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Investment plan review

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  • Investment plan review

    Hi All,

    Would love everyone’s input on our family’s proposed financial plan and would appreciate any recommendations you guys would make to make this plan better (the current plan is very much a work in progress). We are definitely lagging behind in terms of getting started with our investments, but thankfully have not made major financial mistakes yet (other than of course not starting our retirement funds sooner!).


    Age: 32 (both of us, dual physician couple). Single child 2 years old.

    Debts: $10k car (0% APR) – plan to pay it off well before 0% APR expires

    Tax bracket: 33% (married) – both of us are hospital employed



    Emergency fund – working on building it up (currently at 3 months of expenses)

    (Hoping to buy a house in about 4-5 years)



    His 403b (fidelity): 5k (2050 Blackrock fund)

    Her 403b (fidelity): 7k (2050 Blackrock fund)


    Proposed savings plan:

    His 403b: $18,000 annually (no match)

    His Roth IRA (backdoor): $5,500 annually

    Her 403b: $18,000 annually (+$9,000 match)

    Her 401a: $9,000 annually

    Her Roth IRA (backdoor): $5,500 annually

    Total tax advantaged: $65,000 per year


    College fund: $28,000/year x 5 years (important to us to help pay for as much college/professional school as possible)


    Proposed asset allocation:

    Total stock market      45%

    Growth index              10%

    Small Growth              10%

    Small Value                 10%

    Emerging Market           5%

    Total int stock              10%

    Bonds                          10%




    • Is our savings rate reasonable or should we be saving even more?

    • Is the above proposed asset allocation reasonable? If not, what would you recommend?

    • How should we divide up our asset allocation between Roth and pre-tax accounts (i.e. which assets should be in the Roth and which in the pre-tax accounts)? Planning on opening the Roth at Vanguard, but the pre-tax accounts are at Fidelity.

    • Should we contribute smaller amounts per year to the college fund or contribute large amounts for fewer years and let that money grow? If we have more kids, it will be harder to contribute $28k per year for each child.

    Thanks in advance!

  • #2
    I think it overall looks pretty great, youre in a great position overall. Since you're a dual doctor family obviously you should aim to put as much away as possible since you should be able to easily live on one persons salary (depends on cost of living somewhat of course).

    I think/hope you'll be fine and over funded with your college plan depending on number of kids, whether or not you do a 529 just depends and there are plus/minuses to either way.

    No specific advice beyond trying to save more because you should be able to.


    • #3
      1.  Have any student loans?  Those should be a priority if so.  I'm also operating under the assumption that you don't have any other debts (credit card, etc)

      2. If you're dedicated to the college fund, I'd at least fund as much as you could in a 529 to get the state income tax reduction.  Then, after that, could consider UTMA.  If you contribute $28k per year for 20 years, that's a lot of education money.  Probably don't need that much unless you channel your inner-Duggar.

      3.  Asset allocation looks reasonable (a litle complicated but reasonable if you want to tilt small caps).  Probably doesn't matter much where you put money right now.  I'd spend more time picking out the best funds from the portfolios.


      • #4
        The savings rate might be ok but I can't tell because you have to give out the income total to calculate it or you need to calculate it and tell us. On the asset allocation I would not put 10% into a growth index.  Value beats growth over time.  Counterintuitive but true. You are going to need a taxable account to save for the house down payment and E fund.  I think it is great that you are doing all this planning prior to running out and buying a house!


        • #5
          Without knowing the total income it is difficult to know if $65K per year is adequate or $28K per year for 529 plan is feasible.

          In general, for a 2 physician couple living in average COL, managing on one income and investing the other is a great idea. If you cannot do it with one child, you will definitely not be able to do if another one or two come along.


          • #6

            You are going to need a taxable account to save for the house down payment and E fund.
            Click to expand...

            I hope you're alluding to short term bonds for the down payment. Putting that money in equities is too risky. A CD would be another, even safer choice. He/she'll want the money to be there when the time comes, not particularly looking to make huge returns in the relatively short timeframe.


            • #7
              Yes the OP indicated 4-5 years for a house so I would do a short term bond fund not equities.  Depending on what their total income is they may have room for equities in a taxable account as well.


              • #8
                Divide long-term savings (not for house, etc) equally among:

                LC Growth

                LC Value

                SC Growth

                SC Value



                Emergency fund s/b in highest-interest MMA you can find.

                Savings for house can be in the above portfolio if you are flexible on purchase date (i.e. can delay buying if the market is down). Otherwise in high interest MMA account.

                Sounds like you have a reasonable framework for a plan.
                Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


                • #9
                  Thank you all for responding! Sorry for the delay in my response.


                  @Zaphod – I will be using a 529 plan for the time being until the account gets >$300k – I figure college+professional school in 18-20 years will be well over that amount and none of our kid(s) will qualify for any financial assistance.


                  @jhwkr542 – don’t have student loans; fortunately, my parents have paid everything off and it was helpful and therefore my wife and I decided to pay it forward to our kid(s). I agree 28k for 20 years will be a lot of money and will be unnecessary. I was hoping to be aggressive for the first 5-7 years contributing 28k per year, then letting it grow.


                  @hatton1 – thanks for your tip on value rather than growth. I did look more into this and you are right on. I will modify our AA accordingly!


                  @Kamban – we are definitely hoping to live off of one income if possible. Things are just getting started for us, but that’s definitely the goal.


                  @jhwkr542 – I will likely save in a savings account for the house down payment. Thankfully we have a good 4-5 years before we are probably going to buy. And our first house will be a higher-end starter house (is there something as such?!) rather than a “doctor” house.


                  @jfoxcpafp – appreciate your insight on AA. Will definitely incorporate in our plan.


                  F/u question: how should I divide up assets b/w 401K, ROTH and taxable accounts to minimize tax burden?


                  Thanks all!


                  • #10
                    Put reits if you buy these into your Roth.  Small cap value would work well in your Roth.  Tax deferred you could put bonds and any index that has a significant dividend.  Keep your house down payment in your taxable account. You will not need the investment income for years so put stuff that pays income in your tax protected space.