First post, long time reader.

As the subject states I have a high-ish income (relatively recent) but almost no investment exposure or strategy and looking for a diving off point.

Little background.
In my early 20's i was making sub 70k paying off student loans and partying. $100k-ish since 27, last year made 200 and will likely be making 300 for the foreseeable future.

I'm maxed out on 401K and have about $40k in standard savings account. I've been married 4 years and bought a house 3 years ago and paid off both vehicles with no debt besides the mortgage. Looking to start a family in the next couple of years. I feel like I've been living below my means by at least one phase of my career level. I feel like I'm doing everything right but still behind the curve.

I've looked at IRA's but they don't seem advantageous and lose tax benefits if you have a high income level. (?) Mutual or Index funds look more my speed, but I have no idea which would work for me. I'd like to have a majority of my investment as passive long term with a smaller percentage to play with.

I'm a relatively smart guy, but growing up I had no exposure to investments and came from a family that never had enough money to investment, even in 401K's.

I follow the markets closely as a hobby if nothing else and understand the principles of investing. I feel like I'm ignorant to the products that I should use and would fit my situation. So my major issue right now is that I feel paralyzed.

Any help would be appreciated.

Where you're at in life it really just depends how "rich" you wish to be.

If want it fairly safe and not worry about it, continue to max 401K, get an investment firm to set you up in diversified mutual funds that you contribute to routinely with excess (after enjoying the good salary) and retire with $5M - $15M.

If like the excitement and game of investing do the same as above but set aside a set amount that you can invest more aggressively (individual stocks, bitcoins, commodities, shorting, etc.) and retire with $4M - $25M.

I went with first option, although when I started in '82 it was <$17K/year. However dual income for 36+ years and we're a little over $4M in 401Ks, Mutual Funds and paid for house.

Do you have a "throw away" email address I can get a hold of you at to swap contact information?

what's your profession? just curious

way to go on the high salary. Maxing out your 401k is a good first step to make sure you don't somehow manage to blow all your money. You are virtually guaranteed to become a millionarie just by maxing out and investing your 401k.

Google back door Roth. You can fund an IRA this way. It is at least another 5500 yearly you can put away.

I would open a low cost trading account (Vanguard or Schwab). The easiest thing to do is put money into a target date fund. Instant diversification with low cost. Yes you pay taxes up front and upon sale but you can also let it grow without touching it for decades.

Dr T and the Women said:

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Google back door Roth. You can fund an IRA this way. It is at least another 5500 yearly you can put away.

I would open a low cost trading account (Vanguard or Schwab). The easiest thing to do is put money into a target date fund. Instant diversification with low cost. Yes you pay taxes up front and upon sale but you can also let it grow without touching it for decades.

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We do both of these except I use Wealthfront after maxing out our 401ks.

Would I be able to execute a back door roth or would that be something for a professional?

Should i consider a traditional ira as an option?

You can easily do yourself. At your income a traditional ira doesn't help...it is not pre tax

Back door roth for sure. Does your employer offer roth 401k? That might make sense.

Can start 529 but I don't love them.

HSA is a great way to save extra money.

If you or your wife has their own business, SEP IRA limits are much higher ($54k).

You have a lot of knowledge to gain, but the good news is that it is pretty easy to gain.

I'd highly recommend spending a good chunk of time on www.whitecoatinvestor.com. You may or may not be a doctor, and I strongly suspect you aren't based on earning money in your early 20s, but you are in a similar place to most mid 30s docs.

Your specifics will be different, but first realize that IRAs, Roth IRAs, 401k, 403b, and all the other things you'll learn about aren't investments, but rather they are vehicles for investments. Please realize that you have it exactly backwards, the higher your income, the more advantageous pre-tax savings can be. IRAs, 401ks, 403b and a few other plans are all similar in their effect. Tax free today, taxed on withdrawal.

Inside of any of these, you can own bonds, stocks, mutual funds, index funds, ETFs and in some cases even hold real estate, though that can get tricky.

At your income, you cannot contribute to an IRA, but through your employer, you can but up to $18,500 into your 401k. That is money you don't have to pay tax on this year, and possibly never. Once that money is there, you can invest it in anything allowed within the plan, though I'd suggest a low fee index fund. If you are self employed, look into a solo 401k. If you play your cards correctly, as a self employed person you can put up to $55,000 into your 401k for 2018 alone. That will save ~$15,000 off of your tax bill.

You can also contribute $5,500 into a Roth IRA, as well as $5,500 for your spouse, even if he/she doesn't work. Because of your income, you'll need to do what is known as a backdoor Roth IRA. Google it, it's legal and will allow you to tax shelter and additional $5,500-$11,000 annually. You will pay tax on this money now, but the money will grow tax free for eternity, or until congress changes the law, which is unlikely.

There are other things you can do, but I'd start with reading this book https://www.whitecoatinvestor.com/the-book/ and possibly taking this course. https://whitecoatinvestor.teachable.com/p/fire-your-financial-advisor

Curious about profession and how you accelerated your income that quickly

houstonagman said:

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Would I be able to execute a back door roth or would that be something for a professional?

Should i consider a traditional ira as an option?

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I just opened my back door Roth a couple of months ago. Fidelity walked me through it all, including moving my existing Roth that was with another bank. I went through Fidelity because that's where the majority of my retirement funds are. Any firm with good customer support ought to be able to help you with it, just to be sure everything is done correctly.

thanks for all the help guys.

further background. I work for a mid-sized development company. my growth is stemming from a magical combination of hard hard work and luck/timing (which always sounds like bs until it happens to you). My wife doesn't work full time but does a little consulting for fun (makes less than 50k/year)

I'm talking to our hr head today to ask if our 401k guys can help with the backdoor roth. is that correct? i have my savings/checking with BOA, should i look into their merrell services? or go with a fidelity/scwabb type?

i'm becoming deathly afraid of my tax liabilities...

your wife just does stuff for fun part time and pulls almost $50k?

Sounds like one of those ads I see all the time..

What kind of consulting does she do?

ha! she doesnt sell sentsy and she isnt an instagram model. just highly educated in a vary niche field.

I guess that might rule out turning tricks. Maybe not.

What kind of doctor are you?

houstonagman said:

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just highly educated in a vary niche field.

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Which field? Or does it vary?

HoustonAgman, would love to swap contact info with you. I am about the same age as you and live in the Houston area.. feel free to shoot me an email at cypressag123@yahoo.com if you would like to connect

Buy rental properties.

Be your own boss - best way to save for retirement