Portfolio Suggestions

[jhujrt3]

imported post

First time posting to this forum. I enjoy reading the suggestions and commentary on others portfolios and am hoping that I can get some help. I have spent the last 4 years as an infantry officer and will unfortunately leave the Army on 21 FEB 06 to pursue medical school hopefully starting this fall. The following is my portfolio as of 1 DEC 05: (note - Regular = Taxable Account)

1DEC05
FDTTX ROTH
7376.71
FDTTX REGULAR
4705.00
VFINX ROTH
5127.82
VFINX REGULAR
13646.67
JAGTX ROTH
486.99
TSP TOT
15410.40
TOTAL
46753.59
TSP G
3041.85

TSP S
6220.80
TSP I
6147.75
I will keep my money in the TSP when I ETS. I am considering the following actions:
(1) Consolidate all ROTH IRA funds (FDTTX / JAGTX)at the VFINX Roth and then converting that to the Vanguard Primecap Core Roth. I will then add the $4K to the primecap core for the 2006 contributions.
(2) I have $25K from deployment in an emmigrantdirect.com account making 4% however will be buying engagement ring soon. Wondering if I should add some vanguard tax managed funds (ie small cap and mid cap) with the remainder of the that money (leaving at least $5K in the emergency fund).
Appreciate your comments suggestions, thanks in advance.

JR

 

[Birchtree]

imported post

First and most importantly thank you for your service to our country.

The plan you have outlined is workable - but you may be looking at an unseen opportunity. I am bullish looking forward so my suggestions will be slanted. If you plan to be without taxable income for the majority of 2006 then the opportunity I'm referring to is the conversion of your regular IRAs into the Roth IRA. If the funds are located at three different companies then a consolidation plan is efficient. All your mutual funds are doing well so I would recommend a slow process for the conversion. Think about the ability of adding individual stocks to your Roth - the Fidelity Company would probably be the most cost effective unless Vanguard will allow you to purchase stocks. The benefit of owning stocks that pay good income with dividends is that the money comes in every 4 months like clock work and is set for dollar cost averaging. Mutual funds only pay once/year.

If you are not required to liquidate your funds prior to transfer to a Roth IRA then you can move them sooner, otherwise you will gain more value by waiting. Whenever you make a change inside any account in the private sector there will be fees - but you are presently with a couple of the best available. If you transfer and decide to remain intact, then new money could go toward individual stocks - they will provide more flexibility in your later years. With a reduced AGI your tax penalty to transfer funds to the Roth IRA will be reduced.

Your plan to keep your TSP account is practical - you might end up working for the government when you finish school. I'm presently sitting at 100% C fund waiting for the growth value play to be recognized. But if you consolidate your TSP funds you will gain faster growth. Hope this little bit helps - oh you can borrow from your Roth without any fees or complications or paper work. Good luck

 

[Mike]

imported post

I would suggest ETFs and/or stocksfor non-Roth / non-IRA accounts. I think they are more tax efficient than mutual funds, since funds have capital gains distributions that are taxable. With ETFs and stocks, you pay no tax unless you sell them for a gain.

 

[Ichiro]

inported post

Actually, I made money investing in the stock common via the dividend reinvestment program for over 25 years. I mean there are companies out there that are constantly splitting their stocks and increasing their dividends in excess of 10% per year. For example, AFL, I purchased these shares in 1984 and I still continue to hold them. The adjusted cost is now 51 cents per share and the fair market is now about $48 per share. My only problem is that I cannot sell them since i will owe too much capital gain tax. Actually, I am making more money via my dividdend reinvestment program as compared to my individual stocks in my ROTH IRA portfolio. When the music stops that is when I start buying more shares in my dividend reinvestment program.