Debt: None
Salary: approximately $130,000 but will be $140,000 in a few months
Tax Filing Status: Single
State of Residence: Virginia
Age: 31
Current portfolio: $402,540
Current assets
High yield savings account: $8,000 (~2% of current assets)
I-Bonds: $42,744 (~10.62% of current assets)
Taxable: $123,586 in Vanguard Total Stock Market Index Fund VTSAX, expense ratio 0.04% (~30.7% of current assets)
Roth IRA: $46,182 in Vanguard Total Stock Market Index Fund VTSAX, expense ratio 0.04% (~11.47% of current assets)
TSP: $182,028 in "C" fund tracking the S&P 500 index, expense ratio 0.059% (~45.22% of current assets)
_______________________________________________________________
Contributions
New Annual Contributions
$23,000 TSP "C" fund
$7,000 Roth IRA
$25,000 in high yield savings account (saving for a future house down payment. Timeline TBD)
$6,025 in taxable account
Long time reader here, occasional poster. I've been contemplating adding an international position to my portfolio for quite some time. I'm 100% equities in retirement buckets since I have a high risk tolerance/capacity and plan to be 100% equities until age 45, at which point all of my TSP contributions (not existing balance) will go toward the "G" fund government treasuries. Over the years, however, I've learned that I'm prone to tinkering if my contributions are going toward more than 1 fund in a given bucket (it's silly, I know.....). That said, I was thinking about using my $6,025 annual taxable contributions to go toward the Vanguard Total International Stock Market Index Fund VTIAX (I don't have a target percentage for international allocation, so I plan to let this just ride). However, after reading several posts on this forum and others, I'm concerned about the tax drag of having VTIAX in my taxable account, even with the foreign tax credit. Therefore, the options I'm contemplating are:
1) Proceed with the $6,025 annual taxable contributions toward VTIAX and use the foreign tax credit. This would build an international position over the years, and I'll just have to deal with the tax drag (or is it not a tax drag issue given my income and savings rate?). Note: I would not sell any of my existing VTSAX funds in the taxable account.
2) Change my ROTH IRA balance and future contributions to Vanguard Total World Stock Market Index Fund VTWAX. This would give me an international/domestic allocation in the ROTH without requiring me to rebalance anything. Then my $6,025 annual taxable contributions would continue to go toward VTSAX.
3) Other options?
Thanks so much for any insights and recommendations
*Edit* - expense ratios for Vanguard funds fixed thanks to one of the commenters
Salary: approximately $130,000 but will be $140,000 in a few months
Tax Filing Status: Single
State of Residence: Virginia
Age: 31
Current portfolio: $402,540
Current assets
High yield savings account: $8,000 (~2% of current assets)
I-Bonds: $42,744 (~10.62% of current assets)
Taxable: $123,586 in Vanguard Total Stock Market Index Fund VTSAX, expense ratio 0.04% (~30.7% of current assets)
Roth IRA: $46,182 in Vanguard Total Stock Market Index Fund VTSAX, expense ratio 0.04% (~11.47% of current assets)
TSP: $182,028 in "C" fund tracking the S&P 500 index, expense ratio 0.059% (~45.22% of current assets)
_______________________________________________________________
Contributions
New Annual Contributions
$23,000 TSP "C" fund
$7,000 Roth IRA
$25,000 in high yield savings account (saving for a future house down payment. Timeline TBD)
$6,025 in taxable account
Long time reader here, occasional poster. I've been contemplating adding an international position to my portfolio for quite some time. I'm 100% equities in retirement buckets since I have a high risk tolerance/capacity and plan to be 100% equities until age 45, at which point all of my TSP contributions (not existing balance) will go toward the "G" fund government treasuries. Over the years, however, I've learned that I'm prone to tinkering if my contributions are going toward more than 1 fund in a given bucket (it's silly, I know.....). That said, I was thinking about using my $6,025 annual taxable contributions to go toward the Vanguard Total International Stock Market Index Fund VTIAX (I don't have a target percentage for international allocation, so I plan to let this just ride). However, after reading several posts on this forum and others, I'm concerned about the tax drag of having VTIAX in my taxable account, even with the foreign tax credit. Therefore, the options I'm contemplating are:
1) Proceed with the $6,025 annual taxable contributions toward VTIAX and use the foreign tax credit. This would build an international position over the years, and I'll just have to deal with the tax drag (or is it not a tax drag issue given my income and savings rate?). Note: I would not sell any of my existing VTSAX funds in the taxable account.
2) Change my ROTH IRA balance and future contributions to Vanguard Total World Stock Market Index Fund VTWAX. This would give me an international/domestic allocation in the ROTH without requiring me to rebalance anything. Then my $6,025 annual taxable contributions would continue to go toward VTSAX.
3) Other options?
Thanks so much for any insights and recommendations
*Edit* - expense ratios for Vanguard funds fixed thanks to one of the commenters
Statistics: Posted by OxfordComma — Sat Jan 06, 2024 2:18 pm — Replies 3 — Views 166