Please help with AA

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bundy
Posts: 46
Joined: Thu Mar 28, 2013 4:37 pm

Please help with AA

Postby bundy » Fri Apr 05, 2013 7:22 pm

Hello everyone. Im new to investing, mostly because I am just starting my career after being in school for a long time

Im in my 30s. I have a very stable 6 figure job and have no debt. I live in NY and am in the 33% tax bracket.

Here is what I have

ROTH IRA $10,500 Vanguard Target Retirement 2045 Fund. Its only 10% total bond market, 63 total stock market and 27% total international stock market
I plan to contribute max every year the backdoor route.
401k - just started to contribute, plan to max out every year. Havent looked at the options of the plan yet

Taxable

Vanguard Intermediate-Term Tax-Exempt Fund Investor Shares ($10k)
Vanguard New York Long-Term Tax-Exempt Fund Investor Shares (10k)
Vanguard Small-Cap Index Fund Investor Shares (3k)
Vanguard Total International Stock Index Fund Investor Shares (5k)
Vanguard Total Stock Market Index Fund Admiral Shares (12k)

I plan to contribute another 20-30k to my taxable per year.

What do you think? Should I be holding something like Vanguard total bond market in my roth IRA since I already have Total International and Total stock market in my taxable? Also, how "tax friendly" is total international?
Thank you!

ieee488
Posts: 1916
Joined: Thu Dec 10, 2009 8:57 am

Re: Please help with AA

Postby ieee488 » Fri Apr 05, 2013 7:35 pm

You'll need to list your 401K choices with expense ratios for people to help.
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Mill
Posts: 229
Joined: Tue Dec 22, 2009 8:04 pm
Location: Arkansas

Re: Please help with AA

Postby Mill » Fri Apr 05, 2013 7:41 pm

Total international is supposedly pretty tax-friendly as you can claim some tax breaks due to having paid foreign taxes if its held in a taxable account. After just having filed for 2012, I was somewhat disappointed with this tax break, but I guess it was better than nothing.

bundy
Posts: 46
Joined: Thu Mar 28, 2013 4:37 pm

Re: Please help with AA

Postby bundy » Sat Apr 06, 2013 4:02 pm

The way I see it, since my Roth IRA will grow tax free, I should put in whatever combination is likely to have the largest return over 30 years. As I get closer to retirement, I should use more bonds to decrease risk. So is Vanguard retirement 2045 a suitable choice? Or should I use total bond market since I'll get the growth tax free?

Grt2bOutdoors
Posts: 13072
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Please help with AA

Postby Grt2bOutdoors » Sat Apr 06, 2013 6:49 pm

bundy wrote:The way I see it, since my Roth IRA will grow tax free, I should put in whatever combination is likely to have the largest return over 30 years. As I get closer to retirement, I should use more bonds to decrease risk. So is Vanguard retirement 2045 a suitable choice? Or should I use total bond market since I'll get the growth tax free?


It's suitable if you are comfortable with that level of risk. Total Bond Market currently yields 1.63% - if you are aiming for growth of capital, I would use the Target Fund that will automatically re-balance overtime to a more conservative allocation. I would select a Target fund that holds a minimum of 20% bonds, I think 90% is overly aggressive at your age. Yes, I would put the highest total return fund in the Roth and anything that yields taxable income.
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