Looking for Best Alternatives for VTMFX

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Looking for Best Alternatives for VTMFX

Post by ZeroWealth » Fri Jan 12, 2018 9:08 am

Hi everyone,

My wife and I have a "safety net" brokerage account invested in VTMFX, and from everything I've been reading, having the stock and bonds rolled into a single fund isn't the best idea if we ever needed to rebalance because of having to sell both the bonds and stocks. We'll be hitting our one-year anniversary with this fund in March, so we'd like to exchange then so as to only get hit with long-term capital gains.

My question is, what would you recommend we replace VTMFX with that provides the same tax-exempt offerings in a taxable brokerage account? We're still looking to maintain about 50% stock/bond split, as our safety net probably won't be touched for years and we'd like it to grow at a decent clip during this time.

Thanks!
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

User avatar
SpringMan
Posts: 5321
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Re: Looking for Best Alternatives for VTMFX

Post by SpringMan » Fri Jan 12, 2018 9:29 am

The alternative is two funds instead of one with 50% in each. If Emerald City is in a state with an income tax, consider a state specific municipal bond fund for that state. Stock fund could be total stock market. Doing two funds may give you more tax loss harvesting possibilities. Also consider an international stock index fund in a taxable account for the foreign tax credit.
Best Wishes, SpringMan

ZeroWealth
Posts: 67
Joined: Sat Jan 07, 2017 12:00 am
Location: Emerald City

Re: Looking for Best Alternatives for VTMFX

Post by ZeroWealth » Fri Jan 12, 2018 9:51 am

SpringMan wrote:
Fri Jan 12, 2018 9:29 am
The alternative is two funds instead of one with 50% in each. If Emerald City is in a state with an income tax, consider a state specific municipal bond fund for that state. Stock fund could be total stock market. Doing two funds may give you more tax loss harvesting possibilities. Also consider an international stock index fund in a taxable account for the foreign tax credit.
Thanks SpringMan, that's what I was thinking (one stock index and one muni bond). I'm in Washington State, and there is no state income tax, so I'd be going for a general muni bond.

Interesting thought on the international stock index. I've got all my VTIAX in our Roth and Rollover IRAs, would you suggest I move that holding over to the taxable and put the VTSAX strictly in my tax-advantaged?

Thanks!
"I seldom end up where I wanted to go, but almost always end up where I need to be." - Douglas Adams

User avatar
SpringMan
Posts: 5321
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Re: Looking for Best Alternatives for VTMFX

Post by SpringMan » Fri Jan 12, 2018 10:09 am

No but maybe by doing so you could hold all your bond allocation in your IRAs and not bother with tax exempts in you taxable account.
Best Wishes, SpringMan

The Wizard
Posts: 11236
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Looking for Best Alternatives for VTMFX

Post by The Wizard » Fri Jan 12, 2018 10:16 am

VTMFX is the Vanguard tax managed balanced fund, if anyone wondered...
Attempted new signature...

User avatar
grabiner
Advisory Board
Posts: 21345
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: Looking for Best Alternatives for VTMFX

Post by grabiner » Fri Jan 12, 2018 10:32 pm

If you want to hold both US stocks and munis, I wouldn't sell the existing holding in Tax-Managed Balanced for a capital gain. You can just add the individual stock and muni funds as appropriate, so that you can control your allocation.

If you want to hold all your bonds in your IRA, then it may be worth taking the small long-term gain to restructure your portfolio. Tax-Managed Balanced is up 12.64% in the last year, so you'll probably lose about 2% to capital gains if you sell in March.
David Grabiner

venkman
Posts: 407
Joined: Tue Mar 14, 2017 10:33 pm

Re: Looking for Best Alternatives for VTMFX

Post by venkman » Fri Jan 12, 2018 10:42 pm

VTSAX and VWITX (Intermediate Tax-Exempt) in about equal amounts (maybe just a tad more of VWITX) will give you effectively the same thing as VTMFX.

UpperNwGuy
Posts: 117
Joined: Sun Oct 08, 2017 7:16 pm
Location: Washington DC

Re: Looking for Best Alternatives for VTMFX

Post by UpperNwGuy » Sat Jan 13, 2018 11:08 am

The Wizard wrote:
Fri Jan 12, 2018 10:16 am
VTMFX is the Vanguard tax managed balanced fund, if anyone wondered...
Thanks! I was wondering what it was.

Post Reply