Doctoring My Money

My Mutual Funds / Retirement Accounts

2007-10-03T09:01:00.000-07:00

Wanting to reallocate since I'm pretty sure we're going to into a recession or at least a US stock recession (if there is such a thing). My current allocations are as follows:

John Hancock (401k) (Current Employment) (Less than $1k currently but growing)
-Russell 2000 Index Fund (50%)
-SPDR MSCI All Country World Index ex USA Index (50%)
-Large Cap Foreign Blend

Fidelity (401k) (About $2.5k currently)
-Fidelity Spartan International Index (50%)
-Large Cap Foreign Blend
-Fidelity Spartan Total Market Index (50%)
-Large Cap following the Wilshire 5000

ETrade (IRA) (About $15k)
-E*TRADE Russell 2000 Index (50%)
-E*TRADE International Index (50%)
-Large Cap Foreign Blend

The question is how aggressive should I be? I'm thinking about reallocating into hyper aggressive small cap funds from Asia and South America. I don't see how the flow of money there is going to stop anytime soon (espcially China) but there is always risk. Having said this... it is retirement money that is 25-30 years away... but is it worth reallocating?

Rich... I don't get it... I'm jealous

2007-08-06T12:21:00.000-07:00

I am not a fan of rich people... at least certain kinds of rich people. Much of it I know, and admit, has to do with shear jealousy and nothing else. Nevertheless my sentiment remains. It's an odd sentiment though because one day I hope to be rich... at least rich enough to afford myself economic freedom. But getting back to the first sentence... an example of the rich people that crawl under my skin.

I have an aquaintance who happens to be a fellow physician. He is still in training which means he is making pennies. When he is done, he deserves his 6 figure salary and whatever he chooses to do with it... AMEN to him. From experience I know he'll work his tail off but moreso, he'll have a skill that few possess and that is what will drive his income.

He makes somewhere between $40-50,000 per year. He has a 2 new cars (very nice... like BMW quality), kids, a home (around $400,000), very expensive electronic goods, nice clothes... there is something wrong with that. He's not selling drugs and doesn't have an Ebay business on the side... so where does it come from? Bank of Mom & Dad. I seethe.

Now like I said before... half of my seething is jealousy and that is a personal issue and demon I have to deal with on my own but... COME ON. Cut the cord. Be a man. Have some self respect. Now if your parents pay for your education.... a blessing to you. Get you a car. Wonderful gift. Anymore than that... shame on you.

My parents paid for my living expenses during college and medical school. My father is a physician and I'm sure could have helped me out more... but although I am jealous (a common theme here) I'm proud to say everything I own I paid for it on my own. That should make me feel empowered and great... and it is but... I'm jealous.

I hope one day to have made it on my own... working... investing... but right now... I just have this not so fresh feeling... grr.

Rollovers

2007-07-20T13:23:00.001-07:00

I'm in the process rolling over my 403b money from my last job to an IRA. I hesitated a bit in doing this because, 1) the funds I had chosen were doing perfectly fine and 2) I wasn't sure if an IRA had the same safety to lawsuits as a 403b. But now, the funds are leveling off and I'm sure the IRA is safe and so... the rollover.

My plan for this sum of retirement assets is to invest 75% (or about $15,000) aggressively between some index funds, international funds and some bond funds (as like my new 401k ratio or diversification). 25% though I plan to be ultra aggressive and invest in stocks themselves. I'm hoping to strike gold twice (like with my brokerage account) and build on this sum quickly. My my stock picks will be as follows (as alwasy, my picks have cash, little debt and... make something darn good):

Aldila (ALDA)
This company makes graphite shafts. Golf clubs, fishing rods, etc., etc.. It's an odd market but that's why I like it. They seem to be the leader in this area but the question, which makes it a great buy is, "who are the competitors?" The fact that there is no answer I think make it a great pick.

Big Lots (BIG)
If you go into one you'd be surprised by what the have there. Some real name stuff for real cheap. Of course a lot of the stuff feels like dollar store type stuff but... as with all my companies they make money and have no debt. Whooopee.

KHD Humboldt Wedag International Ltd. (KHD)
Great company... I think. That's all I can say. They do industry (dirty work) type stuff all over the world. Not much of a justification but... they have a nice balance sheet.

Smith Micro Software Inc. (SMSI)
Good balance sheet. They make money. Have little debt. To me the catch is that they do the software part of seeing movies, videos, etc., etc... on phones. Now maybe the iPhone will change everything... but not every phone is an iPhone (and not everybody can afford an iPhone)and so... some company is going to provide similar stuff to the masses. I think this company is that company.

If you read this, let me know what you think of the picks.

My Sick Insurance

2007-07-03T14:54:00.000-07:00

I have a great insurance package provided by my company. It's great because 1) they pick up all the premiums as well as their employer cost and 2) they have chosen great insurers.

My family's vision plan is through VSP. They cover yearly exams, a good portion of the cost of frames (close to $100... which these days for designer frames is most of the cost), a good portion of the lenses (very expensive... although they don't cover the anti-scratch or anti-glare portion) as well as contacts just about in full (my wife is a contact lens wearer). I have no idea how much my employer pays for our family to have this coverage but it is certainly better than the $500+ dollars it would cost out of pocket to obtain all of this stuff.

Our dental plan is through Guardian. I had never heard of the plan until I became an employee. It's a PPO plan that really should be called an EPO plan because there are preferred providers that will net less out of pocket expenses when all is said and done. Once again... premiums are paid by the company and we havn't had a problem (we did with the dentist but that's another story) and so... whoopee.

Our health is via United Healthcare and its a PPO plan. No complaints. My biggest issue is PPO vs. HMO and although I chose PPO for the freedom, I occasionaly have second thoughts about my choice. We get little bills everytime we go see the doctor or have a lab test run, which although it doesn't amount to much, I'm always saying, "Why I am paying for this?" At my last employer, we had a Blue Cross HMO plan (couldn't afford the PPO premiums or the bills that may come our way after services were provided) and we used it without a hitch. But since I don't pay anything except these small differences between charges/reimbursement... I'll stick with the freedom.

It is so nice not to have to think about insurance, premiums, coverage, etc., etc.. Having a wife and child I don't know how people can function with that "worry" hanging over their heads. The "worry" I speak of is, "what if 'blank' happens" and, "how am I going to pay for it?" I have good sick insurance... and I am greatful.

My Brokerage Account... Gambling?

2007-06-18T10:53:00.000-07:00

I have a small brokerage account which is the jewel of my assets. I say this not because it will ever amount to anything (although I have the hope that it will) but it does allow me to have some fun and success which I think in investing, goes hand in hand. My success since I opened the account up about 5 years ago has been outstanding. My annual return has always been over 90%. That's really good. Really good!!!

What is my theory you may ask? Uhh... first I must say I learned much of my picking strategy from reading books by the Uber Investor Peter Lynch. To everybody who reads this post, I recommend all 3 of his books as they are easy to read and understand for anybody, investor or not. The books themselves, I don't think, offer too much strategy, but they do give the regular person insight into common threads shared by companies whose stock price will be appreciating in the future. So my strategy...

1. Luck
2. Luck
3. Luck
4. Cash without debt
5. Good product (s)

My portfolio:
Apple: I've held this for 5 years. Through the iPod revolution. They had oodles of cash and no debt 5 years ago. They still have cash and no debt 5 years later. People are still buying Ipods. The Iphone and TV look... well... they'll be better and they look cool. Macs run Windows now. Easy pick.

Coach: I've held this for 5 years. I saw the "C" everywhere I went. I saw fake bags with a "G" which means people really want the "C" but can't afford it (imitation is a good thing). They have minimal debt and lots of cash. Men buy Coach too. When I bought, Coach stores and outlets were opening everywhere. Easy pick.

Under Armor: I've had this for over a year now. All I remember is watching NFL/NBA games and seeing guys wearing this weird spandex stuff and noticing the logo. Then I saw people at the gym wearing it. Then I saw kids wearing it. Then I saw an article about the NFL choosing equipment and along with Nike/Reebok, Under Armor was in the running. Minimal debt with lots of cash. Easy pick. Good pick.

Nvidia: I've had this for 3 years. They make video cards for computers. I didn't buy because of this. They make money, have cash with no debt which as you can see is a cog for me. The key to this company is they make all the video cards in X-Box's. Kind of a hidden market huh? Easy pick.

China Mobile Limited: I've had this for less than a year. A mistake based on principal alone. Their cash/debt ratio is OK. But I have no clue about the mobile phone industry in China and so I bought this one without enough information. A Peter Lynch no-no. Their stock price has done nothing since I bought. But oh well... If I find something else, I'll sell and buy... for now I'll hold in hopes that I just got lucky.

Now although I have read a little about value investing (I own and have skimmed through the "Intelligent Investor") as well as all the other types of investing... I'm really clueless into those strategies. Maybe one day I'll read-read and figure that stuff out. That's for the experts. For me... I'm investing on what I understand and what I know and what I truly believe are good companies ready for a leap. I'll let you know what happens next. If you have any picks for me... let me know. I'm thinking about buying some stock in Big Lots next. Tell me what you think!

My Student Loans Stink

2007-06-02T13:02:00.001-07:00

My student loans are outrageous. That is just a fact. I chose the field I went into and thus chose to assume such debt as a consequence to become a physician but when I sit back and look at them... geesh!!! I view it now as mortgage in my head... an investment to say the least but still... they stink.

My good fortune came in the form of low interest rates and the Clinton administration. And as you can see from my 1st post, the bulk of my loans are fixed at 3.75% which really cannot be beat. The rest of them unfortunately are starting to rise and feel like credit card debt which is very unsettling to me.

All my loans (and my wife's) were for tuition only. We lived frugally to say the least to not accrue more debt along the student trail. Can you believe that? I went to a very expensive medical school in Boston (I think ranked #3 for the cost) and am paying the price.

My loan payments right now (combined for my wife and I) total to about $1500 a month and this will go up slowly (extended plan with rising payments to adjust for the fact that I hopefully will make more over time) over the next 30 years until they are settled. At the time of graduation from both medical school and residency I strongly considered the military as well as debt repayment/service programs but looking closely at them... I just couldn't. I couldn't imagine having no control over my life for years following my residency (especially with a family) and those service jobs pay limited amounts with salaries that although decent, I feel, can be made up in private practice.

Thus my only options at this point seem to be to stay the course. I would love to eliminte much of the private adjustable rate loans ASAP but cash after bills is low at this point making it rough. Combine that with saving for our next home, rising costs of everything, family, etc., etc.... tough, tough, tough.

But the mortgage in my head is worth it!!! In retrospect the only thing I might have done differently was to work before going to medical school. I could have saved money and then taken a chunk out of the loan before it even became a loan. Oh well.

Enough complaining. Once again... any suggestions, thoughts, sympathies... let me know ;-) Oh, and if you know a way to reduce the adjustable rate, fix it, lower it, whatever... let me know fast!!!

My First Job, My Salary, My Income

2007-06-01T14:23:00.000-07:00

After finishing residency I came out to where I am now and am quite happy with where I landed. We live in California Xurbia (rural area with a surburban feel) about an hour from 2 major metropolis'. Lots of families, close shopping, fresh air and lots of new homes. It's a commuter area in that most peoplehere (although not me) commute that 1 hour (more for traffic) and live here for the cheaper housing and to raise their family. This is not for everybody... but it is for me and so we are happy to be here.

As stated in my first post, my salary is $115,000 with $5,000 raises for 3 years. I received a $5,000 signing bonus that we used for our move. My benefits include full health, dental and vision for our whole family (all premiums paid); disability insurance (short and long); full malpractice including tail coverage; $4500 CME; 2 weeks paid vacation and 1 week CME vacation. My call is about 1 in 5 with 1 weekend in 6 weeks. Call includes advice calls for patients as well as hospital coverage for admissions. There are about 10 physicians total in the group and they are all quite nice and fair. Although I would have loved a higher starting salary (money is money) there is nothing to complain about.

I supplement my current salary by working after hours here at the group. The hours are 6-9 Monday to Friday and 10-2 Saturday and Sunday. I try to work twice a week for the extra pay which is $80/hour that is folded into my paycheck (not seperate).

My contract is 3 years (I am almost into year 2) after which time I am hoping to be asked to become a partner. Now I have not a clue as to how this partnership thing works really. I mean ,I understand I will get/buy shares of the company and then revenue after all bills have been settled will be income divided among the partners based upon shares. But how the taxes work, when the income gets distributed, ?'s for me.

If anybody were to look at this post, I'd be curious to hear what you thought overall. If you were getting better, less, more... it would be interesting to compare.

My Home, My Mortgage

2007-05-30T08:57:00.000-07:00

We bought our condo about 1 year ago. At that time I was finishing up residency which was concurrent with the height of the now bursting real estate bubble. Our condo is a 1700 square foot 3 bedroom, 2.5 bath home with a teeny tiny backyard/patio. The nice features in it include open floor plan downstairs, jacuzzi bathtub in the master bedroom, granite kitchen countertops, playgrounds galore surrounding us, easy drives to shopping and a 2 car garage. We are quite happy about the place… the size for the 3 of us is perfect, gives us some room to grow, no outdoor/yard upkeep, etc., etc.. I AM though having second thoughts about the mortgage.

My mortgage is a 5/1 adjustable at 5.75%. Good rate. We hope to move within 5 years as our family gets bigger and as I earn more (these are all hopes) so, so far, all seems good. I put 0 down. Zero. I had no money. I was still a resident which made it tough to make money to put down. After doing some recent reading (Doroghazi), I undercapitalized. Now, I pay no PMI because the bank was gracious enough (because I am a physician) to fund the whole thing. I can’t say I regret doing this because we love our place… but if I think about it enough… I get that not so fresh feeling.

The monthly payments (including escrow for taxes, another thing I’ve recently read is not the smartest thing to do) are $2600 per month. That’s a lot for $350,000. At least I think it’s a lot. In retrospect, or ideally, we should have saved up the requisite 20% down ($70,000), and got a 30 or even 15 year fixed mortgage. No worries then at all. In this ideal world, I figure that out here where we live, a 2-3 bedroom apartment or home rental would have cost us $1750. That’s $750 per month in savings there which over a few years… well actually… that’s a lot of years before we could have a bought a place. I guess we did the right thing.

So I guess I have no regrets. But in an ideal world I would have done it differently… but life isn’t ideal and so… that’s life I guess.

We are already planning our next home… years away. It will be more expensive (obviously) and we’re hoping to do it the right way this time. A $500,000 home needing 20% down is a magical $100k. That’s a lot. In that time I hope to become a partner in my group which will help a lot but my fear is that with the housing bubble bursting we won’t get back our $350,000 and end up losing any equity (or even owing moneyl) on the home. Grr. I have some play money in a Scottrade account (see my last post) which has posted a 90% return over the past 3 years. There is always the gambler's hope that I’ll find some stock that’ll turn that $3000 or so into $30k or even more. A foolish hope… but still a hope. Another option is I’ve been recently getting some fliers in the mail concerning loan companies (sharks) that would drop my rate to 1.75% (and thus the payment to $1600 a month) for 5 years before becoming adjustable. Now, this makes me wary, but I think I would be foolish not to look into it seeing 1) $1000 a month would help and 2) If I’m not going to get my equity back, why should I pay for it?

Sigh… as always, any suggestions, thoughts or comments would be welcome.

Introductions

2007-05-29T16:27:00.000-07:00

If anybody reads this I hope you can help me as much as I can help you... which may not be much either way but hey, at least there is effort .

I'm writing this blog for 2 reasons:

1) To journal my thoughts, frustrations and ideas as to have them on paper for myself. This regards finances only (nothing too personal). Putting things on paper (as Buffet (I think) asks all of his managers to do for him ie. a letter to him) sometimes clarifies things for oneself... and I hope it does the same for me.
2) Perhaps people can take my thoughts, frustrations and ideas and use them for yourselves or vice versa... can throw me a bone of advice.

So feel free to write, blog, whatever the word may be... I'm going to start with some introductions.

I am a 30 year old physician living in Riverside County CA. I grew up in the suburbs of Boston in a doctor family (my father) with 2 loving parents and 2 sisters (I am the sandwhich son). We grew up quite privileged as you can imagine and I am greatful for the lack of suffering. I did my undergraduate work in Massachusetts (via scholarship) and took out loans for medical school in Boston. I say this only because after I left high school I have, in a sense, been on my own. That's not a proud statement, just a fact. My parents were always there and were a wonderful security blanket for me (something I wish everybody had) but... I like doing it on my own.

After medical school I got married and moved to Southern California for my residency, had a wonderful son, and finally got a real job in private practice in Riverside County. Despite all you see or hear in this and future posts... I am quite happy!!! My financials are as follows:

Income
►$115,000 / year
-increasing $5000 per year for 3 years

Assets
►$20,000
-403b Account from my last employer
-Mixed Mutual Funds
-50% International, 25% Small Caps, 25% Large Caps
►$2000
-401k from my wife’s former employer
-Same mix for mutual funds
►$500
-401k from my current employer (started last month)
-Same Mix as above
-4% of my salary is going into this account with ¼ per dollar employee match
►$3500
-Scottrade brokerage account
-Apple, Under Armour, Coach, Nvidia, China Mobile
►$15,000
-Emergency fund in an ING direct account
►$350,000 Mortgage on our Condo
-5/1 Adjustable Rate at 5.75%
-0% down payment
-I’m not sure how much of an asset this is or will be… but we like where we live.

Liabilities
►$350,000 Mortgage on our Condo
►$218,000 Student Loan at 3.75% (fixed)
►$42,000 Student Loan at 7.5% (adjustable)
-Both Student Loans are a combination of my own plus my wife’s. They are still
separate though.
►$35,000 Car Loans at 5.25%

Insurances
►Short and long term disability, malpractice covered by the practice
►Medical, Dental, Vision paid for by the practice
►$500 and $750k Term Life policies for my wife and myself respectively
►We have adequate auto insurance

Budget Highlights or Lowlights
►We try to save about 10% of my salary total per month (includes 4% to the 401k).
►We give about 5% to charity
►We barely get by every month

If anybody has time to look at this, let me know what you think... even if it's scathing. In my posts to follow I'll try to be more specific about all the financials listed above... give you some insight into my thinking... however good or flawed it may be. Hope you enjoy.