There is so much great information on personal finance forums. I regularly participate on several message boards, including Bogleheads, White Coat Investor, and Rockstar Finance. Here are some of the discussions happening around the internet.
1. White Coat Investor: Minimizing Trading Fees
Question: EM/CCDOC is about to open an individual 401(k) and wants to build a 4-5 fund portfolio, ideally with Vanguard. However, he doesn’t want to open a Vanguard account, because they do not permit him to use Admiral shares or ETFs in the individual 401(k), which would mean he would have to pay higher fees. Therefore, the two options he is considering are Etrade and Schwab. With the ETrade option, he would purchase Vanguard ETFs, although he would have to pay a $7.95 commission for each trade. For the Schwab option, he would have to buy Schwab index funds, which happen to be lower cost than the equivalent Vanguard option. He is seeking advice from the White Coat Investor community.
WSP’s Take: Of the two options he listed, I would prefer the Schwab option. Schwab has many excellent ETF options and he can create a 4-5 fund portfolio at very low cost. One of the downsides of Schwab compared to Vanguard or Fidelity is that they are smaller, so the bid-ask spreads may be slightly larger. They also have a shorter track record than Vanguard and Fidelity when it comes to index investing.
I think Fidelity should also be considered as an option for investing in an individual 401(k). Like Vanguard and Schwab, they have many low-cost index fund options and commission-free ETFs to help build a 3-fund, 4-fund, or 5-fund portfolio.
2. White Coat Investor: Non-traditional PGY-4 Psych Resident Questions
Question: Derekhbinah is a 47-yo PGY-4 psychiatry resident who is about to finish residency. He has three young kids (ages 2-8), for which he sends the two school-age children to a $10k/year Jewish private school. He has no medical school debt and $30k in savings. He plans to move to the Midwest for a lower cost of living, and is looking at a VA job which would pay around $220,000, compared to community jobs that might pay >300k. He hopes to be financially independent and retire in approximately 20 years (when he is 67). He is seeking advice from the White Coat Investor community.
WSP’s Take: Given his age, he certainly has a late start to building a nest egg for retirement. One thing that is going for him is that he has no debt. Ultimately, at a psychiatrist’s salary and starting at a later date, he will need to make some sacrifices, and he cannot have all of the luxuries of a young, highly-paid specialist.
While I generally recommend saving approximately 20-25% of gross income, because of his late start, he will probably need to save 35-40% to reach his goal of being financially independent 20 years into practice. Is this compatible with sending his children to private school? Generally, no, but that’s because most physicians do not prioritize private school over other spending items such as a house or car.
However, the original poster seems to place a very high importance in sending his children to Jewish private school, which is completely reasonable. Therefore, he should be willing and able to sacrifice things like a larger house or a nicer car to provide this to his children. As the adage goes, he can afford anything, but he cannot afford everything.
3. Bogleheads: Friend with $1,000,000 in Bitcoin
Question: OnFire has a friend who bought $10,000 in bitcoin when it was trading for $114 a bitcoin. That bitcoin is now worth over $1,000,000, and the friend is letting it ride, but OnFire thinks he should sell it. He is asking if there’s any way to convince his friend to sell it, or whether should he just stop giving him advice.
WSP’s Take: Stop giving him advice. He made a million dollars on bitcoin, and the original poster didn’t. I’m not sure this bitcoin millionaire will listen to anyone other than a fellow bitcoin investor who is in a similar spot as him.
4. Bogleheads: Job Decision For New Attending
Question: Wikiradio is 32, married with one kid, no medical school debt, a paid-off 165k home, and approximately 200k in assets. He is deciding between two job offers:
Job A is where he did his medical training and has many friends, while Job B is in his hometown. He discusses some of the financial decisions, but the long and the short of it is that Job A is worth about 1.3 million over his career than Job B. However, he seems to be asking more for the non-financial considerations:
Job B will have higher professional satisfaction (can practice his subspecialty exclusively), will only have to work at 2 hospitals (vs. 6), and is closer to family. He does have a larger social network in job A. Job B is more of a national, corporate group, while Job A is a more local group.
WSP’s Take: I personally would recommend taking Job B because it sounds like the original poster values the quality of life associated with being able to exclusively practice his subspecialty and work at fewer hospitals, but others (such as White Coat Investor) would take Job A to retain professional autonomy.
Wall Street Shares: 5 Articles To Read This Week
- Passive Income, MD: My Peer to Peer (P2P) Lending Experiment: Two Years In and I’m Getting Out — PIMD has found his P2P earnings to be lower than would be expected, especially in what should be an overall strong economy.
- Mama Fish Saves: Why It Pays To Hustle While You Are Young — doctors know all about sacrificing their youth for future rewards.
- Physician Couple: My Next Job — we can always use more physicians in public office, and PC envisions a future career in politics.
- The Financial Journeyman: How we reached a $1,000,000 Net Worth — Congratulations to TFJ and his wife on reaching the seven-figure milestone by the time he turned 40.
- Vagabond MD via The Happy Philosopher: Adventures in Burnout: One Physician’s Story — Can radiologists get burned out? Absolutely! Interventional radiologist and frequent guest poster and WCI forum member Vagabond MD shares his experience with physician burnout.
What do you think? Do you agree or disagree with any of my responses? What’s your take on the topics in this week’s forum mailbag?
I posted the “minimizing trading fees” question. I am brand new to investing, and when I wrote that comment on WCI, I did not realize that vanguard, fidelity and schwab let you buy their brand of index mutual funds without a trade fee. Rookie mistake I guess. Your reply led me to your site, which has been a great resource as well, Thanks! After agonizing over whether there was a big difference between Fidelity and Schwab index mutual funds, I decided any difference that existed was not big enough to be relevant for me. I opened my account with fidelity and will build up to a 3 fund portfolio for now, using the strategy you describe in your fidelity 3 fund post. I figure this strategy will give me enough time to read up on whether “tilting” is a good idea or not. Before this, I had read WCI’s book, The Wall Street Journal’s Guide to Money and Investing, and Coffee House investor. Those books were all very good for getting the basic facts and a philosophy but, this blog and WCI’s blog were really what enabled me to execute the plan.
Thanks for your help, it really enabled me get the ball rolling.
I’m glad to help — I personally use Fidelity for my investments and love their customer service and physical branches (rarely need to use them, but it’s nice to know they’re there if you need them), so I think you made a good choice (not that Vanguard or Schwab are bad choices).
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