Making Changes - See What You Think

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Topic Author
xram
Posts: 780
Joined: Sat Sep 15, 2012 11:36 am

Making Changes - See What You Think

Post by xram »

Good Morning.

a) I have been reading threads/posts on whether stocks should stay in taxable OR move stocks into tax advantaged. It is clear that there is not a ton of agreement on this subject. If the smart folks/experts on here can't figure it out for sure, I sure cant. :happy

b) I also have a 401(k) becoming available the next paycheck. Will be filling up the 401(k) over 4 paycheck periods.

In light of the above two observations/facts, I am going to implement the following AA. In light of observation "a" above, I am going to move a little bit of equity funds/ETFs into the tax-advantaged space in order to slightly "split the difference/bet on both horses" in the argument/discussion on where to hold funds in light of today's tax code/interest rates/returns etc. This will also help get a little of the funds with average higher return into ROTH and 401(k).

Vanguard Taxable - will be filled with 100% equity stocks/ETFs + muni's here as well
total stock market - VTSAX
small cap value US stock - VBR
total international stock - VXUS
interntaional emerging market - VWO
international small cap - VSS
us municipal bond fund - VWITX

Vanguard ROTH IRAs AND Schwab 401(k) - both with a goal of 25% equities / 75% bonds

small cap value US stock - VBR, VBR
US REITS etf - VNQ, SCHH
interntaional emerging market - VWO, SCHE
international small cap - VSS, SCHC
international REITS - VNQ, VNQ

total bond market -VBTLX, SCHZ
intermediat treasury fund - VFITX, SCHO, SCHR
international bond fund (new vanguard) - ???
TIPS fund/ETF - VIPSX, SCHP
inter corporate fund - VIPCX, VIPCX
high-yield corporate fund - HYG, HYG


Anything crazy here? Any glaring "oH my god don't do that you idiot-type things" going on?
thanks
xram
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
DaveS
Posts: 1308
Joined: Fri Jun 15, 2007 9:42 am
Location: Reno, NV

Re: Making Changes - See What You Think

Post by DaveS »

I don't know who gave you the idea about bonds, vs. stocks in tax free being an issue because it's not. You want tax efficient assets in taxable and tax inefficient assets in tax free. In order of tax efficiency worst to best, taxable bonds, REIT, Small Value, Large Value, Large Blend, International/Emerging due to the foreign tax credit. Sometimes people's 401s may have bad bond or stock choices and you depart from the above, but that is the only reason I can think of. Or maybe your saving for something like a house down payment in a couple of years and you don't want to have it in an asset that might go down just before you need it.

Now you think for a minute. Why would you want tax inefficient assets in taxable, and pay higher taxes for 30 years, then draw out the tax efficient assets from your 401 where they have been compounding tax free (thus wasting their efficiency) when your retired and your marginal tax rate is lower? Dave
Topic Author
xram
Posts: 780
Joined: Sat Sep 15, 2012 11:36 am

Re: Making Changes - See What You Think

Post by xram »

DaveS wrote:I don't know who gave you the idea about bonds, vs. stocks in tax free being an issue because it's not. You want tax efficient assets in taxable and tax inefficient assets in tax free. In order of tax efficiency worst to best, taxable bonds, REIT, Small Value, Large Value, Large Blend, International/Emerging due to the foreign tax credit. Sometimes people's 401s may have bad bond or stock choices and you depart from the above, but that is the only reason I can think of. Or maybe your saving for something like a house down payment in a couple of years and you don't want to have it in an asset that might go down just before you need it.

Now you think for a minute. Why would you want tax inefficient assets in taxable, and pay higher taxes for 30 years, then draw out the tax efficient assets from your 401 where they have been compounding tax free (thus wasting their efficiency) when your retired and your marginal tax rate is lower? Dave
Lots of discussion.

http://thefinancebuff.com/tax-efficienc ... olute.html

http://www.bogleheads.org/forum/viewtop ... 0&t=112526

http://www.kitces.com/blog/archives/479 ... l#extended

Thanks for reply.
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
livesoft
Posts: 86076
Joined: Thu Mar 01, 2007 7:00 pm

Re: Making Changes - See What You Think

Post by livesoft »

We have a lot of funds ourselves, but that's because we have a lot of accounts. At Vanguard, every single one of our accounts has only a single fund in it.

Is there are way to reduce your number of funds per account somehow? For example, could you put VSS, VBR, or VWO in only one account and not in two or more accounts?
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Topic Author
xram
Posts: 780
Joined: Sat Sep 15, 2012 11:36 am

Re: Making Changes - See What You Think

Post by xram »

livesoft wrote:We have a lot of funds ourselves, but that's because we have a lot of accounts. At Vanguard, every single one of our accounts has only a single fund in it.

Is there are way to reduce your number of funds per account somehow? For example, could you put VSS, VBR, or VWO in only one account and not in two or more accounts?
I absolutely could do that. But (and tell me if this is wrong/silly/not indicated), I would like each account (i.e. taxable, roth, 401k) to have the chance at having the "best performer" for the year in each account. It seems to me that the tax placement issue seems to not be that big of a deal right now (i.e. low bond returns etc) that maybe this is not a bad idea??

Just FYI: Currently I have everything placed according to "old" boglehead philosophy of "all bonds in advantaged, and stocks/muni in taxable) .... and could easily keep it this way.

thanks
xram
VTI, VBR, VTWV, SCHH, VXUS, VEA, VWO, VSS, FM, VNQI, VBTLX, VFITX, SCHP, VWITX, IBONDS, EEBONDS, EF(EverBank), UTAH-529
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