It's about $66k right now. It is in a taxable account. Our joint income is somewhere between $150-200k. I guess I just pull it out and pay the capital gains? Maybe half this year and half next year?
Before you move anything and incur tax consequences, I would HIGHLY recommend making a post over at the Bogleheads forum, asking them for advice on your portfolio. Have them evaluate your full financial situation with your travel goal in mind. It sounds like you're bringing in a solid income, but there are so many other factors to consider - retirement savings? emergency fund? tax rate? house? debt? kids? etc. Like another has said, your savings rate could probably increase. But without knowing your full financial picture, it's hard to provide good advice.
A few comments:
- I would avoid a blended fund (equity & bond) in your taxable account since you can't manipulate your asset allocation as well as you could with separate asset class funds. It also creates a tax drag.
- It's best to avoid holding bonds in a taxable account since it's not tax-efficient. If you don't have enough room for bonds in your non-taxable space, then consider a tax-exempt bond fund, like a Muni.
- I think you should save as much as you feel comfortable with spending for your trip. Some may balk at a large travel budget, but I can see how you may need a lot.
- Definitely start reading up on travel hacking. Signing up for credit cards with great rewards/bonuses over these next few years could save you thousands of dollars when you start traveling. It's also nice to get perks like free Global Entry, car rental insurance, and lounge access.
Thanks for all the great comments. This is over my head, so I need to do some research. Maybe I will post a detailed case study.
I'm not sure how to be tax efficient with our savings. I guess our original thought was that earning a good return on our savings would be a benefit. If we have to pay taxes on our earnings, that's fine. Better than not having any earnings.
I like blended funds because we don't have to worry about rebalancing. But I see that the downside is that when we want to change our allocation, it isn't possible without selling.
Our actual goal for the travel fund is $150k, so that must really sound crazy to some. We want to move around and see many different places. If we have money left over, then that's great. I would rather not run out of money.
We do need to increase our savings rate. Now that I have found this site, I am going to work on that. However, I am more interested in valuing my time than early retirement. For example, I work 80% because I want to spend time with my kids while they are young. I don't want to max out my earnings now and then retire as soon as they head off to college. We are more frugal than many people I know, but we do pay for a housecleaner which is totally worth it. We have only one car, a small house that we are paying off, no cable or Netflix, etc. We only keep 10K in our emergency fund, but have been contributing between 12-15% of our salaries toward retirement, save monthly for kids college fund, and not taking on much debt (used car will be paid off next summer). It's exciting to read about the FIRE movement. I have already learned a lot and I hope to learn more!