Forum Mailbag: Fellowships, Disability Insurance, Addicted To Saving, And More!

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

1. White Coat Investor: To Fellowship or Not To Fellowship (Pediatrics Resident)

Question: Lilsnappa’s wife is a second-year pediatrics resident, who is being encouraged by her residency program to do either a year as a chief resident or a two-year pediatric hospitalist fellowship. He is wondering whether doing this is a smart from a financial perspective.

WSP’s Take: 

For internal medicine residents, doing a fellowship, especially in competitive sub-specialties such as cardiology, gastroenterology, or hematology/oncology, makes a lot of financial sense. These sub-specialists make significantly more than primary care physicians. In these cases, it is financially smart to do the fellowship, although primary care physicians can make up some of the difference by saving more aggressively in their first years as an attending.

However, for most pediatric sub-specialties, there is not a significant bump in pay. Therefore, you should do the fellowship because you like the sub-specialty and not for financial reasons. I’ll admit, I am not familiar with the pediatric hospitalist job market. My guess is that most pediatrics residents, especially those at academic programs, should be able to obtain a hospitalist job without a fellowship. From a training perspective, my impression during medical school was that internal medicine and pediatrics residency overemphasizes inpatient medicine over outpatient medicine.

Assuming that she attends an academic residency program, she should be able to obtain that first hospitalist position. After that, she would likely be excluded from having to do a hospitalist fellowship (“grandfathered” in), as she will have years of hospitalist experience. If in the future, a hospitalist fellowship is required to continue working at her job, she can do the fellowship at that time. I find this to be a very unlikely scenario.

2. White Coat Investor: When To Buy Disability Insurance (Current 4th Year Medical Student)

Question: Res153 is a fourth-year medical student who just matched into anesthesia residency. He is eager to purchase disability insurance. He wonders whether he can purchase the insurance prior to starting residency in July. Also, he wonders whether he will need to wait until his PGY-2 year to purchase disability insurance because he has a general intern year (where he will be practicing very little anesthesia).

WSP’s Take: First of all, congratulations on matching to anesthesia and your eagerness to purchase disability insurance. It could not hurt to start inquiring about disability insurance as a medical student, but you may not be able to actually obtain the insurance until you are getting a paycheck from your new hospital. In terms of getting the insurance when you are a intern when you are not practicing anesthesia, I do not anticipate this to be an issue. I was in a similar scenario as Res153, and I was able to purchase disability insurance without any issues as an intern.

However, the best way to handle this situation is simply to start talking to disability insurance agents. I would refer you to White Coat Investor’s excellent list of disability insurance agents, who can answer all of your questions regarding life insurance and disability insurance.

3. Bogleheads: Can You Be Addicted To Saving?

Question: Ny_rn thinks they have a problem. They feel the need to contribute every spare dollar they have to their taxable account. They already max out their 403b and Roth IRA. All additional money goes to their taxable account, which they invest in VTSAX (Vanguard Total Stock Market). Specifically, they gave an example where they found $10 on the floor and sent it directly to Vanguard. They are asking whether this is a problem.

WSP’s Take: Clearly, you should be commended for having such a strong enthusiasm for saving. In addition, I applaud you for investing your taxable account money in a Total Stock Market Index fund. As I have previously written, this is my preferred allocation for a taxable account.

However, I do think it is a bit extreme to have sent $10 you found on the floor to your Vanguard taxable account. It is unlikely that this $10 contribution will make or break your retirement. Just as I have written in the past that you should avoid checking your accounts too frequently, you should also contribute to your investment accounts on a monthly (or even less frequent) basis. It will make you obsess less about money, which is a good thing.

4. Bogleheads: Switching Funds Within A Roth IRA?

Question: Moneyj is a 27-year-old medical student who had a Roth IRA set up by his parents at a young age. He had the Roth IRA at Edward Jones, and it was invested in six different Hartford funds.

After learning about low-cost index fund investing, he decided to transfer his portfolio from Edward Jones to Vanguard. He is interested in moving all of his investments into a Vanguard Target Retirement 2055 Fund. He is concerned that he would have to pay fees or taxes on these transactions to make this happen.

WSP’s Take: First, congratulations on making the switch from the high expense ratio Hartford funds to a low-cost Target Retirement fund with Vanguard. Because this is a Roth IRA, you do not need to worry about any fees or taxes from these transactions.

You will not have to pay any taxes on capital gains in the Roth IRA. You will also not have to pay any taxes on withdrawals from the Roth IRA, so long as you do not withdraw the money before retirement age. Feel free to make the switch as soon as you want. I would just check that there are no short-term trading fees associated with your current mutual fund investments. I am sure you could call Vanguard to ensure that there are no fees associated with a switch to one of their index funds.

Wall Street Shares: 5 Articles I Enjoyed Reading This Week

1. Some Random Guy Online: Low-Cost Investing: Is There a New Sheriff in Town? – an interesting article about the price wars between Vanguard, Fidelity, and Schwab. SRGO started with Vanguard early in his investment life and has stuck with them. I’m a Fidelity guy for similar reasons.
2. Smart Money MD: How Would Your Life Change If You Earned An Extra $100,000 A Year? – investment returns are the most important driver of your future net worth, but your salary is a close second. SMMD looks at how three hypothetical doctors might react to an extra $100,000 in income.
3. Big Law Investor: Defeating the Imposter Syndrome – it sounds like doctors aren’t the only people who are “faking it” when they finish professional school.
4. The Retirement Manifesto: Why Is Asset Allocation Important? – Fritz throws down a good article with some nice pearls about a usually boring topic.
5. Get Rich Quickish: Make It Be A Good Day: Ty passes on a reminder his father gave him during his middle and high school years. A helpful reminder to us all when we want to complain about life.

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?