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Cashless in tax-advantaged?
Posted: Fri Jul 24, 2015 10:42 am
by Xan
In a hypothetical world where somebody keeps separate PPs in each tax treatment (taxable, tax-deferred, and tax-prepaid Roth-style), and does not plan to touch the money in the retirement accounts for decades, is there any disadvantage to going to 3x33% and leaving out cash in those retirement accounts?
If I'm doing the math right, the rebalancing bands would be 23% and 43% as the equivalent of the normal 15%/35%.
Anyone have experience with this?
Re: Cashless in tax-advantaged?
Posted: Fri Jul 24, 2015 10:49 am
by ochotona
I generally don't see the point of separate PPs in different kinds of accounts. What is the justification for this type of strategy in your case?
Re: Cashless in tax-advantaged?
Posted: Fri Jul 24, 2015 11:02 am
by Xan
At the moment, it's primarily because of different time horizons for when I might use the money.
Re: Cashless in tax-advantaged?
Posted: Fri Jul 24, 2015 11:04 am
by ochotona
No-cash levers the results of any portfolio; sounds fine to me to do it in a retirement account.
Re: Cashless in tax-advantaged?
Posted: Fri Jul 24, 2015 2:09 pm
by Tyler
At current rates I wouldn't fault anyone from paring back on cash in a retirement account. But if you look at history it's not something you want to leave out. Paying the historical average of 4-6%, you'd wish you had some in your tax-deferred account.
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