Author Topic: Re-allocating Roth and HSA investments  (Read 570 times)


  • Pencil Stache
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Re-allocating Roth and HSA investments
« on: July 22, 2020, 12:38:22 PM »
I have my Roth IRA and HSA accounts in bonds.  When I started these accounts, the logic was to be able to access the contributions at any time without penalty. Thus, acting like a backup to an emergency fund.  Well, I now have about 18 months expenses in my EF.  More important, I came across advice that tax-free accounts like Roths and HSAs should be in equities since growth will not be taxed.  I really should have these funds in riskier/more rewarding investments than bonds.  So...should I make the move?  I'm about 10-13 years away from FI.

Second, my allocation is 80/20.  If I move my Roth/HSA to equities, then I need to rebalance to get back to 80/20.  The plan is to rebalance in my 401K.  Should I lower my 401K contribution to equities and put more money into bonds until I reach 80/20?  Or just sell equities in my 401K to buy bonds and reach 80/20 immediately?


  • Senior Mustachian
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  • Posts: 10997
Re: Re-allocating Roth and HSA investments
« Reply #1 on: July 22, 2020, 06:29:45 PM »
There is no "correct" answer to asset allocation (AA) choices except in hindsight.

If you pick an AA that you can maintain through market gyrations (within whatever balancing bands you choose), that is likely to be good for you.

See Asset allocation and Tax-efficient fund placement (if you haven't already) for more.


  • Bristles
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  • Posts: 385
Re: Re-allocating Roth and HSA investments
« Reply #2 on: July 23, 2020, 01:54:59 PM »
Yes, you want equities in your Roth accounts because of the tax free growth. On the AA, I wouldn't worry about it a great deal. If you want to go an 80/20 split, just start putting money each paycheck into bonds until you get back to roughly 80/20. IMO, people obsess over their AA to much. Main rule with investing is you don't want to be out of the market.

Side note: I choose to have my emergency fund (actually sequence of returns risk at this point when I early retire) in bonds in a taxable account. Yes, I have to pay normal income on the dividends, etc but if I did need to use it I wouldn't lose the space in my Roths that will continue to grow for the next ~40 years (hopefully).