AA Between Different Accounts

[Jerry1]

I’m working toward simplifying my investments. I’m not there yet, but let’s assume I want a three or four fund portfolio. Let’s also assume a 60 percent stock and 40 percent fixed asset allocation. Me and DW have IRA’s, ROTH’s and after tax investment accounts. My question is how to allocate the assets among those accounts.

My thought is to have the ROTH’s hold 100% stock because my thought is that will be the last money I tap and actually hope it will be my inheritance. It’s currently about 10% of my portfolio but it should increase with some conversions I’ll be doing for the next few years. I expect about $20K per year over the next 5 years.

Then I think the after tax account should be about 75% stock and about two years of cash.

Then I’m thinking the IRA’s should hold the balance in whatever proportion it will take to get to my target AA. This will mean my IRA’s will be heavily weighted to the fixed assets.

Please let me know what you think of that strategy. I’m wondering if I’m missing anything major.

Thanks.

 

[Closet_Gamer]

Your tax bracket and age related to RMDs may change this a bit, but in general it seems sound.

I've always followed a strategy that anything bearing interest goes into the tax deferred accounts.

Anything kicking off preferred dividends goes into a taxable account b/c they're advantaged and a waste of the tax deferred nature of IRAs/401ks.

If the tax deferred accounts are full but you still need fixed assets to get to your AA, consider muni's in the taxable accounts.

If you're retirement plan works without the money you have in the Roths and they really are for the next generation, then putting that all into stocks and going super long makes sense. But I'd be sure you can really carve it off to the side.

My $0.02.

 

[mrfeh]

I’m working toward simplifying my investments. I’m not there yet, but let’s assume I want a three or four fund portfolio. Let’s also assume a 60 percent stock and 40 percent fixed asset allocation. Me and DW have IRA’s, ROTH’s and after tax investment accounts. My question is how to allocate the assets among those accounts.

My thought is to have the ROTH’s hold 100% stock because my thought is that will be the last money I tap and actually hope it will be my inheritance. It’s currently about 10% of my portfolio but it should increase with some conversions I’ll be doing for the next few years. I expect about $20K per year over the next 5 years.

Then I think the after tax account should be about 75% stock and about two years of cash.

Then I’m thinking the IRA’s should hold the balance in whatever proportion it will take to get to my target AA. This will mean my IRA’s will be heavily weighted to the fixed assets.

Please let me know what you think of that strategy. I’m wondering if I’m missing anything major.

Thanks.

You've got it right.

https://www.bogleheads.org/wiki/Tax-efficient_fund_placement