Which ETF in taxable? VIG, VYM or VTI

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Topic Author
sil2017
Posts: 408
Joined: Mon Jan 23, 2017 7:25 am

Which ETF in taxable? VIG, VYM or VTI

Post by sil2017 » Fri Sep 07, 2018 9:47 am

Please help me make a decision.

I have money that I don't need anytime soon. No debt and living off my retirement pension. Do not need to dip into my retirement accounts.

In my taxable accounts I have:

100k in Schwab Treasury Bills for 6 months. Not sure which high dividend stock to buy so keeping it there for now.

I have 40k in Vanguard in the Prime Market money market. I would like to transfer to the federal money market fund so I can purchase an ETF sooner than later (prefer today but can't cause have to transfer from prime market to federal market.

I don't plan to have automatic reinvestment for my taxable ETF.

I have narrowed it down to 3 ETFs (not familiar with other ETFs except for Vanguard) Which would you recommend?

VIG (vanguard dividend appreciation)
VYM ( Vanguard high dividend)
VTI (Vanguard total stock market)- my least favorite as I already have a large percentage of the total stock market mutual fund in my retirement account.

Thanks for reading.

PFInterest
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Joined: Sun Jan 08, 2017 12:25 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by PFInterest » Fri Sep 07, 2018 10:04 am

VTI it is.

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vineviz
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Re: Which ETF in taxable? VIG, VYM or VTI

Post by vineviz » Fri Sep 07, 2018 10:11 am

sil2017 wrote:
Fri Sep 07, 2018 9:47 am
Please help me make a decision.

I have money that I don't need anytime soon. No debt and living off my retirement pension. Do not need to dip into my retirement accounts.

In my taxable accounts I have:

100k in Schwab Treasury Bills for 6 months. Not sure which high dividend stock to buy so keeping it there for now.

I have 40k in Vanguard in the Prime Market money market. I would like to transfer to the federal money market fund so I can purchase an ETF sooner than later (prefer today but can't cause have to transfer from prime market to federal market.

I don't plan to have automatic reinvestment for my taxable ETF.

I have narrowed it down to 3 ETFs (not familiar with other ETFs except for Vanguard) Which would you recommend?

VIG (vanguard dividend appreciation)
VYM ( Vanguard high dividend)
VTI (Vanguard total stock market)- my least favorite as I already have a large percentage of the total stock market mutual fund in my retirement account.

Thanks for reading.
VTI would be the choice I'd make, not only because of the lower expense but also to reduce the hassle of reinvesting the dividends.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

Topic Author
sil2017
Posts: 408
Joined: Mon Jan 23, 2017 7:25 am

Re: Which ETF in taxable? VIG, VYM or VTI

Post by sil2017 » Fri Sep 07, 2018 10:16 am

VTI would be the choice I'd make, not only because of the lower expense but also to reduce the hassle of reinvesting the dividends.

two votes for VTI so VTI it is.

I don't understand about the hassle of reinvesting the dividends ???

I thought it is best to NOT reinvest dividend or capital gains in a taxable account.

mortfree
Posts: 1966
Joined: Mon Sep 12, 2016 7:06 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by mortfree » Fri Sep 07, 2018 10:16 am

if you have too much total stock in retirement, consider VT (Total World)

international001
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Re: Which ETF in taxable? VIG, VYM or VTI

Post by international001 » Fri Sep 07, 2018 10:48 am

sil2017 wrote:
Fri Sep 07, 2018 10:16 am
I thought it is best to NOT reinvest dividend or capital gains in a taxable account.
Why not?

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by MotoTrojan » Fri Sep 07, 2018 10:50 am

Dividend funds mean more tax drag.

Reinvestment is personal preference but reinvesting should yield highest longterm return of accumulating.

international001
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Re: Which ETF in taxable? VIG, VYM or VTI

Post by international001 » Fri Sep 07, 2018 11:39 am

But if you are just saving, what do you want to do with the dividends?

Invest them manually once a year?
Spend them on wine?

Topic Author
sil2017
Posts: 408
Joined: Mon Jan 23, 2017 7:25 am

Re: Which ETF in taxable? VIG, VYM or VTI

Post by sil2017 » Fri Sep 07, 2018 12:02 pm

a little confused with all I have read from my google search.
it seems that having dividends would be a "tax drag"
I prefer tax efficiency


thanks all

gostars
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Joined: Mon Oct 09, 2017 7:53 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by gostars » Fri Sep 07, 2018 6:29 pm

You have to pay taxes on dividends in the tax year they are received. The taxes you pay create a slight drag, because you just lost 15% or more of of that money, and it isn't continuing to accumulate for the long term (this is why we almost always prefer investing in tax-advantaged accounts). If you're just looking to hold the fund for years with no changes, then the optimal thing would be to have no dividends at all so you pay no taxes until you decide to sell, or if you donate them to charity or pass them on to your heirs when you die, no taxes at all. There isn't really such a thing as a good diverse fund with no dividends, but total stock market funds like VTI generally produce less in dividends than funds like VIG and VYM that exist specifically to provide dividends. VTI is therefore a better option to use in a taxable account when the goal is accumulation.

kappy
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Joined: Tue Jun 21, 2016 7:13 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by kappy » Fri Sep 07, 2018 6:50 pm

VTI is my taxable choice as well for the reasons above.

MotoTrojan
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Joined: Wed Feb 01, 2017 8:39 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by MotoTrojan » Fri Sep 07, 2018 6:51 pm

sil2017 wrote:
Fri Sep 07, 2018 12:02 pm
a little confused with all I have read from my google search.
it seems that having dividends would be a "tax drag"
I prefer tax efficiency


thanks all
Then why did you ask about dividend funds? Answering your own question.

Reinvesting dividends doesn’t change your tax. You pay tax on the dividend regardless. Without reinvesting you are just increasing your cash allocation and forgoing growth. Some prefer to take the cash and buy whole shares, or even shares of something else to rebalance.

arf30
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Joined: Sat Dec 28, 2013 11:55 am

Re: Which ETF in taxable? VIG, VYM or VTI

Post by arf30 » Fri Sep 07, 2018 6:53 pm

VTI would be my choice in taxable - most tax efficient, most diversified, lowest expense ratio.

international001
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Joined: Thu Feb 15, 2018 7:31 pm

Re: Which ETF in taxable? VIG, VYM or VTI

Post by international001 » Sat Sep 08, 2018 5:09 pm

gostars wrote:
Fri Sep 07, 2018 6:29 pm
You have to pay taxes on dividends in the tax year they are received. The taxes you pay create a slight drag, because you just lost 15% or more of of that money, and it isn't continuing to accumulate for the long term (this is why we almost always prefer investing in tax-advantaged accounts). If you're just looking to hold the fund for years with no changes, then the optimal thing would be to have no dividends at all so you pay no taxes until you decide to sell, or if you donate them to charity or pass them on to your heirs when you die, no taxes at all. There isn't really such a thing as a good diverse fund with no dividends, but total stock market funds like VTI generally produce less in dividends than funds like VIG and VYM that exist specifically to provide dividends. VTI is therefore a better option to use in a taxable account when the goal is accumulation.
I agree.. better not having dividends on taxable account. but since they are not avoidable, those dividends you have, you should automatically reinvest them. It's convenient, they don't sit idle and you don't have to pay any fee to invest them yourself

Another thing is how much you want to have on value stocks on a taxable account. They are less tax efficient (more dividends), but you can expect them to grow more overtime (they have done so historically)

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