How to start

[GKidney]

Hi all,

I know this must sound absurdly basic but what exactly is the process for setting up my investments. Do I make an account with Vanguard and then open the IRA and taxable investment account through them specifically, or do I go through my bank?

Thanks!

[VagabondMD]

I think you should spend some time learning investing basics and decide what are your ultimate plans for the trust money that you are receiving. If you are expecting more (perhaps significantly more) down the road, this should be taken into consideration.

In general, you should probably set aside some money for emergencies (or other larger, unplanned expenses), in a savings account (Ally at 1.25% is what I use). If you are investing for retirement (or a long term goal, say 10-15 years or longer), a three fund portfolio with 60% in the Vanguard Total Stock Market Fund, 30% Vanguard Total International Fund, and 10% in Vanguard Total Bond in tax-deferred (IRA) and/or Muni Bond in taxable.

Those percentages can be modified based on your risk tolerance. Vanguard has a quiz that you can take when you are opening your account to help guide you.

Yes, a Roth would be best for your circumstances.

You will open multiple accounts with Vanguard (or whomever), and they will be categorized and titled as "Roth IRA-Brokerage" or "Individual-Brokerage".

No, your bank will not be involved, other than potentially linking your bank account to the Vanguard account to transfer funds in either direction.

 

At this point, you should probably read some books on investing-- I like Bernstein's Four Pillars of Investing as a first book, but there are others (Bogleheads Guide, White Coat Investor, etc.)-- probably prior to taking a plunge. You should probably act relatively quickly on the Roth IRA--you have until April, 2018 to make your 2017 contribution.

[Peds]

GKidney wrote:

Hi all,

I am fortunate to have just started residency in June with no debt and I’m in my mid to late 20s. My current salary is btw 50-60k. I currently rent a studio near my hospitals and I am not married. I plan to get married sometime in the future and have 1-3 children. A few hundred k from my trust is coming into my possession and I’m new investing. I’m a generally frugal individual and would like this money to work for me. I’m planning on investing with Vanguard in an index fund and possibly some bonds (ratio undecided). But if anyone recommends diversifying with a couple of different investment products given my financial situation I’d like to hear your thoughts.

I understand there are different benefits to investing from a Roth IRA vs traditional IRA. I was wondering if it would be more beneficial for me to open a roth IRA vs traditional IRA, given I currently have relatively low income (plus this sum) and will have a salary of 300k+ in 3.5 years (much higher tax bracket). As I understand now I would not be able put most of the money in the IRA due to the annual limit. Does this mean I should open an IRA and max it out annually; then in addition to this open a taxable investing account to invest a significant sum of the left over money I have?

Any advice and rationale on this matter would be greatly appreciated.

Also I know this must sound absurdly basic but what exactly is the process for setting up my investments. Do I make an account with Vanguard and then open the IRA and taxable investment account through them specifically, or do I go through my bank?

Thanks!

Click to expand...

1) read read read. perfect time to start your financial literacy journey.

2) nice trust....

3) taxable bonds now don't really matter, but will in your future most likely. total stock and international index funds are fine.

4) only ever use a Roth IRA. go start the process now so it is done by this calendar year. just makes life easier but as noted above you have till april. max it out (5.5K)

5) then set up your residency's 401k and max it out each year (18K).  this will in essence put the trust money into retirement accounts. if you cant live off of your reduced pay, you just spend from the trust.

6) you use vanguard/fidelity/etc. its all online.

[StarTrekDoc]

What would your grantors want you to do with it?  Use that as your guidance first; you'll have plenty of your own funds to invest appropriate into the future.

As far as financials, Peds hit it on the head-- read up on differing opinions; formulate your own plan of attack that matches your lifestyle and tolerances.

Always max out tax sheltered and 529 plans (pay it forward, right?);  if donation minded -  donor directed funds---even perhaps through the trust (consult lawyer on this to max savings).