taxable accounts

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lmk1966
Posts: 16
Joined: Sat Mar 25, 2017 5:13 pm

taxable accounts

Post by lmk1966 » Sat Aug 12, 2017 8:11 am

Help Please ...

What do I need to now about taxable accounts and any suggestions welcome.
I have my 403b maxed, 457 plan not good options (long story, explored it, etc), Can NOT open HSA because of low deductible and does not make scene to change insurance plan to higher deductible just to open HSA..
Have money in ALLY bank making 1.15% but also have some money in regular Bank of America saving account that makes me" nothing"..

No debt, other then 2 mortgages (will keep this way even that probably can pay off condo around $150k mortgage left).
Have townhouse too with mortgage. Selling at this time NOT an option.

Husband died 1 y ago (no $ left after his death, no 401k, no saving, nothing...had to pick up from ground zero and currently relying on my self)..
Luckily I am a physician but already 51 yo and started not long ago, also not the highest paying specialty
Have 1 son and as I get older, worry about future.
I am NOT a spender.

Taxable account suggestions please. Reading everything.
Open Vanguard taxable account with help of their "customer service"? What I need to now first?
Suggestions? Options? Anything welcome.
Thank you

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welderwannabe
Posts: 200
Joined: Fri Jun 16, 2017 8:32 am

Re: taxable accounts

Post by welderwannabe » Sat Aug 12, 2017 8:25 am

Hard to tell from you post whether you have 2 mortgages + a third mortgage on a townhouse, or if the townhouse was included in the 2 mortgages you mentioned.

Paying off the mortgage is always a good risk free method of getting some return.


However, if you heart is set on a taxable account then Vanguard is the best choice. They have a great selection of low expense tax efficient funds.

lmk1966
Posts: 16
Joined: Sat Mar 25, 2017 5:13 pm

Re: taxable accounts

Post by lmk1966 » Sat Aug 12, 2017 8:40 am

Clarification: I have 2 mortgages: condo around $150k left (3 bedroom center of Chicago, great equity, possible/able to pay it off.. Renting it as of right now/ after my husbands death since I needed income.) Selling it NOT an option as of right now (unless total disaster) for different reasons..

Also I live in townhouse in Chicago suburbs, mortgage around $ 290k . Again, it is big but selling it and buying smaller/other/different place NIT an option (explored it)...

Have some money saved but hate to keep it in Ban of America saving account which brings nothing
ALLY almost maxed to have FDIC insurance..

Obviously need to keep 6 months emergency saving.etc..
Not sure if it makes scene to pay off condo ( $150 k left for 15 years, 2.875% mortgage) Same interest for 15 y on townhouse I currently live in
Get different suggestions and do take to consideration that at the end it is my decision but still looking for advise
Financial advisers charge thousands dollars and... I probably will be left with questions)

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ruralavalon
Posts: 10915
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: taxable accounts

Post by ruralavalon » Sat Aug 12, 2017 8:41 am

What are the balances and interest rates on the two mortgage notes?

What is your tax bracket, both federal and state? Your state?

You could simply add this to your original post using the edit button.

For a taxable account I think Vanguard is the right choice. Vanguard's stock index funds are very tax-efficient, and Vanguard also offers a selection of tax-exempt bond funds including some state-specific funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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ruralavalon
Posts: 10915
Joined: Sat Feb 02, 2008 10:29 am
Location: Illinois

Re: taxable accounts

Post by ruralavalon » Sat Aug 12, 2017 8:56 am

lmk1966 wrote:Help Please ...

What do I need to now about taxable accounts and any suggestions welcome.
I have my 403b maxed, 457 plan not good options (long story, explored it, etc), Can NOT open HSA because of low deductible and does not make scene to change insurance plan to higher deductible just to open HSA..
Have money in ALLY bank making 1.15% but also have some money in regular Bank of America saving account that makes me" nothing"..

No debt, other then 2 mortgages (will keep this way even that probably can pay off condo around $150k mortgage left).
Have townhouse too with mortgage. Selling at this time NOT an option.

Husband died 1 y ago (no $ left after his death, no 401k, no saving, nothing...had to pick up from ground zero and currently relying on my self)..
Luckily I am a physician but already 51 yo and started not long ago, also not the highest paying specialty
Have 1 son and as I get older, worry about future.
I am NOT a spender.

Taxable account suggestions please. Reading everything.
Open Vanguard taxable account with help of their "customer service"? What I need to now first?
Suggestions? Options? Anything welcome.
Thank you
I suggest opening a taxable account at Vanguard, and probably investing in some very tax-efficient stock index funds. Examples would include Vanguard Total Stock Market Index Fund and Vanguard Total International Stock Index Fund.

What funds it may be better to use in the taxable account will probably depend what funds you can use in your 403b.

It is often better to treat all accounts together as a single unified portfolio, rather than look at each account separately.

. . . . .

Please add some necessary information.

What is your tax bracket, both federal and state? Your state?

What is the interest rate on each mortgage note?

What funds are you using in your 403b? What other funds are offered in your 403b? Please give fund names, tickers and expense ratios.

Do you have an IRA?

About how much (in dollars) do you believe you may be able to add to investing annually (total, all accounts)?

You can simply add this to your original post using the edit button, it helps a lot if all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

livesoft
Posts: 55514
Joined: Thu Mar 01, 2007 8:00 pm

Re: taxable accounts

Post by livesoft » Sat Aug 12, 2017 9:51 am

In some sense, you already know about taxable accounts since your Ally account, your checking account, and any of those savings accounts you've had over your life have all been taxable accounts.

You may recall that the financial institutions that you have those accounts at send you a 1099-INT every year, so that you can enter the information into your tax software. If you have a taxable account with mutual funds then the financial institution will send you a 1099-DIV and/or a 1099-B (if needed), or a consolidated (combined) 1099-DIV / 1099-B that you can use with your tax software. It's all pretty easy if you are good at reading instructions.

For more info please read IRS Publication 550.

But what do you need to know now? Not much since you really already know it because you have an Ally account.
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retiredjg
Posts: 29743
Joined: Thu Jan 10, 2008 12:56 pm

Re: taxable accounts

Post by retiredjg » Sat Aug 12, 2017 10:05 am

A taxable account is just an ordinary account that does not have some kind of tax advantage. For that reason, it is good to put things in that account that are "tax efficient". That simply means they don't cause you much in the way of extra taxes

The best things to hold there are broad stock index funds such as a total stock index or a total international index. Ordinary bonds would be a bad choice if you are above the 25% tax bracket because they throw off dividends that are taxable each year (even if reinvested). For this reason, it is not often suggested to hold balanced funds in taxable. A balanced fund holds both stocks and bonds.

As far as I know, you can open a taxable account online. No need for customer service.

If you are interested in showing us what you already have, we could help you figure out what to do with your taxable account. See the link at the bottom of this message for how to do that.

sport
Posts: 5828
Joined: Tue Feb 27, 2007 3:26 pm
Location: Cleveland, OH

Re: taxable accounts

Post by sport » Sat Aug 12, 2017 10:09 am

retiredjg wrote: Ordinary bonds would be a bad choice if you are above the 25% tax bracket because they throw off dividends that are taxable each year (even if reinvested). For this reason, it is not often suggested to hold balanced funds in taxable. A balanced fund holds both stocks and bonds.
Even worse, bond interest (and bond fund dividends) do not get the lower tax rate that stock (and stock fund) dividends receive.

WL2034
Posts: 361
Joined: Tue May 21, 2013 10:36 pm

Re: taxable accounts

Post by WL2034 » Sat Aug 12, 2017 11:44 am

Can't go wrong with Vanguard.

Another option, since you mentioned Bank of America, is to open a brokerage account with Merrill Edge (you can link it from your BOA account). You can buy any Vanguard ETF (same low ER as the admiral funds) inside the Merrill Edge account with free trades (there is a balance minimum to get the free trades, but it's not an issue for a buy and hold strategy). Once you have $100k in Merrill Edge, you get some nice perks from BOA (the platinum preferred membership tier) including unlimited free ATM, reduced mortgage / car loan rates, free safe deposit box, increased credit card rewards, increased savings account interest rates (still paltry--stick to ALLY) and some other things. Check it out if those might be of interest to you. If those perks don't interest you, I would just stick with Vanguard. FWIW, I have accounts with both.

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