Investing for Retirement - The Future Proof Way

Attribution to

Attribution to

Investing and retirement planning are two frequent topics on Future Proof, MD.  In the post Florida Radiological Society (FRS) Annual Meeting Presentation I shared with you how I allocate 30% of my gross income for investing.  Now let me explain why I choose to invest this way.

The Future Proof method:  

I choose to invest roughly 30% of my pre-tax or "gross" income.  For those of you who have heard other financial gurus speak about retirement savings, you may have heard numbers anywhere between 10-20% of your income as the recommended amount.  So why do I choose 30% pre-tax?  The short answer is because I can.  The more reasoned answer is because I'm more of a glass-half-empty guy when it comes to investment risks.  So I prefer to end up with "too much" rather than "not enough" by the time I retire.   I divide up my investments in the following manner:

  • ~1/3 in passive index ETF investing with Betterment, see my review of Betterment here.
  • ~1/3 in ROTH IRA - of which half is invested in index ETFs similar to Betterment and the other half I actively manage.  Why a ROTH IRA and not a Traditional IRA?  Check out my post on ROTH IRAs here.
  • ~1/3 in actively managed investing, which means I actively pick individual stocks/companies to invest in.

WCM Asset Allocation

No 401(k)/403(b)?  

For those of you who read my post A Simple Step-wise Approach to Retirement Savings, you may be wondering how come I don't invest in my employer's tax-deferred 403(b) account.  Unfortunately while my employer does offer a 403(b) plan for employees and matches up to 4% income in contributions, there is a 5-year vesting period which means if you leave the system before 5 years, all employer matching contributions and earnings are forfeited.  Guess how long a radiology residency is? (Hint: it's 4 years).

Now I may consider starting a 403(b) account for the tax-deduction in the future once I start moonlighting and my income increases enough to bump me into the next marginal tax bracket.  But as of right now, even if I contribute the maximum, it would not affect my tax bracket.


My chosen allocation essentially means I invest ~30% of my income, 15% in passive index investments and 15% where I pick the investments myself.  Why do I choose to invest this way?

  1. 15% passive index investment - I refer you to my previous post  Long Term Investment Returns - A Comparison for the data related to stock market performance.  Assuming I never increase my contribution and I receive a annualized return of 9% on my investment, I will end up with roughly $2 million by the time I turn 65.  This is my safety money - as in no matter what happens to the other 15%, I should be able to survive fairly comfortably on this amount.  It's not very sexy but it gets the job done.
  2. 15% actively managed investment - now this is the fun part.  I choose to manage the other half of investments myself because 1)  I believe no one cares more about my money than I do and 2) this is my attempt at early retirement.  Let me illustrate with an example - if say you had the foresight of buying $10,000 in Priceline (PCLN) stock in 2005, today your PCLN shares would be worth $556,698.52.  While hindsight is always 20-20 and it's difficult to pick such big winners prospectively, I believe there are future PCLNs being made every day in the marketplace and I would love to be onboard that ride.  In short, this is my potential early retirement money.


  1. Passive index investments are mutual funds and Exchange Traded Funds (ETFs) that represent an economy or a certain sector of an economy, they are pegged to a certain market index which means you win or lose when the market wins or loses.  When I invest in Betterment, I benefit from lowered risk through diversification but I lose out in the sense that I will never beat the market - since I am the market.
  2. Actively managed investment - I actively pick stocks based on several inputs including the financial news industry, the Motley Fool investment advising services, and several personal friends who have an interest in investing.  We often chat about what stocks we are watching and bounce ideas off each other.  The collaboration is a motivating factor and makes this part of investing much more fun than #1 above.

Please note that the above strategies are based on my current individual circumstances and will likely change in the future with changing income/expenses, family situation and risk tolerances.  What do you think about my investing method?  Are there anything you can take away or add?  Please let me know in the comments!

Future Proof, MD

Dr. Bo Liu is an aspiring radiologist-in-training and the founder and editor of the White Coat Money Blog.  He has an interest in interventional radiology and helping his medical colleagues get ahead in this mad world of medicine and money.  When he's not crushing the list at the PACS station or typing up your next favorite blog post, you can usually find him at the local badminton club, movie theater or the most recently opened restaurant.