Portfolio review and advice

[Ph0enixPR]

Hello and thanks for reviewing this.


Questions:

1. I’d like to invest the bulk of my VUSXX treasuries according to my desired asset allocation which is shown below. What are your thoughts on the best strategy considering the process and taking into account tax efficient placement, fees, etc.?

2. What are your thoughts on the desired target asset allocation (target AA?)?

3. What other suggestions do you have regarding appropriate fund placement?

4. What do you think about starting to fill the 401k space with international stock via contributions and buying NYS municipal bond in taxable (converting the VUSXX)?



Debt: None.

Tax Filing Status: Single.

Tax Rate: 37% Federal, 6.85% State

State of Residence: NY (not NYC)

Age: ~44
Portfolio size: Several MM.



Asset Class ------------ Target AA -------------------- Actual AA
US Total Stock -------- 53.19% ------------—----------- 43.59%
Internat Total Stock --------35.73% -------------------- 5.47%
Short-Term Treasuries ------1.61% --------------------- 45.04%
US Total Bond ----—----- 6.55% ------------------------ 4.00%
Internat Total Bond --------2.96% -------------------- 0.67%
Alternatives ---------------- 0.01% --------------------- 1.51%


Breakdown:


TAXABLE:
VTSAX (ER 0.04%) 33.41%
VUSXX Vanguard Treasury MM (ER 0.09%) 44.63%


Current TRAD 401k:
FXAIX Fidelity 500 Index Fund (ER 0.02%) 2.09%
FTIHX Fidelity Total Internat Index Fund (ER 0.06%) 1.11%
FXNAX Fidelity US Bond Index Fund (ER 0.03%) 0.27%
Recordkeeping/admin/other fees (0.3167%)


ROTH IRA (Backdoor):
VTIVX VG Target 2045 (ER 0.08%) 8.35%


Old HSA:
FZROX Fidelity ZERO Total Market Index Fund (ER 0%) 0.86%


Old TRAD 403b:
VITSX VANG TOT STK MKT IS (ER 0.03%) 3.30%
VTIAX VANG TOT INTL STK AD (ER 0.12%) 1.39%
VBTLX VANG TOT BD MKT ADM (ER 0.05%) 0.84%
Recordkeeping/admin/other fees (0.135%)


Old ROTH 457:
VWENX Vang Wellington Fund Adm Shares (0.18%) 2.18%
Not sure about other fees here


I-Bonds: 1.57%

[David Jay]

Welcome to the forum!

The first thing I see is a huge chunk of cash in a taxable account. You are in the 37% tax bracket, so you do not want to be receiving income from a money market in taxable. The most efficient use of taxable space is an equity fund where all or almost all dividends are qualified so you pay long term capital gains rates.

Many here would recommend holding fixed income in tax-deferred as all distributions from tax-deferred are taxed the same. Future taxes are due on tax-deferred accounts so selecting lower growth assets in tax-deferred and higher growth assets in Roth and taxable (with long term capital gains rates) is a common strategy.

The Bogleheads Wiki has a page on tax-efficient fund placement here: https://www.bogleheads.org/wiki/Tax-eff ... _placement

[livesoft]

4. What do you think about starting to fill the 401k space with international stock via contributions and buying NYS municipal bond in taxable (converting the VUSXX)?

Good idea. Most of your portfolio is in your taxable account and your tax bracket is high, so this makes sense.

[Ph0enixPR]

Welcome to the forum!

The first thing I see is a huge chunk of cash in a taxable account. You are in the 37% tax bracket, so you do not want to be receiving income from a money market in taxable. The most efficient use of taxable space is an equity fund where all or almost all dividends are qualified so you pay long term capital gains rates.

Many here would recommend holding fixed income in tax-deferred as all distributions from tax-deferred are taxed the same. Future taxes are due on tax-deferred accounts so selecting lower growth assets in tax-deferred and higher growth assets in Roth and taxable (with long term capital gains rates) is a common strategy.

The Bogleheads Wiki has a page on tax-efficient fund placement here: https://www.bogleheads.org/wiki/Tax-eff ... _placement

Thank you for the response. Yes, my goal is to shave down the big chunk of VUSXX and get things closer to my desired allocations as shown above. I will need help on the best strategy to go about doing this.

[David Jay]

After some thought, it appears that your entire fixed-income allocation can fit in the available space in your 401K and 403B. That is where I would put your fixed-income (except for I Bonds, of course). I would fill the Roth accounts and taxable accounts with Total Stock (VTSAX/VTI) and Total International (VTIAX/VXUS).

Since you have no capital gains in taxable money market you are in the fortunate position to accomplish this without taking any capital gains.

[Ph0enixPR]

4. What do you think about starting to fill the 401k space with international stock via contributions and buying NYS municipal bond in taxable (converting the VUSXX)?

Good idea. Most of your portfolio is in your taxable account and your tax bracket is high, so this makes sense.

Thanks for the reply. I think I’ll set my 401k contributions going forward to 100% international stock.

[Ph0enixPR]

After some thought, it appears that your entire fixed-income allocation can fit in the available space in your 401K and 403B. That is where I would put your fixed-income (except for I Bonds, of course). I would fill the Roth accounts and taxable accounts with Total Stock (VTSAX/VTI) and Total International (VTIAX/VXUS).

Since you have no capital gains in taxable money market you are in the fortunate position to accomplish this without taking any capital gains.

Thank you for the insights. Do you think it might actually be more prudent to keep international stock away from taxable and Roth considering my tax bracket?

[David Jay]

After some thought, it appears that your entire fixed-income allocation can fit in the available space in your 401K and 403B. That is where I would put your fixed-income (except for I Bonds, of course). I would fill the Roth accounts and taxable accounts with Total Stock (VTSAX/VTI) and Total International (VTIAX/VXUS).

Since you have no capital gains in taxable money market you are in the fortunate position to accomplish this without taking any capital gains.

Thank you for the insights. Do you think it might actually be more prudent to keep international stock away from taxable and Roth considering my tax bracket?

My issue is holding your fixed income in tax-deferred. If all your fixed income is in tax-deferred and there is still room, I have no problem putting some international in tax-deferred.

[itnetpro]

Hello and thanks for reviewing this.


Questions:

1. I’d like to invest the bulk of my VUSXX treasuries according to my desired asset allocation which is shown below. What are your thoughts on the best strategy considering the process and taking into account tax efficient placement, fees, etc.?

2. What are your thoughts on the desired target asset allocation (target AA?)?

3. What other suggestions do you have regarding appropriate fund placement?

4. What do you think about starting to fill the 401k space with international stock via contributions and buying NYS municipal bond in taxable (converting the VUSXX)?



Debt: None.

Tax Filing Status: Single.

Tax Rate: 37% Federal, 6.85% State

State of Residence: NY (not NYC)

Age: ~44
Portfolio size: Several MM.



Asset Class ------------ Target AA -------------------- Actual AA
US Total Stock -------- 53.19% ------------—----------- 43.59%
Internat Total Stock --------35.73% -------------------- 5.47%
Short-Term Treasuries ------1.61% --------------------- 45.04%
US Total Bond ----—----- 6.55% ------------------------ 4.00%
Internat Total Bond --------2.96% -------------------- 0.67%
Alternatives ---------------- 0.01% --------------------- 1.51%


Breakdown:


TAXABLE:
VTSAX (ER 0.04%) 33.41%
VUSXX Vanguard Treasury MM (ER 0.09%) 44.63%


Current TRAD 401k:
FXAIX Fidelity 500 Index Fund (ER 0.02%) 2.09%
FTIHX Fidelity Total Internat Index Fund (ER 0.06%) 1.11%
FXNAX Fidelity US Bond Index Fund (ER 0.03%) 0.27%
Recordkeeping/admin/other fees (0.3167%)


ROTH IRA (Backdoor):
VTIVX VG Target 2045 (ER 0.08%) 8.35%


Old HSA:
FZROX Fidelity ZERO Total Market Index Fund (ER 0%) 0.86%


Old TRAD 403b:
VITSX VANG TOT STK MKT IS (ER 0.03%) 3.30%
VTIAX VANG TOT INTL STK AD (ER 0.12%) 1.39%
VBTLX VANG TOT BD MKT ADM (ER 0.05%) 0.84%
Recordkeeping/admin/other fees (0.135%)


Old ROTH 457:
VWENX Vang Wellington Fund Adm Shares (0.18%) 2.18%
Not sure about other fees here


I-Bonds: 1.57%

I'm a long time fan of the Wellington fund. Does not seem to fit your needs. It's not a fund I bought until I retired two years ago but was always the plan after we retired. At 44, I was 100% stocks (medium & large domestic growth), pedal to the metal. Helped get us retired young at 52 but not recommended for the faint at heart for sure.

I'm not qualified to give suggestions here other than to say...

Good Luck!

John

[Ph0enixPR]

Hello and thanks for reviewing this.


Questions:

1. I’d like to invest the bulk of my VUSXX treasuries according to my desired asset allocation which is shown below. What are your thoughts on the best strategy considering the process and taking into account tax efficient placement, fees, etc.?

2. What are your thoughts on the desired target asset allocation (target AA?)?

3. What other suggestions do you have regarding appropriate fund placement?

4. What do you think about starting to fill the 401k space with international stock via contributions and buying NYS municipal bond in taxable (converting the VUSXX)?



Debt: None.

Tax Filing Status: Single.

Tax Rate: 37% Federal, 6.85% State

State of Residence: NY (not NYC)

Age: ~44
Portfolio size: Several MM.



Asset Class ------------ Target AA -------------------- Actual AA
US Total Stock -------- 53.19% ------------—----------- 43.59%
Internat Total Stock --------35.73% -------------------- 5.47%
Short-Term Treasuries ------1.61% --------------------- 45.04%
US Total Bond ----—----- 6.55% ------------------------ 4.00%
Internat Total Bond --------2.96% -------------------- 0.67%
Alternatives ---------------- 0.01% --------------------- 1.51%


Breakdown:


TAXABLE:
VTSAX (ER 0.04%) 33.41%
VUSXX Vanguard Treasury MM (ER 0.09%) 44.63%


Current TRAD 401k:
FXAIX Fidelity 500 Index Fund (ER 0.02%) 2.09%
FTIHX Fidelity Total Internat Index Fund (ER 0.06%) 1.11%
FXNAX Fidelity US Bond Index Fund (ER 0.03%) 0.27%
Recordkeeping/admin/other fees (0.3167%)


ROTH IRA (Backdoor):
VTIVX VG Target 2045 (ER 0.08%) 8.35%


Old HSA:
FZROX Fidelity ZERO Total Market Index Fund (ER 0%) 0.86%


Old TRAD 403b:
VITSX VANG TOT STK MKT IS (ER 0.03%) 3.30%
VTIAX VANG TOT INTL STK AD (ER 0.12%) 1.39%
VBTLX VANG TOT BD MKT ADM (ER 0.05%) 0.84%
Recordkeeping/admin/other fees (0.135%)


Old ROTH 457:
VWENX Vang Wellington Fund Adm Shares (0.18%) 2.18%
Not sure about other fees here


I-Bonds: 1.57%

I'm a long time fan of the Wellington fund. Does not seem to fit your needs. It's not a fund I bought until I retired two years ago but was always the plan after we retired. At 44, I was 100% stocks (medium & large domestic growth), pedal to the metal. Helped get us retired young at 52 but not recommended for the faint at heart for sure.

I'm not qualified to give suggestions here other than to say...

Good Luck!

John

Thanks for making a good point. I do need to get out of Wellington soon.

[Ph0enixPR]

I'm a long time fan of the Wellington fund. Does not seem to fit your needs. It's not a fund I bought until I retired two years ago but was always the plan after we retired. At 44, I was 100% stocks (medium & large domestic growth), pedal to the metal. Helped get us retired young at 52 but not recommended for the faint at heart for sure.

I'm not qualified to give suggestions here other than to say...

Good Luck!

John

Thanks for making a good point. I do need to get out of Wellington soon.

[Ph0enixPR]

Thank you for the insights. Do you think it might actually be more prudent to keep international stock away from taxable and Roth considering my tax bracket?

My issue is holding your fixed income in tax-deferred. If all your fixed income is in tax-deferred and there is still room, I have no problem putting some international in tax-deferred.

I see. So ... about converting (from stock) to more bonds/fixed-income in the 401K and 403B, and converting (from bond) to more US and international stock in the Roth and taxable accounts, what would be the pros and cons of converting now vs closer to retirement? Is it mainly that that I would take on more risk by waiting?

[David Jay]

My issue is holding your fixed income in tax-deferred. If all your fixed income is in tax-deferred and there is still room, I have no problem putting some international in tax-deferred.

I see. So ... about converting (from stock) to more bonds/fixed-income in the 401K and 403B, and converting (from bond) to more US and international stock in the Roth and taxable accounts, what would be the pros and cons of converting now vs closer to retirement? Is it mainly that that I would take on more risk by waiting?

The core idea goes back to Uncle Sam "owning" a portion of every tax-deferred account, while Roth accounts are permanently tax free and taxable accounts can be managed in a tax-efficient manner, generating only long term capital gains (which are taxed at a lower rate).

Those three account characteristics lead logically to three placements:
1. Highest potential growth assets in Roth.
2. Only tax-efficient funds in taxable. These are funds that generate exclusively or nearly exclusively qualified dividends.
3. Lowest potential growth assets in tax-deferred in order to control the growth of the assets subject to regular income tax rates at distribution (all distributions from tax-deferred come out at regular income tax rates).

I want lowest-growth assets in tax-deferred for my entire investing lifetime. Waiting means more distributions in retirement that are subject to regular income tax rates. I do not want any interest-generating assets in taxable as those are taxed at regular income tax rates. I would prefer not to hold municipal bonds at all as they do not offer competitive interest rates.

[Ph0enixPR]

Waiting means more distributions in retirement that are subject to regular income tax rates.

Wow, thanks for the clear explanation. It's much clearer now. Question about this part... this is only true if you end up surpassing your target asset allocation, though, correct? So if I keep it stock, then convert to bond when I'm approaching my target bond asset allocation %, it's the same result?

[David Jay]

Waiting means more distributions in retirement that are subject to regular income tax rates.

Wow, thanks for the clear explanation. It's much clearer now. Question about this part... this is only true if you end up surpassing your target asset allocation, though, correct? So if I keep it stock, then convert to bond when I'm approaching my target bond asset allocation %, it's the same result?

I'm struggling to understand why you repeatedly ask a version of this same question - you keep asking about keeping tax-deferred in stock and converting to bond at a later date.

Any stock you hold in tax-deferred in any period of your investing lifetime is very likely (not guaranteed, but the reason we hold stock is for the presumed equity premium) to grow faster than bonds. That increases the balance in tax-deferred which means more taxes to be paid.

Again, all distributions from tax-deferred are subject to higher tax rates than stock funds in taxable which are taxed at reduced (i.e. LTCG) tax rates.

[David Jay]

On a slightly different topic:

As you get closer to retirement, you may choose to increase your fixed income percentage of your portfolio to the place where it cannot be entirely held in tax-deferred. If/when that happens, I agree with "livesoft" (above) that it is better to hold tax exempt mutual funds in taxable rather than utilize any Roth space for fixed income.

Roth is the most valuable space you have, it should always be used for assets with the highest likely return.

[dratkinson]

Recommended bond book, The Only Guide to a Winning Bond Strategy You'll Ever Need, Swedroe.  Why?  So you know which bonds to avoid.  Then select your bonds from the remaining.
--You can get the book from a public library.
--But if you want to buy from Amazon, this link contains BH affiliate tag to earn a referral fee: https://www.amazon.com/s?k=the+only+gui ... ads.org-20


The general advice is to become more conservative as we age (own: less stocks, more bonds).  The advice is expressed as "own your age in bonds, or age -10 if aggressive investor".  As you are 44yo, your total bonds are not too far from what would be expected.  But we could try to make them more tax-efficient, to give you more after-tax income.


As you are a Vanguard client (own VTSAX in taxable, only way to do that cheaply is to be a Vanguard client) and a NY resident, could consider Vanguard tax-exempt (TE) bond funds.
--TBM* (total bond market index) fund: fed+state taxed.
--Treasury funds: fed taxed, but state TE.
--National muni funds (hold individual muni bonds from all states): fed TE, but state taxed.
--Single-state muni funds (hold individual muni bonds from one state): fed+state+city/other TE.

* Since TBM is preferred bonds of 3fund portfolio, I compare all results to TBM looking for slightly more after-tax income, with only slightly more risk, and within my risk tolerance.  Why?  I want more after-tax income (typically stable).  Additional risk is typically infrequent, and can be TLHed.
See: https://www.bogleheads.org/wiki/Three-fund_portfolio
See: https://www.bogleheads.org/wiki/Tax_loss_harvesting


Since fed tax bite is larger than state's, I believe prioritizing its reduction vs state's gives more after-tax income.

You get to keep only the money (yield) remaining after all taxes are paid:
   After-tax income = SEC yield (bank APY) x (1 -fed tax bracket* -NIIT* -state tax bracket* -city/other tax bracket*).  (* If applicable.)

Computing expected after-tax income (yield remaining) for ALL bonds is labor intensive, its less work to compute TEY (taxable-equivalent yield) of TE bonds.  Then compare the one TEY to all taxable bonds (SEC yield) or CDs (APY).
   TEY = SEC yield (bank APY) / (1 -fed tax bracket* -NIIT* -state tax bracket* -city/other tax bracket*).  (* If applicable.)


NIIT (net investment income tax).  You owe NIIT.  Why?
--Single NIIT threshold: $200K.  Search: https://www.google.com/search?q=niit+in ... gle+person
--Single 37% fed taxable bracket floor: >$600K.  Search: https://www.google.com/search?q=2024+fe ... ets+single


TEY examples.  Compare TEY to taxable bond SEC yield and bank APY.  Higher is better.
--5yr CD rates, search: https://www.google.com/search?q=5yr+cd+rates
--VBTLX (TBM) SEC yield= 4.54%; see: https://investor.vanguard.com/investmen ... file/vbtlx
--VUSTX (LT treasury) SEC yield= 4.61%; 4.61/(1 -.0685)= 4.95% TEY; see: https://investor.vanguard.com/investmen ... file/vustx
--VWIUX (IT national muni) SEC yield= 3.48%; 3.48/(1 -.37 -.038)= 5.88% TEY; see: https://investor.vanguard.com/investmen ... file/vwiux
--VWLUX (LT national muni) SEC yield= 3.85%; 3.85/(1 -.37 -.038)= 6.50% TEY; see: https://investor.vanguard.com/investmen ... file/vwlux
--VNYTX (LT NY muni) SEC yield= 3.61%; 3.61/(1 -.37 -.038 -.0685)= 6.90% TEY; see: https://investor.vanguard.com/investmen ... file/vnytx
--VMLUX* (limited-term national muni) SEC yield= 3.28%; 3.28/(1 -.37 -.038)= 5.54% TEY; see: https://investor.vanguard.com/investmen ... file/vmlux
--VYFXX* (NY mmkt)= 2.25%; 2.25/(1 -.37 -.038 -.0685)= 4.30% TEY; see: https://investor.vanguard.com/investmen ... file/vyfxx

* N.B.  Expect the last 2 funds' SEC yields to drop steeply after the current inverted-yield interest-rate environment returns to normal.
Inverted-yield indicated by shorter terms paying more than longer, see: https://home.treasury.gov/resource-cent ... value=2024


Forum wisdom.  To minimize muni single-state default risk, and hold bonds of IT duration---recommended as reported to be on the "sweet spot" of the risk/reward yield curve---hold a 50/50 mix of VNYTX (LT)/VMLUX (ltd-term).  The combination: drops duration to IT, yield to weighted average, with most of your dividends triple TE. See "duration": https://www.bogleheads.org/wiki/Bonds:_ ... s#Duration


TSM (total stock market) vs TISM (total international stock market).  TSM expected to be slightly more tax-efficient. Why?
--TSM's return is >90% QDI (qualified dividend income, taxed like LTCG).  See: https://www.bogleheads.org/wiki/Qualified_dividend
--TISM's return is >70% QDI + ~10% FTC (foreign tax credit). See: https://www.bogleheads.org/wiki/Foreign_tax_credit

Additional allocation to TISM. S&P500 is reported to earn ~40% of its return from international business. S&P500 is ~80% of TSM. So TSM's return is ~30% (=~40% x ~80%) from international---just don't get FTC with TSM. Do you need an additional allocation to TISM greater than that embedded in TSM? Your choice.

Allowed decisions for this are an additional allocation to TISM of 0-50%: 0% because you believe TSM contains enough, 50% because the US is ~50% of the world economy, so you believe TISM is under-represented in your investments. Your choice.

Disclosure. I have a small allocation to TISM, because I buy it when I need more stocks and TSM is more expensive.


Suggestions.
--Consider using munis in taxable.  This keeps some bonds in taxable (safer than stocks if you need the money) and increases tax-efficiency.
--Consider skewing tax-deferred accounts to bonds.  You need bonds, some can go here, reducing expected growth/tax on withdrawal/conversion/RMD.
--Consider holding 100% stocks in tax-free (Roth) accounts.  Maximizes expected tax-free growth/withdrawals/bequests.


Idea: sample tax returns.  The TEYs miss all tax code effects: the right hand giveth, the left hand taketh away.  To account for them, create a sample tax return for each bond candidate in taxable.  Which bonds are expected to give you the most after-tax income?
--After-tax income = total income (fed taxable + munis) -fed tax owed -state tax owed -city/other tax owed.
--Use same $principal for each bond candidate to create tax return input: expected annual dividend = $principal x SEC yield (bank APY for CDs.)


Ideas to increase tax efficiency.  
--After reading/applying wiki topic: https://www.bogleheads.org/wiki/Tax-eff ... _placement
--Look at your last Sch B for additional opportunities to increase tax efficiency.  How?
   Sch B part 1.  Things reported here (1099INT: bank/savings bond interest, account opening bonuses) taxed as ordinary income: eliminate or reduce.
   Sch B part 2.  Things reported here (1099DIV) should have offsetting tax benefits for: QDI, LTCG, FTC, or TE dividends.



The SWAN test.  We can give you some ideas, but the choices must be yours.  Why?  Because you're the only one who must be satisfied with your investments.  Which ideas should you use?  Use the ones that allow you to Sleep Well At Night.


Example 1.  You've asked about what to put in your tax-deferred accounts.  
--If you skew toward bonds, you'll minimize growth/taxes on withdrawals/conversions/RMDs.
--If you skew toward stocks, you'll maximize growth/taxes on withdrawals/conversions/RMDs.

Idea. Ask your wiser retired self what you should do with your tax-deferred accounts.  What does he want?  
--If he wants to maximize Roth conversions/bequests, then fill it with stocks.  Why?  Because your taxable account is large enough for all your bonds.
--If he wants to minimize bequests/taxes on withdrawals/conversions/RMDs, then fill it with bonds.
--If he still doesn't know, then split the difference and use 50/50 stocks/bonds.


Example 2.  To pay the absolute minimum on tax-deferred withdrawals/conversions: fill it with bonds and don't contribute more.  Why?

This is not as unreasonable as it sounds.  Why?  It was alluded to above, but you may not have put the pieces together.  What?

There is a hierarchy of desirability among the account types.
--Tax-deferred.  All withdrawals taxed as ordinary income.  RMDs apply*.  There are some benefits remaining in your tax bracket.
   Employer accounts (t401k).  Contributions are tax deductible.
   Personal traditional IRA (tIRA).  Contributions are NOT tax deductible, for you.
--Taxable.  Contributions already taxed.  Withdrawals benefit from LTCG.  Other benefits: QDI, FTC, TE dividends.  No RMDs*.
--Tax-free.  Contributions already taxed.  All withdrawals are tax free.  No RMDs*.

* RMDs expected to increase taxes/tax bracket on surviving spouse, so BHs try to avoid RMDs: https://www.kitces.com/blog/tax-rate-eq ... nversions/

Resulting in this hierarchy:
   (least desirable account type):   tax-deferred --- taxable --- tax-free   :(most desirable account type)

Meaning, if your taxable account is large enough to fully pay for your retirement, so you'll never need to withdraw from tax-deferred or tax-free for living expenses or to bequeath, then you can stop contributing to tax-deferred.  Should you do this?  Ask your wiser retired self.


Example 3.  If your wiser retired self really wants to grow the Roth, assuming same working/retired tax brackets, then (generally*) the least tax paid will be on Roth contributions today.
--If employer has a Roth option, use it.
--If employer does NOT have a Roth option, but supports mega-backdoor Roth technique, use it: https://www.bogleheads.org/wiki/Mega-backdoor_Roth
--If your tIRA contribution is NOT tax deductible, then use backdoor Roth technique: https://www.bogleheads.org/wiki/Backdoor_Roth

* Exceptions.  If you expect to be in lower tax bracket in retirement:
--If >10yrs to retirement.  Contribute to Roth today.  Why?  Roth growth to retirement is expected to outweigh tax cost on contribution.
--If <10yrs to retirement.  Contribute to traditional options today, convert to Roth in retirement.  Why?  Tax benefit on delayed conversion is expected to outweigh lost Roth growth from earlier contribution.


Go through same process with all of your decisions.  Choose options that please your wiser retired self and allow you to pass the SWAN test today. There may be little tweaks we can use to make our investments better fit our needs.  But you'll need to look at things from all angles to identify the tweaks.



Disclosure.  Whatever investments we choose, we'll be paying taxes on them: you may hope for the best, but plan for the worst.
--If we create sample tax returns before we buy, then we can make a more informed choice.
--Some BHs create a spreadsheet to: while work to wag income, contributions, inflation, growth, account balances, taxes to retirement; and then in retirement to wag SS, inflation, growth, account balances, taxes on withdrawals/conversions to avoid RMDs on surviving spouse.  This is an iterative process and updated/refined annually.

When I made my taxable bond selection decisions, creating sample tax returns was of great help.  How?  Given known SEC yields to wag expected dividends based on same $principal with different bonds, the tax software did the heavy lifting of applying the tax code, so simplified my understanding of expected quantifiable outcomes: after-tax incomes possible, tax bracket creep,....

My only subjective decision was "could I tolerate the additional risk associated with reaching for more return?"  That decision was made easier by additional BH knowledge and plan tweaking:
--Bonds are reported to lose 5-15% during a crash, so I increased bond allocation to ~120% (=1/(1 -.15)) of anticipated need, and stopped worrying. Why? Worse case: the money would be there if needed, but maybe with a tax-reducing CL (capital loss) on the sale.
--If the risk appears---NAV annoys me by dropping 5-15%---then I can TLH it.

When I asked my retired self "What do you want to do?", he said "Go for it!". So putting the pieces together allowed me to be comfortable reaching for more after-tax income by using munis not generally recommended for folks in lower tax brackets.  I pass the SWAN test.


How does one learn this stuff?  You start from zero.
--Read recommended books (search for wiki list) and forum.  
--Ask questions.  
--Follow forum topics that interest you where others ask for help.  Why?  Their needs/answers may apply to what you want to do.  And you may know something that gives them an idea that helps them solve a problem.  Sometimes they come back a few years later and post a followup to their topic in which they thank the forum for its help; that's a nice warm fuzzy.



Welcome.



Edit.  Clarity, second thoughts.