Aug 23, 2017 | Erin Boehm, MD
WIC Book Review

Most doctors do not enter the profession for the money, but in this time of rising college and medical school costs coupled with lower physician reimbursement, we should be more vigilant than ever when it comes to our personal finances. Unfortunately, many physicians suffer from financial illiteracy, having spent their formative years learning about renal physiology and the coagulation cascade rather than fixed asset allocation, mutual funds, 401(k)s and IRAs. The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing, by James M. Dahle, MD, strives to address the challenge of physician financial illiteracy and teaches us important lessons regarding personal finance and investing.

Dahle is an emergency room doctor from Utah and editor of The White Coat Investor, a popular blog designed to address the specific financial challenges physicians face. His personal interest in finance and investing began in residency after feeling like he was taken advantage of by several financial professionals. He took it upon himself to learn the ins and outs of personal finance and investing so that he could be in control of his financial future. He now spends a good portion of his free time sharing what he has learned with others so that more physicians can get on the road to what he calls “the good life” – a life that is free from financial worries where one can practice medicine in a way that provides personal satisfaction and allows for a comfortable retirement at a chosen time.

Many of the key concepts in the book are standard advice that most everyone has heard before: live below your means; start saving for retirement early; and pay yourself first. However, Dahle delves into the details in a way most have not been exposed to before and uses real world examples to make his points. His book begins by highlighting the difference between income and wealth and how to transition between the two. During your career, he explains, the goal should be to use your high income to convert your negative net worth (due to student loan debt) into increasing wealth. This is accomplished by saving, investing and paying down debts. In retirement wealth can be converted back to income, using the 4 percent rule, which states that you can safely withdraw 4 percent of your retirement portfolio each year and expect it to last through your retirement. Using this logic, becoming a millionaire, something often viewed of as a big achievement in personal finance, only would provide $40,000 per year, before taxes, of retirement income. Thus, the average physician will want to have much more in his or her retirement portfolio, and Dahle provides the resources to accomplish that goal.

The White Coat Investor offers financial advice spanning the entire range of a physician’s career: from choosing a medical school, to how to spend (and save) as a resident, what to do with in the crucial first few years in practice, when a person’s salary can double or even triple or more, and all the way through to the basics of estate planning. Dahle explains that often young physicians struggle with what to do first with their new-found increased cash flow. Should they pay off student loans or save for retirement? He demonstrates how “living like a resident” for a few years after you finish your training can allow you to do both, by contributing your extra income to paying down your debt, building your retirement portfolio and saving for a down-payment for a house. Dahle recommends what within five years of finishing residency you should have all your student loans paid off, your retirement savings should be caught up to that of your peers and you should be living in your dream home with a low interest, fixed-rate, 15-year mortgage.

In addition to the basics of saving and investing, Dahle also discusses more nuanced subjects such as real estate investing, asset protection and the pros and cons of being a physician business owner vs. a hospital employee. Given the wide range of topics that span the entire career of a physician, some portions of the book may not apply to all its readers. For example, if you have been in practice for five years, the recommendations to choose a lower cost medical school or to take income and lifestyle considerations into account when choosing a medical specialty are useless to you. However, despite this draw back, there is still much to be learned from reading The White Coat Investor, at any stage in your career. Additionally, it is an excellent reference that can be returned to time and again as your career and financial situation changes. After reading this book, you will be well on your way to having the tools and knowledge needed to take ownership of your personal finances and be in the driver’s seat on the way to “the good life.”

This article was authored by Erin Boehm, MD, a Fellow in Training at the Knight Cardiovascular Institute, Oregon Health and Science University, in Portland, OR.