Taxable acct/FI questions

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
clatexpecti
Posts: 4
Joined: Tue Jun 15, 2021 4:57 pm

Taxable acct/FI questions

Post by clatexpecti »

Looking for advice specifically regarding taxable account.

Goal is to retire age 50-55. Currently in mid 30s. No dependents. File MFJ.
Current income: 250k, in 1-2 years will be 400-450k
Current NW: +150k
Debts: 150k private student loan @ 0.45%. Initial refi was for 1.99% variable 5 year but rates have obviously plummeted during the pandemic. Initially debt was 280k @ 6.8% federal.
Assets: 300k
130k cash, including 30k emergency fund
170k investment:
-8k employer 401k (100% VTSAX) **I just became eligible this year. I am currently maxing out employer 401k.
-5k solo 401k (100% VTSAX)
-1k vanguard taxable (100% VTI)
-150k roth IRA (90% VTSAX 10% VBTLX)

Questions:
1. Is VTI the best choice for my taxable account?
2. Is it the right move to start monthly contributions to the taxable account in lieu of faster debt payoff, considering my rate is currently 0.45%?
3. What else should I be doing to reach goal of FI @ 50?
Last edited by clatexpecti on Wed Jun 16, 2021 7:33 pm, edited 1 time in total.
MrJedi
Posts: 830
Joined: Wed May 06, 2020 11:42 am

Re: Taxable acct/FI questions

Post by MrJedi »

It doesn't appear that you are maxing 401k, so I would max that before going into the taxable.
Topic Author
clatexpecti
Posts: 4
Joined: Tue Jun 15, 2021 4:57 pm

Re: Taxable acct/FI questions

Post by clatexpecti »

MrJedi wrote: Wed Jun 16, 2021 7:17 pm It doesn't appear that you are maxing 401k, so I would max that before going into the taxable.
Thanks for pointing this out - I actually am maxing employer 401k, Roth, and HSA every year. I just became eligible for employer 401k in 2021.
User avatar
retired@50
Posts: 6283
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Taxable acct/FI questions

Post by retired@50 »

clatexpecti wrote: Wed Jun 16, 2021 7:07 pm Looking for advice specifically regarding taxable account.

Goal is to retire age 50-55. Currently in mid 30s. No dependents. File MFJ.
Current income: 250k, in 1-2 years will be 400-450k
Current NW: +150k
Debts: 150k private student loan @ 0.45%. Initial refi was for 1.99% variable 5 year but rates have obviously plummeted during the pandemic. Initially debt was 280k @ 6.8% federal.
Assets: 300k
130k cash
170k investment
8k employer 401k (100% VTSAX)
5k solo 401k (100% VTSAX)
1k vanguard taxable (100% VTI)
150k roth IRA (90% VTSAX 10% VBTLX)

Questions:
1. Is VTI the best choice for my taxable account?
2. Is it the right move to start monthly contributions to the taxable account in lieu of faster debt payoff, considering my rate is currently 0.45%?
3. What else should I be doing to reach goal of FI @ 50?
Welcome to the forum. :happy

With a high income already, and growing, you'll be able to reach financial independence pretty quickly. Depending on your savings rate, it may not even take until 50.

I'd suggest you max out all normal retirement accounts like 401k and Roth IRA, then put any additional savings into the taxable account. I'd imagine that you'll be saving over $100k per year, so putting $19,500 (times 2) into a 401k and $6,000 (times 2) into a Roth IRA will still be only about half of your savings. Working the debt down over the next few years will just add velocity to your plans.

VTI is fine in the taxable account, and you could also consider using VXUS for some international stock exposure if you're interested. If/when you decide to hold some bonds, put them inside your 401k plan into a low expense ratio bond index fund.

Regards,
This is one person's opinion. Nothing more.
Topic Author
clatexpecti
Posts: 4
Joined: Tue Jun 15, 2021 4:57 pm

Re: Taxable acct/FI questions

Post by clatexpecti »

retired@50 wrote: Wed Jun 16, 2021 7:25 pm
clatexpecti wrote: Wed Jun 16, 2021 7:07 pm Looking for advice specifically regarding taxable account.

Goal is to retire age 50-55. Currently in mid 30s. No dependents. File MFJ.
Current income: 250k, in 1-2 years will be 400-450k
Current NW: +150k
Debts: 150k private student loan @ 0.45%. Initial refi was for 1.99% variable 5 year but rates have obviously plummeted during the pandemic. Initially debt was 280k @ 6.8% federal.
Assets: 300k
130k cash
170k investment
8k employer 401k (100% VTSAX)
5k solo 401k (100% VTSAX)
1k vanguard taxable (100% VTI)
150k roth IRA (90% VTSAX 10% VBTLX)

Questions:
1. Is VTI the best choice for my taxable account?
2. Is it the right move to start monthly contributions to the taxable account in lieu of faster debt payoff, considering my rate is currently 0.45%?
3. What else should I be doing to reach goal of FI @ 50?
Welcome to the forum. :happy

With a high income already, and growing, you'll be able to reach financial independence pretty quickly. Depending on your savings rate, it may not even take until 50.

I'd suggest you max out all normal retirement accounts like 401k and Roth IRA, then put any additional savings into the taxable account. I'd imagine that you'll be saving over $100k per year, so putting $19,500 (times 2) into a 401k and $6,000 (times 2) into a Roth IRA will still be only about half of your savings. Working the debt down over the next few years will just add velocity to your plans.

VTI is fine in the taxable account, and you could also consider using VXUS for some international stock exposure if you're interested. If/when you decide to hold some bonds, put them inside your 401k plan into a low expense ratio bond index fund.

Regards,
This sounds great. Thank you!
Currently our savings rate (not sure if I include debt payoff in this?) is about 50%. We've gotten used to just living a relatively frugal but comfortable lifestyle while getting rid of the 6-figure debt. Once that's gone, I plan on a seamless transition to taking the 5-6k/mo I used to put towards loans and put it in the taxable.
Post Reply