Roth IRA Allocation Suggestions

Started by TeslaCoil
Get help with your application

Use all the free resources available to you from SDN: articles, guides, expert advising, forums discussions, and school research.

Browse articles Compare schools My application plan Read Interview Feedback
Practice for interviews Ask an Advisor
TeslaCoil

TeslaCoil

Full Member
Verified Member
10+ Year Member
Physician
This should be a fun one. Recently fired my advisor, who was sucking down 1.4% total assets just to manage a roth. Was netting 7%. Goodbye edward jones. Looking for suggestions for allocations for growth-aggressive growth-ish. Looking at a 25 year timeframe until retirement. I like VOO and VTI, just dont know what percentage to put into that vs others. I like the idea of tech sector funds since I think AI and quantum computing will go far. Very on the fence about international market funds (warren buffet says nix em, but a lot of advisors say to include them). On the fence about dividend funds at this phase in the game. Suggestions anyone?
 
I cannot believe anyone would pay 1.4% in management fee. Even at say 1 million in assets (which is common these days) for almost anyone these days 7 plus years out of anesthesia residency due to the stock market boom.

Just do VTI 25%
VOO 25% or similar
VGT 25%
VB 10% small cap

The rest of the remaining 15% invest whatever you want like bitcoin etf
 
Two approaches I considered for Roth are putting your highest taxed assets in (dividend stocks, REITs, etc) versus your riskiest since they have the highest growth potential. I think most people opt for riskiest, which based on your posts it would seem tech and bitcoin would be good choices.

Another consideration is that the Roth IRA is the last money you’ll touch and may very well go to your kids.
 
aneftp said:
I cannot believe anyone would pay 1.4% in management fee. Even at say 1 million in assets (which is common these days) for almost anyone these days 7 plus years out of anesthesia residency due to the stock market boom.

Just do VTI 25%
VOO 25% or similar
VGT 25%
VB 10% small cap

The rest of the remaining 15% invest whatever you want like bitcoin etf
Click to expand...
I could probably sleep pretty well at night with this portfolio...
 
ambiturner said:
Two approaches I considered for Roth are putting your highest taxed assets in (dividend stocks, REITs, etc) versus your riskiest since they have the highest growth potential. I think most people opt for riskiest, which based on your posts it would seem tech and bitcoin would be good choices.

Another consideration is that the Roth IRA is the last money you’ll touch and may very well go to your kids.
Click to expand...
Sure, but my understanding is that dividend stocks are a better asset to switch into closer to retirement, since they deliver slightly lower yields but also tax exempt dividends... no?
 
aneftp said:
I cannot believe anyone would pay 1.4% in management fee. Even at say 1 million in assets (which is common these days) for almost anyone these days 7 plus years out of anesthesia residency due to the stock market boom.

Just do VTI 25%
VOO 25% or similar
VGT 25%
VB 10% small cap

The rest of the remaining 15% invest whatever you want like bitcoin etf
Click to expand...
Building on this though, is there really much sense in having both vti and voo? Why not just 50% in one or the other?

Also why small caps since you have small cap coverage within vti and voo?
 
TeslaCoil said:
Building on this though, is there really much sense in having both vti and voo? Why not just 50% in one or the other?

Also why small caps since you have small cap coverage within vti and voo?
Click to expand...
Definitely overlap with what you stated. And you are correct. But that’s what my current portfolio is like.

I’m not a real savvy investor.

I try not to overthink things these days.

I used to own 5% international but international underperformed for so long
 
aneftp said:
Definitely overlap with what you stated. And you are correct. But that’s what my current portfolio is like.

I’m not a real savvy investor.

I try not to overthink things these days.

I used to own 5% international but international underperformed for so long
Click to expand...
I agree on international markets... think i'll probably skip those...
 
TeslaCoil said:
Sure, but my understanding is that dividend stocks are a better asset to switch into closer to retirement, since they deliver slightly lower yields but also tax exempt dividends... no?
Click to expand...
If you’re just buying total funds then you probably don’t want/need to get into the weeds on that. If you like splitting into small/international/large/value etc then you can put different funds in different places and the Roth is a nice place for things with a lot of payouts.

I’ve done that and my returns are lower than they would be with a simpler strategy. I have much less volatility though and every now and then you get a nice surprise (like this year with international doing so well).
 
100% VTI/VTSAX or equivalent in all my retirement and brokerage accounts. I'll likely one day add international exposure and eventually bonds, but those days are not today. The more I've read and learned about personal finance, the more I've found I like things as simple and as hands-off as possible. I know that VTI alone has a near 100% likelihood of allowing me to achieve my financial goals.

Most importantly of all, it's simple for my wife if something ever happened to me. She has far less interest in personal finance than me, and if I died or became severely disabled, I want to reduce the stress/challenge for her as much as possible.
 
TeslaCoil said:
Building on this though, is there really much sense in having both vti and voo? Why not just 50% in one or the other?

Also why small caps since you have small cap coverage within vti and voo?
Click to expand...
No real sense in my mind of doing VTI and VOO. They're virtually the same thing. Their correlation is 0.99. No value of having both.
 
If you wanna keep it simple, just put everything in VTI or VOO.

If you want to bet more on AI/quantum computing, can also do VTI/QQQ anywhere from 50/50 to 75/25 if you can handle more volatility but potentially more gains (basically heavier on tech).

Keep it simple
 
TeslaCoil said:
I do like VGT but 100% is a bit above my risk tolerance… Im thinking something like 70/30 VOO/VGT maybe?
Click to expand...
That’s good ratio also.

Again. Don’t overthink things. U can always rebalance stuff. It’s not like you are trying to load 30% in to ptlr stock now at its peak waiting for it to go up more or implode.
 
TeslaCoil said:
but why vxus? International etfs are so unappealing…
Click to expand...
Because it’s possible US is relatively overvalued and international is relatively undervalued. It’s probably a good idea to have some exposure. What percentage? I have no idea. I maintain a significant home country bias for the US, just less than others on here. Plus, international stocks correlate less with US stocks than US bonds do long term, so it’s better diversification with better returns (vs bonds). That’s my understanding anyway.
 
TeslaCoil said:
Where is @BLADEMDA when you need him?
Click to expand...

He's been an active manager of his investments, and has readily admitted over the years that he'd probably have done better passively.

I think that he (like most physicians) has done so well primarily because he's worked like a dog, for a long time, while saving aggressively, spending carefully. He is well-read on financial issues but I think he's been successful despite his stock picking and market timing, not because of it. 🙂

We used to have a prolific financial poster named dr_doze, who may or may not still be around. I valued his contributions. 🙂
 
pgg said:
He's been an active manager of his investments, and has readily admitted over the years that he'd probably have done better passively.

I think that he (like most physicians) has done so well primarily because he's worked like a dog, for a long time, while saving aggressively, spending carefully. He is well-read on financial issues but I think he's been successful despite his stock picking and market timing, not because of it. 🙂

We used to have a prolific financial poster named dr_doze, who may or may not still be around. I valued his contributions. 🙂
Click to expand...
Well what abt you? Any advice?
 
TeslaCoil said:
Well what abt you? Any advice?
Click to expand...
I'm a passive indexer. I don't pick stocks or speculate. I save aggressively. I live below my means. It'll all work out. It's the easy button.

I could retire or go part time right now (I'm 50) but I basically enjoy anesthesia most days, and the pay is so good that I can't help but keep at it full time. For now. My kids are not in super high earning professions so I'd like to have the ability to help them as time goes by.

Some people love finance and derive enjoyment from the game. That's OK of course. All of us earn so much we can't help but win out in the end.

The most important issue, by far, is spending. See for example the other thread going now where the guy can't figure out why he can't get ahead despite his 90th %ile job ... he blames generational societal decline, not his $24,000 mortgage and $6000 nanny. Hidden in that scenario is the likelihood that he'll take on too much risk in his investments, chasing high returns to make up for what is entirely a self-inflicted spending problem. And when the risk shows up, and it probably will, he'll be doubly screwed.
 
TeslaCoil said:
This should be a fun one. Recently fired my advisor, who was sucking down 1.4% total assets just to manage a roth. Was netting 7%. Goodbye edward jones. Looking for suggestions for allocations for growth-aggressive growth-ish. Looking at a 25 year timeframe until retirement. I like VOO and VTI, just dont know what percentage to put into that vs others. I like the idea of tech sector funds since I think AI and quantum computing will go far. Very on the fence about international market funds (warren buffet says nix em, but a lot of advisors say to include them). On the fence about dividend funds at this phase in the game. Suggestions anyone?
Click to expand...

VTI and VOO have similar performance with VOO slightly outperforming.

portfolioslab.com

VTI vs VOO: Performance Charts & Full Comparison

Compare VTI vs VOO performance side-by-side. 1Y return: 16.83% vs 17.30%. Interactive charts, historical returns & key metrics.
portfolioslab.com portfolioslab.com

If long term, either is fine. If you want small cap exposure, go VTI.

International is another question. I'm basically 99% VTI/VTSAX.

If you go back far enough though, international has outperformed US. I'm slowly diversifying but it's not a huge priority.

Easiest thing is just VTI and chill.
 
anonperson said:
VTI and VOO have similar performance with VOO slightly outperforming.

portfolioslab.com

VTI vs VOO: Performance Charts & Full Comparison

Compare VTI vs VOO performance side-by-side. 1Y return: 16.83% vs 17.30%. Interactive charts, historical returns & key metrics.
portfolioslab.com portfolioslab.com

If long term, either is fine. If you want small cap exposure, go VTI.

International is another question. I'm basically 99% VTI/VTSAX.

If you go back far enough though, international has outperformed US. I'm slowly diversifying but it's not a huge priority.

Easiest thing is just VTI and chill.
Click to expand...
How far are we going back?

The last 15 years international stock index is less than 6%

Going back 30 years international has performed less than 6%

Vanguard - Product detail -

institutional.vanguard.com institutional.vanguard.com
 
aneftp said:
How far are we going back?

The last 15 years international stock index is less than 6%

Going back 30 years international has performed less than 6%

Vanguard - Product detail -

institutional.vanguard.com institutional.vanguard.com
Click to expand...

Depends on time frame as well.

1000009567.png


1000009566.png


I haven't really focused much on international. I've gotten Lucky so far as have others due to the great stock market run up these last several years.

Jack Bogle didn't think international was necessary for your typical investor so that is interesting.

I'm starting to re evaluate things and will try to get some more international exposure but it's not a huge priority.
 
pgg said:
I'm a passive indexer. I don't pick stocks or speculate. I save aggressively. I live below my means. It'll all work out. It's the easy button.

I could retire or go part time right now (I'm 50) but I basically enjoy anesthesia most days, and the pay is so good that I can't help but keep at it full time. For now. My kids are not in super high earning professions so I'd like to have the ability to help them as time goes by.

Some people love finance and derive enjoyment from the game. That's OK of course. All of us earn so much we can't help but win out in the end.

The most important issue, by far, is spending. See for example the other thread going now where the guy can't figure out why he can't get ahead despite his 90th %ile job ... he blames generational societal decline, not his $24,000 mortgage and $6000 nanny. Hidden in that scenario is the likelihood that he'll take on too much risk in his investments, chasing high returns to make up for what is entirely a self-inflicted spending problem. And when the risk shows up, and it probably will, he'll be doubly screwed.
Click to expand...

How hot is this nanny??
 
pgg said:
I'm a passive indexer. I don't pick stocks or speculate. I save aggressively. I live below my means. It'll all work out. It's the easy button.

I could retire or go part time right now (I'm 50) but I basically enjoy anesthesia most days, and the pay is so good that I can't help but keep at it full time. For now. My kids are not in super high earning professions so I'd like to have the ability to help them as time goes by.

Some people love finance and derive enjoyment from the game. That's OK of course. All of us earn so much we can't help but win out in the end.

The most important issue, by far, is spending. See for example the other thread going now where the guy can't figure out why he can't get ahead despite his 90th %ile job ... he blames generational societal decline, not his $24,000 mortgage and $6000 nanny. Hidden in that scenario is the likelihood that he'll take on too much risk in his investments, chasing high returns to make up for what is entirely a self-inflicted spending problem. And when the risk shows up, and it probably will, he'll be doubly screwed.
Click to expand...
Fortunately, I dont have those problems. Stay at home wife. No mortgage, no car pmt. 50%+ of my income goes to investments.

I do agree this is where most physicians falter though.
 
Last edited:
  • Like
Reactions: pgg
pgg said:
I'm a passive indexer. I don't pick stocks or speculate. I save aggressively. I live below my means. It'll all work out. It's the easy button.

I could retire or go part time right now (I'm 50) but I basically enjoy anesthesia most days, and the pay is so good that I can't help but keep at it full time. For now. My kids are not in super high earning professions so I'd like to have the ability to help them as time goes by.

Some people love finance and derive enjoyment from the game. That's OK of course. All of us earn so much we can't help but win out in the end.

The most important issue, by far, is spending. See for example the other thread going now where the guy can't figure out why he can't get ahead despite his 90th %ile job ... he blames generational societal decline, not his $24,000 mortgage and $6000 nanny. Hidden in that scenario is the likelihood that he'll take on too much risk in his investments, chasing high returns to make up for what is entirely a self-inflicted spending problem. And when the risk shows up, and it probably will, he'll be doubly screwed.
Click to expand...

Bro living like he got 10 mill liquid and even then thats his 4% SWR with 30k in monthly expenses right there.
 
TeslaCoil said:
Sure, but my understanding is that dividend stocks are a better asset to switch into closer to retirement, since they deliver slightly lower yields but also tax exempt dividends... no?
Click to expand...

There is nothing magic about dividends in terms of tax. Ordinary dividends are taxed as ordinary income at your marginal rate. Qualified dividends are taxed at your long term capital gains rate. You can get equivalent income and taxes by selling shares of a stock that does not pay dividends.

But in a Roth there are is no tax liability for any of it so it doesn't matter.

The theoretical benefit of dividend paying stocks is they are more mature companies that should have more disciplined management required to deliver consistent dividend payments instead of making riskier investments in growth of their company. There is no good evidence that this matters to any degree from which you can benefit. It just doesn't matter. The real reason retired people like dividend paying stocks is that they get a check in the mail (or direct deposit) every quarter and they can use it like a paycheck without having to sell any shares. It's an emotional benefit for them, not a financial benefit.
 
Roth dollars are the last dollars should be spent in retirement and the first dollars passed on to heirs.
What should you hold in this account? Assuming that is a stand alone portfolio and not as part of your overall asset allocation, it should be allocated to the asset class(es) that have the highest expected return over your lifetime. Key word being expected.

Ghost of doze. Yup.
 
Lab Lover said:
Roth dollars are the last dollars should be spent in retirement and the first dollars passed on to heirs.
What should you hold in this account? Assuming that is a stand alone portfolio and not as part of your overall asset allocation, it should be allocated to the asset class(es) that have the highest expected return over your lifetime. Key word being expected.

Ghost of doze. Yup.
Click to expand...

Putting a higher portion of equities into a Roth is not solely because of their higher long term expected gain, it is also because of the tax free treatment of both the growth and withdrawals. The relative problem of equities in tax deferred accounts is you eventually have to pay tax on the growth. Investments that have the highest potential long term growth are best placed in an account that will have the lowest possible tax on that growth. I mean sure you want no tax on anything if possible, but since you are going to have to pay tax on something you would rather it be more on bonds that have not grown as much.
 
Mman said:
Putting a higher portion of equities into a Roth is not solely because of their higher long term expected gain, it is also because of the tax free treatment of both the growth and withdrawals. The relative problem of equities in tax deferred accounts is you eventually have to pay tax on the growth. Investments that have the highest potential long term growth are best placed in an account that will have the lowest possible tax on that growth. I mean sure you want no tax on anything if possible, but since you are going to have to pay tax on something you would rather it be more on bonds that have not grown as much.
Click to expand...
Or just don’t buy bonds. Better to pay higher taxes because you actually made a profit.
 
TeslaCoil said:
This should be a fun one. Recently fired my advisor, who was sucking down 1.4% total assets just to manage a roth. Was netting 7%. Goodbye edward jones. Looking for suggestions for allocations for growth-aggressive growth-ish. Looking at a 25 year timeframe until retirement. I like VOO and VTI, just dont know what percentage to put into that vs others. I like the idea of tech sector funds since I think AI and quantum computing will go far. Very on the fence about international market funds (warren buffet says nix em, but a lot of advisors say to include them). On the fence about dividend funds at this phase in the game. Suggestions anyone?
Click to expand...

IBIT and ETHA
 
You must log in or register to reply here.