Basics and beyond...Personal anecdotes would really help!

[TCUFrog]

Would love any insight from someone who was perhaps once in a similar situation and found success!

I am a 36 yr old, unmarried female physician with no children yet:

After a combo of young and poor financial decision-making, a costly divorce, and some time working in New Zealand where my priorities were to have experiences and pay off bad debt (i.e. minimal savings), I am now in a great spot with a great income, 6-mo emergency fund, limited fixed expenses and a very low interest student loan as my only debt. No kids, but likely one in the next 2 years. I want to dump as much money as possible into retirement investments NOW while I continue to live my awesome minimalist flip-flop wearing lifestyle.

I started as basic as the Kahn Academy, Smart Women Finish Rich and have read the heck out of this site, WCI book, and other supporting investment blogs and resources. Now recently giving thought to hiring a CFP to help me prioritize and initiate my retirement/investments (I only have a small Vanguard IRA thus far), though as I continue to listen and learn, would ultimately want to avoid paying long-term AUM fees and $3-4K annually for "advising" if I am able to do this on my own after a couple years.

I am self-motivated but also wary to make poor decisions that could cost me serious $money$ 20 years down the road. Also afraid to just "pick" someone to give me advice, so I have met with a couple fee-only FAs to see if one of them gives me the warm and fuzzies and I can swallow the annual fee.

Many of you sound very wise and have managed to go out on your own in this adventure. I would appreciate any advice on a "general" outlook in "getting started" and while the objective advice is plentiful on WCI, I would really appreciate a "this sounds like me" anecdote from fellow physicians if out there.

Did any of you start with a CFP and then branch out successfully from a situation like mine?

THANK YOU!!

 

[Dr. Mom]

Different background here, but you are starting to pay attention to your finances sooner than I did! You are not too late.  You have plenty of time to educate yourself as you go, if you want to learn to DIY.  Max out all retirement accounts and put the rest into taxable.  Aim to start with saving 20-25% to retirement and push upwards until it hurts, then back off just a little  Post more specifics on your numbers and we can offer more assistance.  If you just need a you can do it pat on the back, then YOU CAN DO IT! It is very empowering to take control of your finances.  For starters, read everything you can by John Bogle, Random Walk by Malkiel, and The Affluent Investor by DeMuth.

[Hatton]

I second Doctor Mom in that you can do it.  Mike piper has some good short books on investing.  I like DeMuth and Bogle also.  Read this site and physician on fire.  I use Vanguard.  I agree max out all tax deductible space then start a taxable account.  Decide on an asset allocation like 80/20 or 90/10 and buy broad indexes like the 3 fund portfolio.  Avoid whole life and AUM fees. You will be ok. Just get started.

[TCUFrog]

Thank you so much!! I will add those authors to my kindle account today!

General numbers:

200K income

100K student loan debt, 2.8% fixed interest

24K emergency fund

5K traditional IRA, Vanguard targeted retirement fund. (I have previously made too much to start a Roth and have only recently read about the Backdoor Roth IRA conversion so I anticipate doing this soon)

401K with % contribution but not accessible until 1 year of employment as an associate (need to clarify but pretty sure I cannot even contribute to it until then and this is my first full-time position after being off for 3 months)

No other debt, no pending large purchases or mortgages. Own my car and live with my boyfriend. Expenses at $4K/month which includes contribution to the IRA.

Looking at Disability own-occupation plans currently.

Basically, I have a general plan. I have the motivation. I have enough knowledge to know I need more. I would like to make taxable investments if I am unable to contribute to the 401K until next year since I will maximize my trad/Roth IRA, but I don't know if thats the right path or how to get started from there. I feel like a CFP would have gotten me as far as I have gotten on my own and that I would be paying them a bunch of money to just tell me which portfolio to invest in, but then again I don't know what I don't know.

[Hatton]

Get the disability.  You could convert that ira money to Roth now so you will be set to do Backdoor Roth next year.  Save into a taxable account this year.  Start with vtsax.

[Zaphod]

Sounds like you're headed in the right direction. You can do it yourself for sure as you've already shown the ability. Dont worry about picking wrong, it doesnt really matter right now with what is small sums compared to in the end. If you've read this site you know enough to pick.

[Dr. Mom]

Brute force savings is where you start.  With your 200K income, subtract out taxes (50K) and expenses (50K), so that's 100k/year to build wealth.  Start getting that $8K/month into a brokerage account at Schwab or Vanguard.  Build it for a few months to show yourself you can as you are reading up on asset allocation and checking on if you can invest in the 401K.

[hightower]

Yep, your biggest hurdle is simply learning to save more than you spend. It’s easier said than done and will take some getting used to. Once you have some cash to invest, I would recommend you keep it simple. Consider a 3 fund portfolio, maybe with a tilt to REIT or Small Caps or whatever you want. But pick something and stick to it. If you’re going to only contribute to a taxable be careful to pick a tax efficient fund like VTI (Vanguard Total Stock Market) or similar. Come back here often and ask all the questions you can.
I had a bit of a late start as well, but have been pleasantly surprised how quickly you can build wealth on a physician salary when you’re focused. Best of luck

[jhwkr542]

This certainly sounds a lot like me minus the cfp meetings (cause I didn't know what that was!) My story is I started learning about 1.5 years ago right before my first attending job, so only a few years younger than yourself. Absolutely zero business or personal finance knowledge myself and really not much in my family either. As I discovered, it's quite simple to diy. I read the bogleheads wiki pages as a starting point. Here's the basics (and you don't need much more): For most employed physicians, your tax advantaged accounts can all be maxed out pretty easily every year. Those are 401k, HSA, and backdoor Roth IRA (generally physicians are ineligible to contribute directly to Roth IRA). After those are maxed, it's onto the taxable. For what to invest in, bogleheads forum and wiki pages are excellent. Start with 3 fund portfolio. You set it and forget it. Once I got started, I've done very little with my portfolio. There's really not much maintenance so no point in paying someone to do nothing. Certainly, it's been a very well paying hobby.

[Jaqen Haghar MD]

"The giant pine tree grows from a tiny sprout.  The journey of a thousand miles starts from beneath your feet."

At the core of investing is to learn to be a good saver.  Make money and save as much as possible to invest.  Live simply and appreciate the little things.  Don't complicate your life excessively and get caught up in "keeping up with the Jones" because they are often broke.  Remember that a rich person doesn't have to tell you, or show you, they are rich.  Don't be the fool parted from your money.

Once you can do this, go ahead and pick a simple 3 fund+ portfolio at first, as said above.  Remember that the market will crash.  Set your allocations accordingly and don't panic when it happens, just keep at it.  Keep a healthy emergency fund so that you are comfortable with risk and emergency situations.  Go to Vanguard, log into your IRA account, and open an additional taxable investing account online...  you can arrange how to fund it from there.

Continuously pile on the personal education.  If someone would have given me The Four Pillars of Investing by Bernstein, I would have eaten it up right out of residency and have been quite a bit wiser, quite a bit earlier. I started investing as more of a "trader" at first, got disheartened, took a big break, and resurfaced as an investor after years out of the market.  Its a good audiobook available on your iPhone for listening in the car or on the treadmill.

Seek out some of the Bogle-type books, older classic investing books, some books on market history and crashes, and on the history of the Great Depression.

I don't think you need professional help, there are enough resources out there and managing your own cash makes you motivated, but if you want it, go ahead and get some fee-only advisor and don't buy things through them.

 

 

 

 

[TCUFrog]

Thank you all for your honest advice. I have new books in hand and am learning more everyday. I have one more free consultation meeting with a new CFP and will decide after that whether or not I will go with one for the first year. After this forum and hearing how many of you have done it from the ground up, I'm feeling a lot more comfortable with doing it on my own. Cheers!

[Kamban]

It is great to maximize retirement savings, especially if there i a match. And then taxable savings. But also try and plug away and reduce the student loan debt, even it is at 2.8%. It sometimes feels good to be debt free.