New Year new portfolio/plan and need your help

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newDDS
Posts: 52
Joined: Sun Jun 25, 2017 6:52 pm

New Year new portfolio/plan and need your help

Post by newDDS » Tue Jan 09, 2018 9:09 am

Hello all, as the new year kicks into gear my wife and I are working towards getting all our ducks in a row and planning the boglehead way. Quick background I graduated dental school 18 months ago, got married, got our first house and in between it all was set up with a FA.

Our FA has been helpful but now that the whirlwind is over we are transitioning away from him and getting everything set up.

We have fully established a 6 month emergency fund in a credit union account giving 2% interest, and have refinanced our student loans from 7ish% to 4%. Additionally have contributed to our 401ks to at least employer match, but starting this year we will be maxxing both.

My main question for everyone is what should we do with our current Roth accounts through our FA. The current plan is to transfer to vanguard and plug it into an 80/20 S:B ratio with 80% of stocks in Total US market, 20 in Total foreign, and the bonds just in a total bond market.

Would any of you all have any other recommendations? We both are 27, gross income last year of 300k (monumental increase from previous years living off student loans) and want to be aggressive in our early years of investing before kids.

Following our transition from our FA, we plan to max both our Roth's via the backdoor method (our FA did it for us last year, but I imagine with your help and Vanguards it should be just as simple?), max HSA and 401ks, after that we would love any more suggestions you all may have.

Thanks in advance!

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NoRoboGuy
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Joined: Fri Apr 01, 2011 11:07 pm
Location: Just west of Austin TX

Re: New Year new portfolio/plan and need your help

Post by NoRoboGuy » Tue Jan 09, 2018 9:29 am

Sounds like you have a workable plan. The only suggestion I would have is to think more about whether continuing the backdoor Roth approach is a good idea going forward, versus just starting an after-tax account. The Roth approach is not "wrong" it is just an issue of tax diversification, and I do not know how much you have in the Roth versus what your goal is.
There is no free lunch.

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Duckie
Posts: 5733
Joined: Thu Mar 08, 2007 2:55 pm

Re: New Year new portfolio/plan and need your help

Post by Duckie » Tue Jan 09, 2018 6:55 pm

newDDS wrote:My main question for everyone is what should we do with our current Roth accounts through our FA. The current plan is to transfer to vanguard and plug it into an 80/20 S:B ratio with 80% of stocks in Total US market, 20 in Total foreign, and the bonds just in a total bond market.

Would any of you all have any other recommendations?
In general it's better to put assets with lower expected growth (bonds) in pre-tax accounts and assets with higher expected growth (stocks) in Roth accounts. If the 401k plans have decent bond options put the bonds there and just put stocks in the Roth IRAs.

Look at all your accounts as one big retirement portfolio and use only the best options. So your portfolio could include something like: his 401k, her 401k, his Roth IRA, her Roth IRA, his HSA, and joint taxable.

newDDS
Posts: 52
Joined: Sun Jun 25, 2017 6:52 pm

Re: New Year new portfolio/plan and need your help

Post by newDDS » Sat Jan 13, 2018 5:50 pm

NoRoboGuy wrote:
Tue Jan 09, 2018 9:29 am
Sounds like you have a workable plan. The only suggestion I would have is to think more about whether continuing the backdoor Roth approach is a good idea going forward, versus just starting an after-tax account. The Roth approach is not "wrong" it is just an issue of tax diversification, and I do not know how much you have in the Roth versus what your goal is.
That was a question I was hoping to find some more clarity on. As they stand now the roth accounts are not too sizeable, and could be worth making a pivot out of that mindset and getting an after tax account started. I can't say I have done all my due diligence on the pros/cons of the backdoor roth and the tax diversification that accompanies it. Will work on educating myself on it all, thanks for all your help

newDDS
Posts: 52
Joined: Sun Jun 25, 2017 6:52 pm

Re: New Year new portfolio/plan and need your help

Post by newDDS » Sat Jan 13, 2018 5:53 pm

Duckie wrote:
Tue Jan 09, 2018 6:55 pm
newDDS wrote:My main question for everyone is what should we do with our current Roth accounts through our FA. The current plan is to transfer to vanguard and plug it into an 80/20 S:B ratio with 80% of stocks in Total US market, 20 in Total foreign, and the bonds just in a total bond market.

Would any of you all have any other recommendations?
In general it's better to put assets with lower expected growth (bonds) in pre-tax accounts and assets with higher expected growth (stocks) in Roth accounts. If the 401k plans have decent bond options put the bonds there and just put stocks in the Roth IRAs.

Look at all your accounts as one big retirement portfolio and use only the best options. So your portfolio could include something like: his 401k, her 401k, his Roth IRA, her Roth IRA, his HSA, and joint taxable.
That is a great piece of advice. I was looking at them as all equal and just trying to follow the same ratios across the board, but not putting into account the long term tax implications. I will reallocate our accounts, utilizing this strategy. Thanks so much for your help!

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