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Looking for some advice

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  • Looking for some advice

    Hey all, first year out of fellowship and looking for some investing advice. As I move forward, my investment strategy will mostly be back door roth, HSA plan with HSA bank, then 401K, profit sharing and cash balance plan with my group (401, profit sharing and cash balance eligible after one year).  When looking at diversification and risk strategy, do you all have any recommendations on what types of investments should be in each account? For example, Does it makes sense to have all total stock market index in a roth account and then in my HSA hold all total international stock market index or a bond index fund?

    I funded my roth IRA the last 2 years and have it in total stock market index fund and total international index already. I'm just not sure if I should try to keep my balance of stocks and bonds within each account or diversify between accounts?

    Also a few specific questions for HSA bank. I'm currently maxing out my contribution through the rest of the year since I just started in July. Do I need to have a certain amount before I invest it with TDA?  Is there a benefit of waiting? any minimal amount to get access to better funds? what type of funds would you recommend? Thanks in advance

  • #2
    It's best to deside on your overall asset allocation, then apply that as best you can across all accounts.

    Cash balance plans are supposed to have a lower risk profile (i.e. bonds), so you may not wish to hold bonds anywhere else.

    International funds are nice to have in a taxable account if and when you start one. Keeping them in a tax advantaged fund negates the foreign tax credit you'll receive if you hold international in taxable.

    Check out the Boglehead wiki for more info on asset location/tax efficiency.




    • #3
      I would recommend setting your asset allocation based on the time horizon for each account.  Your retirement accounts, including your Roth and 401(k), have the longest time horizon, so I might suggest 100% equities, assuming you have maybe thirty years until retirement.  For accounts that you might need to access at any time, such as an emergency fund or an HSA, I would tend to the other extreme, closer to 100% cash.  I wouldn't worry so much about an overarching asset allocation across your entire portfolio; instead focus account by account, and I think the appropriate allocation will be much easier to determine.