Need suggestions with a challenging rebalancing dilemma

[MikeK]

With the recent drops in gold, I've got a rebalancing problem coming.

Most of my PP assets are in tax advantaged accounts:

53% tax deferred
22% roth
25% NQ

The problem is gold allocations:

0% tax deferred (just isn't anything available I can buy for gold)
19% is in roth
81% is in taxable

Finally, here's my current allocation among the 4 assets:

33% stocks
24% bonds
24% cash
19% gold

If stocks go up anymore, I'd obviously have to sell and purchase gold.  Problem is barely 10% of my stocks are in accounts where I can purchase gold (roth and NQ).

My options as I see it are to
1. Increase my PP holding from VP holdings (currently about 60/40 split) and purchase mainly gold in taxable accounts as I've already funded my roths for the year.  I don't think I even have enough to cover the gold deficit....
2. Trade out of bond positions in my roth accounts into gold and increase my bond holdings in tax deferred (I do have good stock/bond/cash options in my 401k).
3. Combination of above

I really don't like any of the options as they all leave me heavily exposed in my taxable accounts with almost 100% in gold.  I can appreciate that the portfolio as a whole works, but I am heavily restricted from using most of the assets due to tax laws for many years, so the temporal view is starting to bug me.  What if I need access to some of the funds in taxable and gold just took another 10% hit?  I'd hate to liquidate those holdings....

Am I missing some other options I haven't thought of yet?

Thanks for any/all insights!
mike

[Pointedstick]

You can't buy a gold ETF or something in your tax-deferred account? If not, I assume this is a 401k without a brokerage window, which sucks.

If your plan allows in-service rollovers, you could move money from your 401k to an IRA and then buy IAU or something there.

If you can't do that either, you could take out a 401k loan and buy gold in taxable. This sounds weird and risky but I know AgAuMoney did this with some success so maybe he can chime in.

Another option is to turn your entire 401k into a "PP-like" VP. I find dealing with this situation to be a nightmare, myself, so I configured each of my individual accoutns to be a separate PP. I thank my lucky stars that my 401k has a brokerage window, but if I didn't, I'd definitely just make it into a Boglehead-type portfolio or as close as I could get to a PP without gold.

[MikeK]

You can't buy a gold ETF or something in your tax-deferred account? If not, I assume this is a 401k without a brokerage window, which sucks.

My 401k has a mutual fund window, just not one that has a view of gold.  I've got plenty of ways to slice/dice the stock/bond market (both local and global).....

My wifes 403b plan is even worse, basically has one option, which are stocks.  And that's all I've got allocated to the PP.

If your plan allows in-service rollovers, you could move money from your 401k to an IRA and then buy IAU or something there.

Just checked, no mention of in-service rollovers in the glossy brochure.  I'll look into the fine print details, but I'm not hopeful.

If you can't do that either, you could take out a 401k loan and buy gold in taxable. This sounds weird and risky but I know AgAuMoney did this with some success so maybe he can chime in.

This still leaves me (I feel) exposed by only having gold assets in my taxable.

Another option is to turn your entire 401k into a "PP-like" VP. I find dealing with this situation to be a nightmare, myself, so I configured each of my individual accoutns to be a separate PP. I thank my lucky stars that my 401k has a brokerage window, but if I didn't, I'd definitely just make it into a Boglehead-type portfolio or as close as I could get to a PP without gold.

I'm wishing I had your lucky stars....I could sure look into breaking (most) out my 401k into something like that, interesting idea!

mike

[AdamA]

You can't buy a gold ETF or something in your tax-deferred account? If not, I assume this is a 401k without a brokerage window, which sucks.

My 401k has a mutual fund window, just not one that has a view of gold.  I've got plenty of ways to slice/dice the stock/bond market (both local and global).....

My wifes 403b plan is even worse, basically has one option, which are stocks.  And that's all I've got allocated to the PP.

If your plan allows in-service rollovers, you could move money from your 401k to an IRA and then buy IAU or something there.

Just checked, no mention of in-service rollovers in the glossy brochure.  I'll look into the fine print details, but I'm not hopeful.

If you can't do that either, you could take out a 401k loan and buy gold in taxable. This sounds weird and risky but I know AgAuMoney did this with some success so maybe he can chime in.

This still leaves me (I feel) exposed by only having gold assets in my taxable.

Another option is to turn your entire 401k into a "PP-like" VP. I find dealing with this situation to be a nightmare, myself, so I configured each of my individual accoutns to be a separate PP. I thank my lucky stars that my 401k has a brokerage window, but if I didn't, I'd definitely just make it into a Boglehead-type portfolio or as close as I could get to a PP without gold.

I'm wishing I had your lucky stars....I could sure look into breaking (most) out my 401k into something like that, interesting idea!

mike

Also keep in mind that the rebalancing premium historically is only around .5% to 1%, so it's not the end of the world if you can't completely rebalance.  Just let it ride if you have to.

Try to but a little more gold with some cash when you can.

[Ad Orientem]

OK this is going to be heresy for some on here. But oh well. A few months ago I officially gave up trying to fix 401Ks. The unhappy truth is that most of them just aren't PP compatible and can't be made PP compatible without going through elaborate contortions. It sucks, but there you have it.

My new line of advice is to just go with a conservative boglehead portfolio in your 401K. Is it ideal? No. But it is actually a pretty good solution that is a whole lot easier than trying to jam the proverbial round peg into the square hole.

So yea. Just go with a very simple two or three fund boglhead special in your 401K and call it a day. You can then run the PP in your other accounts without all the aggravation.

[Tyler]

I'd similarly be concerned with having a taxable account 100% in gold.  That carries too much risk to near-term liquid assets for my tastes.

As has already been said, I'd personally set up the taxable account as it's own PP and just do the best you can with the tax-deferred accounts.  And if you ever switch jobs, take the opportunity to roll that money into an IRA at the brokerage of your choice and build your PP then.

[rocketdog]

Another option is to turn your entire 401k into a "PP-like" VP. I find dealing with this situation to be a nightmare, myself, so I configured each of my individual accoutns to be a separate PP. I thank my lucky stars that my 401k has a brokerage window, but if I didn't, I'd definitely just make it into a Boglehead-type portfolio or as close as I could get to a PP without gold.

+1.

I too have a 401K account without a brokerage window, along with a Roth and an IRA.  Same with my wife.  For a time I struggled to cobble together an overall PP with all our accounts.  But I finally gave up on that and now I treat each account as its own entity split between PP and VP funds, with our 401Ks essentially like a PP without gold, sort of like a hybrid between a Boglehead portfolio and an All-Weather portfolio. 

Yes, you need to be organized and track everything on a spreadsheet, but honestly, once you set it up it's a piece of cake to monitor (unless you insist on monitoring it daily or weekly). 

[Ad Orientem]

Another option is to turn your entire 401k into a "PP-like" VP. I find dealing with this situation to be a nightmare, myself, so I configured each of my individual accoutns to be a separate PP. I thank my lucky stars that my 401k has a brokerage window, but if I didn't, I'd definitely just make it into a Boglehead-type portfolio or as close as I could get to a PP without gold.

+1.

I too have a 401K account without a brokerage window, along with a Roth and an IRA.  Same with my wife.  For a time I struggled to cobble together an overall PP with all our accounts.  But I finally gave up on that and now I treat each account as its own entity split between PP and VP funds, with our 401Ks essentially like a PP without gold, sort of like a hybrid between a Boglehead portfolio and an All-Weather portfolio. 

Yes, you need to be organized and track everything on a spreadsheet, but honestly, once you set it up it's a piece of cake to monitor (unless you insist on monitoring it daily or weekly).

+2

Somehow I missed the last paragraph of Pointed's excellent post.

[MikeK]

Thank you all for the suggestions and thinking out side the PP box I had cornered myself in!

I've got a spreadsheet (again, based on many forum members examples) that tracks everything already.  I removed the 401k/403b portions and now I've got the opposite problem, way over weighted on gold!

I'll probably end splitting my 401k into what ever it takes to balance out my roth/NQ PP, likely most of it will be stocks until I can beef up my NQ accounts with additional contributions.

Thanks again for all the suggestions!
mike

[notsheigetz]

Also keep in mind that the rebalancing premium historically is only around .5% to 1%, so it's not the end of the world if you can't completely rebalance.  Just let it ride if you have to.

My allocation percentages are pretty close to yours but I am even a little more overweight in stocks due to the fact that ALL 401k money for both me and my wife goes into low-expense S&P funds (the only PP friendly option we have).

Fortunately, I do have the option of doing in-service rollovers due to my age and I could therefore re-balance if I wanted to but I'm following  AdamA's and HB's advice and letting it all ride until my yearly checkup next January. I don't really see any reason to panic because one sector of the PP is doing too well, especially stocks.

Also, I invest in my company's Stock purchase plan which they generously match 25% every 3 months (and it's been doing very well lately). This also drives up my stock allocation but I always have the option of cashing it out which I intend to do when I get the next match in July. If everything goes according to plan I'll be using the proceeds to buy more gold.