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Fixed wrong situations
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user2652379
user2652379
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I hoped I could simply put all my funds into a TDF in a tax credit account and done with it, but it seems it's not that easy.

I'm trying to reallocate to these accounts:

  • Individual Retirement Pension(IRP) - I'm using this for the TDFs or bond-based mutual funds
    • Tax-free up to 7 million KRW per year based on income ranges.
    • Stock investments are limited to 40% - This is the reason why I'm using this account for the bond-based mutual funds
    • Can withdraw only in specific conditions such as a natural disaster or when you reached a certain age. Or can be mortgaged for a loan  - The main reason causing my headache. Tax benefits are good and all, but I can't go for this 100% due to this limit, since I might need a big chunk from my assets in the future, such as a home purchase.
    • Can terminate the contract, but must return all tax benefits.
  • Normal investment account - Since IRP's various limitations on withdrawal, I'm using this to prepare for stock-based funds. Whenthe time when I need a big amount of my assets, this account might be sold first.

My troubles are,

  • IRP sounds good in terms of taxes, but I can't withdraw my asset from it without losing tax benefits.
  • Normal investment accounts are flexible with less restriction on withdrawal but have no tax benefits at all. Considering I'm mostly investing in foreign stock mutual funds, I think the tax can be considerable.
  • Using IRP for bonds and normal accounts for stocks seems like a bad idea. WhenDue to IRP's various limitations, when a big chunk of money(that can't be covered by an emergency fund) is needed, virtually only the stocksnormal investment account can be sold, regardless of the market situation. This will make a mess of my portfolio allocation.

How to allocate assets between asset types and tax-benefit accounts?

I hoped I could simply put all my funds into a TDF in a tax credit account and done with it, but it seems it's not that easy.

I'm trying to reallocate to these accounts:

  • Individual Retirement Pension(IRP) - I'm using this for the TDFs or bond-based mutual funds
    • Tax-free up to 7 million KRW per year based on income ranges.
    • Stock investments are limited to 40% - This is the reason why I'm using this account for the bond-based mutual funds
    • Can withdraw only in specific conditions such as a natural disaster. Or can be mortgaged for a loan  - The main reason causing my headache. Tax benefits are good and all, but I can't go for this 100% due to this limit, since I might need a big chunk from my assets in the future, such as a home purchase.
    • Can terminate the contract, but must return all tax benefits.
  • Normal investment account - I'm using this for stock-based funds. When I need a big amount of my assets, this account might be sold first.

My troubles are,

  • IRP sounds good in terms of taxes, but I can't withdraw my asset from it without losing tax benefits.
  • Normal investment accounts are flexible with less restriction on withdrawal but have no tax benefits at all. Considering I'm mostly investing in foreign stock mutual funds, I think the tax can be considerable.
  • Using IRP for bonds and normal accounts for stocks seems like a bad idea. When a big chunk of money(that can't be covered by an emergency fund) is needed, virtually only the stocks can be sold, regardless of the market situation. This will make a mess of my portfolio allocation.

How to allocate assets between asset types and tax-benefit accounts?

I hoped I could simply put all my funds into a TDF in a tax credit account and done with it, but it seems it's not that easy.

I'm trying to reallocate to these accounts:

  • Individual Retirement Pension(IRP)
    • Tax-free up to 7 million KRW per year based on income ranges.
    • Stock investments are limited to 40%
    • Can withdraw only in specific conditions such as a natural disaster or when you reached a certain age. Or can be mortgaged for a loan - The main reason causing my headache. Tax benefits are good and all, but I can't go for this 100% due to this limit, since I might need a big chunk from my assets in the future, such as a home purchase.
    • Can terminate the contract, but must return all tax benefits.
  • Normal investment account - Since IRP's various limitations on withdrawal, I'm using this to prepare for the time when I need a big amount of my assets.

My troubles are,

  • IRP sounds good in terms of taxes, but I can't withdraw my asset from it without losing tax benefits.
  • Normal investment accounts are flexible with less restriction on withdrawal but have no tax benefits at all. Considering I'm mostly investing in foreign stock mutual funds, I think the tax can be considerable.
  • Due to IRP's various limitations, when a big chunk of money(that can't be covered by an emergency fund) is needed, virtually only the normal investment account can be sold, regardless of the market situation. This will make a mess of my portfolio allocation.

How to allocate assets between asset types and tax-benefit accounts?

Source Link
user2652379
user2652379
  • 715
  • 4
  • 13

How to allocate assets between asset types and tax-benefit accounts?

I hoped I could simply put all my funds into a TDF in a tax credit account and done with it, but it seems it's not that easy.

I'm trying to reallocate to these accounts:

  • Individual Retirement Pension(IRP) - I'm using this for the TDFs or bond-based mutual funds
    • Tax-free up to 7 million KRW per year based on income ranges.
    • Stock investments are limited to 40% - This is the reason why I'm using this account for the bond-based mutual funds
    • Can withdraw only in specific conditions such as a natural disaster. Or can be mortgaged for a loan - The main reason causing my headache. Tax benefits are good and all, but I can't go for this 100% due to this limit, since I might need a big chunk from my assets in the future, such as a home purchase.
    • Can terminate the contract, but must return all tax benefits.
  • Normal investment account - I'm using this for stock-based funds. When I need a big amount of my assets, this account might be sold first.

My troubles are,

  • IRP sounds good in terms of taxes, but I can't withdraw my asset from it without losing tax benefits.
  • Normal investment accounts are flexible with less restriction on withdrawal but have no tax benefits at all. Considering I'm mostly investing in foreign stock mutual funds, I think the tax can be considerable.
  • Using IRP for bonds and normal accounts for stocks seems like a bad idea. When a big chunk of money(that can't be covered by an emergency fund) is needed, virtually only the stocks can be sold, regardless of the market situation. This will make a mess of my portfolio allocation.

How to allocate assets between asset types and tax-benefit accounts?