M3 - What to invest in?

[jowblow997]

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About to start M3 year, have a little under $10k that's just sitting in the bank. No loans and very thankful for strong support from family.

I know very little about investing but I imagine there must be something better to do with this money than have it sit in the bank. I was thinking about Vanguard Index Funds, seems like a relatively safe investment with good returns and low effort.

Any thoughts? Open to any ideas.

 

[tartesos]

The White Coat Investor - Investing And Personal Finance for Doctors




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[jowblow997]

The White Coat Investor - Investing And Personal Finance for Doctors




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Thanks, I've been browsing that website and have found some really great information. However, much of what I've read applies to people who have loans. After that, it's about investing on an attending's salary.

I'm not sure the amount I have is enough to do much of what's on that site.

 

[Plastikos]

Thanks, I've been browsing that website and have found some really great information. However, much of what I've read applies to people who have loans. After that, it's about investing on an attending's salary.

I'm not sure the amount I have is enough to do much of what's on that site.

Its exactly the same, just to a smaller scale.

 

[Surgneuro]

Go with Vanguard, no time as a med student to dabble in other investments.

 

[Stroganoff]

If you don't have an emergency fund, leave that $10K in the bank to serve that purpose. If this $10K you speak of is separate from your decent-sized emergency fund, then sure, start a taxable investment account somewhere like Vanguard/Fidelity/Schwab according to your Investment Policy Statement.

 

[goodoldalky]

If you don't have an emergency fund, leave that $10K in the bank to serve that purpose. If this $10K you speak of is separate from your decent-sized emergency fund, then sure, start a taxable investment account somewhere like Vanguard/Fidelity/Schwab according to your Investment Policy Statement.

Make sure you are maxing out a Roth and your 401k before you do any taxable investing. 99% of residents do not do that. And this is after you have your emergency fund.

 

[jowblow997]

If you don't have an emergency fund, leave that $10K in the bank to serve that purpose. If this $10K you speak of is separate from your decent-sized emergency fund, then sure, start a taxable investment account somewhere like Vanguard/Fidelity/Schwab according to your Investment Policy Statement.

Make sure you are maxing out a Roth and your 401k before you do any taxable investing. 99% of residents do not do that. And this is after you have your emergency fund.

The $10k hasn't been touched in forever, basically just sitting in the bank account getting a few pennies of interest each year. Emergency fund is a non-issue.

Since I'm starting M3, I won't have much time to manage an investment. I'll need to do some more research, I thought for Roth and 401k you need to have an income (which I don't since not taking loans and still an M3).

Maybe I don't know what I'm doing but Vanguard 500 Index Fund has a 10-year average return of over 7% and an expense ratio of 0.14%....$14 fee on a $10,000 investment sounds like a no-brainer. What am I missing here? I know the 7% return isn't guaranteed and varies year to year but anything is better than what I'm getting with the money sitting in a bank account.

 

[cpants]

Yea you can't do an IRA without taxable income.

Make sure you have enough cash set aside for interviews next year -- that can get pretty expensive.

Keep it in a high yield savings account or short term CD's for the next year. May need the liquidity short term. Put it in a Roth and residency 401k/403b once you hit residency.

 

[786783]

Cryptocurrencies: ethereum.

 

[libertyyne]

The $10k hasn't been touched in forever, basically just sitting in the bank account getting a few pennies of interest each year. Emergency fund is a non-issue.

Since I'm starting M3, I won't have much time to manage an investment. I'll need to do some more research, I thought for Roth and 401k you need to have an income (which I don't since not taking loans and still an M3).

Maybe I don't know what I'm doing but Vanguard 500 Index Fund has a 10-year average return of over 7% and an expense ratio of 0.14%....$14 fee on a $10,000 investment sounds like a no-brainer. What am I missing here? I know the 7% return isn't guaranteed and varies year to year but anything is better than what I'm getting with the money sitting in a bank account.

This is probably the best low thought investment you can make. Set it and forget it. Just make sure you won't be needing the money withing the next few years.

 

[jowblow997]

This is probably the best low thought investment you can make. Set it and forget it. Just make sure you won't be needing the money withing the next few years.

Anything I'm missing, sounds too good to be true? If not, I'll put my money there.

 

[libertyyne]

Anything I'm missing, sounds too good to be true? If not, I'll put my money there.

No. I mean there is a small chance that there might be a market crash tomorrow and the market might not recover for 10 years. It is a small but real risk.

 

[The White Coat Investor]

About to start M3 year, have a little under $10k that's just sitting in the bank. No loans and very thankful for strong support from family.

I know very little about investing but I imagine there must be something better to do with this money than have it sit in the bank. I was thinking about Vanguard Index Funds, seems like a relatively safe investment with good returns and low effort.

Any thoughts? Open to any ideas.

You can't invest without a goal. So without knowing what you want the money for and when it's really hard to make an investment recommendation. Before you decide to invest it for a long-term goal like retirement, make sure you don't need it for something else (you probably do) like residency interviews, residency relocation, a house downpayment, a car etc.

Your most important investment as a med stud is in your own ability to earn money-i.e. passing classes, matching into your chosen specialty, learning how to practice medicine etc.

But if you want to invest it for the long term and understand that you may lose money, then a Vanguard broadly diversified Index Fund meets your requirements of a "relatively safe" investment with good return and low effort. Bear in mind that by "relatively safe" I mean it probably won't lose more than 50% in any given year and will lose money in 1 out of every 3 years.

 

[jowblow997]

You can't invest without a goal. So without knowing what you want the money for and when it's really hard to make an investment recommendation. Before you decide to invest it for a long-term goal like retirement, make sure you don't need it for something else (you probably do) like residency interviews, residency relocation, a house downpayment, a car etc.

Your most important investment as a med stud is in your own ability to earn money-i.e. passing classes, matching into your chosen specialty, learning how to practice medicine etc.

But if you want to invest it for the long term and understand that you may lose money, then a Vanguard broadly diversified Index Fund meets your requirements of a "relatively safe" investment with good return and low effort. Bear in mind that by "relatively safe" I mean it probably won't lose more than 50% in any given year and will lose money in 1 out of every 3 years.

That makes sense that I need a goal but I guess I don't really have one right now. Basically just have a little extra money sitting around that is collecting next to nothing in a regular bank account so I wanted to see if there was a better option.

As you mentioned, education is the best investment right now so I don't want an investment that's time consuming. Preferably something I can put away and forget about since I won't be needing this money any time soon. I'll look into Vanguard some more, I've been told it's a good option to put a small amount of money into at this age and forget about until 50-60/retirement.

Thanks for all the responses!

 

[The White Coat Investor]

Okay, so now you have a goal. Retire at 60. Given that's 35 years away, you have nearly all of your lifetime earnings ahead of you, you can take a lot of risk with it. So maybe you could put half into the Vanguard Total Stock Market index fund and half into the Vanguard Total International Stock Market Index Fund and forget about it for a decade.

 

[holycrap]

Cryptocurrencies: ethereum.

Mining it himself or buying eth? I heard eth sucks now anyways

 

[Another Second Opinion]

I would open up a free Vanguard account and buy a few diverse, low-cost ETFs through them (also free to purchase). VTI (total stock market) and VXUS (total international market) should be the bulk, like 50% and 25% respectively. The other 25% I'd put in VNQ (real estate investment) and BND (total bond market), maybe 15% and 10% since you're young and can accept the risk now. If you were 10 years older I would flip it.

 

[ThoracicGuy]

I would open up a free Vanguard account and buy a few diverse, low-cost ETFs through them (also free to purchase). VTI (total stock market) and VXUS (total international market) should be the bulk, like 50% and 25% respectively. The other 25% I'd put in VNQ (real estate investment) and BND (total bond market), maybe 15% and 10% since you're young and can accept the risk now. If you were 10 years older I would flip it.

I'm not sure I would put that much of a tilt into Real Estate (VNQ). I'd keep it to 10% or less. Being young, I'd agree about keeping bonds at about 10%. I'd put the remainder into VTI.

 

[Another Second Opinion]

I'm not sure I would put that much of a tilt into Real Estate (VNQ). I'd keep it to 10% or less. Being young, I'd agree about keeping bonds at about 10%. I'd put the remainder into VTI.

Fair enough. I do like the diversity of a REIT index fund like VNQ, but I agree, these ratios aren't for everyone. VTI has been solid and will continue to be solid for many years to come. Plus it already has a small proportion of real estate.

 

[libertyyne]

I do feel like placing money in bonds over the past few years has been a net negative return after adjusting for inflation. When bonds dont keep up with inflation , and you are not going to touch the money for another 20-30 years, I would be more aggressive and place all of it in stocks. I would even buy some international indexes just to be more aggressive.