Residency is not the obvious time to start investing, and most residents put it off. You are earning a modest salary, carrying significant loan debt, and working hours that leave almost no time to think about anything outside of medicine. It makes sense that investing gets pushed down the list.
But here is the thing. Residency is also one of the best times to start, specifically because of something that will not last: you are in a lower tax bracket than you will ever be again as an attending physician. The window to take advantage of that is limited, and every year it goes unused is a year of tax-free growth you cannot get back.
This post is about how residents can start investing — simply, without overcomplicating it.
First, Understand the Context
Before anything else, it helps to be honest about what investing looks like during residency.
The amounts will probably be small. The salary for most first-year residents in the US sits around $65,000 to $70,000, and after taxes, loan payments, rent, and living expenses, there may not be a lot left over. [1] That is fine. The point of investing during residency is not to build a large portfolio — it is to open the right accounts, develop the habit, and take advantage of the tax environment while you are in it.
The goal during residency is to avoid catastrophic mistakes and get the basics in place. Investing is one of the basics.
Should You Invest at All, or Just Pay Down Loans?
This is the question most residents wrestle with, and the honest answer is that it depends on a few things.
The general framework is straightforward. If your loan interest rate is high — above 7 or 8 percent — that debt is expensive enough that directing extra money toward it often makes more sense than investing, because paying it down gives you a guaranteed return equivalent to the interest rate. [2] If your rate is lower, or if you are on an income-driven repayment plan where extra payments do not reduce your balance in the short term, the case for investing alongside your loan payments is stronger.
There is also the tax bracket argument, which is specific to residents. You are likely in a lower tax bracket now than you will be as an attending. Every dollar you put into a Roth IRA during residency grows completely tax-free and will never be taxed again at the higher rate you will eventually pay. [3] That is a meaningful advantage that is worth preserving even when loans feel like the priority.
One rule that consistently comes up in the resources we have read: always contribute enough to your employer’s retirement plan to capture the full match, if one is offered. A 100 percent match on the first few percent of your salary is an immediate guaranteed return that nothing else can compete with. [4]
The Roth IRA: Where Residents Should Start Investing
For most residents, a Roth IRA is the right first account to open.
The mechanics are simple. You contribute money you have already paid tax on, it grows completely tax-free, and you pay no tax on withdrawals in retirement. [3] For someone currently earning a resident salary — which is likely the lowest income they will see for the rest of their career — paying tax now at a lower rate and never again is a very good deal.
The contribution limit for a Roth IRA in 2026 is $7,000 per year for those under 50. [1] Most residents will not be able to max this out, especially in early years of training. That is fine. Contributing whatever you can manage — even $50 or $100 a month — gets money into the account and establishes the habit. Signing bonuses, tax refunds, or moonlighting income can be used to top up contributions at the end of the year if monthly contributions fall short.
Opening a Roth IRA is straightforward. Vanguard, Fidelity, and Schwab are the most commonly recommended providers for their low fees and wide selection of index funds. [5] The whole process takes about 20 minutes online.
What Residents Should Actually Be Investing In
This is where a lot of people get stuck, and it does not need to be complicated.
The most consistently recommended approach for residents — and honestly for most individual investors — is a simple portfolio of low-cost index funds. [1] A single broad market index fund that tracks the total US stock market, or the global market, is enough. You do not need to research individual companies, predict market movements, or manage a complex portfolio. The evidence consistently shows that simple, low-cost index funds outperform most actively managed alternatives over long periods of time. [5]
If you want something even simpler, a target date fund — which automatically adjusts its allocation between stocks and bonds as you get closer to retirement — is a perfectly reasonable option that requires essentially no ongoing management. Choose one with a retirement year that matches roughly when you expect to retire, and leave it alone.
The most important thing is not picking the perfect fund. It is getting money into a sensible investment and not touching it when markets move around.
Your Employer Plan: 403(b) or 401(k)
Most residency programmes at hospitals offer either a 401(k) or a 403(b) — a 403(b) is essentially the same thing but used by non-profit organisations like most academic hospitals. [6]
If your programme offers an employer match, contribute at least enough to capture it in full before doing anything else. Beyond that, whether to prioritise your employer plan or a Roth IRA depends on whether your plan offers a Roth option and what funds are available. If the funds in your employer plan have high fees, you are often better off maximising your Roth IRA first and contributing to the employer plan after.
If there is no match offered, which is common in residency, a Roth IRA is generally the better first choice because of the greater flexibility and control over fund selection.
Keep It Simple and Automate It
The practical advice we keep coming back to is this: set up an automatic monthly contribution to your Roth IRA, choose a simple index fund, and then genuinely leave it alone.
Do not check it every week. Do not react when markets drop — and they will drop. The residents who benefit most from investing during training are the ones who start, automate, and stop paying close attention. The ones who try to time the market or make frequent changes tend to do worse. [1]
Residency is demanding enough without adding active portfolio management to your list of responsibilities. The whole point of this approach is that it requires almost no ongoing time or attention.
The Bottom Line on How Residents Can Start Investing
Residents can start investing without a lot of money or a lot of time. It requires opening the right accounts, choosing simple low-cost investments, and being consistent about contributing whatever you can manage.
We are not yet at the residency stage ourselves, but this is how we are thinking about it ahead of time. The residents who arrive at attending income with even a small Roth IRA already open and a few years of contributions inside it are in a meaningfully better position than those starting from scratch. The amounts during training matter less than the head start.
References
- Panacea Financial. (2025). Retirement contributions during residency. https://panaceafinancial.com/resources/retirement-contributions-during-residency/
- Acorns. (2026). Pay off student loans or invest? The math. https://www.acorns.com/learn/borrowing/pay-off-student-loans-or-invest/
- Physician Side Gigs. (2025). The Roth IRA: Why doctors — especially residents and fellows — should consider contributing when eligible. https://www.physiciansidegigs.com/roth-ira-for-doctors
- White Coat Investor. (2026). Should I pay off student loans or invest? https://www.whitecoatinvestor.com/student-loans-vs-investing/
- MedMoneyGuide. (2026). Medical resident financial guide 2026: PSLF, Roth IRA and budget. https://medmoneyguide.com/guides/resident-financial-guide
- Med School Advice. (n.d.). Roth IRA — residents talk: Advice and lessons for medical students. https://www.medschooladvice.com/residentstalk/tag/Roth+IRA