Another index fund allocation

[Brad243480]

Ok, so I'm new to the whole asset allocation idea (after getting burned with attempting market timing and stock picking).  I'm going to implement the PP in my ROTH and regular IRA accounts.  I have a hard time buying that much in bonds in the taxable account, and I know that you can buy PRPFX and get some more tax advantages, but I was wondering if anyone has any other reasonable index allocations they like. 

In other words, I'm thinking of using the taxable account as my variable portfolio, just not that speculative of one.  Still don't mind if it's equity heavy, but I'd like to keep it simple and something reasonably easy to stick to with low costs/taxes.  Thanks for any suggestions.

[MediumTex]

How about Wellesley or Wellington?

You could always buy some Berskhire Hathaway or Loews if you want tax-efficient diversified equity exposure.

It might help if you clarified your question a little more.

[Brad243480]

I'm not familiar with Wellesley or Wellington.  I guess my question is really, would it be better to set up the PP as well in my taxable account, or would there be another higher equity allocation that would be more tax efficient?  Keep in mind that this IS money that I can afford to lose, so a variable portfolio is ok here, even for HB.

I just have a problem buying simply the PRPFX and leaving it alone.  It's like I read in one of your posts, Tex.  You get a little "fantasy football" in you with regards to the PP.  I need something to save me from myself, but I don't want something that requires NO attention at all, you know?  Also, I don't completely agree with the PRPFX strategy and think the 4x25 PP is superior.

And I just want to keep it tax efficient.  So if someone could convince me that the 4 x 25 was pretty tax efficient, I would be happy just doing that (because I really do like the AA).  I just really don't care for the idea of splitting up the 4x25 among taxable and non-taxable accounts for a couple of reasons:

1)  It can cause problems when it comes time to rebalance.

2)  I would rather have more stability within each account individually.  I would hate to have one part of my PP get killed and have it all in my Roth...and then my Roth loses like 40% in a year.  I don't know if this is irrational, but it's the way I feel about the matter.

[Brad243480]

A little off topic, but I did think of a possible way to speculate within the PP that might even be acceptable to HB.  Let's say you decided to split up the PP among taxable and non-taxable accounts (which I am very hesitant to do).  Rather than putting the least tax-efficient items in the non-taxable accounts, you put the items that you expect to do the best over the next period of time (months, years, whatever).  Then, if you are right, when you rebalance your gains will be tax-free and your losses you can write off and carry forward.  If you are wrong, you still rebalance, and not much harm done.

Thoughts?

[MediumTex]

I think the PP has had fewer than 10 rebalancing events in the last 20 years or so, so don't think about future rebalancing as a source of significant tax inefficiency.

Right now, the overall PP is yielding less than 2% (give or take a little).  If you have room in your tax deferred accounts for the LT treasury piece, then your overall taxable gains from the portfolio are going to be very small.

I would put a little of each PP asset in your tax-deferred accounts so you will have some tax-free rebalancing ammunition should you need it down the road.

Gold yields zero, VTSMX yields under 2% and cash is yielding under 1%.  I wouldn't worrry too much about gains in taxable accounts right now.

Don't make it too complicated.

If you want to designate some of your money as VP in a taxable account, then do so, but keep the PP funds separate.

[PP4me]

I have my PP split across several accounts including my wife's 401k, where the S&P 500 index is the only acceptable PP option available.  So my wife's 401k is 100% in the S&P 500 index. Occassionally, she gets uncomfortable seeing the losses from being 100% stock in her account.  Its really helpful that she also tracks the total portfolio through mint.com and sees that the total portfolio is growing even when her 401k account balance is falling.  If you have your PP split across several accounts, it may be best to monitor it as a single portfolio on a financial website so you don't worry about the balances in each account.

[Brad243480]

Thanks, PP4me.  I think that may be really helpful.