Plan with the proceeds from house. Please critique my plan

[Happyfatherof2]

Hi,
40 yr old. I expect to sell home and the net proceeds will give me about $309k.
I have no debt and I max out all our tax advantaged investing accounts like our Roth and sep Ira and hsa with the income from my business.
So that just leaves me with a general taxable account to invest in with the proceeds.
I was just going to put ALL $300k all at once —->  into Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX). I was also not planning to spreading out my deposits (Dca), so I just don’t think too much about it.

I do hope to be financially free in 5-7 years. So the fund seems to fit criteri regarding timeline and also the dividends from this fund is supposed to be more tax friendly since it will be in a taxable account t.

Please let me know your thoughts!!!!????

[ysette9]

Sounds like you have a reasonable plan. I take it you have no debt to pay off?

[Happyfatherof2]

Yes that is correct. No debt
Also other ideas/advice if anyone wants to give opinion
Would be most grateful!

[Mississippi Mudstache]

Advice? Get an arm extender and pat yourself on the back vigorously. You're doing it right.

[Happyfatherof2]

Any other vanguard funds I should take a look at before making final decision?

[ysette9]

Any other vanguard funds I should take a look at before making final decision?

Do you have a personal investment policy statement? It is a roadmap of how you want to handle all of your finances overall.

https://www.bogleheads.org/wiki/Investment_policy_statement

Ideally you want to make the decision of what fund to invest in by looking at the big picture of your entire portfolio. If your overall goal for asset allocation is, say, 80% stocks and 20% bonds, then you need to take into consideration what you already have in any retirement accounts. If that is the case, just as an example, then the right answer is probably still to put all of your taxable into VTSAX and then adjust the bonds in your tax-advantages retirement accounts to achieve 20% bonds overall. Maybe you can give us some more details of your big picture for us to help.

[Happyfatherof2]

I’m ok with 80:20
However, my taxable account will be around 90% and my IRAs will only be 10% of my total investments.
Currently I only use Vtsax in my IRAs. But I dont know what to invest in taxable account, when I get a large sum from my home sale and extra cash.
I have no debts nor any mortgages.
And since I am 40, I thought since I can’t touch my IRAs until 60, and my hope is to be FI I’m 5-7 years.... I thought being able to get dividends in taxable account might be the way to go (with Vanguard fund mentioned earlier).

[ysette9]

We have our taxable account in a combo of VTSAX (60%) and VTIAX (40%). The reason for that is to be diversified across the whole globe instead of just the US. Many people are fine with just VTSAX. I think either option is good. In your shoes I would have 100% of my IRA in bonds to keep them out of a taxable account as much as possible for better tax treatment (bonds give off ordinary income which is taxed at higher rates than the long term capital gains rates that stock mutual funds are usually treated at).

You can access your retirement accounts early if need be. If you have maxed out your tax-advantaged space then taxable is a good way to go and you should spend down that stuff first in retirement.

https://www.madfientist.com/how-to-access-retirement-funds-early/

VTSAX and VTIAX are designed to keep dividends to a minimum and keep as much of them as qualified (long term) dividends for best tax treatment. Keeping your taxable income down in retirement will keep your taxes lower and help you qualify for things like Roth conversions and ACA subsidies.