One of PP's important principles is "separation of PP and VP" in a sense that money from PP should not be used in VP and VP should only use money that one can afford to lose. My question is more technical in nature: I'm struggling to find the way to separate the positions that I consider part or PP from those that should belong to VP. As a result of job changes my wife and I have a handful of tax-deferred accounts (rollover IRA, SEP-IRA, Roth IRA, 401(k)) and one taxable account. For now I just keep some PRPFX in my taxable as my VP and everything else in tax-deferred space as my PP. PRPFX is a great choice for taxable accounts as it's tax-efficient, but I would really like to grow my VP into a better structured and less expensive allocation - therefore i would need to use some part of my tax-deferred accounts for positions that are not very tax-efficient (bonds, gold).
I know some of you have both PP and VP, hence this is a question for you: how do you scatter your PP and VP
positions among taxable and tax-deferred, especially when you have 3 and more accounts? Do you designate specific accounts for PP or VP only or do you mash it all up and only control the separation manually (say , Excel sheet)?
Thanks!
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
Thats a great question, and I'll second that. It is hard to track for sure.
My take is the easiest method would be is if possible have these two portfolios at least separate from an account perspective (same broker okay, but different accounts). Reason for this 'physical' distinction is for tracking purposes, but also to reduce the temptation to take from the Variable to fund the PP one.
That being said....easier said than done. What I've done is use my Roll-over IRAs as at least a base for the PP, and the Roths as part of my variable.
Although, one thing to note is that you can open up multiple Roth accounts, just limited how much you can contribute per year in aggregate.
I use an Excel spread sheet, and it makes it very easy to keep track of both the VP and PP, as well as percent holdings for the PP, despite having multiple accounts. If you are unfamiliar with Excel (as I was), I learned how, and created my spreadsheet in a couple of hours from a user.
6 Iron wrote:
I use an Excel spread sheet, and it makes it very easy to keep track of both the VP and PP, as well as percent holdings for the PP, despite having multiple accounts. If you are unfamiliar with Excel (as I was), I learned how, and created my spreadsheet in a couple of hours from a user.
I do have an Excel doc where I track my portfolio, but I keep positions classified by tax type and available investment options - that is I have 3 buckets: 401(k) , all IRAs, taxable. I guess I could just redesign the table so it tracks PP and VP separately. And I will gradually try to separate accounts so , for example, one of IRAs could be used solely for VP.
"Let every man divide his money into three parts, and invest a third in land, a third in business, and a third let him keep in reserve."
- Talmud
