Gyroscopic Investing

I've finally funded my 401k to the point that I have to consider what to buy after bonds

I know that HB says cash, but in today's environment? The Fidelity TSM yields 1.7% and the 1 year t-bill is 1.55%. Also, wouldn't the potential gains from the stocks be better inside of a tax advantaged amount as well? Thanks for any advice.

I don't think cash is a good choice for a retirement account. Go with stocks and bonds, mainly. Some cash for rebalancing is fine.

Harry Browne's reasoning for preferring to stash cash in retirement accounts was that the gains of cash are all taxed at ordinary income rates, so it's most in need of protecting. 401K is fine. You could consider using your Roth IRA or HSA instead, because you can get at the cash if needed. There's even a Bogleheads wiki page on how to use a Roth for emergency cash, by effectively swapping it for stocks (which you leave in taxable). I think interest rates need to be higher than 2% for that to make sense though.

I've been using series I savings bonds effectively as an extra, free tax-deferred retirement account. Plus if you need the cash, you don't have wait until you're 59.5 to get at it. (disadvantage: you probably don't want to be rebalancing out of these and you do have to pay the taxes all at once when the bond matures at 30 years.)

I think I bonds are a great alternative for tax deferral AND tax diversification of Cash for most investors. Creating a ladder of I bonds year after year before you retire (or even in early retirement) can give you a nice guaranteed income stream in retirement that is not subject to the mandatory RMDS you will have to take from your 401k.

sophie wrote: ↑Fri Jan 31, 2020 7:56 am You could consider using your Roth IRA or HSA instead,

I've been using series I savings bonds effectively as an extra, free tax-deferred retirement account. Plus if you need the cash, you don't have wait until you're 59.5 to get at it. (disadvantage: you probably don't want to be rebalancing out of these and you do have to pay the taxes all at once when the bond matures at 30 years.)

I have a Solo 401 because I own an LLC, and can contribute much more to it. I'm not doing any Roth contributions right now because I'm with Fidelity. Should I move to vanguard and use their Roth option inside of the solo 401k?

Also, how to you purchase I-bonds?

1. For i bonds, see https://www.treasurydirect.gov/indiv/re ... s_ibuy.htm

and

https://www.treasurydirect.gov/indiv/re ... eature.htm

2. I have had both Roth IRAs and Sep IRAs from Fidelity. If you call a rep by phone, they can help you set up these accounts. I have not had one, but I think Fidelity should be able to help you set up or transfer your solo 401k with them.