First Brokerage Account

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Joined: Fri Jun 08, 2018 12:16 pm

First Brokerage Account

Post by Cope » Wed Jun 13, 2018 3:48 pm

Considering starting a taxable account and I’m trying to decide between vtsmx or fstmx as my first index fund. I’ve read that the vanguard offering is more tax friendly, but my tax deferred accounts are at fidelity so it seems kind of nice to have everything at one place. Can someone explain the tax benefits of the vanguard offering to this novice?

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Re: First Brokerage Account

Post by bloom2708 » Wed Jun 13, 2018 4:43 pm

From the Wiki:

With Fidelity, for example, you could construct a three-fund portfolio using:

Fidelity Total Market Index Fund Investor Class (FSTMX) or Premium Class (FSTVX)
Fidelity Total International Index Fund Investor Class (FTIGX) or Premium Class (FTIPX)
Fidelity U. S. Bond Index Fund Investor Class (FBIDX) or Premium Class (FSITX) - Probably not in taxable. Taxable bonds in your 401k if possible.

Both the Fidelity and Vanguard Total US funds will be tax efficient. No capital gains. Low turnover. Similar dividend.

At Fidelity, go with Fidelity index funds. Don't pay the transaction fee to buy Vanguard funds. Be aware that Fidelity has a lot of non-index funds that may carry higher expense ratios.

I would do 70% Total US and 30% Total International in taxable. Start with one and keep the ratio intact. Up your bonds in the 401k/IRA to keep your desired mix of stocks and bonds.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

Doctor Rhythm
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Re: First Brokerage Account

Post by Doctor Rhythm » Thu Jun 14, 2018 1:36 am

If you are already a Fidelity client, I'd just stick with them and have everything in one place. Can't speak directly to tax efficiency, but last I checked, the turnover rate for FSTMX was slightly lower than VTSMX.

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