Tag: investing

Low-cost investment showdown: where do you stash your funds?

I opened my first investment account in medical school at E-Trade.  I was roughly $160,000 in loan debt, but I opened a Roth IRA along with a brokerage account at the same time.  I believe that stock trades at E-Trade were only $9.99 a trade, which was one of the lowest in the industry.
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I knew nothing about indexing at the time. Never heard of Jack Bogle or Vanguard. That was probably still okay, since I did not have much disposable investment income at hand. Now that I am more attuned to the available options in the market. The following are a list of where I continue to place my investments and my impressions so far:


This was my first custodian after I started indexing my funds.  Great low-cost options are available, along with Admiral funds for even more savings after you’ve reached a certain amount.  There are essentially no service fees as long as you commit to electronic documents. The website interface is relatively basic but functional.  I wished that Vanguard offered more detailed analyses on funds, but most of the time I already have done my homework about which funds to purchase prior to venturing on the Vanguard website.
My second pet peeve of Vanguard is that there is no easy way to calculate an annualized rate of return on my investments.  The Vanguard interface has a “Balances Over Time” tab that calculates an overall growth of your funds like this:
A 10.5% rate of return is deceptive if you don’t account for the duration investment. My annual rate of return is a meager <4%!

Sometimes you don’t want to load up a spreadsheet to do these calculations by hand. I still keep my investments in Vanguard, but I have since started to diversify even more, as we will see below.


I started placing funds in Fidelity over the past year, due to a slightly lower expense ratio, and the fact that they offered airlines miles on keeping funds with them.
As I had written before, you can earn up to 50,000 Delta, American, or United airlines miles by stashing at least $100,000 in Fidelity. You can also receive miles for smaller investments.  The Fidelity index fund options track all of the standard markets that Vanguard funds do, so you don’t really sacrifice much if you are a Vanguard loyalist.
I like the Fidelity interface.  There are clear cut menu options, customer service is relatively competent and prompt.  My employer uses Fidelity for its 401k custodian, so I’m able to reduce the number of logins to keep track of.

Charles Schwab

I opened a credit card account with Charles Schwab years ago when they offered a free iPod Shuffle after the first purchase. I promptly closed my account a year later when I realized that I was not getting any further benefits from using the card. I never even considered their investment wing until now, because their expense ratios were horrible. Not anymore:
Schwab may have the lowest expense ratios to date!

This is only a recent change since March of 2017, presumably because of the competition in the market, especially from robo-advisors who also charge minimal management fees.  I plan on placing all of my future investments in Schwab.

Where do you keep your investments?
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How should the Smart Money MD portfolio be rebalanced?

The beauty and challenge of investing is that there is no single ideal portfolio. Do you keep all of your investments in equities or split the difference based on your age? Is there a better formula, similar to how we estimate peat heart rate during exercise (220 – Age = maximum heart rate)? Or do you go against the grain and just throw all of our investments into real estate?

Just as how there is no single method to pass your boards, there is no single solution that we should all follow to invest our earnings.  The winning portfolio is the one that leaves you with adequate funds during your entire withdrawal timeline. This element of unknown is why many of us choose to prolong our working career.  I hope that I won’t have to do the same.


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How did I design my investment portfolio?

I’m embarrassed to say that I started late in the finance game. I blame my shortcoming on working in a conservative field that has an overly long vesting period.  Medicine is one of the most conservative careers out there.  There is nothing radical in becoming a doctor. You study hard in college, take your MCAT, and apply for medical school. Rinse and repeat during every step of your medical career. Once you master the basic skills and keep working hard (very hard), you can really become a kick-ass doctor.  You just have to trade over a decade of your life to do it. By the time I was studying for my USMLE, @MillenialMoney had already started his journey to make millions.

Finance, on the other hand, is full of uncertainty.  Sure, there is a science to it, but I wasn’t bright enough to open a open on the subject or read a blog or two.  I spent my waking hours learning how to treat prerenal azotemia.  The problem was that I did not realize how important the financial aspects of medicine were.  I had a negative net worth with zero cash flow during medical school.  Someone in that situation isn’t like to take too many chances.

The moment I started earning minimum wage as a resident, I bought individual stocks.  The stupid way.  I bought stocks that were at their 52-week high and ready to tumble.  Tumble like the time you decided to teach yourself how to ski at age 30 by watching some Youtube videos.  I bought stocks without knowing what a stock really was.

That’s right. Indiscriminate stock purchasing marked the birth of the Smart Money MD investment portfolio.

The current Smart Money MD portfolio.

Fortunately I had so little disposable income that the individual stock purchases didn’t probably only set me back a year or two in the grand financial scheme. Over time, I did begin to index and bought funds that my employer 401k offered. With job changes came different options, and hence, the current Smart Money MD portfolio:

I love making spreadsheets during my free hour every week!

Those of you investment buffs will see that there is a bit of redundancy in the portfolio. Fidelity’s FSTVX fund essentially mimics the total stock market while Vanguard’s VINIX follows the S&P500.  Both of these funds already invest in Berkshire stock, which I have purchased separately.  In fact, most of the individual stocks that I hold are replicated in the index funds! Live and learn.

What do I intend to change in the portfolio?

The Smart Money MD portfolio is tilted towards equities, which has made 2016 a great year in growth. However, these bull runs don’t last forever. Eventually everyone will need and should have a means to temper these unsustainable runs. I have been more interest in short-term CD’s over bonds as fixed sources of income, although tax-free municipal bond funds also seem to be appealing.

The downside of CD’s is that they are taxed as ordinary income. For high-income professionals in the growth phase, this means paying taxes at the marginal rate. At the current interest rates, one would be lucky to keep up with inflation in fixed assets. Not bad, but also not great.

Other options I’m currently considering:

  • Surgical center investments. Yes, as a doctor all sorts of investment opportunities are thrown at you. Doesn’t mean that they are great, but they can be a great way to generate ancillary income. Some of these investment opportunities really seem too good to be true (and some are), but they are interesting propositions to entertain.
  • Real estate. Who doesn’t like a great flip story? Or a cash flow opportunity in a rental property? Up until now, I have only been interested in REITs as a way to get into the real estate market simply because anything else appears to be too time consuming. Fortunately there are additional startups and services that allow investors to purchase property (or shares of property) after vetting their location and potential growth options. I guess these startups are an in-between for busy working people.
  • Dividend portfolios. This is more of a variation of handpicking equities that produce some higher dividends. We’ve seen our share of portfolios with hand-picked high-yield dividend stocks like with @DvdndDiplomats. Very interesting way to get more involved with individual stock picking. However, I have been loathe to spend my free time reading about individual stocks.

How much should doctors even care about in their investment portfolios?

A good number of my colleagues are loyal users of Roboinvesting services like Betterment, Personal Capital, and to a lesser extent, Motif. I personally only use Personal Capital for tracking my expenditures and investments mainly because I didn’t feel that I had enough disposable income to invest when I started my first job. However, our needs change over time and I might reconsider in the future.


You might also like: A Financial plan for busy people.


I think that Roboinvesting isn’t a horrible idea. It actually sounds like a great idea (Note: no financial interest in the mentioned companies).   Most doctors aren’t going to retire early, so hyper-saving isn’t the goal.  I don’t expect every doctor to map out her investments in multi-page spreadsheets, and you don’t have to do it to get rich. You just need to watch your expenses (avoid time-shares, “investment clubs”, and divorces) and keep a strong savings rate.

What suggestions do you have to diversify the Smart Money MD portfolio?

Earn some airline miles while investing in low-cost funds

I like airline miles and fancy hotels just like everyone who has gotten themselves in this predicament. There are practical ways to redeem these perks (converting to cold hard cash), and highly luxurious ways of capitalizing on them (like flying in first class with your personal butler) that don’t actually save you money but simply allow you to travel and vacation in style.

In any case, those of us who are looking for low-fee ways to invest can choose low-fee funds from Fidelity while earning airline miles. If you are able to put $100,000 in a taxable investing account in Fidelity for at least 9 months, they will award you with 50,000 airline miles! They have offers for American, Delta, and United miles.

This can translate into at least one free domestic airline ticket (maybe $400) or something fancier if you are into that game (this may be a topic for future posts).

Fidelity lowered its index fund fees earlier this year to compete with Vanguard’s fees. The differences in savings are negligible over the long term, but worth noting:

Chart courtesy of Fidelity Investments

For instance, Fidelity’s S&P 500 index fund has an expense ratio of 0.045%, compared to Vanguard’s at 0.05%.

You can still receive a certain number of miles if you put in a smaller amount. I typically keep my taxable investments inside a Vanguard account, but given the recent change of lower fees with similar funds and airline mile perks, I plan to roll in some uninvested funds over the next year into my Fidelity account.


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Note: I do not have any financial interest in Fidelity or any of the airline affiliates. All of the links in this post are public links.

What is Motif Investing and Does it Belong in My Portfolio?

Note: I do NOT receive any commissions from writing this review, although I wish I did. All opinions expressed in this article are not influenced by any third parties. Any information should not be construed as investment advice either. 

Update: Motif reached out to me, and mentioned that they do have a dividend auto-reinvesting program. This program is different from a traditional DRIP in that it allows you to reinvest dividends in any other Motif fund. The article has been updated to reflect this change.

I recently came across Motif Investing, a startup that focuses on an alternative way of investing. The company was co-founded in 2010 by Hardeep Walia and Tariq Hilaly. They are both smart guys with business degrees from Wharton and HBS, respectively. Hardeep was an executive at Microsoft while Tariq belonged to Alliance Bernstein, a large hedge fund. This means serious experience with money.

What is Motif Investing? 

I would consider Motif Investing a hybrid between individual stock picking and indexing. The premise is that in a “motif”, you have up to 30 stocks or exchange traded funds (ETFs). Each stock in the motif shares a common outlook, and one of the presumed advantages is that you can own a set of stocks that provide an appropriate amount of exposure to the market.

There are at least 150 predefined Motifs to choose from. When you first sign up with them, you can complete a survey to analyze your “Investment DNA”. Some Motifs include Horizon Models, “Biotech Breakthroughs”, “Housing Recovery”, and “Eating Out”. Obviously each motif has a catchy title to represent your investment sentiment. The “Eating Out” Motif holds stocks in fast food chains, casual dining chains, cafes, and fine dining establishments.

How Much Does Motif Investing Cost?

One of the advantages of Motif Investments is that the purchase of each Motif is CHEAP. You are charged $9.99 for a purchase that contains up to 30 stocks or ETFs. This means that each stock trade is only $0.33! I don’t have the details on how Motif is able to accomplish this but I’d imagine part of this comes from have a set volume of trades and some relatively deep pockets in their funding. I don’t know if the trade costs are part of the burn rate of the company.

If anyone from Motif wants to enlighten me, please contact me through the website!

All of the Horizon Motifs incur no transaction costs as well. For instance, if you purchase the Horizon 1-Year Aggressive Motif, you will get a mix of VTI, BNDX, BND, VXUS, IVR, and GSG at no trading costs! Great deal, if you ask me.

If you decide to customize your own motif, you are charged $4.95 to change a single stock or $9.99 to change your entire motif.

What Advantages Does Motif Investing Confer to Me As A Doctor?

As mentioned above. Spending less than 10 bucks for 30 stocks is a steal. If you are computer savvy and a data junkie, Motif Investing offers you all of that. You get data points of all of Motifs, nice graphs, and plenty of information to maximize your “control” of your portfolio. The amount of data available to interpret is amazing, and Motif’s interface is a data junkie’s paradise.

There is a strong social presence on Motif. There are commentary options throughout the entire website, and you can also share your motifs on Facebook, Twitter, and Linkedin. Is this an advantage? I’m not sure, but you have all the options to share your investing prowess to the world. Conversely, the world also has the opportunity to critique your investments as well.

What Disadvantages Does Motif Investing Have?

For the first several years of existence, Motif did not have a DRIP option to reinvest your dividends.  Investors lost the ability to dollar cost average commission-free, albeit in small amounts.  They now offer their own auto reinvesting program which allows you to invest any cash dividends in any other stock or ETF the service offers. Think DRIP, but only better.

While not exactly a disadvantage, there’s no magic formula in investing. Motif provides a framework to select categories of investments that suit your interests, but it’s unclear to me that long term this will confer advantages. Yes, you feel like you are in more control, but if you look at many of the motifs available, they have incurred losses over the past 12 months, just like the how their underlying stocks have performed individually.


I think that Motif Investing offers an interesting spin for the techie world. You get some advantage of an immense amount of data to make your decisions, and you might get some diversification from owning up to 30 stocks with one trade. However, you still aren’t protected from human idiocy. If you decide to play margin (which is available) and lose big, you’re still out some money. If you like buying and selling to time the market, you can still do it and incur transaction fees.

Most non-finance professionals (read: doctors) aren’t really going to benefit largely from having these options. We doctors as a whole are bad businesspeople and bad investors. Even those of us who claim to understand biotech firms and have medical knowledge of pharmaceuticals are not necessarily going to do well with biotech stocks. Instead of buying individual stocks in a particular genre, you get up to 30. Big deal. If you’re going to get rich with stock investing through Motif, you’ll likely have gotten rich without it.

I may consider using Motif in the future when I have ancillary income. It gives some more diversification to individual stock picking that I itch for, but I definitely won’t put all of my taxable income in Motif.

What opinions do you have for Motif Investing? Have you had experience investing through them?

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