The followers of The White Coat Investor are on a broad spectrum in their approach to major financial activities (earning, spending, saving, investing and giving), ranging from zealous adherence to detached appreciation. Sometimes people look at it as the WCI community zigs, and I’ve appreciated being allowed to disagree on Vanguard, REITs, and tithes.
But WCI founder Dr. Jim Dahle didn’t disagree with me so much that he advised readers or me against using alternative financial products or investing in private REITs. In this column, I reflect on the ways I traded against WCI Advice (AWA).
Buying a house during residency
Thanks to Economic Outpatient Care, I bought an apartment in a very high cost of living area on the East Coast during my MD/PhD training. At the time, I had at least six years left in my program, and the “tipping point” when buying was cheaper than renting was less than five years in my area. Like many people, I thought renting was “throwing money away” and felt uncomfortable managing a six-figure sum that my parents had gifted me over the years.
When I discovered WCI a few years later, I started asking “what ifs” about my AWA home purchase during medical school. For comparison, I tracked my housing return and the hypothetical return of investing the down payment in an S&P 500 index fund. While my wife and I lived in the apartment, the comparison was flawed because of the implicit rental income. But as we increasingly wanted to move to another state for my residency, I was concerned about selling the condo.
My concerns were justified. As soon as I got into my preferred residency program on the West Coast, we put our condo up for sale. Due to the unexpected unique restrictions of our HOA, we were unable to sell it within three months, so we rented it out.
Being an out-of-state landlord has not been as difficult as we feared, thanks to our wonderful tenants and building management. The additional monthly income has helped our cash flow, especially considering the growing costs of our new daughter. As long as we sell in the next few years, we might have enough partial exclusion no capital gains tax to pay. Nevertheless, the lump sum of the sale would have given us more flexibility if we wanted to buy a house. . . at leastA few years after my first job as a supervisor.
Pronunciation: Still to be determined. But it seems that the AWA home purchase was not wise.
Buying a certified pre-owned vehicle instead of a beater
I’m not a car guy. When my wife and I needed to buy a car in 2023, many 10-year-old cars, which may not even qualify as beaters for WCI, met my minimum requirements: Bluetooth connection, rearview camera, and heated front seats. But used cars were still overpriced relative to their original MSRP and the prices listed on Kelley Blue Book, Edmunds or other websites.
Instead of buying a brand new car or a beater, we bought a three-year-old certified pre-owned (CPO) hybrid sedan for $26,600. The price was reasonable considering the lack of accident history, low mileage and cleanliness. Because it was CPO, the original manufacturer’s warranty still applied. We plan to drive it until we can’t drive it anymore, so we’re hoping that maintenance, insurance and fuel costs over its life will be less than what they would have been with a non-hybrid beater (gas is expensive on the West Coast!).
If we had spent half the amount and invested the rest, we would have had about $15,000 extra after ten years. Will running our CPO be worth the extra $2,000-$3,000 per year? So far it seems that way. We have confidently saved more than 20% of the gross family income. While I think the importance of the latest safety features is often overstated, I don’t think we would have felt safer driving a 10+ year old beater with our new daughter in the backseat. We sometimes wonder if we should have spent a little more so we could drive to trailheads that require four-wheel drive or greater access.
Pronunciation: Technically AWA, but I followed the spirit of the advice.
More information here:
The cheapest way to own a car
Why I keep my rusty car
Owning crypto instead of bonds
I’ve written about why I own crypto at its lows and highs, even though crypto is probably somewhere between life insurance and stock picking in terms of AWA investment strategies. Since Jim is also against owning 100% stocks, I doubled the investment in AWA by not owning any bonds. Nevertheless, I have tolerated my portfolio volatility through two stock market declines of more than 20% (three if we count the post-Liberation Day crash in 2025) and a major crypto crash in 2022. My risk tolerance has rewarded me with higher annualized returns.
Despite the aggressive risk profile of my ‘financial independence portfolio’, our asset allocation is more conservative across all financial assets. We have an emergency fund that helps us sleep at night. Morgan Housel, Charlie Munger, and Warren Buffett pushed us to have enough cash so that we would never interrupt compounding by withdrawing Roth IRA contributions or HSA funds. Only the most extreme scenarios would have us looking for promotional 0% APR credit card balance transfers. Until I start investing in a taxable account for financial independence, the size of our emergency fund will likely remain the same.
Pronunciation: AWA returned more money, albeit with a small asterisk.
Exiting small-cap value stocks
While I haven’t yet given up my allocation to domestic and international small cap value (SCV) stocks, I can recommend simplifying our asset allocation at the next annual financial review with my wife. My recommendation to own only the total number of domestic and international stock index funds (e.g. VTI, VXUS) will not be based on performance. As I write this, domestic SCVs are underperforming the broader stock market in 2025, but my favorite SCV investments AVUV and AVDV have outperformed VTI and VXUS, respectively, since 2020.
Instead, I’m more committed to simplicity* because I realized that future outperformance might not be worth the headache. I may seem weak of heart, since I have only owned SCV stock for a fraction of the three decades that Jim has held SCV stock. But it’s a matter of how I ended up in SCV stock imprint. When I first learned about personal finance and investing, the WCI and sources adjacent to the WCI (e.g. Rick Ferri, Paul Merriman) shaped my view on asset allocation. I have since discovered easier ways to Dublin from other finance educators respected by the WCI community (e.g. JL Collins, Big ERN). I’ve become ambivalent about SCV after reading compelling arguments for and against factor investing, and now simplicity could be the deciding factor against owning SCV stock.
It may be best to give up SCV sooner rather than later because my contributions will be even more important than my portfolio returns if I become attendee. “How much” I save will be more important than “what.” Because our 401(k)/403(b) contributions will make up the majority of our savings, maintaining our current allocation to SCV would be challenging. Employer defined contribution plans likely won’t have AVUV (or similar investments), so if the plan allows it, I’ll have to open self-directed investment accounts that don’t allow automatic investing (i.e. automatically buying AVUV with new contributions). Coupled with the added hassle, the lack of automation can negate any outperformance from AVUV.
Pronunciation: I don’t care if it’s AWA or if it’s going to cost me money. I’ll do it anyway!
[AUTHOR’S NOTE: *I acknowledge the apparent irony of owning crypto and abandoning SCV stocks, although crypto and stocks are more different than large cap and SCV stocks.]
More information here:
Partner-focused personal finance
The perspectives of an older investor versus a younger investor
‘You can’t do it all wrong’
While these decisions are AWA, I would not categorize any of them as a financial error or negligence. The first decision was before I discovered WCI, and it has had no negative impact on our financial well-being. The second and third decisions were intentional and reasonable. The final decision not yet made has the greatest potential to be a mistake. Even then, my assignment to SCV for less than a decade (or any of the other three decisions) will seem like a blip if I become financially independent.
My wife and I will face more financial consequences when I become a caregiver and our child is older. But if past behavior is a guide to future behavior, we will mostly do well and be just fine.
In what ways do you invest in AWA? Did you do most of it right? Have you made any big mistakes?
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