Post FI Notes 018: FI Within 5 Years of Fellowship

Some of us get earlier starts than others.

Today’s interviewee went to a low-cost medical school in India, had a scholarship for a master’s degree, and entered the workforce with savings. The interviewee’s spouse benefitted from similar decisions.

Their circumstances have allowed this family to reach financial independence within the same decade of entering professional practice, and they’re branching out into commercial real estate as well.

Let’s take a peek at their investments and situations, and perhaps learn about some alternative financial plays available to those who have crossed the FI finish line.

If you’re interested in participating in one of three interview series, please download the most appropriate form for your life situation: FIRE Starter, FIRE Crossroads, or Post-FI Notes. To see other posts in the series, visit our Q&A archive.

 

 

Getting to Know You

 

You’re financially independent. About how much does your household spend in a typical year? How much could you spend while still abiding by the 4% rule?

Currently, we spend about $100,000 to $120,000 per year, which is about 3% of our net worth.

If we adhered strictly to the 4% rule, we could spend about $40,000 more per year.

Our biggest expense has always been my car hobby.  While my wife is a “point A to point B” person, I’m not; I bought a Tesla 3 years ago and plan to buy a 992.2 Carrera S Cab in the next year or so.

In addition, we strive to make our homes as futuristic and environmentally friendly as possible, so we’ll be investing in Tesla solar panels and Power Walls in the next few months.

We do not have a mortgage, but in hindsight, a low-interest loan on our home when we purchased it would have been a good decision, allowing us to invest more heavily into the market.

I was blessed to have a scholarship throughout my master’s program and have never paid a single dollar in tuition. My medical school expenses in India were around $500-$600 total for the entire 5 1/2 years of education.

My wife had complete financial support from her family during her medical school enrollment and has had no loans as well.

I think that not having student loans is a big reason why we reached FI at an early age. But we also have tried to curtail our expenses both prior to having children and after kids, and we’ve had no major lifestyle changes along the way.

 

Tell us about your household. How many people and at what ages? Are you supporting anyone outside of your home? Where do you live?

We are a family of four with two kids under six. Both of us are physicians and now practicing. My wife is purely in academia; my practice is a mix of academia and private practice. We’ve been active professionally for five years.

We do not support anyone outside our home. I did support my parents briefly for a year post-fellowship. We live in the beautiful, diverse, hot, humid state of Texas.

 

Are you still working? In what career? Did your work schedule or attitude towards work change once you knew you were FI?

Yes, I have been working fully utilized, and then some, for the last five years, and I plan to continue to do so for five more years at least. I work 365 days a year–that is not an exaggeration, as even on vacations I am always on telecall. Folks sometimes ask, “why are you killing yourself?” Ultimately, I am just trying to figure out at what point enough is enough. I still don’t know.

I have weeks where I cover five to six hospitals or rehabs, and then weeks where I am covering just one academic hospital, but the latter is usually coupled with covering multiple teleneurology sites.

Lately, I have ventured into the world of real estate. I have been a passive investor for three years and I am now actively sponsoring multifamily commercial real estate for a year, and in fact, I am closing on my 3rd complex next month. My wife works in academics 100%. So far the work has not changed despite our reaching FI.

 

Was financial independence a long-term goal of yours? Did you think you might retire early or be able to do so when you first got started in your career?

I had no idea about FI until I read the post on your site and then started looking into it. Once I put the numbers together, I knew right away that we would be there within two to three years of graduation from our individual fellowship training.

I don’t think I plan to retire early, but I will surely consider reducing the medical end while continuing to spend the rest of my time doing things I love, like commercial real estate, investing in start-ups, and spending more time on the race track in my 911.

 

 

Investing

 

How is your nest egg invested? Approximately what percentage is allocated to stocks, bonds, real estate, and alternatives?

Personal real estate, owned free and clear: 25%

Commercial real estate: 15%

Stocks and bonds: 55%

Others/crypto: 5%

 

Are your investments primarily in tax-deferred, Roth, or “taxable” post-tax accounts?

All of the above and as below:

We max out yearly our 401(k), 403(b), and 457 plans including the voluntary Roth accounts for both of us. We also had significant funds in our combined 401(k) from residency and fellowship, and I also had tax-advantaged accounts from my clinical research coordinator work, which we converted to an IRA and then to self-directed accounts to invest in real estate.

We max out our health savings accounts and do our backdoor Roth IRAs.

I have a mega-backdoor Roth that I max out, and I also have a defined benefit plan that I max out.

We both have large taxable brokerage accounts as well.

We also max out our 529s, formed within a few months of their respective births, for both kids. We aim to add at least $150,000 in principal and then let the rest of the funds grow.

We have invested heavily in I-bonds as well for 2021 and 2022 through our individual accounts as well as our multiple existing entities, trust, LLCs, and corporations.

I have a whole life insurance policy, and in addition, I am looking into a Roth leveraged 7702 plan for next year.

 

 

 

What has been your best investment?

Commercial real estate undoubtedly has been our best investment. We typically experience doubling of most principal invested in these deals within 4-5 years, depending on the cycle of the deal.

I have been investing as a limited partner in syndications and start-ups. Some funds are invested in triple-net leases.

For the past year, I have begun investing as a general partner, functioning as a capital raise co-sponsor and assisting with underwriting deals on the asset management side; as I mentioned, I’m onto my 3rd multifamily property now.

I like to buy multifamily units of 5-50 doors, and I make sure they’re class B or C and have a value-add component that will cause forced appreciation at the time of exit. I invest primarily in Texas and Florida, and I’m now venturing into Colorado and Tennessee.

 

Your worst investment?

It’s crypto! Specifically, the UST, backed by the Anchor protocol.

I had bought $50,000 worth of USDC that I converted to UST and staked on Anchor to earn 18-20% annual interest.

This went well for a few months, but then the currency crashed from de-pegging, resulting in a value of each UST dropping to just a few cents instead of being equal to one US dollar.

This meant my $50,000 investment dropped to a meager $5,000.

The $50,000 was my play money; and either it’s high risk, high reward, or high risk, high loss. I knew it was on me either way

I did learn a lesson: to try less exotic investments, and as Warren Buffet says, do not lose money in the market, especially serious money.

 

Post-FI Life

 

What do you like to do with your free time? How much free time do you have these days?

I prefer to not have free time in life. Free time does not suit my personality. I like to keep myself occupied, since as they say, an idle mind is the Devil’s workshop; for me, that means my mind on the race track.

I love to cook.

 

Do you enjoy travel? Tell us about a favorite trip you’ve taken.

Yes, definitely. Our best trip has been driving in a convertible on Highway 1, the Pacific Coast Highway, from San Francisco to Los Angeles. This was our honeymoon trip.

 

Do you incorporate giving (money or time) into your post-FI life?

Yes, I believe quite heavily in supporting local schools We both are god-fearing spiritual folks and thus always donate funds on a yearly basis to our respective religious organization.

 

What advice do you have for others hoping to achieve the financial success you’ve found?

Keep working and keep hustling. There is a lot of light at the end of the tunnel. Stay happy, stay blessed, and embrace life as it comes.

 

 

PoF: Catch all the future interviews from those just getting started, at a crossroads, or at the end of their FI journey with a free subscription to Physician on FIRE.

 

 

 

I thank today’s interviewee for sharing their story, and I’ve shared my feedback privately with them. I wouldn’t want my opinions to influence yours. Please give your take and answer any questions they have had in the space below!

Again, if you’d like to partake in a future Q&A, please download a FIRE Starter, FIRE Crossroads, or Post-FI Notes interview form.