Hi all,
I am 30 and have been a terrible investor the past few years. I mean to change that, but I am looking for some help. Let me first give you run down of my assets and goals. I have 80K in my 401(k), which I max out each year. That is invested in various index funds, broken down approximately into 65% US stock, 10% international stock, 10% global real estate, and 15% fixed income/bond. I feel good with my allocation there - so no need to touch that unless you all think otherwise. I currently am in a very high tax bracket (income over 200k), so I don't contribute to a roth or traditional IRA. I am guessing my tax bracket will be lower when I retire, so I don't think it makes sense to put the money into a IRA, but perhaps I am mistaken.
The problem is that I have been letting about 250K sit in my alliant bank account, which gets 1% interest. I have been letting it sit because I plan on buying a house in the near future, or possibly starting a small business. But now I am thinking I should invest it - since I won't be using it for at least a few years.
My thinking is that of the 250K, I want to keep 40K in cash, and I want to have 100K invested in a very low risk allocation for future use for a house or small business (next 2-5 years). That leaves about 110K for higher risk investment.
I have done some research and below is what I was thinking for the 100K (low risk) and 110K (higher risk) allocations.
100K - low risk allocation = 30% VBINX, 20% VFSTX, 15% VBLTX, 15% VTIAX, 10% VAIPX, 10% VGSLX
110K - high risk allocation = 75% VTSAX, 15% VGTSX, 10% VBLFX
I realize those may overlap to some extent - but I am trying to keep the two allocations distinct for now in case my priorities change in the future and I want to shift some from one to the other. What do you all think? Is there some tax-avoidance techniques I should employ? (Municipal bonds perhaps?)
Any advice would be greatly appreciated!
Thank you.
