Thank you for your patience with me and helping me to get my first posting right.Now we're getting somewhere...
If you've reviewed the tax efficient fund placement link I posted earlier, you'll come to understand the following observations.
1. The blue funds above in the taxable account are creating additional income that isn't currently needed. You've got W-2 income, which is plenty, since you're able to save 6 figures in your taxable account during the year. So, you're paying 32% Federal tax on all that additional income coming from the bond fund and the cash holdings.
2. The fix for the problem mentioned in point #1 is to invest the cash and bond holdings in a tax efficient stock index fund. Stock index funds create less income, and further, the income they create is mostly qualified dividends, which are treated more kindly by the current tax code.
3. If you think this will leave you without an emergency fund in your taxable account, you're right. But there are ways to hold an emergency fund in your tax advantaged accounts. See this link for how: https://www.bogleheads.org/wiki/Placing ... ed_account
4. The Schwab funds (SWTSX & SWPPX) in the "His 401k" account are duplicative. All the stocks in the S&P 500 are also in the total stock market index fund. Since you were somewhat concerned about holding too much in tech/large companies, I'd consolidate into the total market fund SWTSX, which will add a touch more in the mid/small cap space.
5. I think the desired international allocation of 5% is too small to have much benefit. To actually get most of the benefit of international stock diversification you'll need to have 20% your equity in international stock (30% would get you the full benefit). Some reluctance here is normal, as many investors have a "home bias" but with a portfolio as large as yours, holding very little international equity seems like an unforced error to me.
6. To compensate for eliminating the bonds and cash in the taxable account, you should be adding some bond funds to one or more of the tax-deferred accounts like "Her Rollover" "His Traditional" and his and her 401ks. You can sell stock funds and buy bond funds in these accounts to accomplish this goal. No tax consequences when switching things around in these accounts.
7. You also seem concerned about your exposure to the technology sector, but you hold VUG in the Roth accounts. VUG is a technology heavy (56%) fund. The fix would be to sell VUG and buy a broad market index fund that is less concentrated in tech. Again, no tax consequences.
#1 to #4 , #6, and #7 make a lot of sense! These tips we can implement right away and are easy to do so to be more tax efficient and shorten my fund listing.
We can also contribute more to the 401K plans and max those out to save some tax dollars today, but we may already have too much in 401K deferred plans, the reason why we don't. I was looking for a balance between taxable and deferred accounts.
#5 Any particular international fund/EFT you hold and would recommend? I'm not seeing strong international performance due to the strong dollar and great US performance but history may not predict the future I'm aware of. If you don't mind to providing more of your insight and elaborate on why the 'unforced error', it will be a great help.
Statistics: Posted by summerjoy — Tue May 14, 2024 4:34 pm — Replies 10 — Views 1225