Kevin M wrote:Wow, what a great choice of funds!!! The LifeStrategy and Target Retirement funds are great if you want simplicity. The next step up in complexity is to use the three underlying funds directly: Total Stock, Total International, Total Bond, split 70/30 US/International and whatever split you want for Stocks/Bonds.
Using individual funds allows you more flexibility to optimize for tax efficiency. The standard advice is to hold bonds in tax-advantaged accounts (like 401k or IRA) and stocks in taxable, but at today's low rates it can be argued that it's more efficient to do it the other way around. You almost certainly will hear more people here recommending to hold bonds in tax-advantaged accounts.
Once you've maxed out your 401k, how about an IRA, either traditional or Roth depending on your tax situation?
For taxable, I'd just open up a Vanguard mutual fund account and use the mutual funds. The ETFs are just different share classes of the Vanguard funds, and are more complicated to buy and sell. If you hold an international stock fund in taxable, you'll get the benefit of the tax credit for dividends (which you don't get in your 401k), but the higher dividend yield will offset this benefit to some extent. There is a Boglehead Wiki article that covers this.
No one can answer the stock/bond split (risk vs. expected return) question for you. It depends on your unique ability, willingness and need to take risk. Age in bonds is a common rule of thumb, so 60/40 for a 40-year old probably wouldn't be crazy.
If you post your situation using the format suggested in the Portfolio Advice post (see link in my signature line below), you are likely to get more detailed suggestions.
sari wrote:I have a SEP IRA (in an actively managed fund prior to the 401K) which I would like to roll into the new 401K plan. Tax bracket is 39%. I'm maxing out the 401K/profit sharing already.
sari wrote:Would a back door roth 401K be advisable since my tax bracket will definitely go down (assuming the current scale stays the same) during retirement? Won't I still have to pay taxes at the current rate to roll it into a back door 401K? Also, since I will be maxing out at 51K for the 401K, I don't believe I can still contribute to an IRA? Thank you.
Kevin M wrote:Hi sari,
I already answered much of this in my reply to your PM. What about my answer didn't you understand?
It's hard to coordinate replies to PMs and replies to posts if there's no coordination between the two. It seems as if you either did not read or did not understand my PM reply. Shall we post the PM reply here so others can see what I already said?
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