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The Sunday Best (05/21/2023) – Physician on FIRE

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Physician on FIRE has partnered with CardRatings for our coverage of credit card products. Physician on FIRE and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.

The Sunday Best is a collection of articles I’ve curated from the furthest reaches of the internet for your reading pleasure.

Every week, I scan hundreds of headlines, read dozens of posts, and bring you the best of the best to save you time and mental energy.

Financial Independence (FI) is a primary focus, but it’s an awfully broad topic. I tend to approach FI and early retirement from a fatFIRE perspective and through the lens of a physician, so expect to see those biases in the selected articles.

Related topics that have become recurrent themes include early retirement, selective frugality, tax issues, travel, physician issues, and of course, investing.

For more great articles, take a peek at The Sunday Best Archives. Now let’s get to the best… The Sunday Best!

 

 

 

FIRE is alive and thriving in 2023. David Baughier with Fiology lists the Top 10 Best Financial Independence Blogs in 2023 (and a few bonuses!).

 

Could there be an entrepreneur in you just waiting for an opportunity? The Motivated MD explains 8 Reasons Why Doctors Make Great Entrepreneurs.

 

With Money Market Funds paying good interest and banks failing, Dr. Nirav H. Shah, a physician entrepreneur and business owner, answers two important questions. Is My Money Safe In a Money Market Fund at a Brokerage and What Happens If It Goes Bankrupt?

 

Entrepreneurship can be fun, as Dr. Will Flanary, aka Dr. Glaucomflecken tells Passive Income MD. How I Fulfilled My Calling as Both a Doctor and a Comedian Through Social Media.

 

Entrepreneurship can be freeing, too. I’ve taken my family to twenty-some countries in the last few years, spending up to two months in some of them. A Digital Nomad’s Guide on How to Thrive and Survive Living Abroad from The Female Professional.

 

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If I had read this a couple years ago, I’d have tens of thousands more Delta Skymiles than I do now. A Purple Life shares Lessons Learned After 2 Years Of Airbnb Nomad Life.

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I’ve often said that I don’t vacation anymore. The White Coat Investor articulates what I mean when I say that. It’s a Lifestyle, Not a Vacation.

 

Our servers were bewildered by our attempts to tip in Australia and New Zealand. This article and infographic from Visual Capitalist explains why. Mapped: How Much Should You Tip In Each Country?

 

Switching gears to the country where most of us live, Mark Miller with Morningstar considers a proposal. Would Raising the Full Retirement Age Really Save Social Security?

 

Our tax code is applied in strange ways, but they don’t have to be mysterious. John Yeigh with Humble Dollar demystifies That 28,000,000% Tax in a post that impacts people like my parents and many other retirees considering Roth conversions after age 65.

 

Have you realized capital gains this year? You can still defer the taxes for a few years and get tax-free earnings on an investment held for 10 years in an opportunity zone. AcreTrader discusses the benefits of Investing in Farmland Within Qualified Opportunity Zones.

 

Do homeowners enjoy a lower inflation rate than renters? Big E.R.N., Ph.D. from Early Retirement Now digs delightfully deep into the numbers. Accounting for Homeownership in (Early) Retirement– SWR Series Part 57.

 

It’s a shame that investing in real estate is not as simple as buying VTSAX. As Ben Carlson with A Wealth of Common Sense reminds us, There is No Index Fund For the Housing Market.

 

There is no time like the present to take advantage of the final days of the 80,000 point welcome bonus on the excellent Chase Sapphire Preferred® Card that ends this week, presumably reverting back to the previous 60,000 point bonus. Those additional 20,000 points are worth an extra $250 in travel, and they’re yours as long as you act before May 25th at 9am when the limited-time promotion ends (and you meet the attainable $4,000 minimum spending requirement within three months).

 

Is now a good time to buy I Bonds? An updated discussion for both current  and would-be bond holders now that inflation and interest rates are tempered. How, When, and Why to Buy I Bonds in 2023

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What to Do About Those I Bonds

 

When I Bonds were paying 7.12% for the first six months back in 2021, these were a safe no-brainer investment. My wife and I each bought $20,000 worth.

When the rate jumped to 9.62% in the spring of 2022, we added another $10,000 to each of our balances for a total of $40,000 worth that is now worth about $44,000, a balance that does not credit us with the last three months’ interest.

As inflation cooled in the fall, the new rate offered was 6.89% and now new investors will get 4.30% on their I Bonds purchased in May through October of 2023. The variable rate, currently just under 3.4%, will fluctuate, but the 0.9% fixed rate is locked in for the duration of ownership.

Those of us who got in on I Bonds in the last couple of years are now getting 3.38% to 4.3% on our I Bonds, depending upon when they were purchased and whether or not they have a 0%, 0.4%, or 0.9% fixed rate to supplement the current variable rate of about 3.4%.

Those interest rates are still respectable and comparable to many high-yield money market and savings accounts. As inflation continues to subside and the variable interest rate declines, however, we may find better uses for that $40,000 plus interest that has accumulated.

Remember that you’re locked in for the first 12 months. You can’t sell during that timeframe. Also remember that the tax on the interest is tax-deferred until you sell. It’s a nice feature, although it does mean that all of the earnings will be taxed in the year in which you cash out.

Finally, recall that if you sell within five years of purchasing them, you’ll lose the most recent three months’ interest. That’s just over $100 per $10,000 invested at the current 4.3% rate. When you log in, the balance shown already reflects the forfeiture of the most recent three months’ worth of interest. It gets added back in at the five year mark.

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One final consideration for early retirees is the fact that the interest can be tax-free for certain taxpayers if the I Bonds are cashed in and used for eligible higher education expenses. There are a number of criteria that must be met, and the one that will exclude just about any working physician is that your income must be under about $100,000 for singles and $125,000 for married couples filing jointly. See the precise figures for the phaseout ranges above, but it’s less than most working professionals will earn.

We’ve had ours for 14 to 18 months. Does it make sense to hold them for another three and a half to four years? Time will tell, but I’m holding them for now. I do think it’s a very safe investment despite what the headlines might say about the U.S. defaulting on its debt. But that’s a story for another day…

 

 

From our friends at Forme Financial, a site sponsor: Did you know physicians are one of the most highly taxed professions in the US and are more likely to get audited than most taxpayers? An expert advisor can help you identify ways to potentially reduce your tax burden and to avoid common tax mistakes made by doctors. For example, they can provide guidance on how to

  • Assess tax planning opportunities based on 1099 and W2 income
  • Evaluate backdoor Roth opportunities
  • Determine which retirement vehicles are right for you
  • Utilize tax-smart investing techniques
  • Leverage charitable giving for maximum tax benefits 

At Forme Financial, we provide 360-degree wealth management exclusively to physicians. Our expert advisors are passionate about helping our physician clients save time and money, so they can focus on what they do best.

Reach out to a Forme Financial advisor today to find out how we can help you maximize your financial potential.  

 

 

Have an outstanding week!

-Physician on FIRE

 

Physician on FIRE has partnered with CardRatings for our coverage of credit card products. Physician on FIRE and CardRatings may receive a commission from card issuers.



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