Even hotter topic alert! Today on the Finance Flash Go! podcast, we’ll be discussing the Backdoor Roth IRA!

There IS a way for high income earners to contribute to a Roth IRA. It is colloquially called a Backdoor Roth IRA.

I won’t get into the nitty gritty of exactly how to do this here, but will describe the general idea.

Let’s say your income as a married couple is above $206,000. You already maxed out your 401(k) and 457(b) options. You want to maximize your tax advantaged investing before going into a taxable account.

What you can do is contribute $6000 to a Traditional IRA. Because you are above the income limit, your contributions will then be taxed. Leave it in the Traditional IRA and your money will be taxed again upon withdrawal.

BUT…the government will now allow you to roll your (now after-tax) Traditional IRA contributions into a Roth IRA once a year. Once this rollover is done, the money will grow tax free and not be taxed upon withdrawal. You are contributing to a Roth IRA through the backdoor…hence the nickname.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Hot topic alert! Today on the Finance Flash Go! podcast, we’ll be discussing the Roth IRA!

The Roth IRA is named after Senator William Roth who introduced the concept.

With a Roth IRA, your money is taxed at the time of contribution. The money then grows tax-free and is NOT taxed upon withdrawal. The contribution limit in 2020 is $6000 and the general rule for age of withdrawal without penalty is 59½.

Ok, here’s the kicker…there is an income limit to be allowed to contribute to a Roth IRA. The income limit in 2020 is $139,000 for individuals and $206,000 for married couples. Most physicians will again be above these limits.

With that being said, there IS a way for high income earners to contribute to a Roth IRA. It is colloquially called a Backdoor Roth IRA.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, we’ll talk about health savings accounts or HSAs!

An HSA is an account where you contribute tax free money to be used towards health care expenses. While in the account, it grows tax free and is withdrawn tax free, so long as it goes towards health care expenses.

Triple tax free – no other account does that!

The extra nice trick is that you don’t need to withdraw money to pay for health care expenses right when they are due.

You can save the receipt for a health expense in 2021 and withdraw the money from your HSA in 2050 tax free using your saved receipt after it has had 30 years to benefit from compound interest growth.

That’s why it is often referred to as a Stealth IRA.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, the topic is 529 accounts!

A 529 account is an education savings account. Contribute money tax free, invest it tax free, and withdraw it tax free so long as it goes towards your designated child’s education.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, the topic is Traditional IRAs!

A Traditional IRA or Individual Retirement Account is an investment account available to any individual.

You can contribute up to $6000 yearly (as of 2020) to a Traditional IRA. Money put into this account is not taxed. Again, the money grows and then is taxed upon withdrawal (when your effective tax rate is likely lower).

Money can be withdrawn without a 10% penalty beginning at age 70½.

The main issue with a Traditional IRA is that the initial tax deduction upon contributing money is phased out for individuals making more than $75,000 or married couples making more than $125,000 in 2020.

Physicians will be above this income limit and therefore, their contributions will be taxed twice – once at contribution and once at withdrawal!

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, how to manage lifestyle creep!

So, we are all on the same page, lifestyle creep is the concept that when we increase our income, we respond by increasing our spending.

This is such a huge thing for physicians because after training, our income increases 100s fold overnight. Add that to years and years of delayed gratification and mountains of debt and it can be a recipe for disaster.

The reason is that it is much easier to reduce spending that was never there by avoiding excessive lifestyle creep than it is to get rid of the spending once the items like huge houses, luxury cars, etc are already signed for and bought on credit or with loans.

Once your lifestyle creeps too much, you will still have to pay loans and your income is never going to increase 100x again. In fact, many doctors have seen their income decrease, leading to issues like bankruptcy.

What are some strategies to mitigate lifestyle creep,

In fact, I would go so far as to say that I can predict with good accuracy how someone will end up financially by what they do with their first attending paycheck. You have a critical window here to really set yourself up for financial success and even make up for past mistakes. Once you are debt free and firmly on the road to financial freedom, there will be plenty of time for splurging if you decided that’s truly what makes you happy – although I bet you will find that not quite to be the case.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, we are talking about an amazingly simple and effective investment strategy called rebalancing!

Ok to start, we are assuming that at this point you have determined your asset allocation and bought funds according to your asset allocation. What next?

When investing in anything, the goal is to buy low and sell high. Then you earn the difference between the buying price and the selling price.

But how can you do this in the market without timing it or guessing the future, which we cannot reliably do?

It’s actually incredibly simple.

After you buy your funds in your asset allocation, do nothing. Then once or twice a year, rebalance your portfolio back to your set asset allocation.

Here’s an example of how to do this.

Let's say your goal asset allocation sis 80% stocks, 10% bonds, and 10% REITs.

Some years, stocks will do better than bonds and REITs.

At the end of the year using our example, you may have 90% stocks, 5% bonds, and 5% REITs (because stocks performed better).

To rebalance, you would sell enough stocks (you are selling high) and buy enough bonds and REITs ( you are buying low) to get an allocation back at 80% stocks, 10% bonds, and 10% REITs.

Do this and you are guaranteed to ALWAYS sell high and buy low.

Alternatively, you can divvy up whatever new funds you will be investing in the correct proportion to rebalance your asset allocation back to its predetermined percentages. This way, you can just buy low and don’t need to sell (and risk any tax implications).

Now sit back another year and do the same thing.

Rinse, lather, repeat.

You are now investing without needing to predict the future (impossible) or constantly stalk the finance pages (misleading) in a manner guaranteed to have you buy low and sell high (that’s how you make money, right?).

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, we are talking about the all-important 401(k) account!

A 401(k) investment account is probably the most common retirement investment account offered by employers. Additionally, self-employed individuals can open a solo 401(k).

In a 401(k), the money you put in ($19,500 limit in 2020) is not yet taxed (pre-tax money). It then grows in the account and is taxed when you withdraw the money in the future. This is advantageous because your effective tax rate during your peak earning years is very likely to higher than it will be in retirement when you will take the money out.

Often, employers will contribute to your 401(k) as well. Commonly, a “match” is offered in which the employer will contribute a certain amount if you contribute to the 401k to a certain level. The maximum combined employer-employee contribution in 2020 is $57,000. If you are self-employed with a solo 401(k), don’t worry. You can contribute as both employer and employee.

The price for this tax advantage is that the money cannot be withdrawn prior to age 59½. Take the money out before that age and you will pay a 10% penalty in addition to the typical taxes.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, we are discussing what is included in our savings rate.

As I’ve shared before, the formula for wealth as a physician is quite simple. And a savings rate of at least 20% is pretty much mandatory.

Let's give an example:

We can determine that we would need to save $50,000/year for 30 years assuming a very conservative 5% return to live on $120,000 annually in retirement.

If your annual gross income is $250,000, 20% of your gross income is equal to the necessary $50,000/year. This salary is right around the median (actually a bit below) average physician income in 2020.

So just about every physician should be able to do this, and really even do a lot more.

I see and receive a lot of questions about what should be included in your savings rate. Basically, people asking, “Does X count towards my savings rate?”

I have pretty strong feelings about what does and does not count. And the reason I feel strong is because I base it on (what I think is) a pretty simple definition.

If you are setting aside any money from your gross pay (your paycheck or self-employed earnings), that counts towards your savings rate.

Based on my definition, it really doesn’t matter what you are saving that money for. Money is fungible. Each dollar can be used interchangeably to buy things or build wealth in any way.

This includes debt payments! Each $1 of debt that I pay off increases our net worth by $1. So of course it counts towards our savings rate!

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!

Today on the Finance Flash Go! podcast, we are discussing real estate syndications.

Passive real estate investing is any investment into real estate that you make with your money alone. You contribute no “sweat equity” to the venture.

You simply hand your money to someone else (usually a group) and they use that money to invest in real estate. The most common forms of this type of real estate investing are syndications and funds.

In a syndication, you and a number of other people pool your money to buy and invest in one property. In a fund, you are contributing along with others to a large pool of money used to invest in many real estate investment properties.

If you performed your due diligence well with the passive investment that you choose, they do well and you receive a return based on the structure of your investment.

These investments can use Buy & Hold, Buy & Sell, Fix & Flip, or any other real estate strategy to turn a profit. They are all passive in this instance because you are not the one doing the work.

You will also want to make sure that you understand how your syndication is structured, meaning how the syndication will pay its investors, like you.

Please enjoy the Finance Flash Go podcast! We plan to release a new episode every weekday answering important finance questions. If you ever want to submit a question to our podcast, send an e-mail to [email protected], and please be sure to check out Jordan Frey’s blog prudentplasticsurgeon.com where he gives great financial advice.

A brief disclaimer While we are providing knowledge and awareness around financial topics in this show, we are not held responsible for any financial decisions you choose to make in response to the podcast. We hope to provide accurate information in regards to money and different methods of wealth creation, but it is always the learner’s responsibility to due their due diligence before making important financial decisions.

We hope you enjoy the show and thanks for tuning in, and if you like the podcast please subscribe, share, and leave us a review on the podcasting platform of your choice!