Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
401k, Roth IRA, and Taxable -- Asset Allocations?!
Old 07-20-2016, 05:37 PM   #1
Confused about dryer sheets
 
Join Date: Jul 2016
Location: Alexandria
Posts: 1
401k, Roth IRA, and Taxable -- Asset Allocations?!

Hello! I'm new to the community and love the idea of early retirement. I'm 26 years old and want to revamp my asset allocations now that I'm maxing out my 401k contributions and Roth IRA, with additional investments in a Vanguard taxable account. Here's my current investment picture:

Taxable Accounts
  • ~$10,000 VTSAX (Vanguard Total Stock Market Index Fund)
  • ~$10,000 VTIAX (Vanguard Total International Stock Index Fund)
Roth IRA
  • ~$10,000 VFFVX (Vanguard Target Retirement 2055 Fund)
401k Pre-Tax
  • ~$45,000 Target Retirement 2055 Fund (BlackRock)

For the Roth IRA, I chose the target retirement fund as a temporary holding until I can shift it to something better. Through some research, I think going all REIT for Roth would be advantageous given the tax-free aspect. But given these three different investment vehicles, how can I best establish a suitable asset allocation? I've always preferred to keep my money in as few accounts as possible for simplicity, but the need to split into these different investment accounts has thrown me for a loop. Should I break up the 401k funds into individual funds (S&P 500 and Bonds) to weight more allocation to bonds, as it appears there are none in my current portfolio?

Any tips or advice for reallocation and investment strategy going forward would be fantastic, thanks in advance!!
__________________

__________________
the585 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-20-2016, 07:29 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Jul 2005
Posts: 3,858
To add bonds, simply select an earlier dated target retirement fund.

Your AA looks fine for a simple portfolio. I wouldn't change to a bunch of REIT's, especially when vnq is one of my best performing funds for the past few years. That's bound to change sooner or later. Stick with the broad funds.

Your AA should apply to the total of all your accounts. The location of the various components should be determined by growth characteristics and tax concerns. With pretty much all equities, you don't have much to worry about right now.
__________________

__________________
Animorph is offline   Reply With Quote
Old 07-21-2016, 05:45 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,174
First, select an asset allocation without regard to specific products and funds.

Second, choose the funds to fulfill that asset allocation. You will be constrained by what your 401(k) plan offers.

Third, consider tax-efficiency and asset location in order to minimize taxes.

Fourth, get it right now so that you don't have to sell things in a taxable account because you started off on the wrong foot.
__________________
LOL! is offline   Reply With Quote
Old 07-22-2016, 05:21 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 14,656
At your young age, your AA can be 100% equities. When you get 10 years or so from retirement begin investing contributions and income in bonds until you get to your target retirement date AA.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
pb4uski is online now   Reply With Quote
Old 07-22-2016, 05:30 AM   #5
Thinks s/he gets paid by the post
target2019's Avatar
 
Join Date: Dec 2008
Posts: 3,464
Quote:
Originally Posted by the585 View Post
Hello! I'm new to the community and love the idea of early retirement. I'm 26 years old and want to revamp my asset allocations now that I'm maxing out my 401k contributions and Roth IRA, with additional investments in a Vanguard taxable account. Here's my current investment picture:

Taxable Accounts
  • ~$10,000 VTSAX (Vanguard Total Stock Market Index Fund)
  • ~$10,000 VTIAX (Vanguard Total International Stock Index Fund)
Roth IRA
  • ~$10,000 VFFVX (Vanguard Target Retirement 2055 Fund)
401k Pre-Tax
  • ~$45,000 Target Retirement 2055 Fund (BlackRock)

For the Roth IRA, I chose the target retirement fund as a temporary holding until I can shift it to something better. Through some research, I think going all REIT for Roth would be advantageous given the tax-free aspect. But given these three different investment vehicles, how can I best establish a suitable asset allocation? I've always preferred to keep my money in as few accounts as possible for simplicity, but the need to split into these different investment accounts has thrown me for a loop. Should I break up the 401k funds into individual funds (S&P 500 and Bonds) to weight more allocation to bonds, as it appears there are none in my current portfolio?

Any tips or advice for reallocation and investment strategy going forward would be fantastic, thanks in advance!!
What's available in your 401k? The Blackrock target fund has a very high expense ratio. Over long periods it will probably consume a good portion of your new earnings.
__________________
target2019 is offline   Reply With Quote
Old 07-23-2016, 07:24 PM   #6
Full time employment: Posting here.
Markola's Avatar
 
Join Date: Nov 2013
Posts: 517
Good start. Your AA is fine for your age and all of your funds are self-balancing. You've chosen well. Simplicity is a big part of success, and that's what you have.
__________________

__________________
Markola is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Confused choosing between: 401K, Roth 401K, Roth IRA or Traditional IRA? krldrummerboy FIRE and Money 22 05-26-2016 11:46 AM
2011 and 2012 tax planning... Roth IRA and Roth 401k jIMOh FIRE and Money 6 05-02-2010 10:20 AM
Questions about limits surrounding ROTH IRA, SEP IRA and ROTH 401k RockSplat FIRE and Money 14 06-08-2009 12:30 PM
401K, Roth IRA, Roth 401K - Need advice please tsturbo FIRE and Money 15 05-10-2009 02:08 PM

 

 
All times are GMT -6. The time now is 12:39 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.