Forum Mailbag: Early Job Offer, Cost of Youth Sports, Domestic / International Rebalancing, And More!

There is so much great information on personal finance forums. I regularly participate on several message boards, including Bogleheads, White Coat Investor, and Rockstar Finance. This is a roundup of my favorite discussions happening around the internet.

1. White Coat Investor: Accepting an Early Job Offer from Home Program

Question: Antheus is in his last year of residency in a small, competitive field. He is currently doing residency in the South but has fairly strong family ties to the East Coast. However, he has been given a job offer by his home program with a fairly lucrative starting package: $300k base, 35k bonus, and 25k contribution to a 403b (total package 360k). However, he doesn’t see himself being in academics for his entire career and sees himself eventually going into private practice. His home program is not pressuring him into accepting the offer. He wants advice from the WCI community.

WSP’s Take: I would not accept the offer and explore the market for as long as the home program will let you. It is fairly common for programs to offer residents job offers very early in the job search process, and it is very tempting for residents to take the offer. It’s convenient and you know exactly what you are getting. Especially because you are not in love with either the job or the location, I would definitely apply to other jobs, especially private practice jobs on the East Coast, because this has both the practice setting and location you desire. Don’t settle (yet).

An interesting read related to this topic comes from Dr. Walter Nguyen, aka Senior Resident. He discusses the various types of (temporary) first jobs after residency. There’s always a risk when taking a position at your home program that you will become the “forever fellow,” where the senior attendings will always remember you as the young resident that they raised into a doctor. I’m not saying that this scenario always happens, but it’s something to keep in mind when you’re ambivalent about staying at your home program for your first job.

2. Rockstar Finance: The Cost of Youth Sports

Question: MonkeyFreeMe is starting to pay quite a bit for youth sports for his three kids as they get older. He has already spent $2,510 in the first 7 months of 2017. They are an athletic family (he and his wife both played NCAA sports) and all three children are also athletic. He was wondering whether it was worth paying up to $5,000 a year for youth sports.

WSP’s Take: Sports are wonderful, and if the kids enjoy playing and you enjoy watching them play, then I think this is money well-spent. I played tennis as a child and I’m happy that my parents invested the money in equipment and lessons so that I could meet my full potential in the sport (high school level).

That being said, money spent on youth sports should not be considered an “investment” with the potential return of an athletic scholarship. While it seems like the original poster has the pedigree and his children have the talent to potentially get athletic scholarships, this should be considered an ancillary benefit, not the primary reason for spending money on youth sports.

3. Bogleheads: Rebalancing Domestic / International Allocation

Question: Indexonlyplease wants to know how important it is to rebalance the domestic/international portion of your portfolio (he currently has an 80/20 domestic/international split). He understands the importance of rebalancing the stock/bond allocation of his portfolio, but he was wondering whether he could just let the domestic/international allocation drift without periodic rebalancing.

WSP’s Take: Rebalancing is an important component of portfolio management. It’s clear that without periodic rebalancing, the stock/bond allocation would drift to a more aggressive allocation than the original intentions of an investor. Essentially, indexonlyplease is arguing that because there are strong arguments for an international allocation ranging from 0% to >50% international, there is no reason why he can’t let his international allocation drift up and down from his current 20% allocation.

The problem is that this sort of laissez-faire approach to rebalancing could lead to a loss of investing discipline. When you want to add money to your stock portfolio, do you try to maintain the 80/20 asset allocation you originally wanted, or do you maintain whatever allocation your portfolio has drifted towards? I recommend rebalancing to your intended asset allocation, including the domestic/international mix.

4. Bogleheads: An 85/15 Stock / Bond Allocation at Age 35?

Question: Ancho and his wife are 35, and now have a healthy six-figure portfolio. They were able to withstand the 2007-2009 financial crisis without panicking, and they feel confident that they will be able to weather the storm when this bull market finally ends. He was wondering whether an 85/15 allocation is too aggressive of a stock/bond allocation.

WSP’s Take: Given the original poster’s ability to stay the course and not panic during the 2007-2009 recession, I think 85/15 is a perfectly reasonable asset allocation. He should be able to withstand any future bear market without panicking. Given that the asset allocation of Vanguard’s target date funds is 90/10 stocks/bonds for a 35-year-old, an 85/15 allocation is an excellent choice.

Wall Street Shares: 5 Articles I Enjoyed Reading This Week

1. Physician on FIRE: Can a Bear Take Away Your Financial Independence? — with the recent bull market, a lot of physicians have reached financial independence. But when the current bull market ends and a correction / bear market comes, can your FI card be taken away?
2. My Curiosity Lab: The Anatomy (and Pathology) of Financial Health — Dr. Curious shows us the many parallels between the human body and personal finance. Learning personal finance is a piece of cake compared to learning medicine.
3. Passive Income, MD: 40 Is the New 60 — while most people want to look and feel younger than they are, you should consider striving to be older than you actually are from the perspective of your time to retirement age.
4. Mustard Seed Money: Why You’re Not An Investor If You Invest This Way — I have frequently discouraged investors from trading, and I wholeheartedly agree with this article.
5. Live Free, MD: Yes, You Need a Credit Score — Dave Ramsey does a lot of things right, but debt is a tool that can be helpful to most physicians. Just don’t let it become your master.

What do you think? Do you agree or disagree with any of my responses? What’s your take on the topics in this week’s forum mailbag?