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hellomoneyisfun wrote: ↑Thu Feb 09, 2023 7:14 pm My employer matches against all contributions in either the roth or traditional option, however contributions are only disbursed in the traditional, so was thinking of doing 3% in roth and 3% in traditional to hedge my bets.

Your employer matches all contributions? Really? If so, you should be maxing out your 401k. Every $1 you invest earns you $1 in a match. That's the best investment available anywhere!

If you think you'll get married in a year or two, consider buying some life insurance now. Premiums will only go up.

... Can you do a balance transfer with a 0% intro offer? This can be filled with "gottchas" like 3% balance transfer fees, and requirements to continue using the card racking up new debt. Be very careful with the fine print on these, while it's possible for people without the need for debt to use these if the terms are right (i.e. no transfer fees) it can be a disaster for someone who doesn't have the ability to pay it off. A 0% transfer are often only limited to some time period, like 12 months or such. If OP can't get the devote enough income to get it paid off by then it'll just create a new refinancing problem down the road. You need to prove you can actually budget your money to consistently make the payments to start diggin...

Looking for your advice on how to handle my recent credit card debt. I recently switched sales industries and have seen my income drop significantly over the last 6-12 months with no end in sight (went from ~$110K to $65K). I made the terrible mistake of not adjusting my spending habits accordingly. As a result, I have racked up credit card debt for the first time in my 35 years and am in the hole for $17K with American Express. :oops: I am leaning strongly towards immediately paying the debt off in full so I can have a fresh start and move forward with a major lesson learned. I would greatly appreciate your advice on what to do now (other than stop digging a deeper hole obviously...) I spent some time researching my options and am not sur...

Background: Long time reader, first time poster. I am married with a 2 physician (and 2 medical school debt) household. I am a complete DIY investor. I have had 1.5 years as a fully paid physician and my wife has had half a year, aka we are relatively recently able to crack down on the debt. My income is roughly $425k and hers is $350k. Each spouse’s investments track desired asset allocation individually. Emergency Funds $40k at Ally @ 3.30% interest, easily covers 3-4 months expenses Debt: His Private Student Loans: $298,500 @ 2.65% Her Private Student Loans: $325,500 @ 5.1% Mortgage: owe $708,000 @ 4.25% until 2037 (15 year ARM) No credit card debt and 2 vehicles owned outright Tax Filing Status: MFJ Tax Rate: 37% Federal, 3.23% Indiana...

Fundamentally, I think I'm just innately uncomfortable with the idea that I'm effectively borrowing money at 3% to try to get a higher return. I would never do that in any other context--maybe that's my lower-middle class upbringing holding me back. Again, I can get over it if it's objectively the right decision. And you fine people seem to strongly believe that's the case. Congratulations on making partner! It is the objectively right decision to invest rather than pay down mortgage. You will get better returns in the market in the long run. Paying down the mortgage reduces your tax deduction (assuming you itemize). And it concentrates your wealth in one local real estate market. It has its own risks that you are discounting because you a...

Welcome! Rough numbers on the safe withdrawal rate of your portfolio (estimated at 3%), plus your pension, suggests that you're looking at about $71,618 per year after 65, not counting social security. 2. Allocation. What to consider when we plan allocation? Should it be related to each individual’s retirement timing? Should the allocation be considered as overall or for each individual respectively? Would appreciate your inputs on our current allocation and contribution in 2023. How to put pension into consideration, when we plan the allocation between pre-tax vs. roth, stock vs. bond? You are holding a lot of cash. Is that because you are worried about losing the money in the stock market? Or is that because you just haven't gotten around...

Welcome! You may not like the advice you receive here, but it seems to me like you do a lot of stock picking and pay high ERs with the overall result--as you put it--that your wins and your losses "cancel." Why not just stick to low fee index funds? His 401k 40k all in Fidelity® Growth Company Commingled Pool. ER 0.43 Available Options: FID 500 INDEX (FXAIX). ER .015%. I chose the active fund vs this overall for the higher historic returns but has not worked out comparatively this year. FID EXTD MKT IDX (FSMAX) 0.035% FID INTL INDEX (FSPSX) 0.035% FXAIX, FSMAX, and FSPX are all good options. His Roth IRA at Fidelity 185K. All stocks. Did a 401k to Ira and Roth conversion 2 years ago all from previous work, taxes paid. Decided on a...

Hi Bogleheads! Could you please give me a simple explanation of the differences between VTSAX and VTWAX? VTSAX is Total US Stock Market, right? and VTWAX is Total World Stock Market, right? Does VTWAX include VTSAX since it's the Total World Stock Market? What would be the pros and cons of both? To be honest, I'm very new at this (obviously) and was all set on VTSAX and then I started seeing "VTWAX and chill" on message boards and I'm trying to figure out how they're similar and different. Thanks for all your expertise! Will you be investing in a taxable account? My understanding is that VTWAX is less tax efficient than a combination of VTSAX and VTIAX because of the foreign tax credit. It might not be enough of a difference to m...

Hi Bogleheads! Could you please give me a simple explanation of the differences between VTSAX and VTWAX? VTSAX is Total US Stock Market, right? and VTWAX is Total World Stock Market, right? Does VTWAX include VTSAX since it's the Total World Stock Market? What would be the pros and cons of both? To be honest, I'm very new at this (obviously) and was all set on VTSAX and then I started seeing "VTWAX and chill" on message boards and I'm trying to figure out how they're similar and different. Thanks for all your expertise! Will you be investing in a taxable account? My understanding is that VTWAX is less tax efficient than a combination of VTSAX and VTIAX because of the foreign tax credit. It might not be enough of a difference to m...

vglifer wrote: ↑Wed Jan 25, 2023 6:28 pm I just had a big salary jump moving as an independent contractor from ~300k to ~800k. House paid off, 529 accounts fully funded for both kids, no debt, I max out backdoor Roth IRAs and i401k. What else should I be considering now with the extra cash flow?

Contemplate the meaning of life and then save, spend, give accordingly.

Hey all, Well it all happened kinda quickly...but barring everything falling apart at the home inspection...we bought a house! :D This won't really be a "can we afford this" thread because I'm confident and comfortable with the move we're making...but I suppose if anyone thinks this will put us in financial ruin let me know. I'm sure we can find something at the inspection to derail things haha. Here are some financial details: Ages 38 with kids 1 and 3 Income = $150k per year Net worth = $1.1m Current Home Value = $280k Current Debt = None Investments (401k, Roth IRA x2, HSA, Taxable, Inherited IRA, 529) = $705k Cash + iBonds = $112k (iBonds are part of e-fund) The new home price is $410k, 20% down $82k. AFTER the new house purc...

Welcome!

1. The best thing you can do to receive helpful advice is to post in the suggested portfolio review format: viewtopic.php?t=6212

That will require determining what your adviser has all of your accounts invested in, the expense ratios for those funds, and the funds available in your wife's 401k.

2. Have you considered a Solo 401(k) to increase your own tax-advantaged investments?

3. Your investment situation does not look like it would be too complicated for you to manage, though the Vanguard adviser may be a smooth transition.

Please review and report back!

Leverage can be useful and I have willingly gone into debt when circumstances were right but 9.75% is rather high and the likelihood of your investments doing better than that isn't very high so I'd agree with the others and focus on removing that. Yes, I think I am going to knock off the debt first. However, I’m having a hard time seeing why I should put my taxable contributions to paying it off. If I am paying money towards an investment account now, and finish my debt in 3 years, I would have more money in investments and it will compound nicely, especially with dividends. If I pay down my debt fast in 2 years (1 year early) then start to invest, it would be less returns than the example I gave before? Am I right to believe this? What y...

You should post in the suggested portfolio review format. If you do that, commenters can advise you on a low fee, tax-efficient allocation that fits your risk profile. It will be worth your effort.

Need to get a new car after my previous car died and repairs cost more than the car is worth. Looking for advice on whether I should get an auto loan or a private loan instead and also use some of the loan money to pay off high interest rate credit card debt? First of all, I want to say thank you in advance for any advice on my situation. I am having a very hard time deciding what to do. I will try and keep it as short and to the point as I can. My current car is a 2011 Lincoln MKZ 3.5L V6 with 267,920 miles on it and is undrivable, it needs a new water pump and also needs the head gasket replaced as well as other minor repairs but those are the two that make it unreasonable to pay to get it fixed. Kelly Blue Book values the car in "f...

All, my first post and nice to meet you all. Looking forward to reading through this forum. A little background. I am 26. Married. A CPA working in Forensic. My wife is 26. She is a Physicians Assistant. We want to build for our future and kids (none yet). I make approx. $115K including bonuses. I currently invest 8% in a 401k with approx. $37K in it. I am only invested in VFIAX. My wife makes $125K. She invests 8% in a 401k with approx. $15K and she is invested in something that mirrors the S&P as well. We have about $50K liquid cash. I am essentially looking for any help for the future. Our net income a month is approx. $13,200 and costs approx. $7,300 (I created a budget of course because of my CPA background). Any recommendations f...

Hello, I would greatly appreciate any feedback and thoughts on my questions & portfolio below: Ages: 42, wife 41, kid 6 Emergency fund - yes (same as cash position) Tax Rate: 47% fed + 12% state State: CA Annual expenses: $160k $616k - Income 1 $90k - Income 2 $27k - Rental property income Desired Allocation 70-30 My goal is over time to convert my whole portfolio into a two/three fund model, but found it too tedious to list all the funds below. It's currently a mixture of the VTI/VGTXX/VBMFX, Target Cycle funds, and previously purchased individual equities (about 20% of portfolio) Debts: $1.3 million @ 2.375% 30-year fixed - primary residence $93k @ 3.875% 30-year fixed - investment home $22k @ 4.99% 36 months - car loan I. Cash/Savin...

Hello Bogleheads and happy new year to everybody! I am somebody who has some learning challenges. therefore, I find it very difficult to understand even the simplest investing. Years ago a friend of mine helped set up my VANGUARD accounts. I was considering hiring a financial planner just to analyze my portfolio. However, they wanted $750 to look at it. So I will do my best to follow the template that is suggested On this forum for support and guidance with my current portfolio. Thank you in advance for your time, consideration and assistance! Emergency Funds: YES (6) months Tax Filing: Single Tax Rate: 12% fed. 4% state Residence: California Age: 58 Debt: None Housing: Renter Desired AA: 58% equities/42% bonds ?? Approx total portfolio: $...

Rough range of 750k-2mm for a house (depends on which suburb and a few other factors) Makes sense re: just holding enough for a downpayment (even for the upper range) and rolling the rest into the market to diversify. Something just feels icky about borrowing at 5-6% on a mortgage if we don't have to.. but I guess there is always refi and it avoids us becomes super concentrated in one real estate asset vs the entire market All of your reasoning is correct. The high mortgage rate would be unpleasant, but it would be partially offset by some tax savings if you itemize. And the nominal return at your AA may be higher than 5-6%, even after taxes and even apart from the benefits of diversification. Finally, if you invest the money, it won't go ...

Hi! Wanted to ask this group for a quick sanity check Context: - My wife and I are in our mid 30s, and have ~600k in 401k+RothIRA retirement savings, no debt, 2 paid off cars, and ~$1.2mm in cash (all cash from temporary spikes in stock compensation over the last few years) - We have been considering major life moves (changing jobs, geo's, etc) and so have been dragging our feet over the past year in getting the cash into index funds - We now know we will likely move coasts to be closer to family later this year, and potentially buy in an HCOL area (NYC burbs) after 1-2 years if we decide to stay Question: Given mortgage rates where they are, are we better off holding all of the cash to save optionality for an all-cash of mostly-cash house...

Looks good overall to me. I would use VFIAX (can add extended market/small cap if you want; 4:1 ratio would be good enough) for US stocks and VTIAX in the 401k and Roth IRA. You can change the Roth IRA holdings without any tax implications. Then I'd use VLCAX/other total and large cap funds in taxable for US stock (could use VTSAX to tax loss harvest) and VFWAX for international. If you ever wanted to tax loss harvest, you would have more options if you used ETFs. No need to make any changes in that regard now though. 5. I would like to be financially independent in 15 years (age 55). If I am able to continue saving at my current rate, is that a realistic goal? I would like 80k of income during retirement. I do have a pension, but I am con...

douglasj76 wrote: ↑Sat Jan 14, 2023 1:10 pm Thank you for the feedback everyone. I will readjust my OP and it look like this is going to beneficial.

Not much to add while you update your post with the information requested, but consider calculating how much you're paying annually for these funds:

(Balance Fund A * ER) + (Balance Fund B * ER) + etc etc.

Then multiply your current total balance by the average ER for the low-fee funds recommended. Rough math suggests you could save several thousand dollars a year.

But will you receive a match for after-tax contributions to the 401(k) that will be converted to the Roth? If so, you should certainly contribute more to the MBR 401(k) and forego the Roth IRA. If you won't receive a match, it may just be a wash. It sounds like the fees in the 401(k) and the Roth IRA are comparable. If that's so I think it doesn't really matter what you contribute to. I have heard that 401(k)'s are better protected from creditors, so that perhaps counsels in favor of your 401(k). No, I do not receive a match on my after tax contribution. Ok, well then I think it probably doesn't matter if the fees are the same. I guess there's the creditor thing and, also, you can contribute to the Roth IRA into 2024, so if you happen to h...

Do you have a match on the 401k? What are the fees associated with the two accounts and what funds are available in the 401k? Yes, I have a match on the 401K and I plan to maximize the traditional 401K bucket anyways as I am targeting the maximum allowable amount ($22.5K) for the year. The intent is to maximize tax deferral for this year. The fees associated with my employer 401K is quite low and I have good funds (low cost S&P 500 fund) available to choose. I will use the same fund for my Traditional tax deferred 401K as well as the megabackdoor Roth 401K portion. Funds wise my portfolio is very simple (just S&P 500 in my 401K) But will you receive a match for after-tax contributions to the 401(k) that will be converted to the Rot...

Do you have a match on the 401k?

What are the fees associated with the two accounts and what funds are available in the 401k?

Why are you not maxing out His 403b before investing in taxable?

Jen_ken wrote: ↑Wed Jan 11, 2023 9:58 am Why should one avoid investing VT in the Roth IRA?

Sorry for confusion. I simply meant for purposes of avoiding a wash sale during your current rebalancing. VT is a great fund for Roth IRA.

I also didn't mean to suggest necessarily you should get out of your target date fund because it has bonds. I was simply noting that you say you don't want bonds but do own them. Whether you should hold bonds is another question (I think you should, but if you don't want to, you don't want to!).

I'll chime in to say that I am younger with fewer assets but am very happy I closed out Betterment (I got out with an overall tax loss of ~$100). The simplicity helps me SWAN.

Also, now that your TIRA is in your Solo 401(k), you can do a "backdoor" Roth contribution, which might be better than taxable.

Consider slowly moving your bonds out of taxable into your 401(k), if you can do so without tax consequences, for future tax efficiency.

Thank you so much for the insight I was thinking today — with markets how they are, investing now is a huge opportunity. By rebalancing 2 accounts I’m effectively not investing at all until end of April in order to avoid tax consequences. Is it worth it to pick up this endeavor now while long term buying now is the best bet? You could increase your contributions to the 401k plan (using the 2065 fund) while you're waiting for the taxable account to get settled. Or you could use extra money to pay off debt - which is never a bad idea. Also, consider reading up on the backdoor Roth option I mentioned above. Regards, Also, OP, you can continue to buy VTI and VXUS in your taxable even during the 31 days. The wash-sale rule prohibits purchases o...

I would use the LOC and invest the cash, unless you're extremely debt averse. You should beat that rate over 15 years.

(If your tax rate is low enough treasuries or HYS would beat that rate!)

Good plan. And thank you for your service to this country.

Also played around with Robinhood from 2021-2022, have about $3,350 [down $1500]. Stopped buying on a whim and set to invest daily $2.50 amazon, Disney, Google, META and Microsoft and $1/day Bitcoin & Etherium. Just an idea, my side-project just messing around. Not sure if I should leave the daily investments on or stop messing with Robinhood for now. Stop playing, stop messing. Stop investing in this way ($1 a day is stupid) and cash this stuff out. :D Great advice and to-the-point - not just for OP but for many younger investors Agree'd- makes sense now Welcome to the forum. It is good that you want to get serious and to do so urgently. But there is a difference between acting with urgency and acting hastily. Pause, reflect, and stud...

Thanks.

I will owe substantial taxes this year, but I met the safe harbor so I will not owe an underpayment penalty. However, I understand that taxes are due on tax day whether I file for an extension or not.

Am I able to calculate my tax liability, pay that amount to the IRS before tax day, but nevertheless file for an extension to file in October?

(I would prefer to file later but want to avoid interest on taxes owed.)

Response: Hello! Thank you for your very detailed response. This is the second time I have heard the number $20k as it relates to a down payment number. That sounds like a nice goal to reach in the coming years. 403(b) Expense Ratios: Large Cap: 0.47% International Fund: 0.85% Mid Cap: 0.97% ^These are extremely high. This bothers me but I don't think there are any options that are lower. Interest Rates on the School Loans are: Loan 1: 4.450% at $3,475 Loan 2: 5.05% at $3,000 Loan 3: 4.530% at $1,136 Loan 4: 2.750% at $6,000 Loan 5: 3.730% at $5,500 Loan 6: 3.730% at $2,000 Honestly, I enjoy living at home currently and my family does not mind. I understand that I am saving/ investing in multiple areas and need a single focus so I apprecia...

Questions: 1. One of my goals for 2023 is to start saving for a down payment on a future home. I use Ally Bank for a high yield savings account and have been putting $150 a month into my home savings goal. It is a start and I know I must increase it in the future. a. How long do you think it will take for me to have a realistic down payment? (Houses are between $100k - 200k where I plan on moving to). b. How much should I have in this account on estimate? 2. Could someone give me advice on my pension and 403(b)? The allocations I have and the funds? I know that I did not put the ticker symbol and that is not correct; however, I honestly could not find a ticker symbol for a lot of these funds (not sure why). Thank you! 3. Am I on the right ...

You say you don't want to hold bonds, but your former employer 401k has bonds because of the target date funds. Is that intentional? (Nothing wrong with that, and some would say you should increase your bond allocation anyway)

As to whether you can take your foot off the gas or take a year off, we need to know how much you want to spend now and in retirement.

Anyway you're in great shape and should feel very financially secure, if that was your concern. Not perfect, and indeed insulating from all risk is impossible and undesirable, but you've done very well.

All valid points. I will say we have probably 2-3 years of expenses in cash equivalents at the moment so I'm not worried about "needing" the money. The downside to not maximizing TSP is higher taxes this year. We will be in 32% marginal federal bracket next year even if I don't work at all after separating so the extra TSP deferral will save around $5k in taxes. If I take a position I would likely try to not start till after summer as I need a little mini sabbatical anyway Max. The expected values to compare are 1. tax savings (for TSP and hypothetical 401(k)) and 2. company match (for TSP and hypothetical 401(k)). Tax savings will be a wash if you max no matter what, but there is the very slight possibility any future job doesn'...

IMO if you can cash flow it properly without seriously undermining your ability to use any tax-advantaged space then you can go ahead and buy. At a certain point some people get tired of renting, and that's ok. Here are some things you could consider to split the difference a bit.

-Downgrade that expensive car.
-Decrease 529 investments, use funds to increase savings for down payment and/or max tax-advantaged options.
-Stay on lower end of 700-900.

Definitely don't pay extra to the debt at that rate.

So to clarify, the approach would be: (1) in taxable, exchange VTSAX for VTIAX (to TLH); (2) in IRA, exchange VTIAX for VFIAX (to acquire the TLH Pair for VTSAX but to keep my international/domestic allocation consistent); in 31 days, in IRA, exchange VFIAX for VTSAX (to eliminate VFIAX from the portfolio and return to my initial allocation of VTSAX and VTIAX). You still will not have undone step 1. That's true to a point. But though I would hold more international and less domestic in taxable, I would hold more domestic and less international in the IRA--unless I'm completely missing something! So it's a wash from the overall asset allocation. Anyway, I think I'm convinced that I'm overthinking it. I will probably just TLH VTSAX by exchan...

retiredjg wrote: ↑Wed Jan 04, 2023 10:48 am But wasn't there a distribution/dividend in late December?

Yes. I am planning ahead. There is a period between late January and late February in which to TLH.

MnD wrote: ↑Wed Jan 04, 2023 9:37 am In taxable sell VTSAX and buy SCHB. Or SWTSX if you don't like ETF's.
Done.

VTSAX won't have any distributions until late March so no worries about reinvested dividends.
The Schwab broad market funds don't track the same index either.

I am not sure whether I can buy SWTSX through Vanguard (I don't like ETFs for probably irrational reasons), but if I can I'll probably just do this.

Thanks everyone for the comments. One follow up regarding the following line of comments that I would over-allocate to VTIAX: Wouldn't you also need to sell VTIAX in taxable and buy VTSAX as step 4, which may result in a cap gain? Don't forget about reinvested dividends. If you buy VTSAX in the IRA and then less than 30 days find that you want to TLH VTSAX in taxable, you would need to sell all VTSAX in the IRA first or wait until 31 days have past, in which time the loss may have disappeared. It's simplest to just use different funds in your taxable accounts versus your tax-advantaged accounts. I agree -- OP I think you are going to need to sell the extra VTIAX you bought in your taxable account in order to get back to your target asset al...

Suppose that I want to TLH VTSAX (Total Stock). The taxable account holds only VTSAX and VTIAX (Total International), and the IRA / Roth IRA also holds VTSAX and VTIAX. The goals are to TLH but to (1) avoid a wash sale, (2) keep the number of tickers in taxable constant (for simplicity), (3) remain in the market as continuously as possible, and (4) keep exposure to VTSAX and VTIAX the same. Is there anything wrong with the following plan of action? 1. In taxable, exchange $X of VTSAX at a loss for $X of VTIAX. 2. In IRA / Roth IRA, exchange $X of VTIAX for $X of the TLH partner for VTSAX, presumably I would just do 100% VFIAX (the S&P 500 fund). 3. 31 days later, in IRA / Roth IRA, exchange $X of VFIAX for $X of VTSAX. As far as I can t...

One general point I would make is that you've received a lot of great suggestions but your follow-on questions suggest you might not fully understand the rationale behind them. Make sure you have a full understanding of your course of action before you do anything drastic, and consider posting your step-by-step plan here before doing it. Now to some more specific points: 1. Lakpr is suggesting the backdoor Roth because it looks like you can't contribute directly to Roth IRAs at your income level. Have you checked the income limits on the Roth IRA contributions? If you want to do a backdoor Roth, because of the pro rata rule, you need to clear out your IRAs by rolling them into the 401ks. 2. If you like VT in taxable you can keep it. Many do...

lakpr wrote: ↑Sun Jan 01, 2023 3:36 pm

Lakpr's advice seems sound to me. I would add that you may want to either reduce your I Bond, Treasury, and Cash holdings or count those towards your bond allocation, thus reducing how much you hold in bonds in 401(k).

Also, you asked about the Mega Backdoor Roth. I assume you're talking about after-tax contributions to your 401(k) that are then rolled over into your Roth 401(k). Yes, that's still allowed if your employer has it. Yes, that's likely preferable to taxable investments.

Good luck.

Thanks everyone for the excellent advice! In terms of the 403b, my spouse is currently working a flexible schedule with lower hours, hence the lower amount. The contribution is still around 15% of gross, and she will get the full match from her employer. I do need to look more at our fixed income. From what I've read around here lately, the prevailing wisdom seems to be that one should hold less fixed income during 30s and 40s, some even saying 100% equities. I don't think I'd be comfortable with 100% equities, but I need to sharpen up my knowledge on fixed income. Should I stick with total bond, or integrate some I-bonds? I want the simplest, set it and forget it, method. I understand where everyone is coming from on the mortgage too. I a...

Regarding your portfolio only: 1. You might consider simplifying taxable. You have several positions that make up a relatively small amount of your portfolio that could possibly be improved. VNQ, BNDX, BND are not particularly tax efficient. VT is not as tax efficient as its components of VTI and VXUS. A high-dividend fund like VYM may not be advisable because of tax drag. Consider liquidating BNDX, BND, VNQ if it can be done without generating significant capital gains. Consider exchanging VT for VTI and VXUS if it can be done without generating capital gains. Consider exchanging VYM for VTI or similar. Consider turning off dividend reinvestments for VYM and use those payouts to invest according to your AA. 2. Generally speaking you want b...

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