Author Topic: VWIUX (Tax Exempt Intermediate Bond) & 3 Fund Portfolio  (Read 482 times)

Phinance

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VWIUX (Tax Exempt Intermediate Bond) & 3 Fund Portfolio
« on: April 15, 2019, 04:31:01 PM »
Is VTSAX/VTIAX/VWIUX in a taxable account considered a sufficient 3 fund portfolio? Specifically re the bond (VWIUX) portion, is there a better alternative in a taxable account for high-income?

My understanding is that bond funds are highly tax inefficient and need to be in tax deferred accounts and so if having one in a taxable account, itís best to elect a tax-exempt (VWIUX) one? Is this true?

Thanks.

Radagast

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Re: VWIUX (Tax Exempt Intermediate Bond) & 3 Fund Portfolio
« Reply #1 on: April 15, 2019, 09:42:55 PM »
Sufficient. It may still be good to keep half your bonds in regular/federal bond funds in tax exempt accounts, in case muni bonds do uniquely bad for a period.

Lots of alternatives.

Series I saving bonds are good to defer taxes on interest to the future if you will be in a lower tax rate then. They also protect from state taxes if you have them. They have very good rates considering the tax advantages and that they essentially have no risk at all. Caveat: limit of $10k/SSN/yr.

A similar choice is VTEAX/VTEB ("total" tax exempt). VWLUX for a little more risk and return. VWALX for risk and return more similar to an intermediate term investment grade corporate bond fund.