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.