Where Do I Go From Here - Asset Location [2022 Update]

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SnowBog
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Re: Where Do I Go From Here - Asset Location

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Congrats!
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dogagility
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Re: Where Do I Go From Here - Asset Location

Post by dogagility »

AnnetteLouisan wrote: Tue Nov 23, 2021 3:26 pm I’m prepared to stay the course and tune out the noise.

This has been a big year for me: my first ibond purchase ever and my first Treasury Direct Account, my first Roth IRA (w Fidelity) and now my first taxable brokerage account (with Fidelity). And my first account opening rebate promotion 🤣
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

I’ve been reading that it’s polite to follow up and tell everyone how issues were resolved, what was decided, or what the status is. So here’s a short update:

1. I put $3500 into FSKAX in my new fully funded $7k Fidelity Roth 401k in October. Plan to put the rest into FSKAX by year end.

2. Opened and funded with $5000 a taxable brokerage w Fidelity last week (w$100 bonus). I plan to put equity ETFs in there, not MFs. To be honest, I am not sure how to use my taxable brokerage but at least it’s set up, funded and in a core holding. I assume the mechanics are like the IRA. I’ve not been nervous in the current volatility.

3. I didn’t change my allocations yet in my 401k. But I plan to, consistent with my IPS.

4. Leaning against the HDHP/HSA due to health issues and complexity, but will attend open enrollment workshops.

5. Getting a raise at work. That’s nice. Final specifics TBD.

6. I didn’t have “The Talk” about inheritance yet with mom. We had a brief preview of the talk and it sounds like it’s not going to be like the Talks many of you have with your offspring. It sounds like some bad news for me financially (likely less than expected but no debts) is on the way but that’s ok, and I never planned for anything different. I think people behave pretty consistently from life to death and expecting a big change is unrealistic.

7. I have a draft will and other legal documents prepared by a major firm. But I’m still struggling with who the beneficiaries and executor should be and whether to do a revocable living trust instead.

8. I’ve decided to try to preserve my income stream until around 60 rather than aim for retiring at 56-58 (although it’s nice to know I could). My net worth goal is now 2.5-3, up from 2.2, although I do understand that I probably don’t need that much given cola’d pension and ss that cover most of my anticipated expenses.

9. I didn’t sell into the recent market drops, or buy either. I plan to buy another $3500 of FSKAX by year end, ideally if it hits 115-119 territory. It’s currently in a Fidelity core govt money market.

10. I pretty much decided not to do series EE bonds given my age, existing heavy bond AA, and the 20 year sword of Damocles torture aspect with the interest, although today’s post makes the most compelling case for them I’ve ever heard. I will do more I bonds though, maxing out my allotment again in 2022.

11. The extensive credit card cash back discussion got me thinking, I admit. If I try one it will be a simple cash back on everything card. I guess I could just view it as a discount card. Too many people on here say it’s good and why should I leave money on the table?

12. I kept my apartment so far and am waiting to hear if I can WFH permanently. Once I find out, I can decide whether to sell, rent it out or hang onto it and either rent elsewhere or keep trying to remediate. But I think it’s time for a decent place to live finally.

13. Gift, tip and donation season is upon us so my wallet will be opening. I’ll do that AFTER I learn what portion of the bill for my recent hospital stay (asthma flare - all good now) will be my responsibility under my PPO.

14. I didn’t file an insurance claim since my apartment was unscathed in the fire.

15. Continuing to educate myself with the On Investing podcast and other BH commenter and advisory board recommended sources.

That’s all for now. Oh and I had a very nice Thanksgiving, if an unusual one.
Last edited by AnnetteLouisan on Thu Dec 02, 2021 10:44 pm, edited 6 times in total.
SnowBog
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Re: Where Do I Go From Here - Asset Location

Post by SnowBog »

Thanks for the update - and glad to see things are going well!

The only item I'd suggest a change on would be the one below - which as written smells like market timing.
AnnetteLouisan wrote: Tue Nov 30, 2021 11:29 pm 9. I didn’t sell into the recent market drops, or buy either. I plan to buy another $3500 of FSKAX if it hits 115-119 territory.
I'm assuming this is more because you weren't comfortable doing a lump sum into your new Roth IRA (congrats again!) - and instead decided to split it up (DCA) with $3500 in Oct. and the remaining $3500 by year end.

I'd stick with that original plan! Make sure you get the money invested by end-of-year (or some time line you can commit to) - regardless if the market hits your target price or not. In the majority of cases "time in the market beats timing the market" [over the long-term].

So, I'd recommend an amendment to #9 - something like...
9. I didn’t sell into the recent market drops, or buy either. I plan to buy another $3500 of FSKAX if it hits 115-119 territory or by Dec. 31, 2021 regardless of price [per #1].
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Re: Where Do I Go From Here - Asset Location

Post by tomsense76 »

AnnetteLouisan wrote: Tue Nov 30, 2021 11:29 pm 13. Gift, tip and donation season is upon us so my wallet will be opening. I’ll do that AFTER I learn what portion of the bill for my recent hospital stay will be my responsibility under my PPO.
Hope you are feeling better!
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

Yes - better than ever - it was an allergy-triggered acute asthma exacerbation, which needed some monitoring, but since every possible test was done there, I now know I DON’T have everything from Covid to cancer to heart disease to a blood clot in the lung.

So, feeling good! Thank you!
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

SnowBog wrote: Wed Dec 01, 2021 3:16 am Thanks for the update - and glad to see things are going well!

The only item I'd suggest a change on would be the one below - which as written smells like market timing.
AnnetteLouisan wrote: Tue Nov 30, 2021 11:29 pm 9. I didn’t sell into the recent market drops, or buy either. I plan to buy another $3500 of FSKAX if it hits 115-119 territory.
I'm assuming this is more because you weren't comfortable doing a lump sum into your new Roth IRA (congrats again!) - and instead decided to split it up (DCA) with $3500 in Oct. and the remaining $3500 by year end.

I'd stick with that original plan! Make sure you get the money invested by end-of-year (or some time line you can commit to) - regardless if the market hits your target price or not. In the majority of cases "time in the market beats timing the market" [over the long-term].

So, I'd recommend an amendment to #9 - something like...
9. I didn’t sell into the recent market drops, or buy either. I plan to buy another $3500 of FSKAX if it hits 115-119 territory or by Dec. 31, 2021 regardless of price [per #1].
thank you, Snowbog! It’s in a Fidelity core govt money mkt fund for now but definitely will put it into equities before year end.
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Re: Where Do I Go From Here - Asset Location

Post by Eagle33 »

AnnetteLouisan wrote: Tue Nov 30, 2021 11:29 pm 6. I didn’t have “The Talk” about inheritance yet with mom. We had a brief preview of the talk and it sounds like it’s not going to be like the Talks many of you have with your offspring. It sounds like some bad news for me financially (likely less than expected but no debts) is on the way but that’s ok, and I never planned for anything different. I think people behave pretty consistently from life to death and expecting a big change is unrealistic.
At least she didn't tell you that she wanted pockets on the inside of her casket to put any left over money as my Dad (jokingly) told me. And from what I've read you are doing fine on your own.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location

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Eagle33 wrote: Wed Dec 01, 2021 7:48 pm
AnnetteLouisan wrote: Tue Nov 30, 2021 11:29 pm 6. I didn’t have “The Talk” about inheritance yet with mom. We had a brief preview of the talk and it sounds like it’s not going to be like the Talks many of you have with your offspring. It sounds like some bad news for me financially (likely less than expected but no debts) is on the way but that’s ok, and I never planned for anything different. I think people behave pretty consistently from life to death and expecting a big change is unrealistic.
At least she didn't tell you that she wanted pockets on the inside of her casket to put any left over money as my Dad (jokingly) told me. And from what I've read you are doing fine on your own.
Yes- doing great - had to!! 😅

I think charities are going to make out quite well though!
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Re: Where Do I Go From Here - Asset Location

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I listened to a presentation today about HDHPs and HSAs. $4650, with $800 of that kicked in by my employer, quadruple tax free if you count FICA, and portable. Catastrophic out of pocket caps around $7.5k. Will need to learn more about plan options. It it appears my employer’s HSA is kept at a bank.

They were very clear that deductibles are high and coinsurance is high. They were also clear that people with health issues will have to do more legwork as far as staying in network etc and keeping receipts. They implied that these plans are preferable for younger folks without chronic conditions etc. That’s not not me.

The tax advantage is compelling, particularly in my 35 percent fedl, 14 state and local plus fica bracket, but here again, it’s a behavioral issue. If I did this I would have to switch insurers and I’ve been very happy with my current one. I’d have to worry more about coinsurance, coverage and advance notifications during times of illness or worse, and I want to worry less. I think it could make perfect sense financially so I will get more specifics. Like a lot of things, it seems a gamble: could pay off, could come back and bite me in a difficult time.

I looked at the details of the Amex Membership Rewards program since have Amex, and decided against it. Will find out this week if my bank debit cards with credit features have cash back that I did not sign up for, if so that could be the simplest switch.

I’m submitting reimbursement requests for flexible spending so I don’t lose my contributions.

And I learned my lesson on market timing - it was quite a week! Stayed calm, didn’t sell or buy other than DCA, but definitely would have done better having gone in earlier and just held firm rather than waiting for a certain price. My $3500 in FSKAX is off 5 percent for the month but I’m ok with that since it’s a long term investment. I did not check my 401k balance on 12/1 and may just hold off for a while.

So now I’m waiting for the entry point with $8500 ($3500 in Roth IRA, $5000 in taxable). I’ll bite at 115-119 for sure. Will go in by year end if - as I suspect - waiting doesn’t help much…

But I consider all this an education en route to…. Whatever my future holds.
Last edited by AnnetteLouisan on Thu Dec 02, 2021 5:49 pm, edited 1 time in total.
pizzy
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Re: Where Do I Go From Here - Asset Location

Post by pizzy »

AnnetteLouisan wrote: Thu Dec 02, 2021 5:27 pm I learned my lesson on market timing
AnnetteLouisan wrote: Thu Dec 02, 2021 5:27 pm So now I’m waiting for the entry point
:oops:
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Re: Where Do I Go From Here - Asset Location

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It’s a process, pizzy. I’ll get there. 😅
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SnowBog
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Re: Where Do I Go From Here - IPS, Pension & Medical Info

Post by SnowBog »

pizzy wrote: Thu Dec 02, 2021 5:48 pm
AnnetteLouisan wrote: Thu Dec 02, 2021 5:27 pm I learned my lesson on market timing
AnnetteLouisan wrote: Thu Dec 02, 2021 5:27 pm So now I’m waiting for the entry point
:oops:
AnnetteLouisan - felt appropriate to repeat early advice I offered... I think you worry too much at the price you are buying at... As "Bob" shows - you could buy at the worst time possible - and still come out great.
SnowBog wrote: Sat Sep 25, 2021 9:19 pm ...
[*] I met Bob. https://thereformedbroker.com/2020/12/2 ... ket-timer/ This was insightful for me to realize that the "worlds worst market timer" - who only bought right before market crashes - repeatedly - but was able to "stay the course" turned out quite well.
...
For long-term investments - "time in the market" is almost always the winner...

And you've already been on the "wrong" side of waiting... As previously noted, your initial delay getting your money invested cost you more than you probably lost this week.
SnowBog wrote: Sun Oct 31, 2021 3:28 pm ...
Had you gotten the $7000 invested into a total stock market in October, you would have gained roughly $460 for one month. https://www.portfoliovisualizer.com/bac ... ion3_3=100

That's 3.8 times more gain than the difference between these funds since 2010 (which is only $121 over 11+ years). https://www.portfoliovisualizer.com/bac ... ion3_3=100

So this is a case of "don't let perfection be the enemy of good enough".
...
AnnetteLouisan wrote: Thu Dec 02, 2021 6:19 pm It’s a process, pizzy. I’ll get there. 😅
Just joined in September.
That it is! You are making progress - you just have to keep reminding yourself that you are a long term investor, set a workable plan you can stick with, and then get your money working for you ASAP.
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

I checked all my accounts today - purposely delayed it a few days given the volatility. I was in good shape! My s&p funds in my 401k sure are doing the heavy lifting. My Fidelity accounts really are easy to use.

I set up a watchlist for my one Fidelity total market equity index fund investment, but if I learned anything this week it’s to try not to monitor stuff daily (although it’s tempting). I definitely found the volatility more than usually dramatic but I used my nerves of steel, lol, and did nothing.

I’m going to listen to On Investing over the weekend. I have to admit Booglie’s comments about leverage and asset prices were compelling, as was the additional color by another commenter on EE bonds. If those guys are limited to 10k per year like the Ibond, I could always do it as an experiment. worst case? I redeem.

I also looked at a comparison chart showing my current health plan vs a HDHP w HSA. It’s a close call, but I think I prefer the PPO w flex spending because I pay less up front. I want more covered and I don’t want to worry too much about coinsurance, reimbursements and staying in network. But I see the value of an HSA. A quadruple tax free, portable $4650 with a net $1k in network deductible after my employer throws in $800. It’s all good, but I’m in those danger years health wise.
Last edited by AnnetteLouisan on Fri Dec 03, 2021 10:11 pm, edited 4 times in total.
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Re: Where Do I Go From Here - Asset Location

Post by clip651 »

If you already have a plan you like, doctors you like, and either health problems (that you're already addressing with doctors you like) or are worried there are health problems possibly on the horizon, then I think staying with your current plan is a really great decision. And that's pretty much regardless of the cost savings of any other plan, as long as you can afford the plan you already have and like.

Not having access to the doctors you wish you had access to is a big deal if you're having a health problem. So is having to start all over with a new practitioner for a chronic problem if you don't need to do so.

Just 2 cents from someone who has dealt with chronic health issues myself and helped several family members through their health problems, too!

cj
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Re: Where Do I Go From Here - Asset Location

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clip651 wrote: Fri Dec 03, 2021 9:51 pm If you already have a plan you like, doctors you like, and either health problems (that you're already addressing with doctors you like) or are worried there are health problems possibly on the horizon, then I think staying with your current plan is a really great decision. And that's pretty much regardless of the cost savings of any other plan, as long as you can afford the plan you already have and like.

Not having access to the doctors you wish you had access to is a big deal if you're having a health problem. So is having to start all over with a new practitioner for a chronic problem if you don't need to do so.

Just 2 cents from someone who has dealt with chronic health issues myself and helped several family members through their health problems, too!

cj
Flex spending (akaFSA/HRA) is pretax, not portable and has no possibility of tax free gains.

HSAs are quadruple tax free (federal, state, local and fica), earn tax free gains and are portable. So it’s the best deal out there, I see that, especially for dual income ($4650/yr for singles over 50).

Question:
Are flex spending accounts really tax free to almost the same extent as HSAs, namely fedl state local and fica, just without the portable tax free gains, and an employer kick in, plus longer record keeping and possible fees in the HSA?

Or are flex spending accounts only fedl state and local tax free but you pay fica?

Either way, a PPO with a flex spending account, as I’ve been doing since flex spending was invented, still seems a great tax deal, even if not the all time best. Plus you are incentivized to spend on medical so you don’t lose it, which is arguably good for us procrastinators who don’t take as good care of ourselves as we should.
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Re: Where Do I Go From Here - Asset Location

Post by SnowBog »

Both FSA and HSA come out "pre-tax", meaning no federal, state, local (if applicable), social security, or Medicare taxes.

FSA is normally "use it or lose it" (although some added flexibility may exist due to COVID). And as you noted, no way to invest or grow the FSA amount.

HSA can be invested (if not directly through your plan, you could look to do a "partial" transfer to another provider like Fidelity, where you could invest it). Provided HSA withdrawals pay for medical expenses, there is no penalty or tax to access the funds (including gains) at any time. (Although it's generally better - when you afford to do so - to not use your HSA while working, instead save your receipts, and reimburse yourself years later.)

You may be able to do both HSA + FSA, although the latter becomes limited to Dental & Vision only. But if you know you need new eyeglasses/contacts, dental work, etc. - can be a great way to further lower your taxes - and thus reduce the cost of dental and vision expenses.
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

Since waiting for the right entry point cost me literally millions over my lifetime and I’m still waiting, maybe I should just DCA $750 or $1000/mo into VTI or some tax loss pair in my Fidelity taxable brokerage and call it a day. $12,000 a year is a nice round number I wouldn’t even feel.

:beer I think I’m truly almost there!!! Thanks to this miraculous forum!

Thus I’d be:
-maxing my 401k & catch up & matching
-maxing my Roth IRA
-maxing my ibonds
-contributing to pension
-maxing my flex spending account
-getting some tax breaks on my RE
-still saving 65k a year in HYSA - hey, it is what it is. Insured liquidity.
-getting cap gains/losses in taxable
-making appropriate charitable donations and gifts

2021-make final decision on EE bonds, see if current banks have cash back cards and try one, make final decision on whether to keep $220,000 in term life, finish up estate docs

2022: re-evaluate HSA vs FSA


Question: is the $75 fee charged every trade.
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Re: Where Do I Go From Here - Asset Location

Post by livesoft »

AnnetteLouisan wrote: Sun Dec 05, 2021 7:34 amQuestion: is the $75 fee charged every trade.
What $75 fee? I admit I have not followed this thread much. Do you mean a $75 fee charged by Schwab to buy Vanguard mutual funds? Don't pay that fee even if it means you do not buy Vanguard mutual funds at Schwab. I might even suggest that it is insane to pay that fee.
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Re: Where Do I Go From Here - Asset Location

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livesoft wrote: Sun Dec 05, 2021 8:00 am
AnnetteLouisan wrote: Sun Dec 05, 2021 7:34 amQuestion: is the $75 fee charged every trade.
What $75 fee? I admit I have not followed this thread much. Do you mean a $75 fee charged by Schwab to buy Vanguard mutual funds? Don't pay that fee even if it means you do not buy Vanguard mutual funds at Schwab. I might even suggest that it is insane to pay that fee.
Fidelity- is buying VTI fee free on Fidelity? I’m new.
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Re: Where Do I Go From Here - Asset Location

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AnnetteLouisan wrote: Sun Dec 05, 2021 8:05 am Fidelity- is buying VTI fee free on Fidelity? I’m new.
Fidelity does not charge commissions on ETF transactions and also on some other transactions.
https://www.fidelity.com/why-fidelity/pricing-fees
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

livesoft wrote: Sun Dec 05, 2021 8:24 am
AnnetteLouisan wrote: Sun Dec 05, 2021 8:05 am Fidelity- is buying VTI fee free on Fidelity? I’m new.
Fidelity does not charge commissions on ETF transactions and also on some other transactions.
https://www.fidelity.com/why-fidelity/pricing-fees
Holy cow that’s a great chart!! Thanks.
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

Hospital bills coming in gradually. So far massive amount billed, insurance paid about half and my portion is a very acceptable small fraction of the total.

Will providers come to me personally for the difference? My insurance EOBs are showing some denials on the ground of lack of medical necessity - they say it could have been addressed on an inpatient basis - but say that since they have agreements with the provider, I am not responsible for the charges. Is it case closed or should I expect bills from the hospital directly? I don’t have medical costs too often so I don’t know the drill (but I’ve seen documentaries where people get hounded for the difference in perpetuity).
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Re: Where Do I Go From Here - Asset Location

Post by LadyGeek »

Is it related to anything mentioned in this thread? I don't see any discussions about hospital bills. Bear in mind that the most you will pay is your out-of-pocket limit. Above that, you will pay zero - regardless of additional charges.

If you have further questions, start a new thread in the Personal Finance forum (insurance questions go here) so we can help you better.
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Re: Where Do I Go From Here - Asset Location

Post by AnnetteLouisan »

Thank you, Lady Geek. You are right that it is tangential. There was a discussion earlier in the thread about the virtues of HSAs/HDHPs v PPO plans and Flex spending (a decision I have to make by Monday for 2022), and how that consideration was impacted or illustrated by my recent acute care visit for asthma. Another commenter weighed in that in my case keeping the PPO made sense. I waited on the decision so I would see how this event illustrated the trade offs.

So this update dovetails with a conclusion that in my case a PPO could be preferable since out of pocket amounts in the current year are lower, while still benefiting from a pretax flex spending account. However if you prefer to delete it or move it to personal consumer issues that is fine of course. I guess it’s not actionable without my plan details but people could state whether in such cases providers pursue the difference.
Last edited by AnnetteLouisan on Tue Dec 07, 2021 2:17 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location

Post by LadyGeek »

There's no need to delete anything, as readers benefit from the discussion. My only intention was to keep this discussion on-track for your asset location questions. If you wanted to deep-dive into the realities of medical billing (and how it applies to your situation), you should start a new thread in the Personal Finance forum - it's intended for insurance questions.
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Re: Where Do I Go From Here - 2022 Update

Post by AnnetteLouisan »

I’m posting this as a link to my original post to keep it all together.

Just to update you on how the subjects of my posts turned out, and thanks to all of you, I’m starting the year with:

- a lot more confidence about what I’m doing with investing and also more humility about what I still need to learn
- a better AA (rebalanced)
- lower life insurance costs, saving over $2k a year
- no plans to sell anything (unlike 2021, when I was considering shedding all remaining equity exposure and you all pulled me back)
- an extra $10k in I bonds (bought today, total $20,116)
- a higher salary, bonus $, etc
- a larger flex spending account, 401k deferral space etc. - I decided against the HSA for various reasons
- a Roth IRA and small taxable account w Fidelity going into FSKAX
- $176 k more than I had in Jan 2021, most post tax
- still no rewards or cash back cards - still pondering, but I think my answer is no for me. If, then possibly a Walmart card.
- kept my apartment, didn’t file an insurance claim for the fire
- really appreciate BCBS insurance, my portion was minuscule of my $58k extravaganza (and I feel good)
- have not had The Talk yet about Inheritance but I am the executor for both so I plan to get the NYS executors handbook (which sounds super macabre)
-a smidge more developed market ex-US in my 401k (5 percent, up from 3.8)
- I declined the rate increase on my LTCI
- I contributed over the $300 to charities despite not being able to deduct if I take the std deduction
- I gave my secretary a retailer gift card
- my dad loves his gift - the bp monitor- and is eating better these days

My to-dos for this quarter are finish my estate plan, choose (or not) a WFH option being offered, make some decisions about whether to stay in NYC or leave, and invest my2022 Roth IRA money.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Just maxed out my new IRA for 2022 by transferring funds to Fidelity. Once they arrive I’ll convert the 7k to my Roth in a few days.

I have FSKAX on a watch list on the Fidelity website and I’m going to place a limit order if I can find how to do that again on the website. Found it last week… Newbie city.

I have 3500 invested and 10500 awaiting investment in a core fund in my IRA, and 5k awaiting investment in my taxable brokerage, all of which is very new for me.

I know I shouldn’t market time and so I plan to set up auto investing - maybe 1k/mo into taxable? once I get these funds invested. Maybe 250/week? I know lump sum is preferable to DCA but DCA will let me stress less about price and making the wrong decision. Once I get my sea legs I will aim to lump sum.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Tue Jan 18, 2022 3:45 pm I have FSKAX on a watch list on the Fidelity website and I’m going to place a limit order...
...
I have 3500 invested and 10500 awaiting investment in a core fund in my IRA, and 5k awaiting investment in my taxable brokerage, all of which is very new for me.

I know I shouldn’t market time and so I plan to set up auto investing - maybe 1k/mo into taxable? once I get these funds invested. Maybe 250/week? I know lump sum is preferable to DCA but DCA will let me stress less about price and making the wrong decision. Once I get my sea legs I will aim to lump sum.
You'll get there...

If it helps, remember:
  • We invest because we expect the markets to gain in value over time (reflecting the expansion of the economy, ingenuity, population, work effort, etc.)
  • We want stocks to regularly be "at all time highs", which reflects its doing what we expect it to do over time
  • Assuming we are investing for the long term, we don't really care if the stock goes up or down on any given day... We care about the long term trend to continue to be rising
  • If you look at a long term chart, you will find very few times where the market dropped (and no way to predict these) vs. the market going up. Which means that you are far more likely to "lose money by waiting" to invest (as you are missing out on the gains) than you are to lose money investing (especially as you only care about long term gains, and you trust the markets will recover over your investing horizon)
On this later point, according to Portfolio Visualizer, you missed out on $320+ in gains (more likely $930 as you weren't keeping up with interest) by not investing the remainder of your $3500 from last year. https://www.portfoliovisualizer.com/bac ... ion2_2=100

This is true even if you had invested this years $7000 (assuming > 50) contribution on Jan. 4, only to see the markets fall since then.

Have you made $320 or more in your core fund? No. Instead, you've traded the fear over losing money "buying high" for the near certainty of missing gains by not being invested in the market.

For what it's worth, the brutal start to the market this year is a good and bad example of this.

As noted, even if you had invested $7000k "near the peak" for this year, you'd still be up overall (assuming the rest of your $3500 last year was invested in October).

Even if you got "lucky" and invested the remaining $10,500 today (at the current market low for 2022), you could feel like a market timing god - and you "gained" $138 by waiting on the sidelines.

Hopefully, you realize that would be luck, as you had no way to predict today would be the low for the year (or if it will be lower in the future). Unfortunately, some people get caught in the "buy the dip" mentality thinking they can wait for things to "be on sale", or waiting for a target price that may never come.

Let's use last year as another comparison point. Similar dates, but using the then current pricing.
  • $3,500 invested on 10/2/2020 @ $95
  • $7,000 invested on 1/5/2021 @ $107.05
  • Would have gained $750 by 1/19/21
  • Or $3,177 by 12/31/21
  • No date* in January was a lower price... * OK, technically 1/4 was lower at $106.14, but you wouldn't have been able to do a Backdoor Roth and purchase on 1/4. And even if you could, the point so stands, you'd just have even more gains.
Had you used a "limit" order attempting to "buy on sale" in 2021, it likely never would have executed and you would have missed out on roughly 30% gains. We can't predict when the markets go down or up, but we expect them to go up more often than down, so we should invest accordingly.

My recommendations for you:
  • If your limit order doesn't execute, cancel and replace with a "market" order. (While maybe January will continue to be the exception, historically you'll come out ahead doing so.)
  • If you aren't ready to "lump sum", then schedule reoccurring investments (aka DCA) in whatever dollar amount and schedule you are comfortable with, such that you ensure everything is invested within ideally 6 months (but no longer than end of year). Schedule these ASAP and don't think about or change them. You need to learn to take emotions out of investing, and a forced schedule can help.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Or the simple version...

Time in the market beats timing the market
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

You have the patience of an ethereal being, SnowBog. I do understand it in theory. It’s just hard to change the discount shopper mindset when it comes to my own money. You’re right maybe I’ll just do a market order instead. I didn’t place the limit order yet.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

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I never heard of a "limit order" for a mutual fund. Please tell us how that goes. :)
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

livesoft wrote: Tue Jan 18, 2022 6:42 pm I never heard of a "limit order" for a mutual fund. Please tell us how that goes. :)
Oh dear is that why I couldn’t find that option today on the Fidelity website, even though I found it last week. Lol.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

As my 2020/2021 example shows - the fallacy of the "discount" model - is that the markets may never get to the discount you expect.

And there's the rub... While you wait for the "discounted price" - which may never occur - you are missing out on gains.

For FSKAX, the gain over the last year has been 19.8% (including the current market downturn). And as noted, there wasn't a single day that was "on discount" compared to the start of 2021. That's not uncommon... (Down markets like January - or March 2020 - or 2008-2009 are uncommon - which is why we remember them...)
Last edited by SnowBog on Tue Jan 18, 2022 8:55 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

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SnowBog wrote: Tue Jan 18, 2022 6:54 pm As my 2020/2021 example shows - the fallacy of the "discount" model - is that the markets may never get to the discount you expect.
Oh yes as there are many points in any index that are both an all time high and a value where the market has never gone that low again.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

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I’m not challenging the philosophy, just explaining where Im coming from. I get that I’m wrong, and I expect with time I’ll feel more comfortable. I’ve made a LOT of positive changes this year and market timing seems like the last balustrade or whatever. That and maybe cash back cards. I earned 36k in my 401k this year because you all stopped me from selling my equity stake.

At 55, coming from kinda maybe close to poverty for US standards (which is likely where my optimism deficiency comes from), with maybe 5 more salary earning years if I’m lucky, and having pretty much wrecked my first 40 years by being too conservative, and really not having anything else to a certainty as a Plan B, I’d be destroyed financially and emotionally if I lump summed my cash into total market (which Morningstar rates as a fairly high risk investment) and it went down on a prolonged basis. I turned so many needy friends away at the door in 2001 and 2008 - it was awful and I’ll never forget them.

I always look at the 5 year performance charts to get some perspective on the price trajectory. And in light of its history, I think FSKAX is more likely to go down from here than up for various reasons, including geopolitical risks. I don’t mind losing the $500 or so gains by delaying. I did put 3500 into FSKAX in autumn 2021 and it’s down so far. I’m more concerned about staying financially comfortable and preserving what I’ve earned so far.

I described the fear to my brother as being like standing on top of Niagara Falls, about to throw money down. I could lose it… don’t want to lose it. I get that I am losing to inflation. I hedge against the likelihood of being wrong, so I will lump sum some amount in soon, if only to test it.

I only have $1.86 million to my name, 1/3 of which is in my house, plus a tiny pension and SS, neither guaranteed. I thought 1.86 million was freaking amazing but yikes no it isn’t, I’ve learned. Plus yes I want to brag at cocktail parties if I ever attend one again that I bought the dip [OT comment removed by admin LadyGeek].
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

You are making progress - don't take any feedback to the contrary.

We are just offering our perspectives and insights - as many of us have been through similar stages.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

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SnowBog wrote: Wed Jan 19, 2022 12:38 am You are making progress - don't take any feedback to the contrary.

We are just offering our perspectives and insights - as many of us have been through similar stages.
Understood. I greatly appreciate it. In a few months I’ll be schooling the newbies. Lol.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

I think you might actually be challenging the philosophy. The idea of Boglehead is not that the stocks never lose money. It is that the loss on the equities side is compensated by having a healthy dose of bonds.

Iiuc your target AA is 30/70. If you struggle to get there, it's possible it is too aggressive. It might be perfectly fine to stay where you are as everyone's risk tolerance is different.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by CurlyDave »

AnnetteLouisan wrote: Tue Jan 18, 2022 9:14 pm
...At 55, coming from kinda maybe close to poverty for US standards (which is likely where my optimism deficiency comes from), with maybe 5 more salary earning years if I’m lucky...I only have $1.86 million to my name, 1/3 of which is in my house, plus a tiny pension and SS, neither guaranteed. I thought 1.86 million was freaking amazing but yikes no it isn’t...
Only? ONLY !!??? :oops:

https://dqydj.com/average-median-top-n ... centiles/

Look at the link. Not the best one, just the first one I could find. Coming from close to poverty to solidly in the 90+ percentile of household wealth as a single person is a very solid accomplishment.

Could it be better, of course it could -- we all can do better. But the fact that you got to where you are and are going to do better in the future is a great success story.

Find those same net worth brackets for the entire world instead of the US and you are in the 99th percentile.

The people on this board are self-selected "Prodigious Accumulators of Wealth", a tough group to compare your accomplishments against.
Answering a question is easy -- asking the right question is the hard part.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 19, 2022 11:07 am I think you might actually be challenging the philosophy. The idea of Boglehead is not that the stocks never lose money. It is that the loss on the equities side is compensated by having a healthy dose of bonds.

Iiuc your target AA is 30/70. If you struggle to get there, it's possible it is too aggressive. It might be perfectly fine to stay where you are as everyone's risk tolerance is different.
I was actually very steel nerved in March of 2020, surprising myself.

Im not challenging the philosophy. I’m like those people on a diet asking if “just one cookie” is okay. Market timing seems to be that cookie.

In my 20s I worked in a ministerial capacity for a major brokerage (gone now). People really lost their life’s savings, which isn’t fixable, and had no legal recourse. They weren’t index funds of course but they were vehicles marketed to them as conservative and reliable.

I’ve also had to make calls on behalf of an overseas retiree to liquidation funds asking how many cents on the dollar they can expect to receive of their retirement investments, and when. And the answer was very few and not soon. It’s hard to have a conversation like that with a retail investor in his mid 60s.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 12:45 pm I was actually very steel nerved in March of 2020, surprising myself.

Im not challenging the philosophy. I’m like those people on a diet asking if “just one cookie” is okay. Market timing seems to be that cookie.

In my 20s I worked in a ministerial capacity for a major brokerage (gone now). People really lost their life’s savings, which isn’t fixable, and had no legal recourse. They weren’t index funds of course but they were vehicles marketed to them as conservative and reliable.

I’ve also had to make calls on behalf of an overseas retiree to liquidation funds asking how many cents on the dollar they can expect to receive of their retirement investments, and when. And the answer was very few and not soon. It’s hard to have a conversation like that with a retail investor in his mid 60s.
I guess I don't see why you think 30/70 would burst into flames or something catastrophic might happen. It is actually one of the safest BH portfolios out there. 0/100 is actually not as safe as 30/70 because the bonds can crash like 2009.

On the topic of market timing, it is OK if you're making forward progress & you can estimate to get to your target AA within a reasonable timeframe. For example, "waiting for a -1% day" is fine because we know these days will happen. "Waiting for a -20% bear market" is not OK because we have no idea when it'll happen.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Fair points. My bond portfolio must be a mess right now - I only look once a month. I put a little more into FSKAX today.

I had a neighbor, a lovely elderly patrician-mannered woman, who lost all her money (inherited from her parents, she’d been a flower child) in the market and had to downsize (to be my neighbor). She used to come to peoples doors selling homemade herbal remedies to pay the bills. It was sad. She lost her apartment after a years long legal battle, forcibly evicted by US Marshals.

I doubt she had a 60/40 BH portfolio, and I know for a fact herbal essences weren’t her only herb consumption. But these are real people whom I’ve seen suffer from lack of astute investing skills.

I have some former university classmates who got wrapped up in dot com euphoria and are now on the street muttering to themselves despite advanced degrees. I know a lovely young man now who is mightily over leveraged and overburdened with a desire to be a billionaire. Real, nice people who should have been comfortable but drank too much kool aid and got carried away.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 1:31 pm Fair points. My bond portfolio must be a mess right now - I only look once a month. I put a little more into FSKAX today.

I had a neighbor, a lovely elderly patrician-mannered woman, who lost all her money (inherited from her parents, she’d been a flower child) in the market and had to downsize (to be my neighbor). She used to come to peoples doors selling homemade herbal remedies to pay the bills. It was sad. She lost her apartment after a years long legal battle, forcibly evicted by US Marshals.

I doubt she had a 60/40 BH portfolio, and I know for a fact herbal essences weren’t her only herb consumption. But these are real people whom I’ve seen suffer from lack of astute investing skills.

I have some former university classmates who got wrapped up in dot com euphoria and are now on the street muttering to themselves despite advanced degrees. I know a lovely young man now who is mightily over leveraged and overburdened with a desire to be a billionaire. Real, nice people who should have been comfortable but drank too much kool aid and got carried away.
You can always find people who lost money in the market.

The question is, how are they applicable to your 30/70 target AA? Even if the 30% completely blows up and becomes $0, you're left with 70% of your portfolio intact.

As I said earlier, if getting to 30/70 stresses you out then wherever you are might be the right AA for you. And there's nothing wrong with that.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

I think 30/70 makes sense. I’m just wrestling with the prices to get there. You’re right that scare stories aren’t that relevant. It’s more not wanting to overpay. It was nice to pick up FSKAX today at 127 when it hadn’t been below 130 in months.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Marseille07 wrote: Wed Jan 19, 2022 3:13 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 1:31 pm Fair points. My bond portfolio must be a mess right now - I only look once a month. I put a little more into FSKAX today.

I had a neighbor, a lovely elderly patrician-mannered woman, who lost all her money (inherited from her parents, she’d been a flower child) in the market and had to downsize (to be my neighbor). She used to come to peoples doors selling homemade herbal remedies to pay the bills. It was sad. She lost her apartment after a years long legal battle, forcibly evicted by US Marshals.

I doubt she had a 60/40 BH portfolio, and I know for a fact herbal essences weren’t her only herb consumption. But these are real people whom I’ve seen suffer from lack of astute investing skills.

I have some former university classmates who got wrapped up in dot com euphoria and are now on the street muttering to themselves despite advanced degrees. I know a lovely young man now who is mightily over leveraged and overburdened with a desire to be a billionaire. Real, nice people who should have been comfortable but drank too much kool aid and got carried away.
You can always find people who lost money in the market.

The question is, how are they applicable to your 30/70 target AA? Even if the 30% completely blows up and becomes $0, you're left with 70% of your portfolio intact.

As I said earlier, if getting to 30/70 stresses you out then wherever you are might be the right AA for you. And there's nothing wrong with that.
I think about this a little differently...

So long as the market economy exists, it is impossible to go "lose all your money" buying things like a "total stock market" low cost passive index fund.

The people that lose their money in the markets are those who are trying to pick stocks, chase fads, and/or trying to time the market.

That's the beauty of the genius behind the index fund. So long as companies exist, with an interest to get bigger and more profitable, the index fund will grow.

Sure, some companies will fail... But I'll own the ones that spring up to take their place.

Sure, the market will have "bad" days/weeks/months/years/cycles, and I may temporarily have less $$ show up in my account... But I still own the same # of shares (or likely more if I was rebalancing - and this buying "on sale"). And when the economy recovers (which it's done every time in history), so will my $$.

Your 30/70 AA is the "icing" on the cake above. That 70% generally doesn't change much. That helps remind you that you have enough to weather the storm and give time to the markets to recover. That removes some concern over retirement while the markets are down, as the bulk of your wealth wasn't impacted (as significantly). While you won't gain as much wealth as others, that 70% protects you from a lot of things someone who's 100/0 thinking about retiring in the next 10 years could face.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

So true, Snowbog. I arrived at 30/70 because it was the amount where if I lost half of my equities value, I wouldn’t be too concerned, especially given my employer match.

I’m teed up nicely now:
401k future allocations 25 percent s&p, 5 percent ex-US, the rest bonds and stable value.
IRA gradually going into FSKAX
Taxable maybe going into VTI soon
I bonds maxed out for 21 and 22 already

With a raise and bonus arriving shortly, I’m teed up well for the year.

Then I’ll have to see about moving more cash to taxable - maybe 50k this year.

Rents in Manhattan are up, so if I sublet to an exterminator….and hightail it to Key West… 😅

The real good news is my folks RE holdings values and rents are up. I’m just the amateur, the scoffed at employee who lacked the gumption to start a business and took the white collar professional route. They are too busy playing golf and managing their businesses to chat online, if they even know how.
Last edited by AnnetteLouisan on Wed Jan 19, 2022 6:26 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Wed Jan 19, 2022 3:21 pm I think 30/70 makes sense. I’m just wrestling with the prices to get there. You’re right that scare stories aren’t that relevant. It’s more not wanting to overpay. It was nice to pick up FSKAX today at 127 when it hadn’t been below 130 in months.
This isn't buying retail... There aren't fixed prices...

Maybe think of the market as an auction. No one overpays at an auction. The item is sold for exactly what those at the auction think the item is worth.

But the difference to the auction analogy is in an auction, there is a price at which I'm unwilling to pay.. I don't want the item that badly...

In the case of investing, "not buying" isn't an option. I will not get market returns if I'm not in the market. I will not reach my retirement goals if I'm not in the market. Therefore, I must be in the market.

My example from 2021 is still valid. The lowest price for FSKAX all year was on the first trading day of January.. If you thought it was over priced, or was going to go cheaper, you are still waiting... And you may never see prices as low as they were in January 2021 ever again.
Marseille07 wrote: Wed Jan 19, 2022 1:05 pm For example, "waiting for a -1% day" is fine because we know these days will happen. "Waiting for a -20% bear market" is not OK because we have no idea when it'll happen.
This is sage advice, with a caveat. I caution against using a "limit" (aka fixed price) approach. Even the 1% drop example may never happen that way, as there has yet to be a drop to get below 1% of the January 2021 price.

But if the 1% is more generic, like "the market dropped by 1% today", and that helps you invest - great. Livesoft uses their "Really Bad Day" approach for a similar effect.

Personally, after getting over my initial fears of "buying high", I've gotten to the point I hate seeing money sitting uninvited. So when I have cash to invest, I invest it. If the price goes down tomorrow - sure it stings knowing I could have bought more shares with the same money. But I remind myself the opposite is true, had I waited and the market went up, I'd have less shares. (Oddly, the latter does not seem to bother people as much... But it's effectively the same.)
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

SnowBog wrote: Wed Jan 19, 2022 6:25 pm But if the 1% is more generic, like "the market dropped by 1% today", and that helps you invest - great. Livesoft uses their "Really Bad Day" approach for a similar effect.
Yes, this is what I meant - a day where S&P dropped by more than 1%. It's a bit of market timing for sure, but can ease your mind if one's so concerned about a crash.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

I didn’t even know what FSKAX was in January 2021, not did I have an IRA or taxable to invest. So I made no judgments on its price at that time. I opened my TD account in April and Fidelity in October. But I see your point.

So since I’m wading into this w my IRA and taxable, what would you suggest for my $650k in cash? I need 5 yrs of expenses (say $50kx5=$250k to be generous) to sleep well at night, so arguably I could invest $400k this very year.

I mean, I’m not going to, but maybe 50-75k I could realistically do. Plus my maxed 401k & catch upandRoth IRA andcatch up and match and ibonds…

26k 401
10k ibonds
7k Roth IRA
Match
86k savings
50-75k taxable

Might work out well!
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