Portfolio Investment Advice, Small Taxable Acc't Ideas

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bigwheels
Posts: 9
Joined: Thu Oct 15, 2015 4:37 pm

Portfolio Investment Advice, Small Taxable Acc't Ideas

Post by bigwheels » Thu Dec 07, 2017 10:14 am

Hoping for some advice with what to do with $10,000 in a taxable account that will probably grow $5-10k over the course of next year. These funds might have a 5-10 year timeframe, perhaps used for a down payment within that window. Have minimal need for an emergency fund (no car, no house, no kids, very solid job/income streams), but do feel risk averse with this money, in comparison to the funds in my retirement accounts. Is this actually a valid concern? I've been thinking they may not be given my contrasting thought of not being too concerned with the presence of a sizable emergency fund.

I'm considering leaving $5,000 as cash, putting $5,000 into a MA muni fund and adding additional funds to that over the course of the next year. I would include this in my overall AA and re-balance my tax-advantaged accounts accordingly. I understand I could also choose to put that money into a total market stock fund, but feel the MA muni fund satisfies some of the risk aversion I have to that particular account, but is also more aggressive than say a CD ladder or I-bond. Again, maybe this is a behavioral thing I should recognize and choose to overcome/ignore?

Appreciate any thoughts!

Taxable account/emergency funds: $11,000
Debt: None
Tax Filing Status: Single
Tax Rate: 25% Federal, 5% State
State of Residence: MA
Age: 31
Desired Asset allocation: 85% stocks / 15% bonds
Desired International allocation: 20% of stocks

Portfolio Total: Barely six-figures

Current Assets

Taxable @ Fidelity
$11,000 cash (have not included in AA as yet)

Simple-IRA @ Fidelity
16% FID INTER TREASURY BOND INDEX PREMIUM (FIBAX) (.09)
12% FIDELITY GLOBAL EX US INDEX INVESTOR CL (FSGUX) (.18)

Roth IRA at Fidelity
65% FIDELITY TOTAL MARKET INDEX PREM. (FSTVX) (.71)
7% FIDELITY GLOBAL EX US INDEX PREM. (FSGDX) (.18)

Contributions

New annual Contributions
$12,500, SIRA
$5,500, IRA
~$5,000-10,000, savings/taxable

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BolderBoy
Posts: 3454
Joined: Wed Apr 07, 2010 12:16 pm
Location: Colorado

Re: Portfolio Investment Advice, Small Taxable Acc't Ideas

Post by BolderBoy » Thu Dec 07, 2017 11:47 am

bigwheels wrote:
Thu Dec 07, 2017 10:14 am
I'm considering leaving $5,000 as cash, putting $5,000 into a MA muni fund and adding additional funds to that over the course of the next year.
I sort of like this idea as long as you recognize that many state-specific muni funds are long term. Since I think you should have an emergency fund (even if you don't) this would satisfy that for the most part.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

mega317
Posts: 1219
Joined: Tue Apr 19, 2016 10:55 am

Re: Portfolio Investment Advice, Small Taxable Acc't Ideas

Post by mega317 » Thu Dec 07, 2017 5:00 pm

Muni funds outside of Vanguard are more expensive. I haven't done careful research but I believe at Fidelity you're better off in the national muni funds than state-specific. And in the 25% bracket you're probably just better off with a total bond fund.

I see nothing wrong with including your taxable/emergency money in your overall AA. And I see nothing wrong with using fixed-income in taxable. It may be less tax-efficient than stock index funds but your taxable is small and you don't want it to crash, leaving you with insufficient emergency funds. Most people have their emergency funds in a savings account which is taxed the same as bond interest, i.e. equally tax-inefficient.

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Sandtrap
Posts: 2720
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii😀 Northern AZ.😳

Re: Portfolio Investment Advice, Small Taxable Acc't Ideas

Post by Sandtrap » Thu Dec 07, 2017 5:03 pm

Good idea.
Did you consider high yield online accounts for the cash and then CD's further?
j :D

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