contributions not in line with target allocation intl vs domestic

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
CDub
Posts: 19
Joined: Thu Jan 18, 2018 8:27 am

contributions not in line with target allocation intl vs domestic

Post by CDub » Wed Jul 11, 2018 7:55 am

I know this is a very simple question, just wanted to confirm. I would like to keep a roughly 70/30 split between domestic/international. However, I am not currently contributing to any international funds.

The only low-fee index fund option in my 401k is an S&P500 Index fund. My HSA is invested in VTSAX. Currently maxing out the HSA and 401k represent all of my contributions.

I have a rollover IRA invested in VT (total world). Since I'm not actively contributing any international funds at the moment, would the simplest strategy just be to split the rollover IRA into VTSAX + VTIAX and rebalance across those two 1x per year?

bloom2708
Posts: 4285
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: contributions not in line with target allocation intl vs domestic

Post by bloom2708 » Wed Jul 11, 2018 9:32 am

Your plan to split and adjust in your Rollover IRA is good. No tax consequences there.

We continue to up our bond allocation (at re-balance time) in Rollover IRAs to keep Taxable and Roths 100% stocks (Total US + Total International).

At some point, if you run out of space in the Rollover IRA, you may have to add a second fund to the other accounts. That is fine as well.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

annielouise
Posts: 275
Joined: Wed May 14, 2008 4:11 pm

Re: contributions not in line with target allocation intl vs domestic

Post by annielouise » Wed Jul 11, 2018 10:42 am

We do a similar strategy with bonds. You may want to check in more frequently than once a year, though, perhaps quarterly. While you may not need to rebalance that often, it wouldn't hurt to check.

CDub
Posts: 19
Joined: Thu Jan 18, 2018 8:27 am

Re: contributions not in line with target allocation intl vs domestic

Post by CDub » Wed Jul 11, 2018 10:50 am

bloom2708 wrote:
Wed Jul 11, 2018 9:32 am
Your plan to split and adjust in your Rollover IRA is good. No tax consequences there.

We continue to up our bond allocation (at re-balance time) in Rollover IRAs to keep Taxable and Roths 100% stocks (Total US + Total International).

At some point, if you run out of space in the Rollover IRA, you may have to add a second fund to the other accounts. That is fine as well.
Thank you, that makes sense. How often have you found a need to up the bond allocation? I see annielouise's recommendation to check it quarterly. The plan will hopefully not be too long term (which would require a second fund on the other accounts), once I receive another salary increase I can start contributing to a roth and then a taxable to add international.

bloom2708
Posts: 4285
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: contributions not in line with target allocation intl vs domestic

Post by bloom2708 » Wed Jul 11, 2018 11:36 am

CDub wrote:
Wed Jul 11, 2018 10:50 am
bloom2708 wrote:
Wed Jul 11, 2018 9:32 am
Your plan to split and adjust in your Rollover IRA is good. No tax consequences there.

We continue to up our bond allocation (at re-balance time) in Rollover IRAs to keep Taxable and Roths 100% stocks (Total US + Total International).

At some point, if you run out of space in the Rollover IRA, you may have to add a second fund to the other accounts. That is fine as well.
Thank you, that makes sense. How often have you found a need to up the bond allocation? I see annielouise's recommendation to check it quarterly. The plan will hopefully not be too long term (which would require a second fund on the other accounts), once I receive another salary increase I can start contributing to a roth and then a taxable to add international.
Maybe set a threshold like 5%. If you are off by 5% (or 3 or x%) then re-balance. Or Quarterly or 5% whichever comes first.
"We are here not to please but to provoke thoughtfulness" Unknown Boglehead

Post Reply