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Taxable and Tax-Deferred Investments
Posted: Fri Aug 16, 2013 11:14 am
by buddtholomew
My PP is entirely taxable and I consider theses investments as a portion of my emergency fund. After a recent rollover, I now have tax-deferred space available to migrate 100% of my LTT exposure. Ideally, an investor would want to shelter their bond holdings to minimize taxes, but I am concerned with the economic scenario that played out in 2008.
If LTTs buoy the portfolio as in 2008, my overall portfolio is doing well but the funds available in the taxable account are significantly reduced. How do I reconcile this mentally and what would others do under similar circumstances?
Re: Taxable and Tax-Deferred Investments
Posted: Fri Aug 16, 2013 11:31 am
by AdamA
buddtholomew wrote:
My PP is entirely taxable and I consider theses investments as a portion of my emergency fund. After a recent rollover, I now have tax-deferred space available to migrate 100% of my LTT exposure. Ideally, an investor would want to shelter their bond holdings to minimize taxes, but I am concerned with the economic scenario that played out in 2008.
If LTTs buoy the portfolio as in 2008, my overall portfolio is doing well but the funds available in the taxable account are significantly reduced. How do I reconcile this mentally and what would others do under similar circumstances?
Is there a stock and/or money market fund in the tax deferred space (for rebalancing)?
Even if there's not, I would take full advantage of the tax deferred account. Minimizing taxes is a guaranteed way to improve your returns, even if you can't rebalance perfectly.
Re: Taxable and Tax-Deferred Investments
Posted: Fri Aug 16, 2013 3:50 pm
by buddtholomew
AdamA wrote:
buddtholomew wrote:
My PP is entirely taxable and I consider theses investments as a portion of my emergency fund. After a recent rollover, I now have tax-deferred space available to migrate 100% of my LTT exposure. Ideally, an investor would want to shelter their bond holdings to minimize taxes, but I am concerned with the economic scenario that played out in 2008.
If LTTs buoy the portfolio as in 2008, my overall portfolio is doing well but the funds available in the taxable account are significantly reduced. How do I reconcile this mentally and what would others do under similar circumstances?
Is there a stock and/or money market fund in the tax deferred space (for rebalancing)?
Even if there's not, I would take full advantage of the tax deferred account. Minimizing taxes is a guaranteed way to improve your returns, even if you can't rebalance perfectly.
I would use the tax-deferred space for my VP. Perhaps the question is moot. A PP without LTT is not a PP and subject to risk.