Author Topic: Using VWLTX for bond allocation in taxable portfolio?  (Read 2486 times)

PinkFrugalRunner

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Using VWLTX for bond allocation in taxable portfolio?
« on: January 01, 2015, 01:32:14 PM »
Hi, I am an early-20s investor just starting out. I am in my last year of law school. I worked at a law firm last summer and am able to save a good portion of my earnings, and I've been reading up on the best way to invest for maximum long-term growth. I purchased Vanguard Total Stock Market admiral shares and am going to divide the remainder of my investment between the international market investor shares and some form of bonds.

Would the long-term tax-exempt municipal bond fund be a good option (VWLTX) keeping in mind that this is a taxable account? I know the total bond market fund is taxable at your regular rate...

I already maxed out a Roth IRA set up at the end of the summer, using a Vanguard LifeStrategy Fund. Thanks in advance for any advice!
« Last Edit: January 01, 2015, 03:17:02 PM by PinkFrugalRunner »

matchewed

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #1 on: January 01, 2015, 03:51:27 PM »
I guess I would ask you the following. Why do you think this is a good fund to use for your bond allocation rather than some other broader bond fund like VBMFX?

PinkFrugalRunner

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #2 on: January 01, 2015, 04:03:19 PM »
Because it is a taxable account, and the total bond market funds are taxable at my income tax rate (which will be relatively high-bracket starting next year) so I was looking for a tax-exempt bond fund.

RyeWhiskey

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #3 on: January 01, 2015, 05:50:26 PM »
A more tax efficient setup would be to hold all of your bonds in your Roth IRA in the Total Bond Market index and your stocks in the taxable account. If the bond portion of your allocation spills over then a good option, for your tax concerns, would be Intermediate Tax Exempt Fund (VWITX) which has a similar duration to the total bond market index.

wtjbatman

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #4 on: January 01, 2015, 10:04:04 PM »
I wouldn't fill my Roth space with a bond fund. That's a waste of tax free growth opportunity. Your Roth should contain whatever fund or funds are likely to experience the most growth (REITs, stocks, etc).

matchewed

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #5 on: January 02, 2015, 05:05:03 AM »
PFR, have you just tried running some numbers to see how what options are best?

BooksAreNerdy

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #6 on: January 02, 2015, 09:07:34 AM »
Following this question. We have reits in the roth and also want to do the tax exempt bond fund in the taxable acct.

PinkFrugalRunner

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Re: Using VWLTX for bond allocation in taxable portfolio?
« Reply #7 on: January 02, 2015, 02:03:49 PM »
PFR, have you just tried running some numbers to see how what options are best?

I'm not really sure how to run the numbers appropriately, i.e.: what sort of bonds I should be considering. I'm very, very new to investing - I just opened my Vanguard account a couple of months ago and chose the Target Retirement number for my Roth. I've only recently gotten up to date on the MMM/Bogle advice and invested most of my summer savings in VTSAX. I just know the next step is to do the international stock and a bond allocation. So, any suggestions would be much appreciated!