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Portfolio Balancing and Monitoring Question
Old 08-21-2008, 11:14 PM   #1
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Portfolio Balancing and Monitoring Question

I have a pretty basic question: When you balance and monitor your overall portfolio, do you have just one "pie" per se with various percentages, or several "pies" according to the following categories:

1. Taxable regular investment
2. Tax deferred investment accessible at 59.5 y.o. or through 72t
3. Tax deferred but no age limit (457b plan)
4. ROTH

Being the lazy one, I want to just keep one pie and adjust from time to time, the majority of the investment being through DCA. DH, however, wants to have four separate pies. His reasoning is that they all have different purposes and we should be strategic about when to withdraw from what pie.

However, I have no idea then how to structure each of these four pies, even thinking about it gives me a headache. I feel that since we are in the accumulation stage, it really doesn't matter, and we can adjust between the pies when we come to the point of retirement.

So what do you think? (And step two of the question is, if I am right, should I compromise to maintain marital harmony)
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Old 08-21-2008, 11:49 PM   #2
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One pie. It is a mistake to have 4 pies because money is money and is fungible. All books that I know of recommend one pie.

Also you should have only tax efficient investments in your taxable accounts. Put your fixed income in your tax-advantaged accounts. Here's an short example. If you had a total stock market index fund in taxable and a bond index in your Roth IRA, but you wanted to sell some bonds before age 59, how would you do it? Easy, exchange bonds in Roth IRA to shares of total stock market index, then sell the same number of shares of total stock market index out of your taxable account. Net result: you have the same amount of total stock market index as before, but have sold some of your bond position. You have also paid less taxes than if you had bonds in your taxable account.
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Old 08-21-2008, 11:51 PM   #3
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and your husband should be well-aware that, being married, he's always wrong by default.
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Old 08-21-2008, 11:57 PM   #4
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Excellent, LOL. A single pie is much easier to manage! I have a good appetite but 4 pies are too many.

Marquette, I am afraid he hasn't learned this secret yet, and doesn't show any sign of improving. (I just realized this is kind of a precarious discussion, since you might meet him someday at the Bogleheads gathering!)
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Old 08-22-2008, 12:11 AM   #5
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Bogleheads are pretty adamant about the one-pie notion. You might have him ask the same question on the bogleheads forum.
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Old 08-22-2008, 12:23 AM   #6
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Originally Posted by GoodSense View Post
Marquette, I am afraid he hasn't learned this secret yet, and doesn't show any sign of improving. (I just realized this is kind of a precarious discussion, since you might meet him someday at the Bogleheads gathering!)
He's allowed to have an opinion about investing as soon as he wises up and comes to a meeting!
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