Building Taxable Potfolio

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Topic Author
rascott
Posts: 106
Joined: Wed Apr 15, 2015 10:53 am

Building Taxable Potfolio

Post by rascott » Tue Jun 11, 2019 7:30 pm

To date, all my non-real estate investing has been done in tax- advantaged retirement accounts. We aren't quite maxing them, but getting close.

That said....I'm 22 years from being able to touch that money penalty-free..... and would like to start building investments that I can (possibly) access before I hit retirement age. Those retirement accounts, that money is locked off and it's invested almost entirely in equities, I don't even really look at it.

This taxable account would possibly be for home renovations, buying cars, snagging another rental property if a deal comes by, etc....No definite time frame.... but have $2-3k/mo I can start putting to work.

Does something like a 60/40 allocation make sense, since its a possibly shorter time frame? Or should I just consider this AA just like I would retirement accounts? And if the market drops I'd just put off whatever large purchases I wanted to make....none of it would be for money that I HAVE to get at.

Rudedog
Posts: 52
Joined: Wed Aug 01, 2018 3:15 pm

Re: Building Taxable Potfolio

Post by Rudedog » Tue Jun 11, 2019 8:58 pm

I'm in a similar situation, I have gone 50/50, with the fixed income portion mostly in a CD ladder. If the market takes a dump, I'll tap my CDs.

delamer
Posts: 7830
Joined: Tue Feb 08, 2011 6:13 pm

Re: Building Taxable Potfolio

Post by delamer » Tue Jun 11, 2019 9:37 pm

You are at cross purposes.

You say the money is for “possibly shorter time frame” but then you say you’d just put off the purchases if the market drops.

So you want to do home renovations or buy a new car or you find a good deal on a property, but you can wait 3 years (for example) until the market comes back?

If you really want go use the money as you said, then go with cash equivalents/TIPS/short-term bonds.

Topic Author
rascott
Posts: 106
Joined: Wed Apr 15, 2015 10:53 am

Re: Building Taxable Potfolio

Post by rascott » Wed Jun 12, 2019 7:07 am

delamer wrote:
Tue Jun 11, 2019 9:37 pm
You are at cross purposes.

You say the money is for “possibly shorter time frame” but then you say you’d just put off the purchases if the market drops.

So you want to do home renovations or buy a new car or you find a good deal on a property, but you can wait 3 years (for example) until the market comes back?

If you really want go use the money as you said, then go with cash equivalents/TIPS/short-term bonds.

Yes...nothing here would be a definite "need". I'm willing to take a decent level of market risk...as I may well not end up using much of this money for a decade+. There is likely $60-80k in renovations we'd like to do to our home over time.....we bought a bit of a fixer. But that's all really lifestyle/consumption renovations (new kitchens, bathrooms, etc).....nothing that HAS to be done.

Also wouldn't mind some form of early retirement from the JOB... or at least a career shift to more self-employment type work...in 10-12 years....and having all money tied up in retirement accounts wouldn't help with that transition.

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ruralavalon
Posts: 15677
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: Building Taxable Potfolio

Post by ruralavalon » Wed Jun 12, 2019 7:17 am

rascott wrote:
Tue Jun 11, 2019 7:30 pm
To date, all my non-real estate investing has been done in tax- advantaged retirement accounts. We aren't quite maxing them, but getting close.

That said....I'm 22 years from being able to touch that money penalty-free..... and would like to start building investments that I can (possibly) access before I hit retirement age. Those retirement accounts, that money is locked off and it's invested almost entirely in equities, I don't even really look at it.

This taxable account would possibly be for home renovations, buying cars, snagging another rental property if a deal comes by, etc....No definite time frame.... but have $2-3k/mo I can start putting to work.

Does something like a 60/40 allocation make sense, since its a possibly shorter time frame? Or should I just consider this AA just like I would retirement accounts? And if the market drops I'd just put off whatever large purchases I wanted to make....none of it would be for money that I HAVE to get at.
rascott wrote:
Wed Jun 12, 2019 7:07 am
. . . . .
Yes...nothing here would be a definite "need". I'm willing to take a decent level of market risk...as I may well not end up using much of this money for a decade+. There is likely $60-80k in renovations we'd like to do to our home over time.....we bought a bit of a fixer. But that's all really lifestyle/consumption renovations (new kitchens, bathrooms, etc).....nothing that HAS to be done.

Also wouldn't mind some form of early retirement from the JOB... or at least a career shift to more self-employment type work...in 10-12 years....and having all money tied up in retirement accounts wouldn't help with that transition.

In my opinion a 60/40 equity/fixed income allocation is suitable for those sorts of uses with shorter but indefinite time frames.
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