*This review is the opinion of Debt Free DDS only. I have no financial relationship with the White Coat Investor.
The Book “The White Coat Investor: A Doctor’s Guide to Finance and Investing” is an outline to personal finance and investing targeted for Doctors, Dentists, and other High income professionals. If you fall under one of these categories, I highly recommend you read this book and apply its principles.
Books that change lives
There are a lot of books in this world that have changed a lot of lives. I realize this is somewhat of a personal thing. Religious books such as The Bible, The Qur’an, The Torah, The Book of Mormon and others are examples that have changed a lot of lives. But another aspect of life other than faith that is very important is personal finance. I truly believe those who have good personal finance habits and have their financial ducks in a row have less stress, have less burnout, are less prone to suicide and divorce, are better significant others, better parents, and better dentists, physicians, or just better at whatever job you have.
Having a good financial education, which includes reading several finance books, is essential to having this aspect of your life in order. I am sure there are several great books on the subject (and crummy ones). I know I have read many great ones. But the one that turned my life around financially, and has set me on a path to become debt free and financially independent is Jame’s M. Dahle MD’s book “The White Coat Investor: A personal guide to Finance and Investing“.
Praise for the White Coat Investor
In order to know if this is a book you should pick up of the shelves to read , one need look no further than the foreword and the the “Praise for the White Coat Investor” at the front of the book. The foreword is written by William J. Bernstein, MD. He is the author of many classic finance books and an authority for physician finances. If he is willing to put his name on this book and write the foreword, then you know it is a book worth reading.
There is also praise from the likes of Allan S. Roth and Taylor Larimore. Larimore states the book is “A very practical book for physicians (and others) who want a simple, easy-to-follow guide to financial success.” I couldn’t have said it better myself. It is a must read book for anyone looking to kick off their financial education. Larimore is one of the famous Bogelheads and Co-author of “The Bogeleheads guide to Investing“, another classic financial book.
Who this book is for
The White Coat Investor book is targeted to physicians, dentists and other high income professionals. Although some of the things he discusses may be irrelevant to people in other situations, a lot of what he teaches are good, sound financial principles that will help anyone get on the path to becoming debt free and financially independent.
When I say Physicians, Dentists, and other high income professionals, that includes all those in any aspect of their career. Ideally you read this book prior to entering dental or medical school. However, this book wasn’t around when a lot of you were in school. And some of you won’t find it until later in life. And that is ok. Even a 50 year old that has been out of school for two decades could find this book, apply it’s principles, and be able to be financially independent within 15 years. As a high income professional, it is almost never too late to begin on the path to FI.
Obviously those who read this book earlier in their careers and apply it’s principles will reach financial security earlier and be able to benefit from more years of proper financial habits. You will become debt free and financially independent sooner, as well as have the magic of compounding interest work in your favor for more years and enjoy a more comfortable retirement. We have all made financial mistakes, but the sooner we read this message and apply it, the sooner we will reach our goals.
The book is a general outline for a financial plan that will get you to where you want to be financially. It isn’t in depth enough to formulate a complete financial plan from, but is an excellent starting point. In order to get a full financial plan, you either need to get help from a financial advisor (make sure you read this book first so you know if you are getting good advice), or you need to read several other financial books and take The White Coat Investor’s course “Fire Your Financial Advisor”.
Dr. Dahle starts of by explaining how the cost for medical, dental, and other professional school is sky rocketing. Interest rates for federal loans are horrendous, and salaries for doctors aren’t keeping up with inflation. He explains the importance in doing what you can to minimize your student loan debt and choose a specialty where you will enjoy it but still make enough money to justify the cost of the education. Despite all of these obstacles, he says it is possible to become a millionaire by age 40 and retire a multimillionaire.
He discusses how as a medical or dental resident, or even while in school, we should focus on our education and not try to get rich. No one is going to get rich in dental or medical school or residency. The important things we do at this time with our finances is learn to save and to not get into consumer debt.
Live Like a Resident
This is what the White Coat Investor is famous for in my view. This book is where I learned the concept of living like a resident. What he means is that medical residents live on a salary of about $63,000, as does the average American. Once we get our real jobs as attending Dentists or Physicians, we should continue to “Live Like Resident”, meaning live on about $63,000 a year (or a little more), until our student loans are paid off (and any other high interest rate consumer debt). Yes, even if you are making $300, 400, 500k a year, swallow your pride, don’t buy a fancy car or house, live like the average American and throw the rest of the money at your loans. I started doing this when I learned this concept 2 years after training. Three years later I had paid off over $400,000 in student loan debt. It works. Trust me.
The book then dives into more info on what to do with your money and how to build wealth. He explains that the only number we can control and the most significant factor in building our wealth is our savings rate. He recommends saving at least 20% of gross income if you want to retire well. And that is if you work a normal career length. If you want to retire earlier, then your savings rate must be higher. Investments you choose and market returns are certainly a huge factor in your success building wealth, but how much you save is the most important.
Dr. Dahle then goes into a little more depth on the basics of investing and correct principles. I can’t go into all of them here. You need to get the book to read it all. But the principles of keeping costs low, keeping risk as low as you can emotionally handle in a bear market, and having a diversified portfolio are at the top of the list. Costs are a huge factor in investing success. Most people don’t pay as much attention to costs as they should.
He then explains that there are a lot of ways to reach your financial goals and many good portfolios. However there are many bad ways as well. He helps you recognize what not to do. A big one is not mixing insurance with investing. Investing and insurance are both very important to a financial plan, but they are separate parts of a full financial plan and should not be mixed (I’m looking at you Whole Life Insurance).
Good advice at a fair price
This is another classic White Coat Investorism. If you read this book and some others, and take his course, I feel comfortable that you could do your finances yourself. But if your are not comfortable with that, there is no shame in hiring help. Dr. Dahle’s book helps you recognize how to get good advice at a fair price. There is no price low enough for bad advice, and good advice can be had for a lot less than some charge.
Other topics important in a full financial plan
Toward the end of the book, he goes into other aspects that are important to a financial plan such as Asset protection and Estate planning. If your are not familiar with where to start, he explains it very well. He has a lot of other resources on his website as well.
Taxes are also discussed in this book. Of course this is a major aspect of any high income professionals life. We will pay a lot of taxes in our lives. He introduces important concepts to know and understand to make sure you are obeying the law, but also not overpaying taxes.
The Good life
He finishes with a positive message stating that although it won’t be handed to you on a silver platter just because you are a physician or a dentist, you can have a great career and be very financially successful if you follow these concepts outlined in his book.
I can attest this is true. I have been out of training for 6 years now. Over $400,000 in student loans are long gone, the only debt I have is a very manageable mortgage and practice loan, I am saving 30% of gross income towards
retirement financial independence, and I have a 6 month emergency fund. I also have a complete financial plan thanks to this book, and also his online course. I know if I stick to it, I will reach my goals of becoming debt free and financially independent sooner than I ever thought possible.
-Debt Free DDS
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