In this episode, host Steve Chen reconnects with Dr. Jim Dahle, founder of The White Coat Investor, to reflect on life, money, and purpose five years after their first conversation. Jim shares the impact of a serious 2024 climbing accident, how it shaped his perspective on aging, balance, and living with intention. They dive into investing philosophy, simplifying wealth, estate planning for kids, and the challenges of being a content creator in the age of AI. The episode blends financial wisdom with personal insight, showing how resilience and purpose evolve with experience.
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Callouts:
The Purpose Code: How to Unlock Meaning, Maximize Happiness, and Leave a Lasting Legacy by Jordan Grumet
Die with Zero: Getting All You Can from Your Money and Your Life By Bill Perkins
The Four Pillars of Investing by William J. Bernstein
Transcription
Announcer (00:00):
This episode is brought to you by the Boldin Financial Planning Platform.
Steve Chen (00:04):
Formerly NewRetirement, create a financial plan for free boldin.com. Welcome to Boldin Your Money. I’m your host Steve Chen, and today we’re catching up with someone who’s no stranger to the podcast, Dr. Jim Dahle. He’s an emergency room physician and founder of the White Coat Investor. Jim and I first talked back in January, 2019 and we talked a lot about his own journey through building financial resiliency and building towards financial independence. When we talked a lot about what it is, especially for doctors to go through their own journey as they go through medical school, how they deal with debt and how they set themselves up to be on a great path over the course of their whole lives. And so I wanted to kind of loop back and check in five years later to learn more about what’s developed with Jim’s life and also with White Coat Investors. So with that, Jim, welcome back to the show. I appreciate you joining us.
Dr. Jim Dahle (01:08):
Yeah, it’s wonderful to be here. It’s been a little while, but it’s good to be back.
Steve Chen (01:12):
Yeah, you’re looking good and we met at Bogleheads a couple of years ago, so it was great to meet you in person. One of the reasons we reconnected was I saw your post about your climate accident, which was almost a year ago in August, 2024, and it seemed like that really had a big impact on your life and would love to get your take on how that affected your thinking and if it’s affected the way you’re approaching life at all.
Dr. Jim Dahle (01:37):
Yeah, interesting the way you phrase that, how it’s affected my thinking, right, because frankly, I’m lucky to be alive, right? I had pretty serious injuries from this fall, including fractures of all the way across my face, separated my skull from my face and leaked all the fluid that my brain’s supposed to be swimming in out my nose, aside from spine fractures and rib fractures and nasty wrist fracture and shoulder separation and lacerations of those sorts of things. So it was a pretty big trauma. This was my first time in my life being disabled. I was definitely disabled from work at least for a few weeks and really took several months off, and so that’s a sobering time. I’m back at work now and I can do all the work I want to do both in the emergency department as well as here at the White Coat Investor, but it does feel as if one chapter of my life has closed and another one has opened in that respect.
(02:35):
If for nothing else, then recreation activities, I mean, my wrist is probably not coming back to a hundred percent, so am I going to be climbing as hard as I used to? No. Is there a whole list of things on my bucket list that I’m probably never climbing? Yes, there is. And so it does feel over the last year that I’ve moved a little bit from my youth to middle age and I turned 50 this summer and maybe I should become middle aged much sooner instead of pursuing these pursuits like climbing mountains. But it does feel like I’ve turned a little bit of a page that year, this last year, at least in my recreational pursuits, but I’d like to think I was living pretty intentionally before then, so it’s not like, oh, I got to quit working and spend more time with my family or playing or something like that. I was doing all that stuff before, so I think I have pretty good balance on life and that balance is pretty similar now to how it was a year ago.
Steve Chen (03:31):
Yeah, I’ve heard that doctors actually make terrible patients. Do you think you’re a good patient?
Dr. Jim Dahle (03:37):
I’m actually thrilled with how I was as a patient. I had a pretty bad head injury, obviously aside from the CSF leak and all the fractures, I was badly concussed, and so I was asking the same questions over and over again for several days, and that beautiful thing about it is I’m reassured that I’m not a mean drunk because I spend most of the time in the ICU thanking people repetitively for taking care of me. So I was actually kind of happy to hear that at least I was nice about my head injury, so I think I wasn’t that bad of a patient.
Steve Chen (04:11):
Yeah, well, I can see that. Yeah, you had this, you approached it with a sense of gratitude, like I saw your YouTube video, I watched that yesterday, and you talked about the heroes of your life and people who came to help you out and from actually hearing you firsthand, it sounds like this injury was even more material. I didn’t realize how injured you were.
Dr. Jim Dahle (04:30):
There were two helicopters involved in getting me from that mountain to the trauma center. It was pretty amazing actually, that I got there in less than three hours from the injury, but I definitely needed a trauma center, there’s no doubt about that.
Steve Chen (04:41):
It sounds like it’s not slowing you down that much because right before we got on, you were talking about you’re going to go canyoneering and coming up, so
Dr. Jim Dahle (04:47):
Yeah, I’m pretty excited. It’s my first trip canyoneering since before that fall, so I’m a little nervous about it, but I think I’m ready to go and able to travel and doing other fun stuff, playing hockey and skiing, and I was out running yesterday, so I’m happy. I can still do lots of fun things that I enjoy.
Steve Chen (05:03):
What is Canyoneering?
Dr. Jim Dahle (05:04):
This is an interesting thing that a lot of people that don’t live in this part of the country have never heard of, but along the Colorado Plateau, which is basically southwestern Colorado and southern Utah and northern Arizona, there are slot canyons. They’re basically formed by water running through sandstone and exploring those slot cans is the sport known as canyoneering. It involves repelling and swimming and route finding and hiking and teamwork, some climbing, and so it’s a lot of fun for those of us who do it, but it’s definitely a niche sport. I’ve been a lot of very cool places that people have no idea exists even when they go to national parks like Zion or Arches or Grand Canyon.
Steve Chen (05:45):
I was reading a “A Walk in the Park”. I was just looking it up by Kevin Fedarko. Have you read that book?
Dr. Jim Dahle (05:51):
I have not.
Steve Chen (05:51):
It’s about him hiking the entire Grand Canyon. So there is some of this discussion of Stock canyons and stuff like that, and they first start out and they’re totally unprepared. He used to river raft it and he was like, oh, I can river raft the whole thing. But then I think hiking,
Dr. Jim Dahle (06:06):
Hiking, it’s a different job. You got to change levels as you hike through it and the changes of the levels is the challenging part, aside from the fact that this thing’s like 260 miles long or something.
Steve Chen (06:16):
Exactly. Maybe you can take this on. This could be one of your bucket list things.
Dr. Jim Dahle (06:21):
I’ve looked at a lot of that train. In fact, just a couple of weeks ago we were out at Torah weep with the kids for spring break and peering over the edge. This is the only place of the Grand Canyon where you can really look over the edge and look directly down at the river, and at that point the canyon is about 2,500 feet high, but it’s a pretty impressive viewpoint.
Steve Chen (06:39):
Yeah, yeah, for sure. We hiked Mount Whitney with my oldest son when he was 13, and that goes to 14,000. I remember we kind of got up the saddle and looked over and you’re looking down like 4,000 feet. It’s pretty crazy. I’d never seen anything like that and you really are like, wow,
Dr. Jim Dahle (06:56):
That east face of Mount Whitney is a fun climb too. I got a chance to do that. It’s been quite a while. It’s been decades actually, I think since I climbed Mount Whitney, but we came up that face. It’s longer than we thought it was going to be, that’s for sure.
Steve Chen (07:07):
That’s the biggest thing I’ve ever done, and I just remember going from, I think you started at eight, then you go 10, 12 at 12,000. I was like, oh, we’re right there and then I’m slowing my pace of making progress slowed to our crawl. It took us forever to get to the last part of it.
Dr. Jim Dahle (07:22):
Yeah, it’s pretty impressive. Health will affect you until your body gets used to it.
Steve Chen (07:25):
Has this affected you talk about the chapters one closing and I guess the next one. How do you think about the next chapter and has your orientation about the work that you’re doing and the why behind your work changed?
Dr. Jim Dahle (07:38):
It’s interesting. I just got a feedback from a bunch of our employees. They tell me I’m much nicer now and I’m like, was I jerked before? I didn’t realize it, but so apparently I’m nicer than I used to be. I’m also told that I’m much more mission focused. I think that’s been a gradual change over the years and I think that comes just with building wealth. When you have enough, you stop caring about more money quite so much. Well, what else am I going to leave this planet besides a little bit of money at this point, we’re not going to spend all of our money. We’ve got to figure out where that’s going to go when we’re done and what else do I want to do? What do I want to do with the rest of my life? I’m not quite 50 years old and I feel like I’ve still got a lot I can give, so I’m definitely more focused on purpose and mission and those sorts of things. As you become financially independent, you start reading different books. Instead of reading how to invest, how to get Wealthy, you start looking for books which are much less common on how to be wealthy, and so I’ve been reading books this year like The Purpose Code and Die with Zero and what do you do when you get what you want? Those sorts of books, and I suspect that’s probably affected the way I think about some of this stuff as well.
Steve Chen (08:49):
Any big takeaways from those books? I mean, die With Zero, people have talked a lot about it. I haven’t heard of the Purpose Code, but check it out.
Dr. Jim Dahle (08:56):
Die With Zero’s. Big takeaway is most people are dying the wealthiest they’ve been their entire life and he sees that as a huge tragedy. The older you get, the less well you can exchange money for awesome life experiences, so he actually advocates that you actually hit your peak wealth between age 45 and 60 and at that point your wealth’s declining because you’re using it for good, whether that’s experiences for yourself or people you care about or giving it away to charity or whatever his idea was basically, yeah, really die with zero. Now that’s kind of an unattainable goal, but as a mindset, I think there’s a lot of value there for those of us who have accumulated wealth and maybe aren’t using it in the best way we could.
Steve Chen (09:38):
No, that’s a great insight. Yeah, I can totally see that. I’ve seen some stuff too around you need to look at a lot of people track their net worth, is it going up into the right, but they also need to track the same time how much human capital do they have left and what your probability of being alive and a lot of folks are. Yeah, they’re indexing to, I want to have plenty of money when I’m 95, and then
Dr. Jim Dahle (09:57):
What exactly do they think they’re going to be doing with the money at 95? Right? I mean, part of life is just balancing current you with the needs of future you, and that can be challenging for sure.
Steve Chen (10:09):
When you think about your own time, right? There’s your work, your family, the White Coat Investor, which is a larger conglomerate of things. Are there other big things that you’re putting your energy into?
Dr. Jim Dahle (10:19):
I mean, I have some volunteer work through our church and community and that sort of thing. One of the fun things about getting to this stage of my career and this stage of our family is to see my wife get all excited about career. Like stuff. For example, she ran for office last year. She is an elected member of the district school board, and so she’s been having a heck of a time being on the school board. Of course, that’s not always a can be a thankless job and you get a lot of flack when you’re on the school board, so it’s been fun to watch her pursue some of her interests as well. That’s probably been one of the bigger changes in the last year for us.
Steve Chen (10:55):
Do you think you’ll run for public office?
Dr. Jim Dahle (10:57):
No, I think I’m completely unelectable now with 3000 or 4,000 blog posts and 500, 600 podcasts out there. Surely any political opponent I ever had would be able to just find something that would keep me from ever being electable that I’d set on some podcast or something. So I don’t think so. I’m not really interested in it, number one. Number two, I’m pretty sure,
Steve Chen (11:21):
I don’t know. I think you seem pretty electable. How has it evolved over the past? You’ve been doing this for a while. I think it started in 2011, right? It was like a blog and then I know you’ve bought other properties and podcasts and YouTube and stuff like that and courses. How do you see it evolving?
Dr. Jim Dahle (11:36):
The mission really hasn’t changed much at all. The goal is to be the spot for docs. The docs that want to learn about finance or want referrals to financial service professionals or companies. Basically we won’t want to help docs stop doing dumb stuff with their money. When I say docs, I’m also talking about other high income professionals and frankly, 98% of it’s the same for everybody. Let’s be honest. That part hasn’t changed at all. Now mostly what we’ve done is realized that some people like to learn in different ways than others. Some people like online courses, some people like video, some people like audio, some people like written stuff. Some people want emailed newsletters, other people want books or they want to go to a live conference, and so we try to package up the same information into whatever way you like to learn and give it to you that way.
(12:23):
That’s a lot of what we’ve done over the years as White Coat Investor. Most of it at this point, it’s just keeping it going, knowing that every year 30,000 people come out of medical school and they still need to know the stuff. The last year is people needed to learn. So I don’t know that we have dramatic changes. We are always trying to figure out ways to serve people a little better, whether that’s bringing one service in house or taking one out of house or finding a different person to refer to. But for the most part it’s similar work what I was doing a decade ago.
Steve Chen (12:53):
Do you think you’re going to keep running it for the foreseeable future? Would you ever consider selling it?
Dr. Jim Dahle (12:57):
I’d consider selling it. You’re making an offer. I mean, we didn’t attain it for sure, but as I get further in life, I care less about the money that offer would bring in as much as trying to figure out how this thing can outlive me, and that part’s a little bit trickier it turns out than just figuring out a valuation to sell.
Steve Chen (13:14):
For sure. It’s hard. Well, I’m glad you’re making progress and you’re doing good work in the world, which is awesome. So I thought we could talk a little bit about just what’s happening in the world a bit. I know it’s been a kind crazy time and we’re personal finance experts, but
Dr. Jim Dahle (13:28):
I guess I should ask, when does this run right? Because it feels like everything’s changing day by day here in April of 2025. Every day is different than the day before politically
Steve Chen (13:38):
For sure. It is basically impossible to keep up with it. I did a podcast. I tried to get in front of it early on right after Liberation Day, the tariff thing, and we rolled a podcast Tuesday morning and we put it out Wednesday evening, and in that time the market moved or the Dow would move like 2000 points or there was a 10% swing one day and a 15% mean it was crazy. So I was like, everything changed. So
Dr. Jim Dahle (14:01):
There was one day in there, which was probably the most profitable day of your life if you’re like most people. The market went up 10% that day, and if you multiply 10% by the amount of money you have in stocks, that’s probably more money than you’ve ever made on any other day of your life. That’s true.
Steve Chen (14:15):
Yeah. I’m thankful I took what I know is our suggestions, which is just stay the course and don’t sell. I mean, I do remember talking to friends and just seeing online people were freaking out. They normally do. Some people were thinking about it selling and I think some people probably did sell the day before or whatever. It’s really, it’s hard to watch that happen. Yeah. But do you have any take on what happens here? Do you think things will settle down or do you think this continues on for a while?
Dr. Jim Dahle (14:43):
Well, my crystal ball is cloudy as usual, right? I have no idea what the future holds. I don’t know what interest rates are going to be in a year. I don’t know what the Dow Jones is going to be at in a year. I don’t know which asset class is going to outperform others or how bitcoin’s going to do or how gold’s going to do or anything like that. And I think it’s fascinating that people ask those questions that they think somebody knows, right? When all evidence is to the contrary, then nobody knows and nobody’s going to know, and you really ought to quit asking the question because you’re not going to get any sort of useful information as an answer. And if you’re not convinced of that, I would suggest you start keeping a journal, write down your own predictions, write down the predictions of others, be as specific as you can, and then go back and look at it in three months, in six months, in a year and two years, and it won’t take you long before you convince yourself that you need an investing method that doesn’t require you to be able to predict the future to be successful.
(15:36):
You almost surely do not have that ability. And if you do, there’s no way that you should only be managing your money, you should be managing billions of dollars.
Steve Chen (15:44):
I think that’s a great point. How do you get this insight that it is impossible? And I know you can read and stuff like this. I think people are so they want to be able to explain things, so they want stories and I feel like that’s what a lot of financial services gives. It’s like gets in front of you like, Hey, here’s what’s happening, do this or that. You can be confident because telling you what to do. And the reality is nobody knows.
Dr. Jim Dahle (16:08):
Yeah. I mean what we need to have the proper perspective is experience and you can get a certain amount of experience in your own lifetime, but what you should really ideally do is borrow experience from history. And I think it’s important to understand financial history. I mean, every time something crazy happens in the markets, it feels like this time it’s different. It will always feel like that. It’s supposed to feel like that in some respects. It is different. We’ve never dramatically increased tariffs like they’ve been increased in the last month. That’s never happened before. It is different this time in that respect, but markets are resilient. Markets have had shocks like this before, and once you go through enough of ’em, you realize that you’ve seen this movie before and you know how it ends, right? In 2022, we raised interest rates like 4% in a few months.
(17:04):
That had never happened before. It led to the worst bond market returns that we’ve ever had in a single year in 2022, and it felt like this time it’s different. In 2020, we had a worldwide pandemic. People were keeling over in China, in ICUs, in Ireland, or not Ireland, Italy, and it was starting to hit New York City. It felt like this time is different. And where were we at a year later? Where were we at five years later? The markets are resilient. Companies that were profitable five years ago are mostly still profitable today. These are the most profitable corporations in the history of the world, and if you go back through history like this, you realize that you expect a 20% drop in the stock market on average about once every three years. Well, when was our last one? It was three years ago. We’re down.
(17:55):
I don’t know what it is today as we record this, 13, 14%, something like that. This is an expected event. If you didn’t expect this, you don’t understand what you’re doing. Investing in stocks, they drop like this from time to time and that’s just part of the game. The point is, this is money. You’re not going to spend for 10 or 20 or 30 or 40 or 50 years and is it likely to still be down 50 years from now? No, it is not. So you just got to learn to stay the course. Jack Bogle was famous for saying, this is my most important advice. If there’s one thing, you got to understand that you got to pick a reasonable course and you got to stay with it through thick and thin, and I think that’s still really good investing advice.
Steve Chen (18:37):
It feels like you learned this pretty early as you got started. You were, I know, involved in Bogleheads really early on. It’s like how did you get started in your own journey here and come to these realizations?
Dr. Jim Dahle (18:48):
I got mad. That’s what happened. I realized I had been taken advantage of, not with a lot of money. I didn’t have a lot of money. I could have lost everything I had and it wouldn’t have been a lot of money, but I was mad. I felt like the financial services industry was taken advantage of that every interaction I’d had with him, it ended up ling a realtor, a mortgage lender, twice a recruiter, an insurance agent, a financial advisor. I just had felt like I’d been ripped off. And so that motivated me to learn and I started reading. I lived across the street from a used bookstore and I went over there and started grabbing used financial books and I’d read ’em. I read a whole bunch of terrible financial books. There are a lot of really bad financial books out there, but I read some good ones and after a while I realized, well, the good ones are saying the same things.
(19:31):
And one of the early ones I read was called The Four Pillars of Investing by Bill Bernstein. He’s a neurologist turned kind of financial guru, and one of the four pillars was learning financial history. And so he went through that and he loves writing about history. He’s done all kinds of history books, financial history books kind of stuff. But once you get that perspective over centuries of financial markets and developments and stuff, you just look at the world differently. It’s almost like you feel like you have a superpower looking around. You’re like, nobody else understands that this is going to go away in a few months. And that’s the truth. Yes. Sometimes things change that are dramatic that make a difference for centuries. At the end of the Bronze Age, for instance, a bunch of Eastern European civilizations really tanked and nobody came back for centuries. But since then, the markets have been pretty darn resilient and I wouldn’t bet on the end of the Bronze Age again, you’re probably much more likely to get something the equivalent of the.com crash.
Steve Chen (20:30):
When you’ve studied history, do the problems that led you to get mad, did they persist? Were they existing back then? Was there a lack of transparency and a lack of alignment?
Dr. Jim Dahle (20:41):
Well, another one of the pillars in Bernstein’s book was learning how to interact with the financial services industry. And you realize that the people that go into financial services, this isn’t a hundred percent true, but it’s generally true. They’re not the same people that become kindergarten teachers. They have a little bit different motivation and you really have to put your business hat on when you walk into the financial services world and realize people are there to make money from you and you are the source of their profits. And so you got to be a little more on your guard and realize that maybe you ought to treat some of those people as though they’re a criminal trying to rob you. And when you have that mindset in place, then you interact a little bit better with the financial services industry.
Steve Chen (21:24):
It’s so funny talking to you. I mean, I agree with what you’re saying and also
Dr. Jim Dahle (21:29):
You somewhat work in the financial services.
Steve Chen (21:31):
Yeah, we interact with the financial services. I mean, I’m in financial services, but I interact with the community and I do think these issues persist just because of how the industry operates, which is generally it’s kind of opaque and yeah, you are the product versus the customer.
Dr. Jim Dahle (21:47):
At least the information is out there now, prior to really the internet, probably this information wasn’t out there. You had to go dive through obscure periodicals in the library or read books to really get a sense for how this stuff works. At least now, if you want to learn it, it’s pretty quick to learn.
Steve Chen (22:06):
Well, I think it’s changing. I mean, I remember I was reading back our podcast from 2019 and when I first met you and Tim Reta was getting going with Next Generation personal finance, and that’s become a thing, and now he’s educated, I think 50,000 teachers and they’re teaching 5 million kids a year. It’s incredible. So literacy, financial literacy is getting taught, which is great. The information is out there. I do think it’s a generational thing. I really feel like the millennials are smarter than Gen Xers and the Gen Zs are smarter than millennials and the Alphas are probably going to be smarter than the,
Dr. Jim Dahle (22:41):
And hopefully that keeps going, but it’s pretty awesome when you think about, it’s a little bit like reaching doctors. What we’re trying to do is help doctors be more financially literate. I think it actually does improve patient care. And likewise, if you just make the teachers more financially literate, they’ll naturally teach it to their students. And so you really get this multiplier effect where you end up helping a lot more people than you think you are initially.
Steve Chen (23:04):
Yeah. As you’ve built wealth, you talked about how your orientation on purpose has changed. Do you feel like things are getting more complicated? I know that you probably have to think more about your estate and taxes and stuff like that. Is life getting more complex for you or are you keeping it simple?
Dr. Jim Dahle (23:20):
This is a challenge for us. Me, because I’m a hobbyist. I mean, I’m like, all right, one of the things I did a few years ago is we added some I bonds to our portfolio. I bonds are cool, they’re inflation index, they’re working a little bit differently from tips, but they’re cool. The problem with IBOs is you can only buy $10,000 a year, so it really doesn’t work to add IBOs to your portfolio once you’re already wealthy. And so I went through all this trouble of opening up treasury direct accounts, one for myself, one for my wife, one for our trust, and bought IBOs every year. And here I am three or four or five years later and still have an insignificant amount of our portfolio in IBOs. Is there anything wrong with IBOs? No. Can they be a meaningful part of portfolio? Absolutely. Are they a meaningful part of our portfolio? No. All they’re doing is adding complexity to our lives. We are getting no portfolio benefit out of having what we have in I bonds. So you start thinking about things like that going, we got to simplify things like this. So we look into simplifying things a lot now, but is our financial life complex? Yeah, it’s
Steve Chen (24:24):
What are some of the things that you do to simplify your life?
Dr. Jim Dahle (24:26):
Our financial life?
Steve Chen (24:27):
Yeah, your financial life.
Dr. Jim Dahle (24:28):
Well, for instance, I filed in 12 states a couple of years ago. Well, last year I filed in nine and hopefully this year it’ll be six or seven. So that simplifies my life somewhat obviously reduces my tax preparation costs, but I have to be a little bit careful which private investments I invest in if I don’t want to be filing in multiple states and where those investments are located and whether they do some sort of composite return and those sorts of things. That’s one example of something that maybe people don’t think about going in, but can make your financial life a little more complex going out. The other thing I think about from time to time is starting a rental property empire. I think it’s a great way to build wealth. I think it’s a good way to preserve wealth. I think it’s worked for many, many people. It’s not something I need in my life then. And if I start buying a bunch of direct rental properties, all it’s going to do is give me a whole bunch of schedule to file on my taxes and phone calls and things to deal with, whereas we’ve already got a reasonable investing plan if we follow is going to work just fine to meet all of our financial goals.
Steve Chen (25:30):
When you invest, is it primarily, it sounds like you’re doing some private alternative stuff, direct investing that you’ve done and then you’ve got stocks and bonds and you’ve got your business.
Dr. Jim Dahle (25:40):
Yeah, I mean our investment portfolio is kind of boring. It’s 60% stocks, 20% bonds, 20% real estate. That’s what it’s been for years and years and years. And I don’t try to go, oh, the tariffs are hitting. Should I put more in international real estate? Nope. Third of it or international stocks? Nope. A third of it’s in international stocks. It was in 2006, it wasn’t 2016. It will be in 2026. And sometimes international stocks will do better than us stocks. Sometimes they won’t. I don’t know when that’s going to be, so I’m just going to keep the same percentage year after year. And the beautiful thing about that is all the stuff I don’t have to listen to or read or think about. And there’s a lot of power in that.
Steve Chen (26:21):
When you think about your positions, is it really like you chop it up, inequities across international, domestic, large cap, whatever it is, some mix, but it’s pretty straightforward?
Dr. Jim Dahle (26:31):
It’s pretty straightforward. I mean, we do a little bit of small value tilting in our portfolio. I have for years that hasn’t paid off by the way. I mean a total market approach or even a large growth for the last five plus years has definitely been more profitable than a small value tilt. But because of that tilt, we have four stock funds, total Stock market Fund, the total International Stock Market Fund, and a small value US fund and a small value international fund. That’s our stock funds. That’s 60% of our portfolio now because of a lot of it’s in a taxable account, each of those has a tax loss harvesting partner. So I may have eight funds in that taxable account, but it’s four asset classes.
Steve Chen (27:12):
Do you do the tax loss harvesting stuff yourself?
Announcer (27:15):
Yes, I do all the portfolio management myself. It’s one of those things that, number one, it’s not that hard to learn, I don’t think. And so I learned it early on and I’ve been doing it ever since. When you do it with a four figure portfolio, it’s no big deal to do it with a five figure portfolio or six or seven or whatever. It’s the same game. So I find it easy. And secondly, I’d just be unhappy with if someone else was doing it, I’d be hassle and I might be a terrible client, so I might as well just take care of myself.
Steve Chen (27:42):
And how often are you rebalancing and trying to capture it?
Announcer (27:44):
Rebalancing I think is totally overrated. Everyone gets into the ideal way to rebalance using some sort of backtested thing. And the truth is nobody knows. Nobody knows. And there probably isn’t an ideal way. Should you rebalance in some way at some point? Yes. If you’re doing something to rebalance, you’re doing it right. Don’t go any further than that. If you’re trying to rebalance every week, you’re just creating work for yourself and you’re probably hurting your returns more than you’re helping. So don’t make this too complex. So mostly I just direct new money at whatever is lagging and try to bring the portfolio back in the direction of being balanced and that’s good enough.
Steve Chen (28:27):
And how about tax loss harvesting?
Dr. Jim Dahle (28:29):
I’ve done lots of tax loss harvesting over the years. I did a little bit more this month. Obviously the market’s going crazy. It’s pretty easy to tax loss harvest right now at this point, I have more tax losses than I’m ever going to use against my ordinary income. So barring a sale of our house or a sale of the white coat investor is a business, I’m never going to use up all of my tax losses. So I’m pretty cautious about getting more. Now. I do grab more when they’re easy to grab, but I make sure it costs me nothing to get them. But does tax harvesting add a little bit to a portfolio, but it’s up there with rebalancing, right? This is a relatively minor portfolio task. The big problem people have, the reason people aren’t wealthier than they are is they don’t put more money in their accounts. And when you compare rebalancing and tax loss harvesting and stuff to figuring out a way to make more money and save more money, more of it in your accounts, they’re pretty small chump change kind of amounts.
Steve Chen (29:28):
And I guess in terms of building taxable wealth, so do you generally save in your tax deferred first or when you’re saving money, are you kind of like Roth tax deferred and taxable?
Dr. Jim Dahle (29:40):
Yeah, I don’t see any reason to put money in a taxable account until you’ve maxed out your tax protected accounts. So the first thing we fund every year is our HSA. That’s usually January 2nd. We’re doing backdoor Roth IRAs on January 2nd and third, and I try to max out any 4 0 1 Ks available to me early in the year as well. And after that I got nowhere else to put another in a taxable account. It used to be we didn’t even have a taxable account and now it’s our largest account. That’s a good problem to have. It’s hard to complain about that. That just means we made a lot of money.
Steve Chen (30:12):
That’s awesome. You obviously make money as a doctor, but you’re also making money through the business essentially that’s driving it and I guess you’re capturing returns for your real estate stuff. You’re getting distributions from
Dr. Jim Dahle (30:24):
That? Yeah, I mean we have portfolio income, dividends and interest from stocks and bonds. We have rents from some of the private real estate investments. We have occasional capital gains and then of course business income from the white coat investor and the white coat investor pays my wife and I both a salary and I have a little bit of clinical income too.
Steve Chen (30:44):
That’s good. Well diversified. Good job. That’s amazing. Yeah, I feel like owning a business completely is the lowest risk path for wealth building in this country. It’s very tax efficient and through that and just through running a profitable company, you can do incredibly well.
Dr. Jim Dahle (31:02):
I would not argue with that point that you can do incredibly well. I think it can be the most profitable way to use your money to use your time, et cetera. I would not describe it as the lowest risk way though I think there are far lower risk ways to build wealth, maybe not to such an extreme. Obviously if you’re going to build the next meta, the next alphabet, then you’re not going to do that being somebody else’s employee. But I’ve thought a lot about what is the most producible way to build wealth in a relatively short time period, and I think it’s using a reasonable amount of leverage in building a portfolio of short-term rental properties. Is it another job? Yes, it is another job, but you can eventually outsource of a lot of the parts of that job. It’s a reasonable use of leverage that can further boost your returns.
(31:55):
And the truth is you’re running a hotel business, not just a housing business, but I think it’s got a lot going for it if your goal is to get rich quick. I think that’s one of the more reproducible ways to get there. And it’s not quick. It’s not in two months. It’s going to be 5, 10, 15 years, but I think it’s one of the more reproducible ways to do it as opposed to trying to start the next white coat investor. I mean since we started this, there’s been another hundred plus physician financial blogs out there and only about three or four of ’em have ever made any significant amount of money at all, and none of ’em have been as successful as the white coat investor. I would say trying to do this is the risky thing, whereas there’s lots of other ways to build all the wealth you’re ever going to want without taking that sort of risk.
Steve Chen (32:41):
Yeah, I think that makes sense. Franchises or
Dr. Jim Dahle (32:44):
Oh yeah, they’ve already been proven, right? You don’t think your subway’s going to make money. The subway’s going to make money, put it on the right corner and it’ll make $80,000 a year like the other subway and you buy enough of ’em, you’ll have be a subway millionaire
Steve Chen (32:58):
And I agree with you on real estate, but it is a job that’s like building a business. I mean you do it for 10 or 15 years and you end up with whatever, a hundred doors or a thousand doors or whatever. It’s
Dr. Jim Dahle (33:07):
For sure it’s building a business, no doubt about it. I just think it’s one that’s a little more reproducible. You can get help from people who have done that same business just in a different location. They don’t mind helping you at all, not competing with them, whereas if you’re trying to build the next bold in, you’re competing with the entire planet, it’s more challenging.
Steve Chen (33:27):
Yeah, I know. I know. It’s interesting. How about your family and your kids? So I’ve seen this with my friends as they get wealthier, it’s like they start to really think about how much they disclose to their kids about what they have and what might happen and how do they keep them aligned in terms of making sure they’re motivated and not going to blow it.
Dr. Jim Dahle (33:45):
So estate planning becomes much more important to you as you build wealth and as you become older, there’s no doubt about it. And for a lot of people, estate planning means talking to an attorney and putting some papers together. For us, estate planning is a lot more significant than that. It involves teaching our children and getting to know our children and talking to our children about when they’re going to inherit money and why and how and those sorts of things. You can really blow it. You can really ruin somebody by giving them the wrong amount of money at the wrong time in the wrong way. So our estate plan is essentially four chunks that each of our kids will get, and the first one I think is what most people find very interesting, which is what we call the twenties fund. And so relatively small percentage of what they’re likely to inherit, but it comes to ’em in the form of a Roth IRA for money they’ve earned as teenagers that we basically give ’em a parental match on 5 29 to pay for college A-U-T-M-A account they can use for whatever they want in their twenties and then an HSA because there’s a cool thing you can do with HSAs these days where while they’re still on your family plan but they’re actually not your dependent, you can put in a family contribution for them.
(34:53):
So that’s the four parts of their twenties fund and we get to watch them and see how they use this money and there’s only one of ’em in their twenties now, but we get to see how they use their money and whether they can handle inheriting more money later.
Steve Chen (35:06):
How do you keep visibility to their money or the money? Do you still have access to the accounts?
Dr. Jim Dahle (35:11):
Well, up until they turn 21, I mean I’m controlling it all. It’s all custodial accounts. As they turn 21, the access goes away, but you’re still talking to ’em about it and that sort of thing. Basically, if they can’t manage money, they’re going to inherit the later inheritance is in a different format than they would, they’re much more likely to get a spend thrift trust kind of inheritance than a lump sum kind of inheritance. And then we tell ’em, you got to have a career. You got to go do something getting any more money from us until you’re 40. And so they get a chunk at 40, a chunk at 50 and a chunk at 60, and the idea there is three strikes. You’re out if you blow it, you got to blow it three times and the first one probably pays off their mortgage and the second one maybe makes them financially independent and the third one, they’re just managing for the next generation. That’s kind of our plan for now after we die with Zero, he really advocates for inheritances between 26 and 35, which is earlier than we were planning to really give significant amounts of money. So maybe if they prove that they can handle it, maybe they’ll get some money a little bit earlier, but right now if we got hit by a bus, they wouldn’t get anything other than their twenties fund until they turned 40.
Steve Chen (36:17):
Yeah, I think it’s so interesting. As you have more money, you can afford to be more generous and it can change people’s lives. There’s someone in my family and he is in his thirties and he is like they want to buy a house and they’ve been saving up their money, but they’ve got relatives that have more money. They’re probably never going to use their money. If we could inherit some money, that would be really helpful for us. But also they’re working hard. They have a career and all that stuff.
Dr. Jim Dahle (36:42):
It’s true. Money at 30 is way more useful than money at 50. I don’t need an inheritance from my parents now. It would not help me whatsoever. I’d just be managing it for the next generation. So there’s a lot of wisdom there in kind of that die with zero philosophy to give inheritances early and give to charity early and spend your money early when you can really still get maximum memories and life experiences out of it. Obviously you have to balance that with not eating Alpo in your eighties, but most Americans just don’t save enough money, let’s be honest. But of those who do, very few of them figure out how to spend it well, that transition is a lot harder than most people think it is if you go from saving money to spending money.
Steve Chen (37:21):
Yeah. Do you see that in your community where people coming to you now as you must be having doctors that have going through their careers and you’re 20 years into this, 20 plus years into it, they’re hitting retirement or whatever. They’re getting to that point. Are they showing up and saying, Hey, I need help with this, I got to think this through.
Dr. Jim Dahle (37:38):
Yeah, for sure they are. A lot of ’em, even if they started at the beginning of their career with me when I started doing White Coat Investor, they’re getting to the point where they’re starting to think about early retirement. Those sorts of things are in their fifties now, and so definitely people are thinking about that. But this is a challenge. For many years I’ve been writing about how there’s five money activities you got to master. There’s earning, saving, investing, spending and giving. And the truth is almost nobody’s good at all five of them naturally, if you’re a natural saver like I am, you usually get pretty good at earning and saving and investing and then you suck at spending. So for five plus years, five or 10 years, I’ve been trying to get better at spending and I’m not just talking about spending money, I’m talking about spending money well on things that actually make me happier, that improve the lives of others that I’m getting a good deal on, for instance, and those sorts of things. Spending can take just as much work as saving money does.
Steve Chen (38:32):
Well, many people are good at, they’re able to spend lots of money, but they necessarily spend it well and they get going on that early versus the saving.
Dr. Jim Dahle (38:40):
There’s a real bummer to blow a bunch of your money on something that doesn’t even make you happier.
Steve Chen (38:43):
That’s right. Understanding that about yourself is super important. There’s a dirt bike sitting in my garage. My middle son was made some money in the summer and he’s like, I’m going to spend two grand on a dirt bike. I’m like, whatever. And then, I mean, I think he enjoyed having it, but he’s not necessarily getting maximum utilization out of it.
Dr. Jim Dahle (38:59):
Yeah, the worst part about it’s, it’s in your garage. I
Steve Chen (39:01):
Know. Exactly. I guess last question on the estate stuff, this stuff resonates a lot, but when you zoom out, how do you think about the mix of what is going to your family? Sounds like family and charity is where your money’s going. Is it going anywhere else?
Dr. Jim Dahle (39:15):
Not really, although we’ve made a significant point of giving to nieces and nephews. So we’ve funded, I don’t know, 35, 5 20 nines. I think one of ’em has been cleaned out so far. Only one niece and nephew has actually graduated from college, 35, 5 20. So we’ve offered them a match on any money they earn themselves and put in the 5 29. We give ’em a two to one match, and so that adds up to a chunk of change every year when there’s 35 of ’em. So that’s been a cool way, but that’s basically what we’ve done. We’ve done charity and we’ve got plans for our kids and then we’ve reached out to the nieces and nephews. I’m sure down the road there’ll probably be something for grandkids as well. But yeah, charity versus family I think is the decision most people are struggling with. How much do you leave to each?
Steve Chen (39:57):
Yeah, I’m going to study these five activities in terms of things to master with your money, which is good. As we kind of close out here a little bit about, we appreciate you guys have been partner with us at Bolden at White Coat Investor, and I dunno if you have any feedback from people that are using the platform or things that you’re seeing. Are people getting value from it there?
Dr. Jim Dahle (40:19):
Yeah, I think so. I think people find it useful. People love calculators, they love anything that will project things out, and it is good to do that, especially if you don’t feel super comfortable using a financial calculator or a spreadsheet. If you’re a total money nerd, you probably figured out how to do those things, but most people aren’t total money nerds. They would like a little bit of software to help them make these hard decisions and there are so many hard decisions out there. Two of the hardest ones are the Roth question, whether to do Roth or traditional contributions, whether to do Roth conversions. That’s a hard one. Another hard one is paying off debt versus investing. These are hard decisions. Having any sort of a platform or software that can help you to inform those decisions, obviously there’s still lots of value judgment and variables you don’t even know for years and years that go into these decisions, but to have a little bit of software that can help with that I think provides a lot of value to a lot of people.
Steve Chen (41:18):
That’s really how we are thinking about it. How do we help people get educated, see what’s possible, make informed decisions about what to do next? This kind of next best action for my money is the perpetual problem across all these platforms, and that’s something that we’re definitely working on. Any other big things that you think that your audience would love to see in this area?
Dr. Jim Dahle (41:42):
I mean, what everyone would love to see is one very inexpensive program that does everything for them. So they never need an accountant, they never need an attorney, they never need a financial advisor and just take care of it all for ’em. I mean, that’s what people want and it’s fun to see the developments in the FinTech space. I saw some software the other day that combined filing for an LLC with filing your taxes and did both of those services for you. And so it’s interesting to see what people are coming up with, but I think the successful platforms and software pieces are be continually adding more features as the years go on, and especially with the advent of ai, being able to add maybe even education component into that. AI education right now I think is very hit or miss. You never know what you’re going to get when you type into it, but I suspect over the years that’s going to improve.
Steve Chen (42:37):
I think we’re getting closer to this point where you’re going to have more people that are better and simpler tools that do more for you. Are you seeing the impact of AI in your business right now?
Dr. Jim Dahle (42:47):
Well, only as the AI engine steal from us. That’s the problem when you’re a content creator is AI takes from your content and doesn’t necessarily give you any credit for it. If you type something into Google and you get the AI answer at the top, you no longer have to go to that website. That website now doesn’t have a chance to show you advertisements or make any money. So I think it really might have a very negative effect on real content creation out there, but we’ll have to see as years go by, what happens.
Steve Chen (43:17):
Are you blocking the AI engines right now?
Dr. Jim Dahle (43:20):
No, not currently blocking them. Thought about it, and it may come a time when we need to do something like that, but hopefully this all sorts out in a way that it becomes beneficial to the people actually creating the content. Let’s be honest, AI is not necessarily creating, it’s not great for creating stuff. It’s great for compiling and synthesizing stuff, but that all has to be created by somebody.
Steve Chen (43:46):
Yeah, there’s an emerging like ai, SEO search engine optimization or AI eo, right? I don’t know if it’s material yet though. We have the same problem. I think every content creator is running into this right now, and it is a bummer. I totally agree with you that AI is not innovating new stuff. It’s consuming and regurgitating things, which can be great for some people, but necessarily great for the people who are creating the content.
Dr. Jim Dahle (44:08):
Yeah, it is probably going to contribute to over the last 15 to 20 years, it’s probably been a down slope in how many people read blocks, and that’ll AI will probably accelerate that trend, I would imagine.
Steve Chen (44:21):
Yeah. Awesome. Well, look, Jim, this has been great. Do you have any questions for me or anything I can ask you about or answer?
Dr. Jim Dahle (44:27):
I don’t think so. Just appreciate all you’re doing to help White Coat investors to reach your financial goals.
Steve Chen (44:33):
For everyone listening, we will link out to White Coat Investor. Jim, thanks for being on the show. It’s been great to get your insights and we’ll also any reviews or feedback to this are super appreciated for both of us. And thanks for taking the time to listen to Bolden Your Money. And Jim, thanks for being on the show.
Dr. Jim Dahle (44:51):
Thank you.
