BIO: James M. Dahle, MD, is a practicing emergency physician who took an interest in personal finance and investing in residency after getting ripped off by every financial professional he came into contact with. He founded The White Coat Investor in 2011 to help fellow docs get a fair shake on Wall Street.

STORY: James got sold a whole life insurance policy in medical school. He invested in it, thinking it would be a good option, only to realize seven years later that it was not. When he pulled out of the policy, he lost 33% of the premiums he had paid.

LEARNING: You must understand anything you buy. Don’t buy more insurance than you need. Focus on one catastrophe-related insurance product that’s reasonable.

“Insurance is expensive, so don’t buy more than you need.”

James M. Dahle

Guest profile

James M. Dahle, MD, is a practicing emergency physician who took an interest in personal finance and investing in residency after getting ripped off by every financial professional he came into contact with. He founded The White Coat Investor in 2011 to help his fellow docs get a fair shake on Wall Street.

Worst investment ever

When James was a medical student with minimal income, a friend interning with a large mutual life insurance company convinced him to buy a whole life insurance policy.

Looking back, what James really needed as far as insurance went was a term life insurance policy. At that point, he was married with no kids, and his wife was designing her life around his financial future as a doctor. The insurance policy James invested in, partially as an investment, was a whole life insurance policy. He held on to that policy for about seven years when he realized this was not a good deal for him. Not only was it not the insurance James needed, but it was a lousy investment.

By the time James surrendered that policy, his cumulative return was minus 33% of the premiums he had paid. So he walked away with only two-thirds of the money he had paid into it.

Lessons learned

You must understand anything you buy, especially if it has a long commitment.
Don’t buy more insurance than you need.

Andrew’s takeaways

Focus on one catastrophe-related insurance product that’s reasonable, find the best price on it, and set it up to protect your family against that catastrophe. Then, build a solid investment plan with the remainder of your money.

Actionable advice

While you don’t want to get paralysis analysis, you do need to take the time to understand what you’re buying, whether it’s an insurance policy or an investment. You need to know how it works and how it’s likely to perform over the long term so you’re not disappointed and end up bailing out.

James’s recommendations

James recommends evaluatelifeinsurance.org if you’re already in a whole life insurance policy and trying to decide whether it’s worth keeping it, even though maybe you shouldn’t have bought it originally. He also recommends the Fire Your Financial Advisor, designed to help you write a financial plan to go from zero to 60.

No.1 goal for the next 12 months

James’s number one goal for the next 12 months is to help as many doctors as possible reach a situation where they feel good about their finances, whether that’s achieving financial independence or just feeling like they have their financial ducks in a row. James wants them to be able to quit worrying about their money so they can concentrate on the things that matter most in life.

Parting words

“Keep your head up and your shoulders back. You’ve got this.”

James M. Dahle

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Finance Made Ridiculously Simple
FVMR Investing: Quantamental Investing Across the World
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