What’s changed since?
Over the past couple years I’ve done the following:
Annually: Converted Traditional to Roth IRA Annually: Harvested long term capital gains Early 2018: Sold US stock to purchase Municipal bonds (enough to fund our lifestyle for 1 – 2 years)
I’ll review each in full. But first, an asset allocation snapshot:
GCC Asset Allocation
As of January 31st, 2018, according to Personal Capital our portfolio looks like this:
In other words, it’s basically the same as it was 2 years ago.
Assets and allocation
US Stocks: 71% -> ~80% VTI, plus 20% S&P500 and 1% Small-cap trusts in my old 401k
International Stocks: 18% -> ~90% VXUS, 7% VWO, and small holdings of Vanguard MFs in our HSA
Bonds: 6% -> ~85% Municipal bonds (mostly VTEB, some MUB), 15% intermediate term Treasuries (IEI)
Alternatives: 4% -> 100% VNQ (a REIT.)
Cash: ~0% (Emergency Funds are over rated.)
Not shown in the chart above are some legacy I-bonds and a private seller-financed mortgage contract, which are less than 5% of total assets. When included, total weight of US Bonds is ~10% and total stock is ~90%
Some interesting ratios:
Stock / Bonds: ~ 90 / 10
US / International equities: ~ 80 / 20
Taxable / Pre / Post-tax: ~ 70 / 25 / 5
A Roth conversion is the act of moving funds from a Traditional IRA to a Roth IRA. It is fully taxable in the year of the conversion, but that tax rate can easily be 0%.
In 2016 I converted ~$6k, and in 2017 I converted ~$24k. Tax paid: $0. Tax free