Help with asset allocation

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Topic Author
Bogli
Posts: 21
Joined: Tue Jul 27, 2021 12:04 am

Help with asset allocation

Post by Bogli »

Hello all,

Please help me with asset allocation. New to this and learned form reading.
45 y/o
Annual income $200k
Paying tax as Head of household
Checking/savings acct - $260K
Taxable brokerage- $20K invested in VOO/VTI 50:50
401K- $61k ( started 2 years ago ) . Full 61K invested in a T Rowe Rice target date fund 2040. No VG funds available but has states street fund for S&P 500 but no ticker so am not sure whether to invest in it. Company matches 25% for a dollar. However due to failed non discriminating testing of the employer can only contribute 15-16 K per year so cannot max the 401K
Employer has a Roth 401k option - should I put money in that?
Will be opening a ROTH IRA for backdoor to contribute 6K .

Question is , what should I invest in the Roth IRA? Vanguard target date fund vs the 3 fund portfolio vs VTI alone?

Should I do the 3 fund portfolio in the taxable brokerage since no availability in the 401K ?

What and where else can I invest ? Also planning to start a 529 for kid in high school ( for graduate /professional school )

Thank you and will appreciate your responses !
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Help with asset allocation

Post by dbr »

For Roth vs Trad see here: https://www.bogleheads.org/wiki/Traditional_versus_Roth

In general Roth accounts are invested in risky investments such as all stocks.

A three fund portfolio can be implemented many ways. Probably the basic "without which not" is a total stock fund, including S&P 500 funds, and any intermediate term bond index fund. The idea is an illustration that can be implemented exactly as illustrated or implemented roughly using the essential thinking behind it.

Once you invest in Roth IRA and/or taxable accounts it may be less useful to use target date funds, depending.

For tax efficient asset allocation see here: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Johnathon Livingston
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Joined: Sun May 09, 2021 6:10 pm

Re: Help with asset allocation

Post by Johnathon Livingston »

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LadyGeek
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Re: Help with asset allocation

Post by LadyGeek »

This thread is now in the Personal Investments forum (portfolio help).
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Topic Author
Bogli
Posts: 21
Joined: Tue Jul 27, 2021 12:04 am

Re: Help with asset allocation

Post by Bogli »

LadyGeek wrote: Mon Nov 08, 2021 6:33 pm This thread is now in the Personal Investments forum (portfolio help).
Ok thank you !
Topic Author
Bogli
Posts: 21
Joined: Tue Jul 27, 2021 12:04 am

Re: Help with asset allocation

Post by Bogli »

dbr wrote: Mon Nov 08, 2021 4:23 pm For Roth vs Trad see here: https://www.bogleheads.org/wiki/Traditional_versus_Roth

In general Roth accounts are invested in risky investments such as all stocks.

A three fund portfolio can be implemented many ways. Probably the basic "without which not" is a total stock fund, including S&P 500 funds, and any intermediate term bond index fund. The idea is an illustration that can be implemented exactly as illustrated or implemented roughly using the essential thinking behind it.

Once you invest in Roth IRA and/or taxable accounts it may be less useful to use target date funds, depending.

For tax efficient asset allocation see here: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Thank you for the links !
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retiredjg
Posts: 54082
Joined: Thu Jan 10, 2008 11:56 am

Re: Help with asset allocation

Post by retiredjg »

Bogli wrote: Mon Nov 08, 2021 4:02 pm Annual income $200k
Paying tax as Head of household
It appears you are in the 32% tax bracket. The general guideline is to use traditional 401k in this higher tax bracket.

401K- $61k ( started 2 years ago ) . Full 61K invested in a T Rowe Rice target date fund 2040. No VG funds available but has states street fund for S&P 500 but no ticker so am not sure whether to invest in it.
There is a good possibility the 500 index and a bond fund is a better choice in this 401k. You would need to list what is available in the plan and the expense ratios of each fund.

Will be opening a ROTH IRA for backdoor to contribute 6K .
Before doing this, get very familiar with how this works and how to document it on your taxes. The backdoor process is easy to do but tricky to document on your taxes. A lot of people mess it up. Do not assume a tax-preparer will know what to do because many do not.

Question is , what should I invest in the Roth IRA? Vanguard target date fund vs the 3 fund portfolio vs VTI alone?
This question should be answered after determining what is best to hold in the 401k. When planning a portfolio, you should start the plan with the 401k (most restrictive account) and build the rest of the portfolio around that.

Should I do the 3 fund portfolio in the taxable brokerage since no availability in the 401K ?
The "3 funder" is built in the portfolio, not in one account of the portfolio. Consider everything together and make it all work as one portfolio, not separate accounts.

You will understand your portfolio better and you will get better help if you post your information in the format we use to help people with their portfolio questions. See the link at the bottom of this message for how to do that. When/if you are ready to do that, just type out the information in some word processing program and then cut and paste it into the original post using the edit button. Or you can just edit the original post but that is a little harder to do.
Topic Author
Bogli
Posts: 21
Joined: Tue Jul 27, 2021 12:04 am

Re: Help with asset allocation

Post by Bogli »

retiredjg wrote: Wed Nov 10, 2021 7:47 am
Bogli wrote: Mon Nov 08, 2021 4:02 pm Annual income $200k
Paying tax as Head of household
It appears you are in the 32% tax bracket. The general guideline is to use traditional 401k in this higher tax bracket.

401K- $61k ( started 2 years ago ) . Full 61K invested in a T Rowe Rice target date fund 2040. No VG funds available but has states street fund for S&P 500 but no ticker so am not sure whether to invest in it.
There is a good possibility the 500 index and a bond fund is a better choice in this 401k. You would need to list what is available in the plan and the expense ratios of each fund.

Will be opening a ROTH IRA for backdoor to contribute 6K .
Before doing this, get very familiar with how this works and how to document it on your taxes. The backdoor process is easy to do but tricky to document on your taxes. A lot of people mess it up. Do not assume a tax-preparer will know what to do because many do not.

Question is , what should I invest in the Roth IRA? Vanguard target date fund vs the 3 fund portfolio vs VTI alone?
This question should be answered after determining what is best to hold in the 401k. When planning a portfolio, you should start the plan with the 401k (most restrictive account) and build the rest of the portfolio around that.

Should I do the 3 fund portfolio in the taxable brokerage since no availability in the 401K ?
The "3 funder" is built in the portfolio, not in one account of the portfolio. Consider everything together and make it all work as one portfolio, not separate accounts.

You will understand your portfolio better and you will get better help if you post your information in the format we use to help people with their portfolio questions. See the link at the bottom of this message for how to do that. When/if you are ready to do that, just type out the information in some word processing program and then cut and paste it into the original post using the edit button. Or you can just edit the original post but that is a little harder to do.

Thank you !
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