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Participant ○○○

Portfolio Update

Once money market returns evaporated about two months ago, I have attempted to find replacements. Having tried some of the available best monthly performers and getting poster suggestions, I settled on a few funds from brokerage access at my risk comfort level with large amounts and an expectation of achieving acceptable total returns.

In a Portfolio Visualizer backtest from 2018 to yesterday, the portfolio results are CAGR 3.79%, Best Yr 6.70%, Worst Year .74%, Max Drawdown -4.33%, and U.S. MKT Correl 0.56. The bond funds in order of larger amounts to smaller are: PIMIX, VMLUX, VFSUX, IUSB, PTTRX, and BIV. 

Added by edit: CASHX was included in the PV backtest.

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Frequent Contributor

Re: Portfolio Update

For me, m-mkt alternatives have been ICSH and ultra-ST and ST bond funds with no or limited frequent trading restrictions [all at Vanguard; FCONX at Fido, SWSBX at Schwab]. I realize that there some volatility in these. I also have access to 3%+ SV in 403b.

YBB
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Contributor ○○○

Re: Portfolio Update

I only own a muni MM in my taxable account. I would like to do something with the bulk of it. But what to do without adding income? I suppose I could use the cash to pay taxes on Roth conversions.

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Frequent Contributor

Re: Portfolio Update

I guess you could sock it into stocks that don't pay dividends like Amazon.  Why don't you want to increase income?  Anything more than you hate to pay taxes?  Depending on amount and if you have long term care covered or not, there is the nontraditional care policies tied to insurance.

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Participant ○○○

Re: Portfolio Update

Currently own some QQQ in taxable and RIRA, and that's enough equity for me now. The bond portfolio has a 0.56 correlation with equity (per PV) as noted in daily market and 10YR changes. I don't rely on portfolio income, but loss even temporarily is what I want to avoid. 

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Frequent Contributor

Re: Portfolio Update


@PaulR888 wrote:

I guess you could sock it into stocks that don't pay dividends like Amazon.  Why don't you want to increase income?  Anything more than you hate to pay taxes?  Depending on amount and if you have long term care covered or not, there is the nontraditional care policies tied to insurance.


IMO, the main goals should be performance + risk/volatility.  If one can increase income without sacrificing these then it's OK.   We got our proof YTD with a crash in CEFs while QQQ (which is what the OP holds, a great choice BTW) did much better.  Selling a small amount of someone's funds every 2-3 months (or when needed) is a pretty easy process.

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Contributor ○○○

Re: Portfolio Update

Simply trying to minimize income so I can maximize a Roth conversion. I currently have what I need in cash to pay bills. I do have a max CG fund that has no yield.


@PaulR888 wrote:

I guess you could sock it into stocks that don't pay dividends like Amazon.  Why don't you want to increase income?  Anything more than you hate to pay taxes?  Depending on amount and if you have long term care covered or not, there is the nontraditional care policies tied to insurance.


 

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Participant ○○○

Re: Portfolio Update

If possible, two tax years before you become eligible for Medicare, look at the MAGI ranges for income-related penalties. One dollar more of income above the upper limit , and you will have a much higher penalty reducing your monthly SS payment. Early RIRA contributions and conversions are helpful at that point.

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Explorer ○○○

Re: Portfolio Update

I learned the hard way on too much income my CPA warned me about 5 yrs. ago about my income divvy's getting high [290k yr] also muni income, they cut my & wife's SS, CPA died 4 yrs. ago, I forgot about it , BUT IRS didn't ,I have to rearrange things a bit.

 

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Re: Portfolio Update


@Gary1952 wrote:

Simply trying to minimize income so I can maximize a Roth conversion. I currently have what I need in cash to pay bills. I do have a max CG fund that has no yield.


@PaulR888 wrote:

I guess you could sock it into stocks that don't pay dividends like Amazon.  Why don't you want to increase income?  Anything more than you hate to pay taxes?  Depending on amount and if you have long term care covered or not, there is the nontraditional care policies tied to insurance.


 



Gary ....  I don't know your specific situation but when I retired I lived off my trust and did Roth conversions too.  I invested my trust in solid bond OEFs and I wasn't afraid of some dividends as it help make my trust grow a little.  I even had some bond CEFs which allowed my to sell over time and  take some capital losses.  You can always invest in total return and core bond funds that generate little yield.  While I was Roth converting, I started SS at 62 because I had a lot of expenses.  If you are not taking SS, you are in the Roth conversion sweet spot.  If you are taking SS, I would consider running some scenarios including one taking Roth conversions up to and right through the point that taxes SS at max 85% and keep going right up to your MAGI that triggers IRMAA.  Keep under that point.  I suggest doing Roth conversions late in the year so you get better visibility on your income.  Remember no more mulligans for mistakes so if you don't like what you did next year you are stuck with it.  
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Contributor ○

Re: Portfolio Update


@jmrdnc wrote:

If possible, two tax years before you become eligible for Medicare, look at the MAGI ranges for income-related penalties. One dollar more of income above the upper limit , and you will have a much higher penalty reducing your monthly SS payment. Early RIRA contributions and conversions are helpful at that point.


I am 7-8 yrs away from qualifying for Medicare.   Is the two tax years you mentioned the tax year in which I complete 63 yrs of age?

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Contributor ○○○

Re: Portfolio Update

Parts B (Dr. visits) and D (prescription) will use your MAGI to determine how much more you will pay above the base amount (currently $144.60). It rolls to the 2 years previous each year. 


@Anitya wrote:

@jmrdnc wrote:

If possible, two tax years before you become eligible for Medicare, look at the MAGI ranges for income-related penalties. One dollar more of income above the upper limit , and you will have a much higher penalty reducing your monthly SS payment. Early RIRA contributions and conversions are helpful at that point.


I am 7-8 yrs away from qualifying for Medicare.   Is the two tax years you mentioned the tax year in which I complete 63 yrs of age?


 

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Contributor ○○○

Re: Portfolio Update

I am living off of my trust (taxable) account and SS. I have cash enough to do that invested in the Schwab muni MM and I also own SWNTX (Schwab inv. grade muni fund) for income down the road. What you explained in your post is exactly what I am doing. Every income dollar not taxed allows me to convert another Roth dollar.


@PaulR888 wrote:

@Gary1952 wrote:

Simply trying to minimize income so I can maximize a Roth conversion. I currently have what I need in cash to pay bills. I do have a max CG fund that has no yield.


@PaulR888 wrote:

I guess you could sock it into stocks that don't pay dividends like Amazon.  Why don't you want to increase income?  Anything more than you hate to pay taxes?  Depending on amount and if you have long term care covered or not, there is the nontraditional care policies tied to insurance.


 



Gary ....  I don't know your specific situation but when I retired I lived off my trust and did Roth conversions too.  I invested my trust in solid bond OEFs and I wasn't afraid of some dividends as it help make my trust grow a little.  I even had some bond CEFs which allowed my to sell over time and  take some capital losses.  You can always invest in total return and core bond funds that generate little yield.  While I was Roth converting, I started SS at 62 because I had a lot of expenses.  If you are not taking SS, you are in the Roth conversion sweet spot.  If you are taking SS, I would consider running some scenarios including one taking Roth conversions up to and right through the point that taxes SS at max 85% and keep going right up to your MAGI that triggers IRMAA.  Keep under that point.  I suggest doing Roth conversions late in the year so you get better visibility on your income.  Remember no more mulligans for mistakes so if you don't like what you did next year you are stuck with it.  

 

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Participant ○○○

Re: Portfolio Update

The MAGI which adds back muni and some other federal non-taxable income in a taxable account, initially comes from the tax return on file two years prior to the year in which you turn 65. Then each year in future, the two year pattern repeats, so one should be aware of what the applicable IRMAA brackets are. It's best to research all of this, as it's difficult (at least for me) to explain online. 

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