Author Topic: what funds do you have in your taxable account?  (Read 1763 times)

kenmoremmm

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what funds do you have in your taxable account?
« on: September 27, 2019, 01:58:02 AM »
i've been maxing roth and 401k for several years and am looking at adding a taxable account. seeking recommendations. i see one list here: https://www.thebalance.com/best-vanguard-funds-taxable-accounts-4121221

Stimpy

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Re: what funds do you have in your taxable account?
« Reply #1 on: September 27, 2019, 03:40:48 AM »
Personally, I just go with what I already am investing in.  If it works in the non-taxable accounts, it should work in a taxable account. 

Only taxes your gonna have to pay is on any dividends, and that, pending tax bracket etc may be as little as 0%.  But you will have that on many various index funds so.... Take it as you will.

Obviously do as you please, the list you have doesn't seem bad though, I would think you could find a better expense ratio then .14-.19%, which is still not bad all considering.

terran

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Re: what funds do you have in your taxable account?
« Reply #2 on: September 27, 2019, 07:43:17 AM »

RWD

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Re: what funds do you have in your taxable account?
« Reply #3 on: September 27, 2019, 07:47:59 AM »
I have VTSAX, VTIAX, and VBTLX in my taxable brokerage account. Of those VTSAX has the lowest dividend rate so it's probably the most tax-efficient. But VTIAX gives the foreign tax credit, so it's pretty good too. Though I am watching out for the international portion going too high because of the threshold for Form 1116.

effigy98

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Re: what funds do you have in your taxable account?
« Reply #4 on: September 27, 2019, 04:55:40 PM »
YOLO portfolio... 60% TQQQ and 40% TMF. 36.64% CAGR, 10k -> 149k in 8 years. The future should act just like the past... we got this!

effigy98

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Re: what funds do you have in your taxable account?
« Reply #5 on: September 27, 2019, 05:01:40 PM »
In all seriousness if I had to choose 1 fund in taxable, would probably do NTSX in current environment.

flipboard

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Re: what funds do you have in your taxable account?
« Reply #6 on: September 28, 2019, 01:48:40 AM »
All of them.

seattlecyclone

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Re: what funds do you have in your taxable account?
« Reply #7 on: September 28, 2019, 09:40:17 AM »
I have VTSAX, VTIAX, and VBTLX in my taxable brokerage account. Of those VTSAX has the lowest dividend rate so it's probably the most tax-efficient. But VTIAX gives the foreign tax credit, so it's pretty good too. Though I am watching out for the international portion going too high because of the threshold for Form 1116.

I have VTSAX (US total market), VFIAX (US 500, purchased as a tax loss harvesting partner for VTSAX), and VTMGX (developed markets international).

The Form 1116 threshold of $600 is worth considering here. As long as you're working and have a relatively high income you'll probably get your full foreign tax paid back even if you have to fill out that form, but once you retire and your income drops that probably won't be the case anymore. Without the ability to take a credit for foreign taxes I think the foreign stocks go down a couple spots in the Bogleheads tax efficiency hierarchy. I've been just above that level for the past couple years so I started making new purchases of international stocks in my retirement accounts instead, and plan to sell some taxable international stock pretty early in FIRE to get back down below that threshold.

NorCal

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Re: what funds do you have in your taxable account?
« Reply #8 on: September 29, 2019, 07:17:57 AM »
As a Schwab investor, I carry SCHB, SCHA, and PGX. 

The simple answer is that you want to carry domestic US stocks (anything with Qualified Dividends) in your taxable account, and everything else in your tax advantaged accounts.  But don't sacrifice your overall asset allocation for tax reasons.

kenmoremmm

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Re: what funds do you have in your taxable account?
« Reply #9 on: October 01, 2019, 03:38:30 PM »
ok. i get adding VTSAX. i think i'm heavy enough on international now that i don't want anything in this account.

is adding tax-free bonds a good/bad idea assuming i might want to access the funds in 3-5 years?
https://investor.vanguard.com/mutual-funds/profile/VWAHX
https://investor.vanguard.com/mutual-funds/profile/VWITX
https://investor.vanguard.com/mutual-funds/profile/VWSTX
https://investor.vanguard.com/mutual-funds/profile/VMLTX

Indexer

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Re: what funds do you have in your taxable account?
« Reply #10 on: October 02, 2019, 03:49:31 PM »
"is adding tax-free bonds a good/bad idea assuming i might want to access the funds in 3-5 years"

In this case, yes! You probably don't want to put money you need in 3 years in the stock market, and you want to keep your taxable account tax efficient so tax free bonds make sense in this case. The other thing to consider is your tax rate. If you're in a low tax rate you are probably better off using a taxable bond fund, paying the taxes, and still ending up with a higher yield than the munis.

I personally wouldn't use VWAHX, the High Yield tax exempt. It handled 2008 better than most high-yield bond funds, but I'm concerned about the finances of several states and cities, especially if we went through another severe recession. I'm specifically worried about the states&cities with unfunded pensions, the ones that already struggle to pay their bills, and the places where their tax base is leaving.

If you look through the bonds in VWAHX you will keep seeing the words, "Illinois, Chicago, Kentucky, New Jersey, and Puerto Rico."

Pension funding levels:
Illinois: 36%
Kentucky: 31%
New Jersey: 31%

Everyone here understands compounding. If you are 1/3 funded for retirement on the day you retire things are going to get ugly, especially if your portfolio takes a big hit in a recession.

Credit ratings:
Illinois: 1 level above junk (Baa3)
Chicago: Junk (Ba1)
Puerto Rico: Junk (D)

I hope they are all fine, but if they end up not being fine I wouldn't want the money I need within 3 years tied up in these municipalities.


Side note: You can only add 10k/yr, but iBonds can also be a good parking place. The taxes on the interest are deferred until you cash out, and once FIRE you will likely be in a lower tax bracket.

seattlecyclone

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Re: what funds do you have in your taxable account?
« Reply #11 on: October 02, 2019, 03:59:49 PM »
Don't completely discount taxable bonds though. The higher your tax bracket, the better deal that tax-free bonds will be. Conversely, there's probably some tax bracket below which you'll actually get a greater return from the taxable bonds (as these bonds have to offer the promise of a big enough return to compete even after the typical investor pays their tax). I haven't done much real research on where this break-even point is, but I'd bet it exists.

Saving in Austin

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Re: what funds do you have in your taxable account?
« Reply #12 on: October 02, 2019, 04:13:21 PM »
This article from Go Curry Cracker discusses avoiding capital gains taxes:

https://www.gocurrycracker.com/never-pay-taxes-again/

kenmoremmm

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Re: what funds do you have in your taxable account?
« Reply #13 on: October 02, 2019, 04:16:08 PM »
marginal tax bracket for us is 24%. not retiring for at least 10 years.

Steeze

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Re: what funds do you have in your taxable account?
« Reply #14 on: October 02, 2019, 04:18:05 PM »
Taxable holds US Index, Developed World Index, and Emerging Markets Index.
Bonds & Reits are in IRA/Roth/401k.

Actually due to outrageous fees in my 401k most of it is in US Index. That keeps me at a 1.9% ER instead of the 2.5%+ I would get otherwise. Crooks.