The White Coat Investor's Guide for Students: How Medical and Dental Students Can Secure Their Financial Future

by James M. Dahle, Rick Ferri (Foreword)

Written by practicing emergency physician and founder of The White Coat Investor, Guide for Students is specifically targeted at medical and dental students and addresses their specific financial concerns.
Many professional students feel guilty about living on student loans while simultaneously worrying that they may never be able to pay them off. This book will lift the burden of guilt while providing insight into the financial consequences of the major decisions you will face during school and residency training. Assuming no prior knowledge of personal finance and investing, the book is filled with straight talk and clear explanations. Let Dr. Dahle be the financial mentor you didn’t even know you needed.
This book will teach you how

Medical and dental school are filled with enough pressure. Use this guide to remove the financial worries so you can move forward into your career with the confidence you need.


I wish I had this information when I was a student. This book should be required reading as part of the dental and medical school curriculum. –Alexandra E. Forest, DDS, MD
An invaluable resource for pre-med students, medical students, and those in residency. –Rick Ferri, CFA
Succinct summary of financial gems! –Col. Gregory Morgan, Ret. USAF, CPA
This book provides solid financial advice for anyone in medical school or anyone considering medical school. More importantly, it provides a foundational framework for making sound and prudent financial decisions throughout one’s life. It is worth its weight in gold. –Ryan Kelly, CFP
Packed full of straightforward practical recommendations and is a must-read for medical students! –Mitchell D. Belkin, Medical Student
This should be the required textbook for a Financial Literacy 101 course in every medical and dental school curriculum. This book will teach you how to become financially independent by making smart moves with your money as a student, a resident, and as a practicing doctor or dentist. –Angela Chiara, Dental Student
The one book to read the summer before starting medical school. –Jake Babel, Medical Student
How I wish I had this amazing book when I started school. I would be in a very different place now financially. –Jonathan Polak, MD
Great advice from an author that is easy to understand and relatable. Imagine “First Aid for the USMLE” but for your financial freedom. A very important read for health professions in the midst of medical training. –Austin C. Snyder, Medical Student
The breadth of financial topics covered in concise, easy-to-read chapters makes this book a “go-to” for students and residents who want to understand the basics of personal finance quickly and learn how to practically apply economic concepts to every step of their medical journey. –Chelsea G. Swanson, JD

Genres: Finance, Nonfiction, Medical

336 pages, Kindle Edition

Published January 8, 2021

Reviews

[Keana Burger · Rating 5 out of 5]

Amazing insight and objective advice. Does not shame anyone for any decisions and tells you when you need to skip or read. My brain is so full and I am so thankful. May have to re-read the final chapters again in the future to refresh financial terminology but overall 10/10 would recommend.

[Megan · Rating 5 out of 5]

Been reading this off and on throughout med school, finally got around to finishing the residency chapters. Everyone needs to read this!!!! (And we could also just make finance a required topic in med schools thanks)

[Brooke Vandenberg · Rating 5 out of 5]

A MUST read for dental and med students. I will be referencing this book for the rest of my pre professional career!

[Britney Halbur]

Lol. I was curious! Honestly a lot of it was common sense and the rest of it kinda went over my head, but I appreciated both getting a straightforward opinion as well as financial literacy info at the end. Quick read, only took a day but the end definitely dragged (I just don’t like finance but we’re trying out here)

[Andrew · Rating 5 out of 5]

9/10 ; Read the first half of this four months ago and just picked it back up to finish the second half in December. Quick and dirty review of pretty basic topics. I found the investing and general tax protected account review very high-level. All super accurate and helpful for any student. Not too much new there. I definitely think the analysis of grad school specific loan planning and repayment strategies were super helpful. In addition, the tax strategies for during and after the four years in school were definitely new, and I even am implementing some in my own plan. Takeaways: play the long game in investing and simplify as much as possible ; take time with school financial decisions and shop options around ; plan ahead even when all the data is not available and consider future milestones like loan payment, house purchase, child raising.

[Nicole Fye · Rating 5 out of 5]

I have put off reading this book for so long because I knew nothing about finances and was scared of facing my student loans, but this book explains everything in plain English and gives specific advice in a variety of personal scenarios. I have notes and a list of what to do with my first paycheck and what to do with student loans thanks to this book, so I feel much better about working soon.

[Mitchell Love · Rating 5 out of 5]

Just trying to keep the finance bros on their toes!

Grateful for a well-written and insightful personal finance book for those looking to go into the medical field. Encouraging to see an Emergency Medicine doc intent on helping others achieve financial literacy!

[Colby McArthur · Rating 5 out of 5]

Very helpful! As someone who had a good grasp of financial basics, I could skip through a lot of it, but it had a good explanation of insurance types, bonds, and taxes for high earners that was very helpful.

[Nathan · Rating 5 out of 5]

James Dahle’s The White Coat Investor’s Guide for Students emphasizes the importance of financial planning, frugality, and protecting yourself via disability and life insurance, giving good tips and advice on which insurance policies to purchase. Dahle also covers appropriate debt-to-income ratios, eliminating student loans, and investing to become financially independent.

You will find financial freedom, and with that freedom will come a confidence that comes from the knowledge that you do not work for money, money works for you. Money is no longer your master, and you can then afford to take the personal and professional risks in life that will maximize your happiness.

I prefer to think of this concept as a "debt-to-income ratio" (DTI), a term frequently used in lending. For our purposes today, it is simply the ratio of your total student loans upon completing your training to your expected income upon completing your training. At 1X, medical or dental school is an excellent investment. With careful financial management (which we will discuss later in the book), you can pay off that debt within two years of completing your training and then enjoy that high income the rest of your career. At 2X, the investment was not nearly as good. However, it is probably still an acceptable ratio. With careful financial management, this debt can be cleared within five years of the completion of training. At 3X, things start breaking down.

When you are paying for school with debt, by definition you are living above your means. Each month you sink further and further into debt. Minimizing how far you go into debt is key to your finances. After you select a school to attend, the main way you can do this is by spending as little as possible.

It is psychologically much easier to increase your standard of living than to decrease it. This tendency we all have to grow into our income is called lifestyle inflation or the hedonic treadmill. Despite spending more, we do not permanently increase our happiness. It also turns out that many small increases in spending actually bring more happiness than one large increase in spending. If you live frugally as a student, the modest upgrades in lifestyle in residency will feel like splurges and bring on more enjoyment.

Living on $50,000 a year while earning $300,000 a year is not pleasant, requires discipline, and is going to be harder than you think. Do not extend that time period any longer than you have to.

Too many Americans, including doctors, buy insurance to protect against financial loss that would not actually be a financial catastrophe (consider how many people buy Applecare® for their iPhone). Meanwhile, they do not bother purchasing term life or disability insurance and carry only the state required minimum liability insurance. So make sure you protect against those financial catastrophes that can be insured against by purchasing personal (umbrella) and professional (malpractice) liability policies, homeowner's or renter's insurance, disability insurance, term life insurance if you have dependents, and health insurance.

As you prepare to enter your career, be aware of the existence of burnout and its prevalence among doctors. Maintain the relationships, habits, and outside interests that will allow you to overcome burnout. Increase your personal resilience whenever possible. Eliminating financial concerns from your life will reduce the likelihood of burnout, and facilitate solutions when it occurs.

Ownership will never be right for all dentists, but I want to reassure you that just having a high student loan burden should not be a reason to avoid owning a practice. In fact, I would argue that the higher your student loans, the more you need to own your job. You simply need a higher income to pay them off.

Lots of people mistakenly think that "renting is throwing money away." That is absolutely not true. Renting is exchanging money for a place to live. You exchange money for food to eat and entertainment to watch all the time, but do not view that as throwing money away. Paying for housing is no different.

While smart decisions about purchasing, maintaining. and upgrading can help, the primary factor that determines whether you make money on such a short-term home purchase is completely out of your control: appreciation. The home simply has to appreciate enough to overcome the substantial costs of buying and selling. It typically will not do so during a three to four-year stint in school or residency. On average you will lose money.

Admittedly doctors generally buy more expensive houses than the typical American, but a doctor who becomes financially independent certainly does not have half their net worth tied up in their house. The house more likely makes up < 20% of their net worth, and usually less than 10%. If you become successful, the value of your house will not be a major part of your financial life.

Paying off a student loan with a 6-10% interest rate immediately eliminates the interest that you would be paying on that loan-which basically provides you a guaranteed after-tax return of 6-10% on that "investment." This should be very attractive given that for years the best rate of return you have been able to find on a guaranteed investment has been in the 1-2% range. There is essentially no justification for carrying that level of debt in order to invest money elsewhere.

The only time you lose with a variable interest rate loan is when rates go up a lot and do so early in the loan term. By taking out a fixed-rate loan, you are essentially buying an insurance policy against rates going up. Like any insurance policy, there is a cost. So if you can afford to run interest rate risk, then do so. Calculate out the worst-case scenario on a variable rate loan. If you can afford it, take it. The risk will probably not show up. If you cannot afford to take that risk, then you will have to insure against it with a fixed rate loan.

The second risk that lending companies take on is term risk. The longer you take to pay off your loans, the longer it will be before they can lend that money out to someone else (hopefully at a higher rate). Plus, a longer loan term increases the chance that you will default on the loan. Thus, if you are willing to commit to pay the debt off over a shorter time period, the lender is willing to offer you a lower interest rate.

I tell attending physicians and practicing dentists that they really need to be saving about 20% of their gross income for retirement in order to preserve their pre-retirement standard of living. Realize that getting that "savings rate" up to 20% will need to be a major financial priority as you move into your career.

A workaround that many doctors use is called a Backdoor Roth IRA, which consists of contributing to a traditional IRA (no deduction) and then converting it to a Roth IRA later (at no tax cost). However, this indirect Roth IRA contribution process is subject to a pro-rata rule that requires you to roll traditional and SEP IRAs into a 401(k) or similar plan.

A practicing dentist or physician has the potential to earn $200,000-$500,000 per year for the next 30-40 years. This represents a sum of $6-20 million. Converting this potential income and wealth into actual income and wealth is the greatest financial task of your life. However, there are risks that could show up in your life that would prevent you from being able to accomplish this task. One of the most common of these risks is an extended or even permanent disability. Insurance companies estimate that as many as one in seven doctors will be disabled at some point during her career. While many imagine this will occur in a sudden traumatic accident, medical illness is actually a more common cause of disability that prevents a doctor from working.

Most doctors do not have the skills or education to generate anywhere near their former income doing anything besides the practice of medicine or dentistry. They invested 10-15 years in their education and training to develop their specialized knowledge base and skill set. Not insuring this ability against such a prevalent risk with such serious consequences is simply foolish.

Since disability insurance is frequently used, it tends to carry fairly expensive premiums. Typically, a solid policy will cost you 2-6% of the benefit. So if you purchase a policy with a $10,000 per month benefit, expect to pay $200-$600 per month. This will be a major budget line item for you during your career, so try to get over the sticker shock quickly.

Good policies are own occupation, specialty-specific policies. This means that they will pay you the promised benefit in the event that you cannot perform the essential duties of your specialty, even if you could do something else.

There are six companies currently selling true own-occupation policies to doctors including Principal, The Standard, Guardian, Ameritas, Mass Mutual, and Ohio National.

Every purchaser should buy a partial/residual disability rider. This provides a partial benefit to you in the event of partial disability or during the recovery from a complete disability. Resident purchasers will also want to buy two other riders, The first is a cost of living rider. This rider increases the benefit each year with inflation beginning with the year after you are disabled. The second rider is a future purchase option rider. This allows you to buy a larger policy when your income goes up without a medical questionnaire or exam.

Nevertheless, disability is common enough among physicians that you should carry a policy from the time you leave school until the time you reach financial independence.

Get a $1-$5 million, 30-year level term policy in place as soon as possible. The jump in price from year 30 to year 31 is usually pretty dramatic, however, so it is best to make sure you buy a policy with a long enough term that you are certain you will be financially independent by the time the term is up. Once you have a nest egg sufficient to support your loved ones in the event of your death, you have no need for life insurance and can safely cancel the policy and save the premium.

If a company does not pay out any dividends, the investor will pay no taxes on its earnings until selling the shares. In fact, if the investor dies before selling them, those earnings will not be subject to income tax at all due to the step-up in basis. That means that when the investor's heirs go to sell their inherited investment, the IRS considers them to have bought it at the price on the day of the investor's death, and they only have to pay capital gains taxes on the difference between the value on the day they sell and the value on the day the investor died.

The smaller the company, the riskier the investment tends to be. Sometimes that additional return "premium" shows up and sometimes it does not, but on average over decades, smaller stocks have had higher returns than larger stocks.

In fact, over the decades, the data has been pretty clear that value stocks outperform growth stocks over the long run. However, just like with large and small-cap stocks, it might take a very long time for you to receive that "premium."

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There are some rules of thumb out there, perhaps the most common being to make sure you get 0.20% in extra yield for every year of extra duration, but those rules can break down at very high or very low interest rates. Since current yield is generally the best predictor of future returns with bonds, you want to make sure you are being paid to take on additional risk. Yield curves can flatten (meaning a invert (meaning a short-term bond has a higher yield than a long-term bond). long-term bond does not have a higher yield than a short-term bond) or even These events have some correlation with economic and stock downturns

For a high earner, that safe harbor is either paying 100% of taxes due (within $1,000) or at least 110% of what was due on last year's tax return. Thus an easy way for a self-employed doctor to calculate their quarterly estimated tax payments is to multiply their tax bill from the year before by 110% and then divide by four. Note that that figure has absolutely nothing to do with your income from this year or your tax bill for this year.

In addition to income taxes, your employer will also deduct payroll (or FICA) taxes from your paychecks. The two main payroll taxes are Social Security and Medicare tax. If you are an employee, your employer will pay half of that amount. If you are self-employed, you will be responsible for both halves, but will be able to deduct the employer half.

Investment income can also be taxed at a lower rate. If you have held an investment for at least a year before selling it for a gain, it qualifies for the lower long-term capital gains tax rates, which range from 0-20%, much lower than the 10-37% brackets used for ordinary income.

The upfront tax deduction inherent in a tax-deferred account is very useful for doctors, who are usually in one of the highest tax brackets during their peak earnings years. Typically, they are allowed to save tax on the contributed amount entirely at their marginal tax rate. In retirement, they can use the withdrawals to fill the brackets. It would not be unusual for a doctor to save money at 35% and then pay taxes on that money decades later at a rate of 15%.

While a health savings account is designed to used ideally to pay for health care, it can be used for any purpose you like. However, if you use it for something other than health care before age 65, you will have to pay a 20% penalty (and taxes) on the withdrawal. That is a bad idea. However, after age 65, it functions very similarly to any other tax-deferred account in that you only have to pay taxes on the withdrawal. In this way, it functions as a "stealth IRA." Another unique aspect of HSAs is that under current law you do not have to withdraw money from the account in the same year you spend it on health care. You can actually save your receipts for years, allowing the investments in the account to continue to grow before withdrawing money in an amount equal to the receipts tax and penalty-free.

Our next worthwhile calculation is your retirement savings rate. I think this is worth calculating once per year throughout your working career.This is simply how much money you saved for retirement divided by how much money you earned (again, "Total Income" from your tax return). Be sure to include contributions to retirement accounts, including any employer match, in both the numerator and denominator of the equation. If you will save 20% of your gross income for retirement throughout your career, you will be able to maintain your standard of living during retirement.

If you can charge 1% or more of the purchase price of a property as monthly rent, it is likely to "pencil out" as a good, cash-flowing rental property.

[Albert Li · Rating 5 out of 5]

great reference for healthcare students!

[Mehrsa · Rating 5 out of 5]

Well First of all I wish I had read this book in the first year of med school. :))) ha ha
After graduation you came to realizing some unlikable facts; mostly in finance :)
But this is adulthood, btw.

Here are my fav quotes from the book :

There is a saying on Wall Street that if you really want to get to know someone, you either marry them or manage their money. I have only been married once and do not plan on changing wives after 40 years. When people ask me if gold is a good investment, I point to my wedding ring and tell them it was the best investment I ever made. I hope you are as lucky.



As you see, the introduction section completely shows the honesty of the writer 😁, and he is completely right. In med school the most important and precious investments ate your close friends, partner in time, and connections.
The rest of the book is interesting too. It simply comes back to the moral stigma that doctors face during their life and career to accept money for their services. Like the narration of structural beliefs of this stigma in economic manner 😀

[Owen · Rating 5 out of 5]

Lots of good specific information on money and finance for those thinking of going to Med school. Good knowledge to have before going, and specific things to know and do on the road to becoming a doctor.

Lots of information on borrowing money for school and repaying it, getting insurance, investing, etc.

Many references / links to information on the author’s website and other locations.

The student loan and tax laws change all of the time, so the links to updated web pages are valuable.

There are good summaries at the end of each chapter.

Highly recommended.

[Nguyen · Rating 4 out of 5]

As a medical student reading this book, the first part contained mostly information that are obvious to medical and dental students. However, the last two parts were incredibly useful. The author broke down the concepts well that I believe readers with little experience in finance like me can easily understand. After finishing the book, I felt a lot more confident in my knowledge of the topics of loans and investing for doctors. 7.5-8/10

[Clarice Wall · Rating 4 out of 5]

Decent overview for students and a quick skim. I feel much more financially literate after reading it. Deducted a star because some of the information wasn’t as fleshed out as I would have hoped. He mostly wrote to single medical students/residents. Some of the advice wasn’t as helpful to me as someone in a dual-resident household. But it has given me tools and language to speak to a financial advisor in an easier manner.

[Julia Goebel · Rating 5 out of 5]

I am astounded to admit that I enjoyed reading a financial literacy book. I would also be lying if I said that this book didn’t stress me out - but also affirm many of my financial choices so far as a medical student. I can absolutely recommend this book to any pre-med and medical student getting a US education. It covers loans, living frugally, investing, and retirement in a way that is easy to understand.

[Travis Sorenson · Rating 3 out of 5]

Useful information. A lot of it is very basic financial literacy, (e.g. live frugally, attend a cheap medical school if given the choice) but some specifics were new to me (I think the difference between a traditional IRA and Roth IRA has finally stuck). Many of us may have a long way ahead of ourselves paying off our medical school debt, but by giving some financial consideration we can find ourselves wealthy. And personal finance is kinda fun besides.

[Mad Stork · Rating 5 out of 5]

A good book about personal finance: its biggest value is how specific it is, i.e., aimed at dental/med students. Worth reading for a general overview of the financial decisions you will encounter on this path, so far as I know. I especially enjoyed the bullet points for the main ideas at the end of the book.

[David G Fields · Rating 5 out of 5]

I would consider this book essential reading for any medical student. The inspirational books about uplifting stories and medical careers are fun but this is an actual PRACTICAL read full of information and advice that will change the way you live and spend. If I could give this more than 5 stars I would. *chef’s kiss*

[Lucero Chairez · Rating 5 out of 5]

A special thanks to Dr. Pinoli for lending me this book! I found it very insightful. Although I am only applying to PA school, this book offered an introduction to financial literacy that I never had. These are concepts that every adult should understand so I am glad to have had this introduction so early in my financial career. Overall a great book! Dense material, but worth it in the end.

[Michael · Rating 3 out of 5]

very skimmable, but some interesting bits throughout

general guidelines (from memory)

go to the cheapest med school ✅
live frugally ✅ [maybe a ❌ bc of spring break]
live like a resident 2-5 years as an attending
multiply living expenses by 25 to figure out size of retirement nest egg

[Smit · Rating 4 out of 5]

A really good book that cuts to the point very quickly. Although everything in here might not be very important for everyone, there is something very important for everyone going through the process of medicine and medical school.

[Scotty Killian · Rating 5 out of 5]

A great book for future health professionals on the basics of financial literacy. Includes sections on student loans, buying a home, and investing. I Absolutely recommend this book to anyone considering medicine, dentistry, or other health fields to read before, or during, their training!

[Thomas Finn · Rating 5 out of 5]

Such an important book for pre-med and medical students to read. I would even recommend this to current residents. It's never too late to get your finances figured out. I learned a lot in this book and will be reading it again closer to residency applications.

[Rohit Veligeti · Rating 5 out of 5]

As an incoming medical student, I found this guide exceptionally valuable for navigating the financial challenges ahead. The book breaks down complex loan strategies and financial concepts specifically for medical students without unnecessary fluff.

[Amanda Dryer · Rating 4 out of 5]

It was a very straight forward guide on some very complicated finances, this would be good to revisit later. However, some of the information is no longer up to date, because of the One Big Beautiful Bill Act. Still, it holds some great wisdom and principles.

[Aaron Early · Rating 5 out of 5]

Very informative read. Helpful as we start to look into the future.

[Elijah Cosovan · Rating 4 out of 5]

I found the first two parts helpful for myself. Overall the book provides good pointers on managing loans and finances, and teaches financial literacy concisely.

[Dan · Rating 4 out of 5]

Useful financial advice I'll probably skim through a few more times.

[Heidi · Rating 5 out of 5]

This book was extremely helpful. The first section was especially useful if you are preparing to go to medical school

[Jacob Cody · Rating 5 out of 5]

Every medical student needs to read this book first year and then again upon graduation. Very helpful. He does a great job explaining various relevant and basic financial topics in a simple way.