Current vs future investments

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benevo
Posts: 74
Joined: Wed Apr 05, 2017 7:21 am

Current vs future investments

Post by benevo » Sun Jun 11, 2017 10:37 am

Hi all,

I am changing my investments (from some 'meh' funds that an old financial adviser recommended, to the 2040 Target Retirement fund). I understand, technically, the difference between having all future contributions go to the 2040 and selling my current investments. Is there an overall recommended Boglehead suggestion of changing all current investments/selling, vs just having all future contributions go to the new (2040) fund (and leaving my existing ones as-is)?

For what it's worth, I'm 29, a newer investor, and only a little over $50k at the moment. I also just started a roth IRA on the 2055 TR fund.

For the 401k, I'm currently putting in as roth 401k, but with some advice here (I am currently right on the cusp of the 25/28% bracket and don't anticipate being higher than 28% in the future) I think I should be at the traditional 401k per previous research, including info I read in the wiki - yes?

Thanks for any insight!
-be

mhalley
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Joined: Tue Nov 20, 2007 6:02 am

Re: Current vs future investments

Post by mhalley » Sun Jun 11, 2017 12:00 pm

The main reason to delay changing is if there are large capital gains in the funds. If the funds are in tax advantaged accounts, (IRAS, ROTHS, 401ks, ETC) then do it right away. If in taxable accounts, sell any losers, sell any gainers that offset the losers, determine how much taxes would be owned on the remainder and sell if you can stomache the taxes. Turn off dividend reinvestment if you plan on delaying the conversion to the new portfolio.

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BL
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Joined: Sun Mar 01, 2009 2:28 pm

Re: Current vs future investments

Post by BL » Sun Jun 11, 2017 1:07 pm

Yes, convert all to the Target fund now. Hopefully the Target fund has reasonable ERs.

Yes, change to trad. 401k now.

benevo
Posts: 74
Joined: Wed Apr 05, 2017 7:21 am

Re: Current vs future investments

Post by benevo » Sat Jun 17, 2017 7:51 pm

Thanks, both!

In the same thinking, my contributions can be put towards:

Pre-Tax
Roth
After-Tax

Pre-tax would be best traditional option, yes? I have a better chance of the money growing that way I'd think.

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BL
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Re: Current vs future investments

Post by BL » Sun Jun 18, 2017 5:53 pm

benevo wrote:Thanks, both!

In the same thinking, my contributions can be put towards:

Pre-Tax
Roth
After-Tax

Pre-tax would be best traditional option, yes? I have a better chance of the money growing that way I'd think.
Yes, pre-tax sounds best up to the max of 18k/year, currently. Also consider filling the Roth IRA with 5.5k. Vanguard Target funds are low-ER, and some of the other companies also have low-ERs, but not all. What are your ERs?

If you have still more to invest, look into the After-tax option. If it can be moved to a Roth on a yearly basis, this might be a great place for additional investment.

benevo
Posts: 74
Joined: Wed Apr 05, 2017 7:21 am

Re: Current vs future investments

Post by benevo » Sun Jun 18, 2017 7:44 pm

BL wrote:What are your ERs?
0.0008 for all the TRFs

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BL
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Re: Current vs future investments

Post by BL » Sun Jun 18, 2017 11:30 pm

benevo wrote:
BL wrote:What are your ERs?
0.0008 for all the TRFs
Great!

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