3 Fund Portfolio outside of work retirement plan?

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Topic Author
rolandrt
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Joined: Mon May 11, 2020 10:13 pm

3 Fund Portfolio outside of work retirement plan?

Post by rolandrt » Fri May 22, 2020 1:47 pm

If I'm set at work with TSP L2040 and contributing max, would it be redundant for a three fund portfolio outside of TSP, at Merrill Edge: VOO, VXUS, BND?

bloom2708
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Location: Fargo, ND

Re: 3 Fund Portfolio outside of work retirement plan?

Post by bloom2708 » Fri May 22, 2020 1:51 pm

How about your Roth IRA next?

You likely do not need all 3 components everywhere. Your Target fund likely has 4 components (add International bonds).

The key is do you have more to save? If so, Roth IRA first, then other options like HSA, paying down debt, then taxable.
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead

whereskyle
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Joined: Wed Jan 29, 2020 10:29 am

Re: 3 Fund Portfolio outside of work retirement plan?

Post by whereskyle » Fri May 22, 2020 2:03 pm

rolandrt wrote:
Fri May 22, 2020 1:47 pm
If I'm set at work with TSP L2040 and contributing max, would it be redundant for a three fund portfolio outside of TSP, at Merrill Edge: VOO, VXUS, BND?
Not redundant, just you devoting more money to the portfolio of your choice. You should review the wiki on tax-efficient placement (also called tax-efficient location) before you decide which tax-advantaged accounts to use, and, if you will also contribute to a taxable account, what you should keep in your tax-advantaged account and what you should keep in your taxable account.
"I am better off than he is – for he knows nothing, and thinks that he knows. I neither know nor think that I know." - Socrates. "Nobody knows nothing." - Jack Bogle

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CyclingDuo
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Re: 3 Fund Portfolio outside of work retirement plan?

Post by CyclingDuo » Fri May 22, 2020 5:11 pm

rolandrt wrote:
Fri May 22, 2020 1:47 pm
If I'm set at work with TSP L2040 and contributing max, would it be redundant for a three fund portfolio outside of TSP, at Merrill Edge: VOO, VXUS, BND?
Not at all.

As mentioned above, beyond your retirement tax advantaged account, there is the Roth IRA and the taxable account to invest in which comes in really handy if there are things you want along the way in life before retirement comes along. You can coordinate your overall portfolio to get your AA balance, but using a Roth IRA and a taxable account in addition to your TSP would not be redundant at all for the Three Fund Portfolio strategy. You would want to consider your taxes and what type of bonds go in taxable. Right now with interest rates so low, it's not a big deal to have BND in a taxable account. However, that could change in the future. There are other options for bonds in a taxable account that could be more tax efficient based on your individual situation.

Hey, the more the merrier - right?
"Everywhere is within walking distance if you have the time." ~ Steven Wright

prioritarian
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Joined: Tue Jul 16, 2019 6:00 pm

Re: 3 Fund Portfolio outside of work retirement plan?

Post by prioritarian » Fri May 22, 2020 5:59 pm

I'd like to have a three- or four-fund plan in my taxable investments but taking advantage of TLH and avoiding unnecessary capital gains has made this impossible. I now have 11 ETFs and cannot sell most without incurring unwanted taxes.

Topic Author
rolandrt
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Joined: Mon May 11, 2020 10:13 pm

Re: 3 Fund Portfolio outside of work retirement plan?

Post by rolandrt » Fri May 22, 2020 7:13 pm

I have a taxable and a Roth with MEdge. A CFP told me recently don't even bother. Focus on maxing TSP and your boys 529s. Sounds reasonable, but I hate the idea of having just opened an outside taxable and a Roth for nothing.

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