Sell VBTLX in taxable?

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Topic Author
investingdeacon
Posts: 7
Joined: Mon Mar 18, 2019 1:27 pm

Sell VBTLX in taxable?

Post by investingdeacon » Tue Jun 11, 2019 8:47 pm

Hi Bogleheads,

I appreciated your help on my previous post and want to thank you for giving me the confidence I needed to fire my financial advisor and go on my own.

I'll cut to the chase: I need help determining if I should sell my shares of VTBLX that are currently held in my taxable account and rebalance those shares into my tax advantaged accounts such as my 401k, Roth IRA, and HSA accounts.

According to Personal Capital, here is my current asset allocation across my portfolio (32 years old, wife is 29):
US Stocks 73.48%
Intl Stocks 7.88%
Bonds 14.16%
Alternatives 3.4%
Cash 1%

I'm shooting for an AA of 90% stocks, 10% bonds.

My AA in taxable is 12% bonds, the rest in VTSAX. My AA in tax-deferred is 19% bonds, the rest in a variety of indexes/ETFs . I have some unraveling/simplifying of the Roth IRA to do since I took control of the account from my financial advisor at ML.

Right now I own ~ $25,500 of VBTLX in taxable. This was purchased in March. My questions are twofold:

1) It seems that I would be best shifting my entire bond allocation right now to tax-deferred accounts. If so, does it matter whether I put this in 401k vs. Roth IRA vs. HSA?
2) What are the short term capital gains implications of selling VBTLX right now vs the tax implications of keeping it? The fund has increased approx $500 in value since I purchased, so I'm not terribly concerned if I pay a small capital gains tax and sell the fund right now, vs holding this in taxable and paying taxes on the yield over time.

Thanks

livesoft
Posts: 66481
Joined: Thu Mar 01, 2007 8:00 pm

Re: Sell VBTLX in taxable?

Post by livesoft » Tue Jun 11, 2019 8:54 pm

I'd do it. What short-term cap gains are you writing about? You'll have to explain and give details. Look online in your Vanguard account and it will tell you the unrealized capital gains. Your $500 gain is probably reinvested dividends, too, right?
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Topic Author
investingdeacon
Posts: 7
Joined: Mon Mar 18, 2019 1:27 pm

Re: Sell VBTLX in taxable?

Post by investingdeacon » Tue Jun 11, 2019 8:59 pm

livesoft wrote:
Tue Jun 11, 2019 8:54 pm
I'd do it. What short-term cap gains are you writing about? You'll have to explain and give details. Look online in your Vanguard account and it will tell you the unrealized capital gains. Your $500 gain is probably reinvested dividends, too, right?
It says I have $495 in short term unrealized capital gains. I turned off reinvesting dividends about a month ago when I thought I might want to sell the fund.

lakpr
Posts: 1637
Joined: Fri Mar 18, 2011 9:59 am

Re: Sell VBTLX in taxable?

Post by lakpr » Tue Jun 11, 2019 9:00 pm

It does matter where you put the purchases of VBTLX (Vanguard Total Bond Index Fund). Bond funds best belong in a tax deferred account such as 401k; the idea is that by constraining the growth in tax deferred accounts, eventually when you withdraw from the account, you will minimize the amount you have to pay to the tax man

Roth IRA and HSA, on the other hand provides you tax free growth. Therefore you should aim to put the asset classes that are expected to provide you the greatest growth: equities.

livesoft
Posts: 66481
Joined: Thu Mar 01, 2007 8:00 pm

Re: Sell VBTLX in taxable?

Post by livesoft » Tue Jun 11, 2019 9:07 pm

If you realize $495 short-term cap gains, then you will pay tax just like if you earned $495 in interest in a savings account.
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