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Investing advice for a PGY1 with no student loan debt

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  • Investing advice for a PGY1 with no student loan debt


    I'll be starting my residency in internal medicine this coming July with tentative plans to do a fellowship in cardiology. I will be graduating medical school with no student loan debt and have no dependents. As I am only a couple of days into reading WCI and the salary I make as a resident will represent my first salaried job, I am understandably new to the world of finance and investing. As I continue to read and educate myself, I am seeking advice regarding how best to utilize my resident salary in the context of not having student loans to worry about. From my readings, I have heard suggestions including investing in disability insurance, life insurance, setting up a Roth IRA or 401k, and investing in mutual index funds. I would appreciate outside opinions regarding how to invest in my specific situation.


    Thank you.

  • #2
    Wonderful that you will have no student loans - that opens up a world of opportunities. Will you have a 401k or 403b at your new job? If so, does the plan have a Roth IRA option? This is a good point in your career to sock away dollars in a Roth.

    Begin with a Roth IRA and OO (Own Occupation) disability insurance. I don't see any need for life insurance at this point unless your parents and siblings are depending upon your income. Unless you are doing IC locums or have another self-employed side hustle, you won't be able to set up a 401k in your name only (referred to as a "solo-401k", "solo-k", or i-401k).

    Mutual funds and ETFs (Exchange Traded Funds) are the investments you will buy with the money you contribute to your Roth IRA and qualified retirement plan. The account is the receptacle for your money and the funds are what you invest your money in.

    If you have no qualified retirement plans available at work, you can also start a taxable account.

    Keep educating yourself and I hope your training experience is a good one.
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087


    • #3
      I like Reddit's beginner steps for those new to personal finance:


      Step 0: Budget and reduce expense, set realistic goals

      Step 1: Build an emergency fund

      Step 2: Employer-sponsored matching funds (401k, 403b, etc.)

      Step 3: Pay down high interest debts (it appears you can skip this step)

      Step 4: Contribute to an IRA

      Step 5: Save more for retirement (taxable)

      Step 6: Save more for other goals


      I think these are reasonable guidelines but you're in a little different situation than the general public. You're way ahead of the game without having any student loan debt. Reading through your post, I'm going to guess you don't have a significant other at this time. If so, you don't need life insurance since nobody depends on your income. Disability insurance would be a good idea since it'll only get more expensive the older you'll get. I would also look into whether your health insurance will qualify you for an HSA.


      When looking into investing, the single best thing you can do is to look at no fee, low expense funds. Pretty much every major firm (Vanguard, Fidelity, etc.) have options to meet this although you may be somewhat limited in your employer-sponsored plans. Remember, the amount of time your money is in the market, generally the better. Invest early, invest often, and enjoy your future financial freedom.


      • #4
        What Joanna said. Roth for whatever you invest, good DI, no need for life at this point (after all, who would the insurance pay out to if you got no spouse or kids?), and taxable account if anything is left over (which I doubt you will have if you max out a Roth 401k or 403b). Make sure to have an emergency fund. And enjoy life. Residency, in many ways, is worse than med school.


        • #5
          Thanks, all.


          • #6
            I'd agree with emergency fund, Roth, 401k, taxable savings, and a thank you to whomever/whatever allowed you to be debt free!

            What are you goals? Residency, fellowship, career, retirement age, lifestyle, geography, family. Those thoughts will help you write an IPS too.