Any Thoughts about my investment strategy plan?

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Topic Author
gab77pr
Posts: 14
Joined: Wed Jan 27, 2021 9:07 pm

Any Thoughts about my investment strategy plan?

Post by gab77pr »

Hello,

During my investment strategy journey I have had ups and downs, insecurities, doubts and a lot of questions that have been answered over the time. This place has been playing a great role in providing information and advice. I was dealing with "analysis paralysis" for a long time. With the information received during the last few weeks I have arrived to the conclusion what I should do. The only thing that I need is arrange this plan in a certain way that I don't miss something to avoid mistakes that cost me money, effort and time.

Here's the break down of my plan:

Me 37 y/o, wife is 32y/o planning to invest a total of 178k between regular brokerage account and two Roth IRA accounts. We have around 63k as a savings and emergency funds. Would like to retire before the age of 59. Probably the amount of money is not huge to accomplish that but is something we believe could help us working towards that plan if we do things alright.

I was working with a Fidelity Investment Advisor and I got a certain Investment Strategy to work with. According to what she said the recommendation was to use the Fidelity Target Day Index Funds 2045 with an expense ratio of .12% for the 3 accounts. That's sounds pretty decent because is not really expensive compared to a proactive management that will cost way more money and also will provide some peace of mind working in its own.

Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.

Another thing that I would like to clarify here. Reading some posts and recommendation, looks like there are different opinions regarding this particular. The option to build the 3 different accounts with the same Target Day Index Fund, build the 3 accounts with 3 Target Day Index Fund but with different intervals, like 2050, 2055, 2060 to avoid wash sales. Or build the two Roth IRA with Target Day Index Funds and the taxable account with some Index fund like VTWAX, VTSAX, VTI or FSKAX to give you and example. Or the other way. Use the Target Day Index Funds for the taxable account and use the another Fund for the Roth IRA. Even the 3 funds portfolio I could use. This is the thing that I have been overthinking to select the best option for me.

What's your opinion about this?. What's the recommendation to follow?. Should I go with Target Day Index funds in the 3 accounts?. I have been learning about the wash sales, the Dollar Cost Averaging and Lump Sum Investing. I was inclined to do the DCA, but maybe is better the LSI since the history provide better results in that direction.

I think this is a long post, but I hope with your guidance and suggestions I can finish this analysis paralysis today and start working towards this work investing. Have been more than a year keeping that money losing value. That's enough and is over. I hope you have patience with me and in the future you will see the fruits of this strategy.

Thanks for helping, thanks in advance!!
MattB
Posts: 1226
Joined: Fri May 28, 2021 12:27 am

Re: Any Thoughts about my investment strategy plan?

Post by MattB »

gab77pr wrote: Thu Jul 29, 2021 10:34 pm Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.
Hello and welcome to the forum.

To answer your question: No. This plan does not make sense.

You (or your wife) will need to have earned income to contribute to a Roth IRA. You'll want to contribute (at least) as much to your 401k or equivalent to get whatever match your employer provides. Above and beyond that, you could (and possibly should) use your income to contribute the maximum amount to your Roth. This avoids capital gains taxes on money that you've already invested.

Your plan sells investments and thus may incur capital gains taxes, depending on the amount of your gains and your joint income.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: Any Thoughts about my investment strategy plan?

Post by exodusNH »

gab77pr wrote: Thu Jul 29, 2021 10:34 pm Hello,

During my investment strategy journey I have had ups and downs, insecurities, doubts and a lot of questions that have been answered over the time. This place has been playing a great role in providing information and advice. I was dealing with "analysis paralysis" for a long time. With the information received during the last few weeks I have arrived to the conclusion what I should do. The only thing that I need is arrange this plan in a certain way that I don't miss something to avoid mistakes that cost me money, effort and time.

Here's the break down of my plan:

Me 37 y/o, wife is 32y/o planning to invest a total of 178k between regular brokerage account and two Roth IRA accounts. We have around 63k as a savings and emergency funds. Would like to retire before the age of 59. Probably the amount of money is not huge to accomplish that but is something we believe could help us working towards that plan if we do things alright.

I was working with a Fidelity Investment Advisor and I got a certain Investment Strategy to work with. According to what she said the recommendation was to use the Fidelity Target Day Index Funds 2045 with an expense ratio of .12% for the 3 accounts. That's sounds pretty decent because is not really expensive compared to a proactive management that will cost way more money and also will provide some peace of mind working in its own.

Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.

Another thing that I would like to clarify here. Reading some posts and recommendation, looks like there are different opinions regarding this particular. The option to build the 3 different accounts with the same Target Day Index Fund, build the 3 accounts with 3 Target Day Index Fund but with different intervals, like 2050, 2055, 2060 to avoid wash sales. Or build the two Roth IRA with Target Day Index Funds and the taxable account with some Index fund like VTWAX, VTSAX, VTI or FSKAX to give you and example. Or the other way. Use the Target Day Index Funds for the taxable account and use the another Fund for the Roth IRA. Even the 3 funds portfolio I could use. This is the thing that I have been overthinking to select the best option for me.

What's your opinion about this?. What's the recommendation to follow?. Should I go with Target Day Index funds in the 3 accounts?. I have been learning about the wash sales, the Dollar Cost Averaging and Lump Sum Investing. I was inclined to do the DCA, but maybe is better the LSI since the history provide better results in that direction.

I think this is a long post, but I hope with your guidance and suggestions I can finish this analysis paralysis today and start working towards this work investing. Have been more than a year keeping that money losing value. That's enough and is over. I hope you have patience with me and in the future you will see the fruits of this strategy.

Thanks for helping, thanks in advance!!
It sounds like you have $178k sitting around? Are you both working? Are you planning on investing any more than the $178k? That's not nearly enough to retire on, unless you have pensions and/or family money to count on.

You will also have to consider health insurance from 59 until you're able to start on Medicare.
Topic Author
gab77pr
Posts: 14
Joined: Wed Jan 27, 2021 9:07 pm

Re: Any Thoughts about my investment strategy plan?

Post by gab77pr »

MattB wrote: Thu Jul 29, 2021 11:50 pm
gab77pr wrote: Thu Jul 29, 2021 10:34 pm Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.
Hello and welcome to the forum.

To answer your question: No. This plan does not make sense.

You (or your wife) will need to have earned income to contribute to a Roth IRA. You'll want to contribute (at least) as much to your 401k or equivalent to get whatever match your employer provides. Above and beyond that, you could (and possibly should) use your income to contribute the maximum amount to your Roth. This avoids capital gains taxes on money that you've already invested.

Your plan sells investments and thus may incur capital gains taxes, depending on the amount of your gains and your joint income.
Hello there, thank you for your information. We have an income of 55k. My employer is funding the 401k with 11.5% and I am providing another 1%. We have around 241k in a savings account losing value. That was a windfall. The plan is to use that money, after taking apart our emergency fund and invest it. We want to open two Roth IRA accounts and one brokerage account.

Do you mean that my plan is not going to work?. Any additional information will be greatly appreciated. Thanks in advance!
Topic Author
gab77pr
Posts: 14
Joined: Wed Jan 27, 2021 9:07 pm

Re: Any Thoughts about my investment strategy plan?

Post by gab77pr »

exodusNH wrote: Thu Jul 29, 2021 11:57 pm
gab77pr wrote: Thu Jul 29, 2021 10:34 pm Hello,

During my investment strategy journey I have had ups and downs, insecurities, doubts and a lot of questions that have been answered over the time. This place has been playing a great role in providing information and advice. I was dealing with "analysis paralysis" for a long time. With the information received during the last few weeks I have arrived to the conclusion what I should do. The only thing that I need is arrange this plan in a certain way that I don't miss something to avoid mistakes that cost me money, effort and time.

Here's the break down of my plan:

Me 37 y/o, wife is 32y/o planning to invest a total of 178k between regular brokerage account and two Roth IRA accounts. We have around 63k as a savings and emergency funds. Would like to retire before the age of 59. Probably the amount of money is not huge to accomplish that but is something we believe could help us working towards that plan if we do things alright.

I was working with a Fidelity Investment Advisor and I got a certain Investment Strategy to work with. According to what she said the recommendation was to use the Fidelity Target Day Index Funds 2045 with an expense ratio of .12% for the 3 accounts. That's sounds pretty decent because is not really expensive compared to a proactive management that will cost way more money and also will provide some peace of mind working in its own.

Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.

Another thing that I would like to clarify here. Reading some posts and recommendation, looks like there are different opinions regarding this particular. The option to build the 3 different accounts with the same Target Day Index Fund, build the 3 accounts with 3 Target Day Index Fund but with different intervals, like 2050, 2055, 2060 to avoid wash sales. Or build the two Roth IRA with Target Day Index Funds and the taxable account with some Index fund like VTWAX, VTSAX, VTI or FSKAX to give you and example. Or the other way. Use the Target Day Index Funds for the taxable account and use the another Fund for the Roth IRA. Even the 3 funds portfolio I could use. This is the thing that I have been overthinking to select the best option for me.

What's your opinion about this?. What's the recommendation to follow?. Should I go with Target Day Index funds in the 3 accounts?. I have been learning about the wash sales, the Dollar Cost Averaging and Lump Sum Investing. I was inclined to do the DCA, but maybe is better the LSI since the history provide better results in that direction.

I think this is a long post, but I hope with your guidance and suggestions I can finish this analysis paralysis today and start working towards this work investing. Have been more than a year keeping that money losing value. That's enough and is over. I hope you have patience with me and in the future you will see the fruits of this strategy.

Thanks for helping, thanks in advance!!
It sounds like you have $178k sitting around? Are you both working? Are you planning on investing any more than the $178k? That's not nearly enough to retire on, unless you have pensions and/or family money to count on.

You will also have to consider health insurance from 59 until you're able to start on Medicare.
Hello, In fact we have around 241k and 63k will be designated as an emergency fund. The rest of the money will be invested. I am working making around 55k. My employer offers a 401k with 11.5% coming from them and I am putting another 1%. After doing some research and ask for advice I thought this plan could work for us. What I have to change in order to be able to meet with the goals?
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: Any Thoughts about my investment strategy plan?

Post by exodusNH »

gab77pr wrote: Fri Jul 30, 2021 12:31 am
exodusNH wrote: Thu Jul 29, 2021 11:57 pm
gab77pr wrote: Thu Jul 29, 2021 10:34 pm Hello,

During my investment strategy journey I have had ups and downs, insecurities, doubts and a lot of questions that have been answered over the time. This place has been playing a great role in providing information and advice. I was dealing with "analysis paralysis" for a long time. With the information received during the last few weeks I have arrived to the conclusion what I should do. The only thing that I need is arrange this plan in a certain way that I don't miss something to avoid mistakes that cost me money, effort and time.

Here's the break down of my plan:

Me 37 y/o, wife is 32y/o planning to invest a total of 178k between regular brokerage account and two Roth IRA accounts. We have around 63k as a savings and emergency funds. Would like to retire before the age of 59. Probably the amount of money is not huge to accomplish that but is something we believe could help us working towards that plan if we do things alright.

I was working with a Fidelity Investment Advisor and I got a certain Investment Strategy to work with. According to what she said the recommendation was to use the Fidelity Target Day Index Funds 2045 with an expense ratio of .12% for the 3 accounts. That's sounds pretty decent because is not really expensive compared to a proactive management that will cost way more money and also will provide some peace of mind working in its own.

Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.

Another thing that I would like to clarify here. Reading some posts and recommendation, looks like there are different opinions regarding this particular. The option to build the 3 different accounts with the same Target Day Index Fund, build the 3 accounts with 3 Target Day Index Fund but with different intervals, like 2050, 2055, 2060 to avoid wash sales. Or build the two Roth IRA with Target Day Index Funds and the taxable account with some Index fund like VTWAX, VTSAX, VTI or FSKAX to give you and example. Or the other way. Use the Target Day Index Funds for the taxable account and use the another Fund for the Roth IRA. Even the 3 funds portfolio I could use. This is the thing that I have been overthinking to select the best option for me.

What's your opinion about this?. What's the recommendation to follow?. Should I go with Target Day Index funds in the 3 accounts?. I have been learning about the wash sales, the Dollar Cost Averaging and Lump Sum Investing. I was inclined to do the DCA, but maybe is better the LSI since the history provide better results in that direction.

I think this is a long post, but I hope with your guidance and suggestions I can finish this analysis paralysis today and start working towards this work investing. Have been more than a year keeping that money losing value. That's enough and is over. I hope you have patience with me and in the future you will see the fruits of this strategy.

Thanks for helping, thanks in advance!!
It sounds like you have $178k sitting around? Are you both working? Are you planning on investing any more than the $178k? That's not nearly enough to retire on, unless you have pensions and/or family money to count on.

You will also have to consider health insurance from 59 until you're able to start on Medicare.
Hello, In fact we have around 241k and 63k will be designated as an emergency fund. The rest of the money will be invested. I am working making around 55k. My employer offers a 401k with 11.5% coming from them and I am putting another 1%. After doing some research and ask for advice I thought this plan could work for us. What I have to change in order to be able to meet with the goals?
If you're able to earn 7% per year in the market, your 178K will be around 700K in 20 years. That will only have a safe withdrawal rate of about $28K/yr. And that will be in 2050, meaning $28K will be worth $14K/yr, give or take.

We don't know what your expenses are, but 1% of your salary into your 401K is something, but not a lot, though the 11% employer money is pretty sweet. If you can, I'd try to put more in. At $55K and MFJ, if you have a Roth 401K option, that probably makes a lot of sense.

How much you save for retirement, either by saving directly or spending less now has the biggest effect on your retirement prospects. Could you or your wife work a part-time job as well? 20 hours a week at $13/hr is another $10K before taxes that you could save. Over 20 years, even without raises, that adds ~150K.

Earning more now also means your social security will be larger.

Shifting money each year into Roth IRAs makes a lot of sense as your capital gains rate is very low. And even if you manage to earn 10% on your taxable, converting 12k only puts you on the hook for $1200 in gains.
MattB
Posts: 1226
Joined: Fri May 28, 2021 12:27 am

Re: Any Thoughts about my investment strategy plan?

Post by MattB »

gab77pr wrote: Fri Jul 30, 2021 12:31 am What I have to change in order to be able to meet with the goals?
The most important thing, probably, is to do what you can to improve your career earnings. Second, save more money.

I did a back of the envelope calculation using optimistic estimates and you'll have ~$1.1m at 59 years old, given your current 241 investible assets and your current employer + personal savings rate. You can use the compound interest calculator to do similar calculations: https://www.investor.gov/financial-tool ... calculator

$1.1m is about enough to support a $40k/year withdrawal rate when you retire. That may or may not be enough for you. But there is a lot of uncertainty that went into you getting to $1.1m in the first place. So, again, your best bet is to earn and save more money.

--

On the investment piece, I wouldn't worry about wash sales and such at the present moment. Those are fringe concerns. You should develop and implement a basic, sound investment strategy for the $241k you want to invest now. You might consider Boglehead's 3 fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio The important thing is that you understand and are comfortable with whatever plan you decide to follow. That way you have the confidence to follow it going forward.
Topic Author
gab77pr
Posts: 14
Joined: Wed Jan 27, 2021 9:07 pm

Re: Any Thoughts about my investment strategy plan?

Post by gab77pr »

exodusNH wrote: Fri Jul 30, 2021 12:53 am
gab77pr wrote: Fri Jul 30, 2021 12:31 am
exodusNH wrote: Thu Jul 29, 2021 11:57 pm
gab77pr wrote: Thu Jul 29, 2021 10:34 pm Hello,

During my investment strategy journey I have had ups and downs, insecurities, doubts and a lot of questions that have been answered over the time. This place has been playing a great role in providing information and advice. I was dealing with "analysis paralysis" for a long time. With the information received during the last few weeks I have arrived to the conclusion what I should do. The only thing that I need is arrange this plan in a certain way that I don't miss something to avoid mistakes that cost me money, effort and time.

Here's the break down of my plan:

Me 37 y/o, wife is 32y/o planning to invest a total of 178k between regular brokerage account and two Roth IRA accounts. We have around 63k as a savings and emergency funds. Would like to retire before the age of 59. Probably the amount of money is not huge to accomplish that but is something we believe could help us working towards that plan if we do things alright.

I was working with a Fidelity Investment Advisor and I got a certain Investment Strategy to work with. According to what she said the recommendation was to use the Fidelity Target Day Index Funds 2045 with an expense ratio of .12% for the 3 accounts. That's sounds pretty decent because is not really expensive compared to a proactive management that will cost way more money and also will provide some peace of mind working in its own.

Here's is where I want to make things clear before starting funding these accounts. I will transfer 178k into the brokerage account. Will invest 12k in the two Roth IRA for this year. Then will invest 166k into a taxable account. Following a year I will sell 12k to put that money into the Roth IRA accounts, doing the same a few years down in a road to build a strong Roth IRA investment.

Does this plan make any sense to you?.

Another thing that I would like to clarify here. Reading some posts and recommendation, looks like there are different opinions regarding this particular. The option to build the 3 different accounts with the same Target Day Index Fund, build the 3 accounts with 3 Target Day Index Fund but with different intervals, like 2050, 2055, 2060 to avoid wash sales. Or build the two Roth IRA with Target Day Index Funds and the taxable account with some Index fund like VTWAX, VTSAX, VTI or FSKAX to give you and example. Or the other way. Use the Target Day Index Funds for the taxable account and use the another Fund for the Roth IRA. Even the 3 funds portfolio I could use. This is the thing that I have been overthinking to select the best option for me.

What's your opinion about this?. What's the recommendation to follow?. Should I go with Target Day Index funds in the 3 accounts?. I have been learning about the wash sales, the Dollar Cost Averaging and Lump Sum Investing. I was inclined to do the DCA, but maybe is better the LSI since the history provide better results in that direction.

I think this is a long post, but I hope with your guidance and suggestions I can finish this analysis paralysis today and start working towards this work investing. Have been more than a year keeping that money losing value. That's enough and is over. I hope you have patience with me and in the future you will see the fruits of this strategy.

Thanks for helping, thanks in advance!!
[/quote

It sounds like you have $178k sitting around? Are you both working? Are you planning on investing any more than the $178k? That's not nearly enough to retire on, unless you have pensions and/or family money to count on.

You will also have to consider health insurance from 59 until you're able to start on Medicare.
Hello, In fact we have around 241k and 63k will be designated as an emergency fund. The rest of the money will be invested. I am working making around 55k. My employer offers a 401k with 11.5% coming from them and I am putting another 1%. After doing some research and ask for advice I thought this plan could work for us. What I have to change in order to be able to meet with the goals?
If you're able to earn 7% per year in the market, your 178K will be around 700K in 20 years. That will only have a safe withdrawal rate of about $28K/yr. And that will be in 2050, meaning $28K will be worth $14K/yr, give or take.
Is that amount of 14k because of the inflation over the years?
We don't know what your expenses are, but 1% of your salary into your 401K is something, but not a lot, though the 11% employer money is pretty sweet. If you can, I'd try to put more in. At $55K and MFJ, if you have a Roth 401K option, that probably makes a lot of sense.
I am working with our money and expenses and is probably I can put more money towards retirement. What I am not sure is I should put more money into the 401k or just toward the Roth IRA or taxable account. Like I mentioned before, I would like to retire before 59 but is for some reason is not viable, I will do at the regular age of retirement. The most important thing is build some wealth for that age.
Shifting money each year into Roth IRAs makes a lot of sense as your capital gains rate is very low. And even if you manage to earn 10% on your taxable, converting 12k only puts you on the hook for $1200 in gains.
Do you mean that this is a good plan?. That's my thinking even though I am not expert. The Roth IRA will grow over the time and we don't have to pay taxes over the gains. My assumption is I can have the taxable account growing and the Roth IRA doing the same.
tashnewbie
Posts: 4230
Joined: Thu Apr 23, 2020 12:44 pm

Re: Any Thoughts about my investment strategy plan?

Post by tashnewbie »

Welcome to the forum!

It sounds like you're fairly new to the world of investing. I recommend taking some time to do research about investing so that you have more comfort and confidence with it. I think the wiki is a great place to start; here are some articles you may find helpful:

Getting Started
Bogleheads Investment Philosophy
Prioritizing Investments
Three-Fund Portfolio

Overall, I think you need to figure out your plans and goals for your money and then develop an investment strategy (some call it an investment policy statement). That will include your desired asset allocation (percentage of stocks and bonds) across your entire portfolio and it will take into account tax efficiency.

In general, I think it's a great idea to max a Roth IRA for each of you for 2021 and 2022. You can invest $12k now and then another $12k in January. I wouldn't invest the 2022 contribution, because you'll need to sell it to fund the Roth IRAs in <5 months. You'll need to figure out what to invest in, and that's a question that should become clearer as you do the background research and decide on your overall plan. Things like VTSAX, VTIAX, and VFIAX are all great to use in a taxable account or Roth IRA. Target Date Funds aren't as ideal in either of those types of accounts. They're generally not tax-efficient so not great for a taxable account; although for you, I think you're in the 0% long term capital gains tax bracket, so a TDF in taxable might be great for you, at least for the foreseeable future. Not great for Roth accounts because TDFs contain some bonds (although a small amount with the further out TDFs) so don't contain the highest expected return asset (equities) which should be prioritized in Roth accounts. But TDFs do provide simplicity; all you have to do is keep adding money. That simplicity might be invaluable for you as a new investor and as someone who might not want to learn a lot about investing or be hands-on.
exodusNH
Posts: 10249
Joined: Wed Jan 06, 2021 7:21 pm

Re: Any Thoughts about my investment strategy plan?

Post by exodusNH »

gab77pr wrote: Thu Jul 29, 2021 10:34 pm
If you're able to earn 7% per year in the market, your 178K will be around 700K in 20 years. That will only have a safe withdrawal rate of about $28K/yr. And that will be in 2050, meaning $28K will be worth $14K/yr, give or take.
Is that amount of 14k because of the inflation over the years?
Yes, even typical inflation will eat away the value of money.
gab77pr wrote: Thu Jul 29, 2021 10:34 pm
We don't know what your expenses are, but 1% of your salary into your 401K is something, but not a lot, though the 11% employer money is pretty sweet. If you can, I'd try to put more in. At $55K and MFJ, if you have a Roth 401K option, that probably makes a lot of sense.
I am working with our money and expenses and is probably I can put more money towards retirement. What I am not sure is I should put more money into the 401k or just toward the Roth IRA or taxable account. Like I mentioned before, I would like to retire before 59 but is for some reason is not viable, I will do at the regular age of retirement. The most important thing is build some wealth for that age.
It sounds like your tax rate is pretty low. The question you need to answer is whether your tax rate will be lower after retirement. If so, 401K makes more sense. If not, Roth IRA or Roth 401K makes more sense. If your tax rate is low enough, it can make sense to only contribute to your 401K to get the match and then put the rest in Roth up to the $6K per person and then taxable after that. The advantage of your 401K is that you can rebalance your investments without incurring taxes.
Topic Author
gab77pr
Posts: 14
Joined: Wed Jan 27, 2021 9:07 pm

Re: Any Thoughts about my investment strategy plan?

Post by gab77pr »

MattB wrote: Fri Jul 30, 2021 1:00 am
gab77pr wrote: Fri Jul 30, 2021 12:31 am What I have to change in order to be able to meet with the goals?
The most important thing, probably, is to do what you can to improve your career earnings. Second, save more money.

I did a back of the envelope calculation using optimistic estimates and you'll have ~$1.1m at 59 years old, given your current 241 investible assets and your current employer + personal savings rate. You can use the compound interest calculator to do similar calculations: https://www.investor.gov/financial-tool ... calculator

$1.1m is about enough to support a $40k/year withdrawal rate when you retire. That may or may not be enough for you. But there is a lot of uncertainty that went into you getting to $1.1m in the first place. So, again, your best bet is to earn and save more money.

--

On the investment piece, I wouldn't worry about wash sales and such at the present moment. Those are fringe concerns. You should develop and implement a basic, sound investment strategy for the $241k you want to invest now. You might consider Boglehead's 3 fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio The important thing is that you understand and are comfortable with whatever plan you decide to follow. That way you have the confidence to follow it going forward.
Hello, I appreciate your time and information provided to regarding this particular. In fact we are going to invest 178k. We have around 63k as an emergency fund and 178k to invest, making 241k in total. What you are saying if I invest the whole amount of money sounds pretty decent.

I read the Bogleheads article that's pretty simple and easy to understand. I appreciate this information. Over the last few months I have been overthinking and coming back and forth the way I should make my investments. According to the information provided in that article, if I use the Target Day Index Fund in the Roth IRA accounts and the 3 funds portfolio (90/10) in the taxable account, is this a good investment strategy?.
MattB
Posts: 1226
Joined: Fri May 28, 2021 12:27 am

Re: Any Thoughts about my investment strategy plan?

Post by MattB »

gab77pr wrote: Fri Jul 30, 2021 3:45 pm Hello, I appreciate your time and information provided to regarding this particular. In fact we are going to invest 178k. We have around 63k as an emergency fund and 178k to invest, making 241k in total. What you are saying if I invest the whole amount of money sounds pretty decent.

I read the Bogleheads article that's pretty simple and easy to understand. I appreciate this information. Over the last few months I have been overthinking and coming back and forth the way I should make my investments. According to the information provided in that article, if I use the Target Day Index Fund in the Roth IRA accounts and the 3 funds portfolio (90/10) in the taxable account, is this a good investment strategy?.
Hi.

What you are saying isn't really a strategy so much as an asset allocation. Will you stay in the target date fund and the 3 fund portfolio from now until you retire? Will you add more money to it over time, etc.? These are rhetorical questions. But they are questions you should think about before you embark on your investing career.

That said, an appropriate target date fund in your Roth and the 3 fund portfolio in your taxable account will probably be fine. Though nobody knows what the future holds.

Again, the most important thing to focus on is increasing your income and savings rates over time. Doing that, and investing consistently in low expense index funds, will give you the best chance of retiring comfortably.

Best regards,
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