load it up on TIPS.
More information here:
I Bonds and TIPS: Which Inflation-Indexed Bond Should You Buy Now?
Asset Allocation for Bonds
“Hi Dr. Dahle. Thank you for all you do for fellow physicians. We had a question in regards to asset allocation for bonds that we're hoping you can share your wisdom on. My wife and I are in a fortunate position that the money we put away in tax-advantage retirement accounts vs. regular brokerage accounts will be in roughly a 1:3 ratio so that the majority of our money put away for future retirement will be in regular brokerage accounts. Our asset allocation is 20% bonds, 10% REITs and 70% stocks with the bonds being 50/50 nominal bonds vs. TIPS and I bonds. I understand that, except for municipal bonds, bonds should be held in tax-advantage accounts, but on the other hand, there are arguments to be made to leave room in tax-advantage accounts for total stock index mutual funds with higher long-term expected returns to reduce the tax struck on the growth.
How do you balance the two in your tax-advantage accounts? At what point should one consider using municipal bond mutual funds rather than total bond mutual funds so that one can have some bonds in regular brokerage accounts and thus leave more room in tax-advantage accounts for total stock index mutual funds to maximize growth potential in the long term?”
Dr. Jim Dahle:
This is similar to the question we had earlier and kind of sums up what we've been talking about. It sounds like your tax-protected or taxable ratio is about 1:3 so you have to put a whole bunch of your portfolio into taxable. When that's the case, yeah, bonds probably aren't a bad thing to put in there. When your ratio is the opposite, if it was three-quarters tax protected, I don't know that bonds would go in there. I'd probably be putting things like a total stock market fund or a total international stock market fund in there. Those are very tax-efficient investments. They do very well in taxable accounts. You can tax-loss harvest them. You can donate appreciated shares to charity. They're great things to have in a taxable account. If you just have a little bit of your money in taxable, I think those are probably the first things that tend to go in there.
But if you've got to put a lot of your asset classes into taxable, then I think bonds are a reasonable thing to put in there. Of course, in the form of muni bonds, because if you're in a high tax bracket, they have a higher after-tax yield once you pay the taxes on the income that they're paying out. But there's been a time in my life when we didn't have a taxable account. These things change. Back in the 2000s, we had a taxable account and we ended up donating the entire thing to charity and then we were back to a 100% tax-protected portfolio. Then a few years later we were earning enough and saving enough that we were maxing out our tax-protected accounts and still saving a whole bunch.
Now our taxable account is our largest account and probably going to continue to grow. But just keep in mind that just because that's where you are right now, it doesn't mean that's where you'll always be. Those ratios can change over time. But in your situation, three-quarters of your money now in taxable, yeah, it's certainly reasonable to put some, if not all of your bonds, into that taxable account using muni bond funds or something similar.
Problems with Vanguard
The problem with Vanguard is they solved so many problems, they basically reduced investing costs for everybody to the point where investing is almost free. That caused them to become really popular and grow really fast. Part of this is Jack Bogle's fault. He always said that we're not going to be a tech company, we're not going to have the very best technology of any company out there because technology, of course, is expensive. But it takes technology to service gazillions of people. There is so much money flowing into Vanguard for the last few years that they literally cannot hire fast enough and train fast enough and boost their customer service experience fast enough to really take care of everybody.
You see that in complaints about customer service and screw-ups and being on the phone for a long time to the point where a lot of people are like, “Is Vanguard trying to get us to open up a Fidelity or Schwab or TD Ameritrade account and just buy Vanguard ETFs there because they don't want to deal with our customer service?” It's not that unusual these days to hear a complaint about Vanguard customer service. I think that's probably what Zora's going to be talking about. But let's listen to the speak pipe.
“Hi Dr. Dahle, this is Zora from Michigan. I wanted to inform you about Vanguard's recent activities that raised some alarm, and it was very disturbing. Recently, I opened one traditional and then one Roth IRA account. Without my knowledge, they opened a second account on my behalf, but they didn't really notify me of this. I called Vanguard, I talked to someone, nobody was able to give me an answer, so I requested for one of the accounts to be closed. The account was closed. Then I transferred the money to do the Backdoor Roth conversion. I transferred the money from the traditional to the Roth IRA. I noticed a few days later, the conversion didn't take place and then also they said the account that was closed was opened back up and then the money was eventually transferred to that account. With all these events happening, I just don't feel comfortable with Vanguard. Is this normal? There's absolutely no communication from Vanguard whatsoever about closing and opening these accounts. I feel like they did all of this behind my back without any information, any communication.”
Dr. Jim Dahle:
Well, yeah, kind of a classic customer service screw-up. They botched it, they opened the wrong account. But let's keep in mind there's not something nefarious happening here, right? Nobody stole your money. They are just showing incompetence. They tried to close an account and they reopened the account and they didn't do the Roth conversion like they were supposed to.
Here's the deal. If you don't feel like Vanguard's treating you well, go to Fidelity. They're fine. Obviously, don't invest in the super high expense ratio funds that Fidelity offers. But if you want to use mutual funds, Fidelity has a handful of very low-cost index funds and you can buy Vanguard ETFs there. You can buy iShares ETFs there, and I would say 90% of the time you're going to have a better customer service experience at Fidelity or at Schwab than you are at Vanguard. A lot of us have been with Vanguard for a long time. We feel loyalty to them for what they've done for the industry. We feel loyalty to Jack Bogle. Part of it is just inertia. We started investing at Vanguard 20 years ago, and we're still there due to feeling loyalty and due to inertia.
But there's no logical reason you have to invest at Vanguard. If you feel like they're not treating you well, go somewhere else. Not to your bank or your credit union or some crappy place to invest. But there are other good options out there. The main ones are Fidelity and Schwab. Go open a Fidelity account, and I would expect that you will spend less time waiting on hold. You'll probably have a better customer service experience and there might be a few additional fees you pay here and there. But you can certainly invest in a Boglehead way in a very reasonable low cost broadly diversified way without being at Vanguard.
Where are your investments held, Disha?
Dr. Disha Spath:
I have several accounts at Vanguard, and then we do have some at Fidelity, as well. I have my solo 401(k) at Fidelity and the kid's Roth IRAs at Fidelity. It's not easy dealing with these brokerage services, honestly, but I think that's why they can keep their costs low, too, at the same time. Like you said, there's a bit of a headache, but you can move around in between them if you like someone better. I don't have any experience with Schwab. What do you know about Schwab, Jim?
Dr. Jim Dahle:
I've actually invested with all three of these big three. I've had Fidelity do something similar with accounts as what has happened to Zora at Vanguard. I've had them open wrong accounts and stuff. It had to do with the WCI 401(k), which is relatively complicated. But basically, our Roth IRAs are at Vanguard. Our taxable accounts are at Vanguard. Our kids' Roth IRAs are at Vanguard. Our kids' UTMA accounts are at Vanguard. The WCI 401(k) is at Fidelity. Our HSA is at Fidelity. My 401(k) with my partnership is at Schwab. I'm using all three of these and I rarely call any of them, to be honest. Almost everything I do can be taken care of online. But I had to call Vanguard just this month to move some money from one brokerage account into another, and it was fine. I waited on hold for a few minutes, not long. I asked them to take care of something which was relatively complicated, something that could not be done online. I met competent people who took care of it. It was done right the first time. The money was moved over as expected, no problems whatsoever. I've had similar situations at Fidelity and Schwab. but there's no reason you should feel like you have to be at Vanguard, especially with the ability to buy ETFs these days. You can invest in all Vanguard funds without ever sending any money to Pennsylvania. Don't feel like you're stuck there, Zora. If you had a crappy experience, take your business elsewhere.
More information here:
Vanguard: Growing Pains or Abandonment of Its Mission?
WCICON Attendee Interview with Yemi Ajirotutu
I wanted to bring up an interview I did a few days ago with a doc who came to WCICON last year and is going to be coming back next year. I'm talking with Yemi. Yemi is a sports medicine doc down in sunny LA. And as we record this in mid-December, it's 19 degrees where I am here in Utah and 66 where she is in California. Welcome to the podcast, Yemi.
“Thanks so much for having me, Jim. It's great to be here this morning.”
We talk a lot about California on the podcast and how it's a difficult place to build wealth for doctors and so on and so forth. But you know what? There are benefits of living there. and one of those benefits I think is on display today. You do get something for the sunshine tax that you pay in California, and today is one of those days.
“Yeah, definitely.”
Another great opportunity to get out of the cold temperatures if you live someplace cold like I do, is to come to the Physician Wellness and Financial Literacy Conference or WCICON. For 2023, that's March 1-4 in sunny Phoenix, Arizona, which will be dramatically warmer than Salt Lake or Wisconsin or Maine or wherever you're at right now. Yemi is an alumni of this conference. She attended last year at WCICON22 and is planning to come back this year. We thought we'd talk with her for a few minutes about her experience and what she liked and why she's coming back this year. Tell us about your trip to the conference last year, Yemi.
“Where do I start? I flew from California to Phoenix, very short airline trip. But just to even start off, how can you deny the JW Marriott Resort? It was absolutely beautiful. It was a great conference venue. I had a really great time at the conference last year. I actually kicked off my conference experience doing the recognizing burnout and preventing burnout interactive session with Dike Drummond. That was just a great way to kick off the conference. It was very interactive. I got to meet a lot of colleagues and network with them and chat with them about their experiences in medicine, and we all just kind of worked together, just talking about ways to prevent burnout and create that life and career balance—that work life balance that we're all trying to achieve. So, that was a great way to kick off the conference.”
Awesome. And that was even before the opening reception last year. It's not a bad place to be early. As you mentioned, it is a great facility. That's one of the wonderful things about it. Over the years, the feedback we've gotten from attendees is, “Hey, make it nice. We want to go to a luxury place. A lot of times we're paying with CME dollars, we're writing it off, we want to do something nice. This is our time away from work. And if the point is wellness, let’s go to a nice, luxurious place.” The JW Marriott there just north of Scottsdale—it's technically in Phoenix, but it's pretty much Scottsdale—certainly qualifies.
What else did you enjoy about the conference?
“Really just the networking. I was just so inspired by all the different individuals that I met along the way. Physicians in various practices, and I even met some dentists and oral maxillofacial surgeons. People from a lot of different backgrounds. But it was just so inspiring to see people passionate about their careers in medicine and also their careers outside of medicine. I actually registered for the premium registration and so it gave me access to a couple of different networking opportunities and I met a group of colleagues who were really passionate about real estate. They were all actually partners in real estate investing, and they kind of shared to me their interests and they started talking about passive real estate investing. And so, I actually walked away from the conference with an interest in pursuing more knowledge on passive real estate investing.
That's one of the things that I came away with from the conference, was just all the different inspiring individuals that I met. Everyone was so down to earth. I remember meeting individuals who had written books that I had read and everyone was so nice and just passionate about what they were doing. I was very taken aback how just approachable and inspiring and kind everybody was.”
It's a pretty incredible community, isn't it?
“It is. Absolutely, absolutely.”
How about the content? How did you decide to interact with the content? There's so many ways, whether it's after the conference via the online course or virtually or attending in person.
“I did a little bit of a hybrid so that I could facilitate my wellness. Most of the sessions I went to were in person, but it was nice to have the ability to do some of the sessions online or virtually if I felt like I wanted to sleep in a little bit. I did consume some of the content virtually. Then, I also went back and revisited some of the content after the conference just to kind of brush up on some topics that I either missed or if I didn't go to a session I said, ‘Oh I kind of want to check it out after the conference.' It was nice to have the availability to consume some of the amazing content after leaving the conference. So, that was a great bonus.”
The conference last year is my favorite conference I've ever been to. I'm a little bit biased obviously, but it is my favorite conference. Part of what I liked about it is we kind of knocked off at, I don't know what it was, 3:30 or 4:00 in the afternoon and we did other stuff. Wellness activities is what we called them. Did you attend any of those wellness activities, which ones, and did you enjoy them?
“I actually did not. I actually brought my significant other with me. I feel like my wellness was just kind of hanging out with him after the conference. I wanted to get up, I think there was a 5K race and I think I wanted to enjoy that, but I didn't make it. But there were a lot of opportunities to golf and do activities on the resort ground. So, I didn't actually do that, but I think next year when I'm there, I'd actually like to enjoy a spa and I think there's a spa there, so I think I'm going to enjoy a massage there in the spa.”
There's definitely a spa there. There's no doubt about that. Awesome. What made you decide that this was such a good experience that you wanted to come back in 2023?
“I think, first and foremost, just the resort. Like you mentioned, it's such a luxurious experience, it's kind of a nice opportunity to take a couple days away from work just to be in a luxurious space. So, that's one. And two, just interacting with that content again. I just left the conference so motivated and inspired by the content, individuals and just a way to kind of get that energy up again. I think every year it's kind of nice to go to a medical conference that you're interested in going to. I feel like it's so easy in our careers to go to a research conference or go to a conference for one of our professional organizations and feel obligated to go. But this is a conference that I actually feel I'm excited to go to. I want to learn something new.
I actually left the conference sitting in the airport coming up with a list of short-term and long-term goals. Part of me is just inspired to get back there and see what did I achieve vs. what do I want to go back to and still achieve in the future. Really just learn something new and just get inspired and motivated again to build that life and that career that I want, that I feel like I'll thrive in.”
That's awesome. One of the things you mentioned, the fact that there's other specialties there. For most of us, this is the first medical conference we've gone to maybe ever, maybe since medical school, where there are people from other specialties there. So often we go to our national conference, our regional conference, it is just our specialty. It's really pretty cool to be sitting there with an OB on one side and with an orthopedist on the other side, a pediatrician ahead of you and a dentist behind you. You just don't do that very often. It's very cool to be able to compare and contrast and get ideas from other people that you would never run into anywhere else in life and apply them in your own life. That's been one of my favorite parts of the conference, as well.
“Absolutely.”
If someone's sitting on the fence wondering if they should go, what tip do you have for them?
“I would say one thing I spoke to previously was that this was one of the first conferences where it felt like it wasn't that I had to go, it was that I wanted to go. I think you'll find that the content is very inspiring and motivating. You'll meet a friend, someone that you really want to stay in touch with. I would say just push yourself. I think sometimes it's a little daunting to think about finances and to think about creating the career or the practice that you so want. This is not about just medical jargon and scientific knowledge. This is about life and lifestyle and seeing yourself and the person next to you and getting motivated by something that they're doing or just learning something new.
I think sometimes we get really bogged down in our careers and I think that we also need to think about life outside of our careers and some of the choices that we can make to enhance that life, both within and outside of our careers. So, do it! You won't be disappointed.”
Awesome. Well, I appreciate that. If you are interested in coming to the Physician Wellness and Financial Literacy conference, you can still come, you can still come in person, you can attend virtually if that's not a possibility for you. You can sign up at wcievents.com. Yemi, thank you so much for coming on the podcast and for sharing your experience and for coming to the conference and just for what you do every day. It's important work. Thank you very much.
“Thank you. Thank you so much for having me. And Jim, thank you so much for what you do. I'm just very pleased to be here and be a part of this.”
That was great hearing from her. Man, I had a great time at the conference last year. I know you did as well, Disha, even though you, like me, were working the whole time.
Dr. Disha Spath:
It was busy.
Dr. Jim Dahle:
I love hearing from people who enjoyed that enough to be coming back again this next year. We hope to see all of you there as well!
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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.
Dr. Disha Spath:
Hello and welcome to another White Coat Investor podcast. I'm your host, Dr. Disha Spath, and I'm here with Dr. Jim Dahle. Hey, Jim, how are you today?
Dr. Jim Dahle:
Doing great. It's always great to be here.
Dr. Disha Spath:
Yes, sir. We're going to be talking about some charitable giving and bonds.
Dr. Disha Spath:
But first, this episode is sponsored by locumstory.com. If you're considering locum tenens, either full-time or on the side, you probably have a question or two or 20. Fortunately, locumstory.com has the answers you need. It's packed with unbiased information and advice from physicians like you.
Dr. Disha Spath:
locumstory.com has nothing to sell. It is simply a resource for information. You'll find super handy tools to let you see locums trends for your specialty, compared different locums agencies. There's even a quiz to help you decide if locums is right for you. locumstory.com is a perfect place to start if you want to learn more about locums.
Dr. Disha Spath:
Thank you, listeners, for what you do. What you do is not easy. Healthcare is a train wreck right now. Thank you for being there for us, thank you for being there for all of your patients, and thank you for all that you do.
Dr. Jim Dahle:
Yeah, I bet if most people are like me, you're dealing with the triple virus threat right now between RSV and flu A and COVID. It's pretty much, I walk in, they say all my muscles hurt, doc. I tell them they have flu A and about 95% of the time I'm right.
Dr. Disha Spath:
Yeah. And we're getting, in primary care, a lot of calls after hour calls, for patients that think they have COVID, but it could be a bazillion other viruses. They could be testing positive for COVID and or have multiple viruses. It's kind of nuts. And the kids are really taking a brunt of it this time, which is really sad.
Dr. Jim Dahle:
A really nice side effect of the whole “Let's stay home, let's stay six feet away from each other, let's wear masks, let's wash our hands thing” in the last few years has been much less flu A and RSV. Well, it's back. They are still important pathogens in our lives, it turns out.
Dr. Disha Spath:
Yeah.
Dr. Jim Dahle:
Unfortunately, it makes for busy shifts in the ED for sure. But that's what I've been up to lately.
Dr. Disha Spath:
I'm surprised we didn't pick up any viruses in Jamaica, actually. Did anybody get sick?
Dr. Jim Dahle:
Nope. I don't think anybody did. Yeah, that's a good intro. We just got back from Jamaica. It was the first WCI retreat we've ever done. We took all the staff members from WCI and their partners and went to Jamaica. And I had a meeting down there. Yep. It was a meeting, a very important meeting. It was mandatory. Everybody had to go to Jamaica to go to this meeting.
Dr. Disha Spath:
I am so glad I was at that productive meeting.
Dr. Jim Dahle:
Very productive meeting. And we did a lot of team building exercises there at this five or six day meeting we attended. But it was a good time. It was actually really important for team building. And one of the great things about working here is being able to do stuff like that. And that's the fun thing about having your own company is you got to run it the way you want. And so, we did. It was a good time.
Dr. Disha Spath:
Oh my gosh. So fun.
Dr. Jim Dahle:
We have something to ask you guys for. We have a favor to ask. We're doing our survey, our annual survey. WCI is primarily driven by you, particularly the podcast you've noticed. What we do on the podcast is almost entirely listener driven, but everything we do at WCI, we're trying to serve you, we really are trying to help you become more financially literate, more financially disciplined, etc.
Dr. Jim Dahle:
We have this survey for you to help us to do that better. At whitecoatinvestor.com/survey, you can give us the feedback on what you like, what you don't like, what you'd like to see, what we're doing bad, et cetera. We want that information.
Dr. Jim Dahle:
So, if you'll take a few minutes and fill out that survey, we would really appreciate it. In fact, we'd appreciate it so much we're going to bribe you to take it. We're going to give 20 people who take the survey a t-shirt, and everyone gets entered into this random drawing, but one person will get an online course of their choice. So, we'd appreciate you spending a few minutes filling out that survey and enter the lottery for these prizes.
Dr. Jim Dahle:
All right, let's get into some content. It's one of my favorite times a year. We're recording this, what is it? The 19th. By the time you hear this… When are they going to hear this, Megan? January. So, this doesn't run till like the first week of January, but I'm thinking a lot about charity as we record it. And we're going to be talking a lot about charity on this episode. Lots of questions that have come out with it.
Dr. Jim Dahle:
But we tend to back load our charitable giving for December just because it tends to be more convenient for us. Especially nowadays, we've got to move money around a few places using a donor advised fund, etc. So, we end up doing almost all of our giving in December.
Dr. Jim Dahle:
And so, charity's very much been on my mind. We had our meeting with our kids a couple of weeks ago, and we actually did the physical allocating from the DAF literally yesterday. This was Katie's first time putting in all the orders to distribute that money from the donor advised fund. And so, we just got done doing a whole bunch of charitable giving.
Dr. Jim Dahle:
We're going to let the White Coat Investor audience help with our charitable giving this year as well. This post actually doesn't run for five days after we record this, but it will have run a couple of weeks ago by the time you hear this on the podcast. We're basically letting podcast or blog readers answer a poll to decide some of the charities that we're going to support this year. So, look for that. On the 24th is when it's going to run on the blog. You can go back and take a look at that post by the time hear this podcast.
Dr. Jim Dahle:
But let's get into some of your questions about charitable giving. I think our first one here is from Chris. Let's take a listen to him.
Chris:
Hi Jim, this is Chris from Oregon. My question is about charitable gift annuities. The way I understand them is they provide smaller payouts compared to a standard income annuity since a portion is going to charity, but they also allow for a portion of your premium to be considered a charitable tax deduction.
Chris:
If part of my financial plan at retirement calls for me to put some portion of my nest egg into an income annuity, and it also calls for me to donate to charity, then would it make sense to accomplish both these goals by utilizing a charitable gift annuity? Or would it make more sense to separately purchase a single premium immediate annuity, for example, and separately donate the money to charity, for example, by donating appreciated share shares in my taxable account or by donating a portion of my required minimum distribution?
Chris:
I guess some of the answer depends on if I want to maximize leftover money to my heirs or if I end up having a complicated estate. But I'm trying to get a more general sense of the charitable gift annuity. Do these products make sense or are they creating unnecessary complexity and expense? Thanks for all your help over the years. I appreciate your answer.
Dr. Disha Spath:
Okay. Let me just define what a charitable gift annuity is for anyone that doesn't know. Basically, a charitable gift annuity is where a donor signs an annuity agreement with a charity, a single charity, and makes a lump sum donation and then takes a partial deduction for it. The charity then invests that lump sum in an investment account, and the donor then receives payments on a fixed schedule with a fixed interest rate for the rest of their lives according to the annuity agreement.
Dr. Disha Spath:
When the donor passes, the charity then receives the balance of the invested funds upon the donor's death. Basically this is a good way to get a little bit of income in retirement and make that donation.
Dr. Disha Spath:
The downside of this is that it's a contract with one charity and it's not a trust. You're basically married to just donating to that one charity. The interest amount is fixed and it doesn't adjust for inflation. And annuity rates, they vary with the age of the donors. So, if you're younger when you purchase this annuity, you might get a lower interest rate on your annuity just because you have a longer time that they have to pay out.
Dr. Disha Spath:
This is in comparison to a charitable remainder trust. A charitable remainder trust basically it's another large donation, but this time you make it to an irrevocable trust. And that trust can then set up an income stream for you. After your death, any remaining funds in the charitable remainder trusts are then distributed to the charity or charities of your choice. It can be multiple. Or you can pair this with a donor advised fund. And that way, your beneficiaries can continue to give out of that fund after your passing.
Dr. Jim Dahle:
Yeah, there are so many options here. But you're absolutely right that the people for whom these work really well are people like you, Chris, people who want to give money to charity and want some sort of an income stream for them or for an heir, like a spendthrift kind of situation. That's the people who look at these sorts of things.
Dr. Jim Dahle:
And there's kind of the two big categories. Trusts and annuities. Annuities are typically done with smaller amounts of money. If you're only doing this with a few hundred thousand dollars, you might be more likely to use an annuity. If you're doing it with a few million, you might be more likely to use a trust.
Dr. Jim Dahle:
But there's a gazillion ways to set these things up. All of them, however, are essentially a split interest gift. Part of it's going to either you or your heirs, and part of it is going to the charity. And so, you get a donation deduction, a charitable donation deduction essentially for the portion that's going to the charity.
Dr. Jim Dahle:
But it's possible for this to work out better than not using this trust, better than just giving some money to charity and buying an annuity. This can work out better. So, if you have both of those goals in your life, it is worth looking at these things. And they're abbreviated CRATs, CRUTs, CLATs and CLUTs.
Dr. Jim Dahle:
Basically, there are unitrust and there are annuity trusts. The UT stands for unitrusts. And with the unitrusts, the income payments vary with how well the investments in the trust are doing. Think of it like a variable annuity. With an annuity trust, the payments are fixed. And so, that's the difference between a unitrust and an annuity trust, the UT versus the AT portion.
Dr. Jim Dahle:
And then the other part of these trusts is whether they're leads, a lead trust or remainder trust. Because the C always stands for charity, right? But the L stands for lead and R stands for remainder. So, CLATs and CLUTs versus CRATs and CRUTs.
Dr. Jim Dahle:
That letter refers to what the charity gets. So, if the charity's getting the money upfront and then the charity is giving you the annuity or giving your heirs the annuity, that's a lead trust. If the charity gets what's left in the end, that's a remainder trust.
Dr. Jim Dahle:
So, lots of different ways you can set this up. This is not a do-it-yourself project. This is something you go and see in an estate planning attorney in your state to set this up if this is something you're interested in doing.
Dr. Jim Dahle:
The charitable annuity, as Disha mentioned, one charity is generally who's getting that, it's usually a smaller amount. It's always fixed. I think it's always fixed. That may not actually be true.
Dr. Jim Dahle:
There are other options too. You can just give the money to charity directly. You can put it in a DAF and give it to charity. You can start a foundation. You can start a charitable foundation and then give to the charity from there. You can get charitable life insurance.
Dr. Jim Dahle:
So, what they do is you're giving the premium each year to a charity and they are buying life insurance on you. So, when you die, they get a whole bunch of money. I mean, there are a million ways to solve this problem. It's just not straightforward at all. You've really got to consider your options.
Dr. Jim Dahle:
But I think this is something you ought to consider. If you're considering buying in an annuitizing sum of your portfolio and you want to give some money to charity, you should be looking at all these options and look at them carefully because it's a big decision. It's usually a lot of money you're putting into something like this and you ought to take your time with the decision.
Dr. Jim Dahle:
What was this question specifically? Do you remember?
Dr. Disha Spath:
Yeah. I think he asked should he do this instead of just a regular annuity? By definition you're sharing your profits with the charity, so you're not going to get as much of a return from doing a charitable annuity than you would from a regular annuity. But in this format, you're combining the two, giving and having a set amount of income in retirement. I guess it really depends on what your goals are and how much you actually want to donate and how much you need to live on.
Dr. Jim Dahle:
Yeah, that's a good point. The general rule of charity is you do not come out ahead for giving money to charity. If you give the money to charity anyway, you got to be careful how you do it because it allows you to either have more money afterward or to give more to the charity. But you don't end up with more than you would otherwise have.
Dr. Jim Dahle:
But in your situation, I think I'd look pretty carefully at these charitable trusts, charitable annuities because you have both the goal of a stream of income and a desire to give to charity. That's who these are designed for. So, I think it's definitely worth looking into there.
Dr. Jim Dahle:
He mentioned something about QCDs, qualified charitable distributions. For those who don't know what these are, these are something you give to a charity in lieu of your required minimum distributions.
Dr. Jim Dahle:
Now, due to the weird way, RMD laws have changed in recent years. You can start doing qualified charitable distributions at age 70 and a half, even though you don't have to start taking RMDs until 72. But basically, you take your RMD and give it to charity and then you don't have to pay taxes on the RMD and you can still itemize your deduction or you can still take the standard deductions. You don't have to itemize like you normally would for big charitable gifts.
Dr. Disha Spath:
Oh, that sounds nice.
Dr. Jim Dahle:
It’s a real benefit there. If you are 72 plus, you have an IRA, you have to take RMDs from and you give to charity, this is the best way to give to charity. You should give to charity using qualified charitable distributions every year. I help my parents to do that each year. And it's really a pretty slick trick. Because if you have tons of deductions, fine, but a lot of times in retirement people aren't paying a lot of taxes, especially if they're in tax free state, like my parents are. They may not be donating all that much to charity. They often have the mortgage paid off so there's no mortgage interest. They may not be in that expensive of a house, so the property taxes might not be much.
Dr. Jim Dahle:
In short, they may be better off taking the standard deduction. 90% plus of Americans take the standard deduction. But with a QCD you can still essentially get a charitable donation deduction, while still taking the standard deduction. So, it's really a slick trick.
Dr. Disha Spath:
Cool.
Dr. Jim Dahle:
All right, more charity questions. We got another one here. This one's from AJ. I think this is more of a what should a policy be question. So, we can debate that a little bit. I'm not sure this one's going to have a right answer, but let's take a listen to the question.
AJ:
Hey Jim, thanks for all you do. This is AJ from Texas. I've heard you talk about charitable giving and picking charities based on their mission, transparency and low overhead. I have previously donated a 10% tithe to my church. I have recently come to realize that there is no transparency in how my church uses this money. And there are mounting allegations that they're hoarding money in equity deals, stock market and real estate.
AJ:
Do you give churches a pass on your criteria when it comes to charitable giving? Do you think churches should be forced to be transparent like other nonprofit groups? I’m struggling with this issue. Thanks for your input.
Dr. Jim Dahle:
Great question. I don't know that I know the answer to that. Disha, what are your thoughts?
Dr. Disha Spath:
From what I know, most churches don't have to file to become a 501(c)(3). But they can, and when they do, they do have to file form 990 with the IRS, and then they can make that public. So, they can make it more transparent. When they do become 501(c)(3) they kind of have to report what they're doing to the IRS. But they don't have to do that, I guess, if they don't want to. That would be a very good question to ask when you are joining a church and donating and tithing to them, I think, whether they do make their investments public.
Dr. Jim Dahle:
Yeah. I guess the bottom line is if I were an organization and I had the option not to file something like that, I probably wouldn't file it. So, I don't know that I blame them for not filing that. All it does is open you up to criticism for however we're using the money. Because obviously not everybody's going to agree with how the money should be used. So, I don't know that I'd file it if I didn't have to.
Dr. Disha Spath:
Yeah. They are required to file it if their gross receipts are greater than $200,000 in the year. So, I should have mentioned that. Or their total assets are greater than $500,000 for the year.
Dr. Jim Dahle:
Oh, that's going to be most big churches are going to have to. But I don't know that there's a lot of information. I'm looking at this form. It's a few pages, it's 12 pages on it. But most of it's kind of balance sheet stuff. Form 990 you said churches do have to fill it out.
Dr. Disha Spath:
If they meet those income criteria, they have to fill it out and then they can choose to make it public is what I was reading. They don't have to.
Dr. Jim Dahle:
Oh, they don't have to. They just have to file it with the IRS.
Dr. Disha Spath:
Right.
Dr. Jim Dahle:
Same basic answer then to that.
Dr. Disha Spath:
Yeah.
Dr. Jim Dahle:
Should they? Well, I don't know. I don't know that I would if I were in charge of the church. But it's up to you whether you want to give to that church. Presumably you're there because you believe in what they're doing, and you trust the leaders. I guess if that's not the case, well, why are you giving them tithe anyway? That's more of a philosophical religious question, I suppose, than it is really a financial question. It's really your call.
Dr. Jim Dahle:
I know a few people that have become disillusioned with their religion or their church and they still feel strongly about paying a tithe than they've chosen to give the tithe to other charities that they feel like they support more than the church itself. Whether that counts in God's eyes, I'll leave between you and God, but I know a few people that have chosen to do that sort of a thing with their tithe money. But this is far more a religious question than it is a financial question. I don't know if there's any one right answer to that.
Dr. Disha Spath:
Yeah, I don't really want to get into the muck of what we believe religiously, but I'll say I don't belong to a church because of concerns like this.
Dr. Jim Dahle:
Politics and religion, you got to love them, right?
Dr. Disha Spath:
Yeah.
Dr. Jim Dahle:
We get into both of them here at the White Coat Investor podcast.
Dr. Disha Spath:
It's always juicy.
Dr. Jim Dahle:
Yeah. Good luck with your decision. I do know that a lot of big churches, their finances come out anyway eventually. Somebody files a suit and it ends up in the lawsuit information and then the press picks it up. And so, you can kind of know where the money is, where the money's going.
Dr. Jim Dahle:
But whether you would make those exact same decisions that the church has made about what to do with the money, I guess I'll leave up to you. Some big mega churches might be buying private jets and have them sitting out on the tarmac behind the church. Others may be using it for various investments and then giving from those investments. There's quite a bit of variation there.
Dr. Jim Dahle:
All right. Before we get into our next question, I wanted to bring up an interview I did a few days ago with a doc who came to WCICON last year and is going to be coming back next year. Let's get her on the line here.
Dr. Jim Dahle:
All right. We have a special guest today on the White Coat Investor podcast. I'm here talking with Yemi. Yemi is a sports medicine doc down in sunny LA. And as we record this in mid-December, it's 19 degrees where I am here in Utah and 66 where she is in California. Welcome to the podcast, Yemi.
Yemi:
Thanks so much for having me, Jim. It's great to be here this morning.
Dr. Jim Dahle:
Yeah, it is awesome. We talk a lot about California on the podcast and how it's a difficult place to build wealth for doctors and so on and so forth. But you know what? There are benefits of living there and one of those benefits I think is on display today. You do get something for the sunshine tax that you pay in California, and today is one of those days.
Yemi:
Yeah, definitely.
Dr. Jim Dahle:
Another great opportunity to get out of the cold temperatures if you live someplace cold like I do, is to come to the Physician Wellness and Financial Literacy Conference or WCICON. And for 2023, that's March 1st through 4th in sunny Phoenix, Arizona, which will be dramatically warmer than Salt Lake or Wisconsin or Maine or wherever you're at right now.
Dr. Jim Dahle:
Yemi is an alumni of this conference. She attended last year at WCICON22 and is planning to come back this year. We thought we'd talk with her for a few minutes about her experience and what she liked and why she's coming back this year. And so, tell us about your trip to the conference last year, Yemi.
Yemi:
Yeah. Where do I start? I flew in California to Phoenix, very short airline trip. But just to even start off, how can you deny the JW Marriott Resort? It was absolutely beautiful. It was a great conference venue. And so yeah, I had a really great time at the conference last year.
Yemi:
I actually kicked off my conference experience doing kind of the recognizing burnout and preventing burnout interactive session with Dike Drummond. And that was just a great way to kick off the conference. It was very interactive. I got to meet a lot of colleagues and network with them and chat with them about their experiences in medicine and we all just kind of work together, just talking about ways to prevent burnout and create that life and career balance, that work life balance that we're all trying to achieve. So, that was a great way to kick off the conference.
Dr. Jim Dahle:
Awesome. And that was even before the opening reception last year.
Yemi:
I came a little early.
Dr. Jim Dahle:
Yeah. Well, it's not a bad place to be early. As you mentioned, it is a great facility. That's one of the wonderful things about it. Over the years the feedback we've gotten from attendees is, “Hey, make it nice. We want to go to luxury place. A lot of times we're paying with CME dollars, we're writing it off, we want to do something nice. This is our time away from work. And if the point is wellness, let’s go to a nice, luxurious place.” And the JW Marriott there just north of Scottsdale, it's technically in Phoenix, but it's pretty much Scottsdale, certainly qualifies.
Dr. Jim Dahle:
What else did you enjoy about the conference?
Yemi:
Really just the networking. I was just so inspired by all the different individuals that I met along the way. Physicians and various practices and even I met some dentists and oral maxillofacial surgeons. People from a lot of different backgrounds. But it was just so inspiring to see people passionate about their careers in medicine, and also their careers outside of medicine.
Yemi:
I actually registered for the premium registration and so it gave me access to a couple of different networking opportunities and I met a group of colleagues who were really passionate about real estate. They were all actually partners in real estate investing and they kind of shared to me their interests and they started talking about passive real estate investing. And so, I actually walked away from the conference with an interest in kind of pursuing more knowledge on passive real estate investing.
Yemi:
That's kind of one of the things that I came away with from the conference, was just all the different inspiring individuals that I met. Everyone was so down to earth. I remember meeting individuals who had written books that I had read and everyone was so nice and just passionate about what they were doing. I was very taken aback how just approachable and inspiring and kind everybody was.
Dr. Jim Dahle:
Yeah, it's a pretty incredible community, isn't it?
Yemi:
It is. Absolutely, absolutely.
Dr. Jim Dahle:
How about the content? How did you decide to interact with the content? There's so many ways, whether it's after the conference via the online course or virtually or attending in person. How'd you choose to digest the content of the conference?
Yemi:
Yeah. I did a little bit of a hybrid so that I could facilitate my wellness. Most of the sessions I went to were in person, but it was nice to have the ability to do some of the sessions online or virtually if I felt like I wanted to sleep in a little bit.
Yemi:
I did consume some of the content virtually. And then I also went back and revisited some of the content after the conference just to kind of brush up on some topics that I'm either missed or if I didn't go to a session I said, “Oh I kind of want to check it out after the conference.” It was nice to have the availability to consume some of the amazing content after leaving the conference. So, that was a great bonus.
Dr. Jim Dahle:
One of the things I really like about the conference and the conference last year is my favorite conference I've ever been to. I'm a little bit biased obviously, but it is my favorite conference. And part of what I liked about it is we kind of knocked off and I don't know what it was, 3:30 or 4:00 o'clock in the afternoon and we even did stuff.
Yemi:
Yeah.
Dr. Jim Dahle:
Wellness activities is what we called them. Did you attend any of those wellness activities and which ones and did you enjoy them?
Yemi:
Yeah. I actually did not. I actually brought my significant other with me. I feel like my wellness was just kind of hanging out with him after the conference. I wanted to get up, I think there was a 5K race and I think I wanted to enjoy that, but I didn't make it. But there were a lot of opportunities to golf and do activities on the resort ground. So, I didn't actually do that, but I think next year when I'm there, I'd actually like to enjoy a spa and I think there's a spa there, so I think I'm going to enjoy a massage there in the spa. So, I think I'll do that next year.
Dr. Jim Dahle:
Yeah, there's definitely a spa there. There's no doubt about that. Awesome. So, what made you decide that this was such a good experience “I want to do it again and come back in 2023?”
Yemi:
Yeah. I think first and foremost just the resort. Like you mentioned, it's such a luxurious experience, it's kind of a nice opportunity to take a couple days away from work just to be in a luxurious space. So that's one.
Yemi:
And two, just interacting with that content again. I've just left the conference so motivated and inspired by the content, individuals and just a way to kind of get that energy up again. I think every year it's kind of nice to go to a medical conference that you're interested in going to. I feel like it's so easy in our careers to go to a research conference or go to a conference for one of our professional organizations and feel obligated to go, but this is a conference that I actually feel I'm excited to go to. I want to learn something new.
Yemi:
I actually left the conference sitting in the airport coming up with a list of short-term and long-term goals. And part of me is just inspired to get back there and see what did I achieve versus what do I want to go back to and still achieve in the future. Really just learn something new and just get inspired and motivated again to build that life and that career that I want, that I feel like I'll thrive in.
Dr. Jim Dahle:
Yeah. That's awesome. One of the things you mentioned, the fact that there's other specialties there. For most of us, this is the first medical conference we've gone to maybe ever, maybe since medical school where there are people from other specialties there. So often we go to our national conference, our regional conference, it is just our specialty.
Dr. Jim Dahle:
It's really pretty cool to be sitting there with an OB on one side and with an orthopedist on the other side, a pediatrician ahead of you and a dentist behind you. You just don't do that very often. And it's very cool to be able to compare and contrast and get ideas from other people that you would never run into anywhere else in life and apply them in your own life. That's been one of my favorite parts of the conference as well.
Yemi:
Yeah, absolutely.
Dr. Jim Dahle:
So, if someone's sitting on the fence wondering if they should go, what tip do you have for them?
Yemi:
I would say one thing I spoke to previously was that this was one of the first conferences where it felt like it wasn't that I had to go, it was that I wanted to go. I think you'll find that the content is very inspiring and motivating. You'll meet a friend, someone that you really want to stay in touch with.
Yemi:
Yeah, I would say just push yourself. I think sometimes it's a little daunting to think about finances and to think about creating the career or the practice that you so want. And this is not about just medical jargon and scientific knowledge. This is about life and lifestyle and seeing yourself and the person next to you and getting motivated by something that they're doing or just learning something new.
Yemi:
I think sometimes we get really bogged down in our careers and I think that we also need to think about life outside of our careers and some of the choices that we can make to enhance that life, both within and outside of our careers. So, do it! You won't be disappointed.
Dr. Jim Dahle:
Awesome. Well, I appreciate that. If you are interested in coming to the Physician Wellness and Financial Literacy conference, you can still come, you can still come in person, you can attend virtually if that's not a possibility for you. You can sign up at wcievents.com.
Dr. Jim Dahle:
Yemi, thank you so much for coming on the podcast and for sharing your experience and for coming to the conference and just for what you do every day. It's important work. So, thank you very much.
Yemi:
Thank you. Thank you so much for having me. And Jim, thank you so much for what you do. I'm just very pleased to be here and be a part of this. Thank you.
Dr. Jim Dahle:
All right. That was great hearing from her. Man, I had a great time at the conference last year. I know you did as well, Disha, even though you like me, were working the whole time.
Dr. Disha Spath:
It was busy.
Dr. Jim Dahle:
I love hearing from people who enjoy that enough to be coming back again this next year.
Dr. Jim Dahle:
All right, let's take our next question from Mary. This one is about donating appreciated stock. And this is a subject near and dear to my heart. So, let's take a listen to that.
Mary:
Is it better tax wise to donate appreciated stock to charity or to use it to offset capital losses?
Dr. Jim Dahle:
All right, short and sweet. Great question Mary.
Dr. Disha Spath:
I'll let you take that one. No, I'll let you take that one. It's your favorite topic.
Dr. Jim Dahle:
Yes. The answer is yes. Yes. Donate appreciated stock to charity instead of cash. If you're going to donate to charity anyway, donate appreciated stock. What do you mean offset losses? You don't want to offset losses. Use losses to offset gains. Better not to have the gains. And when you donate to charity, you don't have the gains.
Dr. Jim Dahle:
So, if you've owned something for at least a year and it has appreciated and you're going to give money to the charity anyway, just give the appreciated stock or appreciated mutual fund shares directly to the charity. If you want to make it really easy, use a donor advised fund.
Dr. Jim Dahle:
If you're at Vanguard, you can open a Vanguard charitable account. Same thing with Fidelity. If you're at Fidelity, they've got their own DAF there. You move it from your brokerage account into the charitable account, they liquidated a few days later, you get the full charitable deduction for the full value of that publicly traded security that you donated on the day you donated it. That's your charitable deduction.
Dr. Jim Dahle:
But nobody pays the capital gains taxes. You don't pay them. The charity doesn't pay them. It's a great way to donate to charity. So yes, you should donate appreciated shares if you're going to give to charity anyway.
Dr. Jim Dahle:
Now, if you're not going to give to charity, obviously, you're not going to come out richer by giving to charity. But if you're going to give to charity anyway, use appreciated stock anytime you can instead of cash. And what that does is you're continually flushing out the capital gains from your portfolio. And so, the basis of your portfolio goes up and up and up over the years. And that way when you actually do have to sell some shares in order to spend that money, you won't have to pay very much in taxes, because your basis will be so close to the value compared to if you never sold shares.
Dr. Jim Dahle:
Obviously, you should tax less harvest when you can as well. This is great when you do have capital gains, you can use those losses against your capital gains. You can use up to $3,000 a year of them against your ordinary income. But you don't want to burn those capital losses for nothing that you don't have to use them for already. Save them up, you'll use them eventually.
Dr. Disha Spath:
Jim, is there a minimum that you can put into a DAF to start it?
Dr. Jim Dahle:
Well, each DAF has its own minimum. Vanguard is fairly high actually. I think it's $25,000.
Dr. Disha Spath:
Oh wow.
Dr. Jim Dahle:
They only allow a minimum grant to a charity of $500. So, if you don't want to give $500 plus at a time and you don't have $25,000 to put in there, Vanguard is not your DAF.
Dr. Disha Spath:
Okay.
Dr. Jim Dahle:
You probably want to look at Fidelity. I think Fidelity it's like $5,000 minimum to open it and $50 per donation. And it's not that hard to transfer money from a Vanguard brokerage to a Fidelity DAF. In fact, you could even put it into the Vanguard DAF and then have the Vanguard DAF make a donation to the Fidelity DAF if you want. There's lots of different options there. Since they're all registered charity, you can go from one to the other. If you're just trying to do small amounts, Vanguard may not be the best one.
Dr. Disha Spath:
Good to know.
Dr. Jim Dahle:
One of the cheapest ones as far as expense ratios if you're leaving money in there long term, but they're relatively high minimums. All right, tell us about the quote of the day today.
Dr. Disha Spath:
All right. It's from Robert G. Allen. He said, “How many millionaires do you know who have become wealthy by investing in savings account? I rest my case.”
Dr. Jim Dahle:
You got to take some risk. Unless you're willing to save 50% of your money for your whole career, you got to take some risk with your investments.
Dr. Disha Spath:
Right. With the current inflationary environment, it's very hard to keep up with that kind of inflation in the long term. So, you have to invest, got to take some risk. I totally agree.
Dr. Jim Dahle:
Do you know who Bob Allen is? This Robert G. Allen guy?
Dr. Disha Spath:
I feel like I should. Maybe I should Google it real fast.
Dr. Jim Dahle:
It was a long time since he was kind of out there in the personal finance literature. Like an 80s, 90s kind of guy. He wrote “Multiple Streams of Income.” I don't know that I endorsed everything he ever wrote or said for sure, but he was based out of Utah and this was kind of his big idea. It was this idea of multiple streams of income, which we all talk about now, but it kind of came from this guy.
Dr. Disha Spath:
Cool.
Dr. Jim Dahle:
I think we're switching subjects. Are we done with our charitable questions? I think we are.
Dr. Disha Spath:
Yeah. We're going to bonds and bonds, and bonds. More bonds.
Dr. Jim Dahle:
Is there anything else to say about charity before we change topics?
Dr. Disha Spath:
I think it's a fabulous thing to do.
Dr. Jim Dahle:
I always think about the five money activities. Earning, saving, investing, spending, giving. And I try to become better at each of them. But what a lot of people don't realize is giving is work too. You got to make sure you're given where your money's going to do the most good. Whether that's to friends or family or acquaintances or registered charities or churches like the question we had earlier. And if you don't spend any time with it, you're probably not going to do it very well.
Dr. Jim Dahle:
So, it's a great problem to have, but I encourage you to put just as much effort into it as you put into deciding on and planning your next vacation to make sure you do it right.
Dr. Disha Spath:
I love that.
Dr. Jim Dahle:
All right, let's do bond funds. What's your account to put bond funds into? It's an anonymous question on the Speak Pipe. Let's listen to it.
Speaker:
Hi Jim. I'm having trouble figuring out which account to put my bond funds into, either my tax protected retirement accounts or my taxable account. I know you came out with a few different blog posts, one particular a while back that talks about which bond funds are reasonable. And in some of those you touch on the benefits of having them in one account versus the other.
Speaker:
But at the end of the day, I'm still sort of unsure about which one to put them in. Especially as time goes on, if I have a pretty large allocation in bonds as I get older and more and more percent of my portfolio in a taxable account, I don't want to end up filling my retirement accounts with only bond funds.
Speaker:
I was curious if it was a reasonable thing to sort of divide up your bond allocation between your taxable and retirement accounts or what other way to do it. It seems like I'm sort of mostly taking my risk with stocks as opposed to bonds. I don’t know if that helps, but any advice would be appreciated. Thanks.
Dr. Jim Dahle:
Portfolio construction.
Dr. Disha Spath:
Yay. Your favorite.
Dr. Jim Dahle:
The questions with no right answers, right? We can talk about this stuff all day. If there's five blog posts on the blog about this and they're all 3,000 words long talking about the pros and cons, there's clearly not a right answer to the question.
Dr. Jim Dahle:
There are many ways to do this. A couple of things to keep in mind. One, there is a benefit to having your tax protected to taxable ratio grow. So, more of your money is in tax protected accounts than is in your taxable account. The way you do that is by having high returning assets in the tax protected accounts, whether they are tax deferred or whether they are tax free a.k.a traditional and Roth. That's a good thing. That factor would lead you to put higher returning assets a.k.a stocks into your tax protected accounts.
Dr. Jim Dahle:
The other factor you think about is tax efficiency. How much of your return is going to be income each year? How is that income going to be taxed? And in that respect a typical taxable bond, a treasury or a corporate bond, a mortgage-backed bond, those sorts of things are not super tax efficient. They pay out basically their entire return each year in income. And that income is taxed at ordinary income tax rates. Sure, treasuries avoid state and local taxes, but basically your ordinary income tax rates.
Dr. Jim Dahle:
Bonds are not tax efficient vehicles. It turns out at really low interest rates, it doesn't matter all that much. As interest rates rise like they have in the last year, bonds and tax protective starts being a better and better strategy.
Dr. Jim Dahle:
However, there's always the option to use muni bonds and more and more of my accounts are also becoming taxable like yours over the years. And so, more and more my bonds are ending up in a Vanguard muni bond fund because that's tax free, at least federally tax free income that those bonds pay out. Now, obviously they pay out a lower rate than your regular taxable corporates and treasuries, but if you're in a high tax bracket, you may still come out ahead like we typically do by using a muni bond fund.
Dr. Jim Dahle:
There's not a right answer there, but as interest rates rise, it becomes more and more beneficial to put those bonds into your tax protected accounts. If your strategy is splitting the difference, I think it's perfectly acceptable. Ours are kind of split as well. Some of our TIPS are in taxable, some are in tax protected. All of our I bonds are obviously in taxable. Our G fund is obviously in tax protected. Our muni bonds, they're all in taxable. So, that's where I'm at. I got a bunch of my bonds in taxable and some still in tax protected. So, I can't criticize you if that's what you want to do because that's what I'm doing right now.
Dr. Jim Dahle:
But back in the day when my taxable account was perhaps 10% of my portfolio, I didn't have any bonds in it. All the bonds were in tax protected accounts then. So, it's a classic portfolio construction dilemma of when do you put bonds in taxable and it sounds like you're kind of at that point where it's time to have at least some of your bonds in a taxable account.
Dr. Disha Spath:
I live in New York. We have a New York muni bond fund at Vanguard, so I just invest in that in my brokerage account as well along with the stock funds.
Dr. Jim Dahle:
Yeah, yeah. When you live in New York, you got to do whatever you can.
Dr. Disha Spath:
Exactly. Location dependent.
Dr. Jim Dahle:
Especially if you're in the city, right?
Dr. Disha Spath:
That's right.
Dr. Jim Dahle:
Imagine that you're in a high tax state to start with and then it's like you're in a high tax state within a high tax state.
Dr. Disha Spath:
Yeah, that's why I moved to upstate.
Dr. Jim Dahle:
All of you doctors in Manhattan, thank you for being there to serve the people even though it is not good for you financially.
Dr. Disha Spath:
It's a fabulous city though. You can't blame them.
Dr. Jim Dahle:
Yeah. I talked to Yemi earlier. She's in California and pays the sunshine tax for sure, but you know what? She's benefiting from this week, the sunshine. It’s 15 or 19 degrees here in Salt Lake and it's 60s and 70s in California. So, there are some upsides to living in these high tax places and some pretty cool things about being in Manhattan. Even if I can't stand to be there for more than about three days at a time, it really is a pretty incredible place.
Dr. Disha Spath:
Agreed.
Dr. Jim Dahle:
Okay, let's take a question from Nate.
Nate:
Hello. I'm a physician in California in my early 50s. We have our house almost paid off and anticipate doing so this year. My idea was to take the money that we normally would pay our mortgage with about $3,500 a month and invest that figuring we haven't missed it for a long time and we are used to paying that, so we might as well invest it.
Nate:
My idea was to invest the money in either California municipal bonds or a California municipal bond fund since the money is free from both state and federal taxes and the tax equivalent yield would be pretty good and the money would be quite safe in those investments.
Nate:
What are your thoughts on that? The idea is that I'm saving this money outside of my pension because I would like to be able to access it earlier if I choose to retire, cut back or take a sabbatical. Thank you very much.
Dr. Disha Spath:
Yeah. If you want a safe investment, it sounds like a good safe investment to invest in. What do you think, Jim?
Dr. Jim Dahle:
Yeah, for sure. You're in California. There's lots of California muni bonds and you're paying a high state tax rate. If it doesn't make sense of California, it doesn't make sense anywhere to use a state specific muni bond fund. So, I wouldn't lose any sleep at all about investing in that.
Dr. Jim Dahle:
Now I'm not entirely clear and I don't think that Nate is either entirely clear on what the purpose of this money is. Because at the end, he rattled off two or three different things he could use this for. Is this money you're going to spend somehow different from your retirement money? This is money you're going to use to bridge until you get a pension or to pay for three or four years of early retirement or something that you're somehow treating as a different bucket than your overall retirement nest egg.
Dr. Jim Dahle:
And if so, fine, think of it separately, have its own asset allocation. But if this is just going to be part of your retirement nest egg, well, you should look at your overall investing plan for your retirement money and then ask yourself, “Well, I've got this $3,500 or $3,800, or whatever it was that was going toward the mortgage and now what should I use it for?”
Dr. Jim Dahle:
Well, it doesn't matter that before it went to the mortgage. The money doesn't care what it was going to be spent on. It's just like any other savings you have. It's just like any other windfall you have. And it ought to go into your written investing plan according to how you invest all your money. It doesn't necessarily need to go someplace unique like into muni bonds if that's not what your plan is calling for already. So, I would spend some time thinking about what this money is really for Nate before you decide how to invest it.
Dr. Disha Spath:
I think that's such an important point, especially in a market like this where bond buying goes up when the market is down. But really if you were actually looking at your portfolio and your written investment plan, most people should be buying stocks right now, not bonds, because your stocks are totally falling in value so that your written investment plan should lead you to buy something that's down. So, I think that's really an important reminder for us to all look at a written financial plan instead of just going for whatever's popular at the moment.
Dr. Jim Dahle:
Yeah, of course. Depending on what kind of bonds you're investing in, those might be down.
Dr. Disha Spath:
Yeah. Asterisk, it's true.
Dr. Jim Dahle:
But a terrible year for most bond fund investors. The people are calling it the death of the 60/40 portfolio. It kind of reminds me of that, what was it? Newsweek or something. In 1981 or 1982, they ran this headline “The Death of Stocks.” This cover is famous of course, because it was the mark of the beginning of the longest bull run in stocks that we've ever had in history.
Dr. Jim Dahle:
Obviously, buying bonds now, even the ones that kind of got hammered in 2022, you're getting a much better investment than you would've gotten a year ago buying those bonds. But there's some bonds that did just fine this year. If you stayed really short term, your bonds aren't down all that much. I bonds are way up this year.
Dr. Jim Dahle:
And so, it kind of depends on what bonds you own. Hopefully you didn't own long-term treasuries because they got hammered over the course of 2022 as interest rates went up. But hopefully they'll provide a better return going forward from here.
Dr. Jim Dahle:
All right, for those of you who aren't aware, we have a free real estate masterclass. If you're interested in learning a few pearls about real estate and kind of getting a little bit of an intro totally for free to our longer real estate course, the No Hype Real Estate Investing course, you can take this free masterclass. And it's available at any time, at your convenience. whitecoatinvestor.com/remasterclass. Be sure to check that out.
Dr. Jim Dahle:
All right, we’ve talked about some nominal bonds. We've talked about some muni bonds. I guess now we're going to talk about TIPS and I bonds, our favorite inflation indexed bonds. Let's take this question from an anonymous Speak Pipe.
Speaker 2:
Hi, Dr. Dahle. It's anonymous in the Pacific Northwest. Thanks for continuing to answer questions from the White Coat community to empower us to take control of our finances.
Speaker 2:
Now that interest rates are approaching more historically normal levels, there's a lot of interest in bonds. In particular there's been a lot of I bond hysteria, but I haven't heard people talk much about TIPS. Five-year TIPS auctioned in October had a coupon rate of 1.625% and will likely become more attractive as the Fed continues to increase rates.
Speaker 2:
Could you talk about TIPS versus I bonds as well as give your thoughts on how much of the fixed income portion of our asset allocation we should consider devoting to individual bonds versus bond funds? Thanks.
Dr. Disha Spath:
Okay. I bonds are treasury bonds that pay a fixed rate of interest as well as another lay of interest that varies with a current inflation rate as measured by the consumer price index. That inflation adjustment is made twice a year and that I bond doesn't actually yield any income initially. You only get the income when you cash it out. And you can do that after 12 months of owning it. And if you do it within five years of owning it, you forfeit the last three months of interest. That's an I bond.
Dr. Disha Spath:
TIPS is different. TIPS principle values are adjusted to incorporate for the current inflation rate, whereas I bonds receive an adjustment in their interest rates to reflect inflation. So, TIPS are adjusting the principle, which then varies at your interest payments indirectly. TIPS can be bought from the government at treasurydirect.gov but they can also be bought via a brokerage firm. Or you can also buy a TIPS fund or an ETF.
Dr. Disha Spath:
The advantage of TIPS is basically you don't have any purchase constraints. You can buy it at a brokerage. You don't have to go to Treasury Direct. You can sell it on a secondary market, which makes it a little bit more liquid but you do get semi-annual interest payments from TIPS. Actually, it can be an advantage if you're actually looking for income.
Dr. Disha Spath:
This advantage is that you're going to have to pay tax on those income payments as well as inflation adjusted payments. And you're going to have higher volatility due to the trading on the secondary market.
Dr. Jim Dahle:
Yeah, that's exactly right. Other than it's not treasurydirect.com, it’s treasurydirect.gov.
Dr. Disha Spath:
Oh, sorry. Thank you.
Dr. Jim Dahle:
I tried to see what was on treasurydirect.com. I don't think there is a treasurydirect.com, but I was curious. There's some spam imitator trying to take people's treasury money there.
Dr. Disha Spath:
Right. Sorry. Yeah, that's a really good correction. Thank you so much for making that clear.
Dr. Jim Dahle:
But yeah, TIPS, I bonds, I love them. I feel like I talk about them all the time. At the beginning of the year, I bonds were an awesome investment and then I think it was in May, they got even better. For a portion of this year, I bonds were paying like 9.5%. As a safe investment, that's incredible. That's the best I bonds have ever been.
Dr. Jim Dahle:
And they're not quite as good right now as they were then, but they're still paying like six something, because you get this fixed rate plus the inflation adjustment and this year inflation was really high. And so, they paid really, really well.
Dr. Jim Dahle:
And the cool thing about them, I mean there's a lot of cool things, but one cool thing about them is kind of like the TSP G fund. You never lose principle. Kind of like a money market fund that way. When rates rise, that's usually a bad thing for bonds, at least in the short term because the principle goes down. But that's not the case for a money market fund. That's not the case for a savings account. That's not the case for the TSP G fund. That's not the case for I bonds. It's a good thing when rates go up there for these sorts of investments. It actually is all good for them and their returns.
Dr. Jim Dahle:
I like both I bonds and TIPS. I own both of them. I own TIPS both in mutual fund or ETF and directly at Treasury Direct. When I tend to buy taxable, I tend to buy individual TIPS, which obviously since they're all guaranteed by the US government, there's not like a benefit of diversifying. It’s not like there's multiple US governments. It's basically the same whether you buy them directly or whether you buy them in a fund. You're just getting some additional liquidity and some ease of use mostly by using a fund if you're interested in that. If you want to buy them in your 401(k), you're probably not going to be able to buy them individual TIPS. You're probably going to have to use a TIPS fund if you want to do that. But either one is fine. There's not a right or wrong answer there.
Dr. Jim Dahle:
The overall question I like that you asked is how do you decide how much of your bonds to index to inflation and how much do you not index to inflation? Because obviously, when inflation is lower than expected, the nominal bonds do better. When inflation is higher than expected, the inflation index bonds do better.
Dr. Jim Dahle:
And so, I think it's good to have both. I've always had both. I was never sure exactly how to split between them. So, I just did it 50/50. And we've always had 50% of our bonds in inflation index bonds and the other 50% in some sort of nominal bond. Although for a lot of that it's just been in the TSP G fund that I had access to since I was in the military.
Dr. Jim Dahle:
How about you, Disha? Do you have any inflation index bonds? Have you chosen to split those in some sort of percentage? What’s your mix of nominal to inflation index bonds?
Dr. Disha Spath:
Yeah. Honestly, I don't think I was that savvy. I don't think I have purchased any TIPS in our retirement accounts as far as if I remember on top of my head. We thought about the I bonds, but it just wasn't in our plan at the time. So, we didn't do it. But we were actually taking our money, saving it for backyard renovation, which hasn't happened. So I really wish I'd bought the I bond at this point but it's really hard to find contractors it turns out.
Dr. Jim Dahle:
They're not a terrible short term investment as long as you're going to hold them for at least a year.
Dr. Disha Spath:
Yeah, we were hoping to do it in six months and it didn't happen. So, at this point it would've been better if we just invested, but… So no, but I will.
Dr. Jim Dahle:
Some people use them as their emergency fund. Now, obviously you can't in your first year because you can't take the money back out. But after the first year, you can take the money out. The big downside of I bonds is you can only buy $10,000 a piece of them. Now you can buy $10,000 for you and $10,000 for your spouse and $10,000 for your LLC and $10,000 for your trust and that sort of thing. But it's kind of unwieldy if you're trying to invest a lot of money.
Dr. Disha Spath:
Yeah. TIPS are better for that.
Dr. Jim Dahle:
TIPS are better for that for sure. And right now, honestly, you had mentioned that in October five year TIPS had a yield of 1.6% or something. Right now, they've come down a little since then. I'm looking the yield curve right now as of the 16th of December, five years are 1.47% and then it's pretty much flat. 10 years are 1.35%, 30 years or 1.4%.
Dr. Jim Dahle:
But compared to where TIPS yields have been, the real yields on treasury bonds have been for the last, I don't know, five to 10 years, this is great. You can guarantee that you'll beat inflation by 1.5% over any time period you want. This is about as attractive as TIPS have been in a long, long time.
Dr. Jim Dahle:
Now, there was a time right when they came out in like 2000 when you could get 3% or 4% real on TIPS. I don't think we're ever going to go back to that. Maybe it was because they were so new and nobody really knew what they were, that the yields were so high. But if you ever see that again, back up the truck and load it up on TIPS.
Dr. Jim Dahle:
All right, let's take a question about asset allocation for bonds.
Speaker 3:
Hi Dr. Dahle. Thank you for all you do for fellow physicians. We had a question in regards to asset allocation for bonds that we're hoping you can share your wisdom on. My wife and I are in a fortunate position that the money we put away in tax advantage retirement accounts versus regular brokerage accounts will be in roughly a one to three ratio so that the majority of our money put away for future retirement will be in regular brokerage accounts.
Speaker 3:
Our asset allocation is 20% bonds, 10% REITs and 70% stocks with the bonds being 50/50 nominal bonds versus TIPS and I bonds. I understand that except for municipal bonds, bonds should be held in tax advantage accounts but on the other hand, there are arguments to be made to leave room in tax advantage accounts for total stock index mutual funds with higher long-term expect returns to reduce the tax struck on the growth.
Speaker 3:
How do you balance the two in your tax advantage accounts? At what point should one consider using municipal bond mutual funds rather than total bond mutual funds so that one can have some bonds in regular brokerage accounts and thus leave more room in tax advantage accounts for total stock index mutual funds to maximize growth potential in the long term? Thank you for your help and everything that you do.
Dr. Jim Dahle:
Okay, good question. Kind of similar to the question we had earlier and kind of sums up what we've been talking about. It sounds like your tax protected or taxable ratio is about one to three so you got to put a whole bunch of your portfolio into taxable. And when that's the case, yeah, bonds probably aren't a bad thing to put in there.
Dr. Jim Dahle:
When your ratio is the opposite, if it was three quarters tax protected, I don't know that bonds would go in there. I'd probably be putting things like a total stock market fund or a total international stock market fund in there. Those are very tax efficient investments. They do very well in taxable accounts. You can tax loss harvest them. You can donate appreciated shares to charity. They're great things to have in a taxable account. And if you just have a little bit of your money in taxable, I think those are probably the first things that tend to go in there.
Dr. Jim Dahle:
But if you've got to put a lot of your asset classes into taxable, then I think bonds are a reasonable thing to put in there. Of course, in the form of muni bonds, because muni bonds of course, and if you're in a high tax bracket, have a higher after-tax yield once you pay the taxes on the income that they're paying out.
Dr. Jim Dahle:
But there's been a time in my life when we didn't have a taxable account. So, these things changed. Back in the 2000s we had a taxable account and we ended up donating the entire thing to charity and then we were back to a 100% tax protected portfolio. And then a few years later we were earning enough and saving enough that we were maxing out our tax protected accounts and still saving a whole bunch.
Dr. Jim Dahle:
And now our taxable account is our largest account and probably going to continue to grow. But just keep in mind that just because that's where you are right now, it doesn't mean that's where you'll always be. Those ratios can change over time.
Dr. Jim Dahle:
But in your situation, three quarters of your money now in taxable, yeah, it's certainly reasonable to put some, if not all of your bonds into that taxable account using muni bond funds or something similar.
Dr. Disha Spath:
Agreed.
Dr. Jim Dahle:
Okay. Where are we at? We got another question about Vanguard. Zora is not happy with Vanguard. Lots of people are not happy with Vanguard.
Dr. Disha Spath:
I wonder if she got a fake site.
Dr. Jim Dahle:
Well, maybe, maybe not. But the problem with Vanguard is they solved so many problems, they basically reduced investing costs for everybody to the point where investing is almost free. And that caused them to become really popular and grow really fast.
Dr. Jim Dahle:
And part of this is Jack Bogle's fault. He always said that we're not going to be a tech company, we're not going to have the very best technology of any company out there because technology of course is expensive, but it takes technology in order to service gazillions of people. And there is so much money flowing into Vanguard for the last few years that they literally cannot hire fast enough and train fast enough and boost their customer service experience fast enough to really take care of everybody.
Dr. Jim Dahle:
And so, you see that in complaints about customer service and screw ups and being on the phone for a long time to the point where a lot of people are like, “Is Vanguard trying to get us to open up a Fidelity or Schwab or TD Ameritrade account and just buy Vanguard ETFs there because they don't want to deal with our customer service?”
Dr. Jim Dahle:
So, I don't know. It's not that unusual these days to hear a complaint about Vanguard customer service. And I think that's probably what Zora's going to be talking about. But let's listen to the speak button.
Zora:
Hi Dr. Dahle, this is Zora from Michigan. I wanted to inform you about Vanguard's recent activities that raised some alarm and it was very disturbing. Recently I opened one traditional and then one Roth IRA account. Without my knowledge, they opened a second account on my behalf but they didn't really notify me of this. I called Vanguard, I talked to someone, nobody was able to give me an answer, so I requested for one of the accounts to be closed. The account was closed.
Zora:
Then I transferred the money to do the backdoor Roth conversion. I transferred the money from the traditional to the Roth IRA. I noticed a few days later the conversion didn't take place and then also they said the account that was closed was opened back up and then the money was eventually transferred to that account.
Zora:
With all these events happening, I just don't feel comfortable with Vanguard. Is this normal? There's absolutely no communication from Vanguard whatsoever ever about closing and opening these accounts. I feel like they did all of this behind my back without any information, any communication.
Dr. Jim Dahle:
Well, yeah, kind of classic customer service screw up. They botched it, they opened the wrong account. But let's keep in mind there's not something nefarious happening here, right? Nobody stole your money. They just basically are showing incompetence is what they're doing. They tried to close an account and they reopened the account and they didn't do the Roth conversion like they were supposed to.
Dr. Jim Dahle:
Here's the deal. If you don't feel like Vanguard's treating you well, go to Fidelity. They're fine. Obviously, don't invest in the super high expense ratio funds that Fidelity offers. But if you want to use mutual funds, Fidelity has a handful of very low-cost index funds and you can buy Vanguard ETFs there. You can buy iShares ETFs there and I would say 90% of the time you're going to have a better customer service experience at Fidelity or at Schwab than you are at Vanguard.
Dr. Jim Dahle:
A lot of us have been with Vanguard for a long time. We feel loyalty to them for what they've done for the industry. We feel loyalty to Jack Bogle even though he has been gone for a few years now. And part of it is just inertia. We started investing at Vanguard 20 years ago and we're still there due to feeling loyalty and due to inertia.
Dr. Jim Dahle:
But there's no logical reason you have to invest at Vanguard. If you feel like they're not treating you well, go somewhere else. Not to your bank or your credit union or some crappy place to invest. But there are other good options out there. And the main ones are Fidelity and Schwab. Go open a Fidelity account and I would expect that you will spend less time waiting on hold. You'll probably have a better customer service experience and there might be a few additional fees you pay here and there but you can certainly invest in a Boglehead way in a very reasonable low cost broadly diversified way without being at Vanguard.
Dr. Jim Dahle:
Where are your investments held, Disha? Is yours held mostly at Vanguard?
Dr. Disha Spath:
Yeah, I have several accounts at Vanguard, and then we do have some at Fidelity as well. I have my solo 401(k) at Fidelity and the kids Roth IRAs at Fidelity. Yeah, it's not easy dealing with these brokerage services honestly but I think that's why they can keep their costs low too at the same time. Like you said, there's a bit of a headache, but you can move around in between them if you like someone better. I don't have any experience with Schwab. What do you know about Schwab, Jim?
Dr. Jim Dahle:
Well, I've actually invested with all three of these big three. And I've had Fidelity do something similar with accounts as what has happened to Zora at Vanguard. I've had them open wrong accounts and stuff. It had to do with the WCI 401(k), which is relatively complicated.
Dr. Jim Dahle:
But basically, our Roth IRAs are at Vanguard. Our taxable accounts are at Vanguard. Our kids' Roth IRAs are at Vanguard. Our kids' UTMA accounts are at Vanguard. The WCI 401(k) is at Fidelity. Our HSA is at Fidelity. My 401(k) with my partnership is at Schwab. I'm using all three of these and I rarely call any of them, to be honest.
Dr. Jim Dahle:
Almost everything I do can be taken care of online. But I had to call Vanguard just this month to move some money from one brokerage account into another and it was fine. I waited on hold for a few minutes, not long. And I asked them to take care of something which was relatively complicated, something that could not be done online. And I met competent people who took care of it. It was done right the first time. The money was moved over as expected, no problems whatsoever.
Dr. Jim Dahle:
And so, I've had similar situations at Fidelity and Schwab. but there's no reason you should feel like you have to be at Vanguard, especially with the ability to buy ETFs these days. You can invest in all Vanguard funds without ever sending any money to Pennsylvania. Don't feel like you're stuck there, Zora. If you had a crappy experience, take your business elsewhere.
Dr. Disha Spath:
Yeah. I actually, interestingly have my kids UTMAs at Acorns because of their user interface just being so friendly for the kids. It's an app-based thing and they have these fun graphs, they can trace the growth of their money and kind of see what they own. So, for that, I pay $5 a month. It's a lot for brokerage. But just because it keeps my kids interested and it's a better visual format, I'm willing to pay for that. You do get better service if you pay more but I'm not willing to pay more for most of my portfolio.
Dr. Jim Dahle:
You're dating yourself here, Disha, when you say $5 is expensive, right? Think about our parents. They were investing in the 80s or 90s. What did it cost to call up a broker and put in a trade, like to trade from one mutual fund to another? You were probably paying a load of 8% plus $250 per transaction.
Dr. Disha Spath:
Geez.
Dr. Jim Dahle:
We can thank Jack Bogle for the fact that investing is practically free these days when we're like, “Oh, $5 fee.”
Dr. Disha Spath:
True.
Dr. Jim Dahle:
“I have to pay $3.99 to trade an ETF.” People have no idea what it used to cost to invest.
Dr. Disha Spath:
But it's free at Vanguard!
Dr. Jim Dahle:
It was routine to pay 1% for a mutual fund. This was the Vanguard Revolution, to bring these costs down, down, down, down. And even Vanguard's expense ratios started out quite a bit higher than they are now. They worked single digit basis point investment ratios.
Dr. Jim Dahle:
Now you can go to Fidelity and buy a total stock market fund. You can go to iShares, you can go to Schwab, you can go to Vanguard, and you'll be under five basis points for all of them. It's free. You can buy every stock in the world for free. And you couldn't do that decades ago.
Dr. Disha Spath:
It's true.
Dr. Jim Dahle:
It's interesting that now we think about $5 a month as being expensive.
Dr. Disha Spath:
I'm the frugal physician, remember?
Dr. Jim Dahle:
All right. Well, I think we've come to the end of our podcast. If you're considering locum tenens, either full-time or on the side, you probably have a question or two or 20. Fortunately, locumstory.com has the answers you need. It's packed with unbiased information and advice from physicians like you.
Dr. Jim Dahle:
locumstory.com is nothing to sell. It is simply a resource for information. You'll find super handy tools to let you see locums trends for your specialty, compared different locums agencies. There's even a quiz to help you decide if locums is right for you. locumstory.com is a perfect place to start if you want to learn more about locums.
Dr. Jim Dahle:
And I've talked to so many docs that have done locums that has really worked well for them. The Physician on FIRE started his career doing locums. He did several years of locums, had all his expenses paid. He had basically no expenses. His entire anesthesiologist's salary after tax was pretty much being saved for retirement. And voila, by the time he was 39 or something, he was financially independent.
Dr. Jim Dahle:
Don't forget our survey, whitecoatinvestor.com/survey. Please, please, please fill it out. We will bribe you. We're giving out t-shirts and a free online course of your choice for the winners of a drawing you'll be entered into by taking the survey.
Dr. Jim Dahle:
Don't forget about our masterclass. If you have not taken that, if you're thinking about real estate investing, maybe not ready to commit the full No Hype Real Estate Investing course, check out the real estate masterclass, whitecoatinvestor.com/remasterclass.
Dr. Jim Dahle:
All right, have we had any good reviews lately, Disha?
Dr. Disha Spath:
I think so. Let me read one. This one is titled “A Must Listen for All Physicians. Dr. Dahle is truly serving the people who serve by sharing his knowledge regarding all things $$$. I’ve been listening to the podcast nonstop since I’ve discovered it a few months ago and cannot believe the amount of information I’ve not only learned but retained due to the accessible nature of the podcast. Thank you, Dr. Dahle!” I love that.
Dr. Jim Dahle:
You guys got to give a few of these for Dr. Spath here.
Dr. Disha Spath:
Oh, nah. I'm here to learn from you, Jim. Come on.
Dr. Jim Dahle:
All right. Well, it's been good to be with you again. I know that you're inundated with snow just as we are here in Utah. But it's wonderful this holiday season to have a white Christmas.
Dr. Jim Dahle:
And until we see you again in the new year, keep your head up, shoulders back. You've got this, and we can help. See you next time on the White Coat Investor podcast.
Dr. Disha Spath:
See you later.
Disclaimer:
The hosts of the White Coat Investor podcast are not licensed accountants, attorneys, or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.
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