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Posted on 8/23/13 at 4:21 pm to Broke
quote:
You do need someone to work with though. Don't know if your guy is the right guy. But go be a Dr. and let an expert handle the money.
This. And ask about a wrap fee. It's like going to a Sandals resort, all-inclusive so no worries about your adviser pushing you into higher-commission investments.
Posted on 8/23/13 at 5:34 pm to matthew25
quote:
Would you advise a $50,000 or $100,000 whole life or a $2,000,000 20-year term?
It all depends on what you are purchasing the policy for. If it is only for the death benefit, then probably the term. If you need a place to put some cash to earn a decent return and not be exposed to the market, then I would look at some whole life options.
For the record, I am not a financial advisor or an insurance salesman for whatever that is worth.
Posted on 8/25/13 at 12:50 am to AndyJ
who did you consolidate with to get 1.75% PSL? Sounds like a variable rate loan to me. If not I want to short whatever company sold that to you.
My wife's a doctor. We have a combined 365k in student loans with an average rate around 5.5%. Don't think I'm doing any better than that but want to make sure.
My wife's a doctor. We have a combined 365k in student loans with an average rate around 5.5%. Don't think I'm doing any better than that but want to make sure.
Posted on 8/25/13 at 9:12 am to AndyJ
First thing is to get "own occupation" disability insurance. Your biggest asset is your earning potential. Next thing I'd do is switch to level term life insurance.
Posted on 8/25/13 at 1:38 pm to BostonAdam
That's my question, is that 1.75% really fixed? How many years is it being amortized over?
Posted on 8/25/13 at 1:42 pm to matthew25
quote:
And do get the emergency fund and a house!
Buy a REASONABLE house and work on getting it paid off. There is nothing like having your home free and clear. B/C we did this 15 years ago, now, as we approach retirement, we can pretty much do whatever we want.
Get rid of that student loan debt. Debt free is the way to be. Pay off ALL debt.
This post was edited on 8/25/13 at 1:44 pm
Posted on 8/25/13 at 2:40 pm to Bama54
quote:
Get rid of that student loan debt. Debt free is the way to be. Pay off ALL debt.
That student loan debt is at 1.75. There are a bunch of options that can offer a better return for less risk than tying your liquidity up in debt repayment.
To put it into perspective, inflation is outpacing that interest rate. You're basically losing purchasing power by paying it down early at this rate. If the rate is fixed, then it is reasonable to expect that the student loan principal will become cheaper to pay down over time.
This post was edited on 8/25/13 at 2:48 pm
Posted on 8/25/13 at 3:12 pm to foshizzle
quote:
Together we have $200,000 in student loan debt but our interest rate in 1.75%. Geez. Get this paid off asap.
quote:. For sure. That's cheap money. Only a Bama or ole piss fan is stupid enough to pay that debt first.
Couldn't disagree more.
This post was edited on 8/25/13 at 3:13 pm
Posted on 8/25/13 at 5:08 pm to AndyJ
I agree that a permanent insurance product serves your agent better than it serves you. You DO need insurance, but an appropriate size 20 year term policy, will protect your family until that time when you are self insured and no longer need insurance (substantial assets, no mortgage, kids grown and out of school, etc).
One exception to the insurance issue might be a maximum funded policy. Basically, it is for high income earners who have already exhausted their other tax deferred options. It allows you to create a policy with a set premium, but you can overfund that policy up to a certain amount and the cash value is invested in mutual funds and maintains it's tax deferral. Once you transition from the accumulation stage of your life to the distribution stage, you can withdraw the equivalent of your cash value without owing taxes on the withdrawals. In the meantime, the policy does have a death benefit if you pass away prematurely. You don't purchase this for the death benefit (again, that is where you buy term insurance), but the death benefit is what makes this strategy another tax deferred option. It is fairly complicated, but it works well if used appropriately and you have an advisor who is familiar with the concept.
I also totally disagree with those that say to open a Scottrade, Fidelity, etc account and buy mutual funds. You are going to be busy with life and a career, you want to hire a pro to run your money. If you want to open an account for some of your "play" money, that's perfectly acceptable.
One exception to the insurance issue might be a maximum funded policy. Basically, it is for high income earners who have already exhausted their other tax deferred options. It allows you to create a policy with a set premium, but you can overfund that policy up to a certain amount and the cash value is invested in mutual funds and maintains it's tax deferral. Once you transition from the accumulation stage of your life to the distribution stage, you can withdraw the equivalent of your cash value without owing taxes on the withdrawals. In the meantime, the policy does have a death benefit if you pass away prematurely. You don't purchase this for the death benefit (again, that is where you buy term insurance), but the death benefit is what makes this strategy another tax deferred option. It is fairly complicated, but it works well if used appropriately and you have an advisor who is familiar with the concept.
I also totally disagree with those that say to open a Scottrade, Fidelity, etc account and buy mutual funds. You are going to be busy with life and a career, you want to hire a pro to run your money. If you want to open an account for some of your "play" money, that's perfectly acceptable.
Posted on 8/25/13 at 8:20 pm to ed3303
Have you heard about Dr. Michael Burry, the neurologist? He did ok managing his money and practicing medicine. Vanguard was in talks with him to run one of their funds.
He's on Wiki and "stars" in The Big Short, by Michael Lewis.
I have a cousin who practices medicine in Jacksonville and is married to a physician. both make > $500,000 per year. They have some butter and egg money to invest in the market and have done quite well.
He's on Wiki and "stars" in The Big Short, by Michael Lewis.
I have a cousin who practices medicine in Jacksonville and is married to a physician. both make > $500,000 per year. They have some butter and egg money to invest in the market and have done quite well.
Posted on 8/26/13 at 10:38 pm to matthew25
If you died tomorrow, which policy would do your family the most good?
Posted on 8/27/13 at 1:38 am to Gevans17
No brainer for me. I asked an accountant the other day about the whole life. He said in the old days, with estate taxes on > $1 million??, the whole life was outside the estate and was used to pay taxes. Could not figure out why anyone would chose whole over term. I said this board would probably have the answer.
Posted on 8/27/13 at 6:57 am to matthew25
I've been told that for physicians the whole life may be a decent investment due to asset protection. For most it is not, but every financial advisor I have talked to has recommended at least some of my money go into one. I have a $500k policy for me and the wife. It has actually performed quite well, but we do max out our contributions to it. Basically it's a way of "hiding" our free cash, but we could borrow against it if needed without penalty and just pay back interest to ourselves. The rest of my insurance is term. I did the whole life for asset protection purposes mainly.
Posted on 8/27/13 at 7:01 am to SmackoverHawg
Whole life will also at some point pay it's own way. It'll reach a point that it's maxed but can continue to grow in value. The death benefit can go towards the tax burden your heirs receive.
I guess mine is more for my kids than me. I'll never cash it in. And hope they don't for a long time!
I guess mine is more for my kids than me. I'll never cash it in. And hope they don't for a long time!
Posted on 8/27/13 at 8:12 pm to AndyJ
You should spend some time on this guy's blog, he is an emergency room physician and good investor. Well, other than him not listening to me about equity REIT risk going into 2008. Physicians, especially specialists and up the chain, are different than most retail investors due to much higher incomes, it's good you are thinking ahead.
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