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Personal Finance Advice and Education! (9 Viewers)
- Thread starter No. 16
- Start date
GoBirds
Footballguy
Do you do anything for diversification from all stock market? I think the target date funds were probably heavier bonds than I would like but not sure if I’m ready to go 100%.
Instinctive
Footballguy
I'm young. I have a little bit in bonds but it's like maybe 2% of my portfolio. Held in my 401(k).
steelerfan1
Footballguy
Hi Birds,
Please don’t take my advice without thorough research or input from some experts in here, but a couple options may be to select a target fund further out than you are which would lower your bond allocation.
The other option that I believe @-OZ- had mentioned in here quite a while ago was from a Paul Merriman article where you choose a target date fund and then you add a 10% small cap value fund. He had charts showing it made quite a bit of difference.
I guess the other question is with a target date fund the amount of International they hold which seems to be a highly debated topic, but there are far better people in here that can comment.
Good luck to you.
-OZ-
Footballguy
right idea, but it’s not 10%.
https://paulmerriman.com/2-funds-for-life/
multiply the investor’s age by 1.5 and use that as a percentage to invest in a TDF, then put the rest into an all-equity fund. He had suggested a small cap value fund like AVUV or VBR but you could use VTI or something else.
We have been all equities for a while but as I mentioned earlier I’ve moved (basically) 1/8 of our portfolio to Paul Merriman’s ten funds for life, 60/40. So that means we have 5% bonds right now (plus $40k in I bonds by the end of the month but that may be used for college instead of retirement). We’ll gradually increase that amount over the next decade before retirement. I don’t foresee going over 20% bonds. But I’m not suggesting that’s right for others - with the pensions, fixed income is already a fair amount of our retirement plan.
Our investments are in M1, which makes it really easy to rebalance. I would probably just keep 4 funds (large cap US, international broad market, US small cap, bonds) in other brokerages. The only TDF I would consider using is the TSP, with their small expense ratio.
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GoBirds
Footballguy
Appreciate the input guys. With by basis higher know and the potential to get whacked with an unwanted capital gain like this down the road it may be time to leave the TDF. Do you guys feel it’s better to go ETF as opposed to mutual funds where you could get hit with these unwanted capital gains?
-OZ-
Footballguy
Generally, yes. There’s little reason to use MFs unless your brokerage doesn’t allow automatic partial purchases of ETFs. (In which case you might consider switching brokerages)
Steeler
Footballguy
Retirement Contribution Questions... I'm over 50 (so is my wife, but don't tell her I told you 
) and these are the max allowable contributions, as far as I understand it:
401K (me): 27K
403B - Roth (wife): 27K ??????
Roth (me): 7K
Roth (wife): 7K
HSA (us): 7.3K (8.3K at 55)
Two main questions: I have 27K available in my 401K, does my wife also have 27K available for her 403B? Is it 27K each or 27K combined... I think it's 27K each but just want to be sure.
Also, each of these "buckets" is unique so the total contributions we could make are 75.3K ( 27K + 27K + 7K + 7K + 7.3K ), right?
) and these are the max allowable contributions, as far as I understand it:401K (me): 27K
403B - Roth (wife): 27K ??????
Roth (me): 7K
Roth (wife): 7K
HSA (us): 7.3K (8.3K at 55)
Two main questions: I have 27K available in my 401K, does my wife also have 27K available for her 403B? Is it 27K each or 27K combined... I think it's 27K each but just want to be sure.
Also, each of these "buckets" is unique so the total contributions we could make are 75.3K ( 27K + 27K + 7K + 7K + 7.3K ), right?
Lion to myself
Footballguy
Correct. You both can contribute $27k. 403bs also have an additional “special” catch up contribution, I believe it can be another $3k a year based on certain requirements. Something worth looking into if your interested and meet the requirements.
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steelerfan1
Footballguy
GoBirds said:
Birds, I would listen to OZ over me 10x out of 10. I didn’t take over our finances until mid 2020 and have made several mistakes.-OZ- said:
My take on a TDF is the ER is about 3x higher than just using a few funds which you can allocate to the exact % you feel comfortable with and rebalance once a year or so.
We only use VTSAX- Total Stock Market and VBTLX- Total Bond. Our allocation is 90/10 which for my age would be considered fairly aggressive.
we also have a certain % of individual stocks which I’d like to trim down in the coming years and place that into VTSAX.
OZ mentioned there’s really no reason to use mutual funds when you can basically get the same ETF. VTSAX is VTI and VBTLX is BND.
So, here’s my thoughts for continuing to use mutual funds and to stay with Vanguard who does not sell partial shares of ETF’s. My personality kind of tends to tinker and time things. I noticed when I had the VTI ETF that I would constantly looking at the ticker to see if I could get a share at its exact lowest point in the day and it was driving me nuts. With VTSAX I look at VTI towards the end of the day and if I see it has taken a decent dip I can throw more into VTSAX.
I also think if I had the chance to buy a partial share of a stock such as AMZN or anything else that I’d be tempted to start putting more funds into individual stocks which I am trying to avoid.
Of course if your brokerage account did allow partial shares I guess you could use auto invest and just purchase x amount of VTI every month as well, but again I’m still really new at this and we just went with mutual funds and vanguard when we went out on our own.
Basically I’m my own worst enemy….
-OZ-
Footballguy
To thy own self be true.
and personal finance is personal.
i don’t strongly disagree with anything you wrote here, but all the reasons you gave are reasons I use M1. There’s no timing with M1, except maybe morning vs afternoon if you use M1+. you can buy Individual stocks, but to do so you need to change your pie and wait for the next trading window. That’s kind of a hassle unless you’re going to hold the stick for a while (I have a few in my regular brokerage).
it’s almost irrelevant but VTI is slightly less expensive than VTSAX. that’s true for VT / VTWAX too, but their returns oddly are more different than I’d expect. I don’t know if that’s just their tracking errors or something else at play there. (VTWAX has had a slightly higher return).
if you’re staying with Vanguard, I think staying with VTSAX makes sense as they don’t sell partial shares (they really need to get with the times here). Or buy whatever you can in VTI, later that day put the remainder in VTSAX. But that’s more work than I want to do.
GoBirds
Footballguy
It’s a great help to me to see what you smarter guys are doing, I’m not even sure if “ER” is effective return or something else.
Also I’m right with you on the bolded, I opened Vanguard after buying into the simplicity and low cost of the Boglehead approach and an embarrassed to admit how many individual stocks I own in that account.
GoBirds
Footballguy
Oz great info as always. On the bolded though if you didn’t show a tax gain any longer you would recommend shifting to ETF versions?
-OZ-
Footballguy
I’d recommend whatever allows you to automate. In vanguard I think that’s MFs.
Expense Ratio. (Basically the cost of using the asset), which you don’t see but they pay themselves for managing the fund.It’s a great help to me to see what you smarter guys are doing, I’m not even sure if “ER” is effective return or something else.
Also I’m right with you on the bolded, I opened Vanguard after buying into the simplicity and low cost of the Boglehead approach and an embarrassed to admit how many individual stocks I own in that account.
D_House
Footballguy
Looks like the tax loss harvesting is going to start early this year. I have VTSAX lots dating back to June with losses.
Tax loss harvesting experts: I'm aware of the $3k yearly limit on use of these harvested losses to offset income. Can carryover capital losses (so above the $3k limit) also be used to offset income in future years? Or can you only use current year losses to offset current year income? Somehow I'm not able to find that detail anywhere.
Also, I'm not quite Peter Thiel in terms of tax avoidance but I funded my Vanguard donor advised fund using mutual funds with LT gains earlier this month and it felt pretty good to see those taxable gains wash away with nary a cent of tax paid on them.
Tax loss harvesting experts: I'm aware of the $3k yearly limit on use of these harvested losses to offset income. Can carryover capital losses (so above the $3k limit) also be used to offset income in future years? Or can you only use current year losses to offset current year income? Somehow I'm not able to find that detail anywhere.
Also, I'm not quite Peter Thiel in terms of tax avoidance but I funded my Vanguard donor advised fund using mutual funds with LT gains earlier this month and it felt pretty good to see those taxable gains wash away with nary a cent of tax paid on them.
steelerfan1
Footballguy
Yes, Vanguard really is old school including their website design which actually appealed to me because I am not a tech friendly guy.
And you are correct that you do need to have your auto invest set to mutual funds in vanguard due to the lack of partial ETF purchases.
so for us going forward it is set it and forget it, rebalance once a year if needed.
my issue was the cash on hand that was still calling me to purchase individual stocks instead of just forcing myself to throw it in the mutuals.
steelerfan1
Footballguy
Please don’t make the mistake of lumping me in with the smarter guys….and I am with you with the amount of individual stocks that we have.It’s a great help to me to see what you smarter guys are doing, I’m not even sure if “ER” is effective return or something else.
Also I’m right with you on the bolded, I opened Vanguard after buying into the simplicity and low cost of the Boglehead approach and an embarrassed to admit how many individual stocks I own in that account.
Tom Hagen
Footballguy
Capital losses can be used to offset capital gains plus up to $3k of ordinary income in the year realized. Any unallowed losses can be carried forward and offset any capital gains plus up to $3k of ordinary income each future year until used up.
Basically you can offset your capital gains to zero plus deduct another $3k loss every year until the original loss is used up.
NutterButter
Footballguy
If carrying over, do you have to use up to the 3k deduction in the following year or can you choose the year to use it. I ask b/c if you have long term cap gains in the next year, I'd think you'd prefer to not use it then and instead wait until you can use it to offset short term cap gains or to deduct it from ordinary income due to the higher tax rate?
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GoBirds
Footballguy
This is what I always thought but the unexpected forced capital gain last year could happen again which worries me about the mutual fund. Not so much now as when I’m close rot retirement with hopefully a large balance and large unrealized gains.
Tom Hagen
Footballguy
You don't have a choice. There are ordering rules for the use of losses that have to be followed. For example, let's say you have a long-term loss in 2021. The loss would be used in the following order each year until used up
1. Offset 2021 long-term capital gains to zero
2. Offset 2021 short-term gains to zero
3. Deduct $3,000 against 2021 ordinary income and carry forward the remainder
The carryover loss would still be considered long-term and follow the same order in 2022 and each future year. If you had a short-term loss 1 and 2 would be reversed for each year. There is no limit to the number of years you can carry forward capital losses but the loss expires when you do (does not pass to your estate).
NutterButter
Footballguy
Does dividend interest fall into bucket #1? So ideally, you want to try to take your losses in the years where you have little or no long term cap gains; provided that your marginal rate is greater than your long term cap gains rate which I'd imagine is almost always the case.
ETA: Actually ideally, you don't want any losses
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Tom Hagen
Footballguy
Interest income is ordinary income and cannot be offset by capital losses (other than the $3k allowance each year). Dividends are a little more complicated. Dividends in the traditional sense issued by a company to a shareholder cannot be offset by capital losses (other than the $3k). Capital gain distributions from mutual funds are considered capital gains and can be offset by capital losses even though they are reported on a 1099-DIV.Does dividend interest fall into bucket #1? So ideally, you want to try to take your losses in the years where you have little or no long term cap gains; provided that your marginal rate is greater than your long term cap gains rate which I'd imagine is almost always the case.
ETA: Actually ideally, you don't want any losses
jm192
Footballguy
You guys have convinced me to not own Gold. But it doesn’t make me any higher on Bitcoin as a “store of value.” Bonds are a store of value, no? I-Bonds and TIPS will keep up with inflation.
Is anyone 100% on crypto as a “store of value?” Seems like there are just way safer options.
Is anyone 100% on crypto as a “store of value?” Seems like there are just way safer options.
Orange&Blue
Footballguy
Not their target retirement accounts. Lots of people just got burned having those in taxable accounts
Orange&Blue
Footballguy
Hell no. You may have lost 15% with stocks, but you would have lost 3x that in crypto. There is nothing backing it up so at any moment your Bitcoin could literally be worthless.
jm192
Footballguy
jm192
Footballguy
A few fun things.
Doing our 2022 Back door Roth contributions this week. Hoping to have everything done this week before Build Back Better picks up steam again.
With the market taking a nose dive, great time to buy buy buy.
I've been doing a ton of research on Crypto of late. I'm probably still near the bottom of knowledge/understanding of it in terms of people in this thread. But I can't bring myself to pull the trigger on any of it.
Doing our 2022 Back door Roth contributions this week. Hoping to have everything done this week before Build Back Better picks up steam again.
With the market taking a nose dive, great time to buy buy buy.
I've been doing a ton of research on Crypto of late. I'm probably still near the bottom of knowledge/understanding of it in terms of people in this thread. But I can't bring myself to pull the trigger on any of it.
jm192
Footballguy
I've been meaning to get out of my bond funds for a while now given the crap yields and I'm 34.
I had started off 20% bonds and 80% stocks. After Ibonds purchases, it shifted to ~25% bonds.
I was thinking of getting out of everything but the ibonds while regular bonds are pretty craptastic. But with the market taking a tank, I've got some pause. I know everyone says bonds are your "cushion," but I'm not losing any sleep over the market. I'm in no hurry to get out of stocks.
Is it wrong to get out of your bonds while stocks are down and buy the dip on stocks?
I had started off 20% bonds and 80% stocks. After Ibonds purchases, it shifted to ~25% bonds.
I was thinking of getting out of everything but the ibonds while regular bonds are pretty craptastic. But with the market taking a tank, I've got some pause. I know everyone says bonds are your "cushion," but I'm not losing any sleep over the market. I'm in no hurry to get out of stocks.
Is it wrong to get out of your bonds while stocks are down and buy the dip on stocks?
Gawain
Footballguy
At 34 (assuming you're not trying to retire at 40), I'd be comfortable 100% in stocks.
At 64, not so much.
Juxtatarot
Footballguy
jm192 said:
That would be the worst place to ask that question.
Desert_Power
Footballguy
Yeah. Going to end up linked to Michael Saylor videos where he is telling you to take out a loan for all your home equity to buy BTC.
-OZ-
Footballguy
-OZ-
Footballguy
now would be a better time to do this than last week or last month. Go to whatever allocation you’ll maintain.
-OZ-
Footballguy
crypto, gold, art, etc are all speculation. Nobody, no reasonable person, should be 100% on crypto as a store of value.
If you really want to store value, canned goods and bullets are better.
jm192
Footballguy
Thanks.
I had multiple threads open and thought I was posting this in the Bitcoin: Help me buy these thread. I later copied and pasted it and got kind of a snarky response from a guy that seems to post there a lot.
Between that thread and reddit, there seem to be a lot of people saying "You don't understand Bitcoin. You have to start looking at it as a store of value."
And then when other stores of value are brought up, "They don't have the upside of Bitcoin"
"So it's about the upside?"
"No. It's a store of value."
And on goes the cyclical argument.
jm192
Footballguy
Thanks.
I think I'm going to re-allocate the 401K (where all of my bonds are) to stocks and just have I-Bonds for Bonds until rates change substantially.
It seems to be that bonds are pushed so much for the Pyschology of things and "Are you able to stomach the big ups and downs?" And I feel I can. The market taking a dive means discounted VTI And VOO.
In a messed up way, I think Fantasy Football prepares you for this. You learn to hold your early picks that are underperforming until they perform better, or well enough to move them for a better asset.
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Runkle
Footballguy
jm192
Footballguy
Asset Location Question:
Is there a preference for International index funds in the 401K over tax-exempt accounts like an HSA or Roth IRA?
My understanding is that International stocks/index funds are more tax inefficient. So that would argue for Roth/HSA. However, assuming things like VOO/VTI have higher growth potential, then you probably want those in your Roth/HSA.
I was able to find some posts on bogleheads and other sites that favor International NOT in taxable accounts at higher tax rates. But can't find a lot of discussion on Tax-deferred vs tax-exempt.
Thanks for any input/tips
Is there a preference for International index funds in the 401K over tax-exempt accounts like an HSA or Roth IRA?
My understanding is that International stocks/index funds are more tax inefficient. So that would argue for Roth/HSA. However, assuming things like VOO/VTI have higher growth potential, then you probably want those in your Roth/HSA.
I was able to find some posts on bogleheads and other sites that favor International NOT in taxable accounts at higher tax rates. But can't find a lot of discussion on Tax-deferred vs tax-exempt.
Thanks for any input/tips
Sand
Footballguy
Hell yes (
).To be specific I see BTC as a store of value. We have one country where it is is legal tender with more on the way (Panama and/or Argentina are next, IMO). I am at 8% of my investments in the space. 5% in stablecoins earning 10% and the rest at risk.
I don't see much of a point to argue the validity of my thinking. But I will say that the thought that the floor for BTC value being zero is
.
Sand
Footballguy
Doesn't matter. Anything in those vehicles is shielded from taxes.
The only thing to be careful of owning in a tax deferred or tax free account is MLPs.
Andrew74
Footballguy
Intl tends to have higher dividend rates than US so sheltering makes sense from that perspective. We’ve been in a 10 year run of US outperformance but long-term US and Intl stock returns have been similar. Unless you are talking emerging markets only, a higher risk/return prospect, I don’t think it matters where you locate Intl in a tax-deferred vs tax-exempt debate.
-OZ-
Footballguy
the floor for practically everything you can’t use in an apocalypse is zero.Hell yes (
To be specific I see BTC as a store of value. We have one country where it is is legal tender with more on the way (Panama and/or Argentina are next, IMO). I am at 8% of my investments in the space. 5% in stablecoins earning 10% and the rest at risk.
I don't see much of a point to argue the validity of my thinking. But I will say that the thought that the floor for BTC value being zero is
You may very well be right that the likelihood of hitting that floor is tiny.
-OZ-
Footballguy
Created a future order for I bonds back in the first week of January, set to purchase today. Went back to alter it (thinking I’d buy stocks now that they’re down instead). Tried the wrong password and locked myself out. Emailed their customer service Monday without response yet (other than the automated message to let me know they got the request). On the site it says a locked account may prevent automatic purchases.
Today I see the purchase went through anyway.
I made sure to have the money in the account in case it did go through
I’m slightly annoyed as I’d rather buy VTI tomorrow, but maybe this was better anyway.
I’ll probably wait to buy the wife’s I bonds next month, sort of lose the 1 month gain but the bonds go 6 months regardless, so it’s not much of a loss.
Today I see the purchase went through anyway.
I made sure to have the money in the account in case it did go through I’m slightly annoyed as I’d rather buy VTI tomorrow, but maybe this was better anyway.
I’ll probably wait to buy the wife’s I bonds next month, sort of lose the 1 month gain but the bonds go 6 months regardless, so it’s not much of a loss.
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Sand
Footballguy
jm192
Footballguy
If I didn't screw it up, I tax lost harvested for the first time today.
We have a taxable account with about 10K in it. It was down 600 something. I figured given the size of the account, it was a good time to pull the trigger. Waiting for it to process and hoping it shows up under capital losses on Vanguard.
We have a taxable account with about 10K in it. It was down 600 something. I figured given the size of the account, it was a good time to pull the trigger. Waiting for it to process and hoping it shows up under capital losses on Vanguard.
-OZ-
Footballguy
GoBirds
Footballguy
I tax lost harvested GOLD and was good to add some back tomorrow, no love at all for gold etf or miners?
