Emergency funds: 12 months of cash of expenses in MM account that all expenses debit from
Debt: 0. Credit cards revolving but paid in full each month.
Tax Filing Status: Married Filing Jointly with 3 children dependents under 12 years of age
Tax Rate: 22% Federal, 2.5% State
State of Residence: Arizona
Age: Both 40
Desired Asset allocation: 70% stocks / 30% bonds although this is a reason for this post. Looking for guidance.
Desired International allocation: 20% of stocks although not interested in any taxable events to make this happen (ie: selling stocks).
Approximate size of total investable portfolio: 7 million
Current retirement & investable assets
Taxable
11% cash in brokerage MM earning 5.25% (This does not include emergency fund)
66% Vanguard Total Stock Market Index (VTI) (0.03%) (all in LTCG status as reinvest dividends disabled)
17% Short duration rolling nominal treasuries (1 year average duration avg yield 5.4%) (0.00%)
Roth His & Her Combined
3.5% Vanguard Total Stock Market Index (VTI) (0.03%)
Combined HSA His & Her Combined
2.5% Vanguard Total Stock Market Index (VTI) (0.03%)
______________________________________________________________
Note: Total percentage of all the above retirement & investable accounts equals 100%.
Current taxable: 94%. Current tax sheltered: 6%.
Contributions
New annual Contributions
$8,300 total combined HSA contribution (annual family maximum)
Background
We've consistently made good income being self employed while investing heavily into equities. Over the last few years we've sold off all of our business and real estate interests with the exception of our primary residence (worth ~$3 million). She is stay at home mom. I am currently "unemployed" while I contemplate the next chapter of my life (probably just waiting for the next business or real estate opportunity). We have a year worth of cash earmarked for expenses and for the time being dividends and interest are essentially covering all of our annual living expenses but not quite due to income taxes; if interest rates come down then we won't be cash flow positive (which may not be a big deal?). We have all of our estate planning complete and we have plenty of coverage for all of the common insurance products with the exception of disability insurance. It took a lot of risk taking, stress and dedication to get to where we are today so we don't want to blow it!
Current VTI dividend, MM and Treasuries income (expected 2024): $165,000 (taxable)
Annual living expenses: $150,000 and I believe this will rise when the kids become teenagers and then start falling once they are out of the house. I believe on average though $140k to $180k over the next 20 years, adjusted each year with inflation is a good range that we can easily keep.
Questions:
1. What should I do about my tax sheltered accounts? It is 94% taxable and 6% tax sheltered and so it seems like noise. I'm thinking I should be super risky with the tax sheltered accounts. We do not have any earned income so cannot continue contributing to IRAs.
2. Should I keep buying treasuries as they mature or should I simplify with a bond fund? Our state of residence is 2.5% income tax rate.
3. I don't need immediate liquidity as there are no business and RE opportunities that fit my criteria right now but if something does come up I do like to act quick. I have margin enabled if for tax purposes my best bet is to use margin for cash rather than selling (ie: buy, borrower, die). I imagine any opportunities that I pursue will will require between $500k and $1.5M. Any thoughts about liquidity in the form of actual cash, treasuries or too much drag and use margin only in the case that an opportunity comes up? I hate the idea of paying interest when I have so much assets.
4. International exposure is something I would like but I also don't want to complicate my taxes and I don't have enough room in my tax sheltered accounts to get to a worthwhile % to make any difference. Should I bag the idea of international exposure?
5. We're currently 72% / 28% and our target is 70% / 30%. I'm not so sure if we should stick with 70/30 or if we should be more aggressive or more conservative. It is understood that we've probably won the game but we still get a little nervous of SORR or some tail-risk in life in general even though we have all of the insurance products with the exception of disability (health, auto, home, umbrella, term life, etc).
6. Anything specific you would recommend about our portfolio or general advice to relax a little? Being 40 with such a high net worth and essentially no earned income has got me thinking about what the future holds, what will last and how can I ensure that we maintain a high standard of living for a long period of time.
Thank you all for such a wonderful community and the extremely valuable feedback you provide to random internet friends. I look forward to the discussion.
Debt: 0. Credit cards revolving but paid in full each month.
Tax Filing Status: Married Filing Jointly with 3 children dependents under 12 years of age
Tax Rate: 22% Federal, 2.5% State
State of Residence: Arizona
Age: Both 40
Desired Asset allocation: 70% stocks / 30% bonds although this is a reason for this post. Looking for guidance.
Desired International allocation: 20% of stocks although not interested in any taxable events to make this happen (ie: selling stocks).
Approximate size of total investable portfolio: 7 million
Current retirement & investable assets
Taxable
11% cash in brokerage MM earning 5.25% (This does not include emergency fund)
66% Vanguard Total Stock Market Index (VTI) (0.03%) (all in LTCG status as reinvest dividends disabled)
17% Short duration rolling nominal treasuries (1 year average duration avg yield 5.4%) (0.00%)
Roth His & Her Combined
3.5% Vanguard Total Stock Market Index (VTI) (0.03%)
Combined HSA His & Her Combined
2.5% Vanguard Total Stock Market Index (VTI) (0.03%)
______________________________________________________________
Note: Total percentage of all the above retirement & investable accounts equals 100%.
Current taxable: 94%. Current tax sheltered: 6%.
Contributions
New annual Contributions
$8,300 total combined HSA contribution (annual family maximum)
Background
We've consistently made good income being self employed while investing heavily into equities. Over the last few years we've sold off all of our business and real estate interests with the exception of our primary residence (worth ~$3 million). She is stay at home mom. I am currently "unemployed" while I contemplate the next chapter of my life (probably just waiting for the next business or real estate opportunity). We have a year worth of cash earmarked for expenses and for the time being dividends and interest are essentially covering all of our annual living expenses but not quite due to income taxes; if interest rates come down then we won't be cash flow positive (which may not be a big deal?). We have all of our estate planning complete and we have plenty of coverage for all of the common insurance products with the exception of disability insurance. It took a lot of risk taking, stress and dedication to get to where we are today so we don't want to blow it!
Current VTI dividend, MM and Treasuries income (expected 2024): $165,000 (taxable)
Annual living expenses: $150,000 and I believe this will rise when the kids become teenagers and then start falling once they are out of the house. I believe on average though $140k to $180k over the next 20 years, adjusted each year with inflation is a good range that we can easily keep.
Questions:
1. What should I do about my tax sheltered accounts? It is 94% taxable and 6% tax sheltered and so it seems like noise. I'm thinking I should be super risky with the tax sheltered accounts. We do not have any earned income so cannot continue contributing to IRAs.
2. Should I keep buying treasuries as they mature or should I simplify with a bond fund? Our state of residence is 2.5% income tax rate.
3. I don't need immediate liquidity as there are no business and RE opportunities that fit my criteria right now but if something does come up I do like to act quick. I have margin enabled if for tax purposes my best bet is to use margin for cash rather than selling (ie: buy, borrower, die). I imagine any opportunities that I pursue will will require between $500k and $1.5M. Any thoughts about liquidity in the form of actual cash, treasuries or too much drag and use margin only in the case that an opportunity comes up? I hate the idea of paying interest when I have so much assets.
4. International exposure is something I would like but I also don't want to complicate my taxes and I don't have enough room in my tax sheltered accounts to get to a worthwhile % to make any difference. Should I bag the idea of international exposure?
5. We're currently 72% / 28% and our target is 70% / 30%. I'm not so sure if we should stick with 70/30 or if we should be more aggressive or more conservative. It is understood that we've probably won the game but we still get a little nervous of SORR or some tail-risk in life in general even though we have all of the insurance products with the exception of disability (health, auto, home, umbrella, term life, etc).
6. Anything specific you would recommend about our portfolio or general advice to relax a little? Being 40 with such a high net worth and essentially no earned income has got me thinking about what the future holds, what will last and how can I ensure that we maintain a high standard of living for a long period of time.
Thank you all for such a wonderful community and the extremely valuable feedback you provide to random internet friends. I look forward to the discussion.
Statistics: Posted by MidnightSnarl — Fri Jul 26, 2024 7:11 pm — Replies 3 — Views 603