Am I Addicted [to contribute to my taxable account]

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CppCoder
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Re: Am I Addicted [to contribute to my taxable account]

Postby CppCoder » Mon Mar 20, 2017 7:03 pm

White Coat Investor wrote:[
My problem is that I've always wanted a taxable account to do taxable account things with. Like invest conveniently in real estate, tax loss harvest, pay off the mortgage and the like. But I have a massive amount of tax-protected space available to me and I'm not dumb enough to pass on it and invest in taxable instead. So I find myself wanting to save even more than I can put in my tax-protected accounts so I can do taxable account stuff even though maxing out the tax-protected accounts will likely provide more than enough for our retirement by themselves, even an early retirement.

First world problems for sure.

I didn't know you could make $10 contributions to the TSM mutual fund though. I thought there was a $100 minimum or something. Guess I'm wrong though. The minimum is only $1.

https://personal.vanguard.com/us/funds/ ... =INT#tab=3

I don't think I'd want to keep track of all those tax lots if I was only investing a few bucks at a time though.


Really? I'm currently reading your book, and I'm surprised that you're not a big taxable investor. Maybe I'm not at the chapter yet where you say, "Just kidding. Contribute to tax-protected and then spend the rest on a new Mercedes." :D I max all of my tax-protected space first too ($65k/year), but I find I still have room for significant contributions to taxable.

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White Coat Investor
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Re: Am I Addicted [to contribute to my taxable account]

Postby White Coat Investor » Tue Mar 21, 2017 12:40 am

CppCoder wrote:
White Coat Investor wrote:[
My problem is that I've always wanted a taxable account to do taxable account things with. Like invest conveniently in real estate, tax loss harvest, pay off the mortgage and the like. But I have a massive amount of tax-protected space available to me and I'm not dumb enough to pass on it and invest in taxable instead. So I find myself wanting to save even more than I can put in my tax-protected accounts so I can do taxable account stuff even though maxing out the tax-protected accounts will likely provide more than enough for our retirement by themselves, even an early retirement.

First world problems for sure.

I didn't know you could make $10 contributions to the TSM mutual fund though. I thought there was a $100 minimum or something. Guess I'm wrong though. The minimum is only $1.

https://personal.vanguard.com/us/funds/ ... =INT#tab=3

I don't think I'd want to keep track of all those tax lots if I was only investing a few bucks at a time though.


Really? I'm currently reading your book, and I'm surprised that you're not a big taxable investor. Maybe I'm not at the chapter yet where you say, "Just kidding. Contribute to tax-protected and then spend the rest on a new Mercedes." :D I max all of my tax-protected space first too ($65k/year), but I find I still have room for significant contributions to taxable.


$65K a year is more than most docs invest and even if it is my recommended 20% still suggests a gross income of $325K, a well-above average doctor salary. So if all you did was max out your tax-protected space and spent the rest on a Mercedes, that would be fine.

I'm fortunate in that I have even more annually available tax-protected space than you do. Three 401(k)/Profit-sharing plans, a defined benefit/cash balance plan, two Backdoor Roth IRAs, an HSA, even the minimal state tax advantaged contributions to four 529s. This year that's something like $217K. Even with a high savings rate, that takes a lot of income to do anything in taxable above and beyond that. The last couple of years I've been able to do that, but it seems my tax-protected space grew at least as fast as my income up until the last couple of years other than a couple of years back right around 2008.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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oldzey
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Re: Am I Addicted [to contribute to my taxable account]

Postby oldzey » Tue Mar 21, 2017 1:05 am

My taxable account addiction ended with a tax-deferred account intervention (403b catchup contributions, which started this year).

At this point, what little extra cash I have goes to feed my tax-advantaged account addiction (Roth IRA contribution). 8-)
"The broker said the stock was 'poised to move.' Silly me, I thought he meant up." ― Randy Thurman

pdanet
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Re: Am I Addicted [to contribute to my taxable account]

Postby pdanet » Tue Mar 21, 2017 8:20 am

[quote="ny_rn" For example - I found $10 on the floor and sent it directly to vanguard.

Am I addicted? Anyone else have this problem?[/quote]

Yes. Get treatment(if that's an option) :D

Seriously, unless you are investing any "found money" towards the Maximum contribution amount, I suggest you think how $10 can improve your life(going to movies, donating, odering a pizza etc) and if you don't find any avenues then, continue with your habit.

RadDoctor
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Re: Am I Addicted [to contribute to my taxable account]

Postby RadDoctor » Tue Mar 21, 2017 9:23 am

Is it better to put extra cash into their taxable account in a fund such as:
Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX)

Or do most people actually put it in:
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

I've maxed out my tax advantaged accounts as well...

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WallStreetPhysician
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Re: Am I Addicted [to contribute to my taxable account]

Postby WallStreetPhysician » Tue Mar 21, 2017 9:51 am

RadDoctor wrote:Is it better to put extra cash into their taxable account in a fund such as:
Vanguard Tax-Managed Balanced Fund Admiral Shares (VTMFX)

Or do most people actually put it in:
Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX)

I've maxed out my tax advantaged accounts as well...


RadDoctor,

VTMFX is 50% stocks, 50% muni bonds, while VTSAX is 100% stocks. It depends on what your overall asset allocation is.

-WallStreetPhysician

CppCoder
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Re: Am I Addicted [to contribute to my taxable account]

Postby CppCoder » Tue Mar 21, 2017 5:28 pm

White Coat Investor wrote:$65K a year is more than most docs invest and even if it is my recommended 20% still suggests a gross income of $325K, a well-above average doctor salary. So if all you did was max out your tax-protected space and spent the rest on a Mercedes, that would be fine.

I'm fortunate in that I have even more annually available tax-protected space than you do. Three 401(k)/Profit-sharing plans, a defined benefit/cash balance plan, two Backdoor Roth IRAs, an HSA, even the minimal state tax advantaged contributions to four 529s. This year that's something like $217K. Even with a high savings rate, that takes a lot of income to do anything in taxable above and beyond that. The last couple of years I've been able to do that, but it seems my tax-protected space grew at least as fast as my income up until the last couple of years other than a couple of years back right around 2008.


I think I have a lack of appreciation for the average doctor's salary. I guess I see salary surveys that breakout salary by specialty, and I don't appreciate that the high earning specialties must account for a small fraction of the overall doctor population.

You are fortunate to have such a large amount of taxable space. I sometimes forget that you get a 401k per employer not per person, and I'd guess that at least one of your employers is the WCI business you created. I feel fortunate too. I have a DB pension, so it's like tax deferred space except someone else contributes to it and takes all the investment risk. Of course, I incur the solvency risk of my employer instead, so I invest anyway even though the projected pension would cover more than 100% of my projected retirement expenses. If all goes well, I guess I'll eventually have wealthy children :).

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White Coat Investor
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Re: Am I Addicted [to contribute to my taxable account]

Postby White Coat Investor » Tue Mar 21, 2017 5:51 pm

CppCoder wrote:
White Coat Investor wrote:$65K a year is more than most docs invest and even if it is my recommended 20% still suggests a gross income of $325K, a well-above average doctor salary. So if all you did was max out your tax-protected space and spent the rest on a Mercedes, that would be fine.

I'm fortunate in that I have even more annually available tax-protected space than you do. Three 401(k)/Profit-sharing plans, a defined benefit/cash balance plan, two Backdoor Roth IRAs, an HSA, even the minimal state tax advantaged contributions to four 529s. This year that's something like $217K. Even with a high savings rate, that takes a lot of income to do anything in taxable above and beyond that. The last couple of years I've been able to do that, but it seems my tax-protected space grew at least as fast as my income up until the last couple of years other than a couple of years back right around 2008.


I think I have a lack of appreciation for the average doctor's salary. I guess I see salary surveys that breakout salary by specialty, and I don't appreciate that the high earning specialties must account for a small fraction of the overall doctor population.

You are fortunate to have such a large amount of taxable space. I sometimes forget that you get a 401k per employer not per person, and I'd guess that at least one of your employers is the WCI business you created. I feel fortunate too. I have a DB pension, so it's like tax deferred space except someone else contributes to it and takes all the investment risk. Of course, I incur the solvency risk of my employer instead, so I invest anyway even though the projected pension would cover more than 100% of my projected retirement expenses. If all goes well, I guess I'll eventually have wealthy children :).


Absolutely WCI is the reason I have three 401(k)s instead of one. But even with just my clinical practice I had a $54k 401(k), $30K DBP, two Backdoor Roth IRAs, the 529s, and an HSA. The last time I had a taxable account all I had was the TSP and two Roth IRAs.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course


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