8-month windfall check-in

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Topic Author
ticktocker
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Joined: Thu Feb 15, 2018 12:33 pm

8-month windfall check-in

Post by ticktocker » Mon Aug 27, 2018 10:39 am

Hello all,

I originally posted back in February a few months after my father passed away. It's taken some time to get everything in order but I wanted to check in and have you folks take a look at my portfolio to make sure everything looks good. Here is how my situation looks today:

Me: 28 years old, unmarried/living with SO, no debt, grossing around $110k/year, live in NYC
Checking/savings: ~$10,000
Emergency fund: ~$25,000 in a Marcus savings account earning 1.85% APY
Cryptocurrency: I own about $50,000 of cryptocurrency. I sold my principle a long time ago and took some profit off the table.
Other: A few accounts are still going through the probate/estate settlement process. I will receive about $185,000 in cash over the next few months.

Taxable Account at Vanguard
  • ~$25,000 cash
  • ~$750,000 VFIFX Vanguard Target Retirement 2050 Fund
  • ~$5,500 VOE Vanguard Mid-Cap Value ETF
  • ~$20,000 VTI Vanguard Total Stock Market ETF
  • ~$35,000 SCHF Schwab International Equity ETF
Inherited IRA at Vanguard
  • ~$115,000 VFIFX Vanguard Target Retirement 2050 Fund
Roth IRA at Vanguard
  • ~$35,000 VFIFX Vanguard Target Retirement 2050 Fund
Real Estate
  • ~$225,000 equity in an investment property my dad owned. House is on the market and we're hoping it sells soon.
  • ~$25,000 equity in a property another family member lives in. I will take this as a cash payment in the next few months.
Questions
  • Does this seem like a healthy portfolio? Anything I should change?
  • I plan on staying in NYC for the next 5-10 years at least, would it make sense for me to consider buying an apartment instead of continuing to rent? I currently pay about $1800/month in rent.
  • I am considering leaving my job and starting a business... how should I think about my portfolio if I make this move? What steps should I take?
Thank you in advance for your help! I truly appreciate it.
Last edited by ticktocker on Mon Aug 27, 2018 10:49 am, edited 1 time in total.

PFInterest
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Re: 8-month windfall check-in

Post by PFInterest » Mon Aug 27, 2018 10:46 am

i would not have put 3/4 MM in a TDF in taxable.

pennylane
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Re: 8-month windfall check-in

Post by pennylane » Mon Aug 27, 2018 10:54 am

I would take the proceeds from the real estate sale and reinvest in a rental property or a property for you to live in. I would not be renting.

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car733
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Location: Chicago, IL

Re: 8-month windfall check-in

Post by car733 » Mon Aug 27, 2018 10:57 am

PFInterest wrote:
Mon Aug 27, 2018 10:46 am
i would not have put 3/4 MM in a TDF in taxable.
why?

aristotelian
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Re: 8-month windfall check-in

Post by aristotelian » Mon Aug 27, 2018 11:12 am

car733 wrote:
Mon Aug 27, 2018 10:57 am
PFInterest wrote:
Mon Aug 27, 2018 10:46 am
i would not have put 3/4 MM in a TDF in taxable.
why?
As you age, it will be spitting out dividends that are taxable at your marginal rate. However, to make a change you will need to cash out and realize capital gains.

Consider investing the Inherited IRA in 100% Vanguard Total Bond Index while putting the funds currently in the Target Date fund in VTI. If you need to increase your bond allocation using taxable dollars, use a NY Muni Bond fund such as VNYTX in your taxable account.

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djpeteski
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Re: 8-month windfall check-in

Post by djpeteski » Mon Aug 27, 2018 11:41 am

If you have a business idea, that is great, but it probably should not be an all or nothing thing.

I would do my best to boot strap my business, get some customers, and develop some kind of cash flow. The temptation in this phase is to invest or borrow a bunch of capital, but the goal is to do it on as little as possible.

Once it becomes profitable, and you can start taking some income out of the business, I would then consider leaving your full time job. Only if, by working more hours in the business, you can generate enough income to live off of.

Keep in mind that your dad set you up great, but it could all be wiped out quickly by some bad business deals. A great book on this subject is The Lean Startup.

wrendan
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Re: 8-month windfall check-in

Post by wrendan » Mon Aug 27, 2018 2:00 pm

You might want to shift the TDF to the corresponding admiral shares of of US total stock / bond and INTL total stock funds to cut down the expense ratio.

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tyrion
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Re: 8-month windfall check-in

Post by tyrion » Mon Aug 27, 2018 2:15 pm

aristotelian wrote:
Mon Aug 27, 2018 11:12 am
car733 wrote:
Mon Aug 27, 2018 10:57 am
PFInterest wrote:
Mon Aug 27, 2018 10:46 am
i would not have put 3/4 MM in a TDF in taxable.
why?
As you age, it will be spitting out dividends that are taxable at your marginal rate. However, to make a change you will need to cash out and realize capital gains.

Consider investing the Inherited IRA in 100% Vanguard Total Bond Index while putting the funds currently in the Target Date fund in VTI. If you need to increase your bond allocation using taxable dollars, use a NY Muni Bond fund such as VNYTX in your taxable account.
Strongly agree with this. That Target Retirement fund is going to eventually kick off some hefty dividends and capital gains, and you will not be able to do anything about it other that sell it (triggering more capital gains). A combination of total stock market (taxable), total international stock market (taxable) , and bonds in the inherited IRA and your own 401k (although you didn't mention one) would be preferable. You can recreate the rough Target Retirement allocation if you want.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Mon Aug 27, 2018 2:27 pm

tyrion wrote:
Mon Aug 27, 2018 2:15 pm
aristotelian wrote:
Mon Aug 27, 2018 11:12 am
car733 wrote:
Mon Aug 27, 2018 10:57 am
PFInterest wrote:
Mon Aug 27, 2018 10:46 am
i would not have put 3/4 MM in a TDF in taxable.
why?
As you age, it will be spitting out dividends that are taxable at your marginal rate. However, to make a change you will need to cash out and realize capital gains.

Consider investing the Inherited IRA in 100% Vanguard Total Bond Index while putting the funds currently in the Target Date fund in VTI. If you need to increase your bond allocation using taxable dollars, use a NY Muni Bond fund such as VNYTX in your taxable account.
Strongly agree with this. That Target Retirement fund is going to eventually kick off some hefty dividends and capital gains, and you will not be able to do anything about it other that sell it (triggering more capital gains). A combination of total stock market (taxable), total international stock market (taxable) , and bonds in the inherited IRA and your own 401k (although you didn't mention one) would be preferable. You can recreate the rough Target Retirement allocation if you want.
Okay, will do. Should I sell the TDF now or wait until the one-year mark (approximately April 2019) to avoid short-term capital gains tax? Thanks again.

aristotelian
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Re: 8-month windfall check-in

Post by aristotelian » Mon Aug 27, 2018 2:37 pm

ticktocker wrote:
Mon Aug 27, 2018 2:27 pm
Okay, will do. Should I sell the TDF now or wait until the one-year mark (approximately April 2019) to avoid short-term capital gains tax? Thanks again.
How much would be the gain that you would realize if you do it now?

What is your tax bracket?

If you aren't sure which would be optimal, you could sell some now and some in 2019.

Also, be careful the gains don't do put you over the limit for your Roth IRA.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Mon Aug 27, 2018 2:50 pm

aristotelian wrote:
Mon Aug 27, 2018 2:37 pm
ticktocker wrote:
Mon Aug 27, 2018 2:27 pm
Okay, will do. Should I sell the TDF now or wait until the one-year mark (approximately April 2019) to avoid short-term capital gains tax? Thanks again.
How much would be the gain that you would realize if you do it now?

What is your tax bracket?

If you aren't sure which would be optimal, you could sell some now and some in 2019.

Also, be careful the gains don't do put you over the limit for your Roth IRA.
The short-term unrealized gains in the taxable account on the TDF are $28,973.42. I believe I'm in the 24% tax bracket.

nolesrule
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Re: 8-month windfall check-in

Post by nolesrule » Mon Aug 27, 2018 3:02 pm

aristotelian wrote:
Mon Aug 27, 2018 2:37 pm
ticktocker wrote:
Mon Aug 27, 2018 2:27 pm
Okay, will do. Should I sell the TDF now or wait until the one-year mark (approximately April 2019) to avoid short-term capital gains tax? Thanks again.
How much would be the gain that you would realize if you do it now?

What is your tax bracket?

If you aren't sure which would be optimal, you could sell some now and some in 2019.

Also, be careful the gains don't do put you over the limit for your Roth IRA.
Probably should also keep an eye on the effects of the regular taxable distributions and the Inherited IRA RMD on the ability to make Roth IRA contributions at that salary level.

aristotelian
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Re: 8-month windfall check-in

Post by aristotelian » Mon Aug 27, 2018 3:22 pm

ticktocker wrote:
Mon Aug 27, 2018 2:50 pm
The short-term unrealized gains in the taxable account on the TDF are $28,973.42. I believe I'm in the 24% tax bracket.
Hard to say. You should do some calculations. Whether you come out ahead to some extent depends on how the market does between now and next year. Since it is almost all stock right now, I would probably be inclined to let it ride, but keep in mind that the longer you let it ride, the more unrealized gains you will get. Also you will need to keep a close eye on what some unrealized gains might do to your Roth eligibility and any other indirect consequences of more taxable income.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Mon Oct 15, 2018 1:40 pm

aristotelian wrote:
Mon Aug 27, 2018 3:22 pm
ticktocker wrote:
Mon Aug 27, 2018 2:50 pm
The short-term unrealized gains in the taxable account on the TDF are $28,973.42. I believe I'm in the 24% tax bracket.
Hard to say. You should do some calculations. Whether you come out ahead to some extent depends on how the market does between now and next year. Since it is almost all stock right now, I would probably be inclined to let it ride, but keep in mind that the longer you let it ride, the more unrealized gains you will get. Also you will need to keep a close eye on what some unrealized gains might do to your Roth eligibility and any other indirect consequences of more taxable income.
Hey - just following up on this. With the downswing in the market, I'm now at a loss of around $5500 on the 20,000 VFIFX shares. Would now be a good time to sell and reallocate? Thanks.

aristotelian
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Re: 8-month windfall check-in

Post by aristotelian » Mon Oct 15, 2018 1:57 pm

ticktocker wrote:
Mon Oct 15, 2018 1:40 pm
Hey - just following up on this. With the downswing in the market, I'm now at a loss of around $5500 on the 20,000 VFIFX shares. Would now be a good time to sell and reallocate? Thanks.
Absolutely, there is never a bad time to realize losses.

sco
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Re: 8-month windfall check-in

Post by sco » Tue Oct 16, 2018 12:16 am

I would ditch the cryptocurrency, I didn't do the math but I expect it is 5% or below your total.
Keep it, if this is your "gambling money" and you are OK losing it all. Otherwise there are better uses for it.

I would also make sure that all tax advantage accounts are maxed, this year and every other year. Even if that means drawing down the taxable account to live.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Tue Oct 16, 2018 1:57 pm

aristotelian wrote:
Mon Oct 15, 2018 1:57 pm
Absolutely, there is never a bad time to realize losses.
Great, so just to be sure I'm getting this right:

I should sell all of the VFIFX in my taxable account and move the proceeds into a combination VTSAX and VTIAX.

Then, I should sell the VFIFX in the IRAs and move the proceeds into VBTLX.

If I need more bond exposure to meet my target allocation, I'll buy VNYTX in my taxable account.

Sound correct? Also, should I be in ETFs instead?

Thanks again!

aristotelian
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Re: 8-month windfall check-in

Post by aristotelian » Tue Oct 16, 2018 2:15 pm

ticktocker wrote:
Tue Oct 16, 2018 1:57 pm
aristotelian wrote:
Mon Oct 15, 2018 1:57 pm
Absolutely, there is never a bad time to realize losses.
Great, so just to be sure I'm getting this right:

I should sell all of the VFIFX in my taxable account and move the proceeds into a combination VTSAX and VTIAX.

Then, I should sell the VFIFX in the IRAs and move the proceeds into VBTLX.

If I need more bond exposure to meet my target allocation, I'll buy VNYTX in my taxable account.

Sound correct? Also, should I be in ETFs instead?

Thanks again!
Sounds good to me. ETF's vs mutual funds is purely personal preference. I believe VNYTX is only offered as a mutual fund.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Mon Oct 29, 2018 11:37 am

Okay, I've reallocated my investments as follows:

Taxable Account at Vanguard
  • ~$4,500 VBR Vanguard Small Cap Value ETF
  • ~$575,000 VTI Vanguard Total Stock Index
  • ~$230,000 VXUS Vanguard Total International Stock Index ETF
  • ~$17,000 VTV Vanguard Value ETF
  • ~$5,500 VOE Vanguard Mid-Cap Value ETF
  • ~$35,000 SCHF Schwab International Equity ETF
Taxable Account #2 at Vanguard (House Down Payment Fund)
  • ~$100,000 in VYFXX Vanguard New York Municipal Money Market Fund
Inherited IRA at Vanguard
  • ~$70,000 VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
  • ~$40,000 VTIAX Vanguard Total International Stock Index Fund Admiral Shares
Roth IRA at Vanguard
  • ~$33,000 VTABX Vanguard Total International Bond Index Fund Admiral Shares
Real Estate
  • ~$225,000 equity in an investment property my dad owned. House is on the market and we're hoping it sells soon.
  • ~$25,000 equity in a property another family member lives in. I will take this as a cash payment in the next few months.
Checking/savings: ~$10,000
Emergency fund: ~$25,000 in a high-yield savings account
Cryptocurrency: I own about $50,000 of cryptocurrency. I sold my principle a long time ago and took some profit off the table. I will probably sell this off soon.

Questions
  • Does this seem like a healthy portfolio? Anything I should change?
  • Is VYFXX a good place to hold money for a house fund? Would a high interest savings account be better? When my other real estate holdings sell, I plan to add those funds to this account as well.
Thanks again for your help.
Last edited by ticktocker on Mon Oct 29, 2018 11:48 am, edited 1 time in total.

Living Free
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Re: 8-month windfall check-in

Post by Living Free » Mon Oct 29, 2018 8:31 pm

ticktocker wrote:
Mon Oct 29, 2018 11:37 am

Inherited IRA at Vanguard
  • ~$70,000 VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
  • ~$40,000 VTIAX Vanguard Total International Stock Index Fund Admiral Shares
Roth IRA at Vanguard
  • ~$33,000 VTABX Vanguard Total International Bond Index Fund Admiral Shares
I'd probably move the bonds from the Roth IRA to the inherited IRA. Hold mostly stock index funds in the roth IRA.

PFInterest
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Re: 8-month windfall check-in

Post by PFInterest » Tue Oct 30, 2018 7:01 am

yes, no fixed income in rIRA.

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welderwannabe
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Re: 8-month windfall check-in

Post by welderwannabe » Tue Oct 30, 2018 7:28 am

ticktocker wrote:
Mon Aug 27, 2018 10:39 am
Cryptocurrency: I own about $50,000 of cryptocurrency. I sold my principle a long time ago and took some profit off the table.
Hoping you sold your principal and not your principle. :twisted:
I am not an investment professional, but I did stay at a Holiday Inn Express last night.

sco
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Re: 8-month windfall check-in

Post by sco » Wed Oct 31, 2018 12:22 pm

Living Free wrote:
Mon Oct 29, 2018 8:31 pm
ticktocker wrote:
Mon Oct 29, 2018 11:37 am

Inherited IRA at Vanguard
  • ~$70,000 VBTLX Vanguard Total Bond Market Index Fund Admiral Shares
  • ~$40,000 VTIAX Vanguard Total International Stock Index Fund Admiral Shares
Roth IRA at Vanguard
  • ~$33,000 VTABX Vanguard Total International Bond Index Fund Admiral Shares
I'd probably move the bonds from the Roth IRA to the inherited IRA. Hold mostly stock index funds in the roth IRA.
I'd do the same.

Also not sure why you have so many different funds in Taxable, but I haven't gone back and re-read the thread either. If you can TLH some those, I would and just focus on one Total Market Index in taxable.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Tue Nov 20, 2018 9:30 am

sco wrote:
Wed Oct 31, 2018 12:22 pm
Also not sure why you have so many different funds in Taxable, but I haven't gone back and re-read the thread either. If you can TLH some those, I would and just focus on one Total Market Index in taxable.
It's because I was in Betterment before and they bought those funds. Didn't sell when I transferred to Vanguard because I didn't want to realize gains.

sco
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Re: 8-month windfall check-in

Post by sco » Tue Nov 20, 2018 1:09 pm

ticktocker wrote:
Tue Nov 20, 2018 9:30 am
sco wrote:
Wed Oct 31, 2018 12:22 pm
Also not sure why you have so many different funds in Taxable, but I haven't gone back and re-read the thread either. If you can TLH some those, I would and just focus on one Total Market Index in taxable.
It's because I was in Betterment before and they bought those funds. Didn't sell when I transferred to Vanguard because I didn't want to realize gains.
Makes sense, maybe you'll have the opportunity to slowly sell them off or take a loss :)

MotoTrojan
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Re: 8-month windfall check-in

Post by MotoTrojan » Tue Nov 20, 2018 1:27 pm

PFInterest wrote:
Mon Aug 27, 2018 10:46 am
i would not have put 3/4 MM in a TDF in taxable.
Or midcap value.

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smarcus3
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Re: 8-month windfall check-in

Post by smarcus3 » Tue Nov 20, 2018 7:27 pm

Sorry to hear about your father. My mother passed away when I was 24. Super sucked. I'd say it gets easier but there will always be hard days. Some harder than others.

------

How much would an apartment cost?

I currently rent at $1595 when I could buy at $250-300K. At that breakdown I'll keep renting forever, even though I could purchase today if I wanted to.

I'm guessing that you're better off renting.
This is my personal opinion. I'm an engineer not a financial advisor.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Fri Jan 04, 2019 1:31 pm

sco wrote:
Tue Nov 20, 2018 1:09 pm
Makes sense, maybe you'll have the opportunity to slowly sell them off or take a loss :)
Just sold off the VBR and VOE since they had minimal long-term gains. I put the proceeds into VTI.

I still have the SCHF and VTV. I'm looking at long-term gains of ~$3,600 for SCHF and ~$3,900 for VTV. Is it worth selling these or should I just hang onto them?

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smarcus3
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Re: 8-month windfall check-in

Post by smarcus3 » Fri Jan 04, 2019 1:37 pm

Will you have losses to offset the gains? As these both have low fees I would probably hang onto them instead of paying tax today. Obviously if you're at a low tax state currently and could move to a higher tax state is could make sense to sell. As a whole pay taxes as late as possible.
This is my personal opinion. I'm an engineer not a financial advisor.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Fri Jan 04, 2019 1:58 pm

smarcus3 wrote:
Fri Jan 04, 2019 1:37 pm
Will you have losses to offset the gains? As these both have low fees I would probably hang onto them instead of paying tax today. Obviously if you're at a low tax state currently and could move to a higher tax state is could make sense to sell. As a whole pay taxes as late as possible.
Nope, no losses to offset the gains. I'll hang onto them for now since I'm in a high-tax state. Thanks!

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smarcus3
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Re: 8-month windfall check-in

Post by smarcus3 » Fri Jan 04, 2019 1:59 pm

Just double check what your state's long term capital gains tax are is to be sure :sharebeer
This is my personal opinion. I'm an engineer not a financial advisor.

needadvise1
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Re: 8-month windfall check-in

Post by needadvise1 » Fri Jan 04, 2019 11:56 pm

I applaud you on your savings to date. I'm not talking about the inherited funds, but living on $110k in NYC and having 500k saved up is pretty damn good.

I think you'll manage the rest of it fine.

Have you considered keeping the rental? I know you probably don't want it, but it might be a good diversification in your portfolio if it makes sense.

Ohh, and at your age / net worth, get a prenup and make sure these are in separate accounts from post-marriage contribution accounts.

blackcat allie
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Re: 8-month windfall check-in

Post by blackcat allie » Sat Jan 05, 2019 11:08 am

sco wrote:
Wed Oct 31, 2018 12:22 pm
Living Free wrote:
Mon Oct 29, 2018 8:31 pm

I'd probably move the bonds from the Roth IRA to the inherited IRA. Hold mostly stock index funds in the roth IRA.
I'd do the same.
________________

May I ask rationale please, on bonds in inherited Roth, and stock index in regular Roth? (Is it related to taxation on distributions?).
...Thanks
“Nothing in life is as important as you think it is while you are thinking about it.” - Daniel Kahneman

Living Free
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Re: 8-month windfall check-in

Post by Living Free » Tue Jan 08, 2019 7:59 am

blackcat allie wrote:
Sat Jan 05, 2019 11:08 am
sco wrote:
Wed Oct 31, 2018 12:22 pm
Living Free wrote:
Mon Oct 29, 2018 8:31 pm

I'd probably move the bonds from the Roth IRA to the inherited IRA. Hold mostly stock index funds in the roth IRA.
I'd do the same.
________________
May I ask rationale please, on bonds in inherited Roth, and stock index in regular Roth? (Is it related to taxation on distributions?).
...Thanks
The inherited IRA is a traditional IRA from what I understood.

SRenaeP
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Re: 8-month windfall check-in

Post by SRenaeP » Tue Jan 08, 2019 9:28 am

ticktocker wrote:
Fri Jan 04, 2019 1:31 pm
sco wrote:
Tue Nov 20, 2018 1:09 pm
Makes sense, maybe you'll have the opportunity to slowly sell them off or take a loss :)
Just sold off the VBR and VOE since they had minimal long-term gains. I put the proceeds into VTI.

I still have the SCHF and VTV. I'm looking at long-term gains of ~$3,600 for SCHF and ~$3,900 for VTV. Is it worth selling these or should I just hang onto them?
If you usually make large charitable contributions, donate the appreciated shares instead of donating cash. This will allow you to forgo any capital gains tax.

Topic Author
ticktocker
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Re: 8-month windfall check-in

Post by ticktocker » Tue Jan 08, 2019 1:31 pm

Living Free wrote:
Tue Jan 08, 2019 7:59 am
blackcat allie wrote:
Sat Jan 05, 2019 11:08 am
sco wrote:
Wed Oct 31, 2018 12:22 pm
Living Free wrote:
Mon Oct 29, 2018 8:31 pm

I'd probably move the bonds from the Roth IRA to the inherited IRA. Hold mostly stock index funds in the roth IRA.
I'd do the same.
________________
May I ask rationale please, on bonds in inherited Roth, and stock index in regular Roth? (Is it related to taxation on distributions?).
...Thanks
The inherited IRA is a traditional IRA from what I understood.
Correct.

sco
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Re: 8-month windfall check-in

Post by sco » Wed Jan 09, 2019 8:49 pm

The ROth will never be taxed again. (put high gain items there like stocks)

The Traditional IRA/401k/403B will be taxed, put the traditionally lower growth items there. Bonds, Cash, Beanie Babies?

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