Author Topic: ETFs for taxable account  (Read 1072 times)

frugal_c

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ETFs for taxable account
« on: September 04, 2016, 01:54:08 PM »
This has probably been asked before but couldn't find exactly what I was after.

I am trying to find the optimal ETFs for a taxable account.  The way I see it I should be focusing on low dividend yielding etfs.  This generally leads me towards growth stocks.  I am concerned to buy growth stocks right now as they seem to have run up, at least in the USA.  Just wondering what other people are doing in this situation?

FB2020

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Re: ETFs for taxable account
« Reply #1 on: September 04, 2016, 04:16:48 PM »
you could sell put options on the ETFs you want to purchase, you get the premium and if it falls to that level you can own it.

You need to learn about options though, if you're not aware of them.

MustacheAndaHalf

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Re: ETFs for taxable account
« Reply #2 on: September 04, 2016, 08:39:28 PM »
Vanguard growth's yield is 1.4% while Vanguard Total Market's yield is 2.0%.  So what does paying 15% (qualified dividends) tax on a $10,000 taxable investment look like for Growth vs Total Market? 

$10,000 x .014 = $140 dividend x .15 tax = $21
$10,000 x 0.02 = $200 dividend x .15 tax = $30

You could save $9/year by switching $10,000 from Total Market ETF to Growth ETF.  But to keep your portfolio in balance, you'd need to have an equal measure of Value ETF (2.6% yield) in your retirement accounts.  It would be a lot of effort to save a rather small amount in taxes in my view.