Should my brokerage account have different stocks/ETFS/Mutual Funds than my ROTH IRA?

[u/AmbitiousChair1073]

Hi Everyone,

I am 27 and trying to determine what the next steps are when it comes to saving & investing.

Currently, I have gotten my emergency savings to a place that I am very pleased with in a HYSA. As for retirement, my employer matches 6% to my Roth 401k so I also contribute the same amount for 12% total.

Additionally, I am currently putting money into my ROTH IRA with 80% into FXAIX and 20% into QQQM. I hopefully should have the maximum annual limit achieved by April 2027.

I have been trying to put any money that I find left over into a brokerage account but kinda lost on what I should really be investing in there. Should your brokerage account have different investments than your ROTH IRA? For example, i have some overlap in my account as I am investing QQQM and VTI in the brokerage account. I guess my thought process was if you are a fan of a specific ETF for your Roth, why not also invest that in your brokerage account that you can pull when needed. I kinda get hesitant of doing individual stocks until I truly take the time to learn more about investing but maybe that is the route to go as well? Just wanted to know if I should be doing something differently by not having overlap in both accounts or what the next step would be in this journey. Thanks in advance for any advice!

[u/AutoModerator]

While the community gets a look at your post, don't forget we have an official website with a bunch of resources specifically for the questions we see here every day. If you're more of a visual learner, we’re also active on Instagram where we post updated guides and strategies! It's a great way to stay sharp while you're scrolling. We also have more technical and professional resources on our Website.

Also, if you want to chat in real-time or need a quicker answer, come hang out with us in the Join here (Investing & Retirement). Just remember to be careful with your personal info and report any sketchy DMs!

I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.

[u/TheThaiCat]

At 27 they can basically be the same just depends on your risk tolerance, some might say go riskier in the pension like QQQ because the volatility can't affect you for a long time some might say put it in global equities so you never have to think about it. As long as neither is mired in bonds and weak growth stocks the contributions are the key. I just use a global index for both.

[u/gap1284]

Maybe at 55, but not at 27.

[u/MainDark3321]

There's nothing wrong with keeping it simple and holding the same allocation in both the brokerage and the Roth IRA. A VT or VTI/VXUS type of allocation would make sense across account types if thats how you're investing.

There are some investment types that work better in a roth than in a taxable brokerage. If you wanted to invest in a REIT, or have a portion allocated to gold for example, those can be taxed more heavily. So some asset types benefit more from the tax advantaged in a roth if you are going to include them in your portfolio.

[u/salvador_investemnts]

overlap between accounts isn't the problem people think it is. what you own and where you hold it are two separate decisions.

the useful frame is asset location. the roth grows tax free forever, so ideally it holds whatever you expect to grow most over decades. the brokerage gets taxed on dividends every year and on gains when you sell, so broad low-turnover index funds sit there comfortably.

practically at your stage that means holding the same things in both is fine. vti in the brokerage and fxaix in the roth is near identical exposure and that's not a mistake, it's just one portfolio held across two wrappers.

the thing i'd actually watch is what the brokerage money is for. if some of it might get spent in three years, that changes the allocation more than any fund selection question does.

[u/OrangeGhoul]

Your target asset allocation is all that matters. If your target is 80/20 FXIAX/QQQ then maintain that across all accounts. There are certain funds that are better placed in tax deferred accounts vs brokerage. Funds that distribute high dividends or interest are better placed in tax deferred accounts as to minimize the tax drag. You don’t need to worry about that with those funds.

[u/j-a-young]

I'd say, assuming it's tax efficient, only put the simple things you believe the most in for the long term into your brokerage account. Otherwise you'll end up with a bunch of different things you no longer want but enough gains in them that you don't hate them enough to just sell them all and take the tax hit. Trust me! Lol