Hi, I have read several books (Malkiel, Bernstein) and have read through many posts on these boards. I still have not found any advice particular to my situation...
Common advice suggests using one asset allocation strategy that spans
both taxable and tax-advantaged accounts, with the goal of putting tax
inefficient assets (bonds, REITs, etc) in tax-advantaged accounts and
sticking with low-turnover stock funds in taxable accounts. This
strategy seems to be geared towards the individual that doesn't plan
to access either account until much later in life (20+ years).
I am in my early 30s, have been maxing my IRA and 401k, as well as
aggresively saving earnings in a taxable account. My taxable account
is about 6x my retirement account. I think I could semi-retire within
5 years, and be fully ER-capable by 40. When my non-retirement funds
double in value, I could comfortably live off a 4% SWR. I have no
debt, mortgage, or kids currently. A house purchase in the near future
is possible.
I find it difficult to plan a singular asset allocation strategy that
spans a taxable and IRA account. It seems simpler to keep the IRA
money on an aggressive long-term path as it won't be tapped until I'm
60. I hope to start living off the taxable account within the next 5-8
years. It seems that's where I should be reducing the risk with less
stock and more of the tax-ineffecient and income-producing bonds and
REITs. Therein lies my confusion.
What is a good strategy? Here's my thinking. Everything in indexes of
course.
IRA
70% stock (2/3 total US, 1/3 total int'l)
20% bond (total bond market)
10% REIT
Taxable
45% stock (2/3 total US, 1/3 total int'l)
40% bond (total bond market)
10% REIT
5% cash
thanks.
Common advice suggests using one asset allocation strategy that spans
both taxable and tax-advantaged accounts, with the goal of putting tax
inefficient assets (bonds, REITs, etc) in tax-advantaged accounts and
sticking with low-turnover stock funds in taxable accounts. This
strategy seems to be geared towards the individual that doesn't plan
to access either account until much later in life (20+ years).
I am in my early 30s, have been maxing my IRA and 401k, as well as
aggresively saving earnings in a taxable account. My taxable account
is about 6x my retirement account. I think I could semi-retire within
5 years, and be fully ER-capable by 40. When my non-retirement funds
double in value, I could comfortably live off a 4% SWR. I have no
debt, mortgage, or kids currently. A house purchase in the near future
is possible.
I find it difficult to plan a singular asset allocation strategy that
spans a taxable and IRA account. It seems simpler to keep the IRA
money on an aggressive long-term path as it won't be tapped until I'm
60. I hope to start living off the taxable account within the next 5-8
years. It seems that's where I should be reducing the risk with less
stock and more of the tax-ineffecient and income-producing bonds and
REITs. Therein lies my confusion.
What is a good strategy? Here's my thinking. Everything in indexes of
course.
IRA
70% stock (2/3 total US, 1/3 total int'l)
20% bond (total bond market)
10% REIT
Taxable
45% stock (2/3 total US, 1/3 total int'l)
40% bond (total bond market)
10% REIT
5% cash
thanks.