Where would you park 140k [Where to invest 140k]

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Hillview
Posts: 314
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Where would you park 140k [Where to invest 140k]

Post by Hillview » Wed Feb 14, 2018 3:18 pm

How's that for a headline?

Emergency funds: 12 months of expenses (I am single breadwinner right now and have some risk aversion)
Debt: no debt, house owned free and clear
Tax Filing Status: married, filing jointly
Tax Rate: 35% Federal, 5.1% State
State of Residence: Mass
Age: 47 (husband 57)
Desired Asset allocation: ~ 65/35 stocks/bonds (I am really going by the Vanguard Target fund allocations here)
Kids: 2 with fully funded college funds assuming a 4% growth

Current investments: $2m in Traditional IRAs @ Vanguard split 50/50 btwn Vanguard Target Retirement 2030 Fund (VTHRX)) and Vanguard Target Retirement 2035 Fund (VTTHX).

Hope to retire from current job in 15 years but to have consulting / lower paying jobs for about 5 years after (thus the longer/older retirement fund choices)

Annual contributions (all going into the above Vanguard Target Funds)
$18,500 her 401k (no match)
$6,500 his IRA
$5,500 her IRA

Currently have 140k to park in a fund intended for retirement, expect to add 1k+ more a month depending on husband's contract work and new business work.

Where would you put this new money?

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Pajamas
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Re: Where would you park 140k

Post by Pajamas » Wed Feb 14, 2018 3:28 pm

I would invest it according to my portfolio asset allocation but would probably not use target funds to facilitate allocation between accounts.

https://www.bogleheads.org/wiki/Asset_a ... e_accounts

runner3081
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Re: Where would you park 140k

Post by runner3081 » Wed Feb 14, 2018 4:23 pm

You aren't exactly "parking" this money in the traditional sense of the term used here (seen more commonly when holding money short-term for a car, vacation, down payment, etc).

As the other response mentioned, follow your asset allocation.

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badbreath
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Re: Where would you park 140k

Post by badbreath » Wed Feb 14, 2018 4:41 pm

Agree with the above posters follow your asset allocation. Also do it tax efficiently.

www.bogleheads.org/wiki/Tax-efficient_fund_placement
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

retiredjg
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Re: Where would you park 140k

Post by retiredjg » Wed Feb 14, 2018 4:51 pm

Agree this is not "parking" which usually means "a place to be for a few months or a year or so".

What you are doing is investing for retirement in a taxable account.

If you wish to keep your target funds in all your other accounts, I would hold 65% stocks in a Total Stock/Total International combination and 35% in an intermediate term tax exempt bond fund. If there is a tax-exempt bond fund for your state, I'd put half in there.

From what little you told us, I doubt you'll need to work another 15 years.

Are you aware that your target funds average out more aggressive than 65% stock and 35% bonds?

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sergeant
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Re: Where would you park 140k

Post by sergeant » Wed Feb 14, 2018 4:52 pm

I think your "headline" is misleading. Parking usually means a temporary spot to place funds intended for something.

Just invest it per your AA.
Lincoln 3 EOW!

soccerrules
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Re: Where would you park 140k

Post by soccerrules » Wed Feb 14, 2018 4:54 pm

so this appears to be your taxable assets , since there is $2M in IRA's and no mention of a taxable account ?

I would invest the $140K according to my AA considering placement of funds for tax efficiency.
Don't let your outflow exceed your income or your upkeep will be your downfall.

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Toons
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Re: Where would you park 140k

Post by Toons » Wed Feb 14, 2018 6:33 pm

Vanguard Balanced Index Fund(Admiral Shares)






:wink:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Nestegg_User
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Re: Where would you park 140k

Post by Nestegg_User » Wed Feb 14, 2018 6:50 pm

agree with others, “park” usually means short term

OP
based on your levels, that you’ve already maxed your 401k, that you’re in 35% fed plus 5+% state tax

and also that your combined current allocation is higher equity exposure

I would investigate a tax-exempt bond fund in your taxable account

there’s quite a few threads that examine a few out there- the usual caveats are to examine any fund for exposure to potential problems (in the past it’s been Puerto Rico bonds, Illinois (and chicago /cook county), Flint and Detroit bonds....) and not stretch for yield but rather keep to better issues in the fund. You might even look at individual bonds as well. In either case, examine the fund/issue to insure it meets MA conditions to avoid taxes.

The ability to develop a significant taxable account will enable you to have a plan of action when you decide to leave the workforce.... depending on whether there’s a pension or annuity payment coming after retirement, having the taxable account gives flexibility in tax planning for the period before you start SS and a place to draw funds to pay taxes from for Roth conversions.

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CABob
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Location: Southern California

Re: Where would you park 140k

Post by CABob » Wed Feb 14, 2018 7:35 pm

Assuming this is taxable money I would probably put it all into a total stock market index fund then if necessary adjust your tax advantaged accounts to maintain your desired overall asset allocation.
Bob

radiowave
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Re: Where would you park 140k

Post by radiowave » Wed Feb 14, 2018 8:09 pm

CABob wrote:
Wed Feb 14, 2018 7:35 pm
Assuming this is taxable money I would probably put it all into a total stock market index fund then if necessary adjust your tax advantaged accounts to maintain your desired overall asset allocation.
+1

or you could take a small portion and put it in a short term CD or high yield savings account for short term needs or cash flow purposes.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

Hillview
Posts: 314
Joined: Fri Feb 02, 2018 7:27 am

Re: Where would you park 140k [Where to invest 140k]

Post by Hillview » Wed Feb 14, 2018 8:10 pm

Ok thanks all -- I am clearly quite new to all this! I appreciate each of your responses. I had not realized "park" = temporary housing for funds. Yes, this is a longer-term account. It is our first taxable fund so I am out of my comfort zone (to the extent I have a comfort zone at all).

Thank you to the moderator who changed the title to make it more appropriate.

If anyone has any additional links I should review I'd really appreciate it -- I am good at researching once I get going in a direction.
Pajamas wrote:
Wed Feb 14, 2018 3:28 pm
I would invest it according to my portfolio asset allocation but would probably not use target funds to facilitate allocation between accounts.

https://www.bogleheads.org/wiki/Asset_a ... e_accounts
Thank you and thanks for the link. So much to learn.
runner3081 wrote:
Wed Feb 14, 2018 4:23 pm
You aren't exactly "parking" this money in the traditional sense of the term used here (seen more commonly when holding money short-term for a car, vacation, down payment, etc).

As the other response mentioned, follow your asset allocation.
Thanks so much, I didn't realize this.
badbreath wrote:
Wed Feb 14, 2018 4:41 pm
Agree with the above posters follow your asset allocation. Also do it tax efficiently.

www.bogleheads.org/wiki/Tax-efficient_fund_placement
Oh wow well, thanks for this -- looks like something to spend some time researching.
retiredjg wrote:
Wed Feb 14, 2018 4:51 pm
Agree this is not "parking" which usually means "a place to be for a few months or a year or so".

What you are doing is investing for retirement in a taxable account.

If you wish to keep your target funds in all your other accounts, I would hold 65% stocks in a Total Stock/Total International combination and 35% in an intermediate term tax exempt bond fund. If there is a tax-exempt bond fund for your state, I'd put half in there.

From what little you told us, I doubt you'll need to work another 15 years.

Are you aware that your target funds average out more aggressive than 65% stock and 35% bonds?
Wow this is a lot of great info. Yes, the investing for retirement in a taxable account is totally new for me so I am starting from scratch on what to look at/consider/research and finally execute. The target fund is basically my cheat for not being an experienced investor. It would be great if we could be done sooner but the youngest kiddo graduates in college in 13 years ... time will tell but you give me hope! Re AA, I am off to review my allocations thanks for pointing this out!
sergeant wrote:
Wed Feb 14, 2018 4:52 pm
I think your "headline" is misleading. Parking usually means a temporary spot to place funds intended for something.

Just invest it per your AA.
Roger that thanks!
CABob wrote:
Wed Feb 14, 2018 7:35 pm
Assuming this is taxable money I would probably put it all into a total stock market index fund then if necessary adjust your tax advantaged accounts to maintain your desired overall asset allocation.
Ok thank you so much, I will take a look at what I would need to do to reallocate my IRAs etc and move into a total market index fund.
Nearing_Destination wrote:
Wed Feb 14, 2018 6:50 pm
agree with others, “park” usually means short term

OP
based on your levels, that you’ve already maxed your 401k, that you’re in 35% fed plus 5+% state tax

and also that your combined current allocation is higher equity exposure

I would investigate a tax-exempt bond fund in your taxable account

there’s quite a few threads that examine a few out there- the usual caveats are to examine any fund for exposure to potential problems (in the past it’s been Puerto Rico bonds, Illinois (and chicago /cook county), Flint and Detroit bonds....) and not stretch for yield but rather keep to better issues in the fund. You might even look at individual bonds as well. In either case, examine the fund/issue to insure it meets MA conditions to avoid taxes.

The ability to develop a significant taxable account will enable you to have a plan of action when you decide to leave the workforce.... depending on whether there’s a pension or annuity payment coming after retirement, having the taxable account gives flexibility in tax planning for the period before you start SS and a place to draw funds to pay taxes from for Roth conversions.
This is so helpful, I really appreciate you taking the time for this detailed information. I will start my research on bonds in MA. This is uncharted territory for me.
soccerrules wrote:
Wed Feb 14, 2018 4:54 pm
so this appears to be your taxable assets , since there is $2M in IRA's and no mention of a taxable account ?

I would invest the $140K according to my AA considering placement of funds for tax efficiency.
Yes first taxable assets. Thanks -- I think I am just not sure how exactly to do this -- there seem to be so so so many options! Thanks for pointing out the tax efficiency. I am unclear how to get a better tax efficiency for post tax money for retirement. I will see what I can dig up.
Toons wrote:
Wed Feb 14, 2018 6:33 pm
Vanguard Balanced Index Fund(Admiral Shares)
:wink:
Adding to the list. 8-)

Hillview
Posts: 314
Joined: Fri Feb 02, 2018 7:27 am

Re: Where would you park 140k

Post by Hillview » Wed Feb 14, 2018 8:15 pm

radiowave wrote:
Wed Feb 14, 2018 8:09 pm
CABob wrote:
Wed Feb 14, 2018 7:35 pm
Assuming this is taxable money I would probably put it all into a total stock market index fund then if necessary adjust your tax advantaged accounts to maintain your desired overall asset allocation.
+1

or you could take a small portion and put it in a short term CD or high yield savings account for short term needs or cash flow purposes.
Thanks -- sorry I missed this just as I was posting my other response. We don't really have any need for near-term cash (we have about a year of expenses saved up in a 1.5% savings acct). Will take a look into the total stock index fund.

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CABob
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Location: Southern California

Re: Where would you park 140k [Where to invest 140k]

Post by CABob » Wed Feb 14, 2018 8:56 pm

Will take a look into the total stock index fund.
This would be the largest of the funds that make up your target date funds.
Bob

Hillview
Posts: 314
Joined: Fri Feb 02, 2018 7:27 am

Re: Where would you park 140k [Where to invest 140k]

Post by Hillview » Wed Feb 14, 2018 9:13 pm

CABob wrote:
Wed Feb 14, 2018 8:56 pm
Will take a look into the total stock index fund.
This would be the largest of the funds that make up your target date funds.

:oops:

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Nestegg_User
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Re: Where would you park 140k

Post by Nestegg_User » Wed Feb 14, 2018 10:59 pm

Hillview wrote:
Wed Feb 14, 2018 8:15 pm
radiowave wrote:
Wed Feb 14, 2018 8:09 pm
CABob wrote:
Wed Feb 14, 2018 7:35 pm
Assuming this is taxable money I would probably put it all into a total stock market index fund then if necessary adjust your tax advantaged accounts to maintain your desired overall asset allocation.
+1

or you could take a small portion and put it in a short term CD or high yield savings account for short term needs or cash flow purposes.
Thanks -- sorry I missed this just as I was posting my other response. We don't really have any need for near-term cash (we have about a year of expenses saved up in a 1.5% savings acct). Will take a look into the total stock index fund.

as per my earlier post: since you didn’t seem to need your funds immediately, and you were in high bracket, I suggested tax-exempt bond fund in taxable account

looking at Vanguard:
there’s a few possibilities—-

VMATX ma tax exempt - long term state municipal
with er 0.15
VTEAX tax exempt bond admiral - long term national bond with er 0.09
VWITX intermediate term fund- national
with er 0.19

each of these have yields above your 1.5% , although they also have lost some ground recently, but yields have increased. The income from them would be federally tax exempt and fully or partially exempt (depending on fund) from state tax.
( some posters have done individual state bonds but we (and most on the board) stick with funds for diversification)

{we were in the 33% marginal rate before retirement and while the rates for tax-exempt were lower, the after tax return was good or about equivalent. you can calculate the equivalent yield before making your decision}

{edit: the addition to these funds also would direct you to more conservative allocation over time even with sticking to the target date funds you are currently in}
Last edited by Nestegg_User on Wed Feb 14, 2018 11:14 pm, edited 1 time in total.

WanderingDoc
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Re: Where would you park 140k [Where to invest 140k]

Post by WanderingDoc » Wed Feb 14, 2018 11:02 pm

50% BTC
50% ETH
I'm not looking to get rich quick (stocks), I'm not looking to get rich slow (indexing), I'm looking to get rich, for sure (real estate) | Don't wait to buy real estate. Buy real estate.. and wait.

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sergeant
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Re: Where would you park 140k [Where to invest 140k]

Post by sergeant » Thu Feb 15, 2018 1:03 am

WanderingDoc wrote:
Wed Feb 14, 2018 11:02 pm
50% BTC
50% ETH
He is (hopefully) joking. I don't think it is helpful to suggest this to a newer poster.

OP, spend a little time on our wiki. There is no hurry. It might be as simple as putting the new money into a Total Market fund in taxable and upping your bonds in your deferred accounts.
Lincoln 3 EOW!

soccerrules
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Joined: Mon Nov 14, 2016 4:01 pm

Re: Where would you park 140k [Where to invest 140k]

Post by soccerrules » Thu Feb 15, 2018 10:52 am

sergeant wrote:
Thu Feb 15, 2018 1:03 am
WanderingDoc wrote:
Wed Feb 14, 2018 11:02 pm
50% BTC
50% ETH
He is (hopefully) joking. I don't think it is helpful to suggest this to a newer poster.

OP, spend a little time on our wiki. There is no hurry. It might be as simple as putting the new money into a Total Market fund in taxable and upping your bonds in your deferred accounts.
Hill -
agree with Sergeant -- Slow down. I would read wiki and some of the suggested reading. Part of this is learning what we don't know and then part of this is understanding the moves/suggestions being made and why you might make the move. 8-)
Don't let your outflow exceed your income or your upkeep will be your downfall.

Hillview
Posts: 314
Joined: Fri Feb 02, 2018 7:27 am

Re: Where would you park 140k [Where to invest 140k]

Post by Hillview » Thu Feb 15, 2018 12:31 pm

sergeant wrote:
Thu Feb 15, 2018 1:03 am

OP, spend a little time on our wiki. There is no hurry. It might be as simple as putting the new money into a Total Market fund in taxable and upping your bonds in your deferred accounts.
soccerrules wrote:
Thu Feb 15, 2018 10:52 am
Hill -
agree with Sergeant -- Slow down. I would read wiki and some of the suggested reading. Part of this is learning what we don't know and then part of this is understanding the moves/suggestions being made and why you might make the move. 8-)
Thank you both. I am up to my eyeballs reading the wiki and other boggle posts as well as reviewing some other info. I also have a call scheduled with the guy at Vanguard who has been helping me get things sorted out to get some ideas from him. I did spend a little time trying to work out the allocation issue I have (to be honest the money for the IRAs is all being moved to Vanguard over the next week or so, so it isn't fully allocated yet.

This is a little overwhelming. So much to learn but I will get there! Thanks again to all of you who helped me identify what to consider and research. Really do appreciate the feedback for a newbie.

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