Please tear apart my hypothetical target portfolio! No pulled punches - I'm a bit green and hoping to learn quickly. Looking forward to hearing your thoughts.
Goal: Tax efficient, stress-free retirement. Ability to live $60,000-ish lifestyle in perpetuity (w/ inflation) Freedom and capital for modest creative ventures now and in the future.
Context: 35 years old, making around $100k salary, have $80k of shelter space built so far (Traditional IRA), and am able to max out 401(k) + Roth (or nondeductible IRA) yearly to continue building it.
- Active Trading $50,000 12.8%
- High-Interest Bonds $10,000 2.6%
- High-Dividend Stock $10,000 2.6%
- LendingClub $10,000 2.6%
- FundRise $10,000 2.6%
CASH (given market...keeping some gasoline on hand for now)
- Cash $20,000 5.1%
- High Yield Money Market-ish $80,000 20.5%
Looking Top-Down, a $390,000 account, placed in the generic market ( SP500 Index) would grow to about $9,000,000 by age 65. So, top-down, you could spend every dime of your future earnings w/o affecting your $9M wealth plan.
But you aren't likely to spend all of your income stream - if instead you keep adding $18k/yr (and invest at 11%), that adds about $4M to your $9M.
In general, as long as your stick with 11%/yr returns (low fees - unmanaged index funds) you should get to your $13M at age 65. The 3 tax status categories - taxable, pretax, posttax) don't affect the gross, only the eventual net - and not as much as people think. Eg, a Roth isn't tax free, you already prepaid the tax.
You could simplify your portfolio - eg, the 2.6% things can't help/hurt your total return, even if you hit a home run and double one, that only adds 2.6% to your account. And high interest bonds (junk bonds) aren't really a good category, if you want to add risk do it with your stock funds.
High yield mm? That's an oxymoron - doesn't actually exist. The Rule of Investing - risk and return are directly proportional. If a MM pays 2%, that is not 'High Yield' no matter what the seller names it, may as well store that money in your savings account.
Your BRK and your Robo fund are redundant - about the same net return after fees. You could combine them - or just use the SP500 Index Fund. Any variance between those 3 are outside our ability of 30-year predictive outcomes.
It looks like you have about 60% in equities and 40% in cash/income. At age 35, I would be (and was) close to 100% equities. I started added some bonds at about age 60.
Looks like you have a good plan - $13M is $13M no matter what tax category you keep it in.