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June 2014


by Andrew D. Schwartz, CPA

Bob Cahill, my CPA firm's #1 mortgage resource, is pleased to announce that Leader Bank is now offering a Healthcare Professionals Loan Program.  "The Leader Bank Healthcare Professionals Loan Program provides borrowers employed at select institutions with outstanding fixed rate options for the purchase of their new home," says Bob.

Bob recently proposed a mortgage package to one of my clients and is saving her $300 per month over the loan package offered by a competitor's Doctor Loan program.  According to Bob, here are the basics of Leader Bank's mortgage program:

  • Maximum loan amount of $1,200,000
  • Property located in Commonwealth of Massachusetts
  • Maximum "Combined Loan To Value" (CLTV) of 90%
  • Maximum "Debt To Income" ratio of 40%
  • Minimum FICO of 720
  • Eligible properties include single family primary residences and warrantable condos
  • US Citizens and Permanent Residents only

One additional provision of Leader Bank's Healthcare Professionals Loan Program requires that you or your spouse must be employed at one of the following 20 major Boston medical institutions:

  • Beth Israel Deaconess Medical Center
  • Boston Children’s Hospital
  • Boston Shriners Hospital
  • Brigham and Women’s Hospital
  • Cambridge Hospital / Cambridge Health Alliance
  • Dana Farber Cancer Institute
  • Harvard Pilgrim Health Care
  • Harvard Vanguard Medical Associates
  • Joslin Diabetes Center
  • McLean Hospital
  • Massachusetts Eye and Ear Infirmary
  • MGH / Partners Health Care System
  • MGH Institute of Health Professions
  • Massachusetts Mental Health Center
  • Medical, Academic and Scientific Community Org.
  • Mount Auburn Hospital
  • Spaulding Rehabilitation Hospital
  • The Center for Blood Research
  • The Schepens Eye Research Institute
  • Veterans Administration Boston Healthcare System

Interest rates have dipped recently so it's a great time to purchase or refinance a home. For more information about Leader Bank's Healthcare Professionals Loan Program or other home mortgage products available through Leader Bank, please feel free to contact Bob Cahill by phone or e-mail.



by Andrew D. Schwartz, CPA

Please help us reunite these three toys with their rightful owners.  Click on the link below to see whether any of these stuffed animals belong to your kids and might have accidently been left with us to care for following your tax meeting at Schwartz & Schwartz in Woburn. 

Missing Stuffed Animals

While you are there, please Like Us on Facebook and begin to receive our weekly updates directly to your Facebook newsfeed.



by W. Ben Utley, CFP

You hopefully make more money than you spend. It’s the right problem to have but it’s a problem nonetheless.  In fact, every new dollar of savings seems to call for a new investment strategy but you don’t know where to begin.

When you ignore the problem. cash piles up in your checking account. Forty thouand…eighty thousand…then six figures. Now you’re getting nervous. If it was hard to invest a smaller sum, it seems impossible to invest more than $100,000.

Then one day, you stumble upon the headline that brought you here, hoping to find the answer. And if this were any ordinary article, you might be well on your way to making the same mistake that most of your colleagues have made at least once in their careers: they pile into a hot investment touted by the media.

First they buy it. Then they watch it drop like a rock. And months later, when the promised results fail to materialize, they sell everything and feel stupid.

It gets worse as the cash continues to pile up and your question goes unanswered…  “Where do I put my money now?”

The best headlines and the best investment strategies have two things in common: there’s nothing new about them, and they work. Keep reading and I will share three investment strategies you can use over and over again, decade after decade, to make your savings last, and make this the last time you fall for a tricky headline.

1.  Stop trading stocks. Start owning markets.

I know you’ve heard stories in the breakroom about how your colleague’s latest stock pick shot up 147% or how he nabbed a tax-free bond paying five full percentage points above average.

Sounds like he’s making a killing, right?

Not exactly. Chances are good he’s gotten killed on plenty of trades but physician culture won’t allow him tell you about his blunders. I’ve seen plenty of doctors who stockpicked their way to a small fortune but most started out with a much larger one.

Instead of taking a bunch of risk by betting on one stock, keep risk in check by owning a whole bunch of them… the easy way. Single stocks can go bankrupt and single bonds can go into default, wiping you out completely. Index funds, which represent ownership in hundreds if not thousands of companies, make it easy to gain instant diversification, diluting the uncompensated or “bad” risk while retaining the “good” risk that leads to rewards over the long haul.

Index funds are cheap. With carrying costs (a.k.a. “operating expense ratios”) as low as 0.05%, you can buy an index fund and gain exposure to bonds or stocks around the world for a pittance. That tiny carrying cost also buys you the freedom to stop acting like a stockbroker and get back to serving as a healthcare provider.

Savvy physicians prefer mutual funds for their tax efficiency. Since they follow a buy-and-hold approach to investing, index funds are more likely to realize tax-favored capital gains and tax-qualified dividends than more highly taxed short term gains. This keeps your tax bill in check.

2. Stop timing the markets. Start owning them (all).

If you have heard about index investing, you probably know about the S&P 500, a basket of stocks that represents the five hundred biggest companies in the United States. The index was made famous in the 80’s and 90’s as it ran up to the dot com bubble, then vilified in the ensuing “lost decade” when the ten year return on that index was very close to zero.

What index hecklers fail to realize, even to this day, is that there’s more than one index. in fact, you can gain exposure to practically all the stocks and bonds on the planet by owning as few as four mutual funds. Had investors done this during the past ten years, they would have avoided some of the tech wreck, found the lost decade, and enjoyed very decent returns after all.

Unfortunately, the average investor seldom receives average returns. According to a recent study by mutual fund data company Morningstar, “the typical investor gained only 4.8% annualized over the 10 years ended December 2013 versus 7.3% for the typical fund.” That’s a yawning 2.5% gap.

Why did investors miss out on fully one third of the market returns? It’s simple. They did the same thing with their funds that your colleague did with his stocks: they traded in and out of the market. To garner the returns advertised over the past decade, or even three decades, you would have to own them through thick and thin, no matter how dramatic nor dire the news.

3. Invest like a Nobel Prize winner.

The main argument against an index-only strategy is exactly that it generates merely average returns in the best case scenario. This logic appeals to doctors who have never once settled for things that are merely average, and that’s pretty much all the physicians I’ve met.

Thanks to the research of Nobel laureate Eugene Fama, we now know it’s possible to reliably beat the averages over the long run, but it’s not free.

Fama, a financial luminary who founded the first small cap index mutual fund way back when fax machines were the size of washing machines, discovered that the smaller a company is, the more likely it is to outperform a larger one. This is known as the “small cap effect” and it’s robust, having been observed in US market history as well as the return series of developed foreign stock markets and even emerging markets.

Fama and colleague Kenneth French, both researchers who hail from the University of Chicago’s renowned Booth School of Business, also found that the stocks of cheap companies, known as “value stocks,” tend to outperform their more expensive “growth stock” peers in what is known as the “value effect.” This effect is also robust in markets domestic and foreign, and is available to investors using index funds.

While a small cap value tilt may add up to four percentage points more than the average untilted portfolio over long periods of time, it brings more volatility too. When equity markets decline, those index funds filled with cheap little stocks take it hard, and you may wish you had never owned them. The only way to reliably garner the higher expected returns from small cap value stocks is to remain fully invested and stay the course even when times are tough.

This too is old news. Even though Fama won the Nobel prize in Economics just last year, his research on the small cap and value effects has been public knowledge since way back in the 1980’s.

These perfectly decent strategies are so mundane—so incredibly boring—that you and your colleagues may never have heard of them. After all, words like “diversified,” “tax-efficient,” and “cost-effective” make wimpy headlines. The good news is that you can start using a solid investment strategy and keep using it year after year, decade after decade, secure in the knowledge that you have found a permanent answer to a nagging question. Remember, the answer to good investing is more than where you put your money now. It’s where you keep it over the long haul.

About the Author

W. Ben Utley, CFP, is an attending advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping physicians throughout the U.S. to make a plan and get on track with saving for college and invest for retirement. Visit Physician Family Financial Advisors Inc Any advice in this article is the Author's opinion on investing and the opportunities available in today's stock and bond markets.




Income Taxes

Saving and Investing





  • 2nd quarter estimates due 6/16/14
  • Income tax returns (or extension requests) for Ex-Patriots due 6/16/14
  • FBAR filing is due 6/30/14 for individuals and businesses with foreign accounts worth more than $10k at any point during 2013.



2013 & 2014 TAX FACTS

  • For 2013, the standard deduction for a single individual is $6,100 and for a married couple is $12,200. A person will benefit by itemizing once allowable deductions exceed the applicable standard deduction. Itemized deductions include state and local income taxes (or sales taxes), real estate taxes, mortgage interest, charitable contributions, and unreimbursed employee business expenses.
  • For 2013, the personal exemption is $3,900. Individuals will claim a personal deduction for themselves, their spouse, and their dependents. 
  • The maximum earnings subject to social security taxes is $117,000 for 2014, up from $113,700 in 2013.
  • The standard mileage rate is $.56 per business mile as of January 1, 2014, down from $.565 for 2013.
  • The maximum annual salary deferral into a 401(k) plan or a 403(b) plan is $17,500 in 2013 and 2014.  And if you'll be 50 or older by December 31st, you can contribute an extra $5,500 into your 401(k) or 403(b) account that year.
  • The maximum annual contribution to your IRA is $5,500 for 2013 and 2014.  And if you turn 50 by December 31st, you can contribute an extra $1,000 that year.  You have until April 15, 2014 to make your 2013 IRA contributions. 


Need Help With Your Nanny Payroll?

This Month's Topics

Leader Bank Launches Its Doctor Loan Program

Did Your Kids Leave A Toy With Us At Your Tax Meeting

Investing: Where To Put Your Money Now

The FICA Refund for Medical Residents 

2013 & 2014 Tax Facts

Tax and Financial Planning Calendar for June 2014


Browse our index of previous months' newsletter topics

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In a shocking development, the IRS recently announced that they will be honoring the FICA tax refunds submitted by residency programs and individual doctors.  The catch is that only FICA taxes paid prior to 4/1/05 qualify.

For more information, go to our April 2010 Newsletter, our January 2009 Newsletter, or our February 2001 Newsletter or read through the IRS' Chief Counsel Advice Memorandum on this issue.

Let's work together to keep current on this hugely valuable tax break.  Please post whatever you read or hear regarding this FICA issue on our new Message Board we set up just for this topic.

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