I have a mix of accounts for my investments including brokerage, 401k and Roth IRA.
I handle all my own investments and my current target allocation is 48% US stocks, 24% international stocks, 8% REIT, and 20% bonds (all ETFs).
In trying to achieve my target portfolio allocation, should I consider the pre-tax nature of my 401k? For example, I could do either of two things:
- Use the full value of my 401k investments in determining my portfolio allocation.
- Assume a 25% tax rate in retirement and discount all my 401k investments by 25% in calculating my current allocation. For example, if I have $100k in bonds in my 401k, I would count that as having $75k in bonds because I'll lose 25% off the top when I withdraw.
It isn't clear to me which makes more sense...