Hi all -
Would love your input on this one.
I have a 401(k) with both pre-tax dollars as well as Roth dollars (from in-plan Roth rollovers of after-tax contributions). I also have many years of compounding ahead of me. I've realized that I need to rebalance and move some money out of stocks and into bonds.
My question: should I preferentially hold my bonds in my pre-tax 401(k) bucket and hold my stocks in the Roth 401(k) bucket?
Since I'll eventually have to pay taxes on gains from the pre-tax 401(k) bucket, but not the Roth (401)k bucket, I'm thinking that I should put the investments with the smallest potential upside (bonds) into the pre-tax 401(k) and investments with the highest potential upside (stocks) in the Roth 401(k). Thoughts? Poke a hole in my reasoning please!
Many thanks
Would love your input on this one.
I have a 401(k) with both pre-tax dollars as well as Roth dollars (from in-plan Roth rollovers of after-tax contributions). I also have many years of compounding ahead of me. I've realized that I need to rebalance and move some money out of stocks and into bonds.
My question: should I preferentially hold my bonds in my pre-tax 401(k) bucket and hold my stocks in the Roth 401(k) bucket?
Since I'll eventually have to pay taxes on gains from the pre-tax 401(k) bucket, but not the Roth (401)k bucket, I'm thinking that I should put the investments with the smallest potential upside (bonds) into the pre-tax 401(k) and investments with the highest potential upside (stocks) in the Roth 401(k). Thoughts? Poke a hole in my reasoning please!
Many thanks
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