ER2023 wrote:I plan on paying off all debt (house and car) within a couple months. Right now, I can afford to allocate just $3k to open a VG fund. The purpose is to fund early retirement - once debt is paid, I will put approx $6k/month in it for 5-6 years - and then retire (somewhat) early - and live off of that for a couple years (as long as possible) until we can start tapping other resources (we max out both 401ks and have an emergency fund).
We are in the 33% tax bracket, so I know I have to select a tax efficient fund. I read the Wiki article for Tax Efficient Funds - thanks to this forum - and just have a couple questions:
Is the Total Stock Market Index a good choice right now? I'm willing to take the risk - would be able to "sleep at night" if market crashes again.
There is also a fund called Pennsylvania Long Term Tax Exempt (holds Pennsylvania muni bonds with average duration 6-10 years) - would that be better?
There is also a Pennsylvania Tax Exempt Money Market - which may be the best way to go since it's a 5-6 year plan?
Appreciate any guidance. Thank you.
Yes, total stock market index is considered "tax efficient". And you are thinking correctly to put tax-exempt bond-type funds in a taxable account. But you are asking either/or. What is your planned asset allocation across all your accounts (retirement and non-retirement?) Look at them all as one big pie and invest your taxable side (stock/bond) accordingly.