Bogleheads.org

Is the "part 2" account a taxable account? If so, you may want to keep tax efficiency in mind when making your fund selections. If you're in a high tax bracket, that could mean using a Vanguard tax-exempt municipal bond fund instead of a regular taxable bond fund. While paying heed to the idea of tax efficiency, it may also be a benefit to hold your bond allocation in a tax-deferred account if you have one. Many people use taxable and Roth accounts for nothing but stock index funds. For more on selecting funds, consider the guidance in the tax efficient fund placement wiki page. Otherwise, if this all seems like too much work, you could simply use the Vanguard 2030 retirement fund (VTHRX) or at least mimic the asset mixture of th...

RETIRE ONE DAY wrote: ↑Wed Mar 22, 2023 1:45 pm
tax bracket 24%

Based on this ^^^, you should go to the effort of reading the wiki page I linked above on tax efficient fund placement.

If you decide to use a tax-exempt municipal bond fund from Vanguard in your taxable account, you can also consider a state-specific muni fund if you live in CA, MA, NJ, NY, OH, or PA. See the Vanguard site for specifics.

Regards,

Is the "part 2" account a taxable account? If so, you may want to keep tax efficiency in mind when making your fund selections. If you're in a high tax bracket, that could mean using a Vanguard tax-exempt municipal bond fund instead of a regular taxable bond fund. While paying heed to the idea of tax efficiency, it may also be a benefit to hold your bond allocation in a tax-deferred account if you have one. Many people use taxable and Roth accounts for nothing but stock index funds. For more on selecting funds, consider the guidance in the tax efficient fund placement wiki page. Otherwise, if this all seems like too much work, you could simply use the Vanguard 2030 retirement fund (VTHRX) or at least mimic the asset mixture of the...

DucatiScotty wrote: ↑Wed Mar 22, 2023 1:11 pm
Are there any other good reasons to keep more than one retirement account once retired and drawing from it?

Thank you,
Scott

The reason that seems to pop up on the forum is just in case of a website or I.T. problem at one firm, or if one firm gets hacked. I've not noticed a website problem that lasted long enough to bother me, so I just use Vanguard.

I would suggest that if you do keep assets split at multiple firms, that you put all your tax-deferred IRA money into one account at one firm. This will make RMD calculations easier as you get older and possibly lose some cognitive ability.

Regards,

catnamedspot wrote: ↑Wed Mar 22, 2023 1:03 pm I know the the Total Money Stock market is a wider assortment of companies - but can there a case be made for the SP having more stable, reliable companies? What things do you consider when evaluating both these indexes?

I think you mean total stock market, not money market, but putting that aside...

Some people want to own the next Tesla or other "hot" stock before it becomes successful enough to be included in the S&P 500 index, so they buy the total stock market index fund instead.

In reality, the difference between the two isn't very large, assuming you can even see it on a 10-year performance chart. So, if you already own one of these two, it's probably easiest to just stick with what you have.

Regards,

Thanks. I may end up calling Fidelity since the divisor they are using is slight different from the one I calculated based on some examples I had seen. Or I might just use the larger withdrawal since it is less than $1K difference. You might find this exchange between Alan S. and myself useful... See link: https://www.bogleheads.org/forum/viewtopic.php?p=6911715#p6911715 Regards, Thanks. I followed the example in this article. Obviously it could be wrong. https://www.morningstar.com/articles/1125762/who-does-and-doesnt-get-to-skip-rmds-under-the-new-10-year-rule Noticed they have a new article that I will read that was just posted. https://www.morningstar.com/articles/1145198/how-the-3-10-year-rules-work-for-inherited-iras I think the firs...

I am in the same boat as you. But they dont look the same at all to me... SWVXX, expense ratio .34%, tax listed as prime VUSXX expense ratio .08% and state tax free this is a big difference, no? just expense ratio on $100k SWVXX = $340 annual VUSXX = $90 annual Expense ratios are important, but less so with money market funds. The real key with a money market fund is to compare the SEC yield(s) among the choices. Picking the higher yield isn't always the way to go because of tax issues. Some money market funds seek to help investors by using treasury products, so the interest isn't taxed at the state level. People in low tax brackets or people in no-income-tax states like Florida don't care about that. Vanguard is routinely regarded as the...

rich126 wrote: ↑Wed Mar 22, 2023 6:57 am Thanks.

I may end up calling Fidelity since the divisor they are using is slight different from the one I calculated based on some examples I had seen. Or I might just use the larger withdrawal since it is less than $1K difference.

You might find this exchange between Alan S. and myself useful...

See link: viewtopic.php?p=6911715#p6911715

Regards,

sheople2 wrote: ↑Wed Mar 22, 2023 9:08 am What is the name of the older Vanguard chart...

It's like a YTD history showing several decades via pie charts of stocks/bonds and their respective estimated YTD.
Vanguard on the phone couldn't help me without the name, which I would just then put into their search.

The site has totally changed, so the tools I was familiar with are not appearing - at least not without the right title.
Thank you.

Is this what you mean?

See link for historical performance averages of a variety of portfolio mixtures.
https://investor.vanguard.com/investor- ... allocation

Regards,

He had stated .38% on average. FYI I am tired and the Missus will be in 9 months I'm a bit confused by the "on average" remark. If that 0.38% is an AUM fee, that amounts to over $5,200 per year if he's managing all of the amounts mentioned above. OR, is that simply the average expense ratio of the mutual fund investments he intends to use? I'll reiterate. Knowing exactly what you're paying for, and exactly how much it's going to cost are important aspects of hiring any advisor. See this (linked) article by Jason Zweig of the Wall Street Journal for the 19 questions to ask your financial adviser . Also, see the wiki page on investment advisers. https://www.bogleheads.org/wiki/Investment_adviser Regards, The .38% is the expense fee...

TheYoungestEngineer wrote: ↑Tue Mar 21, 2023 7:26 pm Thank you so much everyone for the kind replies. Clearly I have a lot of reading to do. Will follow up with another post down the road once I've read some strategy.

Really value all of you for taking time to post valuable information and links. Next post will include portfolio breakdown strategy.

Glad to read that you're not discouraged, and are willing to engage. Some youngsters come here looking for hot stock tips - and are disappointed.

Not to pile on, but here's some additional reading by one of the best financial authors around. William J. Bernstein "If You Can".

Regards,

jebmke wrote: ↑Tue Mar 21, 2023 3:28 pm Mine shows up in Portfolio Watch. I have no idea if it is accurate but it looks right.

I calculate my weighted average in a spreadsheet, and it matches portfolio watch, at least it does when rounded to the nearest hundredth.

My spreadsheet says 0.0685% and Vanguard portfolio watch says 0.07% - close enough for me.

Regards,

Thank you so much everyone for your help and assistance. A few thoughts come to mind after reading your post - Also, welcome to the forum. 1. I'd hit pause on the house idea. The SF Bay Area is way too expensive for someone with your income, unless you're willing to commute 100 miles or live in a chicken coop. 2. Also, I'd cease the individual stock picking activity. Consider selling the individual stocks, harvest the loss for the future tax write-off and put the proceeds into a sensible total stock market index fund like VTI. 3. Make a plan for how you intend to invest. There is a wealth of knowledge in this forum and on the wiki pages. I urge you to spend some time reading and learning about investing the "Boglehead" way. See l...

Zso wrote: ↑Tue Mar 21, 2023 6:01 pm He had stated .38% on average.

FYI
I am tired and the Missus will be in 9 months

I'm a bit confused by the "on average" remark.

If that 0.38% is an AUM fee, that amounts to over $5,200 per year if he's managing all of the amounts mentioned above.

OR, is that simply the average expense ratio of the mutual fund investments he intends to use?

I'll reiterate. Knowing exactly what you're paying for, and exactly how much it's going to cost are important aspects of hiring any advisor.

See this (linked) article by Jason Zweig of the Wall Street Journal for the 19 questions to ask your financial adviser.

Also, see the wiki page on investment advisers.
https://www.bogleheads.org/wiki/Investment_adviser

Regards,

If it's an inherited traditional IRA, then all withdrawals are taxed. Which of course includes the "growth".

If it's an inherited Roth account, then it's another story.

Regards,

Backroads4Me wrote: ↑Tue Mar 21, 2023 5:43 pm They do not have a long-term care policy.

Based on this, you should scrap my earlier suggestion to use savings bonds in an heir's name.

I'd say to keep it relatively liquid in T-bills (52 weeks or less). End of life health care costs can certainly be substantial. The existing cash flow may seem paltry once high medical bills or the costs of assistance with activities of daily living start to occur. Not everyone faces these costs, but many seniors do.

Regards,

Zso wrote: ↑Tue Mar 21, 2023 5:19 pm
We have been thinking about consolidating everything into TIAA. Since we have met with their advisor.
He has been very straightforward and suggested that he can manage the TIAA account but not Vanguard. In order to manage everything. I would have to transfer my 401k plan to a TIAA IRA account.

I am tired of managing which I not too good at!
So the question is should I do it? Any help would be appreciated.

ZSO

What will you have to pay the adviser?

A flat fee, an assets under management fee, something else?

The amount you pay for advice can have a big impact on your retirement.

Regards,

I would like to recommend a single 60/40 (stock/bond) mutual fund or etf at market weighting for my mom for simplicity. This is in a taxable account and I would like to keep costs down. I am looking at VBIAX (Vanguard Balanced Index Fund Admiral Shares; 0.07 ER) and AOR (iShares Core Growth Allocation ETF; 0.2 ER). She is in the 24% federal and 6.25% state (NY) What are the tax differences for each? I also expected them to have similar returns, but it turns out VBIAX has only US equity and AOA has international as well. Vanguard does have other 60/40 funds. The LifeStrategy series offers a globally diversified 60/40 fund (VSMGX). The trouble with using these blended funds is that they often use taxable bonds for the bond component. If you ...

MrCheapo wrote: ↑Tue Mar 21, 2023 4:09 pm ... I like it because:

c) It delivers capital gains so it is tax efficient in my after-tax account

Item c) above is typically considered to have a negative tax impact because index funds don't generally deliver capital gain distributions at all. So, the overall tax cost of this fund is higher, on a relative basis.

Morningstar rates the 3-Year Tax Cost Ratio for the fund at 2.61, while the average fund for the category has a lower tax cost rating of 1.48.

In other words, those annual ST and LT capital gains distributions aren't seen as an efficiency. It's really just more "forced income" which many investors seek to avoid.

Regards,

10b-8 wrote: ↑Tue Mar 21, 2023 3:56 pm
One more question: would you keep the same holdings in all three accounts or distribute them in a specific way?

This can be done in a variety of ways, but if you really seek the most tax-efficient solution, then you could follow the guidance in the tax efficient fund placement wiki page.

If you find that untenable or inconvenient for any reason, then mirroring accounts, with similar allocations in each account, is typically considered "good enough".

Regards,

Does VUSXX still have tax-free from a state tax perspective? Where do I find the list of the states where it is tax-free? I thought I saw it somewhere. Typically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments. https://www.vanguard.com/pdf/USGOIN_2023.pdf I'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket. You'll pay Federal (22%...

Does VUSXX still have tax-free from a state tax perspective? Where do I find the list of the states where it is tax-free? I thought I saw it somewhere. Typically it is, however, the earnings from repurchase agreements are subject to state and local tax. Currently the fund holds about 25% in repurchase agreements. Early 2024 Vanguard will publish exactly how much of the 2023 dividend is a result of US obligations, as a percentage of the total dividend for the year. Below is a link to the 2022 version as an example - look at the bottom of pages two/three for some state specific comments. https://www.vanguard.com/pdf/USGOIN_2023.pdf I'm wondering if I even want to bother with VUSXX vs VMFXX. I'm in the 22% tax bracket. You'll pay Federal (22%...

I have reviewed the "Required Disclosure Information" document for my plan. I notice the following fees: In-Service Withdrawal Fee: $25 per transaction (does anybody know what this means?) Minimum Required Distribution Fee: $25.00 per distribution year (an automatic $25 fee every year I need to do a required minimum distribution?) Looks like fees I will have to incur once I start withdrawing money. I get a generous match from my employer, which I max out, but I'm hesitant to put more money into the 401(k) for fear of getting fleeced with fees. I'm already 100% in a Target date fund to minimize transactions and the associated fees. Also the document says: "please keep in mind that fees are subject to change". Thank you f...

Backroads4Me wrote: ↑Tue Mar 21, 2023 1:17 pm ... Another stretch plus is that he would love to not pay taxes on it and for the kids to benefit from a step up in basis.

I'm not sure the above statement is reasonable if he won't consider the stock market.

The added condition of not paying taxes and getting a step up in basis cries out for Berkshire Hathaway B shares, not that I'd recommend that.

He could avoid paying taxes by using US Savings bonds in the heir's names.

Regards,

Hello Everyone, I am a new father and would like to establish an appropriate financial setup for my child. I would also like to do the same for any future children. We do have a few checks coming in from friends and family so I would like to decide my next steps in the near future. Goal: to establish money to grow. This is not intended for college savings I would like to open an account at a local credit union (they usually deposit $25 for children as a match). This can be used as a parking place for money over the years. I would also like to open a sort of brokerage account to invest in index funds (Boglehead-influenced funds of course, ex: Total Stock Market, 500, etc). What is the best type of brokerage account (I prefer Fidelity): UGMA...

Do you have a 401k plan at work? If so, will it accept the funds in the Traditional IRA? Regards, Huh. This had never occurred to me as a way to avoid the pro-rata rule. We've been doing annual backdoor Roth contributions for my wife, but I never have because I have a rollover IRA from a previous employer's 401k. I now have a 457(b) with my current employer, which according to the plan highlights, will accept rollovers from a pre-tax IRA at any time. It sounds like I could merge my pre-tax IRA (rollover from previous employer's 401k) with my 457(b) and then be eligible for a backdoor Roth without having to worry about the pro-rate rule. Does that sound correct? Yes, it does sound correct. However, if the 457b plan is non-governmental you m...

Pinacoladapopsicle wrote: ↑Tue Mar 21, 2023 11:15 am

retired@50 wrote: ↑Tue Mar 21, 2023 11:11 am Do you have a 401k plan at work?

If so, will it accept the funds in the Traditional IRA?

Regards,

I do, and I'm not sure. Do you mean in the Traditional 401k? I can find out. If it does, would you recommend that I rollover there, instead of converting it?

Yes. Find out if they will accept the rollover from the T-IRA to your Traditional 401k plan.

If so, that's how I would approach this. It appears you're already in a high tax bracket, so converting now seems too costly from an income tax perspective.

Regards,

Investing1987 wrote: ↑Tue Mar 21, 2023 8:22 am
Any suggestions?

Other than your wife's objections, the UGMA sounds like it would suit your goal. See the linked wiki page for more detail and nuance.

Regards,

Do you have a 401k plan at work?

If so, will it accept the funds in the Traditional IRA?

Regards,

Svensk Anga wrote: ↑Tue Mar 21, 2023 8:48 am

strummer6969 wrote: ↑Mon Mar 20, 2023 11:21 pm The only thing I can think of is I-Bonds which had a yield of 9.62% last year. They do have a $10,000 cap.

That 9.62% was the variable rate. You would add to that the fixed rate, which varies according to when the bond was issued. For bonds issued at the peak fixed rate in the six months starting May 2000, that was 3.6%. These bonds got a composite rate of 13.39% for six months. See the column under 522, 4.81% fixed rate here: https://eyebonds.info/ibonds/rates.html

Great. Does anyone have a time machine so we can all go back to the year 2000 and buy an I-bond?

For the lucky few who did, and held the bond, I guess I'd say it's serving its purpose. Trying mightily to keep up with inflation.

Regards,

I've run into an interesting (frustrating) issue with my employer's 401k provider, which is Fidelity. Basically, the investment options available to employees have no associated ticker symbols, making it impossible to do any research, track, etc. outside of the Fidelity site. I called Fidelity to ask about this, and got a bit of runaround about how they just administer the plan, don't make decisions, etc... Has anyone else run into this problem or found a workaround? These investments, funds, etc. must have some way to mark them to market and value them. Thanks. You're probably dealing with collective investment trusts - which won't have ticker symbols, but are similar to mutual funds. What you should see (someplace) is a menu of choices, ...

If you're retired, which safe withdrawal rate (SWR) has allowed you actually to grow your nest egg, inflation-adjusted? This response will make me sound like a simpleton compared to the entries above, but all I did was review my spending for the 2 years prior to retirement to get a sense of what I'd need. Then, I set all the dividends in my taxable portfolio to go to my settlement fund. I've been using that money ever since. Every once in a blue moon I have to sell something, but it's rare. This has allowed my tax-deferred and Roth accounts to continue to grow. Even my taxable account has grown, but at a slower rate than it would have, had I not been taking the dividends. Regards, If you are holding dividend queens your SWR using the divid...

It's a fair question. I'd like to see mutual fund managers issue statements regarding their funds exposure to these so-called systemic financial company failures. And specifically, whether they hold any Credit Suisse AT1 bonds or AT1 bonds of any sort. Seems like a simple enough statement for a fund manager to make. If we are to believe in the simple indexing approach using only 2-4 funds instead of a dozen or so funds, a single fund's exposure to a major default is high impact to an individual investor . I doubt a Credit Suisse bond default would have much impact on US investors. Do you actually own any international bond funds like VTABX? I do, but Switzerland (as in the entire country) only represents 1.5% of the holdings of the VTABX f...

Convert it.

Regards,

miyaraj354 wrote: ↑Mon Mar 20, 2023 11:07 pm Hi all,

My DW overheard a conversation between two people discussing a certain high-yield savings acct that gives back @ 13%!! But also, there is a investment cap of $10k. Anyone knows what that is?

I have no idea, but I know this much, if regular money market funds are paying around 4.5%, then anything paying 13% has RISK, and plenty of it.

Be careful, and let us know if you find out. The forum members will go over the prospectus with a fine tooth comb.

Regards,

You'll get no argument from me.

I've owned Primecap since the 1990s.

Regards,

Everest1 wrote: ↑Mon Mar 20, 2023 6:58 pm Is it worth while converting VFIAX to VOO and VTSAX to VTI?

It's largely a matter of how you prefer to trade, and whether you intend to move assets to other brokerage firms.

See link: https://www.bogleheads.org/wiki/ETFs_vs_mutual_funds

I think the dollar value will be the same, or within a cent or two. The share price, on the other hand, will be different.

Regards,

I don't know if it would be Shariah compliant, but what about preferred stock shares?

Regards,

JenniferW wrote: ↑Mon Mar 20, 2023 5:34 pm Thanks.

Well I log into my personal brokerage account then click on VMFXX from within my brokerage account and it gives me an overview. It used to show 7 day yield in right column but no longer.

Here's a screenshot:

I suspect the 4th line of the left (Fund Snapshot) column, currently labeled 30-Day SEC yield, is just incorrectly labeled.

Regards,

bshnew wrote: ↑Mon Mar 20, 2023 5:52 pm Thanks,
Brooke

Brooke,
You should add the full fund names to your original post.

Many Bogleheads (myself included) are not interested in having to look up ticker symbols. Help us out!

Regards,

jebmke wrote: ↑Mon Mar 20, 2023 5:39 pm a few people, yes. Search the forum and a couple of unhappy folks will pop up.

LOL ! - Thanks for the laugh jebmke.

OP,
See this thread if you want some folks to commiserate with.
viewtopic.php?t=351604

Regards,

Booogle wrote: ↑Mon Mar 20, 2023 5:02 pm

retired@50 wrote: ↑Mon Mar 20, 2023 4:46 pm Did you sell a portion of the money fund, or did you sell 100% of your position?

Regards,

100%

I would have guessed that they would have added the 2 days of interest to the amount sold, but now I'm wondering if you won't get it at month end.

I'm struggling to imagine that you won't somehow get that interest.

Regards,

Booogle wrote: ↑Mon Mar 20, 2023 4:34 pm

livesoft wrote: ↑Mon Mar 20, 2023 4:18 pm Right. Also the same happens with bond funds like VBTLX, but not with BND. Check the prospectus.

I sold a money market fund 2 days after its distribution and didn't get any interest for those 2 days.

Did you sell a portion of the money fund, or did you sell 100% of your position?

Regards,

Aguilar wrote: ↑Mon Mar 20, 2023 8:48 am I have equity funds, a NY muni, and a natl limited term exempt muni in my brokerage.

According to this document (linked below) at Vanguard, 14.04% of the Limited Term Tax Exempt fund tax-exempt interest is from NY bonds.

https://www.vanguard.com/pdf/INBST_2023.pdf

So, you may want to adjust the amount of tax-exempt interest related to NY.

Regards,

morsetaper2 wrote: ↑Mon Mar 20, 2023 11:51 am
Anyone have a better idea or suggestions? Better approach? Tell me how you handled your particular situation. I'm sure I'm not the only one whose ever been in this situation.

I got rid of an active fund in my taxable account during the March 2020 downturn. I sold it for a gain, but I was able to marry that gain with some tax loss harvesting opportunities on the same day. The net was a harvested loss that I've been using up, slowly but surely, in the years since.

It sounds like you're already doing all the right things to control the payouts from the fund.

For more detail, see paying a tax cost to switch funds in the Boglehead wiki.

Regards,

RadAudit wrote: ↑Mon Mar 20, 2023 10:40 am I'm more interested in what does it mean if the report is correct? 0% in US consumer discretionary in a index fund? How do you as a private investor manage to rearrange your portfolio to account for this, if you wanted to?

It's not conceivable to me that 0% in consumer discretionary is correct - it has to be a reporting error of some kind.
Every fund currently showing 0% would have had to sell out of the tickers shown in the VCR consumer discretionary fund below.



Regards,

Merionman wrote: ↑Mon Mar 20, 2023 9:50 am I do not invest in junk bond funds because I realize the risk involved and choose not to take that risk. I just hope Vanguard will clearly tell shareholders in such funds if they were impacted and to what degree in the narrative of the next report on the fund rather than bury a loss deep in a profit/loss jumble of inscrutable numbers you would need a forensic accountant to untangle and understand.

The fund NAV will tell shareholders right away.

No need to wait for a report.

For some reason you seem to think Vanguard is up to something..., why?

Regards,

Referring to only my tax sheltered accts; R/O IRA & Roth IRA. 64 yo so RMD's are some time off in the future. I am retired and do not have a job. Does it make sense to have dividends and interest automatically sent to VMFXX (MM cash acct) and redistribute that cash where appropriate to maintain my percentage allocations I've established in my fund allocation? Or stick to selling chunks of the holdings whose amounts have grown larger than the established % allocation (div & interest currently re-invested). And then buying portions in funds where the allocation has decreased below my established %. I do realize that it may well likely be a combination of both strategies to maintain allocations if I have dividends and interest automat...

Questions: Thanks in advance for any help and/or advice! :sharebeer If you're going to switch careers or go back to school, 90/10 might not be as easy to cope with in an extended downturn - assuming earnings shrink or disappear for a couple years. I think 60% - 70% domestic is fine, but I wouldn't be in a hurry to get there. Just switch the 401k, Roth and HSA contributions to a US Stock index as needed to achieve your goal, slowly over time with contributions. Yes, holding a municipal bond fund in taxable makes sense. If by credit protection, you mean creditor protection, (i.e. protection from lawsuits) then consider an umbrella insurance policy. Speak to your car insurance agent. Most large insurance companies offer these policies. When y...

Hi all, I recently started a new job and I'm trying to figure which bonds I should use in my 401k. For my portfolio, I generally aim for roughly 65% total US market, 15% total international, and 20% bonds. I'm having trouble deciding which one I should buy or what % of each. I listed the options available in my 401k below. Thanks! Putnam Stable Value Fund 15 BlackRock High Yield Bond Portfolio Class K (BRHYX) Fidelity® U.S. Bond Index Fund (FXNAX) PGIM Total Return Bond Fund -Class Z (PDBZX) FXNAX - hands down. I suspect the expense ratio is far lower than the other choices. Regards, Why do you prefer FXNAX? I was leaning towards Putnam Stable Value. FXNAX is down about 20% from mid 2020 to today. Bond funds got clobbered when rates rose f...