? For the guys with a 401, roth ira and brokerage account.
If you are unable to max out the roth ira is there any reason to be buying into a brokerage?
I have been buying more speculative in my brokerage to hold, think nuclear, biotech, drone, solid divi payout in my roth ira and pure growth into my roth 401..
Am I spreading myself to thin and should I just dump all remaining in my roth ira?
Sorry if this is basic stuff. Just diving deeper into the investment world. Was a long time set and forget.
Hope everyone is doing well. Been awhile since I've checked in. Was blessed to have another baby girl join the family a year ago and time is flying.
Edit: to change roth 401 to roth ira
There is, and it's two big things. You have to design for how you want your withdrawal and tax strategy to look when you're ready to start taking out later in life. First is tax balance. I aim for a mix of tax now, tax later, and tax all along (plain brokerage). Know your asset distribution and keep it in balance. What is the balance, I don't know. For me, a good balance would be:
60% roth ira and roth 401k
20% traditional ira, traditional 401k, HSA
20% plain taxable investments
If you have balance of some sort like that, you can live and operate in a higher tax bracket and pay taxes in a lower bracket. You also have options when you need to take a big distribution for somethink like a vehicle, roof, windows, siding, remodel, big travel. This also can net you big gains in real estate later in life because you can live in a non-destination-states where property is generally more affordable vs retiree states. In MN, you can get an isolated 80 acre farm for what people are paying for townhomes and condos in florida, texas, or arizona. If you carry all your tax burden into retirement, you either pay, or you have to run for your life.
The other consideration is timing. When do you want to quit, and how can you keep your options open if your ship comes in, or you're forced out early?
You can pull from taxable investments whenever you want, and at least some of it will be tax free to get out because there is principle. If you're looking good at 50, you can start idling back, take a simpler job, and start using dividends to supplement your income, and if planned well, you've shed or reduced your debt payment burdens.
Have a 401k, because if you leave your job at 55, you can begin pulling from there without penalty. There are some additional rules, but it's a lesser knowing option. You don't have to wait until 59 1/2 for an IRA to come penalty free.
IRAs mature at 59 1/2, that's pretty simple.
Throw in SS at 62.
At 65, you can begin using your HSA dollars for whatever you want penalty free.
Lastly, if you are healthy and wealthy enough, max out your HSA,
never use it for healthcare, and invest it aggressively. Pay your lifelong expenses out of pocket and keep a running total of what you spend. You can "reimburse" yourself when you need to, and that can go back an unlimited amount of years. I keep a running total so I know I'm building a reserve of tax free dollars I can pull out of the HSA whenever I need to or want to.
Your HSA can really become a super unrestricted roth when you do that. Every chiropractor, doctor visit, teeth cleaning, kickball injury, wisdom teeth. Every expense you pay out of pocket becomes a tax free pool within your HSA. Nobody counts this, but that's what it is. I'm blessed to not have a huge built up tax free reserve, but it goes up a little every year. Maybe by the time I'm ready to pull the plug, I can meter out my tax free HSA pool over the number of years I need to coast into age 55.
