Follow up on balancing investments

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jpc763
Posts: 11
Joined: Tue Feb 05, 2019 4:11 pm

Follow up on balancing investments

Post by jpc763 » Thu Apr 25, 2019 3:03 pm

This is a follow up. I have received great advice regarding my Mother In Law. Her portfolio consists of an IRA (20%) and a Trust (80%). She is currently invested in 6 different funds and I have gotten her permission to rebalance into 3 funds. Based on the info I have gathered here, I am targeting the following funds and percentages

Bond Fund (Vanguard Total Bond Market Index Fund – VBTLX) – This will contain 65% of assets
Stock Fund (Vanguard Total Stock Market Index Fund – VTSAX) – This will contain 30% of assets
Money Market Fund (Vanguard Prime Money Market Fund – VMMXX) – This will contain 5% of assets

So my question is about where to purchase each of these.

I can either
a) invest the IRA as all Bond and then mix the Trust up. Or
b) invest the IRA in all Stock and then mix the Trust up.

I am not sure what is the better option with regard to taxes.

Note: She will be withdrawling monthly.

carmonkie
Posts: 154
Joined: Fri Jun 29, 2018 4:31 pm

Re: Follow up on balancing investments

Post by carmonkie » Thu Apr 25, 2019 4:28 pm

How old is your Mother in Law?

With those percentages for all practical purposes you'd be 30% Equities/70% bonds. Was that her desired allocation or how did you come up with that allocation? Seems top heavy on bonds. I have noticed some retirees here are 50/50 and maybe 40/60

I supposed the trust is in a taxable account. Putting bonds there is going to throw a lot of dividends taxed at ordinary income. Looks like option A might be better. Fill-up the IRA with bonds and then the trust with the remaining percentages maybe a tax-exempt bond.

Topic Author
jpc763
Posts: 11
Joined: Tue Feb 05, 2019 4:11 pm

Re: Follow up on balancing investments

Post by jpc763 » Thu Apr 25, 2019 5:36 pm

carmonkie wrote:
Thu Apr 25, 2019 4:28 pm
How old is your Mother in Law?

With those percentages for all practical purposes you'd be 30% Equities/70% bonds. Was that her desired allocation or how did you come up with that allocation? Seems top heavy on bonds. I have noticed some retirees here are 50/50 and maybe 40/60

I supposed the trust is in a taxable account. Putting bonds there is going to throw a lot of dividends taxed at ordinary income. Looks like option A might be better. Fill-up the IRA with bonds and then the trust with the remaining percentages maybe a tax-exempt bond.
Sorry, she is 81 years old

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