Where to invest after maxing out retirement?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Where to invest after maxing out retirement?

Post by Investing4Truth » Sun May 13, 2018 3:08 pm

I'm single, debt-free, currently rent, own a car outright, with two retirement accounts, one 401K and a Roth IRA. I have about $50,000 in savings now, and $6500 in gold.

Would it be a good Boglehead thing to do to convert half my savings and my gold into a taxable investment portfolio that emulates my retirement portfolios? I was calculating the possibilities and I noticed with a positive 10-20 year investment outlook, it could give me the option to retire early to cover those years before I can withdraw from my retirement accounts, or buy a house cash, even though I'd still have to pay long term capital gains.

Do others generally go to taxable accounts once they max out their portfolios elsewhere? Just wondering if there are other options I could consider, since there really isn't much I can do with 30K+ other than to simply reinvest it again.

User avatar
Clever_Username
Posts: 1040
Joined: Sun Jul 15, 2012 12:24 am
Location: Southern California

Re: Where to invest after maxing out retirement?

Post by Clever_Username » Sun May 13, 2018 3:17 pm

First, let's ensure when you talk about maxing out your 401(k), you mean $18,500/year and not just the employer match.

I would turn the gold into cash first. I'd also buy $10k/year in Series I Bonds. That's where my first after-tax-advantaged accounts money goes. Depending on tax bracket and time horizon, you're generally then looking at either a muni bond fund or a stock index fund (either domestic or foreign, depending) in taxable space.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_


Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: Where to invest after maxing out retirement?

Post by Investing4Truth » Sun May 13, 2018 3:22 pm

Right everything is maxed out, icluding the 401K at $18,500. My current retirement pace is pretty good, so now I'm considering investing with the goal of early retirement, but taxable accounts seems to be the only possibility there. :happy

Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: Where to invest after maxing out retirement?

Post by Investing4Truth » Sun May 13, 2018 3:24 pm

Thanks, interesting that taxable came before nondeductible IRAs, but I can see why that would be the case.

Bacchus01
Posts: 1747
Joined: Mon Dec 24, 2012 9:35 pm

Re: Where to invest after maxing out retirement?

Post by Bacchus01 » Sun May 13, 2018 3:27 pm

Too little information to even respond appropriately

drk
Posts: 698
Joined: Mon Jul 24, 2017 10:33 pm
Location: Seattle

Re: Where to invest after maxing out retirement?

Post by drk » Sun May 13, 2018 3:35 pm

Investing4Truth wrote:
Sun May 13, 2018 3:24 pm
Thanks, interesting that taxable came before nondeductible IRAs, but I can see why that would be the case.
Yeah, nondeductible IRA contributions are strictly worse than taxable investments if you're planning to hold: you'll pay taxes on any gains at your marginal tax rate at withdrawal, rather than the lower long-term capital gains rate. On the other hand, a nondeductible IRA contribution is great if you have no tax-deferred IRA money and are able to complete a backdoor Roth conversion.

Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: Where to invest after maxing out retirement?

Post by Investing4Truth » Sun May 13, 2018 3:37 pm

Bacchus01 wrote:
Sun May 13, 2018 3:27 pm
Too little information to even respond appropriately
That's ok, I'm more interested to see what others generally do once they max out all the tax advantaged options, as it might give me some ideas of my own.

BlueRidgeHorizon
Posts: 9
Joined: Tue May 15, 2018 7:31 am

Re: Where to invest after maxing out retirement?

Post by BlueRidgeHorizon » Tue May 15, 2018 8:19 am

Im sorry but bonds do not make sense to me, you are not even keeping up with inflation. If you have money to spend after maxing out retirement then why not look into teh stock market. Also, do you have a brokerage option within your retirement accounts? Are you savy with the stock market. It may be wise to begin learning a few stock strategies which could improve both your retirement and none retirement investments.

In my opinion you can take on a bit more risk with money outside of a maxed retirement fund. Besides stocks, you can invest into real estate, dare I suggest cryptocurrency, and finally something new to my eye which is startup investing. Not the kind that sends you a free tshirt for giving them $5 but there are sites like local stake and a few others I cannot think of atm, but you essentially loan money to a startup with an applied interest rate. Some are high risk loans and others are a bit more stable. As with stocks you can loose your butt, however if you are willing to become passionate about understanding the market it will not take long to successfully establish yourself, making the time sacrifice always pays off.

Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: Where to invest after maxing out retirement?

Post by Investing4Truth » Tue May 15, 2018 9:40 am

Yes, I have the option of creating a brokerage account as well to coincide with my retirement portfolios, I figured I could do the same approach, invest in three-four ETFs that basically cover the entire market. I have my 401K set up the same way.

Another option could be to start my own online business, but I'd really have to sit down and count the costs. I've looked into cryptocurrency as well but it seems too speculative to me. I'd need to learn more there before seriously considering it. :happy

User avatar
Clever_Username
Posts: 1040
Joined: Sun Jul 15, 2012 12:24 am
Location: Southern California

Re: Where to invest after maxing out retirement?

Post by Clever_Username » Tue May 15, 2018 10:03 am

BlueRidgeHorizon wrote:
Tue May 15, 2018 8:19 am
Im sorry but bonds do not make sense to me, you are not even keeping up with inflation.
Is this what you intended to write? Even Vanguard's basic money market account has more or less kept up with inflation over its lifetime.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

Darth Xanadu
Posts: 381
Joined: Sat Jan 27, 2018 1:47 am
Location: Middle Earth

Re: Where to invest after maxing out retirement?

Post by Darth Xanadu » Tue May 15, 2018 10:04 am

I agree that after you've established your emergency fund at a level you are comfortable with, it makes sense to invest the rest in a combination of taxable brokerage account (what you invest in is up to you, but it generally makes sense to view your asset allocation across all holdings), and I-Bonds/CD Ladders (when your balances here are high enough, this can even serve as a 2nd tier emergency fund).
"A courageous teacher, failure is."

rkhusky
Posts: 5263
Joined: Thu Aug 18, 2011 8:09 pm

Re: Where to invest after maxing out retirement?

Post by rkhusky » Tue May 15, 2018 10:05 am

Investing4Truth wrote:
Sun May 13, 2018 3:24 pm
Thanks, interesting that taxable came before nondeductible IRAs, but I can see why that would be the case.
If you are maxing a Roth IRA, you can't contribute to a nondeductible Traditional IRA anyway. The yearly cap applies to the combination of all IRA's.

And, there are some circumstances where non-deductible Traditional IRA is better than taxable.

User avatar
jriding
Posts: 115
Joined: Tue Jan 15, 2013 2:06 pm
Location: CO

Re: Where to invest after maxing out retirement?

Post by jriding » Tue May 15, 2018 10:11 am

If you're eligible for a Health Savings Account (HSA) you should be maxing annual contributions and treating it as another retirement account.

BlueRidgeHorizon
Posts: 9
Joined: Tue May 15, 2018 7:31 am

Re: Where to invest after maxing out retirement?

Post by BlueRidgeHorizon » Wed May 16, 2018 9:24 am

Clever_Username wrote:
Tue May 15, 2018 10:03 am
BlueRidgeHorizon wrote:
Tue May 15, 2018 8:19 am
Im sorry but bonds do not make sense to me, you are not even keeping up with inflation.
Is this what you intended to write? Even Vanguard's basic money market account has more or less kept up with inflation over its lifetime.
Sorry I do not mean to come off like a know it all but from what I have researched the bond market typically offers a 4-7% return. If inflation rate is 2.5-3% over the course of the year and you are taxed at the federal level when the bond matures, are you really beating inflation? I guess it would depend on ones income bracket, please correct me if I am overlooking something here. Thanks

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Where to invest after maxing out retirement?

Post by dbr » Wed May 16, 2018 9:30 am

Sure, lots of people have taxable investment accounts. Some people have more assets in taxable accounts than in tax protected accounts.

Assuming the lot is for long term holding you treat the whole thing as one whole for asset allocation purposes and locate various assets for best after tax performance.

That doesn't mean people can't look at various degrees of tax shelter, but holding taxable investments is fine. One sometimes overlooked opportunity for additional after tax tax deferred investing is building a holding in I bonds.

BlueRidgeHorizon
Posts: 9
Joined: Tue May 15, 2018 7:31 am

Re: Where to invest after maxing out retirement?

Post by BlueRidgeHorizon » Wed May 16, 2018 9:31 am

Investing4Truth wrote:
Tue May 15, 2018 9:40 am
Yes, I have the option of creating a brokerage account as well to coincide with my retirement portfolios, I figured I could do the same approach, invest in three-four ETFs that basically cover the entire market. I have my 401K set up the same way.

Another option could be to start my own online business, but I'd really have to sit down and count the costs. I've looked into cryptocurrency as well but it seems too speculative to me. I'd need to learn more there before seriously considering it. :happy
It sounds like you have alot of exciting stuff to learn about, the brokerage option is particularly interesting. I converted my roth 401k vanguard portfolio to a brokerage this year and I am allowed to convert up to 95% of my portfolio into self managed stocks. There are some limitations but I wanted to focus on particular stocks which show obvious signs of growth, for example it was no mystery why the defense sector exploded last year with a nearly 1 trillon $ defense budget, these stocks would be great for a short term portfolio boost. Its alot of fun. As for the bitcoin thing, Im with you there, its kind of confusing and seems sort of risky, but something I have been wanting to learn more about for sure.

User avatar
Clever_Username
Posts: 1040
Joined: Sun Jul 15, 2012 12:24 am
Location: Southern California

Re: Where to invest after maxing out retirement?

Post by Clever_Username » Wed May 16, 2018 9:44 am

BlueRidgeHorizon wrote:
Wed May 16, 2018 9:24 am
Clever_Username wrote:
Tue May 15, 2018 10:03 am
BlueRidgeHorizon wrote:
Tue May 15, 2018 8:19 am
Im sorry but bonds do not make sense to me, you are not even keeping up with inflation.
Is this what you intended to write? Even Vanguard's basic money market account has more or less kept up with inflation over its lifetime.
Sorry I do not mean to come off like a know it all but from what I have researched the bond market typically offers a 4-7% return. If inflation rate is 2.5-3% over the course of the year and you are taxed at the federal level when the bond matures, are you really beating inflation? I guess it would depend on ones income bracket, please correct me if I am overlooking something here. Thanks
That depends on where you hold your bonds, what type of bonds you're holding, and whether you're looking at them in isolation. There are benefits to stocks and bonds together that neither held separately provide.
"What was true then is true now. Have a plan. Stick to it." -- XXXX, _Layer Cake_

dbr
Posts: 27207
Joined: Sun Mar 04, 2007 9:50 am

Re: Where to invest after maxing out retirement?

Post by dbr » Wed May 16, 2018 9:52 am

BlueRidgeHorizon wrote:
Wed May 16, 2018 9:24 am
Clever_Username wrote:
Tue May 15, 2018 10:03 am
BlueRidgeHorizon wrote:
Tue May 15, 2018 8:19 am
Im sorry but bonds do not make sense to me, you are not even keeping up with inflation.
Is this what you intended to write? Even Vanguard's basic money market account has more or less kept up with inflation over its lifetime.
Sorry I do not mean to come off like a know it all but from what I have researched the bond market typically offers a 4-7% return. If inflation rate is 2.5-3% over the course of the year and you are taxed at the federal level when the bond matures, are you really beating inflation? I guess it would depend on ones income bracket, please correct me if I am overlooking something here. Thanks
Nobody claims that investments in general can outrun taxes. And, of course, the outcome depends on one's income. If your net result is a loss after taxes invest in something that generates less taxable income including tax exempt bonds.

User avatar
kenyan
Posts: 2923
Joined: Thu Jan 13, 2011 12:16 am

Re: Where to invest after maxing out retirement?

Post by kenyan » Wed May 16, 2018 10:32 am

My priority:
1. Her SIMPLE IRA match
2. His 403(b) to max
3. Her Roth IRA (no longer possible due to income increase)
4. His Roth IRA (now backdoor)
5. Her SIMPLE IRA to max
6. 529 accounts
7. I bonds
8. Taxable

Also prepaying mortgage principal. The hierarchy becomes a bit muddled after (5), since we have been devoted to contributing *something* monthly to both the mortgage and 529 accounts, even when we weren't able to complete max out all of the tax-advantaged retirement accounts. Mortgage was previously an ARM, which encouraged us to prepay more before potential rate hikes, but has since been refinanced to low-rate fixed. As a result, it's no longer as much of a priority.

Benefits are changing at work next year, and an HSA will be interjected into that list.
Retirement investing is a marathon.

User avatar
ruralavalon
Posts: 13500
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Where to invest after maxing out retirement?

Post by ruralavalon » Wed May 16, 2018 10:53 am

Investing4Truth wrote:
Sun May 13, 2018 3:08 pm
I'm single, debt-free, currently rent, own a car outright, with two retirement accounts, one 401K and a Roth IRA. I have about $50,000 in savings now, and $6500 in gold.

Would it be a good Boglehead thing to do to convert half my savings and my gold into a taxable investment portfolio that emulates my retirement portfolios? I was calculating the possibilities and I noticed with a positive 10-20 year investment outlook, it could give me the option to retire early to cover those years before I can withdraw from my retirement accounts, or buy a house cash, even though I'd still have to pay long term capital gains.

Do others generally go to taxable accounts once they max out their portfolios elsewhere? Just wondering if there are other options I could consider, since there really isn't much I can do with 30K+ other than to simply reinvest it again.
Investing4Truth wrote:
Sun May 13, 2018 3:22 pm
Right everything is maxed out, icluding the 401K at $18,500. My current retirement pace is pretty good, so now I'm considering investing with the goal of early retirement, but taxable accounts seems to be the only possibility there. :happy
Open a taxable account at a low cost provider like Vanguard. Invest in very tax-efficient stock index funds. Examples include Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) ER 0.04% and Vanguard Total International Stock Index Fund Admiral Shares (VTIAX) ER 0.11%. Wiki article "Tax-efficient fund placement".

In put taxable account we use Vanguard Total International Stock Index Fund Admiral Shares (VTIAX).

What is your tax bracket, both federal and state? What state do you pay income tax in? A tax-exempt bond fund might (or might not) be a good idea as well, depending on your tax bracket and state.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

Investing4Truth
Posts: 14
Joined: Sat Jan 24, 2015 12:11 pm

Re: Where to invest after maxing out retirement?

Post by Investing4Truth » Wed May 16, 2018 4:28 pm

My tax bracket is 15% with state tax being a flat 4% or so (Colorado).

Another thing I was considering was a home purchase with a $600 mortgage, which can very roughly cut my living cost by 50%, and I'd use the savings difference to contribute to a portfolio, but I don't know if I'd be coming out ahead there. Housing prices in my area are very high, so I really can't justify a home purchase of more than 150K, leaving me with the option of ether purchasing a house that will need a lot of work or a condo that are traditionally harder to sell. I feel like it might be better off to shove the 30K into a portfolio and as long as I don't need it for a year, I could always liquidate it if I decide I need to use it for a down payment after all or for other things. Ideally I would just build the portfolio and forget about it for 10 years or so.

Post Reply