My employer recently switched to Fidelity and for now I’ve chosen the LIFEPATH IDX 2050 A option. It looks like this one provides quarterly dividends, but the yield is 0.0%(?)
I’m looking for some fairly risk adverse options or blends that provide dividends that will be reinvested. Anyone have any recommendations?
Wow, great advice! Thanks so much. My rIRA is through Vanguard, and I do want a brokerage account at some point in the future for mid/long term savings.
I’ll likely go with a blend of the Vanguard options, but just so I know, why might it be better to do so if I have an IRA and plan to have a brokerage in the future? Just so I have more “dials to turn” to match my tolerances?
It’s more about tax efficiency. if you open an IRA, you’re likely going to be contributing on a Roth basis, meaning that you’ll never pay taxes on the growth, whereas in a 401k, you’re likely contributing on a pre-tax basis, meaning you will pay taxes on that money. With a taxable brokerage account, you’ll be paying taxes on every disbursement, meaning anytime you sell or receive a dividend.
So, generally speaking, you’ll want:
In practice, that usually means:
This can be as complicated or as simple as you’d like. For me personally, I have:
My overall portfolio composition is the same, I just shift around where I keep each asset class based on tax efficiency.
Ah that makes sense, thank you. For now I’m doing backdoor Roth IRA contributions as I can’t do direct contributions. Eventually I hope to be able to also use the mega backdoor after I fill up the pre-tax federal contribution limits for 401k. That will be “after-tax” that is converted to Roth.