Author Topic: Retiring and going to med school... What to invest in and when to pull the trigg  (Read 3344 times)

banker22

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Hi all

I have been a long time browser of this board and I own (and have read most of) the book. I am 29 years old, recently married, and work as an investment banker in London. My goal is to 'retire' in 2 years to go back to medical school to retrain as a doctor. I got in to medical school a few years ago but decided against it, and have always regretted the decision. If I won 100m right now I would go to med school. This, essentially, is my retirement plan.

I make great money (around 130k-160k per year and increasing exponentially each year) but live in a very expensive city. I estimate I would need around 16k per year to support myself (not including tuition). My wife works and makes good money so this would help, but I'm assuming she will make just enough to support herself. There are definitely synergies here that we should be exploiting...and my goal is for us both to live off of her salary for the next 2 years, while saving all of mine. This should result in 170-200k saved.

I currently have the following debt:

- 40k undergraduate debt at 2.5%
- 20k credit card debt at 15-20%

Medical school will cost around 9k per year and living will cost 16k (not including interest/principal payments on my student loans). So max price would be 25k per year times 4 or 5...so let's say 125k Obviously there are scholarships and also low interest loans I could take out to cover a lot of this. The minimum (if I took out all loans to cover as much as possible) would be 55k.

There are two ends of the spectrum with how I'm planning to save / invest, and the correct answer probably lies somewhere in the middle.

One end (what my family advises and I certainly see the merits of):

Save everything in cash essentially, earning just enough interest to keep up with inflation. Maybe some lower risk investments like fixed income, some equities but probably not given current state of market. Be totally secure throughout medical school, and finish debt free. Pay off my current student loan also and obviously my credit cards asap. Would still be left with 30-50k cash to either invest or buy a house to live in. Incredibly safe...and I would finish school with no debt. But wouldnt really set me up for retirement down the line.

Other end (what is naturally more my tendency, although I can see merit to both sides):

Keep my current student loans as they are at a low rate. Take out maximum new student loans at low rate. Save 30-50k cash buffer but invest the rest in real estate. I've been speaking to lots of US turnkey providers and am visiting one while in the US next week. I could put in 120-150k and generate 10-12% cash on cash conservatively, or around about my living costs. This hopefully would go up over time, and by later in life would be a nice extra income (and fully paid off). Would also take a lot of pressure off of me as I would always have another income stream...a big weight off of my shoulders. Also worth noting that docs in this country make nowhere near as much as US, although haven't ruled out a move back to US for residency (am a US citizen). However... If/when there is another crash, rents could drop, cash flow could dry up, could foreclose. Banks could sue me personally for the difference between the mortgage and the foreclosure value... Wouldn't be fun during med school. Also getting calls from property manager about the boiler at 4am...etc. How much did rents fall during the crisis though? I know not at all in some regions. With the current deal I'm looking at, rent would have to drop 30% for me to break even in cash flow terms. However, between the old loans, new loans, and mortgages I would have a hell of a lot of debt.

I guess option 3 is work another 1-2 years and start school 3-4 years from now. By then I could've saved 450k but am starting school at 33...and the thought of waiting that long is depressing...but I could do it. What's another 1-2 years if it means financial security forever? That said, doctors still make good money here: 80-150k+ when fully qualified 'attendings'...so will never be poor. By this time, equity markets will likely have crashed again and I can comfortably pile a lot of the cash into an index fund. Or depressed real estate or whatever. However, I am currently working 5-10 hours per week volunteering and doing med school research in addition to working 70hrs ... Not sure I can keep this up for 3-4 more years. And my wife would rather we do it in 2 years...but this is likely flexible. Am I being selfish / stupid here? I'm sure most people would take that deal any day...ie 3-4 more years to have saved 400k and be able to retire forever. So what if i start med school at 33...still young in the scheme of things. Theres also the question of getting into med school at this age...but i think that will be fine.

Would be good to hear anyone's thoughts. Sorry if this is a bit jumbled - I am writing on my phone as don't want this to be saved on my work computer ! I will probably edit later when I get home.

affordablehousing

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lots of options here. good news, you'll have tons of money no matter what you do. when ibankers become doctors they're often higher paid specialists like surgeons which I'm sure would provide you with a over 16K salary even in the UK. from my wife's experience graduating from med school without debt is nice. if you like the easy money and the industry stay in banking, if you really want to be a doctor go to medical school. I say figure out what you want to do first then go after it. at least in the us, becoming a doctor is at least a 7 year endeavor, so if you save up money now and don't start until you are 32-33, you won't practice medicine until you're 40. From my wife's experience being an older med student can also be a little stultifying socially. If it's what you want to do cut the cord and go for it.

forummm

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Quote
I have been a long time browser of this board and I own (and have read most of) the book.

What book are you talking about?

Regardless, if you're sure you want to get into medicine, then you should probably follow your interests. Just be sure you know what you're getting yourself into. Medicine in the US is a mess and it takes a long time of working before you see a return. So you'd need to have a career at least into your late 40s for the switch to make sense if you did it US style. I don't know what it's like in the UK. But think about it hard. If you can keep taking the money at your current job and stashing it away, you could just retire and then go to med school for fun. Just make sure you really know what you're getting yourself into. Talk with the kinds of doctors you'd want to be emulating.

banker22

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Thanks guys. I'm well aware what I'm getting into, having spent hundreds over hours over several years volunteering, shadowing, conducting medical research, etc. It's just a question now of how best to save and execute!

BicycleB

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If you're going into med school primarily for personal reasons (joy, to help people, etc) why would you add an unnecessary layer of investment complexity such as investing in foreign real estate and carrying a bunch of loans?

As a previous poster pointed out, you should have plenty of money later in any case.  Why add short term risk when there is no significant long term advantage?


banker22

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If you're going into med school primarily for personal reasons (joy, to help people, etc) why would you add an unnecessary layer of investment complexity such as investing in foreign real estate and carrying a bunch of loans?

As a previous poster pointed out, you should have plenty of money later in any case.  Why add short term risk when there is no significant long term advantage?

As I said above, the advantage would be:

"This hopefully would go up over time, and by later in life would be a nice extra income (and fully paid off). Would also take a lot of pressure off of me as I would always have another income stream...a big weight off of my shoulders."


Doubleh

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Just a quick note to say that if you didn't know it already, student loans here in the UK behave very differently from those in the USA so all of the discussion on the site about trying to clear student loans won't really apply to you. As they are set to carry interest at the rate of inflation or lower you should probably plan to carry the loan for as long as you can since its real value will erode over time. Also bear in mind that when your income drops away in med school, you won't have to make payments to the loan. In fact it actually behaves more like a tax than a loan - Martin Lewis has a great guide here:

http://www.moneysavingexpert.com/students/student-loans-tuition-fees-changes

Secondly go for it, I have a friend who moved from software programming to med school about 6 years ago and is now in specialist training. Every time I talk to him about being a Dr he gets a huge smile. But be prepared that med school is tough

Thirdly I wouldn't touch those turnkey rental providers with a bargepole. I don't know anything about any specific schemes your looking at, but in general terms if it looks too good to be true it probably is. Stick with cash for what you need for med school and look at a balanced portfolio for anything you dont need in the short term. As a Dr you'll be earning a decent salary for several years and have a decent pension so dont sweat it too much.

Potterquilter

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The turnkey rental thing adds a whole level of complication to your plan. Is it a timeshare like deal? 


affordablehousing

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med school and residency suck no matter which way you dice it. I've heard better things from doctors who then went to bschool to become healthcare ibankers / health tech vc's to make more money than bankers going to med school to save the world. I say either get going applying so you can actually be a doctor before you're too old or by the time you save enough money to not pay anything for med school you could retire and do nothing! By the time you save up the $500K you'd want, you're what, 35? At that point who wants to go from a nice easy life to 7-10 years of 80 hour a week studying/standardized testing/hospital drudgery and start over saving up another nut to retire on from 45-55? as for turnkey rentals, I'm assuming condo units in a second tier town, what's the risk? It's also a lot easier to load up on lending club if you want regular risky payouts.