Author Topic: Learning About Taxable Investments  (Read 2162 times)

RePatriot

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Learning About Taxable Investments
« on: March 04, 2018, 09:08:40 AM »
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« Last Edit: December 09, 2023, 07:38:47 PM by RePatriot »

MDM

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Re: Learning About Taxable Investments
« Reply #1 on: March 04, 2018, 09:38:32 AM »
I understand pretax vehicles, but am totally ignorant of the taxable realm.  What are some good places to get started to better understand the world of taxable investing?
There's not much difference in what one might choose for taxable vs. tax-advantaged investing.

See Tax-efficient fund placement - Bogleheads for some considerations.  Even in that article there are opposing views.

I might keep the grad school costs in a low risk place.  E.g., CDs or online savings.  The house?  That's a more personal choice.  See Investment Order for some generic thoughts.

MDM

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Re: Learning About Taxable Investments
« Reply #2 on: March 04, 2018, 12:03:51 PM »
Am I reading correctly that only taxes on dividends are payed yearly?  And that all other taxes are paid at the point of sale?
Pretty much.  For many funds, box 1 and 2 of Form 1099-DIV will have the bulk of the taxable earnings.  See also the spreadsheet linked in 2017 Relative Tax Efficiency - Bogleheads.org for other bits and pieces.

And yes, if the fund value goes up you aren't taxed on that increase until you sell it.  See Topic No. 409 Capital Gains and Losses | Internal Revenue Service for more on that.

Mighty-Dollar

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Re: Learning About Taxable Investments
« Reply #3 on: March 05, 2018, 11:15:43 PM »
I know that annuities are a tax disadvantage. Wealth Manager did a study called "Photo Finish" and determined that the tax "advantage" of annuities is outweighed by the detrimental effects of the ordinary income tax rate that you eventually pay to get your money out. It's not what you make but what you get to keep.

chasesfish

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Re: Learning About Taxable Investments
« Reply #4 on: March 06, 2018, 05:46:05 AM »
The others have answered it pretty well.  I'd just open an account with Vanguard (or Fidelity), move $60,000 in there, then buy $50,000 in VTSAX and use leave the rest in Vanguard's cash fund or buy some a shorter term bond fund.