I've personally managed to make some of my best gains in my individual account with single stocks. A long time ago I believe I had seen some advisement that I should hold VT & VTI in my Roth, so that is basically 90% of my Roth.
It has done well, but some of my individual stocks have soared much higher. The issue there is that I have all the taxes I need to pay in my individual account.
Should things like VT / VTI be in brokerage accounts and put some of the individual stocks in my Roth? Naturally I might not be lucky to get the same gains, and I might also lose a ton on them and then have no tax harvesting benefits.
What are peoples thoughts on this? I feel like the Roth IRA's benefit is for more aggressive single stocks
Looking for general opinions on the subject
Roth or Brokerage for individual holdings – what is best?
byu/badboybananas ininvesting
Posted by badboybananas
9 Comments
You can buy and sell stocks in your IRA, you just cannot pull money out of the account itself. You should max out your IRA before investing in your brokage if your goal is retirement income. Otherwise it doesn’t matter. My IRA and brokage have roughly the same portfolio.
Put what you think will be the biggest winners in Roth.
I mean there’s no magic solution here. You already know the pros and cons of Roth
My personal opinion is you really do not want to lose money in a Roth account because I view the balance as time not money. If you lose $7,000 in a brokerage, you can work and make that money back. If you lose $7,000 in a Roth IRA you just lost a year.
You are currently backwards. Put any new longterm holds in the investment account, and use the Roth for short term or more speculative/optimistic items. (But don’t sell and make a taxable gain just to swap something in accounts.)
> no tax harvesting benefits.
You can still harvest VT/VTI in the investment account to some degree. But prioritizing tax loss harvesting opportunities versus tax gain optimizing is backwards unless you expect to lose money.
If you never ever sell anything this doesn’t matter much, but having a short term gain in an investment account instead of a nontaxable one is a significant error if you could avoid it.
nothing wrong with holding VTI in a Roth. theoretically you want your highest earning holdings in a Roth to capitalize on tax free growth. you might consider selling down your VT positions, which is generally more stable but lower earning, and move the proceeds to either VTI or some of your single-stock bets. if you still want VT exposure, simply build that position up in your taxable brokerage instead over time.
There is no way to know for sure if individual stocks are going to sky rocket. IMO, the best place to keep them in a taxable account where you can tax loss harvest if needed.
Also, you don’t need both VT and VTI. Pick one and sell the other. Put that money into the one you picked.
My wife’s allocations at work are all Roth and basically the company offered target dated funds. With our $15,000 a year limit on Ira’s I go Roth I tend to go half VOO and half speculative. I’ve been a long time, believer in tech and have been purchasing shares for a while of micron AMD Microsoft Apple and Google with it. It has vastly outperformed the market, but that is just what has worked out for me. The lions share of our retirement accounts are in the S&P and Target dated funds offered by her work.
Roth Max First then brokerage.
> I feel like the Roth IRA’s benefit is for more aggressive single stocks.
A Roth IRAs benefit is tax free growth and tax free withdrawal. It doesn’t matter if it happens with single stocks, ETFs, bonds, etc.
If you’re not going to need the money until retirement. If you think single stocks will get you more growth, then go for it.
My opinion? It’s not worth it. Even if you could beat VT/VTI, is it worth keeping up with those companies for 30+ years? I would have to beat it by a large margin for it to be worth it to me.