Best investment options and tax deductions

[DrJackRyan]

I’m starting my (employed) attending job in Oklahoma this summer and am looking for ways to 1) reduce my taxable income and 2) develop a passive income side gig. I’ve considered two options so far and wanted to know your thoughts. The first is single family home purchase for renting and second is buying farm land to lease out/sell hay. The second option would likely transition into a beef cattle business after a few years of me growing my capital as a doctor. Any of you all have experience with this or opinions?

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[dieABRdie]

I’m starting my (employed) attending job in Oklahoma this summer and am looking for ways to 1) reduce my taxable income and 2) develop a passive income side gig. I’ve considered two options so far and wanted to know your thoughts. The first is single family home purchase for renting and second is buying farm land to lease out/sell hay. The second option would likely transition into a beef cattle business after a few years of me growing my capital as a doctor. Any of you all have experience with this or opinions?

Do you have any leads on opportunities for farm land to buy/lease? That's one I was really interested in.

I am strongly leaning away from getting into the landlord game. It think there's just too many people who have piled into that and not sure I want to be holding that deed if the tenants can't pay their rent in the near future.

I like agriculture... but strongly considering energy (oil well/fields). That's a pretty good bet going forward.

I just finished this book. You might be interested.

Official Site of Tax-Free Wealth - A Book By Tom Wheelwright, CPA

taxfreewealthbook.com

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[Doc_with_a_skull]

It depends on how much time you're wiling to spend. I think recently short term rental and the fact that it can offset ordinary income is pretty awesome. However, you do have to put in significant time/ effort. If you want to be passive but still take advantage of real estate, once you build the passive income, transitioning it to syndicated deals would take off the burden. Oil and gas traditionally was a tax efficient investing vehicles, but that's changing some too.

A question to ask might be, is it better to reduce the taxable income, or increase your income to offset the burden of taxes?

 

[sirspamalot]

Change to 1099 instead of W2. Then, go read bradfordtaxinstitute and things get much much better.

 

[FutureInternist]

While trying for side gig income etc is great, as a new attending make sure you have a solid base

3-6 months expenses saved
Short and long term disability
Life insurance - self & spouse (if kids then non working spouse’s life insurance pays for child care while you work)
401k/403b & NQDC/457
Roth IRA
HSA

First 3 are a MUST… others are good for long term goals but opinions on whether its better to max those out or take that $ and put in to a 2nd revenue stream, differ.

Good Luck

 

[Doc_with_a_skull]

While trying for side gig income etc is great, as a new attending make sure you have a solid base

3-6 months expenses saved
Short and long term disability
Life insurance - self & spouse (if kids then non working spouse’s life insurance pays for child care while you work)
401k/403b & NQDC/457
Roth IRA
HSA

First 3 are a MUST… others are good for long term goals but opinions on whether its better to max those out or take that $ and put in to a 2nd revenue stream, differ.

Good Luck

Great recommendation.

Once you get to the investing/ retirement acct, I think it ultimately becomes your risk tolerance and time/ effort/ sweat equity. Retirement accts and HSA are great because you can essentially automate it. However, the returns may not be as good as things like real estate rental property, surveys, and other common side hustles. What is more important question is how much you want to spend in time/ energy to get the potentially higher return.

 

[abolt18]

While trying for side gig income etc is great, as a new attending make sure you have a solid base

3-6 months expenses saved
Short and long term disability
Life insurance - self & spouse (if kids then non working spouse’s life insurance pays for child care while you work)
401k/403b & NQDC/457
Roth IRA
HSA

First 3 are a MUST… others are good for long term goals but opinions on whether its better to max those out or take that $ and put in to a 2nd revenue stream, differ.

Good Luck

95% agree with this. Only question is, why short-term disability if you have a 3-6 month emergency fund? I thought that covered that need. And if any disability extends beyond 3 months, your long-term disability insurance kicks in.

 

[sirspamalot]

LTD is a crucially overlooked item and often not started until someone is 45-50 yo when it gets very expensive rapidly. You are a doctor: cover your own STD (90 day exclusion period) with emergency reserves. Instead, get a LTD policy with "own occ" and riders that benefit you - thats where the payout matters.


Get a fixed policy at age 35, pay for a low risk need until you're 50 (but "its such a waste!" many say) but then.. smile broadly when you realize they are charging 3-4x from age 50-retirement thus making it the bargain of a lifetime.

Remember to make sure they don't "lose your check" and then fail to notify you. Auto deposit and have a good relationship with your broker (who should be reaching out to notify you). I had a 5m life insurance policy vaporize because they claimed they didn't get my check. Wouldn't renew it because by then I was a pilot "and had we known we never would have insured you in the first place" (I took the policy a few weeks before I started my flight training and it was good for about 7 years before the so called glitch).

 

[FutureInternist]

95% agree with this. Only question is, why short-term disability if you have a 3-6 month emergency fund? I thought that covered that need. And if any disability extends beyond 3 months, your long-term disability insurance kicks in.

Most jobs have it for very low fees so, for me, its a no brainer.

The Emergency Fund is for more than just disability.
If one gets fired or quits, credentialing etc at a new place can take up to 3 months, so you have to make sure the house, car, etc payments don’t get missed

 

[Doc_with_a_skull]

Most jobs have it for very low fees so, for me, its a no brainer.

The Emergency Fund is for more than just disability.
If one gets fired or quits, credentialing etc at a new place can take up to 3 months, so you have to make sure the house, car, etc payments don’t get missed

I agree with this. The "emergency" fund typically is used to cover unexpected expenses, rather than when actual emergencies happen and you cannot work. You can always replenish this, and you don't have to scramble to come up with funds, if you need to purchase a random high price tag items. For example, AC goes down suddenly, and it costs 7K, but you don't have it right away, you can pull from emergency fund and replenish it over couple of months. That stress of trying to find ways to cover a high tag expense is gone.

 

[abolt18]

I agree with this. The "emergency" fund typically is used to cover unexpected expenses, rather than when actual emergencies happen and you cannot work. You can always replenish this, and you don't have to scramble to come up with funds, if you need to purchase a random high price tag items. For example, AC goes down suddenly, and it costs 7K, but you don't have it right away, you can pull from emergency fund and replenish it over couple of months. That stress of trying to find ways to cover a high tag expense is gone.

You just said that the emergency fund is not used for actual emergencies... You and I have different ideas about the emergency fund's purpose. I agree it is for EMERGENT unexpected expenses that have to be paid for immediately. Like living off of if you are disabled, or lose your job, or if the AC goes out like you mentioned.

I get that it is cheap with many employers and may make sense to get short term disability (STD?), but my point was that it was non-essential if you have an appropriately sized emergency fund.

 

[abolt18]

Most jobs have it for very low fees so, for me, its a no brainer.

The Emergency Fund is for more than just disability.
If one gets fired or quits, credentialing etc at a new place can take up to 3 months, so you have to make sure the house, car, etc payments don’t get missed

I agree that it is for more than just disability. It's not called a "disability fund"... It's an "emergency fund". That can cover all kinds of emergencies, including disability.

 

[FutureInternist]

I agree that it is for more than just disability. It's not called a "disability fund"... It's an "emergency fund". That can cover all kinds of emergencies, including disability.

Not sure how one can quantify how much a disability will cost? 🤔

Obviously you can use it for whatever you want… heck a weekend getaway( sorry Conference) when in-laws are visiting is an emergency.
But… mortgage, car payment, utility bills, groceries, etc x 3-6, since those #s one can actually know

 

[sirspamalot]

Most employers STD is abolute overpriced garbage if you read the fine print.

Spend your $ on highest quality LTD w/riders and 90 day exclusion.. and ferret away your own STD funds..

 

[RangerBob]

As an independent contractor I do not have a short term disability policy. Just and individual long-term policy and emergency fund. But as pointed out above, employer-provided short term disability is often pretty lousy, so I don't think I'm missing out on anything there.

I agree about getting disability insurance when you’re young and healthy. People would be surprised how many things that seem small will result in large exclusions or even denials.

 

[Doc_with_a_skull]

As an independent contractor I do not have a short term disability policy. Just and individual long-term policy and emergency fund. But as pointed out above, employer-provided short term disability is often pretty lousy, so I don't think I'm missing out on anything there.

I agree about getting disability insurance when you’re young and healthy. People would be surprised how many things that seem small will result in large exclusions or even denials.

Also on the flip side, if you get it while you're young and healthy, and if you specialize, some will consider you "disabled" if you cannot do what that speciality requires. Ie if you are an orthopedic surgeon but cannot be an orthopedic surgeon but you still can be a lecturing professor, you'd still receive the disability benefits.

 

[sirspamalot]

Magic words "Own Occupation" rider. Get it or get rekt.