blackdiamond
Initiate Member
Joined: Jan 17, 2011 3:34:08 GMT -5
Posts: 85
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Post by blackdiamond on Jan 17, 2011 7:23:51 GMT -5
Hi, just joined the board - had been lurking for a long time on YM.
Background:
I currently have all 4 vehicles of retirement (401k, Roth, Taxable and regular savings). I am currently unable to contribute to the 401K due to the type of work I am doing. So I have been using the Roth and taxable as my retirement vehicle for the past year.
My current allocation is: 65% stock (57% - US stock ,8 % - Int'l stock), 10% Bond and 26 % Cash
I hold target date funds in my 401k and Roth and Total stock market in the taxable all held at Schwab
My Question(s):
1] I am trying to re-balance my account to be 80% stock (55% - US, 25% - Int'l) and 20% bond and cash. I am thinking of buying international stock for both the roth and taxable to get me portfolio in check. (total saved to date - 49k). Is this a good idea or should I stop contributing to the savings account till the AA is back where I want it to be?
2] Are expense ratios calculated as an average of all the funds you have in your portfolio?
Sorry if the questions seem like no brainer but I've been stuck in indecision on how to proceed and any suggestions would be helpful
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Post by Savoir Faire-Demogague in NJ on Jan 17, 2011 9:00:52 GMT -5
The biggest question is how old are you?
This will determine your investment horizon.
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bimetalaupt
Senior Member
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Post by bimetalaupt on Jan 17, 2011 9:14:43 GMT -5
Hi, just joined the board - had been lurking for a long time on YM. Background: I currently have all 4 vehicles of retirement (401k, Roth, Taxable and regular savings). I am currently unable to contribute to the 401K due to the type of work I am doing. So I have been using the Roth and taxable as my retirement vehicle for the past year. My current allocation is: 65% stock (57% - US stock ,8 % - Int'l stock), 10% Bond and 26 % Cash I hold target date funds in my 401k and Roth and Total stock market in the taxable all held at Schwab My Question(s): 1] I am trying to re-balance my account to be 80% stock (55% - US, 25% - Int'l) and 20% bond and cash. I am thinking of buying international stock for both the roth and taxable to get me portfolio in check. (total saved to date - 49k). Is this a good idea or should I stop contributing to the savings account till the AA is back where I want it to be? 2] Are expense ratios calculated as an average of all the funds you have in your portfolio? Sorry if the questions seem like no brainer but I've been stuck in indecision on how to proceed and any suggestions would be helpful Black Diamond, I do not know why you can not take the 401K to the max and save taxes.. But you can use a simplified Retirement plan .. Key-hold fund up to 20,000 a year.. I have been in the 60/40 camp for years aka Efficient Frontier.. Most have told me I was nuts esp in 1999.. But with rebalancing it has beat Stocks my a wide margin over the last 10 years.. Esp Sharpe index.  As far as return I have done better in Oil and gas or Art then the stock market. I did about 50-53% investing on my Net Income for last 15 years before I retired early so I know a thing or two about cash management. It sounds like you need a new CPA.. Please do not take that wrong.. Bet you are paying too much taxes.  If that does not save you $$$ then try Frank at MT or Revo ... All you are doing in going to kill you if you make a real huge hit and get caught with AMT..  Just a thought, Bi Metal Au Pt |
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bimetalaupt
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Joined: Oct 9, 2011 20:29:23 GMT -5
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Post by bimetalaupt on Jan 17, 2011 9:23:28 GMT -5
The biggest question is how old are you? This will determine your investment horizon. Age is very much told... Young Lady!!!! With a Budget!!!  and goals!!! ;D ![]() [/img] Just a thought,  Single Bi Metal Au P PS: you did see I did not say buy gold.. Attachments:
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blackdiamond
Initiate Member
Joined: Jan 17, 2011 3:34:08 GMT -5
Posts: 85
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Post by blackdiamond on Jan 17, 2011 9:34:00 GMT -5
The biggest question is how old are you? This will determine your investment horizon. Sorry about that, I am 32 single no kids and plan on working till I'm at least 60. |
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Post by Savoir Faire-Demogague in NJ on Jan 17, 2011 9:39:01 GMT -5
You should be at least 80% in equities, another 10% in some sort of commodities, natural resources indexes, etc.
Not more than 10% in a fixed income allocation.
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blackdiamond
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Post by blackdiamond on Jan 17, 2011 9:44:59 GMT -5
bimetalaupt - I much prefer stock investments since they are more familiar to me. Yes my tax liability will be higher since I can not contribute to the 401k, but the other perks of the assignment more than out way any tax liabilities: my only expense is food / clothing and gas (for now).
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blackdiamond
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Joined: Jan 17, 2011 3:34:08 GMT -5
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Post by blackdiamond on Jan 17, 2011 9:49:32 GMT -5
You should be at least 80% in equities, another 10% in some sort of commodities, natural resources indexes, etc. Not more than 10% in a fixed income allocation. Thanks Savoir Faire, I will look into what sort of commodities indexes are available at Schwab and add them to my roth. I'll also stop contributing to the savings account since that seems to be the reason why my allocations are off. |
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Post by Savoir Faire-Demogague in NJ on Jan 17, 2011 9:49:55 GMT -5
bimetalaupt - I much prefer stock investments since they are more familiar to me. Yes my tax liability will be higher since I can not contribute to the 401k, but the other perks of the assignment more than out way any tax liabilities: my only expense is food / clothing and gas (for now).
BiMetal is suggesting investing in collectibles(ie: art). Avoid collectibles like the plague. Nothing wrong with getting into the energy sector using a variety of vehicles. By holding an sp 500 index you have numerous energy companies.
Don't select investments based solely on tax advantages/consequences. Hold an investment for its investment value.
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bimetalaupt
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Post by bimetalaupt on Jan 17, 2011 10:07:56 GMT -5
bimetalaupt - I much prefer stock investments since they are more familiar to me. Yes my tax liability will be higher since I can not contribute to the 401k, but the other perks of the assignment more than out way any tax liabilities: my only expense is food / clothing and gas (for now). Black Diamond, It was on the other end I got caught.. With huge gains in 1999 we got killed with Alternative Minimum Tax.. Also you are very young so your capital gains could be very high and if you need to move money the taxes could kill you. The best part of Tax Account is you do get Capital gains vs all monies received are normal income. The Rebalance game is best played in a 401k or 403B. The problem is when bonds are hot, Stocks are not!! Rebalance will improve your total performance and raise your Sharpe index.. It is a trading game in you 401K. Target Funds will do this for you. I have a trading account at Schwab where I did shorts against the T-Bond equity (90% cash) so I made about 4 % more then market on these when the DJIA was too high for the economy. All income was taxed at 38% normal rate vs Capital gains rate. You may want to run this by Investing Basics... There are a some real sharp traders their!!! I posted a chart on Mutual Independent investments.. Something to think about over the years.. Like Bonds and stocks move with a negative correlation.. How about that for MBA jargon.. Simply when high beta stocks move up; bonds move down... Just a thought,,,, Best of luck Bruce...AKA Bi Metal Au Pt Attachments:
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bimetalaupt
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Post by bimetalaupt on Jan 17, 2011 10:20:38 GMT -5
bimetalaupt - I much prefer stock investments since they are more familiar to me. Yes my tax liability will be higher since I can not contribute to the 401k, but the other perks of the assignment more than out way any tax liabilities: my only expense is food / clothing and gas (for now). BiMetal is suggesting investing in collectibles(ie: art). Avoid collectibles like the plague. Nothing wrong with getting into the energy sector using a variety of vehicles. By holding an sp 500 index you have numerous energy companies. Don't select investments based solely on tax advantages/consequences. Hold an investment for its investment value. S.F., I starting buying a few Works of art to cover my bare walls. Picasso prices moves very much with stock market prices world wide. The trick is to buy when no one else is. It has been a lot of fun but I have been lucky and love to buy what I want to hang on my walls. I had never thought of selling. As far as oil and gas production goes we have direct holdings rather then stock.. It has been very good to me and my family. I used to use my extra money from a second job to add to my mineral rights and drilling.. It is also fun stuff,esp with extra income now now that I have retired. I also used my income to pay for my MBA.. That has also paid about 15% on my investment.  Just a thought, Bi Metal Au Pt |
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blackdiamond
Initiate Member
Joined: Jan 17, 2011 3:34:08 GMT -5
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Post by blackdiamond on Jan 17, 2011 10:36:05 GMT -5
bimetalaupt - maybe re-balancing wasn't the right choice of word. I have no plans of selling any of my funds in the taxable account right now, just want to add more to that and re-balance using roth and the 401k. I think my main issue is that I don't have enough international exposure (currently at 8%) which I can fix by buying into international index fund.
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bimetalaupt
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Joined: Oct 9, 2011 20:29:23 GMT -5
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Post by bimetalaupt on Jan 17, 2011 10:50:38 GMT -5
bimetalaupt - maybe re-balancing wasn't the right choice of word. I have no plans of selling any of my funds in the taxable account right now, just want to add more to that and re-balance using roth and the 401k. I think my main issue is that I don't have enough international exposure (currently at 8%) which I can fix by buying into international index fund. Black Diamond, International is good move to balance the USA.. IE reduce risk / return or improve your Sharpe index.. I have about 43% international and have made a lot more money over the last 10 years on international Stock and Swiss Bonds.. Investing cam be fun.. I have loved most of the people I have meet over the years by doing the thing I love best. As you can tell, I may be 65 but I am a very aggressive investor.. Risk tolerance is not age related.. Rules are nice but often wrong. Just a thought, Bi Metal Au Pt Attachments:
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Plain Old Petunia
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bloom where you are planted
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Post by Plain Old Petunia on Jan 17, 2011 12:10:14 GMT -5
Thanks Savoir Faire, I will look into what sort of commodities indexes are available at Schwab and add them to my roth. I'll also stop contributing to the savings account since that seems to be the reason why my allocations are off. Black Diamond, Is this savings account your emergency fund, or is it actually earmarked for retirement? If it is your emergency fund or other short-term savings, then do not include it in your allocation. |
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blackdiamond
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Post by blackdiamond on Jan 18, 2011 0:52:44 GMT -5
Petunia100,
This savings account is currently not set aside as EF or short term savings. I have a separate EF account and save for short term items separate from this savings account.
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bimetalaupt
Senior Member
Joined: Oct 9, 2011 20:29:23 GMT -5
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Post by bimetalaupt on Jan 18, 2011 1:10:45 GMT -5
Black Diamond,
One more thing about T-Bonds.. When the events like 9-11 or Lehman bro happen;T-Bond normally increase in value.. The 10 year T-Note hit 2.2% and 30 year T-Bond Hit 2.61% on the last trading day of 2008.. Huge move up and a great defence for the long term depressions.. In the 1930's to end of WWII they went under 1% for some great profits. It is great to have a defence also and they will give you about 8 to 10% return depending on time frame.. Frank the Impeller did better on bonds then I did but I had used them on long term shorts ( as equity = 90% cash). .. We may see the 5% again so this is what I have been using for cash flow discounting for stock value.
Just a thought,
Bi Metal Au Pt
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and goals!!! ;D
