Personal Investments • New portfolio and 401k advice

When logging into my 401k portal, I noticed there was a slider to adjust Roth contributions. However, I have been under the assumption that I wasn't eligible to make Roth contributions due to exceeding incoming limits, unless through a backdoor Roth contribution, which I am still learning. . . . .

You can make Roth contributions to a 401k regardless of your level of income.

Be sure to investigate the rest of the questions I asked. If your employer's plan contains the elements necessary for a Mega-Backdoor Roth, then you contribute much more to your 401k account.

Yes, my employer offers HSA (admittedly, I need to educate myself more on this), and HDHP, which I won't be able to enroll in until next year but something I need to research and consider.

In considering use of an HSA, be sure to first consider whether a HDHP offered by your employer is suitable for your health insurance needs.

Tax Filing Status: Single

Tax Rate: 35% Federal, 9.3% State

State of Residence: CA

. . . . .

Taxable Account (TD Ameritrade):
- Cash: 71% (ready to invest)

I suggest transfer of the account to Vanguard because their broader selection of tax-exempt bond funds.

Forum discussion, Which tax exempt bonds for CA?

Stock index funds are very tax-efficient.

In a taxable brokerage account at Vanguard, given your tax situation, I suggest using these funds:
1) Vanguard Total Stock Market Index Fund (VTSAX), the ETF share class is VTI;
2) Vanguard Total International Stock Index Fund (VTIAX), the ETF share class is VXUS; and
3) Vanguard CA Interm-Term Tax-Exempt Adm (VCADX) ER 0.09%.

No pension, and assuming typical SS eligibility at age 62 but not sure about "substantial", or how to calculate that.

The absence of guaranteed income from a pension reinforces my view that an asset allocation including 20-25% fixed income is more reasonable than having 100% of your portfolio in stocks.

It's easy to feel that you would not sell off in a panic during a prolonged, severe stock market crash. Actually staying the course during a prolonged, severe stock market crash is much harder to do. How much did you have in investments in 2008? How did you act (sell off, not sell off, continue regular contributions, increase contributions, etc.)? In my view, the only real proof of ability to stomach a crash is living through one.

Currently bond fund share prices are low, and their yields are high. So this is a better time that usual to buy a bond fund.

Morningstar (10/02/2023), At Long Last, Bonds Once Again Matter. "For the first time in many years, U.S. bonds now merit consideration from total-return investors."

Interesting. When I search online, I get: "To contribute to a Roth IRA, single tax filers must have a modified adjusted gross income (MAGI) of less than $161,000 in 2024." I assume you mean I can contribute via backdoor Roth, which I need to understand better. I will definitely look into mega-backdoor Roth and impact of switching to HDHP. From initial glance, HD seems like it will meet my needs.

Also, thanks for the suggestion on switching to Vanguard. I will certainly consider this before starting to invest, and will also plan to increase bond allocation based on your suggestions.

I was quite new to investing in 2008 and learned a lot of lessons, and continued through the next 16 years or so racking up losses and learning hard lessons playing with digital assets, so I have much better discipline regarding investing what I know I won't need, buying when fear is high, and staying the course (at least I believe so...perhaps we'll see in the coming years).

Statistics: Posted by DIYtrixie — Thu Mar 07, 2024 4:22 am — Replies 20 — Views 1682