Where Do I Go From Here - Asset Location [2022 Update]

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Marseille07
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

SnowBog wrote: Fri Jan 21, 2022 12:24 pm But there is an argument to make that lump sum vs. DCA, and/or different speeds of DCA might be part of the "plan" phase...
That's my personal take.

And...while you and I presented *our* reasonable speed of DCA, the OP appears to think that's too fast:
I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed?
This is why imo the planning hasn't completed yet, let alone the execution of the plan.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Lots of implementation has occurred:

9/21-started reading BH and learning
10/21-opened and funded Fidelity Roth IRA
Opened Treasury Direct account and bought ibonds
11/21- completed IPS, bought FSKAX in IRA
12/21- signed up for workplace benefits, including FSA and maxing 401k, opened and funded Fidelity taxable account, maxed FSA and got major medical expenses covered or reimbursed.
1/22-maxed ibonds again, maxed Roth IRA, adjusted future allocations in 401k in line with AA, bought more FSKAX, received new salary & total comp numbers, familiarized self w Fidelity website.

That’s a dizzying pace for a newbie who came to BH planning to sell all equity stakes… you all helped right the ship and set it on the right course. Now with some interesting market volatility there will doubtless be buying opportunities.

But yes, next step is getting to the target AA.

I’m glad I’m buying into this in 3 accounts (401, Roth and taxable).
Last edited by AnnetteLouisan on Fri Jan 21, 2022 7:29 pm, edited 1 time in total.
retire2022
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retire2022 »

AnnetteLouisan wrote: Fri Jan 21, 2022 12:52 pm Lots of implementation has occurred:

That’s a dizzying pace for a newbie who came to BH planning to sell all equity stakes… you all helped right the ship and set it on the right course. Now with some interesting market volatility there will doubtless be buying opportunities.
https://finviz.com/quote.ashx?t=VTI worth considering today or next few days
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

retire2022 wrote: Fri Jan 21, 2022 1:53 pm
AnnetteLouisan wrote: Fri Jan 21, 2022 12:52 pm Lots of implementation has occurred:

That’s a dizzying pace for a newbie who came to BH planning to sell all equity stakes… you all helped right the ship and set it on the right course. Now with some interesting market volatility there will doubtless be buying opportunities.
https://finviz.com/quote.ashx?t=VTI worth considering today or next few days
Yes, VTI might be nice for my (new) taxable brokerage account. I haven’t invested the money I put in yet (other than it being in a core fund).
an_asker
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by an_asker »

AnnetteLouisan wrote: Thu Jan 20, 2022 2:49 pm [...]
2022 $7k Roth - into a Fidelity core fund awaiting further investment into FSKAX
1.5k from my 2021 Roth IRA into FSKAX
[...]
Just curious - did you already backdoor your Roth for 2022?
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

an_asker wrote: Fri Jan 21, 2022 4:25 pm
AnnetteLouisan wrote: Thu Jan 20, 2022 2:49 pm [...]
2022 $7k Roth - into a Fidelity core fund awaiting further investment into FSKAX
1.5k from my 2021 Roth IRA into FSKAX
[...]
Just curious - did you already backdoor your Roth for 2022?
I went online several times this week to Fidelity to convert my $7k in my traditional to my Roth and it would not (no idea why - said I only had .01 to convert even though my available balance in my traditional is 7k). I funded it on Tuesday so I get that there’s a time lag and I was too busy to try today. I’ll try again Monday.

Right now I have
2k left in my 2021 Roth IRA, 7k from my 2022 IRA and 5k in taxable to invest. So 14k to do some bargain shopping in the next few weeks. Could be worse… beginner’s luck I grant…
SnowBog
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Saw this in another thread viewtopic.php?p=6465700#p6465700

Thought it might be helpful.
arcticpineapplecorp. wrote: Fri Jan 21, 2022 1:18 pm
NabSh wrote: Fri Jan 21, 2022 12:17 pm I have set up a weekly investment to total market fund in my brokerage account.
So everyone knows that the market has been down recently. The bear market messengers have been calling for a Buble for a while.

So far I have kept the course. But I have thinking about having new weekly investment go to a cash position for a while.
can you define "a while"?

how will you know when to invest?

if the market keeps dropping, fear has increased (thus people are selling). Do you honestly think you'll be happy to invest when there's maximum fear?

do you have a percentage the market will need to fall in order to deploy cash?

what if the market falls, but not by that much and then goes up and you missed out and will be buying at higher not lower prices?

this happened a few years ago (2018?) when people on bogleheads actually said they were waiting for a 20% decline to buy in, yet the market went down 19% and then went up like 30% the following year. Whoops! :oops:

here's what active investors tend to do:

Image

this is what you should do:

Image

and this:

Image

have you read the Swedroe piece Better to Face the Correction? If not, you should. You'll see why investors lose more money anticipating corrections than in the corrections themselves.

what do you think?
an_asker
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by an_asker »

AnnetteLouisan wrote: Fri Jan 21, 2022 4:29 pm
an_asker wrote: Fri Jan 21, 2022 4:25 pm
AnnetteLouisan wrote: Thu Jan 20, 2022 2:49 pm [...]
2022 $7k Roth - into a Fidelity core fund awaiting further investment into FSKAX
1.5k from my 2021 Roth IRA into FSKAX
[...]
Just curious - did you already backdoor your Roth for 2022?
I went online several times this week to Fidelity to convert my $7k in my traditional to my Roth and it would not (no idea why - said I only had .01 to convert even though my available balance in my traditional is 7k). I funded it on Tuesday so I get that there’s a time lag and I was too busy to try today. I’ll try again Monday.

Right now I have
2k left in my 2021 Roth IRA, 7k from my 2022 IRA and 5k in taxable to invest. So 14k to do some bargain shopping in the next few weeks. Could be worse… beginner’s luck I grant…
It took me one week (more or less) last year (December to be precise) when I tried to convert under similar circumstances. So yeah, maybe in Monday or Tuesday!
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.

So under this approach I could just Invest 1.5k /mo into VTI in taxable (or a one time 18-20k) and call it a day for now.
Last edited by AnnetteLouisan on Sat Jan 22, 2022 5:28 pm, edited 1 time in total.
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anon_investor
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by anon_investor »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.
Why not invest more in taxable?
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

anon_investor wrote: Sat Jan 22, 2022 5:28 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.
Why not invest more in taxable?
This year may be an ideal year to do that. Maybe I will!
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

SnowBog wrote: Fri Jan 21, 2022 8:31 pm Saw this in another thread viewtopic.php?p=6465700#p6465700

Thought it might be helpful.
arcticpineapplecorp. wrote: Fri Jan 21, 2022 1:18 pm
NabSh wrote: Fri Jan 21, 2022 12:17 pm I have set up a weekly investment to total market fund in my brokerage account.
So everyone knows that the market has been down recently. The bear market messengers have been calling for a Buble for a while.

So far I have kept the course. But I have thinking about having new weekly investment go to a cash position for a while.
can you define "a while"?

how will you know when to invest?

if the market keeps dropping, fear has increased (thus people are selling). Do you honestly think you'll be happy to invest when there's maximum fear?

do you have a percentage the market will need to fall in order to deploy cash?

what if the market falls, but not by that much and then goes up and you missed out and will be buying at higher not lower prices?

this happened a few years ago (2018?) when people on bogleheads actually said they were waiting for a 20% decline to buy in, yet the market went down 19% and then went up like 30% the following year. Whoops! :oops:

here's what active investors tend to do:

Image

this is what you should do:

Image

and this:

Image

have you read the Swedroe piece Better to Face the Correction? If not, you should. You'll see why investors lose more money anticipating corrections than in the corrections themselves.

what do you think?
The second and third charts look good, SnowBog!
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anon_investor
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by anon_investor »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:30 pm
anon_investor wrote: Sat Jan 22, 2022 5:28 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.
Why not invest more in taxable?
This year may be an ideal year to do that. Maybe I will!
Go for it!

I usually have a target cash holding # and invest any extra money above that in taxable (tax advantaged accounts and I Bonds maxed already).
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

anon_investor wrote: Sat Jan 22, 2022 5:52 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:30 pm
anon_investor wrote: Sat Jan 22, 2022 5:28 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.
Why not invest more in taxable?
This year may be an ideal year to do that. Maybe I will!
Go for it!

I usually have a target cash holding # and invest any extra money above that in taxable (tax advantaged accounts and I Bonds maxed already).
I guess it’s more or less nuts to put 90k/yr into a guaranteed losing situation, even if it is insured liquidity, especially when I already have 650 sitting in cash. Unless I have a use for it.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by anon_investor »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:57 pm
anon_investor wrote: Sat Jan 22, 2022 5:52 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:30 pm
anon_investor wrote: Sat Jan 22, 2022 5:28 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.
Why not invest more in taxable?
This year may be an ideal year to do that. Maybe I will!
Go for it!

I usually have a target cash holding # and invest any extra money above that in taxable (tax advantaged accounts and I Bonds maxed already).
I guess it’s more or less nuts to put 90k/yr into a guaranteed losing situation, even if it is insured liquidity, especially when I already have 650 sitting in cash. Unless I have a use for it.
In my opinion unless you need all that liquidity for something (down payment, etc.) the at least some should be invested.
clip651
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.

So under this approach I could just Invest 1.5k /mo into VTI in taxable (or a one time 18-20k) and call it a day for now.
On the one hand I understand what you're saying. On the other hand, you're looking at different pieces, and calling this "investing" and that "savings" which blurs the picture a little. And you're mostly talking about working with new money coming in, not reallocating what you already have - that's OK, but just realize which parts you're looking at, at any given time.

3.5k/mo + 2k match per month into 401k, IRA, and I bonds.
1.5k/month (proposed) into taxable
90k/year (= 7.5k/month, perhaps not evenly distributed through the year) into savings

---

Your 1.5k/month taxable into VTI would be going to all US stock.

How much of your 5.5k/month (401k, IRA, and I bonds) goes into US stock, how much to international stock, how much to bonds or other fixed income?

----

If 90k/year goes into cash savings - this is more than half of the total of all the categories above (7.5k/month to cash, vs. 7k/month combined between 401k/IRA/I bonds/taxable). So even if you invest all the rest into stocks (you're not, you're getting I bonds and also putting some into bonds in your other accounts with each paycheck if I recall correctly), that's less than 50% of new money going into stocks. And that means you'll still be moseying quite slowly towards your 30/70 allocation. Also, think about your current total amount in cash. Do you need/want to keep increasing that? Or should more of that new cash go to investing in stocks to get you closer to 30/70 a bit sooner?

Again, if what you've listed above is what you're comfortable with, I'm not arguing with that. I'm just trying to get you to look at the math a different way. If you're trying to get to 30/70 by the end of this calendar year, for instance, I don't think this is going to get you there. If you carry on and do the same for another year, it still may not get you there, though that will depend a bit on how the market moves in the meantime (a big gain in stocks would speed you along a bit towards that 30% stocks target).

Also, maybe you've covered this already, but have you decided how you want your stocks and bonds allocated across your various accounts? For instance, for the long run, do you want a mix of stocks and bonds in taxable as well as tax sheltered accounts? Or do you want most of your stocks in taxable (often considered to be advantageous for taxes, but that varies with several factors)? If you want to get to 30/70 a bit more quickly, figuring that out will help you figure out how to allocate new and existing money to get you there.

best wishes,
cj
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Last question first:

Pretty much decided that FSKAX will go in my IRA
VTI in taxable
And 401k I already reallocated future contributions to be 25 percent s&p, 5 percent ex-US and the rest are going into govt bonds and money mkt mutual funds (I already have more corporate bonds than I really want). I don’t think I need bonds in taxable given my cola’d pension, SS and bonds in tax deferred (unless there is some reason to?).

I could change my future contributions in my 401k to 50 percent s&p I guess.

I will most likely move this year and 700k liquid could be nice if there is a serious correction. Kind of Iike a huge cuddly teddy bear. But 740 (650&90) is overkill.

If I sell my apt this year that’s 575-625k, possibly more (with minimal cap gains since I bought recently). If I rent it out, that’s 3-3.5k more…
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retired@50 »

AnnetteLouisan wrote: Sat Jan 22, 2022 6:15 pm I will most likely move this year and 700k liquid could be nice if there is a serious correction. Kind of Iike a huge cuddly teddy bear. But 740 (650&90) is overkill.
The question I'd ask is... Will you have the nerve to invest any of your large cash cushion if a correction comes, or will you hug it like a teddy bear?

Investor, know thyself.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

retired@50 wrote: Sat Jan 22, 2022 6:45 pm
AnnetteLouisan wrote: Sat Jan 22, 2022 6:15 pm I will most likely move this year and 700k liquid could be nice if there is a serious correction. Kind of Iike a huge cuddly teddy bear. But 740 (650&90) is overkill.
The question I'd ask is... Will you have the nerve to invest any of your large cash cushion if a correction comes, or will you hug it like a teddy bear?

Investor, know thyself.

Regards,
I’ll already be investing 84k at least, even without touching the burgeoning cash cushion, so I wouldn’t need to invest it unless there were compelling opportunities. Time will tell how Ill react to a major correction but I’m serene now and unruffled in March 2020 - stayed the course.

I guess these amounts seem large to me. But I’m running out of time arguably to have my money grow.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Sat Jan 22, 2022 6:48 pm I guess these amounts seem large to me. But I’m running out of time arguably to have my money grow.
Worse, your cash is losing to inflation with no way of recovering.

Even if you invest in the market, and the market falls in the short-term, the reason you invest is (in part) to beat inflation over the long-term. You have very little helping you do that right now.
Last edited by SnowBog on Sun Jan 23, 2022 12:08 am, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

I’ll post all my specific 1/31 numbers and AA as soon as they are available. Actually my cash numbers would be even “worse” (higher) than I just wrote above because they didn’t include my 2022 raise and 2021 bonus.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Bought FSKAX at 133 in Nov and 126 last week. Now it’s 124 so might buy more on Monday if futures are down. These aren’t huge purchases (3500, 1500). All in my 2021 IRA.

Then I’ll invest the 5k in taxable likely in VTI in the next few weeks.

Then I’ll likely buy more FSKAX in my 2022 IRA.

This is money for my 70s, god willing. It’s long term money.

Meantime my 401k is on autopilot, 25 percent s&p, 5 percent ex US, the rest govt bonds and mmmfs.

Total worst case, I’m buying too soon, it’s not a lot anyway.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by anon_investor »

AnnetteLouisan wrote: Sun Jan 23, 2022 8:26 am Bought FSKAX at 133 in Nov and 126 last week. Now it’s 124 so might buy more on Monday if futures are down. These aren’t huge purchases (3500, 1500). All in my 2021 IRA.

Then I’ll invest the 5k in taxable likely in VTI in the next few weeks.

Then I’ll likely buy more FSKAX in my 2022 IRA.

This is money for my 70s, god willing. It’s long term money.

Meantime my 401k is on autopilot, 25 percent s&p, 5 percent ex US, the rest govt bonds and mmmfs.

Total worst case, I’m buying too soon, it’s not a lot anyway.
There should be no fear buying equities in a taxable account if for the long term. If the market falls, tax loss harvest. At your high tax bracket the maximum of $3k offset of ordinary income is valuable. The market will eventually recover.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Wouldn’t I need to have a tax loss harvest pair to harvest? If so, what would be good to add to my taxable besides VTI? Someone suggested a muni but my thought was I don’t need more bonds, and taxable should be all equities. (?)
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Sun Jan 23, 2022 8:38 am Wouldn’t I need to have a tax loss harvest pair to harvest? If so, what would be good to add to my taxable besides VTI? Someone suggested a muni but my thought was I don’t need more bonds, and taxable should be all equities. (?)
For tax loss harvest, you want a very similar, but not identical fund. So, another US stock fund. For instance, an SP500 index fund (from Vanguard, or Fidelity, or wherever) could make a good TLH partner for VTI. It will perform similarly to VTI, but not identically, and will still give you good, diversified US stock exposure. You definitely don't want to TLH to a bond fund from VTI, that would be exiting the market with that part of your position. For TLH, you want to stay in stocks, you just want to harvest the loss, move the money to a similar stock fund, and move on. Long term, due to TLH, you may have multiple US stock funds in taxable. So pick the partners carefully when the time comes. You want all TLH partners to be funds you are willing to hold for the long term, because the market may move back up, and never go back down to the level you bought at again. You'll want to hold onto the shares with gains until you need to spend the money, hopefully a long time from now.

But you're getting ahead of yourself. You need to invest enough in taxable in VTI to have any chance at a $3000 loss. And the market needs to go down enough to be worth making the move. At that point, you can post a new thread "help me with my first tax loss harvest!"
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.

So under this approach I could just Invest 1.5k /mo into VTI in taxable (or a one time 18-20k) and call it a day for now.
I-bonds don't count as investing. We're talking about equities.

And 84K/year would take 2.5 years to get to 30/70; no one advocates spending that much time to shift your AA.

Now, if this is the pace you're comfortable with then that's fine, but I think you need to update your target AA. I don't think 30/70 is realistic, as I don't see the "need" and "willingness" in terms of ability / need / willingness to take risk.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by dogagility »

AnnetteLouisan wrote: Sat Jan 22, 2022 5:20 pm Ok, I just calculated that I currently invest 3.5k/mo if you count my 401k, IRA and I bonds. Add another 2k for matching. So that’s 5.5k. If I add 1.5k a month in taxable (18k a year), that’s a robust 7k a month, or a whopping $84k invested per year (more than I ever have invested).

Add my retirement pension and SS contributions and it’s even more. Then add taxes at $76k a year. Now we’re at $166k. Leaving about $134k to spend. I usually spend 40k approx so that’s over 90k going into bank savings. Even if I spent 134 it’s still prudent with all the investing.

So under this approach I could just Invest 1.5k /mo into VTI in taxable (or a one time 18-20k) and call it a day for now.
I wish you the best.

The "progress" you're making is akin to death by a thousand cuts.

I'd highly recommend you choose an asset allocation and then reach that asset allocation ASAP.
Make sure you check out my list of certifications. The list is short, and there aren't any. - Eric 0. from SMA
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Thank you all, candor is a virtue much maligned. I appreciate these insights. It should be an interesting year.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Today I was told my first priority should be getting $66k out of a bank account paying 0.01. My other banks pay 0.40 and 0.35.
I’ve been funding my Roth IRA, I bonds and taxable out of the 0.01 account so maybe it would make sense to just move 40k or so from there into my taxable account and just plan to get that invested this year with all the rest. Sigh.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

You've been brought to the water...

Whether you drink it or not is up to you...
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by 7eight9 »

AnnetteLouisan wrote: Sun Jan 23, 2022 6:15 pm Today I was told my first priority should be getting $66k out of a bank account paying 0.01. My other banks pay 0.40 and 0.35.
I’ve been funding my Roth IRA, I bonds and taxable out of the 0.01 account so maybe it would make sense to just move 40k or so from there into my taxable account and just plan to get that invested this year with all the rest. Sigh.
Many conservative investors, myself included, favor fixed annuities these days. They pay much better than bank accounts, money market funds, CD and other low-risk fixed income investments.

There was a good thread recently titled Purchasing MYGAs (multi year guaranteed annuities) - mega thread that might be worth a look.
viewtopic.php?f=1&t=334589
I guess it all could be much worse. | They could be warming up my hearse.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Look … don’t just do something… stand there. 😅

I will surely act and when I do you will read it here first, no doubt.

I owe you all a beverage of your choice down at the beach or yacht club when we’re all plutocratically retired- whether I’m at the bar or behind it. 😅

Update: picked up some FSKAX in my Roth and some VTI in taxable today (1/24).
Last edited by AnnetteLouisan on Mon Jan 24, 2022 1:20 pm, edited 2 times in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

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AnnetteLouisan wrote: Sun Jan 23, 2022 7:38 pm I owe you all a beverage of your choice down at the beach or yacht club when we’re all plutocratically retired- whether I’m at the bar or behind it. 😅
Why, thank you. This would be my drink: https://www.decanter.com/wine-news/1945 ... rd-403025/
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Sun Jan 23, 2022 7:47 pm
AnnetteLouisan wrote: Sun Jan 23, 2022 7:38 pm I owe you all a beverage of your choice down at the beach or yacht club when we’re all plutocratically retired- whether I’m at the bar or behind it. 😅
Why, thank you. This would be my drink: https://www.decanter.com/wine-news/1945 ... rd-403025/
Why am I not surprised, Marseille07? 😃😂Thank you for my event laugh. These days anyone who gets me to laugh is a star in my book.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by anon_investor »

AnnetteLouisan wrote: Sun Jan 23, 2022 6:15 pm Today I was told my first priority should be getting $66k out of a bank account paying 0.01. My other banks pay 0.40 and 0.35.
I’ve been funding my Roth IRA, I bonds and taxable out of the 0.01 account so maybe it would make sense to just move 40k or so from there into my taxable account and just plan to get that invested this year with all the rest. Sigh.
FYI if you are concerned about FDIC insurance limits, there are plenty of reputable FDIC insured online savings accounts that pay 0.5% APY now:
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Picked up some* VTI at $215 yesterday for my taxable account and some* FSKAX for my Roth IRA at $123. (Blows expertly on fingernails). It was good to familiarize myself with the market order process. Pleased at the execution, in fact. Naturally my first taxable brokerage transaction of my life has to be a day of a wild swing. Beginner’s luck!

I see the appeal of an ETF where you don’t have to get the day’s closing price like you do with a mutual fund.

I see the excitement aspect of this and also the similarity to gambling (in the sense that you feel a little thrill at a “win”), which I don’t do for all sorts of reasons. I want to limit that aspect before I turn into a casino regular in retirement. 😅

Converted my 2022 tIRA to my Roth today, it finally went through after about a week of getting a message that it could not be processed.

I’m going to get all my Roth and taxable money invested by mid to late Feb and take things from there.

*not very much!!!

Update: should have bought more!
Last edited by AnnetteLouisan on Wed Jan 26, 2022 9:01 am, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

Congrats on getting started with VTI in taxable!
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Congrats (I think).

I'll continue to caution against trying to time the market, or thinking you got a "good deal".

The reality is you "got lucky". The majority of the time you are going to lose by waiting...
AnnetteLouisan wrote: Tue Jan 25, 2022 3:55 pm I see the appeal of an ETF where you don’t have to get the day’s closing price like you do with a mutual fund.

I see the excitement aspect of this and also the similarity to gambling
I'd also point out that Bogle was not a fan of ETFs, in part for this reason.

One thing you likely didn't notice was that ETFs do not sell at "value", instead they might sell at a "premium" or "discount" based on how things are going. So what you thought was a "good price" could have actually been "more than the shares were worth". (With massive ETFs like VTI, this is usually negligible.)

With mutual funds, you always buy/sell at the end of day price. Timing doesn't matter.

That said, I do buy ETFs in taxable when possible due to their improved portability, $0 fees, and the marginally more tax-efficient they are. I just invest when I have the money to invest, regardless of price.

But you made another monumental step on your journey, and that is a positive thing! :beer
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Thanks Snowbog.

You note that you invest “when you have money to invest.”
How do you determine this? Do you keep a certain amount in cash, spend some and invest the rest?

Are you referring to when your paycheck comes in (assuming you are a employee) or other income if a business owner or trust beneficiary (nothing wrong in my opinion with any of those options).

Part of my issue comes from having had a way bigger income for 30 years already than what I need or am used to. It’s sort of paralyzing. My family feels the same way. We are in a poverty mind set but we are not in poverty (anymore, well, we were for US standards poverty adjacent - or even if we weren’t, it felt like it). It’s surreal at times. We want to do the right thing but are just learning what that is.

We know that saving and going to discount stores are good. All this other stuff is like a cyclone of unfamiliar habits. It’s hard to get on the Carousel.

But, feeling much more confident based on everything I’ve learned here!!
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Wed Jan 26, 2022 11:01 am Thanks Snowbog.

You note that you invest “when you have money to invest.”
How do you determine this? Do you keep a certain amount in cash, spend some and invest the rest?

Are you referring to when your paycheck comes in (assuming you are a employee) or other income if a business owner or trust beneficiary (nothing wrong in my opinion with any of those options).

Part of my issue comes from having had a way bigger income for 30 years already than what I need or am used to. It’s sort of paralyzing. My family feels the same way. We are in a poverty mind set but we are not in poverty (anymore, well, we were for US standards poverty adjacent - or even if we weren’t, it felt like it). It’s surreal at times. We want to do the right thing but are just learning what that is.

We know that saving and going to discount stores are good. All this other stuff is like a cyclone of unfamiliar habits. It’s hard to get on the Carousel.

But, feeling much more confident based on everything I’ve learned here!!
In a general sense:

Decide how much you need in cash (or easy to access fixed income, like a short term bond fund, money market fund, CD that you could break (check the terms), etc). This normally would not be in a retirement account, because there are tax penalties for withdrawing from those depending on your age, etc. So this is usually held in savings accounts and/or taxable brokerage accounts (for money market fund or short term bonds, etc).

The amount in cash should include an emergency fund (to carry through a job loss or medical emergency, etc), as well as any needs for the next few years that won't/can't be funded from paychecks as they come in. So, for instance, someone saving for a house down payment will want to have that money in cash or easy to access fixed income. Same with a major car purchase, expensive vacation, or whatever other big expenses are planned.

If there is already enough in cash, no more needs to be added. If there is not enough to cover emergency fund plus expected upcoming expenses, then more can be added over time.

Then, look at current income vs. expenses. If your income is greater than your expenses, and you already have enough cash/easy to access fixed income, then all of the excess is available for investing as soon as it appears in your account. This could be done every paycheck, or once a month. If your income is lumpy (bonuses, etc), then you might have bigger lumps available to invest at those times. If your expenses are lumpy (some being more than the paycheck that month will cover), and you know that they will be, then you might figure out how much excess you have after various lumps (such as after property taxes or vacations are paid, or whatever other lumpy yearly expenses you might have). If the lumps plus ongoing expenses are lower than your paychecks, then you just have less extra to invest from that paycheck/month than in months without lumpy expenses.

In your particular situation, you have a lot of cash already. Assuming it is "enough" for your emergency fund plus any future expected large expenses (you mentioned a possible move I believe), then you don't need to keep adding to that cash amount. So any income above what you need for expenses is available for investing every paycheck, or every month. And if you decide your cash amount is larger than what you need, then whatever is the excess in the cash account is also immediately available for investing.

And the investing of this "new money" should be done in a way to get your closer to your desired asset allocation. So if your current actual asset allocation is low on stocks, then 100% of new available cash would go to stocks until you get to your asset allocation. If you have a change in plans and have a new planned expense that isn't already covered by your cash holdings, you can go back to adding to the cash pile with any excess income until you reach your new goal.

I hope that makes sense!

(edited to fix typos)
Last edited by clip651 on Wed Jan 26, 2022 12:52 pm, edited 2 times in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

I simplified the above to say "paychecks" but it could be any income - from a trust, from a legal settlement, from a business, from a lottery ticket, whatever. Excess income is available for investing as soon as you have it, and as soon as you know that it is in excess of your upcoming expenses, and that your cash holdings are already big enough for your emergency fund and upcoming planned larger expenses.

Your other option for excess income is to spend a bit more of it, of course. Maybe a fun splurge here and there, or some gifts to friends, family, or charity, or whatever else.

The option that doesn't make sense to most bogleheads is to use excess cash to just accumulate more cash that you don't have a need for in the next 5 years or so, instead of investing according to your IPS and asset allocation.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

clip651 wrote: Wed Jan 26, 2022 12:47 pm I simplified the above to say "paychecks" but it could be any income - from a trust, from a legal settlement, from a business, from a lottery ticket, whatever. Excess income is available for investing as soon as you have it, and as soon as you know that it is in excess of your upcoming expenses, and that your cash holdings are already big enough for your emergency fund and upcoming planned larger expenses.

Your other option for excess income is to spend a bit more of it, of course. Maybe a fun splurge here and there, or some gifts to friends, family, or charity, or whatever else.

The option that doesn't make sense to most bogleheads is to use excess cash to just accumulate more cash that you don't have a need for in the next 5 years or so, instead of investing according to your IPS and asset allocation.
It’s salary only (very fortunate to have a good job). My NW jumps by 17-20k a month (includes 401k earnings, contributions and matching) and my liquid cash in banks from salary increases by 7-10k a month after taxes and all expenses.

I generally like to keep 500k liquid in banks, which I am already exceeding.

So my options are, even totally ignoring my current cash:

Invest 1k a month (over and above tax advantaged accounts)
2k, 3k, 4k, 5, 6??? $750.00?).

Or just throw in 40k for the year and devote attention elsewhere.

😳😳😳

I remember when free govt American cheese was distributed in my neighborhood in the 80s and how glad people were to get it. My family didn’t get it (our decision) but we sure knew people who did.

I’m not complaining at all I know I’m not alone on this board in affluence being a lovely and relatively recent surprise outcome. Thanks again entirely to Taylor and his men for providing the circumstances in which this was possible.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Wed Jan 26, 2022 1:40 pm
It’s salary only (very fortunate to have a good job). My NW jumps by 17-20k a month (includes 401k earnings, contributions and matching) and my liquid cash in banks from salary increases by 7-10k a month after taxes and all expenses.

I generally like to keep 500k liquid in banks, which I am already exceeding.
So, at a minimum, you could invest the excess 7-10k per month into VTI in taxable. That would increase your stock holdings slowly, and prevent you from further adding to your cash in excess of 500k. That would be approximately 84-120k into VTI if you invest all of that excess each month. With the size of your portfolio, that's still just a start, really, but with how much you are learning from ground zero, I think it is a good start for the moment.

Once you get comfortable with that (later this year, perhaps?), then you can look at your cash balance again as well, and decide if you are also willing to take some of the cash that is in excess of 500k, and invest that into VTI as well. (Meanwhile continue to invest the excess income each month.)

(Your net worth is actually a completely separate issue to be tracked. It should generally increase because you are living below your means, but it will fluctuate some with the markets once you have more invested into stock funds. If you own your home/condo, that value will also fluctuate. Right now it is fluctuating up as you add cash, but in real terms it is also fluctuating down with inflation. How your net worth is progressing is part of the big picture, and helps in figuring out where you are compared to your goals. But it really has little to nothing to do with investing new excess cash to get closer to your desired asset allocation.)

And yes, your ongoing tax advantaged accounts count too. But most of that money is going into bonds, which doesn't get you closer to getting your stock allocation where you want it to be. The excess cash each month is after your tax advantaged contributions, and after all your expenses for the month are paid. So all of it (7-10k) is available each month for investing. And all of it should go towards stocks (VTI in taxable) until you get to your desired asset allocation.

40k for the year will not get you there. It will get you a little more stock, but nowhere near your AA. And you will continue to accumulate excess cash.
Last edited by clip651 on Wed Jan 26, 2022 2:22 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

By the way, I have living relatives that went through the great depression, had to use their ration cards wisely to feed their families, etc. I saw my parents and others struggle through the high inflation years of the 70s, with no job security and families to raise. And I learned investing from scratch, largely here on bogleheads, not that many years ago. So I get it.

But your 500k in cash will keep you out of food bank lines for a long, long time, even if you lose your job, have a medical emergency, and whatever stock funds you hold go to zero (which won't happen with index funds) in the same year. You need to tell yourself that 1000 times until you really believe and understand it.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 26, 2022 1:40 pm I generally like to keep 500k liquid in banks, which I am already exceeding.

So my options are, even totally ignoring my current cash:

Invest 1k a month (over and above tax advantaged accounts)
2k, 3k, 4k, 5, 6??? $750.00?).

Or just throw in 40k for the year and devote attention elsewhere.

😳😳😳
Are you kidding us?

SnowBog and I presented a number that is 200K by EOY, or 20K/mo. 40K for the year won't get you anywhere.

Now, if you want to keep 500K in cash (this is new information than wanting to reach 30/70), then the picture is even simpler - you can invest everything except the 500K.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 26, 2022 2:37 pm
AnnetteLouisan wrote: Wed Jan 26, 2022 1:40 pm I generally like to keep 500k liquid in banks, which I am already exceeding.

So my options are, even totally ignoring my current cash:

Invest 1k a month (over and above tax advantaged accounts)
2k, 3k, 4k, 5, 6??? $750.00?).

Or just throw in 40k for the year and devote attention elsewhere.

😳😳😳
Are you kidding us?

SnowBog and I presented a number that is 200K by EOY, or 20K/mo. 40K for the year won't get you anywhere.

Now, if you want to keep 500K in cash (this is new information than wanting to reach 30/70), then the picture is even simpler - you can invest everything except the 500K.
40k in taxable is on top of 83k in tax deferred, for a total of $123k a year, out of 300 in income, when I have SS and a small cola’d pension expectation and no dependents.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 26, 2022 2:40 pm 40k in taxable is on top of 83k in tax deferred, for a total of $123k a year, out of 300 in income, when I have SS and a small cola’d pension expectation and no dependents.
OK. 123K would move some needle. I wouldn't worry about income or SS or pension here; your AA is just a breakdown of assets you currently have, regardless of your income stream or lack thereof.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 26, 2022 2:44 pm
AnnetteLouisan wrote: Wed Jan 26, 2022 2:40 pm 40k in taxable is on top of 83k in tax deferred, for a total of $123k a year, out of 300 in income, when I have SS and a small cola’d pension expectation and no dependents.
OK. 123K would move some needle. I wouldn't worry about income or SS or pension here; your AA is just a breakdown of assets you currently have, regardless of your income stream or lack thereof.
Thanks. Lots of good options, fortunately.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Wed Jan 26, 2022 11:01 am Thanks Snowbog.

You note that you invest “when you have money to invest.”
How do you determine this? Do you keep a certain amount in cash, spend some and invest the rest?

Are you referring to when your paycheck comes in (assuming you are a employee) or other income if a business owner or trust beneficiary (nothing wrong in my opinion with any of those options).

Part of my issue comes from having had a way bigger income for 30 years already than what I need or am used to. It’s sort of paralyzing. My family feels the same way. We are in a poverty mind set but we are not in poverty (anymore, well, we were for US standards poverty adjacent - or even if we weren’t, it felt like it). It’s surreal at times. We want to do the right thing but are just learning what that is.

We know that saving and going to discount stores are good. All this other stuff is like a cyclone of unfamiliar habits. It’s hard to get on the Carousel.

But, feeling much more confident based on everything I’ve learned here!!
I think clip651 already answered genericly, but since you asked directly, I'll explain how I do it now.

First some context. Prior to finding BH, our savings was what was done through paycheck (401k, ESPP, etc.) or employer actions (RSU). Anything beyond that ended up in a bank account, and at one point we had a rather large bank account...

I fully admit I was financially illiterate during this time. I had no clue that we could - or should - be doing things like invest in IRA's, HSAs, 529s, taxable, etc. Those were problems for other people... As another example, our exclusive bank was a credit union we'd used our entire lives, which I think was paying something like 0.05% in savings and 0.01% in checking. This was when you could easily find options paying > 1%. And before I even understood inflation and that even at 1% I'd still have been losing money... I had a six figure pile of cash from years of hard work and living below our means that was actually costing us even more money, and would continue to do so forever... :oops:

Around 2018 or so (prompted by changes at work that made me realize I could find myself without a job unexpectedly) I started on my way to learning more about finances, and eventually finding the pot of wisdom that is BH. At some point I realized that we had enough cash to pay off the remainder of our mortgage (which we had been aggressively paying off), which was a > 3% guaranteed return comparing our mortgage rate to our interest rate. (On later finding BH, I learned we probably would have been better off investing that money. But no regrets, we can't change the past, we love being debt free, and the excess cash flow enabled us to eventually accelerate other investments.)

On finding BH, learned a ton. Learned that while we'd done a ton wrong, we did the basics right like max out 401k early, live below our means, etc. And we realized that we were better prepared and closer to FI than we thought.

Also learned a ton about finances, investing, retirement planning, etc. Figured out what an AA is and why it's important, what bonds are, why I should probably own some (Ignoring my cash, all my investments were basically 100/0 at that point)... Ended up also hiring PlanVision for a no nonsense recommendation (and I love them, no BS, advocates simplicity, very reasonably priced like < $10/month, still pay them although I rarely use them just knowing they'd tell me to quit meddling is enough). Initially landed on an AA of 80/20, and a goal of the "three fund" model. Once the plan was set, I exchanged my funds in my 401k to get to an overall 80/20. Once my decision was made and my funds selected, I did this in a single day.

Then I started to realize everything else I had neglected. We were earning really good money at the time, paying a boatload in taxes. Yet we'd never even touched my spouses 403b plan, so we set that up and started to max it out (lowering taxes while increasing investments). I had no clue we could do Backdoor Roths, so I setup 2x and started those (no initial tax savings, but definitely long term savings, and again speeding up investments). I had no clue why someone would do an "after tax 401k contribution", only to find out that this was the Mega Backdoor Roth - another great way to speed up investments and lower long term taxes. I continued this journey until all of tax-advantaged accounts were being utilized as well as all of employer benefits were maximized.

Then I switched to our cash... Initially I struggled with things like do we need an emergency fund, is that part of our portfolio or separate, etc. I went through a lot of gyrations, but ultimately landed on cash would be included in our portfolio as part of our AA, but in doing so our AA was more accurately reflected as 75/25. The next was "how much cash" do we need. For us, this was extra hard as my income can be highly variable with some paid as "advances" (meaning if end of year measures aren't met, I owe the money back) and thus hard to predict taxes. So for a long time I maintained a high cash reserve, enough to cover several months expenses + payback any advances + pay any extra taxes. After going through some intermediary changes, including building up a cushion of I Bonds, what we now do for cash is:
  • Maintain 1 months expenses in checking (for simplicity of auto pay, not stressing with moving money around last minute, etc.)
  • Maintain at least enough in "cash" in saving for us to sleep well at night (this is now down to $30k for us, several months of expenses, used to be much higher... But we now know that between I Bonds, muni bonds, and the rest of our assets, we can get to money as needed...)
  • Grow cash reserves throughout the year so that we have enough to front load 2x IRA, HSA, 529, I & EE bonds, etc. in January (this does double duty, most years it will do as stated, but if we end up owing "advances" back and/or have unexpectedly higher taxes, we can use this instead and just invest as cash flow allows)
After deciding we had "too much cash", like you I tried dipping my toe in... Let's do $5k at 5% less than current price and see how it goes... I was exceedingly worried about "buying at all time market highs". Took a lot of reading on here... But the thing that "made it click" for me personally was "Bob, the world's worst market timer" video I've previously shared combined with the realization that looking at the stock market over say a 50 year period, the trend is quite noticeably "up". Took a few months... I realized that it was time my money was "working for me", and actually helping me not only beat inflation, but help me get to my retirement goals. And I realized that by continuing to wait, I was only making the problem worse. When the lightbulb went on, I invested 100% of my excess cash the next day and haven't looked back. It felt like one of the scariest things I did. The next time I had excess cash to invest, didn't even make me the least nervous. The right thing to do is the right thing to do...

After we got to our AA, what this means in daily use, we have a specific $ target for cash (which increases every month and resets in January). If we have more than that amount, I know it's "excess cash" that should be invested. . For example, my spreadsheet shows I have $10k "cash" I should invest, to keep my AA that's actually going to I Bonds which is scheduled for the end of the month.

In reality, because we front load tax-advantaged accounts, we go through most of the year with no extra income to invest in taxable through our regular pay check. The exceptions being annual bonuses or quarterly RSUs, ESPPs, or "advances". We sell the RSUs and ESPPs as soon as possible (admittedly, I sell them at a "limit" price of whatever they landed as any "loss" would be a wash sale). Some of that intermittent money is already factored into the growth of our cash (setting aside enough to front load next year's investments), the rest gets immediately invested based on AA.. As an example, by end of March I'll have another RSU and ESPP hit, that will push my "cash" amount out of balance, and anything in excess will be invested the first market day possible (regardless of the current price, market conditions, etc.).

To add some more context, after better than expected income and amazing returns juiced by the extra investments we started making on our journey above, and perhaps the shock to the markets in early 2020, we adjusted our AA to 60/40. We are likely within a few years of being Financially Independent (aka the numbers work, assuming our assumptions are right, where we'd no longer "have" to work), but still plan on working a few years beyond that (get child into college at least which reduces some of the assumptions). So our "need" for risk was no longer as high, neither was our "willingness" to take risk. We had gotten to the point we had far more to lose than we needed to gain.

Once we decided on the new AA, realized that we couldn't get there in our tax-advantaged accounts (or not while retaining the ability to rebalance there). This resulted in adding municipal bonds to the mix through new money and selling stocks in taxable.

Now everything is basically on autopilot. My spreadsheet keeps track of current AA and projected AA based on planned contributions. At the beginning of the year, I adjust where new money is going. For example, my AA was closer to 64/36 at the start of the year, so 401k contributions were changed to basically 100% bonds, taxable to basically 100% I & EE & muni bonds (Roths left 100% stock).

If things get out of balance (my threshold is 5% of AA or 20% target value), my spreadsheet shows what's off and how much I need to change. (To my earlier example, my cash for January was off by more than 20% of target value, so it showed me how much I should invest.) During the March 2020 crash, several times it showed our AA was out of balance (initially stocks had dropped too much, during recovery they had risen too much). I remember thinking I was an idiot exchanging "safe" bonds for stocks that were plummeting in an economy that was being shut down by COVID. But I steeled my nerves and did it anyway... Oddly, it was harder to sell the stocks and buy more bonds, knowing stocks could go up much more. But I remembered that my AA is based on my need, willingness, and ability for risk. What the markets were, might, could, should do was irrelevant. So I rebalanced.

It was definitely a journey, with more than one false step, and lots of scary steps. And I continue to learn. I continue to appreciate and aspire for simplicity. Until then, I just sit back, update my spreadsheet every so often (mainly just my cash balances, or any changes to # of shares, as the pricing pulls in live updates), and tweak as needed.

I didn't get there over night... But I took one step, then another, then another, and they get easier and easier as I go.


If any of this resonates with you... As mentioned, some of us have been through a similar journey!
Last edited by SnowBog on Wed Jan 26, 2022 6:15 pm, edited 1 time in total.
clip651
Posts: 1584
Joined: Thu Oct 02, 2014 11:02 am

Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Wed Jan 26, 2022 2:40 pm
Marseille07 wrote: Wed Jan 26, 2022 2:37 pm
AnnetteLouisan wrote: Wed Jan 26, 2022 1:40 pm I generally like to keep 500k liquid in banks, which I am already exceeding.

So my options are, even totally ignoring my current cash:

Invest 1k a month (over and above tax advantaged accounts)
2k, 3k, 4k, 5, 6??? $750.00?).

Or just throw in 40k for the year and devote attention elsewhere.

😳😳😳
Are you kidding us?

SnowBog and I presented a number that is 200K by EOY, or 20K/mo. 40K for the year won't get you anywhere.

Now, if you want to keep 500K in cash (this is new information than wanting to reach 30/70), then the picture is even simpler - you can invest everything except the 500K.
40k in taxable is on top of 83k in tax deferred, for a total of $123k a year, out of 300 in income, when I have SS and a small cola’d pension expectation and no dependents.
But most of the tax deferred is going into bonds. That won't get you stock exposure. It's mostly just fixed income in a different spot, for spending in later years.

What's the alternative? The 40k in taxable, 83k in tax deferred, and just let your cash cushion keep growing? That's OK if it's what you want, but it will not get you close to 30/70.

Looking forward to your January 31 (or thereabouts) update where you lay everything out, so we can really see where you're at, and how your current plans will affect things going forwards.
Last edited by clip651 on Wed Jan 26, 2022 4:45 pm, edited 1 time in total.
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