Intern: Clarifying savings and financial plan

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  • Avatar JDOG 
    Status: Resident
    Posts: 5
    Joined: 08/18/2019

    Hi there I’m an intern and am currently saving 50% of my income in a low budget city. I have 25,000 saved in a high yield SA and max my RIRA. I don’t get a 401k match and the options are all pretty terrible (high fee ratios, active funds). I would like to invest in Vanguard but the minimums are 3000k each. How does one build  a balanced portfolio if it takes me a whole year just to buy the minimum of a 20/80 bond/stock split using their index funds? My portfolio would be grossly out of proportion (just having 3000k in Total stock market and 3000k in total bond) as i incrementally try to add money to each fund and try to re-balance it over the next few years. I especially am risk-adverse since I dont make a lot and am planning on going for PSLF later. Thanks! Should I be doing something else entirely with my savings?

    #239549 Reply
    ACN ACN 
    Status: Physician
    Posts: 635
    Joined: 01/08/2016

    You don’t need a balanced portfolio right now; put everything in stocks.  You can also invest in VTI (ETF vs the mutual fund), which is $1k min or a target retirement fund until you have $3k then convert it to Total Stock.

    If you're ever having a bad day, just remember in 1976 Ronald Wayne sold his 10% stake in Apple for $2,300.

    #239568 Reply
    Liked by wonka31
    CordMcNally CordMcNally 
    Status: Physician
    Posts: 2851
    Joined: 01/03/2017

    A few options:

    1.) Use your $25k to get you over the $3k hump. If you save 50% of your income, $25k is at least a year’s worth of expenses.

    2.) Use ETFs.

    Your asset allocation being “out of whack” is largely irrelevant when your portfolio is small. What specialty are you in and how much do you owe in student loans?



    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #239570 Reply
    Avatar wa2106 
    Status: Physician
    Posts: 185
    Joined: 11/29/2017

    I would actually recommend you give yourself permission to spend more

    #239572 Reply
    Avatar Anne 
    Status: Physician
    Posts: 1174
    Joined: 11/07/2017

    Are you saving so much because you are a busy intern with no time/desire to spend more or are you actively trying to “live on half” of an intern’s salary and foregoing things you really want?

    How much student loan debt do you have and how long is your planned residency/fellowship?

    #239585 Reply
    Avatar jhwkr542 
    Status: Physician
    Posts: 1316
    Joined: 02/15/2016

    If you have a Roth 401k option, then contribute to that before starting a taxable account. That 1% expense ratio is nothing for a few years while you’re just starting out. After residency, you can roll it out to a Roth IRA.

    #239590 Reply
    Liked by Lordosis
    Avatar bullsdoc 
    Status: Resident
    Posts: 52
    Joined: 07/06/2018

    Get Roth IRA to 6K, get 4-5K in a high-yield account for upcoming fellowship, licensing things depending on how long your residency is, and then the rest to 401K.  Agree that you could also give yourself a bit of a raise if this level of saving is preventing you from doing things like weddings, occasional vacations, etc. Need to breath in residency, it’s hard

    #239595 Reply
    Avatar Peds 
    Status: Physician
    Posts: 4447
    Joined: 01/08/2016

    If you are saving 50% that is 27-30K. Which means you can max out a rIRA in 3 months which means you can buy either TDF 1K, total US 6K, or ETFs at share price.

    #239602 Reply
    Lordosis Lordosis 
    Status: Physician
    Posts: 1862
    Joined: 02/11/2019

    I would contribute to a Roth 401k if you can. Even if it is bad funds it is only for a little while and if you pass on the space you lose it. The us always a ton of taxable space to go around.
    If you do not want to do that then just by VTSAX until you have enough to diversify. Savings rate is way more important when the accounts are small.
    Good luck.

    “Never let your sense of morals prevent you from doing what is right.”

    #239674 Reply

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