Personal Investments • Portfolio Review Request

Tax Filing Status: Single at the moment, but getting married in 2025. Open to suggestions about filing single vs jointly. We plan to keep our accounts separate, so I can't provide portfolio details for my SO.
State of Residence: Pennsylvania
Tax Rate: 22% Federal, 3.07% State

If you're getting married, that's both an emotional and financial partnership. If either of you have concerns about asset distribution due to divorce, you could work that out together with a pre-nuptial agreement that protects both of you. If you intend to keep your assets separate and file "married filing separately" rather than "married filing joint," then one or both could end up paying higher taxes.



MFS is the same as filing Single. If you each make $100K, then that's $200K - standard MFJ deduction, which puts you both in the 22% bracket. If you each file single then then you're still in the 22% bracket. If one of you makes significantly more than the other, then MFJ is almost always preferrable to Single.

Just a comment for consideration, you have to do what works for you and your future spouse (my youngest son and his wife keep all their accounts separate and I just don't get it, but it seems to work for them).

Taxable Brokerage
47% Vanguard 500 Index Admiral (VFIAX) (ER: 0.04%)
5% Disney (DIS)
4% (Vanguard Small Cap Value ETF (VBR) ER: 0.07%)
1% $3,600 Vanguard Total Intl Stock Index Admiral (VTIAX) (ER: 0.12%)
1% Vanguard Total Stock Market Index Admiral (VTSAX) (ER: 0.04%)


Roth IRA
12% Vanguard Total Stock Market Index Admiral (VTSAX) (ER: 0.04%)
3% Vanguard FTSE All World Ex US Index Admiral (ER: 0.11%)
3% Vanguard Small Cap Value ETF (VBR) (ER: 0.07%)
2% Vanguard FTSE Social Index Admiral (VFTAX) (ER: 0.14%)
1% Vanguard Total Bond Market Index Admiral (VBTLX) (ER: 0.05%)
1% Vanguard Growth and Income Investor (VQNPX) (ER: 0.32%)
<1% Vanguard Russell 3000 Index FD ETF (VTHR) (ER: 0.10%)

Employer-Sponsored Traditional 401k
17% Vanguard Target Retirement 2055 Trust Select (ER: 0.045%)
*Employer offers a 4% match, plus 10% of my base salary

HSA
3% 15,000 Vanguard Growth Index Institutional (ER: 0.04%)
*I have no health conditions and plan to use this as exclusively an investment vehicle rather than for health-related expenses
*Employer contributes ~$2,500 per year

You have a lot of small slices that are less than 5% of total portfolio, which are too small to matter (won't move the needle). You could simplify by reducing that clutter.

1. Can I improve the tax efficiency of my portfolio? Does it make sense to have any bond exposure in the Roth IRA or Traditional 401k?

Bonds only in Tax-Deferred (can also hold stocks). Stocks only in Taxable and Tax-Free. That's the two-sentence summary of Tax-Efficient Fund Placement. If you clean up the clutter, you'll be getting rid of the bonds in the Roth IRA and putting those dollars into stocks (and also moving stocks into bonds in a tax-deferred account), which will better utilize the tax-free growth attribute of a Roth account.

2. Am I subject to wash sale rules between accounts? Should l consider restructuring assets?

Assuming you cleanup clutter and only are holding VFIAX (S&P-500) in Taxable, then the wash sale is only a concern if you're holding an S&P-500 index fund in any of your tax-advantaged accounts (which I didn't see, so no problem with that fund). If/when you cleanup VBR (Small-Cap Value) in Taxable and that cleanup happens to be selling at a loss, some/all of the loss will be disallowed by the Wash Sale if you also happen to buy VBR in your Roth IRA. Unless you really want to retain a SCV tilt of at least 10% of total stocks, then the recommendation was to sell VBR in both Taxable and Roth IRA to clean up clutter; so no wash sale concern.

3. Should I ever consider Roth conversions for the 401k?

If you think your tax rate will be at it's lowest ever in the period when you stop W-2 income but have not yet started SocSec/Pension income, then Roth conversions in that time window can make sense. However, it's a non-trivial decision so review the Wiki topic on Roth Conversion "Whether, When, and How Much?"

4. At my age, should I be prioritizing contributions to retirement accounts ahead of savings for a home?

You need a place to live and the decision between renting and owning is also nuanced. Typical mantra is that owning beats renting in the long run, but if you expect to move around every 3 years for the first decade of your career, that mantra might not be right for your specific situation.

The chart below was for another poster in NYC and does not include the cost of renter's insurance nor the cost of home maintenance, but it conveys the general idea.



You might also look over the Wiki topic on Prioritizing Investments for general guidance (it doesn't say how to make the decision you're asking about, but it does help with: invest or pay down debt, take the match only or max out my 401k, should I put more in Taxable, etc.).

Statistics: Posted by bonesly — Sat Jun 22, 2024 11:01 pm — Replies 2 — Views 370

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