Financial Checklist

ASSESSMENT:

  1. Job stability
  2. Investment horizon
  3. Risk tolerance
  4. Target emergency reserves
  5. Debt

RISK MANAGEMENT TOOLS:

  1. Disability Insurance
    1. Buy in residency
    2. Future purchase option rider
    3. Own occupation
    4. Buy with post-tax dollars
  2. Health Insurance (see HSA below)
  3. Life Insurance (married or dependents)
  4. Liability Insurance  (Umbrella Policy)
  5. Trust
  6. Long-term Care Insurance

GOALS:

  1. Build portfolio to achieve early financial independence
  2. Target portfolio size
  3. Target rate of return
  4. Date to achieve target
  5. Withdrawal rate
  6. Spending Goals
  7. Date to switch from accumulation to withdrawal phase
  8. Bridge period (between income and access to retirement funds if early retiree)
  9. Decumulation strategy to minimize taxes (withdraw from combination of 401k + Roth)

ALLOCATION:

  1. Equities
    1. Domestic
    2. International
  2. Fixed Income
    1. Bonds
    2. TIPS
    3. Municipal Bonds in taxable
  3. Cash Equivalent
    1. Money Market Fund
    2. CDs
  4. Alternatives
    1. REIT
    2. Real Estate (crowd-funding, syndicate, direct ownership)

INVESTMENT VEHICLES:

  1. Cash Emergency Fund (3-6 months living expenses)
  2. Roth IRA (in residency)
  3. Defined Contribution Plan (eg, 401k, Profit Sharing)
  4. Backdoor Roth annual contribution for self + spouse (attending onward)
  5. Health Savings Account (Stealth IRA)
  6. Taxable Brokerage Account
  7. 529 plans for kids
  8. Defined Benefit /Cash Balance Plan

REBALANCING:

  1. Every 1-3 years
  2. Sell funds in one class to repurchase another class
    1. Higher transaction costs
    2. May trigger capital gains in taxable
  3. Use new contributions to raise allocation in funds that dip below target level

TAX EFFICIENT STRATEGIES

  1. Asset distribution based on tax efficiency
    1. Question conventional wisdom: Place bonds in taxable account per WCI? Caveats?
  2. Tax Loss Harvesting
    1. Only possible in taxable brokerage accounts
    2. Beware wash sales