Quote:
Originally Posted by Two SHAE
(I'm American)
Any general advice for managing investments in both tax-deferred (specifically I have a SEP-IRA and a Solo 401(k)) and regular accounts?
Does it make sense to prioritize putting investments I may want to sell in the shorter term in the tax-deferred space so as to not realize gains/losses now?
I have experimented with using a robo advisor (Betterment). This is a regular (not tax-advantaged) account. The fee is 0.25%/year. The benefits are that 1) it doesn't really require any of my time, which is very important and valuable to me right now, and generally better spent doing other things and 2) it has automated tax-loss harvesting. I'm happy with the experience/rate, but does anyone more knowledgable want to make a case that this is a fish move? For what it's worth it's a relatively small % of my portfolio (10-20% range).
Lastly, one specific segment of my portfolio has gone parabolic which has caused significant drift relative to my intended allocation, even with the market going up so much since I started investing (2009ish). Selling would entail taking the tax hit now which would be long-term capital gains tax at this point. For someone that follows the political madness more than I do, should I expect this rate to go up, down, or stay roughly the same during Trump's presidency?
Thanks
Hey man,
I also have a mix of investments across various tax buckets...which in the long run, is an advantage for flexibility.
You should read about 'tax efficient placement' if you aren't up to speed on that at all. A decent starting place is the bogleheads wiki:
https://www.bogleheads.org/wiki/Tax-...fund_placement
A couple things that I consider that might get you thinking...
1. Put obviously tax-unfriendly investments into either deferred or roth buckets. So I would make sure and put my REIT holdings into a deferred or roth account. I don't currently have any bond holdings, but those would obviously go there as well.
2. I consider what I think the overall return rate might be vs. my allocation plans. So for example, I've got a very high allocation to emerging markets. I have stuck a decent portion of this into a tax-friendly bucket, so that if it takes off like I expect I can reduce my allocation without a taxable event. I also consider this with regard to even my tax friendly buckets...I have the most aggressive investments in my HSA, because I expect to NEVER pay taxes on that money...I'll just spend it on medical expenses in retirement.
I'm a fan of things like betterment / wealthfront. I personally don't use them, because they can't handle complicated allocations across the complicated mess of account types that I've got. When I looked at them / talked with them, they also couldn't handle me not wanting them to sell a ton of things I have in a taxable account. No way was I going to take a big tax hit and if I didn't, then the automatic rebalancing they do wouldn't work.
I'm also willing to do it myself, so I'd rather keep the management fee.
I don't find the tax loss harvesting piece to be all that difficult, since in reality, most of your holdings over time are in the green, so you are only dealing with TLH on recent purchases. Bottom line tho...using them is not a fish move at all if it works for your situation and you're good with their fees, which are certainly wayyyy lower than the typical advisor.
Finally, with regard to taxes. Personally, I'm assuming that income tax rates will probably drop to some degree, AMT might change, and the obamacare investment tax could go away completely. I doubt that capital gains will go below 15%...he might eliminate the 20% rate for the highest earners.
Would be glad to chat with you any time. We may have traded contact info in the past, but if not, you can PM me for it.