International total market index in Taxable?

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International total market index in Taxable?

Post by DesertInvestor » Sun Oct 06, 2019 7:04 pm

I read the bogleheads article on tax efficient investing and they rec Int tot mkt in taxable for the foreign tax credit. But, I have heard discussion on here to the contrary.

I use the vanguard total international market index and VSS for small international. All of them currently in taxable. Given the volatility of International tot mkt index, I also found this to be useful for TLH. I'm in the highest marginal bracket at the moment. Is my thinking correct?


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Re: International total market index in Taxable?

Post by Wyodoc » Sun Oct 06, 2019 7:24 pm

If you’re in highest tax bracket I would not hold VSS in a taxable account. It’s quite tax inefficient. Would consider alternative small cap intl or hold in tax advantaged account.

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Re: International total market index in Taxable?

Post by grabiner » Mon Oct 07, 2019 8:30 pm

In the top tax bracket, it is slightly better to hold US stock in taxable and international stock in tax-deferred. In a moderate bracket, they are about equal, but in the top bracket, the extra Net Investment Income Tax on the higher dividend yield, and the higher tax rate on the non-qualified portion of the dividends, make US stock in taxable better.

The other factor may be the options in your 401(k); if your 401(k) has better US than foreign stock options, then you should hold US there, as that is more important than the minor tax difference between US and foreign stock either way.

I still wouldn't sell anything for a capital gain to switch.
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Re: International total market index in Taxable?

Post by bck63 » Tue Oct 08, 2019 7:01 pm

Tax efficient placement is overblown. Just invest. Put it in taxable, along with a total bond index fund.

Just invest.

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