Today I have an update for you from a previous millionaire interview.
I’m letting three years pass from the initial interviews to the updates, so if you’ve been interviewed, I’ll be in touch. 😉
This update was submitted in July.
As usual, my questions are in bold italics and their responses follow…
OVERVIEW
How old are you?
I’m 43 and my wife is 42.
We’ll be married 7 years this winter.
Do you have kids?
My wife and I met later in life and neither of us had children, and we both wanted them.
We have a 5 and a half year old and a 4 year old.
My son is usually a delight (now through his own difficult toddler phase) and my daughter is still going through her difficult phase. It makes doing anything outside of the house or outside of her normal routine really difficult but we try.
What area of the country do you live in (and urban or rural)?
Midsize midwestern town. The urban core has several hundred thousand people.
Formerly we lived in a major metropolitan city also in the Midwest. It’s drivable from our current home and we go there frequently to see my wife’s family, most of whom live there, and friends.
We moved to our current town from the major city in the beginning of 2018 when I relocated for my job.
What was your original Millionaire Interview on ESI Money?
Is there anything else we should know about you?
I really like cats? Worth mentioning.
Cats is good.
NET WORTH
What is your current net worth and how is that different than your original interview?
In 2020, at the height of the pandemic, for the interview I valued it at $2.4-2.8M.
I calculate it as about $4.5M currently.
The breakdown:
- Taxable brokerage account: $1.9M
- My personal brokerage account: $40k
- My retirement: $526k
- My wife’s retirement: $445k
- Checking accounts: $441k
- Education savings plans for children: $137k
All of this is up in 3 years, no surprise.
That’s for the liquid assets. We have some real property. I’ve been using Zillow “zestimates” to value and track residential property values, for consistency:
- Condo in major city: $155k. Was my old bachelor pad before I met my wife. No mortgage. I paid $81k nine years ago. Rented slightly below market for $1085/month for a reliable tenant. Probably net $7500/year after taxes and HOA fees.
- Major city home where we used to live: now disposed of, but mentioned in original interview. Formerly treated by us a rental property after we moved away 5 years ago. We paid off the mortgage and rented it until this spring when we sold it. Originally paid $325k and sold for $425k but with closing costs, etc. our total disbursement was $382k or so from the sale. I put the proceeds in our brokerage account.
- Investment property (4 bedroom house) in major city: Zillow values at $646k with over $150k of equity. Appreciated from $510k we paid to buy in 2020. Renting for $3000/month. Ultimately I want this to be our permanent home. It’s in a really strong school district and my long term plan is to move here and have our 2 children complete the rest of their school there.
- Current home: $675k according to Zillow. We have about $138k of equity in it after refinancing to 3.25%. Built and bought by us for $550k in 2018.
- Major city 2 bedroom condo: $200k. Our pied-a-terre. With another child we outgrew my 1 bedroom bachelor pad for weekends in the city and so we bought this place in 2020. It has an indoor and outdoor pool for the children and for my wife’s family and friends who live in the area when we visit. We paid $166k and owe about $135k.
In addition, we have:
- I also have a variety of oil and gas investments which are very small percentage shares of multiple assets. This netted about $40-50k of income or so per year. Historically these had been customarily valued by a 3-4x multiple of annual income but more recently these are selling for 5-6x plus. If I relatively conservatively value them this way in aggregate that is $250k.
- Vehicles, etc. Maybe $20,000 if we had to sell all of them based on remaining loan balance and equity. We splashed out on two Teslas last year. I had a serious concern based on symptoms I was having that there was something major wrong with me (there ultimately wasn’t) as well as a premonition about my health and I wanted to enjoy having a cool car for once, so I dumped my 9 year old beaten down SUV and bought a model 3. I liked it so much that I thought my wife should have one, so I picked her up an even more powerful model (model Y performance) and gave it to her with a big red Lexus-commercial-style bow on the hood and everything. She is very frugal and wasn’t happy initially, but now she really enjoys having it. She says that people at stop lights try to race her and she always smokes them. 0-60 in 3.5 seconds is pretty high performance. I now regret not buying an even more powerful car for myself.
My wife has several thousand dollars in educational debt. That, about $50k in car loans, plus mortgage debt is the only debt we have.
What happened along the way to make these changes?
The good:
- Continuing to save, of course.
- Continuing in my job (I’m in a pretty well paid career and in a US region that does pay more on average for this). Geographic arbitrage is achieved. Compared to the coasts this is a highly undesirable area in middle America and medical salaries do tend to be higher here to attract personnel. Most years I get an annual salary bump generally of a dollar or so per “relative value unit” (RVU), which is how medical work is measured, which means my income goes up at least $7k per year for the same amount of work. I’ve also gotten somewhat busier clinically as I’ve become more established. I get good patient reviews. I treat people well. My reputation seems to be favorable in this community.
- Staying married. A divorce now would be ruinous.
- Controlling expenses in general (cars notwithstanding).
- I’m also working on a side hustle of trying to more actively trade in the stock market. More on this below.
- Our homes appreciated.
The bad:
- The pandemic more than anything. My income went down substantially for over a year due to well-intended restrictions on non-emergency medical care to limit exposure for patients, and we missed out on the 2020 stock market gains for the most part.
- I’ve also done some stupid things with stock and options trading. 2022 was a disaster.
What are you currently doing to maintain/grow your net worth?
It comes back to what was already said. Trying to be “smart” with money, keep saving, keep investing, keep working and earning.
Trying to grow income.
EARN
What is your job?
I’m a medical doctor and procedural subspecialist.
My wife is not working outside the home.
I am in a very small field and so I am not going to say any more than that for anonymity. This represents four years of college and medical school, plus 8 total years of residency, research time, and fellowship training. I became board certified in 2014.
I’m employed by a large health care system and they handle office expenses, hiring support staff, professional costs like insurance, etc. They also collect from patients. I’m paid by them on a preset rate per RVU for the medical care I provide.
For better or for worse I’m solely on the clinical side. I really don’t want to be a businessperson. I’m not in medicine for that.
What is your annual income?
Generally now between $520k to close to $550k per year from my career, except for 2020 which was about $350k.
I’m trying to actively invest more as a side hustle in addition.
How has this changed since your last interview?
Career income grown basically just from periodic increases in pay rate and by growing practice.
I have had several word-of-mouth referrals which is gratifying. I think patients can tell when someone really has a serious interest in their well being, and when someone is just going through the motions.
I’ve gotten somewhat busier clinically and also the pay per RVU of medical work generally is increased year to year. I am not completely sure how this is determined as I think my employer has some flexibility in setting this rate as well, but a major determinant is decisions by the government for Medicare pricing, and it trickles down. I am unable to say more because I’m deliberately not on the business side of things. It’s not my interest.
My specialty is fortunate, as other specialties here and nationwide sometimes get paid LESS year to year for the same amount of patient care. Our gastroenterologists here just took about a $10k/year pay cut due to this which is not insubstantial. As one of the malcontents in my department would grouse about, this could be a nice vacation or car payment lost.
Have you added, grown, or lost any additional sources of income besides your career?
Easier to start with what was lost.
The oil interests are paying steadily less due to a natural decline in productivity, but the biggest holding still pays anywhere from $2k to over $3k per month.
We sold our original house (the first home we had together) that we were renting out this spring, which was an immediate loss of about $2000/month in rent payments. Being a landlord is hard! I found it to be a big hassle and at best we were breaking even or slightly better.
I rent out my bachelor pad condo for a little extra income to offset our second home condo but I could just as well leave it vacant and use it myself sporadically (HOA, insurance, and utilities probably $5k/year only).
The other house we own in the city is being rented so it’s occupied and kept up and so we don’t lose money every month holding it. Ideally within a few years I want to move into it permanently, so it’s really just about maintaining the status quo. We’re barely making any money overall. My sister in law is the property manager and I don’t think she shed a tear either when we went from 3 rental properties to 2 this spring.
I’ve tried to add an income source by actively trading in the stock market. Compared to being a landlord or having a small business, it seems ideal because the logistics are so simple. No employees and regulations. Minimal overhead and expenses in comparison. Highly portable career.
One big reason we sold a house this year is because I thought I could do better than $2k/month income having the same amount of capital in the stock market rather than in the rental market. Interestingly, there was a recent poll in the medical social network Doximity about preferred side income sources, and most people actually wanted to be real estate investors. Stock market trading was in the minority.
SAVE
What is your annual spending and how has it changed since your interview?
Somewhat more but not extravagantly so.
My wife is frugal but also loves shopping at Costco and Home Depot. She’s done a remarkable job of landscaping our barren new build lot over the years mainly with her own planning and labor.
Along with this came expenses for irrigation system maintenance, yard tools, trees and plants, etc. Endless plants. Where are they all going?
We built a pergola on the back of our house for $9k or so. Put in a fence that was at least $8k. I tried not to think about it.
In the past we had it set up so all the rental income was paid into her checking account and she used it for household expenses and spending money. That was about $6500 per month and it tended to mainly get used. Mortgage payments are about $7000/month which again are partially offset by rental income. The rental house actually makes about $500/month overall as rent is above mortgage.
Our bigger condo is partially paid for by rent on my original smaller condo.
We have car payments of around $1500/month total whereas before our vehicles were wholly owned.
I pay mortgages and car payments. I pay for our cell phone plan which is around $120. My son has therapy which is at least several hundred dollars per month out of pocket, and we do have a medical spending account.
Other than that I really couldn’t tell you what our monthly household expenses are.
My wife has been handling it and not running over budget mainly. I will need to give her $2k more a month now without the rent we were accustomed to before something bad happens with her finances.
I get a quarterly post-tax deferred compensation payment of usually $25-30k and sometimes more, and this is all saved not spent. We’re definitely still saving at more or less the same rate we were. I max out my 401k and we have a very generous company match. They contribute over $10k yearly in addition! I’ve stopped contributing to my 457b because when I leave this job well before retirement age, as I’m certainly planning to, this is just going to be paid to me anyway as a taxable lump sum and I could use the money better in the meantime to invest myself.
We are definitely not suffering from lifestyle inflation otherwise, and this is our mutual preference. Often people here have weekend lake homes with a boat and other toys. We have a small condo in the city. Much of the children’s toy shopping and a lot of their clothes come from thrift stores. My wife and I don’t wear designer clothes. Mainly clothing comes from thrift stores for her as well as Costco, Old Navy, TJ Maxx, places like that.
Besides visiting family, we don’t really take expensive vacations. We’ve gone to California once a year usually to visit my brother and his family and stayed in an Airbnb and cooked most meals at home. My parents had a prejudicial feeling against theme parks and I don’t have a desire to take my children to one. My wife and I did take a nice trip to Las Vegas in the spring just for the two of us which cost more than I would have preferred. Usually we don’t take a separate vacation.
This summer we’re meeting my parents and my brother’s family in Florida for a beach vacation. My parents are providing the lodging at their leased condo so we’re basically just paying for travel and meals.
One additional indulgence for us is getting the prepare at home meal kits delivered several times a month. My wife buys through Green Chef. Delicious! Also, believe it or not, Midwest town USA has truly the most flavorful Indian food that either of us have had anywhere. We patronize them at least 1-2 times a month and a takeout order for the family is around $100. Mango lassis have gone up in price substantially and therefore are no longer a financially comfortable addition for us, so my wife now makes her own and they’re really good. Eating out isn’t very practical with the children. We also don’t go to movies, etc. because of the same reason.
I also tend to buy my children a toy when we stop to charge our cars at a Target on the drive between our house and condo. I figure that the electric car road trip is so much less expensive than a gas car so there’s room in the budget to indulge. If I make some extra money in the stock market around then I’m also much more inclined to do this.
We also each bought unlimited car wash passes for our cars. I wasn’t going to for me, but it beats scrubbing bugs off of it in the summer and washing away mud and salt in the winter. So it costs probably another $500 a year to give our cars a bath.
What happened along the way to make these changes?
Honestly speaking, we really haven’t made any large saving and spending changes in the last 3 years. It’s not like we traded up to a $1.5M doctor house and I stopped contributing to my retirement account. I could save more I guess, but beyond our household expenses I can’t really say that we’re being very frivolous.
It seems like a lot is getting spent but there are medical expenses reoccurring and periodically (we both needed diagnostic medical procedures this year), several hundred dollars for each of the utilities monthly, she’s still making student loan payments, etc.
My wife likes Starbucks and the children often get fast casual meals when they’re on the go but overall spending seems to me to be pretty controlled.
I hardly buy anything expensive, EXCEPT for the 2 nice cars I just bought last year.
I would generally estimate that savings rate is about the same since before which would be up to nearly 40% of my income I would say. I withhold about 45% of my earned income every month for a quarterly surplus payment later so we basically live on half my actual salary every month plus the rental income.
INVEST
What are your current investments and how have they changed over the years?
So, this is interesting. I still do believe strongly in index funds and passive type investments for long term growth. My retirement account allocation hasn’t changed.
My wife actively trades her IRA and has been doing fairly well which hasn’t changed.
The big change for me is that the taxable investment portfolio ($1.9M) is almost all cash. I’m almost solely day trading ETF shares this year. Right now I’ve been making a lot of “scalp” trades (very short timeline for being in a position). I’m in and out of positions within a single trading day, often within as short as 10-20 minutes. When I can I would plan to do “swing” trades on stocks/ETFs as well by holding longer for more gains, but I’m focused on being a day trader primarily.
It may sound riskier than just buying and holding, or trying to catch a multiday trend, but I find that working in really short timeframes is much more controllable for me and I think it suits me the best.
What happened along the way to make these changes?
This is an evolution. I held index funds only until 2020. We sold at the market drop because I was seriously panicked and wanted to make sure we had enough cash to weather potentially years of negative financial conditions. Experts then were saying potentially 2-3 years of severe circumstances.
We did buy back in later in the year and got some gains, but then I became aware of options trading. You can think of options as insurance. They’re a derivative instrument that confers the rights to buy or sell a stock/ETF at an agreed upon price. Just like selling insurance, if you sell an option, you get paid a premium, and it’s yours unless the option you sold triggers a stock transaction for you. In this case what you’re providing insurance against is a big stock price move, either too far up or down.
In this way I figured I could flog our portfolio and make it work harder for income (the premiums from options sales) while still holding the underlying shares for them to appreciate. I really didn’t have much chance to do this in 2020 and started in 2021 meaningfully. I made around $55k doing this.
At the end of 2021 I was expecting the market drop, but I was expecting it to occur later than it did. I was very badly positioned with some big put options in QQQ (the NASDAQ) and the market drop really hurt us. Ultimately I couldn’t avoid option assignment for the remaining contracts I wasn’t able to close (I got stuck with having to buy QQQ at a much higher price than it was trading for) and got HAMMERED. I was also forced to sell other positions at a loss to cover.
Looking at the brokerage statements I calculate that I made over $90k throughout the whole year in bona fide options gains in 2022 from trades that worked out, but this was offset massively by the loss we took, for a huge down year. I’m too embarrassed and ashamed to say how much it actually was.
This obviously had to change. The rest of 2022 brought more interest in learning more about options trading and I looked into options spreads, which is a strategy of trading paired options in a way that it limits your total potential loss to an exact pre-determined amount at the time you enter the position. Earlier in 2022 it was much easier to sell options profitably, but as volatility has decreased, this is becoming less viable. Options actually have expected price change in the underlying asset baked into them mathematically and prices can depend on the volatility in price that is expected.
Later in 2022 I was selling options spreads to bracket a zone around expected price changes (iron condors) and hoping that the price wouldn’t move too much so I wouldn’t have to lose the premium money. It worked well for a while, until it didn’t.
Along with this I learned more about actively trading on shorter timeframes. I realized very quickly that I know very little about how the markets work. I can’t make predictions farther in the future. However, I can much more reliably spot an intraday trend. There actually are stock market indicators which are mathematically derived from recent price data than can highlight trends, predict the max short term price change in a move, tell you when a trend reversal is going to occur, etc. Some of these are proprietary and can be purchased, but most of these are free on any trading platform.
Earlier this year, I was holding an ETF with 3 times weekly options expirations, and therefore 3 chances a week to sell options for premium. I had 10,000 shares which enabled me to sell 100 options contracts at a time, which is a lot. This time I was using what rudiments I know about technical analysis to try to maximize the chances of success.
Unfortunately, these probabilities are mathematically known, and someone is only going to be willing to pay you a very small “insurance” premium on an option that is unlikely to be profitable for the buyer. As volatility has decreased this has become hardly worth doing because it decreases the premium price with it. Unless you wanted to take big chances yourself, you are pretty much restricted to just a few hundred dollars total for each round of options sold.
If I wanted to replace my salary doing this I would need roughly $10k/week. I was looking at maybe 15% of that. Nothing to sneeze at certainly, but it became like “picking up pennies in front of a steamroller.” If you sell options too aggressively for a higher premium, then you are more likely to lose money. The risk for the reward just wasn’t worth it. I found that in order to make money, I would need to trade in trending moves rather than waiting for something NOT to happen. More risk means more reward.
I realized that I can use what I already learned about technical analysis (which may not be all that much) to spot trends and just trade stocks, which doesn’t have to be hard to do. I’m trading stocks and ETF shares only. Going back to a technique I learned in late 2022, I’m looking for “quick hits” only. I’m not looking to stay in a position for a long time or to get greedy. I don’t want to hold something longer after my experience in 2022. I have very strict entry criteria for myself and when I have been day trading, I’ve been “scalping with size” (large number of shares, which is why I need cash).
Typically I’m looking for a $1-2000 quick hit. This represents a relatively small price change with a large number of shares. My daily goal is at least $2000. So far this target or more is largely doable, although it is the minority of days that I have time to do this.
Am I really accomplishing anything? Is this better than holding it for longer term gains? I don’t know. I am concerned that a recession is coming and the last thing I want to do is get stuck with 10,000 shares of something that craters by over 20% tying me to it for the rest of the year. Market timing is hard. We’ve all held something long term that was looking good going up, then went back down practically to where it was 6 months ago.
I want income to replace my career income. If I can do that, then I don’t have to do my job any more. If I can achieve it, $2k per day is $10k per week, which is my yearly salary. That’s also an over 25% yearly return on the money I’m using which seems pretty good, long term gains missed out on or not.
How should I think about the portfolio? Is the portfolio itself an investment? Or is it a $1.9M tool I purchased that is just used to generate money, like buying factory equipment or a rental property? For now I’ve only been buying intraday uptrends but I could use the same technique to short downturns, which is riskier because you don’t actually own the shares you’re trading. Long term I want to get comfortable with this.
I would also consider using leverage. Day trading buying power is generally 4x your available funds minus a small reserve, so I could invest a good part of the cash in long term holdings anyway and make essentially the same trades using 1/4th of the portfolio and margin. Obviously using margin is riskier and that’s not something I’m ready to consider.
I have an escape fantasy. My job is highly stressful and it’s taking time away from my family. Would being a trader be better? How much would I miss the social nature of my job and the chance to make a true difference in patients’ lives? Would any of this be offset by the cerebral nature of trading and the satisfaction of providing for my family and having more time to spend with them? I really don’t know. I really don’t know if this is even possible or viable, but I’m still trying to look into it.
What I’ve seen so far is that the market conditions keep changing and your trading plan has to keep changing with them. Is what I’m hoping to do here going to be viable for long? What might replace it? I also don’t know.
MISCELLANEOUS
What other financial challenges or opportunities have you faced since your last interview?
Really that about covers it.
No inheritances. No lottery wins. Nothing major with our rental properties. No catastrophic expenses or anything. Nothing obvious on the horizon.
It’s conceivable that my wife may return to work relatively soon now that my children are becoming school age and that could add a bit to our finances.
Overall, what’s better and what’s worse since your last interview?
Financial situation is better, clearly. $2.8M to $4.5M in 3 years is about $566k/year addition to net worth. I did some very stupid things in the stock market which hurt us but we’ll still take it.
I don’t want to seem too pessimistic or ungrateful here but my job is still highly stressful. The call schedule changed which allowed for many more weekend days off than before, which helps, but it hasn’t fixed everything. I’m still at work long hours every day of the week otherwise. There really isn’t any way to slow down; it’s all or nothing.
I have looked into other jobs but haven’t found anything comparable. Basically moving anywhere else would be a pay cut for as much or more work and anything else is farther from our families to the point that visits with them would become a real rarity. The major city we came from initially doesn’t have a position for me in the foreseeable future. I don’t think that’s going to happen.
I did take a pay cut during the pandemic because of limitations on patient visits which was actually very nice for me and the family. I could meet my wife for lunch. My health is probably incrementally worse. I’m definitely heavier than I was 3 years ago and am pushing dangerously close to “obese” by BMI rather than “overweight.” I just haven’t been able to make time for much for me. I haven’t been biking in a while.
I do really enjoy being at our condo since I feel like I’m unreachable from work and I feel most completely at peace there, but my family doesn’t want to go every weekend, so I feel guilty being apart from them. Most of my work involves dictation and paperwork which is almost impossible to do with my children around, so being home in the evening feels like a dead several hours of wasted unproductive time. I could go into our home office to work and seclude myself, but in that case I might as well just have stayed at work.
Marriage still seems strong. As children have grown there have been both blessings and challenges with their growing abilities and behavior. Moving here was basically a last resort. I was under even MORE job stress in the major city to the point that I thought I couldn’t do this specialty at all and was making serious plans to try to re-enter training doing something else in medicine and leave procedures behind entirely.
This job serendipitously opened up, in the subspecialty I’m trained for, and I’m also from this state, so it was an improvement in many ways. Leaving our major city we were used to and family and friends was not ideal for us. My wife has gotten established here and being here has gotten more comfortable. The call schedule now for weekends is about 1 in 9 whereas for the past almost 5 years it was 1 in 2, so I have practically every weekend off and can go back to the city very often.
Probably the biggest source of work stress more than anything is that I don’t feel I have the support I need at work. This is not a collegial or collaborative practice. I feel that I don’t have any help or mentorship. I worry constantly about doing the right thing for patients, and it would help me to have partners and a practice environment that are supportive.
What are your plans for the future?
Rereading what I wrote in the initial interview, my plans were to rapidly transition into a FIRE style early retirement after aggressively paying off our 4 bedroom rental house in the major city, and live there. My job is stressful. I just wanted to be done with it. I planned to gather together income from portfolio dividends, rental income, probably my wife would need to have a steady job with enough FTEs to get health benefits for the family, and I would work at least sporadically doing travel assignments in medicine (locum tenens).
The house is in the major city where my wife and I lived long term and we would both prefer to be there. It is also in a very strong school district which is why I bought it. I want my children to go there ASAP, certainly by high school. Even in 2020, this job was not desirable. I was not getting the support I need and that is not changing. The pandemic put the brakes on a job transition because hospitals nationwide were losing a lot of money from procedure volume being way down. Moving back to the major city in my subspecialty is not going to be possible given the local job market.
Potentially I could go back there as a generalist but that would mean a much poorer schedule with irregular hours and the sleep disruption and stress of emergencies. I’m not ready to do that.
I did look at several jobs including one actually back in the area that would be part time as a generalist. It would have been probably a 67% pay cut but would have been 2 days a week only. I would have seriously considered it for the overall lifestyle benefit but ultimately it wasn’t offered to me.
I haven’t made any extra payments on the house at all. We have been taking things year by year, and decided to grow the portfolio instead.
My goals at this point are to move back in 7 years at most because that is when my older child will be nearing high school age. This is a 7 year limit on my current career basically and I would have to replace it with something. I don’t necessarily see the stress of work going down, but it might. I could reevaluate in the future and decide if I want to keep doing this. Potentially I could stay living and practicing here and my family could move back, and I could come back almost every weekend. This is a lifestyle for some families and it could be worth considering.
Regardless of that my goal is to seriously pursue day trading to see if my skills improve and evaluate this as a replacement for my income. If I can be consistently profitable after several years at an income level that would support the family, I very well might quit medicine and do that as my occupation.
In the past when I was doing badly I knew when I really wanted to escape because I would buy lottery tickets. I haven’t bought a lottery ticket in a while, but I have been steadily day trading when I can. At this point halfway through the year, this is the best performance actively trading that I’ve had. My father was able to do something similar and leave his career around age 50 with all of his side income. I’ll be 50 in 7 years. Coincidence? Seems like a good goal to set for myself next.
Given that you have a bit more wisdom and experience, what advice do you have these days for ESI Money readers?
I would recommend not focusing too much on delayed gratification to the point of not having something you really enjoy. If you have a financial gain I suggest spending some of it immediately on something you want.
There is so much uncertainty in life and I see that every day. Take time for your family if you are fortunate enough to have one, and don’t neglect your own health.
Joe B says
First of all, congratulations on your tremendous career and financial success. At a relatively young age, you have achieved what very few individuals even have the capacity to achieve in a lifetime. You are obviously a very intelligent and high-functioning individual. Yet I can’t help but notice what in my opinion are some inconsistencies in your thought process. You lament about how stressful your job is, how you lack proper partnership and mentorship at work, how you do not have enough time to spend on with your family, in your previous interview you mentioned how you do not have enough time to workout and now have admitted to even being close to obese, among other stresses and challenges associated with your job. You are worth almost $5M and live a frugal lifestyle which doesn’t seem it will change. And yet you continue to work at this highly stressful and time-consuming job. And yet you continue to obsess about how to replace your salary with active trading, even though as you have admitted, this has created great stress and loss for you in 2022. You are even considering living separately from your family so you can continue to work while your children can go to your preferred school district. Who actually wins in that situation other than your employer? Just seems like you are another highly productive individual that have allowed their very existence to become merged with productivity and acquiring money. Where the means to the end has become the end in itself.
Cole says
Ooof. Joe b nailed it.
Scott H says
I also was employed in the medical field-now retired. I had to be on call in my occupation for about 19 years. Towards the end-getting tired of middle of the night calls-I paid my younger coworkers to take my call. I consider it some of the best money I ever spent.
g says
I’m a doctor 5 years older than you with probably a very similar age/wealth trajectory as yours. So as “older you” a few thoughts:
You’re currently in tremendous financial shape. In your original interview, you wrote you were targeting $3 million. I didn’t see any updates to that goal, but you’re way past it now. What’s your new target # and why? What’s your desired annual spend?
If you haven’t, check out Ramit Sethi’s podcast. Focus on the multimillion dollar interviews. In his words, “spend extravagantly on what you love and cut mercilously what you don’t.” You don’t have to go to those extremes, but take time to enjoy now. Don’t hold back on the mango lassi’s you enjoy because they cost a few dollars more now.
Your investment strategy worries me. You don’t need to beat the market. Slow and steady wins the race. Maybe you’re the outlier that succeeds LONG TERM in day trading and options trading. My friend is a successful day trader for nearly 2 decades. He’s always stressed, overweight, and has seen a ton of people lose their bankroll and exit over the years. If you stay your course, I see this as one of the pitfalls you could hit that could derail your future financial plans. And then you’d be stuck in practice longer, which it sounds like you don’t particularly enjoy. I’d get back into index funds and spend that extra time with your family and on some hobbies.
I hope my advice doesn’t rub you the wrong way. Your future self may appreciate it. But I’m not a financial adviser. Just a dumb doctor. 🙂
Best of luck!
MI 343 says
Thanks for sharing! I tell my wife constantly that while we will enjoy numerous things along the way, when we get to Heaven when won’t be thinking about what we never got to have or do on earth. So, let’s have balance in our lives that help us earn, invest, take adequate time for exercise, for leisure, and for sharing the gospel. We stick with this plan and it works for us.
MI-119 says
Hi doc, I’m about 7 years your senior and a modest PCP. I think I’ve accomplished a lot of what you’re trying to accomplish, including income growth/diversification and work-life balance. I think very much like you, at times day and/or swing trading and at other times holding for years depending on the market environment. Always start any investment with a risk mitigation plan. Also, flexibility is key to successful market investing and active trading all the time can be harmful in certain goldilocks and free-falling environments but lead to outperformance in stagnant market environments. I hope you glean something from what I did to get here, to see if it helps get you where you want to be. I like to think broadly of where I want to be in 5-year increments, but with specific annual goals. On a more micro level, I think every day about what I can do to achieve my longer-term goals (a better savings account rate, a new revenue generating employee, debt pay-off, etc.)
Not sure I agree with your desire to FIRE as it takes away a large income stream. I recommend making your career more manageable and enjoyable. Financial independence affords one options. The best fire is the fire we all have for patient care. Don’t let the complexities of medical care replace that fire with FIRE, unless you have a real strategic plan of something noble to FIRE to.
My aha moment was the realization that the breadth of my skills are not defined by my profession and the courage to dive into a more entrepreneurial mindset. It was the entrepreneur and not the doctor that got me here. My side hustle was the entrepreneurship tentacles around my profession as a PCP. The physician income was the solid income foundation (it takes money to make money). However, the appreciating assets, tax deferral or cancellation (think well invested HSA account and retirement accounts, tax depreciation) and the wonder of compounding (earning returns/interest on returns/interest) is where the magic happens. Rich dad poor dad fundamentals.
In my cases, I did leave a multispecialty group over 15 years ago and started my own practice. Certainly not for everyone, but neither is the drive, effort and self-education/reflection required for entrepreneurship. Research, research and then research some more. Learn from every failure to mitigate losses and enhance gains.
My practice itself, now a 3-provider practice that offers a wide range of ancillary services (the fruits of that research), multiple medical directorships, affords me a 7-figure annual take-home. I use hospitalists and see patients 3.5 days/week so no weekends, early mornings or evenings. About 5 years ago I had the practice appraised and, to my surprise, it came in around $8.1M. That’s equity one builds for oneself. Don’t get me wrong, it was blood, sweat and tears at first. Networking got me 2 free practices from retiring physicians.
From the beginning I have owned the real estate that housed the practice, with extra suites leased to other medical specialties. Commercial real estate is thus my second side hustle bringing in about $300K/year after expenses. This benefit is in addition to the property appreciation and the tax depreciation which allows me to keep more of my income for re-investment elsewhere.
You mentioned being able to bring in as much in investments as one earns in salary. About 3 years ago I found myself in a position where in a year of average market returns, my retirement accounts appreciated by about $1M annually. 2022 wasn’t great (a good bit of retreat from those gains) but I mitigated my losses and the run-up in 2023 brought my accounts back to record highs even though the markets are not. My best week ever was about a $500k gain that occurred about 3 months ago. Full disclosure partial retreat since, but I’ve learned to stomach daily losses over $100k so long as the long-term uptrend remains intact. Prior to 2022 I would buy and hold for years. 2022 for me was a huge cash position and generally market avoidance year although I bought some ETFs with losses later in the year. 2023 started with a huge upswing back to record highs but evolved into more of a day/swing trading latter half for me given the market ceiling created and threat of a looming, prolonged/severe recession. Nonetheless I still believe we’re in the middle of a 20-year secular bull even if a recession occurs. That can change tomorrow but is my current belief based on market history, technical/fundamental analysis and political headwinds. I’m like you; I don’t generally do index funds unless they’re leveraged. I also trade leveraged ETFs with a long-term up-trend track record. In normalized years they not infrequently can return 50-100% annualized – powerful compounding. I’ve not gotten into options trading given my satisfaction with these returns.
Now my large cash positions are generating about $150k/year based my 4-5+% returns in this money market rate environment. Considering a current 6% 12-17 month CD to further enhance this cash position until the recession threat abates. Optimize every passive opportunity that comes your way even if it’s not much of a reward just yet. It puts you in the entrepreneurial mindset, so that you see the opportunities staring you in the face to which others don’t give second thought. I’ll save pennies on a purchase on Rakuten, knowing I’ve saved tens of thousands of dollars with Microsoft cash back, Rakuten, Retail Me Not, stacked retailer rewards programs, and stacked credit card rewards. My business and personal expenses exceed $2M/year, so that adds up.
This has been good enough for me so far. Per my brokerage good enough for a likely $50M+ NW at full retirement age as I’m nearly halfway there, especially if I manage to sell the practice one day. In good years, I’m closing in on $2.5M/year plus asset appreciation NW increases. Considering cutting back to a 2.5-day work week, but I like where I’m at in my 8-5.
Frugal where I want to be, especially things that require a lot of maintenance hassles. Generous with charity, family and I’ve been thru a few 6 figure cars. A poor sense of balance can make for a miserable, soul-killing existence. As doctors, we know very well that tomorrow is often not promised. Whatever’s leftover over goes to legacy, but I see today as the first day of the rest of my life, and not every day will be as healthy.
Some are fans of leveraging with debt. I’m not, and this has probably muted my growth. I’ve never kept any debt whatsoever for more than 4-5 years. I’m not a perfect investor by a long shot, but 0 debt currently makes for better sleep for me at night.
You’re rocking it. Find your own road to Dublin. It can be lonely. I suspect less than 1% of those who read this won’t find me crazy and blow this off as nonsense especially Bogle heads, but it’s the 1% mindset that makes the 1% the 1%. It’s like a sixth sense but I only typed this because I think you have the mindset. Cheers!
Ethan Cumbler says
Super interesting interview. You are doing amazingly and already at a level of wealth/spending most would aspire to reach.
I am worried about two things.
The first is your health. Not much else matters if you find your lifestyle is causing that to fall to the wayside. I would give real thought into what to cut out that will free up more time to be active and outside even if it costs money or reduces income.
The second is the day trading/options investment strategy. I find we doctors are smart and hard working and this may lead to overconfidence in our ability to beat the markets in our spare time. On the other side of each trade may be someone who does this full time with access to prediction tools (and insider information) that outmatch your own. Worse yet, it is by all accounts both stressful and time consuming.
Why not invest in index funds, capture the market returns, and spend the time you currently spend researching and trading out on a bike with family?
I get the fantasy of not being tied to the call schedule and demands of a clinical career but… it seems like I have run into more doctors working longer than the wanted to because of their attempts to beat the market than of those who tell me they retired early because they consistently outperformed hedge fund managers annual returns.
Financial Fives says
Such a thorough interview, thank you for taking the time to do that. Kudos to you for continuing to work a high stress job even with such a high net worth. Hope you get a job with more leisure time and less stress so you can enjoy life! Nice work overall
MI-145 says
Great interview!
Couple of options to consider for alternative income that is likely less risky than day trading and can still make reasonable level of income with relatively little effort:
1. Real estate: either RE syndications or owning investment property outright seems to be a preferred method by many of the other MMM mentors here – although your experience seem to suggest otherwise
2. Dividend investing: generates regular income with the bonus of not having to touch the principal. I major in this for my FIRE plan (am retired now at 37), and now make about $280k+ in dividend income at 5% dividend return which isn’t bad vs $100k annual spend for family of 4. This allows me to continue investing the excess to grow my income even in retirement.
Question to ask yourself: how much do you spend a year and do you really need to replace your current income $500+k or just have 2x your annual expenses (which should be less than $500+k)?
The reason why I’m asking is that most ppl think that they need to 100% replace their income to feel secure, whereas the more important metric to look at is your expenses plus having a buffer for emergencies or other big spends that don’t occur every day.
Given you’ve got such a high income currently, it’s unlikely you’d be able to find anything suitably passive to fully replace it (otherwise others would’ve done it long ago).
In my case, I gave up $1M+ annual income in return for $285k passive income and complete freedom over my time. It’s a lot to walk away from but I realise the pressure and pain work was causing me was not worth the life energy I was expending to get those $$$. Plus my kids are only young once and I want to spend this time with them (3.5 years old and 6 month old).
Also – with my current dividend investment strategy, I could still double my net worth & income in 20-30 years whilst being completely retired and not earning money from anywhere else. In the meantime I’d have enjoyed being retired for 30 years whilst others slog. I’ve been investing for 10 years from 2013-2023, and they’ve held up at 5% returns during this time through the Global Financial Crisis in 2012-2013, Covid and now the Russia-Ukraine war. I’ve had to rebalance the portfolio a bit but overall has held up pretty well.