I want to start by thanking Dr. Scrilla, Physician on Fire and Hatton1 for sharing their investment portfolios for this post. Please visit their sites for other amazing content and follow-ups to this post.
Giving advice on personal finance is challenging. Everyone has a unique situation from income to marital status or financial expertise to risk tolerance. Financial advisors prey on this difference because it’s hard to find a one size fits all strategy and they can “help customize” one for you … for a small fee.
The personal finance blogging community has helped remedy this problem by sharing information to the masses and encouraging discussion. But there still remains a gap – the writers try to be open about their situation but details are still missing. Readers bring their own assumptions and believe that the writer must be in the same situation.
The purpose of this post is to share the investment portfolios of 4 personal finance physicians bloggers in different stages of their career. I compiled their financial profile in an “objective” standardized format and removed all numbers. Even with objective data shared in a standardized format, I believe there is still room for interpretation and this is mine.
The other 3 bloggers may post their interpretation on their own site or comment below but I also encourage other physician bloggers to join in. Here is a link to a google doc survey where you can submit your information and find some partners in crime to put together a similar post.
Meet Our Docs
|Family||1 Kid||1 Kid||Couple Kid|
At a quick glance, this is a very diverse group of physicians with 4 specialties, 4 career stages and almost every variation of family situation.
- Dr. Scrilla is getting things ready to launch his attending career as he finishes up residency.
- Physician on Fire (POF) is looking to retire from clinical medicine in the next 1-2 years and continue to build his blogging empire.
- Hatton1 is working on closing up her practice and retiring soon.
- I am in the early stages of my career with no intentions of retiring any time soon.
Some might say it’s difficult to extract anything of value from such a diverse group but as you will see below even with the variances we have fairly predictable financial profiles over time.
My interest in finance started early when my brother encouraged me to open a Roth IRA at 18 with the money I earned delivering pizzas. I’ve had jobs ranging from grocery bagger to IT tech support and these experiences have given me an appreciation for earned income. My goals for financial independence are mostly driven by my desire to work because I want to and not because I have to. I see value in what I can contribute to society as a physician but it has to be on my terms.
|T-IRA / SEP||No||No||No||Yes|
|401(k) / 403(b)||No||Yes||Yes||No|
|Donor Advised Fund||No||Yes||Yes||Yes|
An investor’s account types grow over time with new jobs or side hustles but then at some point, it’s time to start consolidating and simplifying. I don’t shy away from investment accounts and am always researching different account types, their tax advantages, and ways other people are using these accounts. My belief is “try it and fix it later” rather than shoot for perfection on the first try.
It was great to see the other docs having a donor-advised fund because this is my favorite account. We started it 5 years ago and use it regularly for our charitable donations. It has actually pushed us to donate more than we would have normally because of how easy it is to use. This account will also play a role in our tax planning strategy going forward where we will bunch our deductions to work around the SALT limitations.
Real Estate Investments
|Second Home or Investment||No||Yes||Yes||No|
Real Estate usually becomes part of a physician’s investment portfolios at some point in their career ranging from buying a primary home to investing in rental properties. Hatton1 noted on the side that she has owned multiple homes and been part of a hospital syndication in years past but has since simplified her portfolio.
With the growth of crowdfunded platforms, I believe we will see more physicians adding real-estate to their portfolios at an earlier age. Also, I wonder if we will see some pull away from the publicly traded REITs. I moved some of my money out of the Vanguard REIT to invest in the crowdfunded REIT but it’s hard to predict if this is a short-term fad or here to stay for a while.
I’m a big believer in the power of Real Estate and spend a significant amount of time and money investing in real estate. Diversification away from the stock market is probably my main driver and second would be the tangible aspect of the investment. I enjoy building relationships with my tenants, understanding their life situations, and learning from them whenever possible.
An old rule of thumb was 100 minus your age for your stock allocation, but I think this is too conservative and most have gone away from it in recent years. My portfolio was similar to Dr. Scrilla’s during residency, with more cash and bonds than necessary. When I got more comfortable with my finances and had stable cash flows I took on more risk to push the boundaries and get closer to the efficient frontier. I suspect this is similar to what everyone does and there is nothing wrong with that because the last thing you need is to take a big hit on your first $5000 and then be scared for the rest of your life.
On the other end of the spectrum is Hatton1 who has a higher bond allocation because she is close to retirement. Liquidity and stability have more value than aggressive stock investments because now her portfolio will be her primary source of income. I wonder what she thinks about the potential for a bond market risk in the next 5-10 years and how she might adjust her portfolio?
Why do I keep 5% in cash? So, while I believe in taking on risk and maximizing opportunities for leverage, there is a part of my brain that likes to have a “what if” fund. These can range from job loss, home repairs to opportunity for a unique investment. This past winter my cash allocation helped significantly because I was able to pre-pay my property taxes on 4 properties without having to source the funds from my investments. So yes, I keep a dry powder in cash but it’s not always advised.
Debt & Liabilities
Finally, we get to debts and liabilities. One of the cornerstones of financial independence is eliminating all forms of debt and POF and Hatton1 are definitely role models for that thought process. I keep a mortgage because I like the idea of interest rate arbitrage and maximize my returns but I am still early in my career so I can ride out any fluctuations in the market. I suspect that as Dr. Scrilla lowers his student loan debt burden he will take on a mortgage, but then eventually we all want to shed these liabilities to be independent. No fancy car loans? I suspect this is a unique group of physicians who are focused on their finances and understand the difference between “good” and “bad” debt.
Did we learn anything of value from this information? Rather than revealing anything earth-shattering or POF’s secret to wealth, I believe it shows that physician finances are more alike than we might believe on the surface. Dr. Scrilla’s portfolio is a little more conservative for someone who is young and POF’s is a little more aggressive for someone close to retirement. Hatton1 followed the traditional path but I would have probably expected more real estate though that is probably a bias on my part because every other article I read is about real estate investing or crowdfunding. The point is, there is nothing fancy behind the curtain and if we share our information openly we can learn from each other to push the envelope further.
What did you learn from these investment portfolios?