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Soon to be new attending in the wake of corona - advice?

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  • Soon to be new attending in the wake of corona - advice?

    Hi - I'd appreciate any input on my situation. I'm going to finish residency and start working in August as a new attending. Finance newbie.

    Stats: Single. ~40k in a high yield savings @1.7%, making ~5k/mo (salary + signing bonus), $8k liquid in checking (paying for boards etc coming up), $2k in HSA, $100k student loans (was on REPAYE, finishing 3 years of half subsidized in August 2020 - joining a PP, no PSLF planned). Own my own house which I will be selling. No other debt. Will be making >$400k range when graduating.

    1) Maxed out Roth IRA for 2019. From my understanding, I can't do that in 2020 given my upcoming income, and am planning to do a backdoor conversion w/ $6k.
    2) Given that federal student loan interest is zero for the time being, not touching that. Will likely refinance privately to take advantage of a low rate in August, then pay the minimum.
    3) Would it be better to dump $30k into index funds (leaving a $10k cushion till I start working)? Or lock some in a no penalty CD from Ally at 1.7% now?
    4) Anything else I'm missing or should be doing? Current residency and upcoming employer does not yet offer a 401k match. I do not have a (Roth) 401k / 403b.
    5) I plan to invest in real estate at some point - would it be worth setting aside anything for that now or waiting?

    Thanks!

  • #2
    Welcome to the board (first post but you've been here for a while I guess)

    I'd put your money into the market. I always advocate lump sum investing. But I can't go against dollar cost averaging into the market right now. Personally a CD isn't attractive to me unless the funds would be needed "soon".

    But... What is the rate on your student loans? Might make sense to take advantage of the interest rate waiver until it's up then kill the loans off. Then CD (or stable bond fund) would be a better choice.

    I wouldn't hold money up for future real estate investing.

    Why are you selling your home?
    "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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    • #3
      I'm moving cities!

      Through what vehicle would your recommend putting money through the market? My Roth IRA is through vanguard, and I plan to backdoor with vanguard.

      My student loans are ~5.7%, half of which is subsidized until August 2020 (three years of REPAYE); of course this is zero right now. I feel like refinancing privately around August 2020 could net me a fantastic rate, right?

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      • #4
        I would keep $30K -to all of it in high yield savings, as an emergency fund, especially starting out. I’d open a taxable account, and start dollar cost averaging into a two or three fund portfolio when you start working. I’d max my portion of the 401k, and backdoor Roth what I could. But that’s just me.....

        How much cash will be coming your way from the sale of the house? What is your vehicle situation? What are you housing plans when you graduate?

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        • #5
          Moving is a good reason...

          At 5.7% I'd pay off the loans before long term investing. So I'd find a high yield savings account & hit the loans hard when the interest kicks back in.
          "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

          Comment


          • #6
            Originally posted by Jaqen Haghar MD View Post
            I would keep $30K -to all of it in high yield savings, as an emergency fund, especially starting out. I’d open a taxable account, and start dollar cost averaging into a two or three fund portfolio when you start working. I’d max my portion of the 401k, and backdoor Roth what I could. But that’s just me.....

            How much cash will be coming your way from the sale of the house? What is your vehicle situation? What are you housing plans when you graduate?
            Not sure house-wise yet, but I'd say 10-15k is a reasonable estimate. I have a fully paid-off Toyota that is somewhat recent and that I plan to keep until it dies. I'm probably going to rent for the first year to feel out the city and then go from there.

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            • #7
              Originally posted by Cubicle View Post
              Moving is a good reason...

              At 5.7% I'd pay off the loans before long term investing. So I'd find a high yield savings account & hit the loans hard when the interest kicks back in.
              So you think even with the market the way it is, it'd be better to pay off the loans? I keep seeing ads for private refinancing in the low 2%... Thanks for any input!

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              • #8
                ^^^ Yes. Paying off your loans is a guaranteed 5.7% return on your investment (your payments). Historically the market has returned 10% per year, but looking ahead I always presume 5-6% annual returns. So do many brokerage groups. Future casting & postulating but paying off your loans also gives you stability.

                But if you could get 2%... then I'd be tempted to keep the loans & invest. My personal cutoff is ~5%, but for others I say 4%. Loan rates under that I'd keep the loans. Above that I'd pay the loans off.

                My opinion.
                "Oh look another bajillion point declin-Ooooh!!! A coupon for pizza!!!!" <--- This is what everyone's IPS should be. ✓✓✓

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