emkay625 wrote:Generally unsure about pretty much everything. Know nothing about finance. No idea how to go about refinancing my loans and honestly don't REALLY 100% understand what that means. Know I want to retire early but no idea how to even start. Thinking about hiring a financial advisor, but want to educate myself first so that 1) I know how to choose one and 2) I actually understand what they're saying.
If you hire an adviser, find one that is fee-based and owes you a fiduciary duty (new rules from Obama are making the fiduciary aspect mandatory starting some time in 2016? iirc). That said, I don't think one is necessary unless you really don't want to do the research yourself. As I said, the personal finance subreddit is a good place to start.
If you want to retire early, you need to figure out how much money you need to achieve financial independence (i.e., able to completely live off your investments). And then your goal will be to get to that amount. There is a subreddit for that as well:
https://www.reddit.com/r/financialindependence (though it's not as good as r/personalfinance because it has a much smaller userbase).
I'll give a quick and dirty rundown. There's two basic aspects that matter for your finances: (1) expenses, and (2) surplus money. Keep your finances reasonable and keep track of your expenses each month (i.e., have a budget and stick to it). With your leftover money, first you should build an emergency fund (usually around 3-6 months expenses, can be more, whatever you feel comfortable with... this might also need to be higher if you have assets that can create emergencies other than losing your job, for example a home that can have surprise expensive repairs). The emergency fund should be liquid and not in anything risky (e.g., you should put it in high interest savings account or CDs (certificates of deposit)). After you have an emergency fund, you should contribute to your 401k up to your employer match (most law firms don't match for lawyers, so this is irrelevant).
After the 401k match, you have 4 basic options: saving for an expense (e.g., down payment for a home), paying down debt, contributing to IRA, contributing to 401k. You should generally do the last 3 before the first 1 (i.e., pay off debt and max out retirement before saving for a large expense), but there are exceptions and certain people feel differently. Whether you should pay down debt (above your regular payments) or do retirement (if you don't have enough to do both), depends on the interest rates on the debt. Low interest rate debt, you should do retirement first. High interest rate debt, you should probably do that first. What is low vs high depends on you. Generally I'd say under 3-5 is low and above 5 is high, in the 3-5 range is kind of wash. For retirement, you should always max IRA before 401k (excluding match) because you have more control over your IRA than the 401k (because your employer chooses the 401k provider). The reason maxing those out each year is good is because you only get 23.5k in tax advantaged space (5.5k in Roth, 18k in 401k) and it disappears each year if you don't use it. Because you have high income, you probably need to do a backdoor Roth IRA.
For your investments that are on a long time horizon 5+ years, the market is fine. Under 5 years, you probably don't want to be in the market (use high interest savings or CDs instead). Index funds for the market are generally a good idea (look of target date funds or use a lazy portfolio).
Hope that helps.
