August 9, 2016 at 9:05 am #19679
I have about $200k in an inherited IRA that I cannot contribute to. The challenge is to grow this fund without contributing, along having to withdraw a required minimum distribution [RMD]-(fully taxable) each year. I had this fund in Lincoln Financial for about 8 years and was slaughtered in fees that they charged. Between fees and the RMD I wasn’t growing my money at all. Last year I switched to Betterment using a 75% stock and 25% bond allocation strategy, and have done much better, one factor being lower fees. Should I try and mimic my TSP allocation strategy and go 85->15? I think a key here is that I cannot contribute to this fund, so it must grow organically.August 10, 2016 at 1:13 am #19689
One thing you might consider to do with part of you IRA is to purchase a group of high quality stocks with history of consistent/increasing dividends that would cover you RMD (cash dividends rather than reinvesting so you don’t have to sell shares). For the balance you could follow same strategy as TSP with index funds, EFTs or mutual funds if you wish. There are many strategies or opportunities outside that may provide for growth, however, you also take on additional risk. Personally, I would prefer using stocks or funds that aren’t available in TSP to compliment rather than replicate TSP. A lot depends on what you want and your risk tolerance.August 10, 2016 at 10:08 am #19695
Thank you for your reply! Essentially Betterment “rebalances” my allocation without having to sell shares. https://www.betterment.com/resources/investment-strategy/rebalancing-explained/
My account there is using mostly Vanguard index funds, and my risk tolerance with this particular account is very high. I’m also thinking of funding a Roth account using the RMD’s. There are still a few months left before I have to make that decision.August 13, 2016 at 4:10 pm #19734
Funding a Roth account using the RMD is a good idea. You can take your RMD any time during the year although it is commonly taken in December, right before end of year. Managing when you take RMD can be beneficial. Also note that you have until the April 15 2017 to fund 2016 Roth IRA.
You must be logged in to reply to this topic.