Author Topic: VG Individual Brokerage Acct Question  (Read 156 times)

401Killer

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VG Individual Brokerage Acct Question
« on: August 11, 2020, 10:23:04 AM »
I am looking to increase my savings amount past my current rate of about 38%. I am maxing my 401k, Roth IRA and recently my HSA.

Given the current situation I like having the fluffy emergency fund but don't want to let it just sit at 1% forever. It appears that if I throw some cash into an individual account I can take it back out pretty much anytime without penalty? I assume you just can't take out any gains without being taxed on that amount. I'm not looking to wipe out the EFund but to at least reduce it to more normal levels while making sure I still have access to it all if needed.

This is all pretty much the same rules as Roth IRA withdrawals?

I plan on buying more VBTLX as my bond holdings are only about 16%.




« Last Edit: August 11, 2020, 10:35:14 AM by 401Killer »

RWD

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Re: VG Individual Brokerage Acct Question
« Reply #1 on: August 11, 2020, 10:58:46 AM »
I assume you are talking about a taxable brokerage account. There are no penalties when you sell stock in a brokerage account. But there may be taxes based on capital gains for the shares you sell (Pro Tip: set up SpecID immediately when you create the account). You will also pay taxes on dividends. The tax rate for these is typically lower than for normal income.
https://en.wikipedia.org/wiki/Qualified_dividend
https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States

You may also want to consider tax-efficient fund placement (e.g. funds with higher dividends are less tax-efficient in taxable accounts):
https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

MDM

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Re: VG Individual Brokerage Acct Question
« Reply #2 on: August 11, 2020, 01:07:52 PM »
Given the current situation I like having the fluffy emergency fund but don't want to let it just sit at 1% forever. It appears that if I throw some cash into an individual account I can take it back out pretty much anytime without penalty?
Yes, unless your investments have decreased in value.  Then you can't take out what you originally put in, because it isn't there to take out.