25, 87K networth.What to do with 65K in cash? Need a plan!

[EvrClrx311]

Reading your post, I see two main passions... FI and educational pursuit (PhD). Place these two goals on opposite ends of a spectrum and decide where you feel most comfortable focusing your energy somewhere between them (25/75 or 50/50 or 90/10). Because you'll need to find where between them works best for you.

I say this because those two goals tend to pull your path in opposite directions. That is, you can do some of each, but not all of both at once. PhD is a huge time commitment and eats up earning potential in your 20's, while FIRE is a dedicated approach to maximizing potential growth and early earnings to fund a path to FI. One of delayed career happiness (investing time now in PhD), one is delayed financial happiness (investing time now in $$$ maximization).

PhD is incredibly rewarding and can lead down a very intellectually stimulating and rewarding career, but as others have noted... it'll set you back on FIRE. Most with PhD's are energized by the idea of education through the age of 30 towards making a difference in a field of research - they aren't looking to jump out of work young. These tend to be people who scrape by in their younger years, with a primary focus on becoming a masterful expert and lead in their field, being someone who can impact things in a big way later. Many are still applying these skills, through their career, into their 60's and later... it's kind of a delayed gratification route to career. Many PhD's I know don't care to FIRE... though they may discover it along the way... they are focused on happiness (in making a difference) in a field they love. Work = love... not a grind.

I'm speaking in generalizations here, and I'm sure some on their board with PhD's will show the other side of it, because not every PhD program or person with a PhD has experienced that. Some start their own companies and are FI by 30...

Those focused on FIRE at your age, and getting there by 35... tend to focus on maximizing earning potential young, in their 20's. An under-graduate working a 9-5 and even second job to maximize earning potential at 22 right out of school saving at the rate you're saving at... can turn that FIRE lever way up by sacrificing a lot of spending (living?) in their 20's to spend their late 30's retired and in control of their time. These people aren't really focused on career's or building them... a job is more a means to an end, so a PhD is sort of overkill... once you have gotten to a place of maximizing potential salary, you jump in and save like heck as early and fast as you can.

So, it sounds like you're wanting both a career and FIRE, which is achievable... just realize you're walking a line between opposing forces. Recognizing what you really desire out of life... where is your happiness going to come from. Is key, I think if you're really passionate about a PhD, maybe turn that FIRE date back to 45... and that's very achievable on your current path.

Keep in mind that your entire investing career to this point has been on the tail end of a market that hasn't done much but go up. Replace the last 5 years with rocky ups and downs that ended up flat and see how your enthusiasm for FIRE might be altered? We may be in for that kind of first half of this next decade.

[nvestysly]

Here's my $0.02 - Put it in some index funds and let it ride. Not unlike what you've already done, but I am not a big fan of bond funds. Even now at age 60, DW and I don't have any bonds. We have some very stable stocks that pay good dividends but no bonds. So my thoughts are very similar to what you have now with a few tweaks. That approach worked for DW and me - but I retired at 52, not 35. I was actually FI at 48 along with DW. 35 seems a little young with your current annual earnings.

[letsdothis]

Quote:

Originally Posted by EvrClrx311 Reading your post, I see two main passions... FI and educational pursuit (PhD). Place these two goals on opposite ends of a spectrum and decide where you feel most comfortable focusing your energy somewhere between them (25/75 or 50/50 or 90/10). Because you'll need to find where between them works best for you. I say this because those two goals tend to pull your path in opposite directions. That is, you can do some of each, but not all of both at once. PhD is a huge time commitment and eats up earning potential in your 20's, while FIRE is a dedicated approach to maximizing potential growth and early earnings to fund a path to FI. One of delayed career happiness (investing time now in PhD), one is delayed financial happiness (investing time now in $$$ maximization). PhD is incredibly rewarding and can lead down a very intellectually stimulating and rewarding career, but as others have noted... it'll set you back on FIRE. Most with PhD's are energized by the idea of education through the age of 30 towards making a difference in a field of research - they aren't looking to jump out of work young. These tend to be people who scrape by in their younger years, with a primary focus on becoming a masterful expert and lead in their field, being someone who can impact things in a big way later. Many are still applying these skills, through their career, into their 60's and later... it's kind of a delayed gratification route to career. Many PhD's I know don't care to FIRE... though they may discover it along the way... they are focused on happiness (in making a difference) in a field they love. Work = love... not a grind. I'm speaking in generalizations here, and I'm sure some on their board with PhD's will show the other side of it, because not every PhD program or person with a PhD has experienced that. Some start their own companies and are FI by 30... Those focused on FIRE at your age, and getting there by 35... tend to focus on maximizing earning potential young, in their 20's. An under-graduate working a 9-5 and even second job to maximize earning potential at 22 right out of school saving at the rate you're saving at... can turn that FIRE lever way up by sacrificing a lot of spending (living?) in their 20's to spend their late 30's retired and in control of their time. These people aren't really focused on career's or building them... a job is more a means to an end, so a PhD is sort of overkill... once you have gotten to a place of maximizing potential salary, you jump in and save like heck as early and fast as you can. So, it sounds like you're wanting both a career and FIRE, which is achievable... just realize you're walking a line between opposing forces. Recognizing what you really desire out of life... where is your happiness going to come from. Is key, I think if you're really passionate about a PhD, maybe turn that FIRE date back to 45... and that's very achievable on your current path. Keep in mind that your entire investing career to this point has been on the tail end of a market that hasn't done much but go up. Replace the last 5 years with rocky ups and downs that ended up flat and see how your enthusiasm for FIRE might be altered? We may be in for that kind of first half of this next decade.

Wow, thank you for such an insightful post. Yes, I have been having to reflect on that. Assuming I stick with the PhD route, I would try to devote some time to at least making investments in places that would benefit me in the near future, and later down the road.
Towards the end of your post you allude to the possibility of the marking going down soon. I have been considering this which is why I have not put all of my money in a brokerage account.

So...regardless of the track I choose, I still have 65K in cash that I am wondering what to do with it!

I have considered purchasing my first home and renting out the other rooms while I live in it and finish school (houses are a lot cheaper here than in the west where I am originally from). Or just investing a bit more of it in stocks, and saving some for future expenses like a car and an emergency fund.

[EvrClrx311]

Quote:

Originally Posted by letsdothis Wow, thank you for such an insightful post. Yes, I have been having to reflect on that. Assuming I stick with the PhD route, I would try to devote some time to at least making investments in places that would benefit me in the near future, and later down the road. Towards the end of your post you allude to the possibility of the marking going down soon. I have been considering this which is why I have not put all of my money in a brokerage account. So...regardless of the track I choose, I still have 65K in cash that I am wondering what to do with it! I have considered purchasing my first home and renting out the other rooms while I live in it and finish school (houses are a lot cheaper here than in the west where I am originally from). Or just investing a bit more of it in stocks, and saving some for future expenses like a car and an emergency fund.

One thing I didn't say in my response above that should be mentioned is that FI is way more about lifestyle than salary. I didn't want to leave you with the impression that you will have difficulty getting there simply because of your career or education, because you certainly have the desire and track record of someone who is REALLY good at saving. That will serve you well on whatever path you take!

As far as investing... right now is a weird time. The market should correct, but it might not. It might just go sideways for a few years (which is kind of a way to correct as well, without going down). In the long run, equities will always return more. The market always marches forward, upward, on a long enough scale.

So on that note, it's fine to have cash on the side, while the market is over priced, but I would avoid market timing. Find a good index fund, and consistently invest in it. Leaving that alone, and letting it compound for decades... is what will get you to FIRE.

The risk of sitting on the sideline and playing it too safe when you have multiple decades ahead of growth and compounding, can be a bigger drag than investing at the wrong time.

I say this as someone who just, for the first time, set aside 38% of my investments in very safe investments... but until this point I've been 100% equities for the last 18 years.

In your shoes I might take this approach... assuming that money isn't something you'll need to use for the next 10+ years... invest a third to half into a total market index fund now... and each 6 months look at putting another 10-25% in based on what the market has done - with a goal to have it all invested within 2 years. Cash, is sort of like a negative return every year. You're losing at the rate of inflation, essentially.

[voidstar]

Wow My parents were dirt poor, I stopped asking for Christmas gifts when I was 8, I knew we couldn't afford anything. All inheritance somehow went to my parents siblings; and in general my family never talked about money because we never had any (beyond providing the basics). But I suppose such is married life with 3 kids...

I had $0 to my name and something like $50k of college debt when I started my career at 21 (I worked thru college, but paid my own car, insurance, etc.).... 20 years later, we (wife and 1 child) have $1.2m now and no debt, but probably another 10 years till retirement. If we both happened to lose our jobs for some strange reason, we could probably get by now, just it would be a bit tight in years where the market tanked (or my wife is mostly paranoid about a major medical cost -- cancer or heart transplant, something extreme; I tried to convince her that if I retired early, I'd jog more and be more healthy, but so far she's not convinced).

I have some co-workers over 70 still working, and I'm wondering WHY... Some of them maybe genuinely really enjoy their job -- maybe. But I think it's more for family health insurance coverage, and/or they have large families (many kids, multiple marriages -- they want to bank more money to help them out for houses and/or school). I respect that -- but another perspective there is that these old highly paid folks are holding up a job entry for maybe 2 or 3 younger folks.


ANYWAY, pardon me, this post is about the OP - but I wanted to share this background, because in comparison I think you're doing quite well. I wish in high school they had taught us a bit more about financial literacy, since that wasn't something I was getting at home. It wasn't until I happened across a co-worker with a financially savvy family that I even started realizing the many options there are out there to make money work for you.


Others have already given very good advise. I'd just like to add: absolutely open a RothIRA as soon as you start working and getting a W-2 (this goes for anybody). I say this because of the 5-year rule: the account must be open for 5 years before you can withdrawal whatever amount you've put into the RothIRA. Although I've never needed to withdrawal from my RothIRA, I wish I had opened my RothIRA much sooner just to get the compounding and tax-free benefits of it earlier. [just of course once you open the RothIRA, don't forget to login and actually decide and make allocations - ITOT I think is good for starters; the ETF options can get overwhelming, but there are tremendous resources available about them -- and then agonize for hours on ETF vs mutual funds ]

In this way, after 5 years, the RothIRA (your contribution portion) can become your emergency fund if so needed (yes, credit cards temporarily, and the RothIRA might be a way to pay that off - in a true emergency, of course; there is no penalty to withdrawal any portion of your contributions after 5 years, but you can't put it back in if you end up not using it -- Fidelity and Vanguard both can do RothIRAs, I suspect just about any of the major brokers can).

Also, you might bank up Vacation hours with your employer. With something like 300+ hours banked up, that are paid back to you if you leave the company, that's also another form of emergency fund [it would be taxed, of course]. This may not apply to you currently, but maybe something to keep in mind down the road (and maybe a benefit only offered in larger firms; not sure). Obviously this applies only to a limited kind of emergencies, such as "I need to move to another state to be closer to a relative that needs care" (something of that nature) -- some personal medical reason for not being able to work might instead fall under Long Term Disability. All situations are different, but just mentioning it as an idea to consider.


Lastly, I'd agree: age 25, go Aggressive Growth 80-100%. No, we can't predict the future -- and yes, 1929-1932 was pretty bad. But what convinced me about the market is what others have said -- dollar cost average in over time, and doing that, then none of the crashes really matter and it's about a +20% return (across 3-5 year spans). Once you do get within maybe 5 years of FI goals, maybe then it's time to shift strategies and not be as aggressive. View market downs as Buying Opportunity, no panic selling -- but be disciplined to have cash on the side (or a pay check) to buy-in during those down times.


I'm not sure about the 25% towards International. Personally, for the past 10 years, I wish I had been more US market focused [not just that it seems US markets did better in general that particular decade, but also International funds tend to have higher expense ratios]. That said, International markets are now currently fairly depressed, and it may be a pretty good buying time for those (but not MORE than 25%, IMO). Basically, I'm not sure about the wisdom of spreading across "asset classes" when you have a relatively small balance (<$100k?) to work with ATM -- if you could be financially independent with any single ONE of those asset classes, then maybe it starts to make sense (like $1m US, $1m international, $1m gold or something like that). Until that point, maybe just focus on US ? Tough call, you'll just have to make a personal decision on this. I think you'd do fine either way.


That's my $.02 ! Best of luck!

[letsdothis]

Quote:

Originally Posted by EvrClrx311 One thing I didn't say in my response above that should be mentioned is that FI is way more about lifestyle than salary. I didn't want to leave you with the impression that you will have difficulty getting there simply because of your career or education, because you certainly have the desire and track record of someone who is REALLY good at saving. That will serve you well on whatever path you take! As far as investing... right now is a weird time. The market should correct, but it might not. It might just go sideways for a few years (which is kind of a way to correct as well, without going down). In the long run, equities will always return more. The market always marches forward, upward, on a long enough scale. So on that note, it's fine to have cash on the side, while the market is over priced, but I would avoid market timing. Find a good index fund, and consistently invest in it. Leaving that alone, and letting it compound for decades... is what will get you to FIRE. The risk of sitting on the sideline and playing it too safe when you have multiple decades ahead of growth and compounding, can be a bigger drag than investing at the wrong time. I say this as someone who just, for the first time, set aside 38% of my investments in very safe investments... but until this point I've been 100% equities for the last 18 years. In your shoes I might take this approach... assuming that money isn't something you'll need to use for the next 10+ years... invest a third to half into a total market index fund now... and each 6 months look at putting another 10-25% in based on what the market has done - with a goal to have it all invested within 2 years. Cash, is sort of like a negative return every year. You're losing at the rate of inflation, essentially.

Thank you for your advice. And I understand where you were coming from in your initial post. I do agree that for me FI is more of a lifestyle. And whether I retire early or not my real good is always meant to give me some stability and flexibility in my professional and personal life.

I totally agree with dollar cost averaging the cash I have and investing it. It looks like the market may move down a bit given, I mean whether for real reasons or the imagined panic with the corona virus. But, as you say the longer term view is what is important.

I plan to invest what I do not plan on using in like 5 to 10 years. Unless I decide to purchase my first home (I definitely have enough for a down payment in my area) that I would live in and rent out the extra rooms. In that case I would invest what I do not plan to use for a house.

I know there is a lot of debate on whether rentals is a viable route, so I will have to look at the numbers and see if it is worth it. In any case, increased contributions to the brokerage account will happen.

[mageedge]

I followed a similar path to that which you plan - PhD and first 'career' job at 29. I chose government admin rather than academia but the financial dynamics were similar. Retired and FI at 57. You are already ahead of where I was at a similar age.
Most important things right now IMO - you live below your means, you budget your money and you are developing an investment plan. And that's great!
You've settled on low cost index funds and have opened a tax advantaged vehicle. It sounds like you are planning on continuing investing and maximizing Roth opportunities.
I think the remaining long-term decision is on Asset Allocation. In answer to your question - take the entire investable pot for % allocation - so yours, excluding cash, is approx 95/5 equity/fixed - aggressive but age appropriate if you are (really) comfortable with the loss potential. The question you need to answer honestly for your self is what level of allocation to equity lets me sleep at night and continue to follow in the event of ,say, a 50% decline in the market?
At your age I had a 10% fixed allocation which gradually increased over the years.
On equities domestic v international; value v growth; small v large all all issues to read about and make informed decisions over time - not critical at this point.
You should consider tax efficiency - so bonds in Roth (or other vehicle) unless tax free. International also better placed in tax sheltered becasue a lot lower % of the dividends are 'qualified' for tax purposes.
On using the cash - emergency fund or short-term expenditures are the reason for holding cash. You mention the house purchase possibility - if that is real then maybe you should keep 20-40k in savings and invest the balance on a dollar cost averaging basis according to the investment plan %'s you adopt.
Immediate moves I'd suggest would be to transfer the non-Roth international to total stock and move the Roth Total Stock to International/Bonds to get the AA % numbers close.
One further consideration in the longer term, since you're already playing the bank bonus game, is to consider ETF equivalents to the mutual funds which you can then transfer around to other brokerages to take advantage of bonus offers and other benefits.
One final suggestion - if you're tempted by "find the next Google" type investments, set aside a % of your allocation for such 'play money' - recognizing you may make a mint or lose the whole enchilada! I did this for a few years with 5% of my allocation in gold and energy stocks - quickly doubled my invesment, withdrew original amount + 10% profit - and the balance proceeded to do nothing for the next decade!

[SnowballCamper]

Do I have too much saved in cash?
Yes.

If so, what should I consider doing with this money?
Keep 6 months of living expenses in cash and put the rest in a total market index fund, like VTI

Should I be looking at asset allocation in terms of all of the accounts and money I have or just worry about allocation within each investment account?
All the accounts and money.

How to you think about asset allocation between IRA, and brokerage accounts?
Some investments can give off a lot of dividend income. I want those in an IRA instead of the usual taxable brokerage. At your current income level this isn't much of an issue. Make your dividends automatically reinvested.

Should I invest more into the brokerage account?
Yes, after you have maximized a Roth IRA, and get any matching funds from an employer (so as soon as you have earned income, fund the Roth IRA)

And if so how should I allocate this. After some reading I have considered an 80/20 allocation but how could I reach this noting that bonds are not tax efficient enough to put in a taxable brokerage account?
At your age, I would skip the bonds for now. There is much discussion about asset allocation, I say pick the most aggressive allocation that will not induce panic selling.


Should I consider investing in other things beyond index funds like ETFs, REITs etc.? ...Have considered buying a rental property but being in a school makes it difficult to really take the time to look into that yet…What should I consider as I go along my FI journey?!
Write your investment strategy and include a discussion of the efficient market hypothesis. Put it someplace where you see it before making any investment changes.

Knowing what you know now, what would you do if you were in my situation?
I would not be a social work student, especially in a PhD program. That isn't an efficient path to financial independence...but it could be the path for you. Read the Millionaire Next Door if you haven't.


I wrote this answer here a while back: https://www.early-retirement.org/for...rly-99570.html

[letsdothis]

Quote:

Originally Posted by mageedge I followed a similar path to that which you plan - PhD and first 'career' job at 29. I chose government admin rather than academia but the financial dynamics were similar. Retired and FI at 57. You are already ahead of where I was at a similar age. Most important things right now IMO - you live below your means, you budget your money and you are developing an investment plan. And that's great! You've settled on low cost index funds and have opened a tax advantaged vehicle. It sounds like you are planning on continuing investing and maximizing Roth opportunities. I think the remaining long-term decision is on Asset Allocation. In answer to your question - take the entire investable pot for % allocation - so yours, excluding cash, is approx 95/5 equity/fixed - aggressive but age appropriate if you are (really) comfortable with the loss potential. The question you need to answer honestly for your self is what level of allocation to equity lets me sleep at night and continue to follow in the event of ,say, a 50% decline in the market? At your age I had a 10% fixed allocation which gradually increased over the years. On equities domestic v international; value v growth; small v large all all issues to read about and make informed decisions over time - not critical at this point. You should consider tax efficiency - so bonds in Roth (or other vehicle) unless tax free. International also better placed in tax sheltered becasue a lot lower % of the dividends are 'qualified' for tax purposes. On using the cash - emergency fund or short-term expenditures are the reason for holding cash. You mention the house purchase possibility - if that is real then maybe you should keep 20-40k in savings and invest the balance on a dollar cost averaging basis according to the investment plan %'s you adopt. Immediate moves I'd suggest would be to transfer the non-Roth international to total stock and move the Roth Total Stock to International/Bonds to get the AA % numbers close. One further consideration in the longer term, since you're already playing the bank bonus game, is to consider ETF equivalents to the mutual funds which you can then transfer around to other brokerages to take advantage of bonus offers and other benefits. One final suggestion - if you're tempted by "find the next Google" type investments, set aside a % of your allocation for such 'play money' - recognizing you may make a mint or lose the whole enchilada! I did this for a few years with 5% of my allocation in gold and energy stocks - quickly doubled my invesment, withdrew original amount + 10% profit - and the balance proceeded to do nothing for the next decade!

Thank you for your advice. In all honesty scholarships and opportunities throughout my academic career have gotten me to this point. All before I learned about FI and personal finance in general. Having FI as a goal from the start, I might have considered a different path. But, I have simply walked through the open doors put in front of me thus far.

It is nice to hear from someone who has gone through a similar path. Knowing what you know now would you still have made that decision to get a PhD? I have considered doing something outside of academia, I am curious as to how you got into that line of work.

*Regarding moving to Total stock in the taxable account, and moving to bonds and international in Roth why did you make this suggestion? Is that related to tax-efficiency. Sorry if this is a silly question

[letsdothis]

Quote:

Originally Posted by SnowballCamper Do I have too much saved in cash? Yes. If so, what should I consider doing with this money? Keep 6 months of living expenses in cash and put the rest in a total market index fund, like VTI Should I be looking at asset allocation in terms of all of the accounts and money I have or just worry about allocation within each investment account? All the accounts and money. How to you think about asset allocation between IRA, and brokerage accounts? Some investments can give off a lot of dividend income. I want those in an IRA instead of the usual taxable brokerage. At your current income level this isn't much of an issue. Make your dividends automatically reinvested. Should I invest more into the brokerage account? Yes, after you have maximized a Roth IRA, and get any matching funds from an employer (so as soon as you have earned income, fund the Roth IRA) And if so how should I allocate this. After some reading I have considered an 80/20 allocation but how could I reach this noting that bonds are not tax efficient enough to put in a taxable brokerage account? At your age, I would skip the bonds for now. There is much discussion about asset allocation, I say pick the most aggressive allocation that will not induce panic selling. Should I consider investing in other things beyond index funds like ETFs, REITs etc.? ...Have considered buying a rental property but being in a school makes it difficult to really take the time to look into that yet…What should I consider as I go along my FI journey?! Write your investment strategy and include a discussion of the efficient market hypothesis. Put it someplace where you see it before making any investment changes. Knowing what you know now, what would you do if you were in my situation? I would not be a social work student, especially in a PhD program. That isn't an efficient path to financial independence...but it could be the path for you. Read the Millionaire Next Door if you haven't. I wrote this answer here a while back: https://www.early-retirement.org/for...rly-99570.html

Thank you for your response, I did look at the post you linked to and it was very helpful. I will be referring to that from time to time for sure!

And yes, I realize that being a SW student is not the most efficient way to FI. I did not know about any of this until a year ago, after I had been in college for quite a while, and after I was given various fellowships to continue my studies. I went through college on my own, and when choosing majors, I really was not thinking about FI, I had never even considered it or knew it was thing. We do not all have the benefit of having guidance. But, I feel lucky that despite this I have saved as much as possible and have avoided debt as much as possible!

I am definitely taking your advice and will consider it as look into my plan and options. Thanks again!

[pjigar]

Quote:

Originally Posted by SnowballCamper Do I have too much saved in cash? Yes. If so, what should I consider doing with this money? Keep 6 months of living expenses in cash and put the rest in a total market index fund, like VTI Should I be looking at asset allocation in terms of all of the accounts and money I have or just worry about allocation within each investment account? All the accounts and money. How to you think about asset allocation between IRA, and brokerage accounts? Some investments can give off a lot of dividend income. I want those in an IRA instead of the usual taxable brokerage. At your current income level this isn't much of an issue. Make your dividends automatically reinvested. Should I invest more into the brokerage account? Yes, after you have maximized a Roth IRA, and get any matching funds from an employer (so as soon as you have earned income, fund the Roth IRA) And if so how should I allocate this. After some reading I have considered an 80/20 allocation but how could I reach this noting that bonds are not tax efficient enough to put in a taxable brokerage account? At your age, I would skip the bonds for now. There is much discussion about asset allocation, I say pick the most aggressive allocation that will not induce panic selling. Should I consider investing in other things beyond index funds like ETFs, REITs etc.? ...Have considered buying a rental property but being in a school makes it difficult to really take the time to look into that yet…What should I consider as I go along my FI journey?! Write your investment strategy and include a discussion of the efficient market hypothesis. Put it someplace where you see it before making any investment changes. Knowing what you know now, what would you do if you were in my situation? I would not be a social work student, especially in a PhD program. That isn't an efficient path to financial independence...but it could be the path for you. Read the Millionaire Next Door if you haven't. I wrote this answer here a while back: https://www.early-retirement.org/for...rly-99570.html

I would second all these advices. And add that if you have access to HSA then max that, invest and dont withdraw from HSA EVER. order of HSA maxout should be after Roth IRA and 401k matching contributions. Reminder goes back to 401k maxout and then brokerage.

As far as investment vehicles, I would mostly stick to total market equity index fund and some bond funds based on you market reaction behavior. You want KISS plan at this point in life and STICK TO IT.

[mageedge]

Quote:

Originally Posted by letsdothis Thank you for your advice. In all honesty scholarships and opportunities throughout my academic career have gotten me to this point. All before I learned about FI and personal finance in general. Having FI as a goal from the start, I might have considered a different path. But, I have simply walked through the open doors put in front of me thus far. It is nice to hear from someone who has gone through a similar path. Knowing what you know now would you still have made that decision to get a PhD? I have considered doing something outside of academia, I am curious as to how you got into that line of work. *Regarding moving to Total stock in the taxable account, and moving to bonds and international in Roth why did you make this suggestion? Is that related to tax-efficiency. Sorry if this is a silly question

On your last question (not silly!) - yes, it's about tax efficiency. As much as possible within your overall asset allocation plan you want to place the least tax efficient instruments in tax sheltered accounts. Regular taxable bonds are the most obvious example of 'tax inefficiency'.
Domestic stock index funds are pretty tax efficient because they declare little or no capital gains and their dividends tend to be close to 100% qualified.
International funds, even index funds, tend to have a much lesser % of qualified dividend so those dividends will be subject to a higher tax rate.
That's a very basic description - lots of variations (municipal bonds, tax managed funds etc.) you can look at down the road.

On your wider question about my career track - never regretted the PhD decision, loved my time as a student. My PhD was in 'Politics and Government' and my first thought, post graduation, was academia. However - no quick job offers and need for income drove me elsewhere.
I ended up in California county government, entry level administrative analyst position, and progressed up the career ladder from there to county CEO.
PhD itself was not critical to getting the job but the analytical training and discipline one develops in PhD research provided a big competitive advantage in my peer group.
Hope that helps. Good luck.

[letsdothis]

Quote:

Originally Posted by mageedge On your last question (not silly!) - yes, it's about tax efficiency. As much as possible within your overall asset allocation plan you want to place the least tax efficient instruments in tax sheltered accounts. Regular taxable bonds are the most obvious example of 'tax inefficiency'. Domestic stock index funds are pretty tax efficient because they declare little or no capital gains and their dividends tend to be close to 100% qualified. International funds, even index funds, tend to have a much lesser % of qualified dividend so those dividends will be subject to a higher tax rate. That's a very basic description - lots of variations (municipal bonds, tax managed funds etc.) you can look at down the road. On your wider question about my career track - never regretted the PhD decision, loved my time as a student. My PhD was in 'Politics and Government' and my first thought, post graduation, was academia. However - no quick job offers and need for income drove me elsewhere. I ended up in California county government, entry level administrative analyst position, and progressed up the career ladder from there to county CEO. PhD itself was not critical to getting the job but the analytical training and discipline one develops in PhD research provided a big competitive advantage in my peer group. Hope that helps. Good luck.

Thank you for your advice and thoughts! I am curious how you got to your position and what you studied?
I am looking to make some adjustments and invest a little bit now and keep dollar averaging. I may get some shares at a lower price given the recent downturn.