High income earner waiting for a bear market to start investing

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
goodenyou
Posts: 2021
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: High income earner waiting for a bear market to start investing

Post by goodenyou » Tue Oct 22, 2019 11:06 am

Busdrvr wrote:
Tue Oct 22, 2019 10:12 am
goodenyou wrote:
Tue Oct 22, 2019 9:46 am
Busdrvr wrote:
Tue Oct 22, 2019 8:59 am
I’m just curious about what someone in this circumstance should have in term life insurance? A big # for sure.
He is not living large and no mortgage. However, to reproduce the future lifestyle of his heirs, a minimum of $6M 20 year term I would imagine. That would cost about $300 per month. He should have a policy on his wife too. Raising children without their mother would be catastrophic for a period of time for the breadwinner. At his savings rate, he shouldn’t need life insurance in 20 years. He should have a robust disability policy as well. Much more likely to be disabled than die. They are expensive and more restrictive now than in the past, especially for physicians.
Being that the op is carrying the housing expenses for the parents and in-laws in addition is certainly a rare and costly endeavor, but admirable at the same time. I know a general surgeon who had a stroke in his mid 40’s. Extremely healthy and fit as well. The good news is that he recovered fully and is practicing again. One never knows what the markets or life will provide.
When I started my practice several years ago and moved into town, one of the few surgeons that do what I do had a massive stroke. He was done in his early 50s. One other committed suicide the year prior. My senior partner contracted and suffered from Guillain-Barré syndrome for many years and then committed suicide 10 years ago as well. I am all too familiar with the uncertainties of life. Life as a surgeon can be stressful. No doubt about it. I try to council young surgeons about it when I get the opportunity.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

KyleAAA
Posts: 7598
Joined: Wed Jul 01, 2009 5:35 pm
Contact:

Re: High income earner waiting for a bear market to start investing

Post by KyleAAA » Tue Oct 22, 2019 1:25 pm

michaelingp wrote:
Mon Oct 21, 2019 10:06 pm
Why on earth is someone who makes $850K a year depending on an internet forum for investment advice? You have complex investment and tax-avoidance opportunities that require professional expertise. If you're making that kind of money, I would think you have very little extra time to worry about investing. Let someone else do it for you. I also find it hard to believe that someone who makes $850K a year is worried about credit scores. People who make $20K a year have to worry about credit scores.
This is a very persistent myth, that the rich somehow work more than everybody else and don’t waste time with mundane vices. Nonsense. I know a billionaire who spends half his day on reddit while still running a successful tech company. By and large, the rich don’t work harder or smarter than the rest of us and have PLENTY of extra time. This myth is harmful. They are just like us.

User avatar
goodenyou
Posts: 2021
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: High income earner waiting for a bear market to start investing

Post by goodenyou » Tue Oct 22, 2019 2:29 pm

KyleAAA wrote:
Tue Oct 22, 2019 1:25 pm
michaelingp wrote:
Mon Oct 21, 2019 10:06 pm
Why on earth is someone who makes $850K a year depending on an internet forum for investment advice? You have complex investment and tax-avoidance opportunities that require professional expertise. If you're making that kind of money, I would think you have very little extra time to worry about investing. Let someone else do it for you. I also find it hard to believe that someone who makes $850K a year is worried about credit scores. People who make $20K a year have to worry about credit scores.
This is a very persistent myth, that the rich somehow work more than everybody else and don’t waste time with mundane vices. Nonsense. I know a billionaire who spends half his day on reddit while still running a successful tech company. By and large, the rich don’t work harder or smarter than the rest of us and have PLENTY of extra time. This myth is harmful. They are just like us.
“What is the matter with the poor is poverty; what is the matter with the rich is uselessness”

— George Bernard Shaw

I am a big fan of George Bernard Shaw. If you ever have the opportunity to see his plays at the Shaw Festival in Niagara-on-the Lake, Ontario Canada, you won’t be disappointed. It is truly world class theatre.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

retiredjg
Posts: 38463
Joined: Thu Jan 10, 2008 12:56 pm

Re: High income earner waiting for a bear market to start investing

Post by retiredjg » Tue Oct 22, 2019 3:26 pm

H-Town wrote:
Tue Oct 22, 2019 10:33 am
steve roy wrote:
Mon Oct 21, 2019 3:55 pm
What if the market stays “up” for the next 17 years? What’re you gonna do with all your extra loot? Bury it in the back yard?
If the OP has more money than they could ever spend, why invest in a risky asset? :|
It's a good question, but I believe that a portfolio of all cash and/or all bonds is riskier and pays less than a portfolio with a small amount of stocks (25% to 30% depending on the source.)

Prettyfrtnt
Posts: 137
Joined: Fri Aug 23, 2019 6:28 pm

Re: High income earner waiting for a bear market to start investing

Post by Prettyfrtnt » Tue Oct 22, 2019 4:56 pm

OP should be the last person on the planet worried about a market downturn or his psychology with managing a downturn.

OP should be buying as much VTI as he can humanly lay his hands on the next 30-40 years. OP should pray for a downturn.

Did we decide he is a surgeon? If so he doesn’t even need to worry about a recession.

Many might want to work 30-40 years. But financial independence is independence and is a lovely thing even in a person who loves their job if life presents a little surprise...

michaeljc70
Posts: 5793
Joined: Thu Oct 15, 2015 3:53 pm

Re: High income earner waiting for a bear market to start investing

Post by michaeljc70 » Tue Oct 22, 2019 8:06 pm

retiredjg wrote:
Tue Oct 22, 2019 3:26 pm
H-Town wrote:
Tue Oct 22, 2019 10:33 am
steve roy wrote:
Mon Oct 21, 2019 3:55 pm
What if the market stays “up” for the next 17 years? What’re you gonna do with all your extra loot? Bury it in the back yard?
If the OP has more money than they could ever spend, why invest in a risky asset? :|
It's a good question, but I believe that a portfolio of all cash and/or all bonds is riskier and pays less than a portfolio with a small amount of stocks (25% to 30% depending on the source.)
Yes. And it is a myth that people that have/make a lot of money want lower returns than other people because they don't "need" the money.

kinaokole
Posts: 25
Joined: Tue Oct 22, 2019 10:48 pm

Re: High income earner waiting for a bear market to start investing

Post by kinaokole » Tue Oct 22, 2019 11:03 pm

goodenyou wrote:
Mon Oct 21, 2019 9:57 pm
masonstone wrote:
Mon Oct 21, 2019 7:38 pm
HEDGEFUNDIE wrote:
Mon Oct 21, 2019 8:41 am
The real puzzler with this one is thinking one can maintain that kind of income until age 75-80. Unless OP’s occupation is dictator of a small African country, I find that to be unlikely.
The OP is fooling himself, even physicians in non-procedure related specialties begin to slow down due to illness and decreased mobility and mental function at age 65. I have yet to meet a single physician that’s over 75 that can work to generate 800k. This on top the of declining reimbursements will make the OP have much less earning power in his elder years than he anticipates.
My partner is 71. He makes more than that. No signs of slowing down, but we shall see. Still does 10-15 surgeries on his surgical day. He bemoans the fact that his RMDs are mid 6-figures on top of his salary. :oops:
Spine surgeons certainly make a good living, but the suggestion that many have the skills to operate well into their 70's is a bit of a stretch. Your partner sounds like an exception.

Regardless, I have no idea why someone would want to practice that long.

Prettyfrtnt
Posts: 137
Joined: Fri Aug 23, 2019 6:28 pm

Re: High income earner waiting for a bear market to start investing

Post by Prettyfrtnt » Tue Oct 22, 2019 11:35 pm

michaeljc70 wrote:
Tue Oct 22, 2019 8:06 pm
retiredjg wrote:
Tue Oct 22, 2019 3:26 pm
H-Town wrote:
Tue Oct 22, 2019 10:33 am
steve roy wrote:
Mon Oct 21, 2019 3:55 pm
What if the market stays “up” for the next 17 years? What’re you gonna do with all your extra loot? Bury it in the back yard?
If the OP has more money than they could ever spend, why invest in a risky asset? :|
It's a good question, but I believe that a portfolio of all cash and/or all bonds is riskier and pays less than a portfolio with a small amount of stocks (25% to 30% depending on the source.)
Yes. And it is a myth that people that have/make a lot of money want lower returns than other people because they don't "need" the money.
Agree more money even if you do not consume heavily allows you to shape your world and the people around it in a really positive way.

Could someone please explain to me how purchasing stock that you don’t need and will not possibly use in 40 years is in any way a risky asset to own??? Am I missing the prior 40 year bear market? What could be a better long term asset than owning companies? Isn’t this why many of us are here. You can definitely diversify your asset classes but why wouldn’t you have some stocks?

Xrayman69
Posts: 253
Joined: Fri Jun 01, 2018 8:52 pm

Re: High income earner waiting for a bear market to start investing

Post by Xrayman69 » Wed Oct 23, 2019 8:25 am

OP started this topic on October 21.

Sounds like a smart or at least a capable learner. Late start in the 40’s. No school loans (possibly because others have invested in the individual and thus paying the rent????)

OP, read some basic books or references provided previously. This can all be done relatively efficiently over the next 2 weeks. You can then come to a conclusion and execute a plan. The key is determining your risk tolerance and developing a personal contract (with yourself and spouse) to stick with a plan that you both are comfortable.

You have all your basic needs covered. Enjoy life daily. This money management thing doesn’t have to be complicated but it can get emotional and thus your investment psychology must be pre determined (thus your personal contract).

Time is your friend (for investment ) and your enemy (for living- you will eventually pass on).

Many have had similar situations as yours (as evident by this site and replies). No one knows you better than yourself and your spouse. No one knows what you want, need, and fear more than yourself and your spouse. Educate yourself and don’t be paralyzed by excessive information around the edges of minutiae. Stick with the plan.

Our family plan is invest and max tax efficient sources the add all excessive investible income each and every week and month to taxable low cost diverse accounts (equities/stock funds, bonds, and real estate and money market/cash). We are youngish so aggressive allocation ((80+% equities and remaining bonds and cash/ real estate investment trusts ).

We live a very comfortable lifestyle after initial lean years to get settled (my spouse deserves it for being patient and tolerant of me- no one else on earth would stick with me or allow me to raise children with them).

After you educate yourself on money management you will find that it is really manageable and in short time you will evolve to the next stage which hopefully will include philanthropy and external service as your familial needs will be more than settled.

You don’t need a money manager parasite. You may want to look into an accountant that works fee for service and help with taxes. this well worth it for our family and saves me hours per year that is much less than my compensation for work that I could otherwise be doing (many on this site will scoff at paying someone to do your taxes but time/cost and expertise ratio for your situation I suspect will favor outsourcing this fee for service relationship with an accountant.

ENJOY your work and your family. You can have both and feel good about it everyday, week, month, year and decades to come.

PDX_Traveler
Posts: 57
Joined: Mon Nov 14, 2016 2:18 am

Re: High income earner waiting for a bear market to start investing

Post by PDX_Traveler » Wed Oct 23, 2019 1:33 pm

In addition to all the good feedback you've already received, it seems you are missing out on some perspective: if your earning power (and its longevity) plus investment time period of ~40 years is as you state, your current cash pile of ~250K is going to be a very small fraction of the overall pile you'll likely amass. Even *if* you were to incur a 20% loss (say) on your starting investments as a result of normal market activity over the next year or so, your continued investments and long time period of investment make this potential initial losses fairly insignificant. What's more important is to build the discipline of regular investing according to a plan.

User avatar
goodenyou
Posts: 2021
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: High income earner waiting for a bear market to start investing

Post by goodenyou » Wed Oct 23, 2019 1:52 pm

kinaokole wrote:
Tue Oct 22, 2019 11:03 pm
goodenyou wrote:
Mon Oct 21, 2019 9:57 pm
masonstone wrote:
Mon Oct 21, 2019 7:38 pm
HEDGEFUNDIE wrote:
Mon Oct 21, 2019 8:41 am
The real puzzler with this one is thinking one can maintain that kind of income until age 75-80. Unless OP’s occupation is dictator of a small African country, I find that to be unlikely.
The OP is fooling himself, even physicians in non-procedure related specialties begin to slow down due to illness and decreased mobility and mental function at age 65. I have yet to meet a single physician that’s over 75 that can work to generate 800k. This on top the of declining reimbursements will make the OP have much less earning power in his elder years than he anticipates.
My partner is 71. He makes more than that. No signs of slowing down, but we shall see. Still does 10-15 surgeries on his surgical day. He bemoans the fact that his RMDs are mid 6-figures on top of his salary. :oops:
Spine surgeons certainly make a good living, but the suggestion that many have the skills to operate well into their 70's is a bit of a stretch. Your partner sounds like an exception.

Regardless, I have no idea why someone would want to practice that long.
My partner is not a spine surgeon, but we have a 77 year old one in town who is still operating. My partner likes to work and is in good health. He did 2 residencies. One 4 years and the other 5 years. He finished when he was 38 years old. He is the only one that I know that did 2 entirely different residencies and practices them both. He doesn't have much else to do. I won't be practicing in my 70s.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

Pitagoras
Posts: 27
Joined: Mon Apr 08, 2019 9:51 am

Re: High income earner waiting for a bear market to start investing

Post by Pitagoras » Wed Oct 23, 2019 2:30 pm

Maybe my comment is rather meant to learn than to suggest, but if you are keeping 40k a month...why don't you pay off your both cars and safe those 3% of interest cost, in just one month? Additionally, increasing your credit score, peace of mind and so many other benefits? Maybe I am just jealous ;-)

Starfish
Posts: 1461
Joined: Wed Aug 15, 2018 6:33 pm

Re: High income earner waiting for a bear market to start investing

Post by Starfish » Wed Oct 23, 2019 7:03 pm

goodenyou wrote:
Mon Oct 21, 2019 10:47 am
Elysium wrote:
Mon Oct 21, 2019 10:39 am
TomatoTomahto wrote:
Mon Oct 21, 2019 9:08 am
HEDGEFUNDIE wrote:
Mon Oct 21, 2019 8:41 am
The real puzzler with this one is thinking one can maintain that kind of income until age 75-80. Unless OP’s occupation is dictator of a small African country, I find that to be unlikely.
Medical specialist that isn’t surgery related? Neurologist? That would account for the extended training period. My wife comes from a long line of people who enjoy working, but even she wouldn’t say 75-80, although her dad is still actively working in his 90s.

ETA: OP, if you’ve been researching, and you’re smart enough to make close to 7 digits annually, you’d know that you’d get a bunch of “market timing” responses here. If you’re not a troll, read retiredjg’s response. If you are a troll, wheee, you win.
Several giveaways it is trolling, first is plan to work till 75-80, second the income of $850K starting at 40 years, third is car loans of $40k with $250k saved up sitting around bearing no interest, fourth is lack of any other details of options to invest, goals, so on...

My first thought was, if someone planning to work to 80 years then they don't need retirement planning, just keep emergency funds for 1 year and continue working, there is no guarantee any of us will live to 80 even though life expectancy says so, especially if you plan to work that long.
I disagree as someone very familiar with this situation. My email inbox is filled with opportunities like this. My partner is 70 and is double boarded in two completely separate surgical specialties after two different residencies and practices them both. He is 71 and makes significantly more that this young fellow. He plans to work another 5+ years with a portfolio value well north of $10M+. My friend is a spine surgeon and makes $4M+ per year. First-hand knowledge.
He is obviously a troll.
Nobody can say at 40 that they plan to work until 80. A doctor knows what is the real chance to be able to work at 80.
A doctor does not suffer like most people suffer from selection bias. The only visible 80 y olds are the active ones. You don't see the majority in the retirement houses, hospitals, graves or just not coming out of their homes. You don't see the ones with arthritis, arthrosis, Alzheimer and that is only a subset of letter A.

And then the market timing thing. Common.

User avatar
JoeRetire
Posts: 3908
Joined: Tue Jan 16, 2018 2:44 pm

Re: High income earner waiting for a bear market to start investing

Post by JoeRetire » Wed Oct 23, 2019 7:23 pm

Antarctic wrote:
Mon Oct 21, 2019 3:20 am
I have saved up $250K already and am reading and learning as much as I can about investing.
Keep reading and learning. You have a way to go.
Don't be a lemming.

rberg922
Posts: 2
Joined: Tue Jul 16, 2019 12:00 pm

Re: High income earner waiting for a bear market to start investing

Post by rberg922 » Wed Oct 23, 2019 8:22 pm

I was saying the exact same thing in 2014, why invest when the market is at all time highs? Now look at where the market is.

kinaokole
Posts: 25
Joined: Tue Oct 22, 2019 10:48 pm

Re: High income earner waiting for a bear market to start investing

Post by kinaokole » Thu Oct 24, 2019 3:49 am

Starfish wrote:
Wed Oct 23, 2019 7:03 pm

He is obviously a troll.
Nobody can say at 40 that they plan to work until 80. A doctor knows what is the real chance to be able to work at 80.
A doctor does not suffer like most people suffer from selection bias. The only visible 80 y olds are the active ones. You don't see the majority in the retirement houses, hospitals, graves or just not coming out of their homes. You don't see the ones with arthritis, arthrosis, Alzheimer and that is only a subset of letter A.

And then the market timing thing. Common.
I don't think he's trolling. Just starting his career after a prolonged period of delayed gratification, he may just be a little naive. But I agree a doctor should realize the chance of maintaining one's mental and physical acuity to a level necessary to practice procedural medicine until age 75-80 is low. Perhaps more importantly, anyone practicing in today's medical climate will realize the desire to work that long is also extremely uncommon.

mortfree
Posts: 1849
Joined: Mon Sep 12, 2016 7:06 pm

Re: High income earner waiting for a bear market to start investing

Post by mortfree » Thu Oct 24, 2019 4:27 am

OP. If you come back to read this...

If you want to feel in control of your buying, set limit orders at prices you are willing to purchase.

For instance, I set a limit order on VTI for 146. I had to wait a little but it executed.

Another thought is given the high income and years of schooling, you may think that investing requires similar effort. It doesn’t.

Finally, if you are a troll - well played.

bltn
Posts: 579
Joined: Mon Feb 20, 2017 9:32 pm

Re: High income earner waiting for a bear market to start investing

Post by bltn » Thu Oct 24, 2019 9:27 am

retiredjg wrote:
Mon Oct 21, 2019 1:43 pm
Antarctic wrote:
Mon Oct 21, 2019 11:03 am
I will start investing probably in international ETFs and small cap...
Nah. Not a great move.

Consider holding the entire US market, the entire foreign market, and bonds. A healthy dose of bonds.
Very good advice. Get rid of that market timing tendency right now if you can. Almost nobody beats the market over a 20-30 year period. To equal the market, you must incur very low expenses and keep emotion out of your investing. Just dollar cost average like clockwork and follow your budget. And from experience I can tell you, with a busy, well paid job, you don t have time to be screwing around with real estate. Just do what works for everybody who follows a few simple rules with dollar cost averaging the stock market. Market returns will make you rich if you let them.
Good luck.
Last edited by bltn on Thu Oct 24, 2019 1:02 pm, edited 1 time in total.

User avatar
CyclingDuo
Posts: 2712
Joined: Fri Jan 06, 2017 9:07 am

Re: High income earner waiting for a bear market to start investing

Post by CyclingDuo » Thu Oct 24, 2019 9:40 am

Antarctic wrote:
Mon Oct 21, 2019 11:03 am
Hi guys, thanks so much for all the input I read everything and appreciate all the ideas, and find funny the trolling comment but its understandable. So let me clear up a few things.
- I lived in debt my whole life. My parents believed in using debt to fund anything and everything and had no problem with it. I grew up fighting this philosophy. I knew nothing about investing and am trying to learn now that I have money for the first time in my life. Last year I gave them $56K to help them pay down their credit cards. My first Booglehead book will arrive today as a matter of fact and I'm going through the Booglehead Wikis.
- I'm keeping my car loans to prop up a high credit score. Since i don't have other loans, I figured these are so cheap why not since it helps my credit score. But I have the funds to pay them off today if needed.
- I pay $15K a month in expenses because - in addition to my expenses - I'm paying my parent's rent and my wife's parent's rent. Yes, I am renting a house too.
- I appreciate the comment about maybe having an unhealthy view of work and money... I will think about this today for sure.
- Thanks you for the comment about investing in small cap and international funds since they may be in their bear markets - great point.

I will start looking for a savings account to move my emergency funds into today. Yes, you all are correct - I do have fear. It's hard to jump in.
I will start investing probably in international ETFs and small cap...
Between 1900 and 2018, there were 33 bear markets, averaging one every 3.5 years.

You are going to have quite a few of them between now and when you retire. Good luck timing all of them. Feel free to track them, along with corrections, here...

https://www.yardeni.com/pub/sp500corrbear.pdf

Invest through thick and thin, and enjoy the fruits of your labor and investments.

:sharebeer
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Topic Author
Antarctic
Posts: 3
Joined: Mon Apr 29, 2019 1:29 am

Re: High income earner waiting for a bear market to start investing

Post by Antarctic » Sat Oct 26, 2019 5:19 pm

Thanks guys. I'm not sure what defines a troll - someone who's actions and belief systems seem so at odds with yours that you have to label them? Makes sense. It's actually a little bit amusing reading all the assumptions here... it speaks of human psychology more than anything else.

I came to this board admitting that I know much less than you guys, looking for a little guidance. I truly appreciate the replies from the very thoughtful people here. Almost done reading my first Bogleheads book. Spoke to some advisers already. Gaining lots of knowledge.

For those wondering, I'm not a surgeon. If I were I'd not want to work until 80. I love my job and find it low stress, I'm home early afternoon, and my commute is 13 min door to door. I am very physically fit training in an Olympic sport for national competitions. I worked very hard creating this life and wouldn't ever give it up.

Post Reply