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Retiring and going to med school... What to invest in and when to pull the trigger?
Old 08-04-2015, 04:55 AM   #1
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Retiring and going to med school... What to invest in and when to pull the trigger?

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.
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Old 08-04-2015, 06:38 AM   #2
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Congratulations. This is the type of problem many people would give anything to have.

What does your wife think about you returning to medical school and which option does she prefer?

Option 2 looks like you might not be ready to let go of your current profession.
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Old 08-04-2015, 07:23 AM   #3
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Congratulations. This is the type of problem many people would give anything to have.

What does your wife think about you returning to medical school and which option does she prefer?

Option 2 looks like you might not be ready to let go of your current profession.
Thanks.

What do you mean about option 2?

My wife is happy with my plans and generally flexible with the options - she trusts me to make the best financial decision for us.
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Old 08-04-2015, 08:35 AM   #4
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No comments to offer on your finances but a word of encouragement: my sister decided at age 30 after marriage and 3 kids that she REALLY still wanted to be a doctor. (She was working as a Medical Technologist.) Her husband encouraged her to go for it. He worked 2 and 3 jobs sometimes to support them while she was in Med school but she graduated in 1991 and has had a great career. It's definitely not too late for a reboot!
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Old 08-04-2015, 09:08 AM   #5
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Go for it OP. This was my dream also and I pursued it after finishing MS in computer science and working at megacorp. But I was already in debt from BS/MS and a family to support just could not do it. My friend from college with similar background had family support and finished Med School. He has been practicing as ENT and facial plastic surgery. He is living his dream!
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Old 08-04-2015, 09:13 AM   #6
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My hat's off to you if you want to make a career change to where you can make a difference in other peoples' lives.

Despite making good money currently, you are not in the financial position to take on additional student debt required go into a profession that doesn't really provide a great income. In other words, physicians in the U.K. just don't make a great return on their investment in their education.

And then you've got to deal with nationalized healthcare that sounds good on paper, but is substandard in the real world.

We had a niece living in a very exclusive section of London--south of Heathrow Airport. Her doctor was trained in the U.S. at Harvard Medical School. She discovered 2 years ago that she had uterine cancer, and received less than the most aggressive treatment. She should have had immediate surgery, radiation and chemotherapy. We buried her 14 months ago in Memphis. Had she come home to be treated, the chances are that she'd be alive today. The U.K. healthcare system is just not as good as it should be--for such a modern country.

Unless you can be a physician in a better and more profitable healthcare system, going to medical school on borrowed funds is not suggested.
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Old 08-04-2015, 10:10 AM   #7
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My hat's off to you if you want to make a career change to where you can make a difference in other peoples' lives.

Despite making good money currently, you are not in the financial position to take on additional student debt required go into a profession that doesn't really provide a great income. In other words, physicians in the U.K. just don't make a great return on their investment in their education.

And then you've got to deal with nationalized healthcare that sounds good on paper, but is substandard in the real world.

We had a niece living in a very exclusive section of London--south of Heathrow Airport. Her doctor was trained in the U.S. at Harvard Medical School. She discovered 2 years ago that she had uterine cancer, and received less than the most aggressive treatment. She should have had immediate surgery, radiation and chemotherapy. We buried her 14 months ago in Memphis. Had she come home to be treated, the chances are that she'd be alive today. The U.K. healthcare system is just not as good as it should be--for such a modern country.

Unless you can be a physician in a better and more profitable healthcare system, going to medical school on borrowed funds is not suggested.
I am very sorry to hear about your niece - no one should have to go through that.

On the whole, however, the NHS is judged to be an exceptional healthcare system.

In terms of ROI of an education: the total cost of a medical education in the US (including undergraduate and graduate) can be as high as $600-800k. In the UK it is just 5 years, totaling significantly less than $200k. Sure, some specialties are paid more in the US, but some are paid less. There is a considerable amount of private work done in the UK...and with the healthcare system rapidly changing in the US, US salaries are becoming much more in line with UK. If we start factoring in hours worked and holidays of the UK vs. US, the UK looks even more appealing...
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Old 08-04-2015, 10:27 AM   #8
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Let's please leave the commentary on national health systems for another time and place - it's not part of the thread topic.
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Old 08-04-2015, 02:14 PM   #9
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The whole invest in real estate (in the US while you go to med school in the UK, paying for the real estate with student loans? I'm confused) on the side gives me a headache. You can afford medical school without it. Just go asap and be a doctor.

And pay off that credit card debt--that is a lot of debt imo for someone earning as much money as you do.
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Old 08-04-2015, 03:18 PM   #10
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Anyone that is telling you that you can generate 10%+ cash income on an investment of $125,000 in some form of real estate investment is either a scam on taking on a huge risk. I always suspect a scam when I see these types of claims but I could be wrong. What actual audited evidence is there of these returns and have you checked them out with the regulatory agencies? What are the odds that you will lose all of your money? What are the odds that the return will be signficantly less? Ever heard of Madoff? Even the regulatory agencies didn't save greedy people from Madoff.
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Old 08-04-2015, 04:26 PM   #11
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The whole invest in real estate (in the US while you go to med school in the UK, paying for the real estate with student loans? I'm confused) on the side gives me a headache. You can afford medical school without it. Just go asap and be a doctor.

And pay off that credit card debt--that is a lot of debt imo for someone earning as much money as you do.
So youd say option 1?

There's no buying properties with student loans...but chosing to not pay back my 2.5% loans early vs investing at a higher rate.
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Old 08-04-2015, 04:28 PM   #12
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Anyone that is telling you that you can generate 10%+ cash income on an investment of $125,000 in some form of real estate investment is either a scam on taking on a huge risk. I always suspect a scam when I see these types of claims but I could be wrong. What actual audited evidence is there of these returns and have you checked them out with the regulatory agencies? What are the odds that you will lose all of your money? What are the odds that the return will be signficantly less? Ever heard of Madoff? Even the regulatory agencies didn't save greedy people from Madoff.
What kind of returns would you expect from real estate? The returns are cash on cash, so on a 30k down payment.

Historically stock market has returned 9-10% in nominal terms. Real estate is a levered investment and significant less liquid...so wouldnt you expect higher returns?
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Old 08-05-2015, 10:39 AM   #13
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I say go for simplicity when you're in medical training. Not having to juggle additional real estate investments when you already have the funds for medical education is an unnecessary additional stress. Medical school was time-consuming but not too bad. But residency was a time of sleep-deprivation, stress, and devouring of all your time. By this time, you'll likely have young children. If you start having tenant issues or flooding basements in your real estate investments, it could be the straw that breaks the camel's back. And your marriage also needs nurturing during this time, as she too will be stressed about all of this.

I wouldn't recommend option 3; you've waited long enough, and have the resources. And it is always possible you may not get accepted to medical school the first time you apply, this time around.
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