25K Additional to Contribute to 4x25 HBPP

[buddtholomew]

VTI, TLT and GLD are each 20% of the taxable portfolio total (60%) with the balance held in Cash (40%). I intend to re-balance at the end of the month and restore the percentages to 4X25. These holdings are a subset of the overall portfolio and I am currently underweight in International equities. Should I purchase VEU (International) to complement the VTI holding in taxable or re-balance bond holdings and purchase International equities in the tax-deferred account?

In other words, do I diversify beyond VTI in taxable for the equity portion of the PP, or continue with the traditional 4x25 approach and re-balance to international equities in the variable portfolio.

All the best-
Budd

[KevinW]

I'm not sure I understand the question.  But I wouldn't let your tax-efficiency "tail" wag your asset allocation "dog."  Meaning that I would first decide on an overall asset allocation in the absence of any tax considerations.  Then, once your AA is set in stone, figure out how to implement it in the most tax-efficient way possible.

[AgAuMoney]

In other words, do I diversify beyond VTI in taxable for the equity portion of the PP, or continue with the traditional 4x25 approach and re-balance to international equities in the variable portfolio.

It sounds like you have some in tax-sheltered account(s) but the $25k to add is in the taxable holdings?

I would not do a sell and buy to rebalance unless there were no other choice.  That simply adds expense and complexity, especially in a taxable account.  Where you have plenty of cash already, I would allocate that as needed to create a portfolio balanced according to your desired asset allocation.

As for asset allocation... Personally I don't see any need for international stocks as part of the PP.  I chose VBK (small-cap growth) to supplement my VTI (mostly large caps) and individual dividend champion stock picks (nearly all large caps).  I do hold a few international stocks in my VP, but much less than I did two years ago.  I realized my large cap holdings all have significant international exposure, so I'm not highly motivated to pay for the aggravation of a fund, or do the research to find good international stocks on my own.  In other words, I have no set allocation to international.

Not sure I answered your question, but hope it helps.

[buddtholomew]

I apologize for the ambiguity. The question is whether to include international equity as part of the HBPP (4x25) or continue to hold them as part of the VP. I am in the process of re-balancing and can either exchange Bonds for International equity in the VP or Cash for US/International equity in the PP.

Scenario 1: International in VP
-Exchange bonds for International equities in VP
-Exchange cash for US equities in PP

Scenario 2: International in PP
-Exchange cash for International equities

[KevinW]

The question is whether to include international equity as part of the HBPP (4x25) or continue to hold them as part of the VP.

Their are arguments to be made for either approach.  I prefer to only use domestic stocks.  See this thread: http://gyroscopicinvesting.com/forum/in ... pic=1196.0

[buddtholomew]

Yes, I am aware of the thread Indices started after I posed my original question. I will continue to hold only domestic stocks in the PP as blurring the line between the VP and PP complicates matters.