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White Coat Investor Podcast
WCI #449: Unions, ACATS Fraud, Vesting, HSAs, and ETFs: What Doctors Need to Know
00:42:46
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This is the White Coat Investor Podcast where we help those who wear the white coat get a fair shake on Wall Street. We've been helping doctors and other high income professionals stop doing dumb things with their money since 2011.
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This is White Coat Investor podcast number 449. Today's episode is brought to us by SoFi, the folks who help you get your money right. Paying off student debt quickly and getting your finances back on track isn't easy. That's where SoFi can help. They have exclusive low rates designed to help medical residents refinance student loans that could end up saving you thousands of dollars, helping you get out of student debt sooner. SoFi also offers the ability to lower your payments to just $100 a month while you're still in residency. And if you're already out of residency, SoFi's got you covered there too. For more information, go to sofi.com whitecoatinvestor SoFi student loans are originated by SOFI bank and a member FDIC. Additional terms and conditions apply. NMLS 696891 all right, welcome back to the podcast. We are grateful you're here. We're grateful for what you do. If you had a rough day today, I'm sorry. Know that you're appreciated, that your work matters. If you're headed to a rough day, I guess you don't know it any better than I do, but I hope that's not the case. Keep your head up. You can get through this. All right, we're going to start by talking about unions and I got an email from a PA in CT surgery and a longtime subscriber says I'm currently involved in forming the union in Oregon for apps. The information and the data on unions for healthcare providers continues to roll out as popularity grows. I think it's time to talk about physician and provider unions on the podcast. With many hospitals having acquired private physician groups and those physicians losing their voice within the hospital system and seeing wages stagnate, I think it's time to at least make some introductions to the who, what and how of unions. I also think it's vital to talk about the bad part of unions. It's a new field and we'd appreciate you guys doing a kind of public service announcement on it. All right, well, here's my public service announcement on unions. If you treat doctors like labor, expect doctors to act like labor. That's the psa, right? I'm sending it to Hospital administrators treat people well and they don't feel like they need a union. Treat people poorly and they feel like they need a union. And maybe they do. So I asked the email writer. I said, well, okay, what do you see as the pros and cons? And I invited her to write a guest post and I think she's going to do that. So she said this. Well, it depends on who you ask, what the pros and cons are. This can be a very polarizing topic. One of the first things I hear people talk about is that unionized employees have protections. You can't get fired as easily if you feel targeted or have had some bad reviews. It's a massive relief to know a union rep will be there to ensure a fair review process and legal representation if needed. If you're another employee who feels their coworker is slacking or just unsafe, some folks feel unions provide them too much protection. Of course, that also means you have a bargaining team who know your job well enough to negotiate it for you. For apps, that's been a big issue. PAs, NPs and CNMs often get grouped together with nurses or physicians and quickly outnumbered on their bargaining team. But that gets more into the nitty gritty than maybe this email can review. Here's a quick review of union pros and cons fees. Here's a con Unions aren't free. You often don't have a choice if you want to join. If they're unionized in that group, you often have to join. You get protection of your rights. That's a pro. And bad employees get sheltered, which is a con, maybe. More commonly, pay is the same across the board, so even though you're more productive, you might not get paid any more than the guy down the hall seeing half as many patients. So no more sweetheart deals for your pay. You're not able to necessarily negotiate it individually. The union does that for you. Whether that's a pro or a con, I guess, depends on how good you are at negotiating. But your special agreements are going to be out the door. So any special skill sets you have or ability to negotiate well that you have, that's not going to necessarily mean you get paid more. It's also a majority rules kind of thing. It's a democratic process, but there's also some strength in numbers. I guess it depends on if you're in the majority, whether you see that as a pro or a con, she says. I personally know where union protections have been worth their weight in gold. A hospital attempts to recover wage overpayments where it's not legal to do so, or the employer makes changes to your work location, responsibilities or schedules, and the union is there to at least bargain over the impact, if not halt it from happening at all. And then of course you get some legal representation when you need it, like discrimination or harassment or breach of contract issues. You also have some ability to push back and some power to address issues like when your hospital decides to make broad, sweeping changes that go against safe patient practices. She admits she's a little bit biased given that she's helping to form a union and a bit of a novice on the subject, but she'll see if she can get us a guest post. So we'll watch for the guest post on unionization. It's certainly becoming more common in medicine. I hear about it typically in bluer states, probably most often among doctors in training. But any big organization with lots of doctor employees should probably not be surprised when unions start showing up, for better or for worse. So let's share our stories with each other and we'll probably have more of those on the podcast as the years go by. Okay, let's take our first Speak Pipe question today.
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Hi Dr. Dali, this is Kelly from Maryland, longtime listener, first time caller. I'm hoping you can provide some insight on protection against ACATs fraud or automated customer account transfer service. There was a recent blog post on this by Mike Piper where he references a great article online by Harry Sitt, but still, I'm really trying to collect more information and I would love any additional information you have or any insight on this topic. As I'm sure you know, ACOTs fraud occurs when a fraudster has your Social Security number and your brokerage account number, and they use your Social Security number to open a brokerage account in your name, and then with your brokerage account number they can initiate a pull of some or all of your money from your taxable account without your approval and without your knowledge. And you may or may not even be notified after the fact that it seems that Fidelity is the only brokerage that offers a lock against ACATS transfers and that specifically Vanguard does not offer a lock. So I'm a little torn about what to do. We're considering moving at least some of my husband's Vanguard accounts to Fidelity because he has had identity theft in the past and we're thinking maybe high risk for this. I'm a little more torn about my personal accounts and I also don't know if my current 403, which is forced to be through TIAA Caref, is subject to this type of risk or if this is only a risk for taxable accounts. Any insight you have is appreciated. Thanks again for all you do.
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Okay, let's talk a little bit about ACAS fraud, although I thought that was one of the more impressively educational speak pipes we've ever gotten on this podcast. So thanks for providing so much information, as well as referring to two of my personal finance blog heroes. Those who've been here not that long may not realize that both Mike and Harry were major inspirations for me to start the White Coat Investor Blog. They both started blogging before I did. They were blogging in the late 2000s. I didn't start until 2011. And I talked with both of them before starting the White Coat Investor blog. And they both encouraged me to go forward and do it. And so I'm very grateful to them. Both of them have spoken at wcicon in the past and they're exceptionally talented bloggers. So I will refer you to their articles. We'll include those in the show notes if you want to read more about what They've written about ACAT's transfer fraud. But in the last couple of months, there's been lots of discussion about this because there was a New York Times article written by Tara Siegel Bernard, who talked about an ACAT's transfer fraud from a Vanguard IRA. So that answers one of your questions. Yeah, IRAs are also at risk for this. I think it's probably less of a risk in an employer provided investing situation than it is in an IRA or a taxable account, but it may be able to be happened there as well. But I would think the employer and the plan may be a little more on the hook for it. So what is acat's frog? Well, first of all, let's go over what it actually stands for. Okay. ACATS is Automated Customer Account Transfer Service. So this is basically a way in which you can move your assets, your, you know, whatever, your stocks and bonds, your mutual fund shares, your ETF shares or whatever from one brokerage to another. Right. It's really handy if you want to do this. Think you want to go to, you know, some brokerage that is offering you a signup bonus. You know, if you'll move your money over there, you'll get $1,000 or you get $5,000 or whatever. And so now you want to move your money over to that account. This is a relatively quick way to be able to do that. That's what the ACAT service is. So what happened that caused everybody to start talking about this? Well, it turned out that this retiree, Tian Tran, he logged into his wife's Roth IRA one afternoon to check on a solar energy stock and found out that half of her retirement holdings, over $120,000, had vanished. They went from her Vanguard account to a Merrell Edge account without her ever authorizing it. The criminal had opened two new accounts in her name, initiated the transfer using acats, and they luckily spotted it. Merrill froze the funds, returned the securities, and they weren't out anything. So it was good. But there's some risk there that maybe it wouldn't have been spotted and they would have been out the money. And so that's the. That's the issue, right? If someone steals your personal data, name, Social Security number, address, whatever can get, you know, access to your existing brokerage account, your existing Iraq, they can request a transfer to some other IRA they've opened that they have access to and liquidate the securities, pull out cash and spend your money, take your money from you. That's the risk. In general, the brokerage that holds the assets has to validate the request within one business day and complete the transfer within three days. So it's supposed to be efficient, right? It's supposed to be fast, but that leaves little time for human review. And because it's mostly automated, the receiving firm only gets basic information. And so it's pretty easy for people to have this happen to them. Finra, the Financial Industry Regulatory Authority, has warned that this type of fraud is on the rise. Obviously, retirement accounts are a target for them. So how do you protect yourself? Well, what Fidelity offers that Vanguard does not yet offer. Although we had the CEO of Vanguard at the Bogleheads Conference a few weeks ago, and he got grilled in front of 500 bogleheads on this topic. And so I suspect the same thing available at Fidelity will soon be available at Vanguard. And that's basically the ability to lock your account. So these transfers can't occur out of it without you first going in and unlocking that feature on the account. So that's what Fidelity offers, Vanguard doesn't. There are a lot of little customer service things that Fidelity offers that Vanguard doesn't. And so lots of people have chosen to just take their assets to Fidelity, and often they still invest them in Vanguard ETFs. They just do it at Fidelity, where you pay no commissions to buy and sell Vanguard ETFs. So there's still Vanguard Investments, but the money's held at Fidelity. I'm not really feel strongly one way or the other about whether someone needs to do this. I've got accounts at Vanguard Fidelity and Schwab. In my experience, I get treated about the same at all of them. I'm not terribly worried about Acat's fraud, but I guess it's a possibility. And if you want to protect yourself from that, you could move your money over to Fidelity. Just be aware that there's a pretty good chance that Vanguard's going to eventually do the same thing that Fidelity has done to protect you from that. Some other things that you can use to protect yourself. This is from a Yahoo Finance article about the fraud. They said use some extra security measures if they're available. Like Fidelity allows you to lock the outgoing transfers and send notifications to your account when your account is accessed. And of course, all these brokerage accounts for the most part offer multi factor authentication, which means you got to have your phone with you if you want to get into your account. So be sure to use that. Request immediate alerts. You can monitor your accounts daily. Boy, that sounds painful. I'm not going to look at my accounts daily. You can shred your statements and secure your paper mail. You can check for unexplained mail. You can ask your broker about identity verification protocols. And of course, if you find something, you need to say something right away. You need to call the brokerage. Might need to call finra, the sec, the local police, the FBI, whatever, once something has actually happened. Let's see, what else does Mike tell you about this? Not much else in his short article on the topic. Just basically how it works. And Harry's article talks about that it can be a problem. He read about an account of it happening from somebody on the Bogleheads forum. He basically says, have the strongest two factor authentication you can. Your email should also have the strongest two factor authentication that you can. That's an option, right? Because if thieves get into your email, they can have stuff sent to your email. Choose paperless statements and tax forms. They're more secure than stuff in your mailbox. Then store those documents securely and of course safeguard your account number from falling into the wrong hands. You do have to know that for a successful ACATS transfer. So protect your statements and use the lockdown that's available. Fidelity's lockdown, he notes, is really only a partial lockdown. He says it's better than no lockdown. But if you enable that setting on the account, they will reject all acat's transfers. He has a list of what is covered and what isn't. He says outbound money transfers would be blocked. Transfers between Fidelity accounts would be blocked. Transfer of shares and assets to another institution would be blocked. Individual withdrawals would be blocked. But deposits or transfers into your Fidelity accounts wouldn't be check writing and direct debit from the account wouldn't be Debit card and ATM transactions wouldn't be trading is not locked, scheduled RMDs or personal withdrawal scheduled plan would not be locked and bill pay would not be locked. So you can lock some transfers out of your account, but not the others. So keep that in mind. But at least you can turn on some alerts so that you'll get an alert before you before it happens. But they don't require your approval. That's part of why ACATS is so efficient. He also recommends you keep some independent records of your securities in case you got to go back and prove what you own. I'm not sure how big of a problem that really would be with Vanguard or Fidelity or Schwab or something like that, but maybe with some other brokerage it might be more of an issue. Okay, I hope that's helpful. Kelly. In talking about ACATS fraud, be aware that it's out there. It's a new type of fraud. It's becoming more common. Can happen very quickly. If you see something screwy going on in your accounts, do something about it. Don't just ignore it and use your multi factor authentication. Consider turning on that account lock. If you've got accounts at Fidelity or. Or use an accounts at Fidelity or another brokerage that will offer a similar lock on this sort of a transfer out. Okay, our quote of the day today comes from Chris Brogan who said the goal isn't more money. The goal is living life on your terms. Great quote. Okay, let's talk a little bit about vesting with this speak pipe. Hello, Dr. Dali, could you go into some detail about how vesting works? I'm a new attending and my vesting period is three years. If I contribute $100 and the hospital matches $100 in retirement savings and I leave before the three years, what do I get to keep? If at two and a half years that initial $100 has grown to $125 for my contribution and $125 for the company match, do I leave with just my $125? What happens to the growth on the matching funds? Do I get to keep that and then the principal is returned to the hospital? Thanks for all the work you do. Okay, great question. The answer hopefully is in your plan document. So anybody that has an employer provided retirement account should have a copy of the plan document. If you don't have it, go ask HR for it. They are legally obligated to give it to you. If you don't have it, go get it. Read the stupid thing. It matters. You'll be surprised how much you learn reading them. And it should answer the question. It may not answer the question. If not, the next place you go is you ask HR. Now, HR might refer you to the provider of the 401 or 403 or whatever and you have to ask them the question. But it's worth asking the question. The way it works most of the time though is if you have vesting, the vesting only applies to the matching dollars. You're always 100% invested in the money you put in there as well as all the gains on the money you put in there. But most of the time until you vest, you not only don't get the match, you don't get the earnings on the match. Now when you start thinking about stuff like this, you start thinking about the opposite. Well, what if you lost money in the account, right? And now you leave before you're vested. Do you have to somehow make the employer whole? Well, I don't think so, but it's worth looking into and asking those sorts of questions. Most of the time I think it's basically just treated as kind of a separate account until you vest and then it's lumped into your account and it's your money. But you know, you can think of some interesting situations that could occur before that money is vested, which might result in somebody not getting back as much money as they might expect they're going to. But the bottom line, ask hr, read your plan document, talk to the plan provider and get an answer to your question if it's really going to matter. You know, if you think you're probably leaving in two years and you don't vest until three, it's worth finding the answer to the question. It might affect how much you want to put into the plan, but most of the time it's just, you know, part of the cost of doing business. If you want that new job and you want it now instead of waiting another year, well, you're going to lose a little bit of money and you ought to ask for a bigger signing bonus at the new job to make up for it. Okay, our next question comes via email. We are a two position couple, age 72 and 73, of average good health, retired and spending approximately $100,000 per year. Our net worth is $20 million. Congratulations. Well done. There's a big Disconnect there between spending $100,000 a year and having $20 million though. Let's keep going. This is interesting. $14 million in taxable accounts, $6 million in Roth IRAs. That's interesting too. No tax deferred accounts at all. Our taxable account is 100% invested in equities with a very low cost basis. Congratulations on all those gains. Right. That's a wonderful thing. But very low cost basis means there's probably a lot of tax costs there if you want to spend that money. Our Roth IRAs are invested 100% in fixed income investments. Okay, so that's basically a. What that? A 7030 portfolio, right? $14 million in stocks and taxable $6 million in bonds and Roth IRAs. This has resulted in a stock allocation of 70% for our total portfolio. We would prefer an overall stock allocation of 60%, but can easily tolerate volatility above our living expenses. We are giving away about $250,000 a year to relatives and charities. Good for you. Good for you. Well done. Since our children will inherit much of our assets upon death, we have been reluctant to rebalance the portfolio to 60:40 since there will be a step up in basis in our taxable account upon our deaths. Keep in mind there's 72 and 73 average good health. Does our reluctance sound reasonable or should we pay capital gains taxes now to get back to 60 40? I love the question. I love the whole situation. There's so much to talk about here. This is lots of fun. First of all, if you get $20 million, great job, well done. Don't know what you did to do it. Maybe some entrepreneurship. Maybe just good earnings and high savings rate and wise investments over the year. Who knows how you got to $20 million? It doesn't really matter. But one thing you ought to be thinking about if you get there is you ought to be thinking about estate taxes, okay? Because right now the estate tax exemption limit is basically 30 million for a married couple. It doesn't take that long to go from $20 million to more than $30 million. Typically, stocks have returns of something like 7 or 10% a year, which means your money doubles every 7 to 10 years. And if you're 72 in good health, one of you is almost surely going to live another 10 years. So your money's gonna double. It'll be at $40 million. Now you've got an estate tax problem. So it's well worth doing some serious estate planning if you like. Giving money away to heirs and family and charities. Maybe you should give more of it away now. Maybe you should get it into a trust, whether it's a charitable trust of some kind or whether it's into a trust where that appreciation that it has in the future will now be outside your estate. You use some of your exemption up now so that all the appreciation that happens in the future is outside your estate, and you can avoid some of those estate taxes. So that's a good thing to be thinking about. But that's not really what they're asking about. They're asking about a totally separate question of whether your asset allocation matters more than your tax bill or not. And the truth is their asset allocation doesn't matter that much. Right? They've got $20 million. They only spend $100,000 a year. Right. How much can you safely spend when you have $20 million? Well, certainly you can safely spend 4% of that a year. That's about $800,000 a year. Even with all their giving, they're using up less than half of that each year. So they can certainly spend dramatically more money than they're spending right now. They could give away twice as much money every year and be okay. And the truth is, they're already in their 70s, right? So they don't need their money to last another 30 years. Probably is probably going to be some period of time less than that. 15, 20, 25, probably something more like that. So it wouldn't be crazy even for them to be spending more than 4% a year. Five or 6% would not be crazy either. So keep that in mind that when your burn rate, as Bill Bernstein likes to call it, is so low, I mean, their burn rate at this point for their actual spending is like half a percent, right? It's not 4%. It's like half of a percent. When your burn rate is that low, it really doesn't matter what you invest in. It could all be in stocks, it could all be in bonds. You're going to be fine. You're not going to run out of money. So it really, you don't have to go too crazy on whether you're 70, 30 or 60, 40. I mean, let's be honest. 70, 30 and 60, 40 don't perform all that much differently. As long as your behavior is okay, as long as you're not gonna panic, sell at 70, 30 in a nasty bear market, you know, then it's probably fine to be 7030 instead of 60 40. I don't love paying taxes. And so if I had to pay a whole Bunch of taxes. And it might be a lot. It might be, you know, four or five hundred thousand dollars in capital gains taxes these guys would have to pay to rebalance this portfolio. If that's what I was looking at. Boy, I'd certainly hesitate too. I'd say, well, maybe I am okay with the 7030 portfolio, but it is likely to get worse, right? Some of the things I would do in that situation, I would make sure I was not reinvesting my dividends into stocks, right? I would be selling stocks to spend. If I need to sell something, they probably don't. Their burn rate's so low it's probably covered by dividends. And of course there's no RMDs out of those Roth IRAs, so they might not need to sell anything. But if I did, I'd be selling some stocks. And that would help a little bit with the ratio there. You know, this is really an academic question. The academic answer is rebalance, right? Don't let the tax tail wag the investment dog. But in this situation, I think I might probably sit on it a little bit more if it was me. It's really a question about regrets, right? What are you going to regret more? Are you going to regret it more if you pay taxes on 1.5 million in capital gains, this 4 or $500,000 in capital gains taxes, and then the market goes up even more in the next five or 10 years? Or if you hold on to what's your own and the market drops 40% next year, or maybe stocks have a 0% return over the next 10 years, are you going to regret rebalancing or not rebalancing more? And maybe you're just trying to minimize your regrets. Great question. Well worth talking about. And of course I emphasized in my email back to them to make sure they knew that they could spend or give more safely. And if there's anything they wanted to buy that would make their life happier, they ought to do that, whatever that might be, whether it's first class tickets or a big cruise or eating at fancy restaurants or remodeling the bathroom or whatever it was, that they should go do those things because they can certainly afford it. One other option I gave them though was if they're giving to their kids or they're giving to family, whoever that family might be, why not give appreciated shares to them, right? That'll change the asset allocation. That'll get them closer to the 60, 40 they want to be. And of course, you know, if they don't need the Money now maybe they even give more than they're giving. And maybe the heir or the family member's in a lower tax bracket. Maybe they can sell those shares at 0%. So way better to flush those capital gains out of the portfolio and take that route. You know, if I had $20 million and I was only spending $100,000 a year, I'd give pretty serious consideration. Just giving all million and a half away to family members and voila, you're back to 60, 40 where you wanted to be. So lots of options there. It's wonderful to have these first world problems like this one. Let's shake our head too much at it. I thought it was a great question and so that's why we're talking about it on the podcast. All right, let's move on to our next one. This one comes off the speak pipe. Hey, Dr. Donnelly, this is Joseph from South Texas. I'm looking@healthcare.gov and I'm looking for HSA plans for 2026 for my family for health insurance. And I don't really see many HSA options or high deductible health plans. I'm looking for online and I think it says with the big beautiful bill that there's going to be more bronze plans that are covered and let us do the hsa. Is that correct? Can we just pick a bronze plan from the, you know, healthcare.gov and then we can do an HSA, I think that starts in 2026. Is that correct? Thank you. Okay, great question, Joseph. Let's start a little bit higher level than I think you're looking for an answer for. First of all, are you actually buying health insurance in the right place? It sounds like you're buying it for your family. It sounds like you're probably still in your earnings years. Maybe you're self employed or something. If you are a typical listener of this podcast, you are a high earner. You're not going to qualify for any sort of tax break by buying your health insurance through the ACA marketplace. So you don't have to do it. You can just go to a health insurance broker. So you said you're in South Texas. Google health insurance broker South Texas and call them up and have them help you buy health insurance. It doesn't cost you any more. Right? The insurance company pays them a commission, but get their help in buying health insurance. You're probably not getting any tax benefit by buying it off the marketplace anyway. There are other places to buy it. There are other plans available other than what's on the marketplace. So keep that in mind. Now, maybe you're in retirement, maybe your income's lower, maybe you're not a super high earner and you actually are qualifying for some sort of credit by buying off the marketplace, in which case that comment does not apply. But make sure that's true before you bother buying off that marketplace. It's not that convenient of a place to shop and there aren't all the options available on that marketplace that that you could use. So only buy there if you're getting paid to do so with a substantial tax benefit. Second thing to keep in mind is in order to use an HSA, in order to contribute to it, you can use it anytime. But in order to contribute to an HSA for this year, your only health insurance plan must be a high deductible health plan. Now, you would think that this would be super easily defined. If the deductible is more than a certain amount, it's a high deductible health plan. If it's less than that amount, it's not a high deductible health plan. That is not the case. The government decides what a high deductible health plan is. So if they say it is a high deductible health plan, then it qualifies for you to be able to make an HSA contribution. If they do not say it's a high deductible health plan because it doesn't meet all the requirements for it, which are more than just having a high deductible, then it does not make you eligible to contribute to an hsa. So keep in mind the definition there. Now you're asking what the Trump administration is doing with regards to the health insurance marketplace. Now, as near as I can tell, everything's in a lot of flux. I don't know exactly how it's all going to shake out, but if you need to buy a plan on the marketplace, you're limited to what you can choose from the marketplace. And maybe something else is going to be added there in the next few weeks that you'll be able to buy. But if not, you're presumably limited to what is available there. I don't think I've seen anything that every bronze plan will be a high deductible health plan. Let's Google that. Will every bronze health insurance plan be a high deductible plan? And Google AI tells me no, not all bronze health insurance plans will be high deductible plans. But Starting with the 2026 plan year, all bronze and catastrophic plans purchased through the marketplace will be considered high deductible health plans by the government. Okay, so there's your answer. So, yeah, it appears that if it's on the marketplace and if it's a Bronze plan for 2026, it's going to be qualify as a high deductible health plan. You'll be able to make an HSA contribution. Says it's due to new legislation which expands eligibility for HSAs to millions more people who purchase their insurance through the ACA marketplace. So there you go. Looks like you were more up to date on it than I was. I think that was part of the one big beautiful bill act. I now vaguely recall reading something about that, but I probably glanced over that because I don't expect it to affect a lot of white coat investors. It does affect some though. I mean, let's see what the income limits are on aca credits for 2026. Those limits are capped at 400% of the federal poverty level. So that is.
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What is the federal poverty level. I know it changes. The 2025 one for a household of four was $32,000. So 400% of that was $128,600. So that's going to exclude most white coat investors. But there's plenty of retirees that can keep their taxable income, their AGI, whatever income that's based on is probably AGI below that amount. So there's some of you for whom this is a legitimate question is mostly going to be retirees or partial retirees or something like that. Maybe some residents, but most residents are probably on the residency health care plan, not buying it off of the marketplace. But if you are buying it off the marketplace, that's what it takes to get some sort of a subsidy. Otherwise, just go get a health insurance broker to help you buy your health insurance. There's other options too. You can look into health sharing plans. Just recognize that those look really good because the equivalent of a premium is usually only about half as much as what it is for real health insurance. But you're also not buying real health insurance. And you need to understand the differences between real health insurance and a health sharing plan. There are some things a health sharing plan doesn't cover. It works a little bit differently. But when you need to make a quote unquote claim or share your expenses with the other people in the plan. So make sure you really understand the differences if you choose to go that route. Lots of white coat investors have been very happy with their health sharing plans. But before going that route. Make sure you understand how it works. Hope that's helpful. All right, Some people have asked about bulk book orders. We give a discount if you buy 25 plus books. We give an even bigger discount if you buy 100 plus books from the White Coat Investor Store. But you probably ought to contact us about it so we can get you those discounts. Just email booksitecoatinvestor.com thank you so much if you're considering this and passing them out to your students or residents or colleagues or whatever. And especially thank you for discussing money and encouraging financial literacy among potential White Coat investors out there. Our next question is off Speak pipe about mutual funds and ETFs. Hey Dr. Dali, first of all, thanks for all that you and the team at WCI do for us. My question today is in regards to exchanging a mutual fund for an etf. In my situation, I'm interested in exchanging the US Small Cap Value Fund for the Avantis US Small Cap Value etf. I hold these in a tax advantaged account, so I'm not worried about the tax implications, but I'm more so worried about missing time in the market. Since the mutual fund trades at the end of the day and ETFs only when the market is open. Are you worried about the spread from market close to market open? Okay, great question. We're going to answer your question as well as some related questions we get frequently. First of all, in a tax advantaged account, you're right, there's no tax consequences to this. And so your only issue is you can't buy the ETF until after you've sold the fund and you don't sell the fund until the end of the day, well then the market's closed so you can't buy an etf. So a couple of comments about doing this. The first one is that this could also work in your favor. The market might open lower tomorrow than it closed today, in which case you get today's price on your sale and then you get a buy lower tomorrow. So it could go either way. You could get burned. And most of the time, since the market goes up, most of the time you will get burned. But sometimes you might come out ahead actually by doing this. So another option you might have is to convert that traditional mutual fund to an etf. Vanguard lets you do this. You call them up and you go, I'd like to convert the fund shares to ETF shares and they'll let you do it. And then once they've done that, you can go in and you can sell the ETF and 10 seconds later buy the new ETF that you wish to have and you're out of the market for 10 seconds instead of overnight. It's a much lower chance of having any sort of significant drop between the time you sell and and the time you buy. So I think if this were a big chunk of your portfolio, I think I'd do that. If this is not a big chunk and you really want that Avantis ETF instead of the other one, I don't know that I'd worry about it. Maybe I'd just sell them the next day, put the ETF order in the next morning. Okay. Now the question I thought you were going to ask until I realized this was in a tax advantaged account, is the tax consequences for doing this sort of stuff. Now you can do the exact same thing in a taxable account. You can convert it to an ETF and then avoid the same issue swapping ETFs out. But the reason most people are doing these sorts of changes is they're often tax loss harvesting, right? So they're trying to harvest a loss, they've lost some money in the fund and they're trying to go to a tax loss harvesting partner. Now, as a general rule, in your taxable account you want to choose one or the other. And ETFs are generally slightly more tax efficient. There's usually more options for tax loss harvesting partners. So I think if you're investing in a taxable account and you're going to be paying enough attention to it to be doing things like tax loss harvesting, I think you're probably better off using ETFs in there. That's what I use in my taxable account. It was kind of a gradual transition over the years, but that's almost our entire account as ETFs. I think maybe our municipal bond fund is still a traditional mutual fund, but everything else is an ETF in there as well as its tax loss harvesting partner. So I would just get used to using ETFs in there. Now, it's fine to use funds if you want a tax loss harvest. You just put the order in for the end of the day and it happens at the end of the day. There's no chance of losing or gaining money on the swap and it allows you to do it anytime during the day and your tax loss harvesting happens. Now, I guess you can get burned if you put it in in the morning when you had a big loss and some or all of that loss disappears during the day. You could get burned. But as long as you're putting it in late in the day is probably not much risk of that. But I think you're better off just doing it with ETFs. Yes, you're out of the market for 10 seconds or 30 seconds or two minutes or whatever, and maybe the price of the new ETF goes up in between the time of the sale and the buy of the new etf, but it doesn't happen very much. Markets don't generally move that fast. And on those days when the market's all over the place, it's probably not the best time to be in there doing things anyway. But if you're trying to get your maximum tax losses to harvest, that might be the day you're in the market trying to do that. Just be extra careful and try to be extra fast on those days so you're not out of the market nearly as much. Now, a few other things to keep in mind if you're going the opposite direction. If you're going from ETF to fund when you're tax loss harvesting, this isn't nearly as big of a deal, right? You just sell the ETF during the day, you put in the buy order for the fund. That happens at the end of the day. So maybe you want to wait until 3:30 Eastern to sell the ETF and then a half hour later or whatever, the market closes and the fund purchase goes through. It's actually easier to go that way than to go the way you're trying to go, which is going fund to etf. If you're going ETF to fund, it's actually a little bit easier to do. But like I said, if you're going to be doing this a lot, if you're going to be making a lot of exchanges, usually because you're tax loss harvesting, just use those ETFs in your taxable account. Learn how to do it. If you're sophisticated enough that you care about tax loss harvesting, you're sophisticated enough to trade ETFs. It's just not that hard. Okay? As I mentioned at the beginning of the podcast, SoFi could help medical residents like you save thousands of dollars with exclusive rates and flexible terms for refinancing your student loans. Visit sofi.comwhitecode investor to see all the promotions and offers they've got waiting for you one more time. That's sofi.com whitecoatinvestor Sofi student loans are originated by Sofi Bank NA member FDIC. Additional terms and conditions apply. NMLS 696891 don't forget about those bulk book orders. Email booksitecoatinvestor.com if you're interested in buying 25 plus copies of our books. And thank you for not only doing that, but just for talking about money with those you interact with. It's a great way to spread the word without feeling like you have to preach to them. Just hand them a copy of one of these books. We have a student book for students. Hopefully soon we'll have a resident book for residents. The White Coat Investor book. The original is a great one to pass out. Financial boot camps are a great one to pass out. Maybe the Asset Protection book isn't the first one you hand people, but it's helpful for the right person in the right situation. Okay, thanks for telling people about the podcast. Thanks also for leaving 5 star reviews. It does help spread the word. Recent one came in said the Exceptional Podcast. Jim has a wealth of knowledge and provides us with exceptional guidances with what I call no bias. Your podcast made a huge impact on my financial life. It is needed for many high income professionals. I highly recommend it. Five stars. Thank you so much for that kind review, especially because it's going to help us spread the word about the importance of financial literacy and discipline among White Coat investors. All right, we've come to the end of another great podcast. I hope you're enjoying these. If you're not, send us an email and tell us why. Editorwhitecoatinvestor.com, we'll get it. We'll fix whatever the issue is, whether it's audio quality or you want different subjects on it, or you just think I'm a jerk. Whatever. Send us the podcast feedback and we'll try to make it better and make it more useful for you and your friends and your family and your peers and everybody you'd like to share it with. Keep your head up and shoulders back. You've got this. We're all here to help you. See you next time on the White Coat Investor Podcast.
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The hosts of the White Coat Investor are not licensed accountants, attorneys or financial advisors. This podcast is for your entertainment and information only. It should not be considered professional or personalized financial advice. You should consult the appropriate professional for specific advice relating to your situation.