donheff
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Most of what I have read about diversification over the past few years advises that we treat our investments as a whole. I.e., evaluate our diversification across the sum of our taxable and pre-tax accounts, keeping investments that throw off a lot of income in the non taxed accounts, etc. That made sense to me and is what I have done. But I just read Bob C's excellent book "Work Less, Live More" and it got me thinking more deeply about diversification.
My plan (consistent with most others that I have heard) is to pull from our taxable accounts in the early years of retirement and then tap into the IRAs, 401Ks, et al when we have to. But our taxable accounts are essentially all equities, thus they are much more volatile that the portfolio as a whole. It seems that stands a good chance of leading to inverse dollar cost averaging - we will pull out more shares when on downturns - than would be the case if we treated the taxed and non-taxed accounts as mini-portfolios and followed standard diversification approaches across both.
The problem with that is putting income producing stuff in the taxable accounts (we will be at a very high tax bracket). But still, Bob has me scared of volatility...
Any thoughts?
My plan (consistent with most others that I have heard) is to pull from our taxable accounts in the early years of retirement and then tap into the IRAs, 401Ks, et al when we have to. But our taxable accounts are essentially all equities, thus they are much more volatile that the portfolio as a whole. It seems that stands a good chance of leading to inverse dollar cost averaging - we will pull out more shares when on downturns - than would be the case if we treated the taxed and non-taxed accounts as mini-portfolios and followed standard diversification approaches across both.
The problem with that is putting income producing stuff in the taxable accounts (we will be at a very high tax bracket). But still, Bob has me scared of volatility...
Any thoughts?