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  • Investing and Tax question

    I am an early career W2 physician. I have been investing in index funds over the last 15 months (autopay every 2 weeks). Have no student loans. Recently bought a house that was cheaper than our initial estimated budget and thus have some $ to invest. Also got a few quarterly bonuses that did not invest right away. Currently have about ~300k that i have not invested. I will probably have a hefty tax bill in April as the bonuses i receive do not have any federal withholding.

    -Where do you invest money that you know you may need to pay for taxes, in april (~100k-150K). i currently have it in synchrony bank giving me ~1% (which will be taxed too). Any better options for investing?

    -Whats the best strategy for investing the other 150k? At this point i am planning on increasing my autopay amount every month in different index funds and slowly get the money in the market. Is that any other better strategy?

    thanks.

  • #2
    Online savings acct is correct answer for money that you  will need to pay tax.

    For the 150K, you should have a written investment plan with specific allocations and then invest according to that.   If that's too much effort, just throwing it all in Vanguard Total Market is something that you'll be unlikely to regret in the long run (i.e. at retirement).

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    • #3
      -you dont, AR is correct.

       

      -allocate to your strategy

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      • #4
        As Zaphod and AR pointed out:

        • (And as you have already done), it's a smart practice to keep funds you will use in the near future in a liquid account such as a savings account.

        • Having a written investment policy (tied to a financial plan/desired outcome) is suggested.


        With regard to the timing of investment, here are two articles to consider on the topic:

        • From Schwab:
          http://a15.g.akamai.net/f/15/5616/5s/schwab.download.akamai.com/5616/report/costs_and_benefits.pdf

        • From Vanguard:
          https://personal.vanguard.com/pdf/s315.pdf


        Cheers!
        If I had to choose between investment analysis and my mountain bike, I'd choose the mountain bike 100% of the time.

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        • #5
          Or, make a little money on the deposits this way on your $300,000.

           

          https://www.tdameritrade.com/offer/2500/index.html?cid=MIXSTNRET131283220622625268639002  $100-2500

          https://www.merrilledge.com/offers   $600+ Platinum Honors

          https://www.chase.com/online/private_client/private-client-home.htm    CPC -  a lot of fees waived and mortgage benefits like Plat Honors

          --once CPC, you can move $$$ out and still maintain the designation.

           

          That may do better than the simple interest that Ally/Synchrony will give you

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          • #6

            Can you give me an idea as to what type of taxes I would pay on my business earnings? I am helping an innovative high tech company with a great product for small businesses globally. And, due to past relationships throughout my consulting online; we have hundreds of thousands of projected sales in the medical, real estate, and retail businesses as well. Having said that, I am wanting to know the amount of taxes that I will need to pay on my business earnings. What are the percentages that a LLC pays?


            Am so excited about what is occuring and wanting to figure out what type of taxes that I will be needing to pay. And since that this area is also about investing, my partner and I have introduced a patented tech product that is partnering with my company. So, that question is in regards to investing. I have the opportunity to invest in the tech product. Does an investment offset any taxes? 

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