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Asset Allocation Question

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  • asmallchild
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    I like the 3 fund portfolio.  Simplicity has its merits.

    It appears you have a high income.  You admit that it’s probably foolish to choose against deferring tax by using a traditional 401(k).  I would tend to agree.  Reducing taxable income now will probably save you $7,000 to $9,000 depending on where you live.  You’ll pay tax later when you take it out, but likely not nearly as much.

    I won’t comment on asset protection; others on this forum know far more than I do.

    I’ve sung the praises of tax loss harvesting before, and I’ll do it again.  I like to hold funds in taxable that I don’t have elsewhere to avoid potential wash sales.  As the opportunity arises, you could exchange from VTSAX to VFIAX (S&P 500) and use VLCAX (Large Cap Index) as a TLH partner to VFIAX in the future.

    I would invest the bonus into VFIAX or if it’s truly “play money” you could put it in whatever fund you think has the most upside, perhaps something that’s taken a beating lately.  You’ve got plenty of options with that criteria  :mrgreen:

     

     
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    Sounds good, thanks for your input.

    I'm looking into switching back to a traditional 401k. That being said, I currently work in a no income tax state, I would likely be targeting my home state of California for retirement so I guess that is one item working in favor of the Roth 401k.

    I have been tax loss harvesting of late too. I've completed the conversions for the backdoor Roth IRA and dividends are set to accumulate in a money market account. Have already exchanged VTSAX to VFIAX and am looking to return to VTSAX in 31 days (or perhaps transition to VLCAX) in my taxable account.

    Leave a comment:


  • PhysicianOnFIRE
    replied
    I like the 3 fund portfolio.  Simplicity has its merits.

    It appears you have a high income.  You admit that it's probably foolish to choose against deferring tax by using a traditional 401(k).  I would tend to agree.  Reducing taxable income now will probably save you $7,000 to $9,000 depending on where you live.  You'll pay tax later when you take it out, but likely not nearly as much.

    I won't comment on asset protection; others on this forum know far more than I do.

    I've sung the praises of tax loss harvesting before, and I'll do it again.  I like to hold funds in taxable that I don't have elsewhere to avoid potential wash sales.  As the opportunity arises, you could exchange from VTSAX to VFIAX (S&P 500) and use VLCAX (Large Cap Index) as a TLH partner to VFIAX in the future.

    I would invest the bonus into VFIAX or if it's truly "play money" you could put it in whatever fund you think has the most upside, perhaps something that's taken a beating lately.  You've got plenty of options with that criteria  :mrgreen:

     

     

    Leave a comment:


  • asmallchild
    started a topic Asset Allocation Question

    Asset Allocation Question

    Just had a quick question about how to allocate incoming funds. I'm an employee in a well-reimbursed field. My company 401k is rather blah and doesn't even offer a match so I've opted (probably foolishly) to contribute to a Roth 401k instead of a traditional 401k since the $18000 I would be deferring wouldn't dent much in my overall taxable income. I do contribute to a personal and spousal backdoor Roth IRA as well at Vanguard (33% VBTLX, 33% VTIAX, 33% VTSAX). The vast majority of what I'm saving for retirement unfortunately has to reside in a joint taxable account also at Vanguard (33% VWIUX, 33% VTIAX, 33% VTSAX)

    I'm looking forward to a rather sizable bonus soon and was curious how to allocate this.

    1) My wife and I both have personal accounts at Vanguard as well. We had wanted to keep this bonus money outside of our joint account as it represents some "play" money for us. We both contribute >20% of our income already towards the joint account and figure we could take more risk with this bonus money and/or actually spend some of it. Would it be worthwhile to place the account in my wife's name for asset protection purposes?

    2) I had initially intended to dump it all into VTSAX (either in a personal account in my name or my wife's name) just to keep things simple and to lower my overall allocation to international and bonds. Any other suggestions/recommendations?
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