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Where to invest money after maxing out Roth IRA during residency?

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  • Where to invest money after maxing out Roth IRA during residency?

    Hello all,

    I'm currently a PGY-1 in a 4 year EM program in California. I'll be getting about a $400/month raise starting as a PGY-2 in July and am wondering what to do with the extra money. I already contribute the max of $5500 to my Roth IRA, my employer does not allow me to contribute any additional money to our 403-b and doesn't offer other investment options.

    Additional info: I have about 190k in medical school loans that I consolidated at about 5% and am in the REPAYE program. I pay about $175/mo and my balance grows about $240/mo. Due to the 50% unpaid interest subsidy, I don't think it makes sense to put the extra money into repaying my loans. I plan on aggressively paying them off after residency. I have an emergency fund that covers about 2 months expenses, which I'm comfortable with as my job is pretty secure. I'm also single w/ no dependents.

    Thank you!

  • #2
    First, you sound pretty squared away.  Congratulations!  In regards to where to put your money to work, I suggest doing a good review of your insurance situation.  If that looks good and it doesn't look like your car isn't about to die or any other expenses are looming on the horizon I have two suggestions, the second of which will depend on your social interests.  First, you can invest in a taxable account.  You're presumably young so I'd advocate for stock-heavy investing but you'll have to determine your own asset allocation.  Vanguard index funds area good place to start, though they've gotten a bit cute with some of their funds.  Just stick to the basics.  Benefit of doing this is it gives you flexibility for retirement and you won't have to pay any income taxes now on your dividends given your income (most likely).  The second suggestion is to consider utilizing some of that on the dating scene.  Again, completely dependent on your long-term social goals.  But all goals are important to consider.  And all require money.  Definitely hit my wallet when I was in your shoes.  But luckily that turned out to be my best investment.   

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    • #3
      If you are healthy and have an eligible high deductible healthcare plan, an HSA.

      -WSP

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      • #4
        I was totally with you, @ENT_Doc, until the dating suggestion  . My philosophy is to invest time in relationships - they don't have to cost a lot of money.

        Totally agree with @ENT_Doc about insurance. Might want to start an emergency fund if you don't have one. Beyond that, a taxable account is also a good idea.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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        • #5
          are you going to need the money?  like house downpayment or getting married or something in the next few years?  investing it may put you at risk for taking a loss if you need the money short term.

          i'm more on the lines of ENT doc-not necessarily for dating, but you may be able to use that money to enjoy life and tying it up long term may not leave you with needed flexibility in the next several years.

          there are various opinions about emergency fund, but 2 mo is on the lean side for most.  if you need to somehow justify saving it to yourself.

           

           

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          • #6
            I'd add to the emergency fund - quick flights for funerals, or a replacement car, or stolen phone can add up. Then the savings (house, marriage, new suits for next job hunts, etc).

            Edit: It'd also help form a good habit to add a low $x/month to a retirement fund.

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            • #7




              are you going to need the money?  like house downpayment or getting married or something in the next few years?  investing it may put you at risk for taking a loss if you need the money short term.

               
              Click to expand...


              Totally agree with you. s/h added that, if you start a taxable account, you should do so only if you can allocate that money for the long term (5+ years), which is probably not an option given your age.
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8




                are you going to need the money?  like house downpayment or getting married or something in the next few years?  investing it may put you at risk for taking a loss if you need the money short term.

                i’m more on the lines of ENT doc-not necessarily for dating, but you may be able to use that money to enjoy life and tying it up long term may not leave you with needed flexibility in the next several years.

                there are various opinions about emergency fund, but 2 mo is on the lean side for most.  if you need to somehow justify saving it to yourself.

                 

                 
                Click to expand...


                I guess it wasn't just dating.  And agree with Johanna - it doesn't have to cost a lot.  But the reality is, you'll go out more.  We all do the song and dance.  And it does cost some money.  And if things work out you have a wedding and ring to consider.  Those aren't cheap.  Again, the relationship thing is a significant cost worth considering IMO if that is one of your goals.

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                • #9
                  These comments about dating are hilarious.

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                  • #10
                    Can you make Roth contributions into the 403b? If so, that is what I would do.

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                    • #11
                      Thanks for all the help! I reluctantly admit I need to get a disability insurance policy, so that will eat up some of the extra money. I think the rest will just go towards growing my emergency fund and having some fun.

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