Hello mustachians,
I need feedback on how to go about funding my ROTH with the money I have, while also trying to get to my target international stocks allocation. I like to max out both ROTHs in the first 4 mos just to get it over with. Below is the info on the money I want to focus on, it doesn’t acct for all our retirement accts or savings.
Tax Bracket 25%, California
TAXABLE ACCOUNT:
$11,000 in Vanguard Total International (VTIAX) w/ a loss of $1400 total.
$9,800 in VTSAX w/ a $53 loss total.
SAVINGS ACCOUNT FOR HOME PURCHASE
$47,000---No plan to purchase a home for at least 4yrs, and would like to have 100k saved. Been saving over $24,000/yr.
CURRENT AA: color=red]TARGET AA:[/color]
Large Cap 45% Large Cap 40%
Med Cap 17% Med Cap 15%
Small Cap 14% Small Cap 10%
International 7% International 15%
Bonds 17% Bonds 20%
Currently, I only have 7% of my portfolio in VTIAX. I want to make this 15%, which I hope to eventually keep in our taxable account due to foreign tax credit.
How should I shift my money around to max out our ROTHs for 2016? Options:
a) Take $9800 from VTSAX in taxable acct and put in ROTH towards VTIAX, then add cash from paycheck to make up the $1200 difference in the ROTHs (to equal $11,000). For remaining year, use $$ from paycheck to increase VTIAX in taxable account so I can get it to 15% taxable acct. I can readjust my allocation in the middle of the year so that the majority of the 15% is in the taxable acct. The amount in ROTH can be adjusted to the VTSAX I carry in my ROTH. It may take me 12-18 months to get my portfolio to 15% VTIAX in Taxable acct only.
b) Take money out of the "home bucket" to fund the ROTH, then use paycheck and tax return to replenish home bucket. This would mean I don't put any money in my taxable account for most likely the remaining year.
c) You're a hot mess, hand this over to a financial planner (i'll keep my fingers crossed it's not this one).
Side question, am I off base that I want to put all my VTIAX in taxable account? I did get the foreign tax credit last year, which is the main reason why I wanted to keep it like that. Taxable accounts and International stocks are a little more complex for me, I just keep reading about it. I won’t pay any capital gains b/c I lost money in the taxable acct, not sure I have a ton in the VTSAX and VTIAX to make much of a difference even if I had to pay something—correct me if I’m wrong.
Thank you as always!