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Asset Location Question

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  • Asset Location Question

    First post, so thanks for bearing with me. I am looking for feedback on my plan for which asset to place in a new taxable account (already maxing out 401k and backdoor his/her Roth IRA).

    Current approximate asset location/allocation:
    30% - Large Cap Blend (Fidelity 500 Index, FXAIX), ER 0.02
    20% - Mid Cap Blend (Vanguard, VSMAX), ER 0.05
    20% - Small Cap Blend (Vanguard, VSMAX), ER 0.05
    15% - International Large Growth (RERGX), ER 0.46
    7.5% - US Bond Index (Fidelity, FXNAX), ER 0.03

    Backdoor Roth IRA:
    7.5% - REIT (Vanguard, VGSLX), ER 0.12

    My plan would be to use my taxable to eventually offload the International Stock portion of my investments from the 401k (given the relatively high ER), and use VTIAX (ER 0.11, I believe) in the taxable. From my understanding International Stocks are not a bad choice for a taxable account, and with the drop in the expense ratio, it makes sense to me. Am I missing other considerations?

    As an aside question, what are folks' methods for timing their taxable contributions? Monthly? Less to decrease the number of lots for future harvesting?

    Thanks for any feedback!

  • #2
    Yes good plan: international in taxable mostly to get out from your high ER international fund option in your 401k.

    For your second question, tax lots don't really matter to me - I don't ever sell. In retirement I doubt I'll sell either. We will live off RMDs, dividends, real estate, SS. So I invest whenever I have an extra $10k or so laying around.



    • #3
      Well I look at tax lots and will sell if it makes sense. Multiple lots are easy because the brokerage firms have to track them for you. This was not always true.
      I like your thought about getting out of the high ER that is offered in your 401K.


      • #4
        Agree with international to taxable in your situation. There are actually two advantages. One is the slight improvement in ER. The other is the tax credit. While not definitive, every little bit helps.


        • #5
          You may be overthinking the timing issue. I make taxable contributions automatically every pay period (twice a month) because all of my tax deferred is maxed out. While I will tax loss harvest I really only do so after major market drops. For example, the recent 10% has not yet drawn my interest.


          • #6
            Agree with others. Looks good.


            • #7
              Thanks for the input!