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For my taxable account bond portion, I bought an intermediate municipal bond both Federal and state tax exempt a month ago. Buying a treasury fund with its zero state tax in a taxable account makes more sense than CD. From the discussion duration should match the goal. what percentage of bonds in the taxable account should be treasury I'm not quite sure. In my case duration is (12-years) intermediate treasury. For my IRA, I have a target fund which has an underlying Vanguard Intermediate total bond (VBTLX). For 401K, I have 1/3 stable value fund (2%+ yield), 1/3 Intermediate total bond (which is increasing in value and has a long term horizon and hope to sell after it matures after 12-years). 1/3 consist of short term treasury and CD to tak...

When Schwab email calculated "yield to maturity" terminology actually assumed 365 days.
Is that incorrect or justified because maturity date (28 days) falls within non-leap year?
Thanks.

Great it's clear, thanks for clarification !
I also correct original message in a case somebody reads it in future.

MrJedi has a good hint and discrepancy is from that assumption. But 2023 is not leap year, February was 28-days.
It means TD is thinking 2023 is leap year by mistake ! am I right?

Hi, I'm calculating investment rate or yield to maturity for 4-week treasury I bought: https://www.treasurydirect.gov/auctions/announcements-data-results/ Security Term CUSIP Issue Date Maturity Date High Rate Investment Rate 4-Week XXX 03/21/2023 04/18/2023 4.220% 4.304% This is email I got: Security Description: US Treasury BILL 04/18/2023 Action: BOUGHT Security No./CUSIP: XXX Type: Cash Trade Date: 03/17/23 Settle Date: 03/21/23 Quantity Price Principal Charge and/or Interest Total Amount 12,000 $99.671778 $11,960.61 N/A $11,960.61 Additional information for this security: - Yield to Maturity 4.293% - Moody's Rating NR , S&P Rating NR - Schwab acted as your agent. Here is my investment rate calculation: interest = 100 - 99.671778 = ...

Thanks for explanation. So I buy total bond for long run in my case 12 years and leave it alone.
Back to this question

Question: Considering 46% of Vanguard Total Bond is treasury (0.4% short, 71.8% Intermediate, 27.8% long).
Do you think buying short treasuries makes it a more balanced investment but what percentage should be?
When short term treasury has a place in portfolio?

Thanks.

Thanks for the link. That was eye opening. So far I'm convinced Total Bond had a return above 5% in many years. Should I buy short treasury and how much? I can go one step forward and even see current potential capital return and income return. I mapped periods of inflation and recession on yahoo graphs. https://finance.yahoo.com/quote/VBTLX/performance/ and https://www.forbes.com/advisor/investing/fed-funds-rate-history/ I identified recession (R) and inflation (I) periods, and identified normal periods. I call it "OK" region and I mean non-inflation/non-recession durations. There are 2 OK long durations where I identified min and max NAV. From 9.89%-11.24% during 12/2008-12/2015 From 10.64%-11.78% during 03/2020-03/2022 This mea...

Instead of speculating, has ever the total bond returned of what CD pays today 5%?
I'm asking for 5 years period. Return from sell and yields.

suemarkp, Question: What Bond did you move to in your 401K? martincmartin, thanks for your explanation about bonds. I learned. I compared major issuer type and their round up percentage of Stable Value Fund vs Total bond. Stable value fund is less Treasury, and it has Asset Backed issuers and more MBS and muni. Stable Value Total Bond MBS 32% 22% Corporate 27 27 Asset Backed 14 - Treasury 11 46 Muni 5 - I think some percentage treasury addition helps, without all those fees. Stable Value fund also is short to intermediate fixed income securities. Following link compares SV to Money Market fund: https://www.galliard.com/globalassets/galliard/assets/edocs/sv-vs-mm.pdf In following link, it explains what happens to SV during rising interest ra...

Treasuries rates are: Date 1 M 2 M 3 M 4 M 6 M 1 Yr 2 Yr 3 Yr 5 Yr 7 Yr 10 Yr 20 Yr 30 Yr 02/15/2023 4.64 4.79 4.79 4.94 4.97 4.96 4.62 4.35 4.04 3.94 3.81 3.97 3.85 broker CD rates are: 3m 6m 9m 1y 18m 2y 3y 4y 5y 4.68 4.80 4.87 5.00 5.05 5.00 4.85 4.85 4.90 Since this is about having treasury bond in 401K (tax deferred), state tax exemption of treasury is nor relevant. CD rates for above 1y are better than treasury (1y, 2y, 5y). What duration should be each treasury? I want some liquidity so if total bond prices goes at bottom when interest rate decrease, I buy them. treasury has more liquidity, easier to sell in secondary market. 1 year CD @ 5.00 for 1/2 of bonds ladder treasuries: 4m (@ 4.94%, 1/4 bond), 6m (@4.97, 1/4 bond) and every 2...

Thanks so much for your points: high yield bonds are risky and require knowledge. Remaining choices are CD and Total market bond index. And I get it, I should not predict, because the market will prove me wrong. I'm 5-years away from retirement and won't touch IRA till 73 years old. I also looked at Vanguard target funds 2030 and 2025(same allocation as for 5-years from now). They have only 1% cash, so it means CD is for short term and bond has a longer view. Then I looked at VBTLX (intermediate bond, total bond market index). Its last 5-years return is variable and interest is around 2%. This gave me the idea to compare annualized returns for interest. I also calculated annualized return of capital return by NAV and interestingly it was th...

Thanks everybody, We will also talk to a trust lawyer as suggested and your inputs helped give us ideas.

Let me clarify: I and my spouse have a living trust. After our death, our assets go to our child when he turns 25 years old. What protection we can put in place so somebody else like spouse cannot claim her inheritance? Thanks 1. It is very unlikely both parents will be dead before your son turns 25. Don't tie in this 25 rule. 2. Is this an existing trust or are you in the process of setting up a new trust? 3. Most likely won't be married at 25. Average age of first marriage in USA is 30 for men. 4. If son keeps inheritance in separate bank account and doesn't want to share with spouse then stays separate from marriage assets. As soon as co-mingled it gets combined. So son can still pick to combine with spouse. 5. Your question and situati...

Let me clarify:
I and my spouse have a living trust. After our death, our assets go to our child when he turns 25 years old.
What protection we can put in place so somebody else like spouse cannot claim her inheritance?

Thanks

I have a living trust, and after death of first spouse benefits surviving spouse.
At the death of the surviving spouse, adult children will be beneficiary. Here is the question:
How do I protect him/her even after some age mentioned in trust, so they don't lose property due to an event?
What are legal things I can do in advance to protect their inheritance?

Thanks.

Mega317,
Thanks and I meant bond type is mutual fund and I have read mentioned link.

As you mentioned, buying CD or Stable Value in Roth is waste and high growth investment should be there, stock index and bond index is right.
Unfortunately Total Market bond Index is not doing well, and I wonder what to do.

For bonds :
401K/Roth : Stable Value, Vanguard Total Market Bond, Eaten Vance Trust High Yield, and Loomis Sayles Core Plus Fixed Income
I can also get other bonds from outside within 401K/IRA.
IRA: I have target fund and underlying index is total market stock and bond Index
Taxable account: I have bought municipal bond

Thanks.

I have question regarding bonds:

1) if bond generate income from dividends and their value decrease, then in long run should diminish. Is this correct?
2) The only way to recover original principal is to keep the fund to maturation date, is this correct?
If value reduces, then principal recovery is one time event.I think rarely investors have that much patience and book keeping capability to keep track of bonds in mutual fund.
3) What is disadvantage of keeping CD in 401K or Roth IRA?
4) is Stable Value account maximize investment income while maintaining preservation of capital, considered a bond?
Thanks.

I appreciate Grabiner and others created these tables and trying to have numerical approach to investment. Thanks Petulant and JeffyScott for contributing in this thread. I'm not getting 20-year and 30-year annualized tax correct in table 2. Let's get annualized 10-year return and assumptions summarized for an example. Please correct if not right. Maybe process of calculation is even more important than assumed dividends or rate of return. Assumptions: Example: the "Tax-efficient stock, medium returns" example, in the 22% tax bracket, the fund earns 8% of which 2% is a qualified dividend taxed at 15%. 1) For simplicity, dividends in our calculation are simplified and they are non-recurring distribution dividends at the end of year...

Thanks jeffyscott, here is correction in bold on distribution tax: My understanding is: if original fund was $1, tax due to distribution is: 1 x 2% = $0.02 tax = 0.02 * 15% = $ 0.003 and return is: 1 x 11% = $0.11, and fund after return $1.11 and after paying dividend: 1.11 - 0.02 = $1.09, Gain = 0.09 and capital gain tax assuming in 22% tax bracket = 0.09 x 15% = $0.0135 so total tax = 0.02 + 0.0135 = 0.0335 which is not same as 0.84 ! I continue here and compute for 10 years: assuming p is initial fund value, and reinvesting dividend after paying tax on it year 0 : tax=0, cost basis = p year 1: tax 1=0.003 x p, cost basis = (1+ 0.02 - 0.003) x p = p x 1.017 extending idea to next, cost basis year n depends on previous year n-1 year 2: tax...

Hi, I have a question about table 2 in : https://www.bogleheads.org/wiki/Tax-efficient_fund_placement I'm trying to derive how Annualized cost over 10 years calculated. It's for portion of tax after fund sold. Example (first row of table 2): Fund = Tax-efficient stock, high returns Pre-Tax return = 11% Distributions = 2% Total Cost = 0.3% , derived for dividends = 2% and capital gain tax (for 22% tax bracket) = 15% Annualized cost over 10 years = 0.84% My understanding is: if original fund was $1, tax due to distribution is: 1 x 2% = $0.02 and return is: 1 x 11% = $0.11, and fund after return $1.11 and after paying dividend: 1.11 - 0.02 = $1.09, Gain = 0.09 and capital gain tax assuming in 22% tax bracket = 0.09 x 15% = $0.0135 so total tax...

Original documentation is incorrect (see link). As you noticed position of +7 is not in right place.
https://advisors.vanguard.com/investmen ... d#overview

I attempted to correct it from my observations and excellent comments by you. I really liked reading them.



Following institutional web site glide path is different. Look for "Glidepath and asset allocation" in the page.
https://institutional.vanguard.com/inve ... /fund/0308

And Investor site doesn't have it, or I didn't find it.

I was considering target fund 2030. Its glide path looks like this. I tried to calculate AA using a ruler from graph, at age 40, 5 years before retirement date at 60, at retirement and +7 years later (at age 72). I see two issues: 1) On glide, the pre-retirement US stock is decreasing from 41 ->37.7 in 5 years, almost -1% per year. Basically if you are investing at the same time this can be noise. Is it worth having ramp down? 2) It makes sense to be more conservative before retirement. After retirement I also want to have growth so I can have a reserve for draw down later. Basically make up for slow down and build up for spending at age 72-79. Do you think ramping up after retirement age 72+ for another 7 years (like V-shape) makes sense? ...

How much tax would you pay now v 5 years? It might be sensible to plan to realise that value, or some of it, now?

Capital Gain will change from 20% to 15%, so on 200K gain tax difference is 200K * (20%-15%) = $10K
it's not worth it to hold long.

I'm under impression, these are answers. Please correct me otherwise or clarify. Question 1: Does selling TD 2025, 2035 and buying TD 2030 in IRA have an impact on my taxes? IRA taxes are upon withdrawal and final value at withdrawal matters. TD exchanges within IRA does NOT cause tax event Regarding Question 2: How can I match Vanguard Gliding Path, how often should I rebalance? I can have same allocation as TD 2030 (2028-2032 retirement dates). What Vanguard reports for its composition is for end of 2022. Every year I need to rebalance to match composition of TD 2030. Regarding Question 3: Tax Efficient Fund Selection: Choice 1 or 2? Till retirement date, choice 1 is better for high tax bracket. After retirement date: Choice 2 taxable bon...

My goal is to : 1) Merge 3 Target Funds into one in IRA 2) Sell company stock and diversify in taxable account 3) Have tax efficient funds Retirement Resources 2027: Retire at Age 65 2028-2029: Taxable Account, Age: 66-67. 2030-2034: Social Security, Taxable account, Age: 68-72 2035+ : Social Security, IRA, Roth Tax bracket and AA current Tax Bracket: Federal : 35%, state=CA AA: Matching what Vanguard TD 2030 does. Breakdown of retirement investments (portfolio) 1) Vanguard taxable brokerage Account: 11% 2) Vanguard IRA, Roth, 401K: 50% Equally divided target funds 2025,2030,2035. Plan is to merge to one: Vanguard TD 2030 ( VTHRX, ER=0.08% ) 3) Company Stock and RSU : 39% I'm selling in 5 years and diversifying in a taxable account. I'm no...

Thanks Valuethinker for sharing your story and I'm convinced to diversify company stock. I have reached some clarity regarding what allocation I need. Retirement Resources 2027: Retire at Age 65 2028-2029: Taxable Account, Company stocks diversified in taxable account (in 5 years, 2023-2027), Age: 66-67                   Roth conversion start here when don't have high income 2030-2034: Social Security, Taxable account, Age: 68-72 2035+ : Social Security, IRA, Roth breakdown of retirement investments (small change brokerage 10->11%, Company Stock: 40->39%). Originally I tried to simplify for easy reading. Tax Bracket: Federal : 35%, state=CA 1) Vanguard taxable brokerage Account:  11%     Currently at cash after TLH moving to:   stock: 11 * ...

It seems I mix different target allocations and it will be difficult to balance investment later.
Assuming I retire at end of 2027, then I need to simplify by allocating some investment for 5 years expense 2028-2032.
From 2033+ investment will be in individual funds but based on TD 2035 (Stock: 72%, Bond: 28%).
I also need count for inflation in expenses up to 2032.

I need to rethink this and start new thread. Go ahead have your thought here.
-- Marginal

KlangFool I edited previous message and answered your question. taxable account has: stock portion: 10 * 56% = 5.6% VTSAX : 3.36.% VTIAX: 2.24% Bond portion: 10 * 44% = 4.4% muni limited term tax exempt (VMLUX): 2.2% CD (rate=4.6%) : 2.2% After company stock sell off in 5 years I buy similar to target fund 2025 allocation but as individual mutual funds (56% stock and 44% bond). The new money stock portion will be (56% * 40) = 22.4% (13.44% VTSAX, 8.96% VTIAX) The bond portion (44% * 40 about 17.6% of portfolio) can be bought in 2 ways: A) Taxable account will have: VTSAX : 3.36 + 13.44 = 16.8% VTIAX: 2.24 + 8.96% = 11.2% VMLUX short term municipal bond : 2.2 + 8.8 = 11% same CD: 11% IRA will have: target fund 2035 (VTTHX) : 50% B) I can buy...

nedsaid wrote: ↑Sat Jan 14, 2023 1:11 am How much gain do you have in your Apple stock?

Gain is about $200K which means 200K x 35.1% ~ $70K tax.
35.1% = 20% for long term capital gain + 11.3% state tax applies to me + 3.8% (medicare tax, refer to net investment income tax)

Here is breakdown of retirement investments : Tax Bracket: Federal : 35%, state=CA 1) Vanguard taxable brokerage Account:  10%     Currently at cash after TLH, moving to:      56% Vanguard total Stock Market Index (VTSAX, ER=0.04%) OR Vanguard Tax Managed Capital Appreciation (VTCLX, ER=0.09%) 22% Vanguard tax exempt short term bond ( VWSUX, ER=0.09%)  22 % 5-year CD (interest : 4.25%) 2) Vanguard IRA, Roth, 401K: 50%  Currently in multiple target fund, correcting by moving to one : Vanguard TD 2035 ( VTTHX, ER=0.08% ) 3) AAPL Stock and RSU : 40%       Problem : Not following diversified allocation (60% vested, 40% unvested and vest in 4 years) Retirement resources for me and my wife: Retire at 5 years from now at 65 years old (2027) 65-67 ...

One more question to avoid wash sale:
Can I buy security again after trade date + 30, or settlement date + 30 ?

Example :
security sell trade date = Dec 27
settlement date = Dec 28

Thanks

Thanks "student" and "livesoft". I added up reinvested funds in IRA and it was almost equal to my sales, so it's worse.
In this devastated day, you tried to help out.I really appreciate your comments and answers.

As next step I move my sells to CD for a month before reinvest them 31-days later.
I sold a little bit tech stock that had loss, but that's so small for TLH.
I meet my tax accountant in January.

I called my Brokerage and unfortunately they told me to consult a tax accountant.
It seems distribution reinvestment in IRA after distribution cannot be reversed by brokerage company. 

Next:
A) I turned off reinvestment in IRA for the next 31 days, so I don't make the wash sale worse if there's more distribution in the next 31-days.
I will turn on target fund reinvestment in IRA after 31-days.
B) I'm thinking of selling some individual stock with loss to stay with the original tax loss harvest.

Question: 
If I sell more individual technology stock with loss, would that be similar to VTHRX (target fund) that got reinvested inadvertently?
BTW I have individual stock in other brokerage company.

Thanks.

Hi,
I was trying to do tax loss harvest.
I sold a target date fund (2500 shares) with loss in my taxable account.
In my distribution setup I had security reinvestment ON in IRA account, so I bought 350 shares inadvertently.

My understanding is:
1) I can tax loss harvest (TLH) for 2500-350=2150 shares in taxable account.
2) I cannot TLH for 350 shares because I reinvested 350 shares in IRA, and will be no adjustment of basis in IRA.

Question:
Q1) Do I need to fill tax form tax 8949 for wash sale?
Q2) My goal was to replace target fund with VTSAX, municipal bonds and CD in taxable account. I keep target fund in tax-deferred accounts.
I have a day left of 2022. Is it anything I can do?

Thanks

Thanks Hudson, your TLH links were useful. I add few more comments for why came to this decision. I also open in a new thread about when is good time to buy bond. Mentioned AA is just for this investment. If I keep the stock portion vested, moving bond to CD doesn't change AA. It happens my total portfolio is also stock/bond 60/40. I think of this investment more conservative with a $10K/year goal, while my retirement portfolio is based on my risk tolerance/age. Plus I can potentially cash out all and come back a month later and buy stock. Bond is not going to change course soon. The Fed is not going to decrease the interest rate till inflation is in control. Even if reversed, the rebound will take time. To make up for 30% bond loss, might ...

I have added update in May 2022 (1.5 years later)
viewtopic.php?t=377575

This is update from previous investment thread: To refer back: (thread : helping elderly parent) https://www.bogleheads.org/forum/viewtopic.php?t=332391 I did some investment with hope to help parents and generate cash $10K/year. It did well and gained 3x my target goal of $10K/year then sadly dived. Time horizon of this investment is 10 years. There are a few questions at the end. Once a good plan needs correction. December 2020 AA 40% conservative, Bonds and CD. Bond split to half: 20% VMLTX (CA muni limited term tax exempt) 20% VCITX (long term tax exempt) kept 1x target in CD as buffer Stock: 60% VTCLX (Tax managed capital appreciation) Reinvest strategy was: I reinvested Bond distributions and cashed stock dividends and sold stock equa...

Thanks SnowBog. It's clear.

Thanks for your responses and links. SnowBog clarifications had good points. I can think of I Bond as short term. Regarding Bond intended duration, I thought about 2 goals. On Account A: I do conversion of Company stock to 60/40 asset in taxable account for 5 years and if I withdraw from it 60/40 for retirement as first resource, then should live for another 5 years, so total 10 years or more. It seems goal says intermediate/long term bond is appropriate. On Account B: generating cash from taxable investment, it should going for 5-10 years. I agree I bond is small portion of portfolio. Then when I swap I bond, I swap with short muni. When I buy more bond, then buy 20k less short term bond. I maintain muni short/long 50/50. One question rema...

I have a tax-deferred IRA account (it holds target funds). I have a question regarding taxable brokerage accounts A, B, started in 2021, with these goals: A) In taxable account A, I'm selling company stock diversifying to AA: 60/40 stock index fund/ municipal bonds (50/50 state/national) for my retirement in less than 5 years. B) In taxable account B, I generate cash to help elderly parent and it has the same 60/40 stock/(bond,CD) allocation. bonds are:  California long term muni: 36% national short muni: 36% CD: 28% some more info about bonds: CA long term muni VCITX: ER=0.17%, dollar-weighted average maturity between 10 to 25 years National short muni VMLTX: ER=0.17%, average stated maturity/average duration=2.8/2.2 years 2021 Gains are: ...

Thanks for your inputs. It seems rent is a better choice for me.
I need to think more.

mrmass wrote: ↑Mon Dec 28, 2020 5:26 am Here's what the forum would likely ask/tell you
1. If you're 5-10 yrs from retiring how much do you have saved?
2. 9% appreciation is speculation
3. What happens if your kid doesn't finish UCLA
4. Any tax implications on selling the stock?

1) Stock holding are vested RSU and can reach 1M in a year or two.
2) Yes 9% is speculation I looked up in Zillow : https://www.zillow.com/westwood-los-ang ... me-values/
3) I think she will most likely. It's investment property after that. We need to hire maintenance company too since I live 350 miles away.
4) selling implies capital gain in high tax bracket.

She pays in state tuition so won't be any change.

BarbBrooklyn wrote: ↑Mon Dec 28, 2020 5:16 am A couple of clarifying questions:

Is this condo for you or for your child?

What percentage of your brokerage acvout does the down payment represent? Would selling create tax implications?

Will buying this property and paying the mortgage and maintenance each month have an impact on your saving rate for retirement?

Yes she lives in it while in UCLA then becomes investment property.
Down payment can be as high as 50% of stocks (down payment about 500K).
Selling stocks will have capital gain implication in high tax bracket.
Buying will impact our retirement saving rate, we have about 2M portfolio in mutual funds.

I'm 5-10 years away from retirement, and I have retirement saving in 401K/IRA mutual bonds stocks/bonds.
I'm thinking of buying a condo while my kid is student in UCLA.
I can cover down payment and even portion by selling brokerage stock.
These are few things I know:

condo price in Los Angeles Westwood area is about $1M
property tax=1.175%
Home price increased 6% last year and predict 9% this year

Rent is $2K to 3K, which is about 3K * 5 years * 12 months/year = 180K

Question:
Should I pay rent OR to buy a condo?
I thought some of you have done this or thought of it before.

Thanks.

Thanks for comments and encouraging me to read IRS 550, I read relevant parts. I'm trying to make a process for myself so I figure out what to do optimally every year for this taxable account.  If I initiate buy before ex-dividends day and keep them for 1 year (more than 61 days), then I will have qualified dividend (QDI). I noticed the dividend is about 2K and most of the fund return is from price change. I'd better keep the fund minimum of a year to qualify for long term capital gain. End of year distribution: If I buy now, I will have end of year distribution 12/29, which means taxes. Following article was discouraging end of year buying, and has recommendations to sell stock funds that have big distribution before the record date. https...

I'm in a high tax bracket, and allocated the following funds using dividend income to cover a parent expense. Here are funds: Stock: Tax Managed Capital Appreciation VTCLX (quarterly distribution) Bond: CA long term tax exempt, and Limited term Tax Exempt (monthly distribution) Strategy: I'm going to use the accumulated stock dividend at the end of year (in a settlement account) to cover parent expenses. Bond dividends just re-invest. Stock dividend cover expenses, and tax on dividends which is 20% like capital gain. If I were short to cover these I would sell stock. Rebalancing: Since stock will drift respect to bonds, I need to rebalance annually if drift>5%. I sell stock to invest in bonds. I know qualified dividends require keeping stoc...

Hudson, Thanks for information, sharing your experience. I feel knowing way more.
I need to dig deeper, open new thread on tax subject.

I meant taxable account.
If you re-invest, then some funds give distribution monthly, and some quarterly.

Qs. How often you perform re-invest or sending to union checking account?
I imagine if you do it quarterly, some money in settlement account from last few months will be out of market before you re-invest !


Qs. You can have re-invest setting all year long, and sell some fund at end of year to re-balance or to withdraw.
In that case, in vanguard do you have choice to tell which stock group you want to sell?
My question is for tax filing. If you select certain group you may declare loss.

This is last piece of puzzle.
Thanks

Thanks for your help and I have decided to make my own investment and avoid draw cash from investments as much as I can.
In a case I ran out, I can withdraw from stock dividends.

I don't know how to tell Vanguard to draw only from stock dividend by X amount.
The only options are re-invest, withdraw distribution and receive check or redirect to checking account.
Can you withdraw amount X from distribution of fund F?

Thanks.

hudson,
I'm not sure what you meant by " I would go with a version of the above."
Did you mean my a, b, c strategies I had earlier OR you are pointing to hi_there's message (saving, investments, and salary)?

I think you meant write check from saving and salary. I invest 300K in stock/bond/CD because I don't have salary right now.
It is temporary solution on top of my portfolio to help my parent, and will change to write check from salary when I have good pay.

I also made some progress in my future fund value calculation. I realized I cannot use compound formula on AAR. More later.