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  • Initial Guidance

    Baring it all. Appreciate the feedback.

    Stage of Life: Last 6 months of Dental Endodontic Residency, Wife is a practicing attorney

    Social Situation: Married, both will be working starting in July. 3 kids, 5,3, 6 months. The kids will be in private schools ($15-17k a year each from age 4+)

    Annual Income: Currently Her $275k. Estimated starting July ~$575-625k combined.

    Net Worth: ?

    State of residence: NY now, PA in July

    Insurance Policies:

    Life: Her $2.5M total. $1M 20-year term, $1.5M term 80,
    Him $2M term 80.

    Disability: Him $12k disability Her has through firm for 60% of salary.

    Debts: He has $135k federal student loans with average 5.75%

    Assets: $60k cash, $150k crypto depends on the day (invested $5k), $90k taxable investment accounts. HSA $5k

    High deductible health plan with HSA

    Adequate auto insurance

    Malpractice policy for moonlighting





    Questions:

    His plan is to work as an associate for 2-3 years and buy into a practice or do a start-up. Her plan is to continue working and based on her current trajectory $225k-$275k salary could be expected for similar role if cut back workload.

    1) Looking to buy a house when we move to PA. It’s a HCOL area. Is it acceptable this early on to get close to the 2x rule? We are fortunate to have a $200k down payment from family.

    2) I'm not sure what my overall asset allocation should be? What do you think?

    3) We expect a $300K-$700k windfall at the end of the year. We plan to pay off student debt and invest the rest. Is this a good idea?


    4) In addition to the above, wife has a real estate trust that pays out $60-70k a year in distributions, but I don't want to rely on it as I am not entirely sure how it is set up.

    5) Should we invest 2021 money in a tax favorable account still?

    6) I need to start reading a lot more about these things. Should I be setting up LLC/ other entities to protect my family?


    Last edited by endotooth; 01-19-2022, 11:55 AM.

  • #2
    1.) I would rent first until you get settled into the city and your job.
    2.) What is your risk tolerance? I'm assuming high given the crypto. Anywhere from age in bonds to no bonds is reasonable.
    3.) Sounds good.
    4.) More information for your own sake would be good but I agree on not counting on that money for now.
    5.) You should be maxing at all available tax-advantaged accounts.
    6.) An LLC for what? You currently have no need for one. Look into umbrella insurance after making sure the rest of your insurances (car, renter's, etc.) are taken care of.

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    • #3
      if your crypto account went from $5k--->$150k i'd go ahead and take that win and move on from investing in crypto.

      Comment


      • #4
        You didn't list your age but from what you wrote you're probably mid 30s. Max all tax-advantaged accounts (457 if it's a good one, 401k/403b, Roth IRA, 401a, check to see if the 401k/403bs have the Roth megabackdoor option).

        When did you put that money into crypto to begin with? Trying to see if you think you were just lucky with that and did it on a whim or you sat down and thought about how you'd react with a huge increase or a huge drop in that investment. How would you react/feel if it went from $150k to $75k in a week?

        1) I'd wait on a house not because you can't afford the 2x rule (you can, especially with that down payment help and the expected windfall) but b/c you need to know the area and your jobs and make sure you're happy with that. Rent a house instead.

        2) We get intense threads about this consider moving to a great school district and not paying for private school. That said, on the HH income you can afford private school.

        3) AA should be what you're comfortable with, and your age. Answer those questions about crypto and then we can better suggest something but ultimately you know the best answer.

        4) Use the windfall to get rid of any loans then I'd either invest the rest or keep more in cash to lower the eventual initial mortgage.

        5) Answered question 5 and for Q6 I see no reason to set up an LLC either

        Comment


        • #5
          Originally posted by JBME View Post
          You didn't list your age but from what you wrote you're probably mid 30s. Max all tax-advantaged accounts (457 if it's a good one, 401k/403b, Roth IRA, 401a, check to see if the 401k/403bs have the Roth megabackdoor option).

          When did you put that money into crypto to begin with? Trying to see if you think you were just lucky with that and did it on a whim or you sat down and thought about how you'd react with a huge increase or a huge drop in that investment. How would you react/feel if it went from $150k to $75k in a week?

          1) I'd wait on a house not because you can't afford the 2x rule (you can, especially with that down payment help and the expected windfall) but b/c you need to know the area and your jobs and make sure you're happy with that. Rent a house instead.

          2) We get intense threads about this consider moving to a great school district and not paying for private school. That said, on the HH income you can afford private school.

          3) AA should be what you're comfortable with, and your age. Answer those questions about crypto and then we can better suggest something but ultimately you know the best answer.

          4) Use the windfall to get rid of any loans then I'd either invest the rest or keep more in cash to lower the eventual initial mortgage.

          5) Answered question 5 and for Q6 I see no reason to set up an LLC either
          But if you just learned more about it JBME..

          OP, agree with all above. Welcome! Tell us more about these term 80 policies and why you need such. I'm also assuming your disability policy is own-occupation

          Comment


          • #6
            Thanks everyone.

            The area does not have any well up-kept rentals at the moment, but we are keeping our eyes open.

            We are both almost 30.

            I invested in crypto back in 2017. It has been worth as high as $350k and has been everywhere in between that and the $5k I invested. I sold $50k worth (about 15% of my holding ) when was near the high and the ~$150k is how much is left today. This week alone it has been as high as $180k and lows of $130k.
            The $50k was taken out as "fun money" and so I could feel I made something even if the remaining drops to $0. We love travelling, not necessarily high end, and most is funded with credit card points. There are a few places in the world I want to visit that will require cash- Antarctica, Svalbard and the like that the crypto was taken out to fund those trips one day.

            I am normally middle of the line in terms of risk aversion, but since we are young I am ok with a more aggressive portfolio. My wife is definitely more on the conservative side, but is willing to stray toward risk if it's appropriate.

            Disability is own-occupation. Term 80 was intentional for a personal reason.

            Comment


            • #7
              You’ll find most people here with at least 10 years until retirement are 90-100% equities. If you can stomach it I’d do that but personally have some bonds (I’m 90/10).

              Comment


              • #8
                Originally posted by MPMD View Post
                if your crypto account went from $5k--->$150k i'd go ahead and take that win and move on from investing in crypto.
                Yeah, donate the crypto in my suggestion especially if you plan to itemize this year. I tried donating through Fidelity DAF and although they do accept it they make it pretty painful and charge extra fees for someone else to investigate your basis. I have had better luck with givewell.org

                Comment

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