Hi everyone,
Early in my career, have about 25 years left in me God willing. I know this isn't White Coat Investors, nor are we Wealth Management professionals. I would just like some humble opinions of elders who have navigated the financial waters.
Since I last posted months ago, we have moved - albeit to just another VHCOL area.
I still bring home about $25-30,0000 a month post tax and 401k. My wife still brings home about $10,000 a month post tax and 401k. We signed a three year rental agreement for a house that Zillows estimates ~ $3.5 million for $8500 a month (utilities included). The house is 2 years old and our absolute dream house. Yes, I know it is an inexcusably large waste of money to spend this type of money on rent, but for the quality of life my wife wants, it's unfortunately the price here. Student loans are all paid off. I still feel we are making zero lead way to financial stability despite our high earnings (and it's disheartening to see the house next to us bought by a VC punk only 6 years out of COLLEGE).
Please let me know where we are going wrong:
Investments -
1) Tax deferred portfolio:
Max'ing out 401k and cash balance plan (we both are putting a combined nearly $100k away in retirement each year). I'm only getting about 7% on my 401k from VTI/VOO/VXUS/QQQ combo. Do I need to be less conservative and if so what do I do? I will not pay a wealth manager 1% to actively trade, that is a financial death sentence.
2) Taxed portfolio:
HYSA. This is where a majority of our liquid cash goes. Anywhere from $13-19,000 a month. We get about 4.5% APY ROI. I want to be liquid if/when a recession comes and all the VC/PE go under and we can finally get a house for a discount.
We both back door Roth the full amount. Again VTI and some QQQ. We also buy about $2-3,000 in stocks each month (mostly QQQ). After we buy a house we will ramp our stock portfolio substantially (if we can ever get a mortgage for what we pay in rent).
3) Real Estate????:
This is obviously a wish someday, and should get us 4% ROI each year compounded (vs the 8% I hope in the stock market - again I don't know how to get higher amounts without risk in the stock market). Being that I can't even get a personal home, I would safely say investment properties are not happening for us any time soon, nor are commercial or industrial real estate. Neither of us can get a professional real estate license anyway so the tax write off won't likely be enough. The 1% rule for renting is impossible in this area.
Costs -
1) Rent. Easily the largest and most painful expense. I don't get 4% ROI on it, as I would owning and the rent could go up after 3 years unlike the mortgage. However, this house would cost us $22,000 a month with $1,000,000 down to buy with a mortgage at 7.5%.
2) All the expenses included food, baby supplies, car finance payments. About $4,000 a month, but a few larger purchases / international trips in the past 6 months have set us back. We need to be better about this. We only buy top tier items on sale that will hopefully last a long time.
In summary: We are only getting 7% return on retirement investments and only 4.5% on liquid investments (and losing on rent when a house would get us 4% ROI each year). We spend an unGodly amount on rent because it's nearly impossible to buy in the Bay Area with these rates (we would be living paycheck to paycheck with no savings other than retirement - see what I said before about rent to mortgage ratio). I know the answer is to move because physicians will never be able to compete with VC/PE/Wealth Management/Tech IPOs/FAANG but we really like the area and would be willingly to change up our investment portfolio to make it work. I just don't see breaking $10 million by 55 at this rate and reaching financial freedom.
How would you change things (other than moving to Wyoming/Idaho) re: investments. Thank you!
Early in my career, have about 25 years left in me God willing. I know this isn't White Coat Investors, nor are we Wealth Management professionals. I would just like some humble opinions of elders who have navigated the financial waters.
Since I last posted months ago, we have moved - albeit to just another VHCOL area.
I still bring home about $25-30,0000 a month post tax and 401k. My wife still brings home about $10,000 a month post tax and 401k. We signed a three year rental agreement for a house that Zillows estimates ~ $3.5 million for $8500 a month (utilities included). The house is 2 years old and our absolute dream house. Yes, I know it is an inexcusably large waste of money to spend this type of money on rent, but for the quality of life my wife wants, it's unfortunately the price here. Student loans are all paid off. I still feel we are making zero lead way to financial stability despite our high earnings (and it's disheartening to see the house next to us bought by a VC punk only 6 years out of COLLEGE).
Please let me know where we are going wrong:
Investments -
1) Tax deferred portfolio:
Max'ing out 401k and cash balance plan (we both are putting a combined nearly $100k away in retirement each year). I'm only getting about 7% on my 401k from VTI/VOO/VXUS/QQQ combo. Do I need to be less conservative and if so what do I do? I will not pay a wealth manager 1% to actively trade, that is a financial death sentence.
2) Taxed portfolio:
HYSA. This is where a majority of our liquid cash goes. Anywhere from $13-19,000 a month. We get about 4.5% APY ROI. I want to be liquid if/when a recession comes and all the VC/PE go under and we can finally get a house for a discount.
We both back door Roth the full amount. Again VTI and some QQQ. We also buy about $2-3,000 in stocks each month (mostly QQQ). After we buy a house we will ramp our stock portfolio substantially (if we can ever get a mortgage for what we pay in rent).
3) Real Estate????:
This is obviously a wish someday, and should get us 4% ROI each year compounded (vs the 8% I hope in the stock market - again I don't know how to get higher amounts without risk in the stock market). Being that I can't even get a personal home, I would safely say investment properties are not happening for us any time soon, nor are commercial or industrial real estate. Neither of us can get a professional real estate license anyway so the tax write off won't likely be enough. The 1% rule for renting is impossible in this area.
Costs -
1) Rent. Easily the largest and most painful expense. I don't get 4% ROI on it, as I would owning and the rent could go up after 3 years unlike the mortgage. However, this house would cost us $22,000 a month with $1,000,000 down to buy with a mortgage at 7.5%.
2) All the expenses included food, baby supplies, car finance payments. About $4,000 a month, but a few larger purchases / international trips in the past 6 months have set us back. We need to be better about this. We only buy top tier items on sale that will hopefully last a long time.
In summary: We are only getting 7% return on retirement investments and only 4.5% on liquid investments (and losing on rent when a house would get us 4% ROI each year). We spend an unGodly amount on rent because it's nearly impossible to buy in the Bay Area with these rates (we would be living paycheck to paycheck with no savings other than retirement - see what I said before about rent to mortgage ratio). I know the answer is to move because physicians will never be able to compete with VC/PE/Wealth Management/Tech IPOs/FAANG but we really like the area and would be willingly to change up our investment portfolio to make it work. I just don't see breaking $10 million by 55 at this rate and reaching financial freedom.
How would you change things (other than moving to Wyoming/Idaho) re: investments. Thank you!