Friday, September 17, 2021

How/where do I open a Roth individual retirement account?

This post is NOT financial advice and I AM NOT A FINANCIAL advisor. Please talk to a financial advisor if you have one. 

This post is on how to open a Roth IRA while in training (residency/fellowship) and save 6k in a tax-free account per year (this post is in 2021 when the contribution limit is 6k). The general rule of thumb is to go for Roth (post-tax) when you are in training and a pre-tax (traditional) account when you are in your peak earnings (attending) years [Reason for this advice is your tax bracket changes based on the money you make].

One can open a Roth IRA account in ANY of the well-known trading companies like Vanguard, Fidelity, Charles Schwab, etc. The drawback of these companies, at least for me at the beginning of my financial journey was not knowing what to invest in. In other words, I really did not know much about the stock market, index funds, etc. Hence, for those who are still new to investing and want to play it safe but still get a head start on investing I recommend the company Betterment to do the investing. They generally invest in low-cost index funds which is what you want to put your money in instead of stock-picking. 

  1. Once you open your account via the above link or http://betterment.com/friend-referral-offer?referral_key=neilfernandes2 you will get to a page where you will have to open your account. 
  2. In the middle of the page, you should have an option saying 'Get Started'
  3. Click on that and then go through the steps (should be pretty self explanatory)
  4. Once the account set up is done you should reach the following screen 
  5. Click on the option 'Invest for retirement'
  6. Fill in the details (another couple of sell explanatory questions)
  7. Towards the end, you will have an option to open a 'Roth IRA' which is what I would pick
  8. Decide on how you will fund the account-> transfer the money-> and bingo you are done. 
  9. You are now a proud owner of a Roth IRA. Money grows now tax-free!

Please note that Betterment charges you an advisor fee, which is around 0.1% or something like that which comes to a couple of dollars. Once you do become financially literate, you can rollover the money to another account like Vanguard or Fidelity which should be really easy to do. However, when you are taking baby steps in the journey of financial planning and while you are learning to become a better doctor, worrying about money should be the last thing for you.

A big thank you to the Whitecoat investor for helping me start on my financial journey!

Tuesday, August 17, 2021

Tips for new attendings

I had written on a post when moving between residency and fellowship. You can find the link here http://neilnf.blogspot.com/2018/06/moving-tips-for-residents.html   

I am updating the post to make it more all-inclusive and financial savvy. 

Things to do before graduating and planning the move.

Disability insurance: 

This is one thing that skyrockets as soon as you get out of residency/fellowship. I would try to get this one ASAP since your earning potential and disabilities will only go up as you get older. This insurance just safeguards your family and you, should something happen to you. I have found the following links to be really useful when trying to understand disability insurance and would recommend reading the same. 

The White coat investor is an amazing site for financial literacy, and this is the one for disability.

The following links are quick facts on the same so that you can quickly understand it.


Group vs individual (an eternal dilemma during residency is if we need it but I hope these links are useful)

Utilities

You will have to end your current utilities i.e., water, electricity at your current place and begin the same at the new location.

Use USPS mail forwarding service to forward any/all mail addressed to you at your old location to the new place https://bit.ly/3pPwqia. There is a charge of <$2 when I did this, but this is worth it.

Bank accounts

  • Close old accounts that you will not use and streamline the ones that you will use going forward.
  • Consider opening a new bank account in the new job place to get account opening bonuses (check https://www.bankrate.com/banking/ or https://www.doctorofcredit.com/best-bank-account-bonuses/ for the latest information.
  • I would recommend updating your banks with your new details around 2 weeks before the move since this will help you in using the same as address proof for getting your driver’s license (they need 2 forms of address proof). 

Credit cards

Consider opening new credit cards since you may have a LOT of expenses while you are house hunting/doing a house make over. My list of credit cards is as follows https://maxrewards.app/refer/neilf120 

International graduates

Do not forget to update USCIS with your new address since your immigration is linked to the same. https://www.uscis.gov/addresschange 


Financial tips

This podcast/video by the white coat investor is worth a watch https://www.whitecoatinvestor.com/financial-priorities-as-a-new-attending/. In summary

  1. Do a back door roth IRA 
  2. Max out the 401k/403b
  3. Max out the 457b if available- This is a judgment call since it depends on the financial stability of your practice.
  4. Max out the HSA (please note that you can contribute money ONLY for the months you are eligible) For example, for me I became eligible in Aug and hence I can contribute only 300*5months= $1500.
  5. DO NOT opt for COBRA since you can retroactively activate it should you become ill.

#tipsfornewattendings