New doctor looking for your seasoned advice on initial investments

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
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ERdoc_
Posts: 5
Joined: Sat May 26, 2018 11:34 pm

New doctor looking for your seasoned advice on initial investments

Post by ERdoc_ » Sat May 26, 2018 11:50 pm

Hey Fam,

Just finished medical school and got hired for my first job as a physician resident. Looked over the "Boglehead" philosophy, did my readings, and for the last month or so have been trying to really decide how to begin my investing career. I plan to invest 20% of my income. I have so many questions and was hoping this forum could allow for the back and forth discussion.
Firstly I'm 27, making between 50-60,000 a year income for the next 3 years, and then that will jump to over 300k hopefully as i complete residency
I haven't had my orientation, where i will ask about the 401k plan for my new job.
Someone told me i should invest half of that 20% toward retirement and half in some more high risk type of funds.
But wanted to know generally what i should do with my budgeted 20% investment strategy?
The only real short term goal i have is to buy a home in about 4 years.

PFInterest
Posts: 2125
Joined: Sun Jan 08, 2017 12:25 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by PFInterest » Sun May 27, 2018 9:33 am

congrats.
1- go read everything at whitecoatinvestor
2- re-read everything at whitecoatinvestor
3- emergency fund. even if a few thousand, things happen.
4- what is the loan situation and plan?
5- 20% is a great goal for retirement. depending on what your work offers it could be mostly in their plan, but also a Roth IRA is great given your lowest income years (hopefully). you can do 5500 and 5500 for your spouse (if married).
6- who is someone? they already sound like someone you shouldnt listen too haha

good luck. starting residency means you have a lot of other things to do.

ERdoc_
Posts: 5
Joined: Sat May 26, 2018 11:34 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by ERdoc_ » Sun May 27, 2018 10:06 am

Thank you!
Ya i have been reading a lot on White coat investor.
Loan situation is around 190k. Being married and on our own, that was a big hit. Interest on the loan is just under 6%, however for the next 3 years its an income based repayment plan, which basically allows me to pay half the interest and the other half is subsidized by the government. I plan to refinance as soon as that is up when i land a full time high paying job in 3 years.

retiredjg
Posts: 33588
Joined: Thu Jan 10, 2008 12:56 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by retiredjg » Sun May 27, 2018 1:11 pm

If $50-$60k is the total family income, I'd use Roth 401k and Roth IRA for these low income years. However, I suspect your spouse is working?

You may still want to use Roth unless spouse's income is pretty high.

jayk238
Posts: 436
Joined: Tue Jan 31, 2017 1:02 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by jayk238 » Sun May 27, 2018 1:13 pm

The most important thing is to focus on residency. Build a network. Build skills. Work harder than everyone. Even if you dont save a dollar you will still come out ahead if you live like a resident when you finish. Its most important to work your hardest now.

Ron Scott
Posts: 805
Joined: Tue Apr 05, 2016 5:38 am

Re: New doctor looking for your seasoned advice on initial investments

Post by Ron Scott » Sun May 27, 2018 4:45 pm

ERdoc_ wrote:
Sat May 26, 2018 11:50 pm

I plan to invest 20% of my income.

Someone told me i should invest half of that 20% toward retirement and half in some more high risk type of funds.

But wanted to know generally what i should do with my budgeted 20% investment strategy?
Starting with an asset allocation having somewhere between 25% and 75% in stocks would be reasonable. I'd forget the part about investing in high-risk funds. If you start feeling confident about your money you can always increase your allocation in stocks without taking on more risk through deliberately dicey investments.

Saving 20% of your gross isn't bad. Just make sure you have a general idea where that level of investing can lead you, and be realistic. For example, assume:
a) you start investing that 20% now,
b) you're the sole breadwinner in the future,
c) your salary grows as you believe it will in three years,
d) your salary grows 1% better than inflation every year thereafter, and
e) your investments beat inflation by 2% every year
...than you'll have about $3 million in today's dollars by the time you turn 60.

And if your salary grows 2% better than inflation and your investments beat inflation by 3% you could end up closer to $4 million. Good?

Ivymd
Posts: 10
Joined: Thu Aug 25, 2016 9:06 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by Ivymd » Sun May 27, 2018 7:00 pm

jayk238 wrote:
Sun May 27, 2018 1:13 pm
The most important thing is to focus on residency. Build a network. Build skills. Work harder than everyone. Even if you dont save a dollar you will still come out ahead if you live like a resident when you finish. Its most important to work your hardest now.
This ⬆︎100%!
You really start establishing your reputation at this point in your career. This is how you will get hired for your future job(s).
I'm 20 years out of residency and there are guys I STILL wouldn't hire from our residency. I don't care what they've done in the last 20 years; untrustworthy then, untrustworthy now.
Follow the recommendations in The White Coat Investor https://www.amazon.com/gp/product/09914 ... icoainv-20 and you'll do great.

kenoryan
Posts: 151
Joined: Tue Sep 12, 2017 7:11 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by kenoryan » Sun May 27, 2018 8:56 pm

Are you talking 20% after tax? Or gross? I have been saving 50% of my after tax since I finished my residency (I had no loans). But the key is to live simple and not get carried away by all the zeros that you see in your paycheck. Money makes more money and the power of compounding is amazing. Index investing. No risky stuff.
Last edited by kenoryan on Sun May 27, 2018 9:26 pm, edited 1 time in total.

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eye.surgeon
Posts: 359
Joined: Wed Apr 05, 2017 1:19 pm
Location: California

Re: New doctor looking for your seasoned advice on initial investments

Post by eye.surgeon » Sun May 27, 2018 9:14 pm

I've been in private practice 16 years.

My opinion: contribute enough into your employee sponsored retirement account to get your employee match, at your low tax rate ideally a Roth 401k. Put the max ($5500) into a Roth IRA again because of t your low tax bracket. Anything else, pay off your loans.
"I would rather be certain of a good return than hopeful of a great one" | Warren Buffett

WanderingDoc
Posts: 1034
Joined: Sat Aug 05, 2017 8:21 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by WanderingDoc » Sun May 27, 2018 9:33 pm

ERdoc_ wrote:
Sat May 26, 2018 11:50 pm
Hey Fam,

Just finished medical school and got hired for my first job as a physician resident. Looked over the "Boglehead" philosophy, did my readings, and for the last month or so have been trying to really decide how to begin my investing career. I plan to invest 20% of my income. I have so many questions and was hoping this forum could allow for the back and forth discussion.
Firstly I'm 27, making between 50-60,000 a year income for the next 3 years, and then that will jump to over 300k hopefully as i complete residency
I haven't had my orientation, where i will ask about the 401k plan for my new job.
Someone told me i should invest half of that 20% toward retirement and half in some more high risk type of funds.
But wanted to know generally what i should do with my budgeted 20% investment strategy?
The only real short term goal i have is to buy a home in about 4 years.
I bought my first home to live in as a resident in 2011, which later became a rental. I started investing in real estate in 2014, and happy to report that rental income now covers my basic expenses. Its truly freeing to know that you are working for enjoyment and want, not because you have to.
Index funds are fine, but its a very slow process to wealth, and one which you have no control. Also, tax treatment isn't near as favorable as with real estate. I would recommend to focus on being a good doctor first and foremost, and spend the next 2 years learning everything you can about real estate. I cannot recommend it more highly.
You may not like medicine in 10 years. You don't want to wait 20 years hoping for your index fund portfolio to grow. Maybe you do, I don't know. Its nice to have flexible options. Good luck!
Don't wait to buy real estate. Buy real estate, and wait. | Rent where you live, buy where others pay your mortgage for you.

ERdoc_
Posts: 5
Joined: Sat May 26, 2018 11:34 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by ERdoc_ » Mon Jun 18, 2018 2:13 am

Thank you everyone for the helpful advice. Cost of living is quite high where I'm located for residency, My wife will be full time in school, so her income contribution unfortunately is limited to some part time nannying for the next year at least, however thankfully she is all for budgeting.

My official orientation starts soon, I will definitely be asking many questions and focusing on the various pre tax advantages offered by the hospital.

Also have to say this was very helpful to come across https://www.bogleheads.org/wiki/Priorit ... nvestments, assuming everyone here would say this is a good strategy to go by.

retiredjg
Posts: 33588
Joined: Thu Jan 10, 2008 12:56 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by retiredjg » Mon Jun 18, 2018 6:57 am

In your case, I don't think the order is as important as the traditional vs Roth decision. You are in the lowest tax bracket you will ever see and then your income is going to be high.

Using Roth now for everything you can is in your favor. This is different from the needs of a person who starts working and moves up the ladder more slowly.

In other words, use Roth 401k or 403b not traditional for these low income years. If you don't have that available, fill two Roth IRA and then put money into the hospital plan.

I like what PFInterest has to suggest.

BogleMelon
Posts: 1414
Joined: Mon Feb 01, 2016 11:49 am

Re: New doctor looking for your seasoned advice on initial investments

Post by BogleMelon » Mon Jun 18, 2018 7:07 am

ERdoc_ wrote:
Sat May 26, 2018 11:50 pm

Someone told me i should invest half of that 20% toward retirement and half in some more high risk type of funds.
As if the total stock index fund in a retirement account is not an enough high risk!!
I fail to understand why people confuse between accounts and risk. You can have a retirement account with a high risk fund, high risk fund and a low risk fund (eg: 70% stocks, 30% bonds), or a retirement account with low risk fund. The type of account has nothing to do with the amount of risk you want to take.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

Xrayman69
Posts: 30
Joined: Fri Jun 01, 2018 8:52 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by Xrayman69 » Mon Jun 18, 2018 8:44 am

No Fellowship subspecialty plans? 2-3 years of additional commitment which would further “delay” the timeline

However subspecialization physicians earn more in the long run? Thus the “delay” may be worth the investment of time with near certainty of greater return than a generalist pay for entire length of career.


Student debt is compound interest in reverse.

First years our of training minimize lifestyle creep (earn more spend more, earn a lot more spend a lot more). Improve lifestyle modestly. If you move to a new town after finishing training rent for the first year to get to know your new environment both from a social needs (what truly is the best neighborhood for your family) and professional needs (is this the job you really like or expected). Most physicians as with all careers will NOT be in the first job they take at the end of their careers. Job change is the norm not the exception.

1 house, 1 spouse. (Rental property doesn’t count unlike vacation home that goes unrented). These are the two biggest investments and risk factors if bad decision.

2015
Posts: 1833
Joined: Mon Feb 10, 2014 2:32 pm

Re: New doctor looking for your seasoned advice on initial investments

Post by 2015 » Mon Jun 18, 2018 11:53 am

PFInterest wrote:
Sun May 27, 2018 9:33 am
congrats.
1- go read everything at whitecoatinvestor
2- re-read everything at whitecoatinvestor

3- emergency fund. even if a few thousand, things happen.
4- what is the loan situation and plan?
5- 20% is a great goal for retirement. depending on what your work offers it could be mostly in their plan, but also a Roth IRA is great given your lowest income years (hopefully). you can do 5500 and 5500 for your spouse (if married).
6- who is someone? they already sound like someone you shouldnt listen too haha

good luck. starting residency means you have a lot of other things to do.
This! Lots of respect for WHC, and I'm not even in medicine.

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