 So what would be your guess on the average savings rate of a doctor? Now I'll get back to it because it's super important because in this episode we'll be getting to exactly how much I save, how much I invest, exactly the various avenues that I'll be investing in. Let's get into it. Hey guys, welcome back to channel. In case you're new here, my name is Lakshman, internal medicine physician and here at the MD journey we help you succeed on whatever journey you're on but doing it with less stress. Now in today's video, I want to talk about money because money is such a taboo topic and if you don't come from money, you don't really understand how to make it, how to earn it, how to save it, and how to invest it. Now this is definitely my kind of background and so in this video, I'll be breaking down roughly how much I'm making, how much I'm saving and how much and where I'm investing my money as well as my overall investment strategy going forward as I'm done with the presidency. And at any point in the episode, if you're enjoying the content that hit that like and subscribe button on YouTube, you'll get a big brownie point from me also tells me that you're enjoying the content, but obviously we have to get into it. So let's get into the first part, which is how much I save and make. Now going back to my initial question, which is what do you think the average savings rate of a physician is? Now if you want, you can pause the video here and comment down below. I'll give you two seconds. Okay. Now this is an older survey, but I'm assuming that the overall approach of how physicians spend and save their money is roughly about the same. But in 2013, when asked, physicians were saving about 13.5% of their income. So if you're a doctor who makes about $200,000 after tax, that's about only $30,000 that you're saving each year. And for me, the more shocking part is on the flip side, that means you're living on about 83% of your income or 170,000 each year. That means you have to grow such a big nest egg to have something you can pull from by the time you're ready to retire around 60 or 65. Now data like this always blows my mind. It's the same reason why my wife and I have adjusted how we do our savings and our investments, mainly because we just don't want to be somebody who has a really good salary, but somehow still has to wait till they're 65 to have a nest egg big enough to support ourselves. And so our overall goal right now is 28 year olds and the very last year of residency is to save as much as possible. So now we can finally get into how much I make and how much I save. And the overall principle in regards to the savings is something that I call reverse budgeting. Now this is a strategy that my wife and I use that I've talked about in various other videos here on this channel. So if you guys are interested, I'll link down below other finance videos that we've made and the finance playlist down below in the description. But basically the way this works is we come up with a list of kind of monthly costs that we know are either predictable or something that's necessary. So the rent that we have to pay or electricity or heat or water, as well as things like life insurance, disability insurance, and other costs that we kind of know are going to be predicted and we really don't want to get rid of them, which for me is AKA a nice internet speed. And so once we come up with the total for our essentials, then we really ask ourselves like, how much do I want to save? And whatever's left is how much we have left to spend on other things like food and gas and transportation. And that forces us to be creative. We know we're going to travel more because we're going back and forth to visit our parents, then maybe that means our grocery bill has to be a little bit more lean and not so fancy. And on the flip side, if we're not spending money elsewhere that we may have done a month ago, then now we have a bigger budget to do things like go for a very nice date night or have some fancier items from our grocery list. But once I add my monthly expenses, including my rent, my food, my transportation or dog, expensive, etc., but not counting my health insurance, the total cost of my expenses every month comes to about $2,400 a month, give or take. And then currently my income as a third-year resident in internal medicine here in Texas is about $3,580 per month, which is after taxes after my 401k match, which I'll get back to in a second, as well as insurance, health insurance and dental insurance and vision insurance for my wife and I is all taken out. So $3,580 and $2,400 in expenses, which overall brings my savings rate to about 32%. Now keep in mind that there's one big thing that is missing from all of my expenses. And that's my student loan payments. And that's because due to COVID, all of that has been now deferred to at least 2022 as I'm making up this video, which just gives me extra time for my wife and I to save and invest our money elsewhere until somebody finally asks for their money. Now also keep in mind that this doesn't include other income that my wife and I have. So my wife currently works as well as I've been doing extra moonlighting or like doctor shifts, real big boy job shifts. And so those are a nice extra bits of income that we have. But because we started our first year of marriage, just kind of depending on my income, all this extra income that's now come out in the last two years is basically just added into the rest of our investment strategy. So now let's get into my investment portfolio and kind of various things that typically will put my money into. So the first place that my money goes before I ever see it is a 401k match that my hospital has. Now, they will match every dollar up to 6% of my income. So if you make 100,000, that's 6,000. So I make roughly about 50 to 60,000. That's how they can match about 3000 per year, plus all the growth that it has in the actual portfolio. So 6% of every paycheck will go into my 401k, which I've now been doing for a year because I've had access for about a year and a half. Now, while the 401k investment is taken out before I ever see it, the next kind of money that comes up is just dependent on where my wife and I are in our various goals. So the first thing that we focused on is making sure we max out our emergency fund and our savings fund to a point that we're both comfortable with. And then every year we go ahead and max the first thing is our Roth IRA. So $6,500 for both of us or $13,000 that we've now been doing successfully for the last three years. So 401k, emergency fund, savings account, and then we go ahead and max out our Roth. And the majority of the money that is both in the 401k as well as the Roth IRA is typically in the total market index fund that's been growing very nicely for the last several years that we've been doing it. But I do also hold some individual shares in my IRA in companies like Amazon, Apple, Tesla, AT&T, and Disney. I love you, Disney. Now, given our salary and our savings rate, it takes a few months at the start of each year to be able to max out our Roth IRA. But once we do that, then our investment strategy changes pretty dramatically. And this is where our investment portfolio starts to broaden. So first up, we have cryptocurrency, which is about 5% of all the money that we do choose to invest. Now, cryptocurrency, if you're not aware, is pretty volatile just depending on who gets in and out of the market. The majority of our money is put into Bitcoin or Ethereum, which we've been doing for the last about one and a half years. And it's worked out pretty well for us. And I don't really pay too much attention to all the news and who happens around Twitter. It's about 5% of my money will automatically go into those very fixed basis of about 75% into Bitcoin, about 25% into Ethereum. Now, in addition to investment accounts and cryptocurrency, the next place that I really like to invest my money, as well as my time, more importantly, are things like side hustles and side businesses. So the empty journey is a great example for I make little bits of income here and there through things like ads and affiliates, as well as coaching students or through some of our programs or recommending somebody else's to individually don't have a big chunk, but together they do kind of add up very nicely to then be able to grow our ability to save future investments and getting into future investments. The one piece of investment that is not in our portfolio right now that my wife and I are both looking to add at least within the next 12 months is real estate. Now, real estate is something that I've read about quite extensively when I was in college in the medical school. And I'm just looking to first get my first big boy job after residency know where I'm going to be located and ideally looking for real estate within that greater area to be investing for consistent cash flow. Now, I think the most exciting part for my wife and I is that right now I'm a third year residency, but compared to the salary that I'll be able to make about a year from now, it's about 20 to 30% of what it would be as a full-time physician as an attendant. And so the difference is that right now we're pretty comfortable with the salary that we have if we just consider living on my salary because we did it for the last three years. There's no reason that we can't continue to do it without a big desire to increase our lifestyle. And again, we're not even counting the income that she's bringing in through the hard work that she's doing at work. And so next year we kind of know we just have more money to play with or this investment strategy to have this outlandish effect, which we're really excited to kind of see finally pay off, especially after 10 to 12 years of schooling and training. So to close off this video, I thought it'd be helpful to go ahead and break my overall investment strategy going forward. Now compared to now to what I'll be making about a year from now, my salary will dramatically increase. So the first thing that my wife and I will focus on is making sure that both my emergency fund and savings fund that we both have saved together increases proportionally for our increased salary. The next thing we'll do is to max out all of our investment accounts, whether that be a Roth IRA or a backdoor or a 401k, just putting the maximum out in there and then letting that grow without really giving you much attention. And then number three is to really grow our pool of money to be able to buy more investments, whether that be real estate, other businesses or be able to invest back into businesses that I already own. And then finally, step number four is to use that pool of money and step number three to maximize the investments that we have that generate cash flow without a lot of input of our time. Great examples of these include rental properties where our tenants pay off the mortgage and there's still a little bit left that they still pay us and that just goes right into our pockets, as well as investing into online businesses that tend to kind of self-run. I've done this for a while now so kind of know where things and opportunities online can be created and then just kind of let run on autopilots. I'm really excited to start more of those in the background. And then finally, in addition to real estate and buying online businesses, I think the last bit of my puzzle would be incorporating whatever is left that I'm not currently using into dividend stocks so I'll then be able to give me a little bit of a return on a monthly or quarterly basis. And then we'll can just continue to repeat the cycle over and over and over again. Continue to keep the savings rate low. Ideally, our savings rate will drop below maybe 15 to 12% next year compared depending on the salary that we'll be having. And then we'll just continue to repeat this process, keeping your savings rate low, increasing the amount of money that we're saving to go into investments and then bring more money into our pocket and just repeating the cycle. So again, have a lunch effect. The most important part of this is the more we increase step number four of increasing the amount of rental property income that we get our online businesses, if that is higher than what I make as a full-time position and eventually I'm basically considered financially free, I'm no longer dependent on the salary that my employer may give me for working as a doctor. And so the more that I save and the more that I invest, the quicker this process will happen. So it'll be really exciting to see this video in five years and kind of understand where I am at that point. Now guys, in all honesty, I know after this video, there's some of you that are like understood everything that I said, and some of you who are probably like, maybe like 10% is probably what I understood from him. To be quite honest, that's probably what most people hear on a normal basis. But in case you are interested in learning more about finances, it's super important that you're working hard, a position you're studying hard, but you also want to know what to do with the money that you'll be making in the near future. There are a lot of finance videos here on YouTube, things on this own channel, I'll link down below the playlist that I've made of strategies and paying off debt and savings that my wife and I are using to be able to do strategies like this if you found this intriguing. If you want to learn even more, then we have finance videos for you on the Metadata Academy, which I'll link down below, as well as all the other resources that come with it. If you're interested at all, definitely recommend the link down below. So most importantly guys, I'm really curious if you're watching this on YouTube, comment down below and let me know what you think of my strategy. If you hate it or if you like it, tell me what's wrong with it, but be nice because I'm still learning. I'm by no means a financial guru. I'm just kind of learning just like you guys are, but if you did enjoy this episode, go ahead and hit that like and subscribe button. Consider hitting that notification bell. More videos going out just like this one on a weekly basis. You're listening to this on a podcast platform, consider hitting that follow and subscribe button on your favorite podcast listening platform. Regardless guys, as always, thank you for being a part of my journey. Hopefully I was a little helped to you guys on yours. If you did enjoy this video, then check out this video right here on exactly how much debt I have in medical school right there, that one. But I'll see you guys in the next one. Take care my friends. Peace.