Author Topic: What to invest in a taxable account?  (Read 621 times)

Happyfatherof2

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What to invest in a taxable account?
« on: April 21, 2019, 09:08:27 PM »
I max out my Roth IRA with vtsax. I max out all my other tax advantages accounts with vtsax.

I want to invest $5k per month in a taxable account.
What should I invest in?
What allocation is good?
Should I change my investments in my tax advantaged accounts as well?

I want to be able to retire in 5-7 years.
Iím 40.

Car Jack

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Re: What to invest in a taxable account?
« Reply #1 on: April 22, 2019, 07:29:02 AM »
Depends where your account is, but an equivalent to VTSAX would make sense.  If you desire some bonds, they should reside in one of your tax advantaged accounts.  Bonds simply damp out the volatility of stock swings.  If you can handle the swings, go ahead and keep your 100% stock allocation.  But as you approach actual retirement, you will likely want to add bonds so that if the market suddenly tanks, you're not sitting there realizing that you have to keep working because your investments just dropped to 50% of what you expected.

terran

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Re: What to invest in a taxable account?
« Reply #2 on: April 22, 2019, 08:38:28 AM »
You might find these helpful.

General asset allocation: https://www.bogleheads.org/wiki/Asset_allocation

Tax efficient allocation between account types: https://www.bogleheads.org/wiki/Tax-efficient_fund_placement

seattlecyclone

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Re: What to invest in a taxable account?
« Reply #3 on: April 22, 2019, 08:51:38 AM »
That tax-efficient fund placement article is great.

One caveat I'd give about international stocks in your taxable account is that you might want to stop buying those there once the foreign tax withheld from your dividends gets close to $600. Past $600, you'll have to file Form 1116 to claim the foreign tax credit, rather than simply claiming the entire amount as a credit. Besides being a bit of a pain to complete, needing to file that form could reduce the fraction of your foreign withholding counts for that credit from 100% down to some other amount. The less other income you have (say, if you're FIREd), the more likely it is that this will happen.