Given the origins of the this blog, and my unabashed fanboyism for all things White Coat Investor, I recently decided to do another read-through of the book that started it all, The White Coat Investor: A Doctor’s Guide to Personal Finance and Investing. I already discussed my personal spin on one of the early chapters, but I wanted to put my thoughts to paper on the book as a whole.
The crux of the book is that physicians – while consistently amongst the most highly compensated professionals – are woefully underrepresented amongst the ranks of the wealthy, or even financial stable. The reasons for this are legion: a prolonged period of education and no-/low-earnings, ballooning tuition and student loans, historically high student loan interest rates (at the time the book was written anyway), declining physician reimbursement, and a lack of financial education for medical professionals whose heads are instead filled with the Krebs cycle and a thousand different diabetes drugs.
The solution is equally multifaceted. It begins in undergrad, when planning for entry into medical school. Dr. Dahle’s main pearls are to go straight through from undergrad (I took two years off to work and travel, whoops), pick a school with reasonable tuition (I went to my state public school), and do what you can to defray or eliminate the need for loan repayment (MD/PhD, military, PSLF, none of which I will have taken advantage of). He also emphasizes the importance of living within your means, since every dollar spent is a dollar repaid with interest (I am a fan of pretending that every $1 spent with borrowed money is actually $2). Finally, he addresses the elephant in the room that some specialties are much more highly compensated than others, and while this should not be the primary determinant of one’s specialty choice (after all, 30 years as a happy pediatrician is better than 8 as a miserable neurosurgeon), it is something that cannot be ignored.
The work continues in residency. The primary takeaways are to develop a a good saving habit, preferably in Roth accounts (I did a pretty good job of this while I was in training) and not not buy a house (super easy for me; if I had my druthers I would rent forever). But the most important things one can do in the years leading up to attendinghood are to focus on your craft and become the best, most in-demand physician you can be, and to make a plan for the first year of attending salary.
The rest of the book is a summary of many different principles of investing and asset protection, with some tailoring to the physician audience. Much of this information can be found in a multitude of other personal finance books, but the very fact that this particular book is more likely to find its way into the hands of a physician than any other random book on investing gives it some additional weight. Essentially, you should take time time to grow into your income (‘live like a resident’, at least until your student loans are gone), save 20% of gross income toward retirement, and avoid the common pitfalls that plague high-earners of every stripe (excessive assets under management fees, whole life insurance, and loss of income due to professional/personal liability or disability).
The book closes with a celebration of the freedom and opportunity that getting your financial life in order affords: one fewer daily gnawing worry, and the ability to make your career into what you want it to be (perhaps even something outside of medicine), without living in the shadow of $5,000 in mandatory payments on a financed lifestyle.
I do think that the book could probably benefit from an updated edition in the near future. One glaring omission is the game changer of low-interest refinancing. This is mentioned very briefly, but at the time the book was written the interest rates were in the 5-6% range, a far cry from the sub-2% rates available now. I imagine this is addressed in Dr. Dahle’s newer book, The White Coat Investor’s Financial Boot Camp: A 12-Step High-Yield Guide to Bring Your Finances Up to Speed, but I haven’t read that one (yet!).
Overall, I left my reread feeling reassured. I’ve certainly made some mistakes along the way, but for the most part I think that I’ve spent the first six months as an attending setting myself up for financial success, and I think Dr. Dahle would be proud.