How Beginners Should Start Investing

 

how beginners should start investing

Your main goal with investing should be for retirement. Investing for your (future) kids’ college expenses is probably second. You will likely need at the very least a few million to live comfortably in retirement as $2M in savings for example will get you $80,000 in pre-tax retirement income using the 4% rule.

You have to invest to get to at least to that point where you will have a decently comfortable retirement, so here is my guide on how beginners should start investing.


How I learned

When I was 18 I met with my neighbor who is a financial advisor over coffee. I was learning about different fields in finance for a paper I was writing, but he happened to give me the best advice anyone has ever given me.

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Cars the “Low” Income Doctor Can Afford Using Net Worth

Cars the low income doctor can afford

This post is part 2 of the Cars Doctors Can Afford series. You can check out the high income doctor’s cars here. What are the cars the “low” income doctor can afford?

I use quotations because low is a relative term. Making over $200k is awesome and even having high debt levels and delayed salary makes it very much worth it like in PA vs Family Practice Doctor.

The best rule for car buying I have ever found is Financial Samurai’s 5% net worth rule for car buying. As it sounds, you should only spend 5% of your current net worth on a car. It’s a great rule because the 60 year old who makes $100,000 and has $5M in assets shouldn’t be treated the same as the 30 year old making $100,000 with no assets.

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Cars the High Income Doctor Can Afford Using Net Worth

Cars the high income doctor can afford

This is a fun post for me. Not only does it include one of my passions, personal finance, but also cars. My absolute weakness.

This will not be one of those posts that condemns people for leasing or financing cars. Rather, I’d like to focus on the outstanding cars the high income doctor can afford if they are serious about investing.

The best rule for car buying I have ever found is Financial Samurai’s 5% net worth rule for car buying. As it sounds, you should only spend 5% of your current net worth on a car. It’s a great rule because the 60 year old who makes $100,000 and has $5M in assets shouldn’t be treated the same as the 30 year old making $100,000 with no assets.

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How Much Should a Doctor Invest (Hint: Don’t ask your friends and family)

How Much to Invest as a Doctor

One of the hardest parts of a medical track is understanding how much should a doctor invest. You’re on the farthest thing from a traditional career path, so who do you ask?

1. Don’t ask your parents

Your parents will probably be the first people you ask before you ask friends or visit personal finance websites. If you ask your parents how much should a doctor invest and they are somewhat financially savvy, they will tell you to invest 10-15% of your post-tax income. If you want to live really well in retirement, they will tell you to push to invest 20% of your net income. The reason they might tell you this is because it is the most widely cited recommended amount to invest. Guess what? They’re wrong.

Those numbers are for standard career paths that begin after 4 years of undergrad. Going to medical school and completing a residency is the farthest thing from being a “standard.”

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PA vs Family Practice Doctor (financial perspective)

PA vs family practice doctor financial viewpoint

 

Is it financially worth it to become a family practice doctor or should you be a physician’s assistant (PA)? The family practice doctor has a higher salary but takes much longer to start earning his salary and has higher debt levels and taxes. The PA, on the other hand, earns less but has lower debt levels and taxes and can start investing 5 years earlier. This is a purely financial showdown: PA vs family practice doctor.

Let’s look at this from 2 standpoints. (1) A financially savvy person and (2) a not as financially savvy person.

Lastly, this is not meant to sway anyone into either field. Much more important personal factors are autonomy and length of schooling desired, as well as desired flexibility to switch specialties mid-career. I made this only because I was always curious.

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