as you can guess, I would like to receive your feedback and input on my portfolio concept. I am a German expat in the US for three years in total (2 more) and I would like to invest our money into different assets.
Please find the required information given below first:
Emergency funds: all good
Debt: we have a mortgage that will be paid of in 2 years
Tax Filing Status: Married Filing Jointly (one kid)
Tax Rate: 19.3% Federal, 4.8% State (based on my W-2 - my first tax is in the works)
State of Residence: NC
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation for bonds: treasury focusing on EURO states and US, corporate on large caps (50/50 split between corporate and treasuries)
Desired International allocation for stocks (covered entirely through ETFs):
- Europe: 24%
North America: 26%
Emerging Markets: 26%
Frontier Markets: 4%
World Small Caps: 10%
The total portfolio will be in the low six figures. With the portfolio I want to further invest into retirement, but also build up general wealth for the future. As indicated above, we are from Germany and living in the US temporarily. It is not yet clear, whether we will go back on the planned date (beginning of 2019) or whether our stay will be extended. Due to my expat status, retirement activities are still covered by everything that is in Germany. I am trying to figure our, whether I qualify for an IRA or a Roth IRA. Furthermore, I have understood that after five years of return, we will be "connected" to the US for tax purposes. The tax declaration makes a tax consultant for us.
In addition to the initial lump sum, I will be able to contribute approx. 1,500$ every month. I would like to invest and re-balance every 2-3 month.
1. I would like to receive your recommendations on which ETFs to pick. I am totally used to ETFs in Germany, which are mostly not available here in the US. I would like to go for commission free ETFs at Schwab and Fidelity to keep costs low, as I will be buying on a regular basis.
2. I do not have any experiences with bonds, so some recommendations are welcome here as well
3. Commodities and Real Estate: I am still undecided whether the portfolio should contain real estate (in the form of REITs) other than shares of real estate companies in the respective ETFs. Since we have a house in German, I am not sure if this would not look as a lump in the portfolio. Also here I am grateful for tips and opinions.
4. I have to deal more closely with the "US tax". So far I have understood that the "Capital Gains Tax" is 15%, as long as I hold the shares longer than one year.
5. Due to the high market level, I am unsure how much I should currently invest, since there can be / will be setbacks. Because of the investment horizons, this should not be too much, but it is a difference, whether one entered 2008 or 2011. Also here I am happy about comments and thoughts.