Personal Investments • Portfolio Allocation Disarray - Set Me Straight

Tax Rate: 20% (I thought this would be higher, but went by the 2023 taxes paid / taxable income calculation)

What we are looking for here is your tax bracket. And it probably is higher than 20%.

If most of your income is from salary rather than capital gains/stock dividends, you can determine your tax bracket by comparing your taxable income (line 15 from Form 1040) to this chart. Please use the edit button to put in your tax bracket. Let us know if there are any questions about how to figure this out.

http://www.moneychimp.com/features/tax_brackets.htm

* An unusually high amount in HYSA and Money Market due to hesitation in lump sum investing. Auto investment set to dollar cost average.​

As mentioned earlier, this high amount of cash indicates that you are not comfortable with the AA (stock to bond ratio) that you said you wanted. A full 56% of your portfolio is sitting on the sidelines! This makes your current AA about 35%ish stocks and you say you want to be at 85% stocks.

There's a disconnect there and it needs to be figured out. What do you think is causing this? Do you think you can learn your way past it or do you think it will not change?

** I am guilty of historically chasing high dividend paying funds.

Are you ready to give this up? Or do you want to keep a little bit? Know that dividend paying funds in your taxable account just raise your taxable income without giving you any more money.

*

** We will start contributing to Traditional IRA this year since we cannot perform backdoor ROTH due to the rollover IRA.​

Your wife can use the backdoor Roth method. She is not affected by your tIRA.

You should not contribute to tIRA because your contributions would not be deductible. You have indicated that your 401k has higher fees than you want and rolling the rollover IRA into the 401k is not an attractive option. You also think you may not leave this job for awhile. That means you should put your "IRA money" into taxable instead of IRA.

Emergency Fund: 6+ months

Is this part of the HYSA? Or not included in what you showed us?

With early retirement as a main focus, what is the most tax efficient approach to diversifying our portfolio?

Get the target fund out of the taxable account. Get the dividend producing funds out of taxable. These things will improve your tax efficiency.

The main way to grow your money for early retirement is to get it invested rather than sitting on the side.

Understanding that target retirement funds should not be held in the brokerage account, are there any issues (other than taxes) with selling this fund and immediately putting into a total market fund?

No issues.

Are dividend paying stocks/funds good to have in a taxable account?[/list]

No. Dividend funds do not increase your income. They just cause unnecessary taxes.

Statistics: Posted by retiredjg — Tue Jul 02, 2024 8:00 am — Replies 13 — Views 1085

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