The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: MoonShadow on July 06, 2016, 04:43:54 PM
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I've decided to re-do all my tax advantaged accounts, and use the Golden Butterfly approach spread across all 3 tax advantaged accounts (401k, Traditional IRA, Roth IRA). The 401k choices are rather limiting, but there is a decent managed Small Cap Value fund there, so I'm likely to use most of my 401k funds for that portion. As a rough percentage, the 401k is about 20% of my overall portfolio, my Traditional about 70% and my Roth about 10%. My questions, like the title suggests, is would I be better off using an index fund or an ETF for the Large Cap portion? Should I favor managed funds for the two bond portions (long date bonds & short term bonds) or should I stick with an index fund or an index ETF? (GLD is my only real choice for the gold portion, so an ETF it is)
Also, if your recommendation is a managed fund, do you have any favorites?
[edit] ETF's would cost me $8 per trade, so every rebalance would cost me up to $40, and if I were to contribute a little each month (as opposed to an annual lump sum contribution) and traded into the lowest percentage portion each time, that would cost me at least $96 per year.
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Nothing?
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I personally would stick with the lowest-ER index funds you can buy for each asset. Treasury bonds are really simple, and I see no need for a managed fund. If you want, you can even purchase them directly through your brokerage with no middle man required.
Regarding trading fees, I like your idea to always buy the lagging asset. That will keep the overall fees quite low and also maintain your target percentages in accumulation with minimum rebalancing required. I also like to save up and only buy something when the fee is small relative to the purchase amount.