Allocation weighting among accounts

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Topic Author
DavidREng
Posts: 7
Joined: Thu Oct 13, 2016 10:24 pm

Allocation weighting among accounts

Post by DavidREng » Tue Sep 10, 2019 2:31 pm

I'm trying to create a tax-wise asset allocation using taxable, tax-deferred 401(k), and tax-free Roth accounts. However, a dollar in my Roth is worth more than a dollar in my 401(k), which is worth more than a dollar in my taxable account. Should added weight be given to balances in a tax-advantaged space to account for its greater after-tax value?

dbr
Posts: 30124
Joined: Sun Mar 04, 2007 9:50 am

Re: Allocation weighting among accounts

Post by dbr » Tue Sep 10, 2019 2:34 pm

See https://www.bogleheads.org/wiki/Tax-adj ... allocation

and

https://www.google.com/search?sitesearc ... x+adjusted

My opinion is that for most people it is not worth bothering. If you want a considered academic analysis be sure to read the Reichenstein papers referenced in the Wiki, and if the links are broken, Google for him.

Topic Author
DavidREng
Posts: 7
Joined: Thu Oct 13, 2016 10:24 pm

Re: Allocation weighting among accounts

Post by DavidREng » Tue Sep 10, 2019 2:40 pm

Thanks for the link. I have been googling that question but didn't know how to properly phrase my intent!

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