I've asked for some suggestions about my situation earlier and after considering all the information I got, I figured out the following plan.
Background: PhD student with ~45k stipend. Just starting.
Emergency funds: Six months of expenses
Debt: 0
Tax Filing Status: Single
Tax Rate: 12% Federal, 4.95% State
State of Residence: IL
Age: 23
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 15~20% of stocks
Current retirement assets
Total: 22.5k
Taxable at Fidelity
30% Vanguard Total Stock Market Index Fund ETF (VTI) (0.03%)
10% cash (SPAXX)
His Roth IRA at Fidelity
45% Fidelity Total Market Index Fund (FSKAX) (0.015%)
15% Fidelity Total International Index Fund (FTIHX) (0.06%)
His 401k
No 401k or other tax-advantaged accounts except Roth
_______________________________________________________________
Contributions
New annual Contributions
Roth 2024 already maxed. 500~1k savings per month.
Questions:
Some considerations that I wonder if I understand correctly:
1. Tax-efficient placement: Since I don't have a tax-deferred account now and I'm still very young, it's better to seriously add bond later. Currently, I should allocate all FTIHX to Roth, and then fill Roth with FSKAX, and the remaining FSKAX into the taxable. 10% just goes temporarily to some short term investment and it won't matter a lot. If in the future I've got a 401k, I should allocate bond to 401k. And as long as I don't put international funds in the taxable, allocation inside 401k+Roth does not matter a lot. Maybe more domestic equities in Roth.
2. If I want to contribute more money, given that Roth is maxed and fully invested for 2024, I should buy in VTI and exchange FSKAX with FTIHX to maintain the desired the AA. I should invest what I have for investment ASAP instead of waiting until 2025.
3. If one day I need to TLH, I can just sell VTI in the taxable and buy, e.g. ITOT.
Is my understanding 1, 2, 3 correct?
4. Anything else I should be careful about?
5. I know that at this stage a lot of things do not really matter for me, but I just want to know the best practices![:happy]( "smile")
Background: PhD student with ~45k stipend. Just starting.
Emergency funds: Six months of expenses
Debt: 0
Tax Filing Status: Single
Tax Rate: 12% Federal, 4.95% State
State of Residence: IL
Age: 23
Desired Asset allocation: 90% stocks / 10% bonds
Desired International allocation: 15~20% of stocks
Current retirement assets
Total: 22.5k
Taxable at Fidelity
30% Vanguard Total Stock Market Index Fund ETF (VTI) (0.03%)
10% cash (SPAXX)
His Roth IRA at Fidelity
45% Fidelity Total Market Index Fund (FSKAX) (0.015%)
15% Fidelity Total International Index Fund (FTIHX) (0.06%)
His 401k
No 401k or other tax-advantaged accounts except Roth
_______________________________________________________________
Contributions
New annual Contributions
Roth 2024 already maxed. 500~1k savings per month.
Questions:
Some considerations that I wonder if I understand correctly:
1. Tax-efficient placement: Since I don't have a tax-deferred account now and I'm still very young, it's better to seriously add bond later. Currently, I should allocate all FTIHX to Roth, and then fill Roth with FSKAX, and the remaining FSKAX into the taxable. 10% just goes temporarily to some short term investment and it won't matter a lot. If in the future I've got a 401k, I should allocate bond to 401k. And as long as I don't put international funds in the taxable, allocation inside 401k+Roth does not matter a lot. Maybe more domestic equities in Roth.
2. If I want to contribute more money, given that Roth is maxed and fully invested for 2024, I should buy in VTI and exchange FSKAX with FTIHX to maintain the desired the AA. I should invest what I have for investment ASAP instead of waiting until 2025.
3. If one day I need to TLH, I can just sell VTI in the taxable and buy, e.g. ITOT.
Is my understanding 1, 2, 3 correct?
4. Anything else I should be careful about?
5. I know that at this stage a lot of things do not really matter for me, but I just want to know the best practices
Statistics: Posted by frankenstein — Sun Feb 25, 2024 11:41 pm — Replies 2 — Views 252