Gyroscopic Investing

I've finally crossed the point where I can hold something alongside bonds in my 401k. I know cash is often suggested, but with stupid low rates, would stocks make more sense?

Tax-deferred space is limited and precious, I agree that it doesn't make sense to use it for cash. Since this is a 401k I bet your choices are limited, so stocks would be a natural (if not the only) option.

It's a self employed 401k, so I can buy anything you normally could with a Fidelity account. I also have an inherited IRA that I must withdraw within 10 years.

Matthew19 wrote: ↑Fri Feb 04, 2022 2:34 pm It's a self employed 401k, so I can buy anything you normally could with a Fidelity account. I also have an inherited IRA that I must withdraw within 10 years.

That's awesome! You can also consider gold ETFs, I personally use SGOL as it has probably the lowest ER and the gold is based in Switzerland (not that it matters too much).

For stocks I use FZROX.

I regret that I let bogleheads steer me toward putting bonds in my tax-deferred accounts. I've added stocks for several years now. Especially the Roth IRA but also a Fidelity solo 401K.

dualstow wrote: ↑Fri Feb 04, 2022 6:29 pm I regret that I let bogleheads steer me toward putting bonds in my tax-deferred accounts. I've added stocks for several years now. Especially the Roth IRA but also a Fidelity solo 401K.

I don’t know how to do the math between paying the tax on bond payments each year and deferring stock gains tax, or saving the tax on the interest and reinvesting it while the stocks still grow

I think i should have paid attention to the fact that bogleheads tend to be in high tax brackets. Took me too long to realize. I have paid very little in taxes — low bracket — and if i could do it all again, I would have started with stocks in tax deferred to stretch that account out since, after all, you can only contribute so much. If i had started with a ton of money, I guess I could have paid an advisor with advice specific to my needs.

Another thing to think about, conversely: Is it possible to have too much money in tax deferred? There is a thread with a title like that either here or in bogleheads.

dualstow wrote: ↑Sat Feb 05, 2022 9:19 am
I think i should have paid attention to the fact that bogleheads tend to be in high tax brackets. Took me too long to realize. I have paid very little in taxes — low bracket — and if i could do it all again, I would have started with stocks in tax deferred to stretch that account out since, after all, you can only contribute so much. If i had started with a ton of money, I guess I could have paid an advisor with advice specific to my needs.

Another thing to think about, conversely: Is it possible to have too much money in tax deferred? There is a thread with a title like that either here or in bogleheads.

That is a question in which I believe MathJak would have probably something valuable to contribute ....

dualstow wrote: ↑Sat Feb 05, 2022 9:19 am Another thing to think about, conversely: Is it possible to have too much money in tax deferred? There is a thread with a title like that either here or in bogleheads.

It's extremely rare, but possible - Peter Thiel's IRA is a good example.

haha, yes!

I've just realized the downside to stocks in IRA is that there is no chance to tax-loss harvest =(

Matthew19 wrote: ↑Mon Jul 11, 2022 11:12 am I've just realized the downside to stocks in IRA is that there is no chance to tax-loss harvest =(

There actually is. It’s called a Roth conversion.

I Shrugged wrote: ↑Mon Jul 11, 2022 9:45 pm

Matthew19 wrote: ↑Mon Jul 11, 2022 11:12 am
I've just realized the downside to stocks in IRA is that there is no chance to tax-loss harvest =(

There actually is. It’s called a Roth conversion.

Simple but true!

foglifter wrote: ↑Fri Feb 04, 2022 2:59 pm

Matthew19 wrote: ↑Fri Feb 04, 2022 2:34 pm It's a self employed 401k, so I can buy anything you normally could with a Fidelity account. I also have an inherited IRA that I must withdraw within 10 years.

That's awesome! You can also consider gold ETFs, I personally use SGOL as it has probably the lowest ER and the gold is based in Switzerland (not that it matters too much).

For stocks I use FZROX.

Spider Mini Shares are the lowest ER. I have SGOL, BAR & GLDM. Those seem the best, but will probably be cashed out, or just confiscated like Luke Gromen said.
Like my Russian Equities & ETF were. Tell me we don't live in a nascent fascist state.

johnnywitt wrote: ↑Sat Sep 10, 2022 2:56 pm

foglifter wrote: ↑Fri Feb 04, 2022 2:59 pm

Matthew19 wrote: ↑Fri Feb 04, 2022 2:34 pm It's a self employed 401k, so I can buy anything you normally could with a Fidelity account. I also have an inherited IRA that I must withdraw within 10 years.

That's awesome! You can also consider gold ETFs, I personally use SGOL as it has probably the lowest ER and the gold is based in Switzerland (not that it matters too much).

For stocks I use FZROX.

Spider Mini Shares are the lowest ER. I have SGOL, BAR & GLDM. Those seem the best, but will probably be cashed out, or just confiscated like Luke Gromen said.

Thanks for sharing, johnnywitt - I didn't know GLDM slashed the ER, I believe it used to be 0.18 initially. I still like the fact that SGOL keeps it's gold in Switzerland (and now UK), although it's governed by US law so there certainly is a risk if "they" decide to confiscate. Also, the gold custodian for GLDM is ICBC Standard Bank, a British bank with 60% ownership by Industrial and Commercial Bank of China. Not calling it a red flag, but something to be aware of.

Actually, I don't understand why GLD still exists with it's fairly high ER of 0.40. The only advantage of GLD is the bid/spread ask and trading volume - this is great for traders, but irrelevant for long-term investors.

foglifter wrote: ↑Sat Sep 10, 2022 6:38 pm Actually, I don't understand why GLD still exists with it's fairly high ER of 0.40. The only advantage of GLD is the bid/spread ask and trading volume - this is great for traders, but irrelevant for long-term investors.

I remember hearing some podcast that said GLD is better for people who play around with options and the like (and most likely why the ER doesn't matter for them).

But yeah, it makes no sense for the PP.

I tried for many years to split assets across account types but ultimately found it much too complicated to integrate property into the PP concept because the different tax treatments interfere at rebalancing time, and the contribution restrictions in certain account types complicate your ability to contribute to all assets evenly.

In the end my solution was to implement a mini-PP in each account, which would work for you since your solo 401k lets you put whatever you want in it.

...Which is also complicated, but in a different way.

Whatever you do, I see a spreadsheet in your future!