Which NY Muni Fund

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BV3273
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Joined: Mon Oct 19, 2015 7:20 pm

Which NY Muni Fund

Post by BV3273 » Mon Jan 13, 2020 12:05 pm

So after much debate about what to do with the bond portion of my taxable account I decided to go with a NY Muni Fund. I am between Vanguard NY Muni Fund and Fidelity NY Muni Fund. The holdings look similar, but the ERs are pretty different. Fidelity has an ER of 0.46 while Vanguard is 0.17. I have my taxable account at Fidelity which I believe charges around $75 to purchase a Vanguard MF. Trying to keep it all under one roof so to speak. Have my 401k for work there as well.

Any thoughts on how I should proceed? I plan on investing every month in this taxable moving forward. Was possibly just thinking of using the Fidelity US Total Bond fund for simplicity.

fabdog
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Location: Williamsburg VA

Re: Which NY Muni Fund

Post by fabdog » Mon Jan 13, 2020 1:06 pm

Well, if you want to keep it under one roof, Fidelity will charge you an extra .29 basis points a year for the privilege. Depending on how much you intend to invest, that may or not turn out to be a lot of money. If you plan on doing monthly investments thru Fidelity that would add up quickly.

So you can go with the Fidelity account and pay the extra expense ratio, or open a Vanguard account and invest directly there. Only you know what your time is worth
Was possibly just thinking of using the Fidelity US Total Bond fund for simplicity.
I am unclear why, after deciding to go with a muni fund (assuming you have looked at the after tax yields and decided that was a wise choice) you'd then decide to switch to the US Total bond fund.

Mike

Topic Author
BV3273
Posts: 374
Joined: Mon Oct 19, 2015 7:20 pm

Re: Which NY Muni Fund

Post by BV3273 » Mon Jan 13, 2020 1:53 pm

fabdog wrote:
Mon Jan 13, 2020 1:06 pm
Well, if you want to keep it under one roof, Fidelity will charge you an extra .29 basis points a year for the privilege. Depending on how much you intend to invest, that may or not turn out to be a lot of money. If you plan on doing monthly investments thru Fidelity that would add up quickly.

So you can go with the Fidelity account and pay the extra expense ratio, or open a Vanguard account and invest directly there. Only you know what your time is worth
Was possibly just thinking of using the Fidelity US Total Bond fund for simplicity.
I am unclear why, after deciding to go with a muni fund (assuming you have looked at the after tax yields and decided that was a wise choice) you'd then decide to switch to the US Total bond fund.

Mike
Honestly. I really like the Wellesley fund and fidelity doesn’t have one. So I was going to do 50/50 - Fidelity Total Market and Fidelity Total US Bond. Then I figured the bond portion wouldn’t be totally efficient so I might as well go with a NY Muni fund.

fabdog
Posts: 884
Joined: Wed Jan 16, 2013 1:59 pm
Location: Williamsburg VA

Re: Which NY Muni Fund

Post by fabdog » Mon Jan 13, 2020 3:05 pm

well, assuming you did the math on the tax efficiency of Total Bond vs NY Muni, then go with the one that makes the most sense.

The fidelity fund is currently yielding 2.58%

The fidelity NY Muni is currently yielding 1.44%

so for the Muni fund to be a breakeven tax-wise you'd need 2.58% = 1.44%/(1- marginal tax rate) or a combined federal/NY marginal tax rate of 44%

If your combined marginal rate is less than that... then go with Fidelity Total Bond

Mike

Topic Author
BV3273
Posts: 374
Joined: Mon Oct 19, 2015 7:20 pm

Re: Which NY Muni Fund

Post by BV3273 » Mon Jan 13, 2020 3:08 pm

fabdog wrote:
Mon Jan 13, 2020 3:05 pm
well, assuming you did the math on the tax efficiency of Total Bond vs NY Muni, then go with the one that makes the most sense.

The fidelity fund is currently yielding 2.58%

The fidelity NY Muni is currently yielding 1.44%

so for the Muni fund to be a breakeven tax-wise you'd need 2.58% = 1.44%/(1- marginal tax rate) or a combined federal/NY marginal tax rate of 44%

If your combined marginal rate is less than that... then go with Fidelity Total Bond

Mike
I’m under 44%. Thank you!

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