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In serious need of investment advice

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  • In serious need of investment advice

    Hi all..

    Fairly new to posting here but have been roaming the boards and learning for a while. Please bear with me as this will be an in depth post.

    First off I am 30 years old and single. Currently living on <10% expenses of my monthly salary. Renting and planning to buy a house once the market cools off a bit. Have been able to pay off my student loan 200k in my first year of practice. I am currently maxed out on 401k, HSA and backdoor Roth.

    So, needless to say I still have an excess amount of cash available and would like to invest it all. My goal is to let my money grow over time and have passive income to supplement my occasional work. What should I invest my money in? Should I invest on a brokerage account with ETFs, indexes, mutual funds, stocks? What other options do I have?

    I have also spoken with some financial advisors, how can I get the hint of a good firm? One guy suggested rebalancing my portfolio to receive more "after tax-tax deferred" benefits such as mix of backdoor Roth, pretax 401k and life insurance with investments (at first I hated this advice but after looking more into life insurance, it wouldn't be a bad option).

    In essence, I'm frugal, would like to have my hard earned money make money. What should I do?

  • #2
    choose an asset allocation (ratio of stocks and bonds) appropriate to your goals and risk tolerance

    put your money in a mix of low cost index mutual funds. Vanguard funds are excellent.

    keep working and saving your money
    my radiology group is hiring, pm if you can do msk and are interested

    Comment


    • #3
      Work on developing a personal investment policy statement and that will help guide you.

      Also, never mix insurance and investment. Insurance policies aren't investment vehicles despite what the salespers...I mean, financial advisor tells you.

      Comment


      • #4
        Well don't get a whole life policy and don't go with the guy that suggested it, for starters. You have no debt and and a crap ton of money. It would be hard to mess this up. You don't really need an advisor but if you insist on one, get a fee only advisor. You could figure out a backdoor roth ( several posts on the blog about it) or if you are lazy like me, just open a taxable account and invest in index funds at vanguard.

        Comment


        • #5
          Full stop. Danger, Will Robinson. Life insurance isn’t a bad option, it a bordering on criminal option.

          Life insurance is to help those who depend on your income in the event of your early demise. I need life insurance because I have a wife and kids who need to eat after my death. Life insurance is not for investing. Period. You are about to lose money. A lot of mo way. Stop listening to a salesman who is trying to make 5 figures off you. This cannot be overstated. Why in the world would you spend a dime on a life insurance policy when no one depends on you? You are getting hustled.

          You need an emergency fund.

          You need good own-occ disability insurance.

          Youre already maxing your retirement accounts. That’s great. Any extra cash should go to 1) emergency fund if you don’t have one (high yield savings account 2) home downpayment savings (high yield savings account) and. 3) taxable account.

          As far as your taxable account goes, you have one of two option:

          1) park it in a savings account for the next 1-6 months while you study personal finance.
          2) put it into vtsax while you study personal finance. You could lose money doing this, but this isn’t a bad idea.

          Comment


          • #6
            As a simple start-up way to get things in order you might consider a Vanguard advisor. Cost is low and the advice will be in line with the general investing advice you will find on this forum. In order, though, to really understand your situation we need more details. Married? Children? Financial goals? Etc.

            Comment


            • #7
              Welcome to the board. Start here (this forum). Agree with all the responses so far.

              And here --> https://www.bogleheads.org/wiki/Getting_started

              Bogleheads (their forum & the wiki) is also a great place to learn. Skim for any topics related to "portfolio", "advice needed", etc... You will find similar situations to yours, & recommendations. That will give you a good framework. Then piece yours together, or post your own situation (like you have done here).

              Specifically for you:

              Excellent you've maxed your 401k, HSA, & backdoor Roth IRA. Generally those should be your first priorities. What you choose to invest in is crucial. Widely diversified low cost passive index funds. VT or VTWAX to start. Depending on your "risk tolerance" you add an appropriate percentage of bonds. Once you get more knowledgeable you can start "tilting" if you so choose.

              Excellent you've paid off $200,000 in loans.

              Excellent you are living so frugally.

              Excellent you are young.

              Excellent you are singl- (oh wait... but you do save a lot of money not going out all the time!)

              Insurance is to mitigate risks. Not to grow wealth. Disability insurance as needed. Term life insurance only if you have people dependent on your income. Property & liability insurance as needed. Umbrella insurance if needed. I don't think I'm missing any others...

              Do not buy individual stocks as investments. Those are for gambling. Money you would be willing blow at the casino.

              You (& I & everyone else on the planet) do not know when the housing market will "cool off". Might be in February. Might be March 2023. If you see something well priced, good location, checks the boxes, job is stable, etc... don't be afraid to buy. Don't rush but don't wait.

              Comment


              • #8
                A lot of good advice here to heed.

                You could probably due without a financial advisor based on your natural saving/investing bias, but if you feel a need certainly go with fee only. They won't try to sell you unnecessary or excessive insurance policies - I heard they get to keep up to 50% of your first year's premium payments. Even if you get a fiduciary advisor, we're all human so you still have to educate yourself.

                Since your tax advantaged accounts are maxed out you will need a taxable account with solid investments for long term capital gains rates, choose appropriate based on your age and risk tolerance. I would advise against individual stocks or leverage without years of lower risk investment experience under your belt.

                Maintain a minimum 6-9 month emergency funds (I keep mine in laddered CD's).

                Give yourself some time for due diligence before making any big decisions and keep your emotions in check when making such decisions.

                Never stop educating yourself about personal finance and surround yourself with the accomplished "been there done that crowd" so trusted friends can help.

                Okay for now since your single, but excessive frugality can be pathological especially if/when you become no longer single. Spend but do so wisely and understand ongoing maintenance costs no just acquisition costs. Derive your happiness from quality experiences and not things, and many experiences don't cost an arm and a leg. Hiking thru a park with a good friend costs nothing. Avoid excessive subscription services, they're everywhere now.

                You'll do great.

                Comment


                • #9
                  •You do know you can walk into Fidelity or talk with either Fidelity or Vanguard free of charge?
                  Do that and never speak with that last “advisor” I again.
                  • How are you investing your retirement accounts? Post that. If you have a reason for the AA, explain that.
                  Should be heavy in stocks and light if any bonds.
                  • Why the rush for a house? It’s not bad, but it will cost you. Just because you can, doesn’t mean you should. “Because” is insufficient.
                  •Get that disability insurance close to maxed out. Use one of the WCI vendors.
                  •You do know you are on the best path already financially. Not sure why you want to change that.
                  •Retirement savings at 20%+ (including taxable) and spend what you need and become rich if you choose. Low cost two or 3 MF or ETF’s will do. (Market index, Intl, bond index).
                  Fine tune it for tax efficiency has you learn or post one and get feedback.

                  Don’t create work or artificial problems. You reached one goal, plan your next. Just don’t cut too much or up the lifestyle creep unnecessarily.

                  Comment


                  • #10
                    Thank you all for this advice. It has been great.

                    I should mention that I an single but have a stable girlfriend. Great gal who loves simple things like me. We do our occasional vacation trips but we are able to keep the cost low. She makes roughly 70k/ yr and is working on her MBA.

                    So I mentioned I'm maxed on my 401k, backdoor Roth and HSA. I also have a own occ disability insurance.

                    As far as the advisor who suggested that, as soon as he told me life insurance I said no.. but he said he will show me something I like and that's when he sort of lost me.. but i like to do my own research anyways. The point that he was trying to make is that I have most of my retirement funds in tax free - taxes on investments but he said that life insurance is tax free - tax deferred investments. Which makes sort of sense but still do not want it.

                    Furthermore, my retirement accounts are all in low risk index funds. For a brokerage account with vanguard what type of low cost indexes and/or ETFs should I choose? I should mention that I'm high risk tolerant. As so, if the market crashes tomorrow and I lose 50% of my money I would buy a ************************ of alot more. Keeps my buying cost low.

                    Thanks all

                    Comment


                    • #11
                      Originally posted by Sleepez View Post
                      For a brokerage account with vanguard what type of low cost indexes and/or ETFs should I choose?
                      go read bogleheads guide to investing, then retirement, then common sense, then ferri asset allocation, then WCI book.
                      theres just a knowledge deficit here so it takes some work to become fluent.

                      Comment


                      • #12
                        I wouldn’t meet again with that advisor. He’ll show you all kinds of fancy charts and graphs that appear to make an insurance policy a good idea and many people end up falling into that trap.

                        If you are risk tolerant then I’d just open a taxable account and plow money into a US total market fund (such as VTSAX).

                        Comment


                        • #13
                          Run from that advisor asap. Click on the wci post https://www.whitecoatinvestor.com/wh...ife-insurance/ for a better explanation. See how with whole life you will likely have negative returns for at least 10 yrs. Compare apples to apples: whole life vs term life plus the difference in cost invested in a taxable account.

                          But you are on the road to great financial success already

                          Comment


                          • #14
                            Originally posted by Sleepez View Post
                            Thank you all for this advice. It has been great.

                            I should mention that I an single but have a stable girlfriend. Great gal who loves simple things like me. We do our occasional vacation trips but we are able to keep the cost low. She makes roughly 70k/ yr and is working on her MBA.

                            So I mentioned I'm maxed on my 401k, backdoor Roth and HSA. I also have a own occ disability insurance.

                            As far as the advisor who suggested that, as soon as he told me life insurance I said no.. but he said he will show me something I like and that's when he sort of lost me.. but i like to do my own research anyways. The point that he was trying to make is that I have most of my retirement funds in tax free - taxes on investments but he said that life insurance is tax free - tax deferred investments. Which makes sort of sense but still do not want it.

                            Furthermore, my retirement accounts are all in low risk index funds. For a brokerage account with vanguard what type of low cost indexes and/or ETFs should I choose? I should mention that I'm high risk tolerant. As so, if the market crashes tomorrow and I lose 50% of my money I would buy a ************************ of alot more. Keeps my buying cost low.

                            Thanks all
                            Again. Stop. He’s going to show you smoke and mirrors and try to sell you a variant of whole life. There are no other vehicles. There is no reason to ever speak to him again. He has nothing to offer you. You are better off than that “advisor”/salesman.

                            Comment


                            • #15
                              Great advice above. Just keep shoveling extra into low cost index funds and read up on it. After you learn everything you need to know about investing and personal finance you will learn that the best thing to do is to shovel money into low-cost index funds and you'll be very happy with yourself.

                              Comment

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