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  • Peds
    replied




    Older thread, but was hoping to ask a similar question about starting a first Roth IRA. Assuming a resident knows they’ll be able to contribute a lot more shortly, would it make most sense to fill that Roth space from the start with Vanguard small value, REIT funds, etc knowing these later would probably make the most sense in the tax-advantaged space, or just go with Total stock market or total international to keep it simple early.

    Follow-up question, if one did start their Roth with VTSAX say, could they move that to a taxable account later to free up that tax-advantaged space for things like small value or REITs? Thank you for any advice.
    Click to expand...


    - sure, thats the same as saying i am young with limited accounts so make it aggressive. Roth is tax advantaged. you just mean re-allocate them to another account. simple is usually best early on.

    - you are confusing two concepts: no, you shouldnt "pull/move" that money out of a rIRA and move to taxable (lots of problems). you mean re-allocate. as in, buy VTSAX in taxable so i can exchange the VTSAX in my rIRA to VGSIX or whatever.

    Leave a comment:


  • Apprentice M.D.
    replied
    I'm going to hit a lot of points at once here:

    1. $5,500 is the max.

    2. You are about to be an attending so this really isn't a problem, but if you ever have a problem saving $5,500 by the tax deadline, apply for an extension. Get that Roth money in there every year!!!

    3. Start working on your goals as an investor AKA investing statement. There are a lot of good posts about this.

    4. Don't try to diversify too much straight out of the gate. The whole point of index funds is that they are already diversified. Diversifying requires you to have many assets, and you are just starting out. As an attending, you should be able to do this quickly.

    5. Nothing is wrong with your Vanguard account. I recently dropped a chunk of change in a new Vanguard taxable account, and the same thing happened. It takes a while for Vanguard to process things. When you opened your Roth IRA account, you likely chose a bank account and a set amount of funds to fund your IRA. It takes time for Vanguard to do any type of transfer. When I opened my new taxable account, it took several days for my bank account to actually get drafted, so my money market settlement fund kept saying $0. Vanguard understands this and doesn't want to keep you from hitting the ground running, so it will likely show a "funds available to invest" line with the amount you entered. Select the fund you want on the left. Go to the right to choose where the funding is coming from and choose money market settlement fund. It shows $0, but Vanguard knows you have credit coming into this account. Do not select your bank account. If you do that, you will fund your Roth IRA with money from your bank account, but Vanguard will still draft the same amount and put it into your money market settlement fund. Don't be dismayed. Future transactions are not near as complicated. I never use the money market settlement fund anymore. My dividends are automatically reinvested, and I just move money from my savings account when I need to.

    Hope this helps.

    Leave a comment:


  • jfoxcpacfp
    replied




    Older thread, but was hoping to ask a similar question about starting a first Roth IRA. Assuming a resident knows they’ll be able to contribute a lot more shortly, would it make most sense to fill that Roth space from the start with Vanguard small value, REIT funds, etc knowing these later would probably make the most sense in the tax-advantaged space, or just go with Total stock market or total international to keep it simple early.

    Follow-up question, if one did start their Roth with VTSAX say, could they move that to a taxable account later to free up that tax-advantaged space for things like small value or REITs? Thank you for any advice.
    Click to expand...


    I’m not exactly sure of what you are trying to accomplish. What does it mean that “they’ll be able to contribute a lot more shortly”? In adddition, are you asking how to invest the Roth funds followed by whether you can take the $ back out of the Roth in order to contribute more to the Roth? Logically, this makes no sense to me so could you please clarify the steps to what you are trying to accomplish?

    Leave a comment:


  • bullsdoc
    replied
    Older thread, but was hoping to ask a similar question about starting a first Roth IRA. Assuming a resident knows they’ll be able to contribute a lot more shortly, would it make most sense to fill that Roth space from the start with Vanguard small value, REIT funds, etc knowing these later would probably make the most sense in the tax-advantaged space, or just go with Total stock market or total international to keep it simple early.

    Follow-up question, if one did start their Roth with VTSAX say, could they move that to a taxable account later to free up that tax-advantaged space for things like small value or REITs? Thank you for any advice.

    Leave a comment:


  • newinvestor
    replied
    Yes, Joseph is correct. You have to wait a day before Vanguard lets you use the money in that fund for buying other funds. You can try again tomorrow.

    Leave a comment:


  • Joseph
    replied
    Sounds like the Vanguard screen and that you are very close to doing it right.  You can pick up the phone and call them.  Phone number in the top right.  (Maybe you have to wait a day until the money is available...that happens sometimes with drag)

    Leave a comment:


  • IAMIanesth
    replied
    I'm not geting a screen like that. I click buy funds. It brings up a screen that is split.  On the left it says where is the money going?  I'm assuming this is where I search for my index fund, add it and select the amount of $.  Then I go to the right side and it says where is the money coming from?  It shows the money market settlement fund with 0$ and then below it has $5500 in total credits and debits and funds available to trade. But where I select in the drop down, it doesn't give me access to the $5500, only the money market account or my linked bank account?  What am I doing wrong???? I thought this was supposed to be the easy part!

    Leave a comment:


  • Joseph
    replied
    Uh-oh.  There is no other way.  It is stuck there forever.  Sorry about that.

     

     

    Just kidding.  Just click "sell all and buy new shares".  The links should be right next to the account: buy, sell, trade.  You have done the hard part, now you get to play and choose.

    Congrats.

    Leave a comment:


  • IAMIanesth
    replied
    Ok guys thanks for all the information so far. Another question, I opened the account, deposited the $5500 but am having problems. It shows I have the $5500 available but how do I purchase the index fund now.  It shows a prime money market settlement fund. Do I have to transfer the money in there before I purchase the index fund?  I'm stuck it seems because the money is there but I can't figure out how to make the purchase of the index fund. Any advice?

    Leave a comment:


  • jfoxcpacfp
    replied




    Hey everyone, long time reader but fairly new to the game. This year I made it a goal to save up money to contribute $5500 in my last year of residency (planning on $5500 in my 1 year fellowship as well) to a ROTH IRA. Thinking about it and saving has been the easy part but now that I’m getting ready to pull the trigger I am having concerns and questions. Wondering if you guys can help me.

    I’m a single anesthesia in my final year, doing a 1 years peds anesth fellowship.  about 350K in loans, currently in IBR and planning on PSLF right now

    1. Being in residency, makes most since to use a post tax investment such as ROTH IRA correct?  limit is now $5500 and not $5000 right? I need to  set it up by April 18th for this year? Does this affect my tax return at all when I go to fill those out this year?

    2. Vanguard seems like a safe place to open up an account?

    3. I’m looking to follow a lot of the advice on here an invest in low cost index funds but picking out a portfolio is intimidating. What are thoughts of a single index portfolio like a Life strategy Fund or Target Retirment Fund vs a balanced index fund portfolio like picking 3 index funds? Some of the ones I’ve seen mentioned are total stock market index, total international stock market, total Bond market

     

    Any advice is appreciated
    Click to expand...



    1. a) Yes; b) Yes; c) Yes, but don't wait until the last minute, too much going on then and your brokerage might not get it in on time; d) You may qualify for the Retirement Savers Credit, depending upon your filing status and AGI

    2. Not my first choice, not my last, but very popular with the folks on this site

    3. As you may be aware, I do not recommend bond funds, particularly at your age, nor do I recommend TDFs. Total Stock Index is fine. Read the 2013 version of Simple Wealth, Inevitable Wealth.


    All the best for a successful career!

    Leave a comment:


  • jfoxcpacfp
    replied




    Hey everyone, long time reader but fairly new to the game. This year I made it a goal to save up money to contribute $5500 in my last year of residency (planning on $5500 in my 1 year fellowship as well) to a ROTH IRA. Thinking about it and saving has been the easy part but now that I’m getting ready to pull the trigger I am having concerns and questions. Wondering if you guys can help me.

    I’m a single anesthesia in my final year, doing a 1 years peds anesth fellowship.  about 350K in loans, currently in IBR and planning on PSLF right now

    1. Being in residency, makes most since to use a post tax investment such as ROTH IRA correct?  limit is now $5500 and not $5000 right? I need to  set it up by April 18th for this year? Does this affect my tax return at all when I go to fill those out this year?

    2. Vanguard seems like a safe place to open up an account?

    3. I’m looking to follow a lot of the advice on here an invest in low cost index funds but picking out a portfolio is intimidating. What are thoughts of a single index portfolio like a Life strategy Fund or Target Retirment Fund vs a balanced index fund portfolio like picking 3 index funds? Some of the ones I’ve seen mentioned are total stock market index, total international stock market, total Bond market

     

    Any advice is appreciated
    Click to expand...



    1. a) Yes, $5,500 to a Roth is appropriate; b) deadline is 4/18 but get your paperwork completed the week before to be sure; c) Depending upon your filing status and AGI, you may qualify for the Retirement Savings Credit on a % of the first $2,000 you contribute

    2. Not my first choice, but a favorite here and not my last choice, either

    3. As I have mentioned several times on this forum, I do not recommend bond funds or TDFs. Total stock market index is fine. Read Simple Wealth, Inevitable Wealth, 2013 version.

    Leave a comment:


  • PhysicianOnFIRE
    replied
    Congrats on finishing up the residency!  Nearly 10 years out from anesthesia myself.  Also, great work saving enough to max out a Roth IRA.

    I agree with Zaphod.  You don't need to spend much time thinking about the ideal asset allocation for $5500.  In 18 months, you'll be able to invest that amount every few weeks if you want.  That's the time to come up with an Investor Policy Statement (IPS) and your ideal asset allocation. If I were in your shoes, I'd go all in with Total Stock Market; when you get to $10,000 you can have admiral funds with the lowest fees.  The Target date funds will have fees 3 to 4 times higher than Total Stock or S&P 500.

     

    Leave a comment:


  • Zaphod
    replied
    Dont overthink the portfolio stuff. Agree with Joseph, go with one of the larger funds like VTI, and if you decide to do a tdf pick the one thats the farthest out you can choose or esle it will have too much bond allocation too quickly (this is a tax free account after all, may it grow).

    Leave a comment:


  • Joseph
    replied
    1. Yes. Yes, $5500 is the maximum. Probably not.

    2. Yes, it is the best and simple to do.

    3. It is fine to have a Target Fund if it fits your investing strategy.  Total Stock Market, Total International, and Total Bond are the big 3, but realize that opening a mutual fund with one of them is a $3000 minimum.  Once you get to $10,000 the expenses go down for each.   The Target or Life Strategy funds get you into all three...if that is what you want: stocks and bonds...in the percentages that they pick for you.

    Leave a comment:


  • IAMIanesth
    started a topic First TIme IRA advice

    First TIme IRA advice

    Hey everyone, long time reader but fairly new to the game. This year I made it a goal to save up money to contribute $5500 in my last year of residency (planning on $5500 in my 1 year fellowship as well) to a ROTH IRA. Thinking about it and saving has been the easy part but now that I'm getting ready to pull the trigger I am having concerns and questions. Wondering if you guys can help me.

    I'm a single anesthesia in my final year, doing a 1 years peds anesth fellowship.  about 350K in loans, currently in IBR and planning on PSLF right now

    1. Being in residency, makes most since to use a post tax investment such as ROTH IRA correct?  limit is now $5500 and not $5000 right? I need to  set it up by April 18th for this year? Does this affect my tax return at all when I go to fill those out this year?

    2. Vanguard seems like a safe place to open up an account?

    3. I'm looking to follow a lot of the advice on here an invest in low cost index funds but picking out a portfolio is intimidating. What are thoughts of a single index portfolio like a Life strategy Fund or Target Retirment Fund vs a balanced index fund portfolio like picking 3 index funds? Some of the ones I've seen mentioned are total stock market index, total international stock market, total Bond market

     

    Any advice is appreciated
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