Today we are talking about how to invest aggressively early on in the year. I share our personal example of investing 6-figures in the first 3 months of the year. Stay until the end to find out mistakes to avoid when investing money as a doctor or high-income earner.
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Hi, I’m Jessica and I love talking about financial freedom after experiencing burnout early in my pharmacist career. We talk passive income and simplifying on this channel to combat stress and burnout. If you haven’t seen my burnout story or our debt-free journey while in residency/fellowship, please click those video links below.
Now, there are two modes of thought. Lump sum investing and dollar-cost average investing. Lump sum investing means you invest all the cash you have available at once. Dollar cost average investing takes cash you have weekly or monthly and invests it. It spreads out the risk throughout the year typically.
Studies have shown that lump sum investing comes out as the preferred return on investment over dollar-cost averaging. This is one of the reasons I believe in investing early and often.
This also means investing early in the year to allow more time for growth in our investment portfolios.
If you would like a reminder on the steps to retire early and ORDER for investing to FAT FIRE, please watch those videos linked below.
How were we able to invest 6-figures within 3 months of the year?
- We are dual income earners with no children currently
- We currently rent in a high-cost of living area (HCOL) of Los Angeles, CA
- We are both six-figure income earners
- We both own small businesses and I also have a full-time W2 position as an Associate Professor
- We have a fully funded emergency fund and down-payment fund to purchase a home in 2022
- We are debt-free – watch our video on how we paid off over $380,000 in student loans
Here are the actual numbers we contributed:
- Work 401(k) for me – I front-loaded my account with ~$12,000 + ~$1,500 in employer match. Recently, I shared a video on how to front-load your Work 401(k) account. Be sure to check out the steps there to help in aggressively investing early in the year.
- Work 401(k) for my husband – He front-loaded his account with a lump sum payment of the full $20,500 into his account
- ROTH IRA for me – I front-loaded my account with the full payment of $6,000 (using the backdoor option)
- ROTH IRA for my husband – He is not contributing to this account currently
- Work 401(k) for my husband – He own his own business and therefore can contribute 20-25% of his profits each year up to a maximum of $61,000 in 2022. Based on this information, he contributed $20,000 to his account and has a remaining $20,500 he can contribute before the end of 2022 to his solo 401(k)
- Real Estate – We have been actively researching how to invest in real estate without becoming landlords. We decided to start with a small contribution into a real estate syndication this year with a $25,000 investment. It is a partnership with several investors. Because of the complexities of it, I won’t go into details in this video on it but we planned to invest and hold in this fund for up to 10 years.
- Taxable Brokerage – The remaining money went into taxable brokerage accounts for each of us. Just over $15,000 in the first 3 months. We auto-invest each week in index funds (total stock market or S&P 500) and also set buy limits for mutual funds when the market dipped low over the past 3 months.
We invest early and often. Please share your strategies.
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// CHECK OUT THESE VIDEOS //
How I’ll Retire Early // Financial Independence Retire Early as a Pharmacist:
How we Paid off $380,000+ in MEDICAL and PHARMACY student loan debt AS FAST AS POSSIBLE using the KAKEIBO Method:
Passive Income Ideas Video: https://youtu.be/PE9-TiFOm80
7+ Income Streams: https://youtu.be/9ruhNsBy9Kc
Money Traps to Avoid in your 20s: https://youtu.be/SD0OsCWbxzM