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Christopher H. Loo, MD-PhD: So welcome everybody to this week's podcast episode for the Financial Freedom for Physicians Podcast. And I'm your host, Dr. Christopher Loo. And as we talk about four different types of freedom: financial, time, location, and emotional freedom. And my mission is to spread good content and information from people that are doing a wide variety of things, very innovative things on the cutting edge, and bringing that information to you so that you can become empowered on your own freedom journey.
So today, we have a really interesting guest. His name is Amir Noor from He's based out of New York. And he's actually a Certified Financial Planner. And he's actually quite interesting in his approach, which we're talking backstage, but I will bring him on to the show and let him introduce himself. So Amir, welcome.
Amir Noor: Hey, Chris, nice to meet you. Thanks for having me on.
Christopher H. Loo, MD-PhD: Yeah, you have a really interesting approach. And we're talking backstage and telling people you know more about you, about your background, your upbringing, and how you got into doing what you're doing today.
Amir Noor: Yeah. So I'm a financial advisor, I've been in the industry for over a decade now. And I am a Pakistani American immigrant, right. So I'm first generation, I was born here. And my parents are immigrants from Pakistan, my father was always an entrepreneur, I've always been an entrepreneur because of that.
And there's a lot of that, like pick yourself up from your bootstraps kind of culture when you're the son of an immigrant. And I find that that's true for a lot of physicians, as well, a lot of physicians that I meet are immigrants themselves. And oftentimes, I don't even know if they wanted to be a doctor, they just know that if they weren't a doctor, they'd be an abject failure to their family. Despite being a financial adviser, I am also an abject failure for not being a physician. So the only way I could really kind of scratch that itch is by having most of my clients be physicians, they can tell me enough things where I can be like, Wow, okay, I'm glad I didn't do it.
Christopher H. Loo, MD-PhD: No, you're actually not missing out on much. But yeah, it's quite interesting, just Asian culture and heritage really espouses and really puts the doctor on the pedestal, but it's not all it's cut out to be. So, one thing was interesting was that you were talking about being a contrarian and I want the listeners to really hear about this, because it really will speak to a lot, a lot of them.
Amir Noor: Yeah I find that if you look at the average financial advisor, and this is starting to change, but most financial advisors are on the older side. So in and of itself, like the young physician who's really hungry and trying to retire early, you're a couple generations apart from one another, so you can't have that mix. And it's a very white male dominated industry. So that pick yourself up from your bootstraps first generation physician really has almost nothing in common with the majority of financial advisors.
And what I've found is that I disagree a lot with those other financial advisors. I think there's a lot of things that are a little overrated, I think there are certain things that are just a waste of money. I think there's certain things that people prioritize that you shouldn't and other things that you're not prioritizing that you should. Like a lot of financial advisors, the way that they're compensated is by the sale of a financial product. So, the financial advisor is compensated for selling a mutual fund or selling an annuity, or selling disability insurance. And so any of your listeners who have been in residency in the United States have seen an insurance salesman run around the hospital selling disability insurance. [laughs]
And like, sure, they might be giving you advice, but the end goal, and the way that they're compensated is by selling you the product. Whereas a fee-only fiduciary advisor is compensated by the client. So you have to really think about who's footing the bill, if you're paying that advisor or they're gonna give you the advice, that's what you're paying for. If an insurance company is paying the advisor by way of a commission, really, they're representing the insurance company.
Christopher H. Loo, MD-PhD: Yeah. So it comes down to conflict of interest, and what they call advisors are really salesmen. How they're incentivized and how they're compensated.
Amir Noor: I think that agrees that is also true in the physician world like chiropractors are compensated for how many adjustments they do. Surgeons are compensated for how many surgeries they do. So the solution for surgeons is to do surgery. But the internist, that's not true right there. They're compensated for actually providing medical care and advice. So it's not fair to really aggressively pick on financial advisors because everyone's compensated for having a thing.
But I think the public doesn't know that. Like, if you're talking to a surgeon they're only getting paid if they do the surgery. Or if you're talking to a financial advisor, by definition of their title and what they're called, you're gonna assume they're paid for their advice, which is just not always true.
Christopher H. Loo, MD-PhD: Yeah, that's, that's so true. So I know a lot of physicians or high income earners, they have their employer sponsored 401k's and all this. For the listeners, tell them how does a 401k work? And what does it mean?
Amir Noor: Yeah, great question. So, usually, hospitals will have a 403b, which works almost the exact same as a 401k. But the 403b is specific to typically nonprofit organizations. So hospitals typically are nonprofit organizations, if you're in private practice, you're probably not a nonprofit organization. So then you probably have a 401k.
And either in either case, what it is, is it's actually section 401, subsection K, or in that case, section 403, subsection B, of the Internal Revenue Code, which is like the tax laws for this country. So that's all really all it is. So you can look up in Google like section 401, subsection K, and you can read the law. And the rule, that is what the 401k is.
Fundamentally, all it is, is it's the style of an account that's blessed by the IRS. So like, let's say you had, I don't know, a Robinhood account or whatever, and you bought 10 shares of Apple, and you bought them for five bucks. So you spent $50. And then you sold those 10 shares for, I don't know, 50 bucks this year, so then you made a 10x profit, good for you, you turned $50 into $500.
So what you did is you made $450 of profit on that sale. So the IRS is gonna say, Okay, well, you made money, so we need a piece of that. [laughs] It's like the mafia, that's how they work. You're gonna pay tax, you're gonna get a 1099 in the mail at the end of the year, and then you're gonna have to pay tax on it. There's some nuance there. And if it's short term capital gains, or long term capital gains, but that's I think, a little too nuanced for right now, but you're gonna have to pay tax on it. And also, the 50 bucks that you use to buy that stock in the first place, you earned from your income. So like you made 100 grand a year, you lost 20 grand in taxes, you only had 80 grand left. And from that 80 grand after tax income, you bought $50 of stock, right?
So in a 401k, there's two advantages. So one advantage is you get to put money in pre tax. So in the example of you making 100 grand a year,if you were going to just put money into an account, you take your after tax money net of your paycheck, and then invest that way. Whereas in the 401k, you get to put money in pre tax before it's been taxed. So if you earned 100 grand, you actually get to put in, let's say, $10,000, into your 401k, the IRS is only going to assess tax on you as if you made 90.
So there's immediate savings right there. So you actually get to have a little bit more to play with, which is important from the perspective of compound interest. And then every year, as you buy and sell stock, you're not getting a 1099 in the mail. You can invest in whatever you want to invest in. But obviously, there's a catch. What happens is, after you attain the age of 59 and a half, and then retire, subsequently, you're no longer receiving a paycheck. So what you're doing is you've built up this nest egg, and now you're gonna live off of that nest egg. So instead of getting a paycheck, you're gonna go to your account, in your 401k and you're gonna say, Okay, I need 10 grand to cover the next two months of my mortgage or three months of my mortgage. So when you take out that $10,000, you basically have yourself a paycheck and then have to pay tax on that amount that you took out.
So let's say for argument's sake, all you had ever all you ever put in your 401k was 10 grand, 30 years later, it's 100 grand. You're gonna pay tax on that 100 grand. But in order to do that you did not pay tax on the 10 grand you put it on the back end, you pay income tax based on what you take out.
So there's there's obvious pros and cons there. For the cardiologist who's making $700,000 a year. When you're retired, you're not pulling $700,000 a year out of your 401k, unless you're horrible with money. You just don't need to, that's way too much money, you're gonna pay your mortgage, you're gonna go out, you're gonna enjoy, you're gonna travel again, do the things you're going to do. But I would be shocked if you continue to spend $700,000 a year, you just don't need it right? Maybe you need $150,000 A year to pay your bills in your retirement. So, from that example, that cardiologist who was making $700,000 a year in their 40s, and now in their 70s, is only pulling out 150 grand is a huge difference in tax brackets. So the tax deduction on the way in is phenomenal. And paying income tax on the way out is not really that big of a deal. For the pediatrician who makes 150 grand a year. 30 years later, accounting for inflation, maybe they need to actually continue to pull $150,000 a year out of their 401k. So their tax situation is not fundamentally different.
Christopher H. Loo, MD-PhD: Yeah, so it's like, basically, you're getting the tax benefit upfront, and then later on, when you withdraw it, you're you have to pay your fair share. Yeah. And it's interesting, because if you're expecting to go from a high income, down to an expectation you expect to cut back on your expenses later on, it's a great vehicle for saving on taxes.
Amir Noor: Absolutely. And then Roth works the other way around. So, Roth, you do not get the deduction up front. So, if you put in that example, were you making $100,000, if you put money into a Roth 401k, or your 401k has a Roth option, you're not going to get the deduction up front. So if you make $100,000, if you put 10,000 into a Roth 401k, the IRS is still going to assess tax as if you made 100,000. You're gonna get to invest it, you're gonna get to grow it, you're still not going to get 1099's each year that's all deferred to later. And then after you've hit the nine and a half, you start taking money out. That's tax free to you. So really, the game you're playing with the IRS is like, you're gonna pay them now or you're gonna pay them later, but you will pay them.
Christopher H. Loo, MD-PhD: Yeah, yeah, the IRS always gets their money in the end. Yeah, one of the interesting things that I got really good advice from, when in my early 20s, was Roth. If you were expecting your income to go up in your later years, start a Roth now. Because that way the money that you put in, and then the money that you take out, there's like a huge tax savings. So, that's one of the best pieces of advice I got.
So, for some of the people I know that are listening, what is the best financial decision someone can make? And how can I get started?
Amir Noor: I think it's doing a financial plan. Not to be self serving about it, but like, seriously do a financial plan. So if you're a dentist, and your whole thing is I'm going to open a dental practice, I'm gonna do it for 30 years, I'm gonna sell my practice on the back end, they're usually not going to get a lot of money, what is your practice worth? It's an office, which oftentimes is the guy's basement, or the girl's basement, and a chair from Henry Schein and a couple of pieces of equipment and drills and stuff. All of those patients are probably going to go see a different dentist. So there's nothing really to sell.
And dentists are notorious for this, where they're like, Oh, I'm gonna sell my business, but the business isn't worth anything. It's the book of patients that are just gonna go see somebody else. So doing the financial plan, and planning that out upfront, really helps you think about okay, what do I need to save? What kind of nest egg do I need to retire instead of relying on selling this practice? And you do that by leveraging a professional? Whether that's a business consultant, a financial advisor, a lawyer. Just because you're a good physician, doesn't mean you're a good business owner. It is a separate skill set.
Christopher H. Loo, MD-PhD: Yeah, I tell a lot of my clients, you can be the best doctor, but you can be really poor just because you're not savvy with money.
Amir Noor: Absolutely. It's not that you can't learn it. I find that a lot of physicians have a lot of arrogance about being a business owner. Like yeah, I went through medical school, I could figure this out. Yeah, but you still had to do the work and study it. You're not just gonna intuitively know.
Christopher H. Loo, MD-PhD: Yeah. Now, what's really interesting is that, we were talking about you being contrarian. And what's interesting is you chose to work with the middle of middle class families as opposed to the wealthy elites. Helping the people get financially literate, education, so that they can become financially free and have equal access.
What's interesting is that you were down to a couple different concepts. So, for example how calendars can keep you poor, talking about weekly paychecks, monthly budgets and your taxes to tell the listeners because I want them to hear this, this opposite view.
Amir Noor: Yeah, I actually just wrote an article about this. I've coined the term now. So this is the first time anyone's gonna hear it. And it's called the Phantom Month.
And I think that's the thing that really kind of keeps middle class families broke. And the reason for that is, anytime anyone tries to take their money seriously, they'll sit down, they'll make a budget. And if you use some kind of budget app, or worksheet, or whatever it is, they'll have you list out your monthly expenses, which makes sense, because you pay your rent monthly, and your mortgage monthly, and your student loan comes in monthly, like a lot of bills are monthly. But you don't live monthly, you live daily.
And I think that's something that really trips people up, because you go to the grocery store, maybe every weekend. And if you're a physician, maybe your weekend is on a Tuesday, and you're on call, that's your only time to go to the grocery store. So you do that, but you're gonna go every week, because you have to eat every day. And, when you're filling out that worksheet, you're like, Okay, I spent $120 a week at Whole Foods. So I'm just gonna multiply that by four, to make it monthly and fill it out on this worksheet. So you'll write down $480. But that's not true. It's an inaccurate representation of how you're spending your money. Because if every month had four weeks in it, 12 months in a year, four weeks in a month would be 48 weeks.
Everyone knows it is not 48 weeks in a year, it is 52 weeks in a year. So there's four weeks that are totally unaccounted for when you do that. And that's what I call the Phantom month. It's this whole extra month of expenses that when you do that you have not accounted for. And now you're over budget, because some months have 31 days. So that's three extra days of eating and gas, and electricity and utilities and bills that you did not account for. And that's the thing that really prevents middle class families from saving.
Christopher H. Loo, MD-PhD: That's really interesting. Yes, I actually never thought about that concept. So, you know. And then you also talk about, for example, avocado toast in the rise and fall of real estate. What is that? This sounds very interesting.
Amir Noor: Yeah. So there's that article that I think everyone is, it's become now popular culture, right, talking about avocado toast being the reason that people can't buy real estate. And in that weekly budget, people will really kick themselves for going to Starbucks, or Dunkin Donuts or getting avocado toast. And usually, when you multiply that out, it doesn't actually add up to a lot. That's not the reason you broke, it's that you are not accounting for that entire 13 month of expenses on an annual basis. And that part is where it adds up.
It's usually other things, it's usually just like a mis-prioritization of your dollars. So, in that regard, you can usually figure out oh, wow, I didn't realize I'm spending x number of dollars on multiple different services that do the same thing, because I didn't cancel the old one. And there's just lost dollars there.
So as an example, I'll just do it right now really quick and pull up the calculator. So if you have, I don't know, he's been $7 a day at Starbucks, five days a week, times 52 years. That only adds up to 1800 bucks a year, usually not a huge deal. And people will really kick themselves and limit themselves and sacrifice to not do that. But won't do the extra work to maybe refinance their student loan, or look into appropriate payback structures that could be costing them tens of thousands of dollars in interest. Or they're not going to get the oil change on their car, and kicking the can down the road, and then they have a $5,000 expense down the road. Those are the things on an annual basis that really kind of kill your budget.
Similarly, with real estate, I think there's a big push for everyone to always want to own real estate. And for some people that's overrated. If you're a physician, and you're doing locum tenens. Why would you buy real estate? You're going all over the country all the time. It doesn't make sense. And so to have that societal or familial pressure on you, that you're a loser if you don't own real estate, it's just not true. It's probably cheaper for you in that example to just rent.
Christopher H. Loo, MD-PhD: Yeah, yeah, it's, yeah, it's really interesting. Just the paradigm shifts with society and culture and a lot of people like millennials and Gen Z, they don't want to own real estate just because it's a big hassle and they can own stocks. And you know they do syndications, and that gives them more time and freedom. And so that's, that's really interesting.
And what do you mean by pizza? Why is Chicago a liar? That's interesting, too.
Amir Noor: Because it's not pizza. It's a casserole. I will die on this hill. I am a born and bred New Yorker. Chicago does not have pizza casserole that masquerades as pizza, it can go to hell.
Christopher H. Loo, MD-PhD: So what is the best pizza in New York City?
Amir Noor: Oh, definitely. Lucali in Brooklyn. Unbelievable.
Christopher H. Loo, MD-PhD: Oh, yeah. I heard Brooklyn is actually really booming. Like a lot of creatives there. It's like a huge bohemian culture and I think it was Red Hook.
Amir Noor: Yeah. A lot of those people are leaving to go to Austin, Texas. So they're going over to you.
Christopher H. Loo, MD-PhD: Yeah. Austin is a fantastic city.
Well, Amir, it's been a fantastic conversation. And I really like how you boil down concepts and you take a contrarian approach and you focus on a specific niche. And then you talk about it in terms of these big concepts. So I know a lot of people are interested in maybe contacting you and a lot of my physician friends, they will resonate with your story. So how can they contact you and get a hold of you and work with you?
Amir Noor: Yeah, absolutely. So you can go to amirnoor.com. There, you can read more about me. There's a bio, there's a link to get right on my calendar and schedule a complimentary consultation, book a Zoom meeting, whatever it is.
I have a life philosophy that everyone is worth a cup of coffee. So if I'm not a good fit for you, that's fine. I'm not going to be offended that you took an hour out of my day. And I'll point you in a different direction. If that's what's best for you.
Christopher H. Loo, MD-PhD: Yeah, awesome. Thanks so much. And we thank you so much for coming on to the show and we look forward to hearing about your future success.
Amir Noor: Yeah, thanks so much. Stay in touch.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.
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