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AVBucks4239 wrote:

]I'm not stupid - I understand all of that. Obviously nobody can predict the market. But a) this is a profession in which people are laid off en masse whenever there is a downturn and therefore b) you may need that $$ sooner than you think. Liquidating stocks in a downturn is like catching a falling knife, and is definitely worse than parking some assets in other investments just in case. Also there is something to be said for holding some $$ to invest in the market when there is a downturn.

Just coming back to this. Market is down 5.3% in the past two days. If you're not in, you buying in now? Or do you think it will get worse, and you may be able to buy in cheaper? But what if it goes right back up -- did you miss your chance? Still going to be on the sideline?

And if you're in, are you going to sell to hedge your losses? Or maybe it will go back up tomorrow, and you should stay in to get your money back?

The active management strategy is just comically stupid when not applied in hindsight.

“To refer to a personal taste of mine, I’m going to buy hamburgers the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up in price, we weep. For most people, it’s the same with everything in life they will be buying — except stocks. When stocks go down and you can get more for your money, people don’t like them anymore.” Warren Buffett.

It's impossible to predict whether the market will keep going down or rebound. You should just keep buying stock at a consistent rate, definitely don't sell (if you can avoid it), and, if anything, start buying more as the market declines (within your means).

A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

legallybrunette93 wrote:A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

nothing. rates are only going to go up. I did the first republic 7 year, and given how low their rates are relative to my future mortgage rate that I'll be able to get, I regret not doing the 15. lock that shit down now. the fed has raised rates 8 times the past three years and, ITE, it seems that your rates will only be rising.

SplitMyPants wrote:

legallybrunette93 wrote:A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

nothing. rates are only going to go up. I did the first republic 7 year, and given how low their rates are relative to my future mortgage rate that I'll be able to get, I regret not doing the 15. lock that shit down now. the fed has raised rates 8 times the past three years and, ITE, it seems that your rates will only be rising.

The reason people ITT have cautioned against refinancing so soon is that many, many people end up hating biglaw to the point where they want to leave much, much sooner than they had originally anticipated. This is dependent on your loan balance and future plans, but refinancing early could severely limit your career options down the road.

From a pure interest rate perspective, you're correct. But you aren't considering loan balance, potential loan forgiveness and the individual's future career interests.

boredtodeath wrote:

SplitMyPants wrote:

legallybrunette93 wrote:A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

nothing. rates are only going to go up. I did the first republic 7 year, and given how low their rates are relative to my future mortgage rate that I'll be able to get, I regret not doing the 15. lock that shit down now. the fed has raised rates 8 times the past three years and, ITE, it seems that your rates will only be rising.

The reason people ITT have cautioned against refinancing so soon is that many, many people end up hating biglaw to the point where they want to leave much, much sooner than they had originally anticipated. This is dependent on your loan balance and future plans, but refinancing early could severely limit your career options down the road.

From a pure interest rate perspective, you're correct. But you aren't considering loan balance, potential loan forgiveness and the individual's future career interests.

fair. although i'd say banking on loan forgiveness is about as prudent as banking on not hating big law so much that you walk away from $200k+ comp for 5ish years. that said, i already know some people that have lateraled to small law after one year...

Anonymous User wrote:

boredtodeath wrote:

SplitMyPants wrote:

legallybrunette93 wrote:A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

nothing. rates are only going to go up. I did the first republic 7 year, and given how low their rates are relative to my future mortgage rate that I'll be able to get, I regret not doing the 15. lock that shit down now. the fed has raised rates 8 times the past three years and, ITE, it seems that your rates will only be rising.

The reason people ITT have cautioned against refinancing so soon is that many, many people end up hating biglaw to the point where they want to leave much, much sooner than they had originally anticipated. This is dependent on your loan balance and future plans, but refinancing early could severely limit your career options down the road.

From a pure interest rate perspective, you're correct. But you aren't considering loan balance, potential loan forgiveness and the individual's future career interests.

fair. although i'd say banking on loan forgiveness is about as prudent as banking on not hating big law so much that you walk away from $200k+ comp for 5ish years. that said, i already know some people that have lateraled to small law after one year...

accidental anon

SplitMyPants wrote:

Anonymous User wrote:

boredtodeath wrote:

SplitMyPants wrote:

legallybrunette93 wrote:A few times in this forum or other forums, in response to someone saying that they refinanced their loans shortly after graduation someone asks why they did that so soon or so quickly. As a new biglaw associate, what are the drawbacks to immediately refinancing with SoFi or First American?

nothing. rates are only going to go up. I did the first republic 7 year, and given how low their rates are relative to my future mortgage rate that I'll be able to get, I regret not doing the 15. lock that shit down now. the fed has raised rates 8 times the past three years and, ITE, it seems that your rates will only be rising.

The reason people ITT have cautioned against refinancing so soon is that many, many people end up hating biglaw to the point where they want to leave much, much sooner than they had originally anticipated. This is dependent on your loan balance and future plans, but refinancing early could severely limit your career options down the road.

From a pure interest rate perspective, you're correct. But you aren't considering loan balance, potential loan forgiveness and the individual's future career interests.

fair. although i'd say banking on loan forgiveness is about as prudent as banking on not hating big law so much that you walk away from $200k+ comp for 5ish years. that said, i already know some people that have lateraled to small law after one year...

accidental anon

Fair point, and again, this is more relevant to those borrowers with large loan balances, but (1) I think federal loan forgiveness for anyone whose loans were issued pre-Trump is a pretty good bet and (2) even if you don't ultimately seek forgiveness, how much are you really losing by going on IDR for a couple of years, artificially lowering your payments and banking the difference until you decide what you want to do?

I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Dr. Nefario wrote:I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Well given that you're going to be in the highest tax bracket as a big law associate (excluding stub year) I can't imagine a reason for not doing a traditional 401k where you put in pre-tax money. You might or might not be at that tax bracket when you begin to withdraw, so I see no upside to doing the roth 401k from the start.

I personally do a traditional 401k and book door 5500 into my roth each year.

Yugihoe wrote:

Dr. Nefario wrote:I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Well given that you're going to be in the highest tax bracket as a big law associate (excluding stub year) I can't imagine a reason for not doing a traditional 401k where you put in pre-tax money. You might or might not be at that tax bracket when you begin to withdraw, so I see no upside to doing the roth 401k from the start.

I personally do a traditional 401k and book door 5500 into my roth each year.

I don't know much about this, but isn't a reason you would do a Roth over a traditional the fact that the highest tax bracket now may be lower than whatever tax bracket (the highest or whatever other one) you're taxed at when you withdrawn from that traditional 401(k) when you begin to withdraw? I mean not just lower in absolute terms but lower enough in terms of TVM to justify foregoing the additional money saved in the present by not being taxed on the traditional 401k contribution.

Separately, I don't understand why you back door to a Roth if you prefer putting in pre-tax money. Once you backdoor, are you not paying taxes on the money you moved as if you had just contributed to a Roth in the first place? My understanding is that people backdoor to get around income limits on contributing directly to Roth IRAs not to somehow use pre-tax money but still get the benefits of a Roth.

I'm probably misunderstanding something here, and I'd appreciate if someone would set me straight.

HangingAround wrote:

Yugihoe wrote:

Dr. Nefario wrote:I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Well given that you're going to be in the highest tax bracket as a big law associate (excluding stub year) I can't imagine a reason for not doing a traditional 401k where you put in pre-tax money. You might or might not be at that tax bracket when you begin to withdraw, so I see no upside to doing the roth 401k from the start.

I personally do a traditional 401k and book door 5500 into my roth each year.

I don't know much about this, but isn't a reason you would do a Roth over a traditional the fact that the highest tax bracket now may be lower than whatever tax bracket (the highest or whatever other one) you're taxed at when you withdrawn from that traditional 401(k) when you begin to withdraw? I mean not just lower in absolute terms but lower enough in terms of TVM to justify foregoing the additional money saved in the present by not being taxed on the traditional 401k contribution.

Separately, I don't understand why you back door to a Roth if you prefer putting in pre-tax money. Once you backdoor, are you not paying taxes on the money you moved as if you had just contributed to a Roth in the first place? My understanding is that people backdoor to get around income limits on contributing directly to Roth IRAs not to somehow use pre-tax money but still get the benefits of a Roth.

I'm probably misunderstanding something here, and I'd appreciate if someone would set me straight.

1. Ah I see your point. In other words, you're saying (i) 20+ years from now, the highest tax bracket may be higher than whatever your tax bracket is now and/or (ii) that whatever tax hit you take now on contributing post-tax money now into a roth will be less than the taxes you'll pay at withdrawl on a traditional ira on the the presumably much larger growth that will accumulate over the 20 years.

My thinking is that you assume you will NOT be in the highest tax bracket at retirement, whereas now as a big law associate, you most definitely are. Also, it's easier to play around with your income levels in retirement because you can time the withdrawls, no? As for the second part of this question, I'm not sure on the math. But conversely, the extra untaxed principal amount you are able to put into a traditional amount is also compounding, so by deferring the taxes, you've got more capital working for you?

2. I am backdooring $5500 in addition to the $18500 I put into my traditional 401k (and backdooring to circumvent the income limits). It's just a way to max another tax advantaged vehicle. Also my employer ONLY provides a traditional 401k option.

Yugihoe wrote:

HangingAround wrote:

Yugihoe wrote:

Dr. Nefario wrote:I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Well given that you're going to be in the highest tax bracket as a big law associate (excluding stub year) I can't imagine a reason for not doing a traditional 401k where you put in pre-tax money. You might or might not be at that tax bracket when you begin to withdraw, so I see no upside to doing the roth 401k from the start.

I personally do a traditional 401k and book door 5500 into my roth each year.

I don't know much about this, but isn't a reason you would do a Roth over a traditional the fact that the highest tax bracket now may be lower than whatever tax bracket (the highest or whatever other one) you're taxed at when you withdrawn from that traditional 401(k) when you begin to withdraw? I mean not just lower in absolute terms but lower enough in terms of TVM to justify foregoing the additional money saved in the present by not being taxed on the traditional 401k contribution.

Separately, I don't understand why you back door to a Roth if you prefer putting in pre-tax money. Once you backdoor, are you not paying taxes on the money you moved as if you had just contributed to a Roth in the first place? My understanding is that people backdoor to get around income limits on contributing directly to Roth IRAs not to somehow use pre-tax money but still get the benefits of a Roth.

I'm probably misunderstanding something here, and I'd appreciate if someone would set me straight.

1. Ah I see your point. In other words, you're saying (i) 20+ years from now, the highest tax bracket may be higher than whatever your tax bracket is now and/or (ii) that whatever tax hit you take now on contributing post-tax money now into a roth will be less than the taxes you'll pay at withdrawl on a traditional ira on the the presumably much larger growth that will accumulate over the 20 years.

My thinking is that you assume you will NOT be in the highest tax bracket at retirement, whereas now as a big law associate, you most definitely are. Also, it's easier to play around with your income levels in retirement because you can time the withdrawls, no? As for the second part of this question, I'm not sure on the math. But conversely, the extra untaxed principal amount you are able to put into a traditional amount is also compounding, so by deferring the taxes, you've got more capital working for you?

2. I am backdooring $5500 in addition to the $18500 I put into my traditional 401k (and backdooring to circumvent the income limits). It's just a way to max another tax advantaged vehicle. Also my employer ONLY provides a traditional 401k option.

Yea, even if you weren't necessarily in the highest tax bracket, the third highest tax bracket 20+ years from now could be higher than the one now. Not that it would be, but at least the highest tax brackets have gotten really high at points in the past (wartime particularly) so I imagine the next highest ones during those times were also pretty high. But yes to (i) and (ii) not as definite reasons but as ones that may apply depending on too many other variables. I also think it may be helpful in that people tend to undersave for retirement so not having to also pay taxes on that amount may help people be more accurate in saving enough if they aren't properly factoring in taxes (of course, that's just personal error that wouldn't apply to everyone).

I was trying to account for having extra money now under the traditional approach in my TVM comment but did not articulate it well. That's certainly an important variable.

Thanks for the explanation. I guess now my question is why is it that you backdoor the 5500 to a Roth IRA rather than just keep the 5500 in a traditional IRA? I assume your preference for the traditional over Roth 401(k) (if given the choice) would also carry over to the same preference IRA. Although I do see a benefit to doing one of each to hedge against the more speculative advantages/disadvantages of each particularly regarding future tax rates, that doesn't seem to be part of your reasoning as far as I can tell. Perhaps I'm still missing something else.

HangingAround wrote:

Yugihoe wrote:

HangingAround wrote:

Yugihoe wrote:

Dr. Nefario wrote:I feel like at some point there was a general discussion about roth 401(k) vs. traditional and which is smarter for biglaw associates, does anyone have input or know where that was?

Well given that you're going to be in the highest tax bracket as a big law associate (excluding stub year) I can't imagine a reason for not doing a traditional 401k where you put in pre-tax money. You might or might not be at that tax bracket when you begin to withdraw, so I see no upside to doing the roth 401k from the start.

I personally do a traditional 401k and book door 5500 into my roth each year.

I don't know much about this, but isn't a reason you would do a Roth over a traditional the fact that the highest tax bracket now may be lower than whatever tax bracket (the highest or whatever other one) you're taxed at when you withdrawn from that traditional 401(k) when you begin to withdraw? I mean not just lower in absolute terms but lower enough in terms of TVM to justify foregoing the additional money saved in the present by not being taxed on the traditional 401k contribution.

Separately, I don't understand why you back door to a Roth if you prefer putting in pre-tax money. Once you backdoor, are you not paying taxes on the money you moved as if you had just contributed to a Roth in the first place? My understanding is that people backdoor to get around income limits on contributing directly to Roth IRAs not to somehow use pre-tax money but still get the benefits of a Roth.

I'm probably misunderstanding something here, and I'd appreciate if someone would set me straight.

1. Ah I see your point. In other words, you're saying (i) 20+ years from now, the highest tax bracket may be higher than whatever your tax bracket is now and/or (ii) that whatever tax hit you take now on contributing post-tax money now into a roth will be less than the taxes you'll pay at withdrawl on a traditional ira on the the presumably much larger growth that will accumulate over the 20 years.

My thinking is that you assume you will NOT be in the highest tax bracket at retirement, whereas now as a big law associate, you most definitely are. Also, it's easier to play around with your income levels in retirement because you can time the withdrawls, no? As for the second part of this question, I'm not sure on the math. But conversely, the extra untaxed principal amount you are able to put into a traditional amount is also compounding, so by deferring the taxes, you've got more capital working for you?

2. I am backdooring $5500 in addition to the $18500 I put into my traditional 401k (and backdooring to circumvent the income limits). It's just a way to max another tax advantaged vehicle. Also my employer ONLY provides a traditional 401k option.

Yea, even if you weren't necessarily in the highest tax bracket, the third highest tax bracket 20+ years from now could be higher than the one now. Not that it would be, but at least the highest tax brackets have gotten really high at points in the past (wartime particularly) so I imagine the next highest ones during those times were also pretty high. But yes to (i) and (ii) not as definite reasons but as ones that may apply depending on too many other variables. I also think it may be helpful in that people tend to undersave for retirement so not having to also pay taxes on that amount may help people be more accurate in saving enough if they aren't properly factoring in taxes (of course, that's just personal error that wouldn't apply to everyone).

I was trying to account for having extra money now under the traditional approach in my TVM comment but did not articulate it well. That's certainly an important variable.

Thanks for the explanation. I guess now my question is why is it that you backdoor the 5500 to a Roth IRA rather than just keep the 5500 in a traditional IRA? I assume your preference for the traditional over Roth 401(k) (if given the choice) would also carry over to the same preference IRA. Although I do see a benefit to doing one of each to hedge against the more speculative advantages/disadvantages of each particularly regarding future tax rates, that doesn't seem to be part of your reasoning as far as I can tell. Perhaps I'm still missing something else.

Yes, exactly. It's a way to hedge and manipulate your income further in retirement. Can withdraw the max amount from your traditional, short of going up a tax bracket or whatever you are trying to avoid, and supplement the rest of your income from the roth.

Recently started stub year at market firm.

Student debt is 185k

Currently on 10 year repayment, payments are $2090ish, currently planning on paying 3k-4K a month, colleague recommended switching to 30 year repayment plan so most of that goes to the highest interest loans (a little under 7%, lowest interest loans like 5% or so). Don’t want to refinance till I have a handle on how well I tolerate big law.


Any downside to this? Would it save me enough interest to be worth it?

Quick question re: Vanguard.

I have a pretty good emergency fund built up, I max out my 401(k), and I have a pretty good amount in stocks (mostly Amazon, some others). I am looking for a lower-risk investment going forward (less volatile than purely stocks, but better returns than a savings account).

I just opened up an index fund through Vanguard. I selected 80/20 bonds:stocks. I am not sure if that is a smart choice, though. My goal is to build up my investment in a way that I can have money ready in 3-4 years for a down payment. Thoughts?

Thank you!

Anonymous User wrote:Quick question re: Vanguard.

I have a pretty good emergency fund built up, I max out my 401(k), and I have a pretty good amount in stocks (mostly Amazon, some others). I am looking for a lower-risk investment going forward (less volatile than purely stocks, but better returns than a savings account).

I just opened up an index fund through Vanguard. I selected 80/20 bonds:stocks. I am not sure if that is a smart choice, though. My goal is to build up my investment in a way that I can have money ready in 3-4 years for a down payment. Thoughts?

Thank you!

Recommend de-concentrating your portfolio into index funds (looks like you're doing this). 80/20 is a solid ratio if you're looking at mid-to-long-term investment horizons (3+ years). If you're expecting to need these funds in the near-term (1-3 years), I'd probably go with something closer to a 50:50 split. In the very short term, (<1 year), I might just ride it out in a money market account and collect your 2% or so, especially given recent market volatility and headline risk going into 2019. Good luck.

I'd appreciate any advice about after-tax 401(k) contributions. Last year, I made after-tax 401(k) contributions after I'd maxed out my IRA and pre-tax 401(k) contribution. I like the convenience of having money automatically deducted from my paycheck into my 401(k), so I decided to stick with it for the after-tax 401(k).

What are the advantages and disadvantages of after-tax 401(k) contributions? And what's your advice: Should I made them again this year or instead just invest that money directly in non-tax sheltered accounts?

Thank you.

p sure you can roll your after tax contributions into a roth IRA, which is huge. i'm maxing mine out.

I maxed out my after-tax 401(k) contributions last year, but I'm not sure that's wise. You can only rollover those contributions into a Roth IRA if your firm's plan permits in-service distributions. If your plan doesn't, you'll have to wait if or until you leave the firm, which makes the Roth IRA rollover less appealing.

everythingbagel wrote:I'd appreciate any advice about after-tax 401(k) contributions. Last year, I made after-tax 401(k) contributions after I'd maxed out my IRA and pre-tax 401(k) contribution. I like the convenience of having money automatically deducted from my paycheck into my 401(k), so I decided to stick with it for the after-tax 401(k).

What are the advantages and disadvantages of after-tax 401(k) contributions? And what's your advice: Should I made them again this year or instead just invest that money directly in non-tax sheltered accounts?

Thank you.

If your plan allows in-service rollovers, you can do what's called the "mega backdoor Roth." It allows you to put a ton of money in a Roth IRA. It's one of the best deals going in retirement planning.

https://www.bogleheads.org/wiki/After-tax_401(k)

Only reason to do a taxable is if you have more immediate needs for the money you are investing (home downpayment, etc.) or are contributing as part of an emergency fund that needs to be freely accessible.

Given all that's going on here, and my level of confusion, are there any consultants who will do a few hours of work to look over your assets, liabilities, etc. and then give you advice on how to invest (i.e., should I do a backdoor roth, am I investing in the right kinds of funds)? I don't really think I need a money manager...

Anonymous User wrote:Given all that's going on here, and my level of confusion, are there any consultants who will do a few hours of work to look over your assets, liabilities, etc. and then give you advice on how to invest (i.e., should I do a backdoor roth, am I investing in the right kinds of funds)? I don't really think I need a money manager...

What do you need help with? PM me.

Just curious, for budgeting purposes, how much in non-fixed expenses should a BigLaw associate in NYC expect to spend each month? So not including metrocard, gym memberships, etc, but including groceries, clothes, restaurants etc. Say I don’t need to live extravagantly, but I’d like to buy a decent suit or pair of shoes every once in a while. Would $2500 be more than enough? (I really have no idea and I’ve heard anywhere from 1500-4000). Thanks

EminentDumain wrote:Just curious, for budgeting purposes, how much in non-fixed expenses should a BigLaw associate in NYC expect to spend each month? So not including metrocard, gym memberships, etc, but including groceries, clothes, restaurants etc. Say I don’t need to live extravagantly, but I’d like to buy a decent suit or pair of shoes every once in a while. Would $2500 be more than enough? (I really have no idea and I’ve heard anywhere from 1500-4000). Thanks

That should be more than enough. It's a problem if you're dropping $2500 a month on food for one person (clothes should be like 100-200 a month, assuming you already have work gear). Your fixed costs will run around 4k or more a month, assuming no roommate.

how much does everyone keep in their emergency funds? I know standard advice is 6 mos expenses, but I've been toying around with the idea of 12 - 18 months in case the economy goes to shit and it takes me a long time to land on my feet because i'm a junior. I'm on track to max out my voluntary post tax + 401k but that's about it as far as equity goes for me.