Author Topic: Buying in to Vanguard Taxable Account  (Read 1699 times)

Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Buying in to Vanguard Taxable Account
« on: February 28, 2020, 07:45:35 AM »
Hello, I have 30k to invest in a Vanguard taxable account today. Both Roth IRA's are maxed for the year (still cont. to my employer 401k at max this year) and will be moving the IRA's to Vanguard Shortly.

If it helps, I have a 350k NW with a household income of 160k/yr (married). No debt at the moment.

I am aware of the difference between ETF's and mutual funds. Can someone offer some suggestions on how I would calculate a buy-in for domestic stock/intl stock/bonds with 30k and include some suggestions on funds to invest in like VTI for example (I am open to ETF or mutual funds ). I was possibly looking at doing a 60/30/10 split at the above diversification.

Mike


Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Buying in to Vanguard Taxable Account
« Reply #1 on: February 28, 2020, 10:48:59 AM »
All, so I checked out Bogelheads wiki page and I'm thinking of the below split. For reference I am a 30yr old male.

30 k to invest in taxable account:

(60%) VTSAX @ $18,000
(30%) VTIAX @ $9,000
(10%) VBTLX @ $3,000

I welcome any feedback with open arms

Thank you

erutio

  • Pencil Stache
  • ****
  • Posts: 692
Re: Buying in to Vanguard Taxable Account
« Reply #2 on: February 28, 2020, 11:43:25 AM »
You will have to determine your Asset Allocations (AA) yourself.  But in general, it is better to hold bonds in tax-sheltered accounts (your IRAs or 401k), as they are less tax efficient.

Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Buying in to Vanguard Taxable Account
« Reply #3 on: February 29, 2020, 01:48:43 PM »
Considering im 30 I think that would be a good AA. How are the actual funds that I outlined below? Should I invest the ETF equivalents?

TomTX

  • Magnum Stache
  • ******
  • Posts: 4461
  • Location: Texas
Re: Buying in to Vanguard Taxable Account
« Reply #4 on: February 29, 2020, 02:32:17 PM »
Considering im 30 I think that would be a good AA. How are the actual funds that I outlined below? Should I invest the ETF equivalents?
I do ETFs to make it easy for in-kind transfers for a brokerage signup bonus.

NWOutlier

  • Stubble
  • **
  • Posts: 116
  • Age: 52
  • Location: Seattle Area
Re: Buying in to Vanguard Taxable Account
« Reply #5 on: February 29, 2020, 04:04:38 PM »
Hello, I have 30k to invest in a Vanguard taxable account today. Both Roth IRA's are maxed for the year (still cont. to my employer 401k at max this year) and will be moving the IRA's to Vanguard Shortly.

If it helps, I have a 350k NW with a household income of 160k/yr (married). No debt at the moment.

I am aware of the difference between ETF's and mutual funds. Can someone offer some suggestions on how I would calculate a buy-in for domestic stock/intl stock/bonds with 30k and include some suggestions on funds to invest in like VTI for example (I am open to ETF or mutual funds ). I was possibly looking at doing a 60/30/10 split at the above diversification.

Mike

Hi Mike - I have a similar scenario for myself.  I have 50k or more coming to me soon (few days, couple weeks) - my income is the same as yours...  I have a taxable account with Vangaurd... personally, I'm doing 100%VTSAX..  so when the check comes in, it will go straight to buy 50k more of VTSAX..

So - as others have mentioned, it's really personal and what you feel comfortable with; I won't even look at that money for 8 years or more (since my investments with Vanguard are setup as first in first out)... So the real time horizon for this money would be closer to 15 years... my guess is that it will be worth double or more by then

As I get closer to my goal, I have been thinking through how else I can diversify.. either a small internet business or REIT's in a roth...  maybe individual stocks.. I don't know.. but until I hit my goal, I'm laser focused on VTSAX for now.

NWOutlier (steve)


MoneyGoatee

  • Stubble
  • **
  • Posts: 116
Re: Buying in to Vanguard Taxable Account
« Reply #6 on: March 01, 2020, 10:49:46 AM »
All, so I checked out Bogelheads wiki page and I'm thinking of the below split. For reference I am a 30yr old male.

30 k to invest in taxable account:

(60%) VTSAX @ $18,000
(30%) VTIAX @ $9,000
(10%) VBTLX @ $3,000

I welcome any feedback with open arms

Thank you

As another poster mentioned, VBTLX is a taxable bond that will get taxed in a taxable account.  Maybe not so bad now at $3k, but when it grows to $10s of thousands it will have a sizable taxable income.  Better put taxable bonds in tax-deferred accounts like IRA.  Put tax-exempt bonds in taxable accounts instead. 

Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Buying in to Vanguard Taxable Account
« Reply #7 on: March 02, 2020, 05:36:49 AM »
Thank you all. Would a better proposal be VTSAX and VTIAX, 70/30?

Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Buying in to Vanguard Taxable Account
« Reply #8 on: March 02, 2020, 05:38:17 AM »
MoneyGoatee, can you provide an example of a Tax-exempt bond fund at Vanguard?

AdrianC

  • Handlebar Stache
  • *****
  • Posts: 1144
  • Location: Cincinnati
Re: Buying in to Vanguard Taxable Account
« Reply #9 on: March 02, 2020, 05:53:48 AM »
Considering im 30 I think that would be a good AA. How are the actual funds that I outlined below? Should I invest the ETF equivalents?
I do ETFs to make it easy for in-kind transfers for a brokerage signup bonus.
Similar. I do ETFs so I can easily hold the same investments across multiple accounts at three different providers. ETFs might be a bit more tax efficient, too, they say.

VTI/VXUS in taxable. VXUS/BND in tax deferred.

Getmeouttahere, bonds in taxable depends on your tax situation, but probably won't matter much at current bond yields.

Getmeouttahere

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: Buying in to Vanguard Taxable Account
« Reply #10 on: March 05, 2020, 11:42:55 AM »
Hello, does anyone know of any good bond funds at Vanguard for a taxable brokerage account? I am planning on staying with VTSAX/VTIAX and looking for some bonds to add to that mix. Can I do BND even though my other two investments would be in mutual funds.

Looking for any suggestions.

Thanks,

Mike

bacchi

  • Walrus Stache
  • *******
  • Posts: 5514
Re: Buying in to Vanguard Taxable Account
« Reply #11 on: March 05, 2020, 01:08:04 PM »
In your 401k or IRA, sell some equity funds and buy some bonds. In the end, it's the same asset allocation.

Yes, BND is fine...but better inside a tax-protected account.


Steeze

  • Pencil Stache
  • ****
  • Posts: 912
  • Age: 33
  • Location: NYC Area of Earth
Re: Buying in to Vanguard Taxable Account
« Reply #12 on: March 05, 2020, 04:27:37 PM »
In your 401k or IRA, sell some equity funds and buy some bonds. In the end, it's the same asset allocation.

Yes, BND is fine...but better inside a tax-protected account.

+1

Change 3k worth of your 401k to bonds, then buy your us/international stocks in your taxable. No need to have 10% bonds in every account as long as you have 10% across all your accounts combined.

Boggleheads wiki has a good article on tax efficient investing. Basically what funds to put in which account in order to minimize taxes paid. Basically anything that throws a big/regular dividend should stay in a 401k/IRA, better yet, a Roth IRA. Read the article and it will all make sense.

Alternatepriorities

  • Handlebar Stache
  • *****
  • Posts: 1121
  • Age: 40
  • Location: Alaska
  • Engineer, explorer, investor
    • Alternate Priorities
Re: Buying in to Vanguard Taxable Account
« Reply #13 on: March 05, 2020, 08:43:25 PM »
Considering im 30 I think that would be a good AA. How are the actual funds that I outlined below? Should I invest the ETF equivalents?
I do ETFs to make it easy for in-kind transfers for a brokerage signup bonus.

Do you have any examples of this/links that youíd get a referral bonus from?

Alternatepriorities

  • Handlebar Stache
  • *****
  • Posts: 1121
  • Age: 40
  • Location: Alaska
  • Engineer, explorer, investor
    • Alternate Priorities
Re: Buying in to Vanguard Taxable Account
« Reply #14 on: March 05, 2020, 08:51:04 PM »
Thank you all. Would a better proposal be VTSAX and VTIAX, 70/30?

That happens to be my main AA... Iíve been using the index funds but Iím considering switching to ETFs after getting burned for 2k in gains Monday while trying to rebalance my Roth and traditional IRA. it was just comically bad timing doesnít change much in the long run, but still stings a little.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 3674
Re: Buying in to Vanguard Taxable Account
« Reply #15 on: March 08, 2020, 09:11:27 PM »
MoneyGoatee, can you provide an example of a Tax-exempt bond fund at Vanguard?
Not MoneyGoatee, but I know of a tax-exempt bond ETF at Vanguard.  Many brokerages have $0/trade for ETFs now.

Vanguard Tax-Exempt Bond ETF (VTEB)
https://investor.vanguard.com/etf/profile/VTEB

MoneyGoatee

  • Stubble
  • **
  • Posts: 116
Re: Buying in to Vanguard Taxable Account
« Reply #16 on: March 10, 2020, 10:14:07 AM »
MoneyGoatee, can you provide an example of a Tax-exempt bond fund at Vanguard?

Vanguard funds with "tax-exempt" in the name are 100% federal tax-exempt and partially state tax-exempt (see here for exact percentage that is state tax-exempt).  Some of these funds are state-specific, and if your tax return is filed in that state, you get 100% state tax-exemption too.  As to what funds to choose, some are long-term, intermediate-term, short-term bonds, etc., so choose the one(s) for your investment goal.  Naturally, you also want to invest in funds that give you 100% federal and 100% state tax-exemption, which is like printing money for you.