M.D. in early 30s, starting 4th yr as attending. Wife taking a few years off to stay home with kids. Goals: debt free by the time we are 40 (6 years) and be on our way to F.I. Considering this we are trying to decide if it would be better to put current (and future) savings to mortgage or invest to tax-efficient index funds?
The #s: Salary of $320k/yr. Maxing 401k/match, 457b, backdoor IRA, spouse IRA, HSA, 10k/yr to 529s x 2, and $500/mo to taxable brokerage account (more on that in a minute). Recently refinanced mortgage to 15 yr at 3.25% with payment of $1900/mo and current balance $223k. Only other debt, my student loans, will forgiven in full through state grant in 15 mo (1/2019). Cars paid, toys paid.
The advisor and taxable account: Relatively new to the WCI world, so still have fiduciary financial advisor who we are paying $800/yr. He started our first taxable brokerage account 5 mo ago. Investing $500/mo to JP Morgan Tax Aware Fun, expense ratio of 1.47.
Question 1. We currently have approx $80k in savings from recently matured 1 yr CD. (In both scenarios we plan to to increase taxable investment to $2000/mo)
Should we?
A) Pay this to mortgage? Would save approx $24k interest v 15 yr payoff. With $800/mo increase in payment/mo, would be debt free in 6 years
B) Invest this taxable brokerage fund? Estimating 8% return, 2.9% inflation, and 15% tax would yield approx $30k/6 yrs. Would add $1800/mo extra mortgage payment to payoff in 6 years. This choice has potential ROI, but of course more risk.
C) Combination of the above?
Question 2. Regarding taxable investment account and future increased monthly investment, the more I learn about investing the more an expense ratio of 1.47 makes me cringe. I'm sure everyone reading this is screaming "Vanguard!" We should really pull the plug on JP Morgan account and change to something like Vanguard Tax-managed balanced fund (expense ratio of 0.9), right? Advisor didn't seem excited about this, promoting performance of this fund and tax advantaged. I've never started an investment account and am a bit nervous to do so now.
Should we?
A) Change all to Vanguard, its not that hard start and manage fund on your own
B) Contribute to both and keep learning/reading for the next year or so
C) Keep funding all to JP Morgan fund
Appreciate any thoughts and suggestions!! 8-)
Dr. J.
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The #s: Salary of $320k/yr. Maxing 401k/match, 457b, backdoor IRA, spouse IRA, HSA, 10k/yr to 529s x 2, and $500/mo to taxable brokerage account (more on that in a minute). Recently refinanced mortgage to 15 yr at 3.25% with payment of $1900/mo and current balance $223k. Only other debt, my student loans, will forgiven in full through state grant in 15 mo (1/2019). Cars paid, toys paid.
The advisor and taxable account: Relatively new to the WCI world, so still have fiduciary financial advisor who we are paying $800/yr. He started our first taxable brokerage account 5 mo ago. Investing $500/mo to JP Morgan Tax Aware Fun, expense ratio of 1.47.
Question 1. We currently have approx $80k in savings from recently matured 1 yr CD. (In both scenarios we plan to to increase taxable investment to $2000/mo)
Should we?
A) Pay this to mortgage? Would save approx $24k interest v 15 yr payoff. With $800/mo increase in payment/mo, would be debt free in 6 years
B) Invest this taxable brokerage fund? Estimating 8% return, 2.9% inflation, and 15% tax would yield approx $30k/6 yrs. Would add $1800/mo extra mortgage payment to payoff in 6 years. This choice has potential ROI, but of course more risk.
C) Combination of the above?
Question 2. Regarding taxable investment account and future increased monthly investment, the more I learn about investing the more an expense ratio of 1.47 makes me cringe. I'm sure everyone reading this is screaming "Vanguard!" We should really pull the plug on JP Morgan account and change to something like Vanguard Tax-managed balanced fund (expense ratio of 0.9), right? Advisor didn't seem excited about this, promoting performance of this fund and tax advantaged. I've never started an investment account and am a bit nervous to do so now.
Should we?
A) Change all to Vanguard, its not that hard start and manage fund on your own
B) Contribute to both and keep learning/reading for the next year or so
C) Keep funding all to JP Morgan fund
Appreciate any thoughts and suggestions!! 8-)
Dr. J.
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