Announcement

Collapse
No announcement yet.

Today's Milestones to Millionaire podcast

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts
    The White Coat Investor
    Founder

  • The White Coat Investor
    replied
    Originally posted by Kamban View Post
    Is there a transcript or a cliff notes version of this podcast?
    No, we only do them for the regular (Thursday) podcast, not the Milestones (Monday) podcast. Sorry! It's actually a fair amount of work to make great podcast notes. Three staff members work on them.

    The cliffnotes version is a doc got into real estate investing and went all in with heavy leverage and has done very well.

    Leave a comment:


  • TXDoc21
    replied
    I plan to enter the real estate rental market for diversification reasons. I just invest in reits for now. That is impressive what she has done.

    Leave a comment:


  • Shant
    replied
    People still need places to live in a downturn. They may not be able to pay you for those places to live though and evictions may not be permitted. I also doubt my own ability to locate and purchase high quality places.

    Leave a comment:

  • Zaphod
    Physician

  • Zaphod
    replied
    Originally posted by White.Beard.Doc View Post
    So let's say hypothetically, there is a significant rise in interest rates and a melt down in real estate prices. Market prices drop 30% and Elaine's net worth goes from 7.5MM 1 year out of residency, to a negative 2MM. What would that look like?

    In my view, she would not be wiped out. Perhaps her annual positive free cash flow on her RE portfolio drops from 500k to 250k. The loans on real estate, unlike loans with stock investments as collateral, do not get called. She keeps paying her mortgage loan payments, and she hunkers down and lives on 20k per month of non-taxable income (due to RE write offs) and the market recovers over the ensuing years. I think that is likely her worst case scenario and I don't think she would go bankrupt, given that all of the RE she owns is high quality and would likely still have decent performance even in a very down market.
    People get this part of real estate very confused for some reason, and somehow apply it to their personal residence as if its a normal or likely thing to happen. If you make payments, it just doesnt, its not a comparable form of leverage and shouldnt be treated as such.

    Leave a comment:

  • krusebear
    Member

  • krusebear
    replied
    Part of the game is managing downside risk. I don’t think the downside risk scenario is acceptable in this situation.

    Leave a comment:

  • White.Beard.Doc
    Physician

  • White.Beard.Doc
    replied
    So let's say hypothetically, there is a significant rise in interest rates and a melt down in real estate prices. Market prices drop 30% and Elaine's net worth goes from 7.5MM 1 year out of residency, to a negative 2MM. What would that look like?

    In my view, she would not be wiped out. Perhaps her annual positive free cash flow on her RE portfolio drops from 500k to 250k. The loans on real estate, unlike loans with stock investments as collateral, do not get called. She keeps paying her mortgage loan payments, and she hunkers down and lives on 20k per month of non-taxable income (due to RE write offs) and the market recovers over the ensuing years. I think that is likely her worst case scenario and I don't think she would go bankrupt, given that all of the RE she owns is high quality and would likely still have decent performance even in a very down market.

    Leave a comment:

  • Turf Doc
    Med Student

  • Turf Doc
    replied
    The way i see it there's the "are you going to flip out factor" and the "can you literally survive a loss" factor. Flip out factor may mean you need more bonds than "recommended" no matter your age, can you survive factor seems like a function of how much money you need to avoid dining at petsmart AND how much human capital you have left.

    Leave a comment:

  • Zaphod
    Physician

  • Zaphod
    replied
    Originally posted by VentAlarm View Post

    I realize I am a bit of a contrarian in this regard. The way I see it, if I got an unexpected inheritance today worth 10M, I would immediately change my allocation to 60:40 even though I would like to keep working. I understand that the expected growth would be lower, but, at that point, I have won the game and am more concerned with making sure I stay FI than maximize long term potential. Yes, my risk capacity would be high, but my need for risk would be low. Time to retirement/agility to take risk is only part of the equation.

    I forget if it was on WCI podcast or one of the other financial podcasts I listened to, but I distinctly remember listening to someone who had 10M in tech stocks that blew up. When asked if increasing NW to 20M would have changed their life at all, the answer was no.
    Easy to say that kind of stuff after something dumb happens, and its probably not realistic either.

    No one is forcing you to take your money and concentrate it somewhat recklessly in a few bets.

    Bonds are low, and there is the possibility of inflation on the horizon, not a good scenario for real returns (these forecasts could be wrong ofc and arent necessarily mine).

    With bonds you can easily predict your return, its not hidden or up for speculation, it will almost certainly return you the coupon/yield over the duration. Not difficult.

    If you can, you should be much more into equities, especially if you're younger. 60/40 sounds great but was devised in an era of massive coupons and has worked great because rates have fallen for 40 straight years. Sure they could fall some, but without committing to violating the zero lower bound they cant go crazy.

    I add or decrease bonds tactically based on where they are relative to what seems reasonable over the longer term, which is def beyond what people here want to do. Even then when bonds gained in June I didnt sell bonds (cuz i didnt have any) I instead bought banks, which has a double tailwind of does well if economy good and will gain from an increase in rates, which they did.

    Leave a comment:

  • VentAlarm
    Member

  • VentAlarm
    replied
    Originally posted by Kamban View Post

    I am not sure I follow that logic

    Bonds add safety.
    Bonds have less growth potential over time than stocks.
    Bonds are useful when you want to start withdrawal of money.
    If you are 4 years out of training, you should be planning to work for an average of 15+ years and not think of withdrawing from your investments in that time frame.
    Adding bonds within that time frame will only stunt growth of the portfolio without serving any specific purpose.
    I realize I am a bit of a contrarian in this regard. The way I see it, if I got an unexpected inheritance today worth 10M, I would immediately change my allocation to 60:40 even though I would like to keep working. I understand that the expected growth would be lower, but, at that point, I have won the game and am more concerned with making sure I stay FI than maximize long term potential. Yes, my risk capacity would be high, but my need for risk would be low. Time to retirement/agility to take risk is only part of the equation.

    I forget if it was on WCI podcast or one of the other financial podcasts I listened to, but I distinctly remember listening to someone who had 10M in tech stocks that blew up. When asked if increasing NW to 20M would have changed their life at all, the answer was no.

    Leave a comment:

  • Kamban
    Physician

  • Kamban
    replied
    Originally posted by VentAlarm View Post

    I know common sentiment is to add bonds based on age; I realize I’m the outlier, but I think it makes a ton more sense to add bonds based on percentage of FI. I just think it makes more sense.
    I am not sure I follow that logic

    Bonds add safety.
    Bonds have less growth potential over time than stocks.
    Bonds are useful when you want to start withdrawal of money.
    If you are 4 years out of training, you should be planning to work for an average of 15+ years and not think of withdrawing from your investments in that time frame.
    Adding bonds within that time frame will only stunt growth of the portfolio without serving any specific purpose.

    Leave a comment:

  • VentAlarm
    Member

  • VentAlarm
    replied
    Originally posted by MPMD View Post

    i'm 100% equities as well
    i don't think you should add bonds based on NW i think you should add bonds based on age
    if you have a time horizon you are likely going to be fine
    I know common sentiment is to add bonds based on age; I realize I’m the outlier, but I think it makes a ton more sense to add bonds based on percentage of FI. I just think it makes more sense.

    Leave a comment:


  • MPMD
    replied
    Originally posted by VentAlarm View Post

    Rookie, I’m 2x for life!

    I agree with the general sentiment here. I’m 100% equities, but I plan to start adding bonds in as my NW increases. Our portfolios is a little under 400k (in my 4th year as an attending). The reason we’re 100% equities is because we don’t have that much to lose if stocks go down and stay down. When we have a multi seven figure portfolio, that will hurt a lot worse. She has a lot to lose. I can’t imagine a 30% decline and knowing I’m upside down on an 8 figure portfolio when I had 5M a year before.

    She’s won the game. Delevering would certainly decrease her returns, but the question is what’s a bigger sin: losing everything or giving up many million in wealth later in life. I would argue former.
    i'm 100% equities as well
    i don't think you should add bonds based on NW i think you should add bonds based on age
    if you have a time horizon you are likely going to be fine

    Leave a comment:

  • TheDangerZone
    Physician

  • TheDangerZone
    replied
    Good for her and her husband. Think I'll stick to boring and passive wealth building for now. I work hard enough during my day job.

    Leave a comment:

  • VentAlarm
    Member

  • VentAlarm
    replied
    Originally posted by Brains428 View Post
    Kamban
    Physician
    Kamban These episodes are like 15 minutes long. Still easy to listen to at 1.5x (although there was one that was pretty exhausting at 1.5-- this wasn't it).
    Rookie, I’m 2x for life!

    I agree with the general sentiment here. I’m 100% equities, but I plan to start adding bonds in as my NW increases. Our portfolios is a little under 400k (in my 4th year as an attending). The reason we’re 100% equities is because we don’t have that much to lose if stocks go down and stay down. When we have a multi seven figure portfolio, that will hurt a lot worse. She has a lot to lose. I can’t imagine a 30% decline and knowing I’m upside down on an 8 figure portfolio when I had 5M a year before.

    She’s won the game. Delevering would certainly decrease her returns, but the question is what’s a bigger sin: losing everything or giving up many million in wealth later in life. I would argue former.

    Leave a comment:

  • Brains428
    Physician

  • Brains428
    replied
    Kamban
    Physician
    Kamban These episodes are like 15 minutes long. Still easy to listen to at 1.5x (although there was one that was pretty exhausting at 1.5-- this wasn't it).

    Leave a comment:

Working...
X