Vanguard Dividend Fund - not Tax efficient

[mitje22]

I just noticed this year that (after some growth) that VDIGX is not tax efficient. I only have $33,000, but in a brokerage account. It had a $3,900 capital gain for 2024...it actually with other dividends pushed me into a higher tax bracket by just a hair... It has been a good investment but I need some other more tax efficient fund in my brokerage account. I want to sell half of VDIGX and make a ROTH contribution for 2025 and then the rest 2026. It just snuck up on me.... The VTSAX has been great, and is tax efficient...

Over half of my growth portion of my portfolio is VTSAX, is there a too much...I am seeing the value of keeping it simple and doing 4 -5 balanced funds. 2 growth funds, then VBIAX and VWELX and VWINX for balancing risk....

I have been watching my small amount invested in VWINX, my thoughts were having that be my holding fund before taking it out. VWINX seems about on par with my VMFXX settlement fund. Am I missing something. Should I just take out of VWELX and VBIAX and put into VMFXX??

[SnowBog]

Yes, dividends are not tax-efficient. And FWIW, dividends are also irrelevant. https://www.youtube.com/watch?v=f5j9v9dfinQ&t=2s

I am seeing the value of keeping it simple and doing 4 -5 balanced funds. 2 growth funds, then VBIAX and VWELX and VWINX for balancing risk....

Simple? What you have sounds far more complicated, with a ton of overlap between the funds...

I have been watching my small amount invested in VWINX, my thoughts were having that be my holding fund before taking it out. VWINX seems about on par with my VMFXX settlement fund. Am I missing something. Should I just take out of VWELX and VBIAX and put into VMFXX??

I'm not even sure where to begin... You are talking about moving balanced funds into cash...

Might I suggest you just move to a https://www.bogleheads.org/wiki/Three-fund_portfolio or perhaps even a one-fund portfolio viewtopic.php?t=287967.

You will have a much simpler portfolio, much more diversification than you have today, with likely far better investment results...

[livesoft]

In my opinion, there is no such thing as too much VTSAX in a taxable account. Without knowing your entire portfolio and the kinds of accounts you have there is not much else to write.

https://www.bogleheads.org/wiki/Asking_ ... _questions

[retired@50]

I just noticed this year that (after some growth) that VDIGX is not tax efficient.

For an introductory course on tax efficient fund placement, see the wiki.
https://www.bogleheads.org/wiki/Tax-eff ... _placement

Regards,

[steadyosmosis]

My taxable account is 100% VTI equities, so that I avoid paying the unnecessary taxes you indicated.

[grabiner]

Vanguard Dividend Growth is an active fund, which causes it to distribute capital gains. In your taxable account, you should use only stock index funds (or ETFs) to avoid capital gaisn.

Over half of my growth portion of my portfolio is VTSAX, is there a too much...I am seeing the value of keeping it simple and doing 4 -5 balanced funds. 2 growth funds, then VBIAX and VWELX and VWINX for balancing risk....

There is no need to have multiple funds to cover the same asset class; you can simplify much more than this. VBAIX (Balanced Index) has the same holdings as stock and bond indexes. Likewise, I don't see the point of holding both Wellesley and Wellington to reduce risk; you could replace them with stock and bond funds, or if you like Wellesley's investment philosophy for some of your stock, use enough of it to get your desired bond allocation.

If you want to get better diversification and need to do it in your taxable account, the best fund for that is Total International, which holds stocks not in Total Stock Market.

[mitje22]

Thank you all for your help.

[mitje22]

Thank you all for your help.