Emergency funds: I have 30k in my taxable Vanguard account earmarked for a emergency fund (see below for more details). In a real emergency we'd also have access to a 100k HELOC if necessary.
Debt: Only debt is a mortgage, we owe ~190k (monthly payment is $2100, original loan balance 330k, house is probably worth ~800k)
Tax Filing Status: MFJ, two dependent children (ages 1 and 4)
Tax Rate: In 2018, we were in the 35% federal bracket (no state income tax)
State of Residence: Washington
Total assets: ~530k
I keep roughly ~10-15k in a checking account at a nation-wide brick-and-mortar bank for monthly expenses, etc. Aside from that, we have the following assets (all at Vanguard):
105k VWIUX (Vanguard Intermediate-Term Tax-Exempt Fund)
53k VFORX (Vanguard Target Retirement 2040 Fund)
My Roth IRA
64k VFORX (Vanguard Target Retirement 2040 Fund)
Wife's Roth IRA
81k VFORX (Vanguard Target Retirement 2040 Fund)
184k VFORX (Vanguard Target Retirement 2040 Fund)
529 for kid #1
22k Vanguard Aggressive Age-Based Option
529 for kid #2
22k Vanguard Aggressive Age-Based Option
We treat our VWIUX holding in our taxable account as our "savings" (since we don't have a traditional savings account anymore). We use YNAB (You Need a Budget) and we treat that money as part of our budget, meaning it is just a big pool of money virtually divided into many different "sub-accounts" for different purposes (e.g., 30k in an "emergency fund", a bunch set aside for home maintenance, various medium-term spending goals, etc.).
Up until about a month ago, I had a somewhat more complex allocation. I had all our tax-advantaged retirement accounts invested in a mix of Total Stock Market, Total Bond Market, and Total International Stock Market funds, and I had a spreadsheet where I kept track of all the balances and tried to maintain a ~70/30 stock/bond split (but I ignored the VWIUX holding, treating it as non-retirement savings). Recently I got fed up with this and decided to just throw everything into the 2040 Target Retirement fund across all of our accounts. Now I'm sorta wondering if that was a mistake.
For some context, we are planning to relocate to Europe in mid-2019 for roughly 2-5 years (on the lower end if we don't like it, on the higher end or even longer if we end up really enjoying it). I have a job lined up and I will be getting paid in Euros, so I don't exactly know how we'll keep investing in our US portfolio (not sure if I'll be eligible for a 401k, may not have earned income to contribute to Roth IRAs, etc). I also want it to be pretty hands-off so that we can focus on raising our kids in a new and exciting place, traveling, etc. Even though looking at account balances once a quarter and rebalancing is pretty easy, it's also one extra thing I have to think about and it's an opportunity to meddle and make changes when they're probably unnecessary.
- How big of a problem is it that I'm holding a Target Retirement fund in my taxable Vanguard account? I know it's not very tax-efficient for someone in my tax bracket, but I don't know how to weigh that against the simplicity of just having one fund to throw money into (not worrying about rebalancing, fighting the temptation to "tweak" things). One option I thought of is I could just throw it all into a more tax-efficient Total Stock Market fund or similar, but then I'm at 100% stocks in there (seems a bit risky?). Unless I should consider my VWIUX holding to count as a "bonds" holding? Up until now, I've been ignoring that holding as part of my AA since I was treating it basically as a savings account and not part of my normal retirement savings.
- Am I making a mistake by not having a traditional savings account? The goal with VWIUX was to try to keep pace with inflation without too much risk (though we can easily tolerate some loss of principal in there). I know there are online savings accounts that pay more than the 0.04% my brick-and-mortar bank will offer, or also CDs and such. But I also like keeping our financial life as simple as possible, and I don't want to have yet another account I have to login to periodically.
- How can I continue to invest while we're living in Europe? I know that might be hard to answer since it might depend on a lot of specifics, but I'm curious if others have been in this situation and what they did. Should/can we open EU investment accounts and invest there? Or periodically transfer money from EUR back into USD and invest in my Vanguard taxable account? Are we eligible to continue making Roth IRA contributions if we don't have any earned income in the US?