The X-ray Beam: Millionaire Doc
For an audio version of this post, please click on the speaker icon (top left).
Welcome to the inaugural post of my X-ray Beam Series.
I would like to welcome Millionaire Doc (MD) who has graciously agreed to be the guinea pig in this series.
MD runs a wonderful blog, Millionaire Doc, and is part of the ever growing physician based financial blogs out there.
I believe MD distinguishes himself from the others with his passion for “Alternative Investing” mainly in the real estate sector.
If you have ever contemplated investing in real estate to help diversify your portfolio, his site is full of high-yield information to help you navigate the various options out there and to avoid potential pitfalls. You should definitely check it out.
Well I hope you enjoy Millionaire Doc as he voluntarily submits to be being scanned under the X-ray Beam:
If you can please give a brief introduction of yourself (age, medical specialty, years of medical practice):
I am a mid-career private practice radiologist working in the Northern CA. I joined the group after finishing fellowship and I’ve been in the same practice for close to 15 years. I’m fortunate to be in a group practice with great colleagues.
1) First off, thank you for taking the time out of your schedule to answer these questions. I love your moniker, Millionaire Doc (whose acronym MD is perfect for our profession). What were some of the other names you considered before going with this one?
I was going to go with “Broke M.D.”, but then I thought people might not take me seriously.
I briefly considered “Alternative M.D.” because I write about alternative investments, but I thought that might be misconstrued as ‘alternative lifestyle’, which I know nothing about.
I finally settled on ‘Millionaire Doc’ even though I was concerned it might sound arrogant and elitist. But it was catchy and easy to remember.
I mean, who is going to remember ‘Smartfinancialplanningfordoctors.com’ right?
Plus, the acronym M.D. is an added bonus!
2) Speaking of our profession in medicine, when did you know you wanted to become a doctor? Were there any influential people or events that made you embark on this career path?
Growing up, I was greatly influenced by my parents to be a medical doctor.
It’s a common story.
Even though my parents were not in the medical profession, they touted the job security, good pay, and respect that physicians enjoy. Looking back, even though they meant well, it was probably not the best way to guide your children into a career path.
I believe parents should encourage their kids to find their passion and let them make their own choices.
But hey, here I am and it all worked out.
3) What were some of the deciding factors that led into choosing the medical specialty of radiology? Were there any other specialties that you considered?
I entered medical school with the intention of becoming a pediatrician. I had volunteered working with at-risk youth and thought this would be a natural match for me.
However, since I have a broad range of interests and I am naturally curious, I kept changing my mind with each rotation I did. The exception was OB-GYN.
Then I discovered radiology. Back in the day, the medical students called it “Radi-holiday”.
We’d show up in the morning for a few hours of readout and be dismissed by noon. We’d see awesome cases and there was no call.
The radiologist was the detective, finding abnormalities in a black and white picture.
If we discovered the diagnosis, we could be heroes. If not, we’d rattle off a differential diagnosis, hedge a bit, and tell the clinician to go clinically correlate.
Either way, it was a win-win!
Of course the reality of radiology is nothing like the skewed perception I saw at the time.
4) If you had to do it all over again, would you choose the same medical profession/specialty?
Yes. Radiology Rules.
5) If you were not a physician, what alternative career would you have gone into?
I’m an extroverted introvert, I am a visual person, and I suck at sales.
Perhaps some type of design engineer.
I’d also consider being a professional real estate investor.
6) Physicians have gained notoriety for being bad at finance. Why do you suppose that is the case?
Physicians don’t get formal financial training.
All of their schooling has largely centered around core sciences.
Once they are in residency and beyond, they don’t have time to learn about personal finance.
But I think that is now changing. With the large amount of free information on the web and other resources, there really is no excuse to be financially illiterate.
It’s scary to see physicians coming out of training with several hundred thousand dollars in student loans.
But I think it’s easy to feel and act rich because of the big starting paychecks.
7) Have you personally fallen trap to any of the typical mistakes physicians make, and if so can you name some of your biggest ones?
I haven’t had any financial catastrophes but I’ve made a lot of smaller mistakes in the past.
For example, I invested a lot of my savings in tech stocks during the dot-com bubble and lost most of it. Granted, it wasn’t that much in total dollar amount, but it hurt nonetheless.
I also didn’t maximize my Roth contributions as a resident.
I guess you could say buying a doctor’s house in the CA Bay Area is a major mistake. But the value of homes around here have gone through the roof so I’ve been able to ride the equity wave.
Our household expenses are quite high, and that’s largely due to living in a HCOL location plus sending our kids to private school.
Some might say living in CA is a major mistake. But I was raised and born here and this is where my family lives. I wouldn’t be as happy living anywhere else.
8) There seems to be a surge in Physician financial blogs these days, which I am guilty of being a part of.
What do you think has been the driving factor behind this and do you think it is a sign that physicians are finally waking up to the importance of financial literacy?
Jim Dahle of the White Coat Investor really started the conversation on the importance of physician personal finance and debt management so he deserves a lot of credit.
He’s probably saved the aggregate physician community hundreds of millions of dollars. Possibly in the billions over the course of an entire physician career.
Other bloggers like the Physician on FIRE, Passive Income MD, Wealthy Doc, and Dr. Cory Fawcett have also offered their perspectives on important financial concepts.
All of these voices are needed to show our community there are already paths that are well paved.
You don’t need to cut your own road- just follow the road other successful physicians have taken.
Also, for the most part, physicians are an altruistic bunch. We like to help people. After all, that’s what drew us into a medical career.
9) What inspired you to start a blog? Were there any surprises along the way? Any advice to individuals who may be contemplating starting one of their own?
I’ve always had a creative itch to start something from scratch, and creating a blog fit that bill.
I also blog to share my experiences with other people so they can learn from my knowledge and mistakes.
One benefit of having a blog is the networking with other bloggers. I’ve met a lot of great folks in the short time I’ve been at it.
I also wanted to leave behind a written record of my thoughts and philosophy so my kids and future generations can look back and read about my life.
If you are contemplating starting a blog, I’d say just do it. It can be very rewarding.
10) Your blog is primarily devoted to what many consider an alternative class of investing, mainly in real estate. Why have you chosen to concentrate on this sector of assets as opposed to the more traditional investing method of primarily concentrating in stocks and bonds?
To be clear, the bulk of my portfolio is in stocks and bonds through Vanguard index funds. However, I am shifting more of my portfolio towards alternative investments like hard money lending, single family homes, and commercial real estate.
The reason is to diversify my holdings outside of the stock market, which we all know can be volatile.
I like hard assets that are tangible and have intrinsic value.
There will always be a need for housing and an apartment building’s value will never go down to zero.
As far as writing, there are thousands of posts on stocks, bonds, and mutual funds. Those topics have already been written to death. I find alternative investments to be much more interesting.
11) In the real estate sector, your primary focus is in the commercial sector of real estate and you use crowdfunding and syndications to accomplish this.
Can you give a brief explanation of what these particular platforms are and why you have chosen to concentrate on them rather than the traditional single family home model most people envision when they think of real estate investing?
In 2012, the JOBS Act was passed which allowed online crowdfund platforms to proliferate.
As a result, commercial real estate opportunities became more accessible to accredited investors.
These platforms are online marketplaces that aggregate and curate deals for their investor pool.
The sponsors benefit by gaining access to a large group of investors.
Previously, these deals were only accessible to investors who had pre-existing relationships with sponsor/operators.
When people typically think of real estate, they think of single family homes. But there is a whole world of different real estate asset types to consider, like office, apartments, self-storage, industrial, retail, medical office, mobile home parks, and senior housing.
12) What do you think some of the obstacles most investors perceive about real estate that make them not want to venture in this class? Any advice to help allay some of these fears?
Real estate is not for everyone.
When people think about real estate they think tenants, toilets, and termites and it’s not worth the hassle.
That’s active real estate investing.
Well, these days, there are many ways to passively invest in real estate including hiring a property manager, turnkey single family homes, hard money loans, and syndications.
I’m not an active real estate investor because I don’t enjoy managing a property and it is not the highest and best use of my time.
Instead I leverage other real estate professionals to do the heavy lifting.
The key is to find a good sponsor/operator
13) Asset allocation is considered an important step any beginning investor must determine but it can be highly individualized based on the investor’s personal risk profile.
Can you share with us your asset allocation and in particular how much of your portfolio do you wish to dedicate to real estate holdings?
If I include the equity of my primary residence, then over 50% of my net worth is in some form of real estate.
If I exclude my primary residence, then about 35% of my net worth is in real estate.
The rest is composed of stock and bond index funds. I think an ideal asset allocation would be 30% real estate, 50% stocks, 10% bonds, 5% cash, and 5% other alternatives.
Of course, this may change with the economic environment, so it’s not set in stone.
14) For a reader unfamiliar with your website, what are three posts you are most proud of that they can gain an insight about you and your philosophies?
15) Is there a book or books that has made a major impact in your financial well-being?
I love reading financial books and I have a collection of them on my shelf.
I’m currently reading Principles: Life and Work by Ray Dalio and it is fantastic.
Other favorites include
Grit: The Power of Passion and Perseverance by Angela Duckworth
Rich Dad’s CASHFLOW Quadrant by Robert Kiyosaki
Outliers: The Story of Success by Malcolm Gladwell
16) By your moniker, you have already broached the 7 figure net worth mark which is a tremendous achievement.
How old were you when you hit this milestone? Did you do anything special to celebrate the occasion? Did you expect to become a millionaire by that age when you first entered medical school?
When I finished training and started private practice, I set a goal of one million dollars in net worth in ten years. I reached that mark in seven years at the age of 38.
Honestly, it was just another day, and I didn’t celebrate it. Maybe I did a fist pump.
17) Can you name 5 things that had the greatest financial impact on you that allowed you to become a millionaire?
18) What is your advice to the medical student/resident/early physician who may be facing a monumental amount of debt early on in their career?
Paying off a large debt load may seem overwhelming, but it’s doable.
The saying “How do you eat an elephant? One bite at a time” applies here.
I would advise planning a course of action.
Learn about all your loan repayment options early on.
There are different loan forgiveness programs but you have to follow the rules. In the early attending years, continue to try to live like a resident, because even though you may earn a large paycheck, your net worth is still likely a large negative number.
Use the S.M.A.R.T goal approach which I advocate in my Road to $1 Million series.
Have both long term and short term objectives, then try to automate your debt paydown as much as possible.
19) Do you have an annual retirement spending goal that you are aiming for? A target net worth? What would be your exit strategy after achieving these goals.
I don’t have a particular spending goal.
I anticipate $150-200K a year would allow a comfortable retirement.
I believe a $10 million net worth by age 65 is entirely achievable- and that would include equity in my primary residence.
I plan to continue working until I turn 60, then either go part-time or locums until I am 65.
I don’t have plans to retire early.
20) Another trend that is sweeping the physician blogosphere is the concept of FIRE (Financial Independence/Retire Early). What are your thoughts on this?
I am an advocate for FI, but not necessarily RE.
Work is ingrained in my soul and I don’t think I would ever stop working in some form or another.
My career is rewarding and not too onerous.
But I can see myself cutting back in the future to a part-time or locums and have work serve me instead of the other way around.
21) What is your greatest fear, if any, you have in retirement, and are there any ways you are addressing that now?
Like anyone else, I do have the fear of running out of money in retirement.
But at my current trajectory, that fear is probably unfounded.
As long as I don’t do anything stupid, I should have enough. I plan to increase my passive income stream through real estate holdings, both single family rentals and commercial real estate syndications.
Again thank you so much Millionaire Doc for your time answering these questions and being placed under the “X-ray beam.” I look forward to your continued posts and wish you much success.
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(and it would make my first FinCon an even more incredible experience)