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Old 07-07-2018, 08:38 AM
 
5,221 posts, read 2,378,942 times
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Quote:
Originally Posted by kgpremed13 View Post
Lets say hypothetically, you were a young man that has no kids, will most likely never get married, and you make a salary of 210k a year in a job that has full benefits. I'm sure I can live off about 25k a year my biggest other expense would be about 18k a year so I should easily be able to save about 100k a year. The first thing I would do is buy a place to live in with cash. There are some really nice 2 bed / 2 bath condos I can get in the city for 160k. Other than that I am content just putting 100k a year in a bank savings account until I reach 3 mill, retire ,and die. I have no need for extra nice stuff, I have no desire to keep up with the Joneses, I probably will never have a family, would just putting all my money in the baking system be a stupid Idea? I'd be into investing if it is low effort and low risk. Maybe even medium effort and medium risk.

How long do you expect it will take you to accomplish the highlighted part above?
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Old 07-07-2018, 09:04 AM
 
Location: NE Mississippi
11,363 posts, read 7,408,144 times
Reputation: 16969
Quote:
Originally Posted by kgpremed13 View Post
Lets say hypothetically, you were a young man that has no kids, will most likely never get married, and you make a salary of 210k a year in a job that has full benefits. I'm sure I can live off about 25k a year my biggest other expense would be about 18k a year so I should easily be able to save about 100k a year. The first thing I would do is buy a place to live in with cash. There are some really nice 2 bed / 2 bath condos I can get in the city for 160k. Other than that I am content just putting 100k a year in a bank savings account until I reach 3 mill, retire ,and die. I have no need for extra nice stuff, I have no desire to keep up with the Joneses, I probably will never have a family, would just putting all my money in the baking system be a stupid Idea? I'd be into investing if it is low effort and low risk. Maybe even medium effort and medium risk.
We used to put away $10,000 a month.
I used mutual funds and transferred the money on Fridays when the market was down. I don't recall that I spent an awful lot of time selecting the fund. I just picked a big, well established fund with a long track record.


That may be a little radical or risky for you, so I can tell you that I see no problem with putting some money into a 2% CD and some money into a mutual fund. But be aware, if you are not, that mutual funds will require you to pay taxes every year on gains. At $3M, it may get to be a problem.
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Old 07-07-2018, 09:48 AM
 
Location: Paranoid State
12,685 posts, read 9,432,561 times
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Vegas, baby. Always split aces & eights, and double-down on 11 except if the dealer is showing an ace.
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Old 07-07-2018, 10:46 AM
 
13,010 posts, read 12,445,977 times
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Quote:
Originally Posted by oregonwoodsmoke View Post
Oh wait... you want to know what I invest in.

I buy real estate but that is not low input and it is not low risk. If you want low risk and don't want to do any work, put part of it into certificates of deposit and part of it into a DOW based mutual fund. Then just let it ride.

Myself, I enjoy traveling so some of my income is spent on travel and some goes to hobbies. Quality of life gets balanced with savings.
Erm, CDs are also known as "Certificates of Disappointment" by some financial professionals. And a Dow 30 Index fund is not well diversified at all. It's a very subjective index (average) and while it is easy shorthand for what the market is doing, it's not really as well constructed as the S&P 500. Really, I don't even like the 500. It's also chosen subjectively like the Dow is. For something simple, I'd look for a Russell 1000 fund, I guess or a total market fund.

I would instead invest in index-based ETFs, targeting broad indexes and making sure to include international in the mix. For safety, allocate some to Treasuries.

However, OP, if you are young, you can afford to put all your investments in equities now - fixed income is less important. Short of an apocalypse, you will never lose all your money. You just have to have the guts to ride out the downturns in the stock market.

Have a plan and stick to it. Rebalance on a schedule.

Check out the writings of John Bogle and Larry Swedroe. I think Swedroe makes more sense than Bogle in the modern market, but Bogle is a good place to start for a sort of foundation.
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Old 07-07-2018, 12:13 PM
 
13,010 posts, read 12,445,977 times
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Quote:
Originally Posted by JrzDefector View Post
Erm, CDs are also known as "Certificates of Disappointment" by some financial professionals. And a Dow 30 Index fund is not well diversified at all. It's a very subjective index (average) and while it is easy shorthand for what the market is doing, it's not really as well constructed as the S&P 500. Really, I don't even like the 500. It's also chosen subjectively like the Dow is. For something simple, I'd look for a Russell 1000 fund, I guess or a total market fund.

I would instead invest in index-based ETFs, targeting broad indexes and making sure to include international in the mix. For safety, allocate some to Treasuries.

However, OP, if you are young, you can afford to put all your investments in equities now - fixed income is less important. Short of an apocalypse, you will never lose all your money. You just have to have the guts to ride out the downturns in the stock market.

Have a plan and stick to it. Rebalance on a schedule.

Check out the writings of John Bogle and Larry Swedroe. I think Swedroe makes more sense than Bogle in the modern market, but Bogle is a good place to start for a sort of foundation.
Another issue - based on your name, I assume you are going into the medical profession? I know too many doctors who have dealt with bankruptcy or have not conserved or invested their money wisely. I mean, I'm bad at saving and I know it. But I'm pretty decent at investing. These guys have made EPICALLY bad investment decisions that have left me astounded.

Do your due diligence. Hire a financial advisor, but DEFINITELY do your research there. You're going to have a demanding job, so it's best to put your money in the hands of someone who can watch over it. But there are a lot of crappy FAs out there.
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Old 07-07-2018, 12:27 PM
 
428 posts, read 177,775 times
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Pick an asset allocation that meets your goals and continue to invest in those asset classes in the same ratio. Don’t over think it. When you get to be my age, 55, you’ll have wealth beyond your dreams.
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Old 07-07-2018, 12:33 PM
 
24,726 posts, read 26,794,844 times
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Quote:
Originally Posted by kgpremed13 View Post
Lets say hypothetically, you were a young man that has no kids, will most likely never get married, and you make a salary of 210k a year in a job that has full benefits. I'm sure I can live off about 25k a year my biggest other expense would be about 18k a year so I should easily be able to save about 100k a year. The first thing I would do is buy a place to live in with cash. There are some really nice 2 bed / 2 bath condos I can get in the city for 160k. Other than that I am content just putting 100k a year in a bank savings account until I reach 3 mill, retire ,and die. I have no need for extra nice stuff, I have no desire to keep up with the Joneses, I probably will never have a family, would just putting all my money in the baking system be a stupid Idea? I'd be into investing if it is low effort and low risk. Maybe even medium effort and medium risk.
Yeah, I think it's kind of stupid to put it all in the bank. I'd want my money to grow, if for no other reason than I'd want to leave something to my favorite charities and leaving more is better.

Investing can be low effort. I don't know why you think it wouldn't be. Something like Vanguard Tax Managed Balanced or Vanguard Balanced Index wold both be low effort funds to invest in. Keep 100k in the bank and put the rest in one of those funds. Both are medium risk. If you're putting away 100k per year, you can easily afford to take moderate risk. In fact, leaving all your money in the bank is also a risk due to inflation and the fact that you'll eventually exceed the FDIC limits.
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Old 07-07-2018, 12:34 PM
 
Location: Omaha, Nebraska
6,306 posts, read 3,479,933 times
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if the OP is indeed a premed, he should check out the White Coat Investor website and forums, too. (Website: https://www.whitecoatinvestor.com/. Forum: https://www.whitecoatinvestor.com/forums/.)
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Old 07-07-2018, 12:45 PM
 
24,726 posts, read 26,794,844 times
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Quote:
Originally Posted by COcheesehead View Post
Pick an asset allocation that meets your goals and continue to invest in those asset classes in the same ratio. Donít over think it. When you get to be my age, 55, youíll have wealth beyond your dreams.
Very good point.

Just to use an example, putting 100k a year over the last 20 years into a pretty boring fund like Vanguard Tax Managed Balanced would have returned 6.09% annualized.

$8333.33 a month saved at a 6% rate of return gets you over $1.3M after 10 years. $3.8M in 20 years. That's more than enough income so that you could live off the dividends. And the dividends from the bond portion of that fund (50%) would be income tax free. The fund currently pays out 2.04% in dividends. That's almost $28K in income after 10 years and $77k per year in dividend income if you keep investing for 20 years before touching the dividends, much of it tax free.

Investing can actually be pretty boring and low stress, especially when you're only drawing down 2% of your investment funds each year. That's well below the 4% safe withdrawal rule for drawing down a portfolio (4% is about 95% safe if you're at least 50% in stocks).
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Old 07-07-2018, 01:47 PM
 
8,293 posts, read 3,456,454 times
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Quote:
Originally Posted by TaxPhd View Post
How long do you expect it will take you to accomplish the highlighted part above?
30 years by my accounting.
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