5 Reasons I Choose Time in, not Timing, the Market

1.       Not worth my time to time the market.
If a group of PhD economists who study and analyze companies all day long perform as well as a group of monkeys throwing darts in stock selection, why would I bother to study and select stock?
When I share with Mini Wise Money (8 year old) the concept of day trading, she said, “that’s too much work for no guarantee more money.” She hit it right on the nail! If an 8 year old can see that it’s not worth her time to time the market, select single stocks, why would a full time doctor with full and busy life try to trade base on his/her blurry crystal ball?

2.       Invest money passively.
Money is just money. It makes life easier to a certain degree. But money can’t buy everything. It especially can’t by time, company, love, happiness, or health.
Put your money on auto-pilot, KISS (keep it stupid simple), save your precious time for precious causes like your loved ones, new experiences/adventures, serving our country and the world.

3.       Invest time actively.
Why waste time checking the market and buy and sell according to a guess? Why not just buy and hold the entire stock market and let it work out over long haul and bring you 8% annualized return?
For most people who trade actively, they all admit that their average hardly ever beats the passive investment model of buying and holding low cost index funds.

4.       Discipline and patience win.
Research has shown those with discipline and patience do well with their investment. They don’t panic and sell when everyone else fearfully backs out of the market at sales prices. They continue to dollar cost average and faithfully put the same amount away at fixed interval of time (usually per paycheck). They also don’t frantically buy when the market is bullish and everyone is buying and bidding the price up and up.
When I focus on investing early, investing as much as possible, rather than trying to time the market in my fantasy. I am rewarded heavily over the long haul while saving my precious time for my loved ones and making myself a better person by continually learning and taking on new adventures.

5.       Turnover is vanity.
Just like I don’t enjoy keeping up with fashion in clothes or accessories. I find it silly to chase the wind in investment. The market is efficient, by the time ordinary people like myself hear of the great news of how I should buy, hold or sell a particular stock, it’s too late. The to-buy stocks are already too expensive; the to-sell stocks already too cheap for me to really benefit as an individual.
Hyperactivity and turnover is just busy work without guaranteed return. Not interested.

Do you value timing the market or time in the market? Why?

If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

5 Things Zootopia Taught Us about Money Success

I love the kids’ movie Zootopia. I laughed so hard and cried during that movie, frequently turning towards Mini Wise Money, sharing precious moments of inspiration and up-liftedness with her.

It’s incredible what we learn as kids from cartoon movies such as Zootopia actually provides the ground rules for great success, not just limited to finances, in adult life. Zootopia taught and reminded me 6 lessons.

  1. Anyone can be anything.

The essence of the American Dream. However, the monetary inequality with 95% of American wealth concentrated in the hands of 5% Americans has become a self-perpetuating vicious cycle.  So we got to wake us and believe in and act upon “anyone can be anything.”

Join the rich and become creators and leave the consuming poor crowd. Anyone can do this: stop consuming, start creating today.

  1. Try everything.

Mini Wise Money took her first pilot lesson recently, at the tender age of 8. After the initial “how can a kid like me fly a plane?” Mini enjoyed it immensely and talked about flying her parents and family all the world once she gets her license.

If you think it, try it. It’s incredible what a new yoga pose can inspire you to do off the yoga mat, in life.

  1. Our life goal is to make the world a better place.

When we make service our goal, better the world our motivation, money follows us. No need to chase after money. If you are successful and already a millionaire as a money chaser, trust me, you will be exponentially more successful if you chase after the ideals of the little bunny in Zootopia (I want to make the world a better place.)

  1. Don’t judge a book by its cover.

When Bunny Judy attributed the Zootopia animals reverting to salvage ways to “biology,” she lost sight of the most important principle to success, including financial success: “inclusion and collaboration.” Based on gene pool, we, regardless of color of our skin or cultural backgrounds, are less than 0.5% different from one another across than the entire human race.

We are different yet so much the same. Embrace everyone and learn from them. You will succeed sooner and be happier if you love rather than hate.

  1. Be the change ourselves.

Stop whining about what doesn’t work in our system. Take ownership, volunteer for more responsibilities, be the change you want to see.

 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

4 Reasons More Banks Should Refinance PGY’s

1.       Doctors are the least likely to default on their loans. Low risk lending.
Doctors are an honest hard working bunch. The default rate of debt/liability of doctors is a fraction of that the average population. Low risk lending. This is proven by the success and mutually beneficial set up of physician mortgage. If Banks are willing to lend doctors upwards 1 million with 0% down and no PMI simply because they are doctors and dentists, why not make a win-win out of student loan refinancing.
Doctors of my era suffer from federal student loan at 6.8%, so if the private banks step up and offer a slightly lower rate, it will be win-win for the borrowing doctors and the private banks.

2.       Early branding.
Doctors are loyal customers. If you help them out with their high interest rate student loans, they will likely do other banking business with you in large ticket items such as large personal loans, professional business loans, and or mortgage, not to mention putting their massive retirement savings with your brokerage.

3.       Lucrative lending.
Guaranteed 4%or 5% return is pretty darn good in this turbulent global stock market. It’s quite lucrative to be able to borrow 0.25% from the feds and turn around and charge doctors 4% for refinancing their 7% federal student loans.

4.       Few competitors at the moment. Fortune favors the brave.
Right now, there are only banks, DRB and LinkCapitol refinancing PGY’s (residents and fellows.) How can the other banks just sit and watch theses 2 banks monopolize such a lucrative low risk market? DRB originally was offering variable rate at 1.9%, now charging as 4-5% variable. It’s getting so much business and so many eager PGY applications, that it’s increasing its lending costs drastically. If you are a competitor bank, would you want to get a share of this market too?

This is shout out to all you solid lenders such as SoFi with lots of funding and great banking services for attending physicians. Refinance (soon-to-be) attending doctors today, your business will profit and grow with the physicians’ paycheck and net worth. Don’t pass up this opportunity.
Make it win-win since so many PGY’s are agonizing over the high interest rate of their federal student loans during their long, arduous, low pay training years. Lend a helping hand now; banks, you will be rewarded generously by these loyal, honest borrowers.

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Top 5 Money Pitfalls Every Doctor Should Steer Clear

Most of us choose to become physicians because we care more about serving others than making the most money with least effort. In fact, one could argue a career in medicine is the antithesis of maximum money for minimum work.

There are many financial pitfalls that doctors are susceptible to, making financial disasters and trapping doctors in a rat race, without the option to retire or to cut back on work.
After chatting with many attendings and residents, I’ve identified top 5 most common money pitfalls that 90% of the doctors fell into at one point or another. If we are warned of these pitfalls, and mindfully avoid them, we would have much less financial stress and enjoy greater satisfaction in all areas of our lives.

1.      Borrow against our future, without practical understanding of how much the loans cost us in interest.
A friend from med school told me, “The financial aid people encouraged me to take out student loan and live comfortably so I could focus on school. It was like monopoly money. Anytime I needed cash, I shoot her an email, within 30 days, I’ve got a check waiting for me in her office. I could cash it for anything: a vacation, fixing my car, childcare expenses. If I knew how much my debt would snowball at the high interest rate while I was studying hard, I could have gotten by with less to prevent amassing such a large debt upon graduating med school.”

2.      Hire “the” professional, without knowing how much their service cost us.
Check out PoF’s calculation on how an average physician may end up paying 13 million dollars to a “financial advisor” over his/her lifetime, (3 decades working, 3 decades in retirement.)
I 100% agree with White Coat Investor’s mantra that if you take the time to learn how to find a good financial adviser, you would have gotten enough education and financial literacy to be the best financial adviser for yourself, free!
Before ever paying a “professional” an AUM (asset under management) fee, pick up one personal finance/investment book and find out for yourself how easy it is to make and manage money (hint: especially when your return is not eroded by 1-3% AUM fee.)

3.      Making more instead of spending less.
Money doesn’t buy happiness. Time is key to happiness. We all only have 24 hours/day. Even with sleeping only 4 hours/day for 15 years, I only had 20 waking hours/day.
Before you sign up for an extra shift thinking you need that extra money, ask yourself if there’s extraneous, meaningless spending in your budget. You know you can cut out an expense if it does not support what brings you lasting happiness.

4.      Overworked and under-satisfied with life; then seeking material objects to compensate for our sacrifices.
We are so over-worked in medicine that we have come to accept it as the norm. We internalize the expectations of our profession to care for others and justify neglecting our own needs. To the point that we are sleep-deprived, with no personal time, no exercise, and little social activities.
It was not uncommon for my friends in medicine to say, “Yeah, my family and friends know that I’d be MIA for a couple months because of Boards, interviews, crazy rotations and calls (fill in the blank.)” Medicine has plenty of grandiose excuses for us to neglect what makes us happy and what makes us who we are.
When we deny ourselves of our personal needs and all we know is studying, taking tests, 28 hour calls, extra shifts, we are in survival mode and we over-compensate our personal needs with purchases. It takes less than 5 minutes to buy a pair of ear rings and it give us the endorphin rush of short lived ecstasy.
“I deserve this.” I work so hard and have so little time to do anything. I deserve a lavish vacation. I deserve to enjoy this 750 series BMW, even if that means I’m delaying my retirement for a year.

5.      Vicious cycle.
The vicious cycle goes like this:

  • Over-working
  • Under-satisfied
  • Compensate with over-consuming/ spending
  • Saving less
  • Not reaching financial goals (or even paycheck to paycheck)
  • Working more.

Break the cycle anywhere you like. The pitfalls are linked, avoiding one likely helps you avoid another. Getting out of one will help you get out of another.

Best wishes,
You deserve so much more than what money can buy.

 If you like this article, you might enjoy other DWM articles on Personal Finance, Investing, Retirement, Practice Management, & Lifestyle.

All articles by DWM are for informational purposes only and not intended as a substitute for professional advice. Please consult a professional accountant, financial adviser or lawyer, before making financial decisions.

5 Uncommon Financial Commonsense

I’ve been hearing the term “educated dumb” and “commonsense is uncommon” frequently lately.

It’s true that to be financially successful, all one needs is commonsense, which is pointed out by a VA nurse who’s retiring at 55, with 750k in retirement savings, and have helped others generously, including her adult son’s family by 200k in educational costs/debts.

While there are doctors at her age, who’s made 300 grand annually for 2 decades with less savings in retirement account, she humbly says that it’s just commonsense.

It’s true. As complicated as most financial salesman like to make personal finances sound, it really is simple. So if you keep it stupid simple, KISS, you’d well!

So let’s remind ourselves what we (should) know as kindergartners.

Ø Save.

Don’t try to buy happiness. It just doesn’t work. Look at the most consumptive culture in the world, the US, with the most cases of depression. Go figure.

Put savings as your #1 non-negotiable expense category in your budget. Pay yourself first, then play with what’s left. If there’s nothing left, count it as a blessing. Having no money to spend on clothes, entertainment and frivolous stuff make you happier.

Don’t agree with me? Were you happier in college without a dime in your savings, or happier now with >1 million net worth?

I have great nostalgia for my college years when all my belongings could fit in the back of a sedan. Those are my funniest, greatest learning years, where I made some of the most lasting friendships in my life.

Ø Make your money harder and longer than you.

Put your savings where it can generate more money for you. Not under the mattress or in bank accounts bearing 0.03% interest. Buy index funds. Buy and hold. Buy in your younger years (low tax bracket) voraciously, like there’s no tomorrow. It will pay off in tremendous time value of money and tax savings.

Ø Give and share.

It’s incredibly true that the more you give, the more you have. Reason is, $40 bucks means so much more to a staving child in 3rd world country than to you. Having a worthy cause to give your money to, makes you realize how blessed you are, and how little you need to spend more on yourself.

Ø Create opportunities.

If a group of kids don’t play with you. You devised your own game and draw players to your game, didn’t you?

Your mind and your time is your greatest asset. Use it wisely. Create opportunities for yourself to generate more income. It’s easy to do when you look around you and see where you can provide service to others. If you follow your heart and your desire to help others, money will follow you. I’d never imagined that I could make money by writing articles. But the income from writing, which is my hobby and one of the major ways that I help those around me, is helping to max out Mini’s 529 at 14k in 2016!

Ø If it’s so complicated that you can’t understand it, it’s not a good thing to buy/service.

Just because it’s complex and expensive doesn’t mean it’s good stuff! Don’t buy anything, particularly financial products if they are too complicated to understand. You are a doctor, you master the most intricate, difficult to appreciate concepts there are on earth, discovered by human so far. If you can’t wrap your mind around how whole-life insurance-annuity-cr*p works to your benefit, it’s probably because it DOESN’T benefit you. It benefits the sales person with 2 weeks of financial training in front of you.

 

There you go.

5 financial commonsense restored. Now, go out there and be a DIY/self-made millionaire!

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