Taxable account investing

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Taxable account investing

Post by gbs » Sat Feb 24, 2007 4:30 pm

[contributions needed]

Tricks of the trade on how to increase after tax returns.

- fund placement
- tax efficient investing
- tax loss/gain harvesting
- foreign tax credit
- essays (please post them first in the suggestion thread)
- suggestions to rename the topic to a more descriptive name(post them in the suggestion thread).
- etc.

If you are new to investing, you should read the Vanguard Plain Talk publication on being a tax-savvy investor for an introduction to tax efficient investing concepts.

Link: Vanguard- Be A Tax Savvy Investor

The following monographs examine the FY 2006 tax attributes for Vanguard's Index and Tax-Managed Funds:

1. Vanguard Index Fund Tax Attributes (FY 2006)
2. Vanguard International Index Fund Tax Attributes (FY 2006)
3. Vanguard Tax-Managed Fund Tax Attributes (FY 2006)

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Last edited by gbs on Mon Nov 26, 2007 10:45 pm, edited 2 times in total.

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Post by gbs » Sat Feb 24, 2007 4:42 pm

1. The Impact of the 2003 Tax Relief Act on Investment Strategies by Vanguard Institutional Investors (September 2003)
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) provides a more favorable treatment of dividends, lower long-term capital gains rates, and reduced marginal tax rates

contributed by Barry

2.Capital gains taxes: There's more than one rate by Kay Bell
Money gurus are always preaching long-term investing. Not only will that give you a better shot at earning more, it'll also get you a lower tax rate when you sell.

3. Tax Externalities of Equity Mutual Funds by Joel M. Dickson, John B. Shoven, Clemens Sialm date: 12/1999
Investors holding mutual funds in taxable accounts face a classic externality. The aftertax return of their investment depends on the behavior of others.

4. Is Your Alpha Big Enough To Cover Your Taxes? by Robert F. Jeffrey and Robert D. Arnott (1993)
Taxable investors should bear two simple points in mind. First, passive indexing is a very difficult strategy to beat on an after-tax basis, and therefore active taxable strategies should always be “benchmarked” against the after-tax performance of an indexed alternative. Second, while
active management can conceivably add value on an after-tax basis, this will only occur with careful planning that results in maximizing the build-up of unrealized capital gains.

contributed by Barry

5. The management and mismanagement of taxable assets by Robert D. Arnott, Andrew L. Berkin, Ph.D., Jia Ye, Ph.D. date: 2000
(...)less than one in ten mutual fund managers beat the market on an after-tax basis, and only two beat it by any meaningful margin. Identifying those two out of 71 funds in advance would be a neat trick.

6. Loss harvesting: What's it worth to the taxable investor? by: Robert D. Arnott, Andrew L. Berkin, Ph.D., Jia Ye, Ph.D. date: 2001
The answer is that loss harvesting adds a great deal of value, far more than most active strategies can hope to achieve, net of trading costs and capital gains taxes.

7. Tax-efficient saving and investing by William Reichenstein, Ph.D. date: 02/2006
For individual investors, tax management also plays a significant role in maximizing wealth but it typically does not receive the attention it deserves. This Tends and Issues examines four types of tax considerations that can reap benefits to investors.

8. Tax-efficient investing—Solutions for maximizing after-tax returns by Scott J. Donaldson, CFA, CFP and Francis M. Kinniry Jr., CFA, Vanguard Investment Counseling & Research, (08/17/2007)
We compare the tax-efficiency of conventional index funds and multiple-share-class exchange-traded funds (ETFs), stand-alone ETFs, tax-managed funds, and separately managed accounts (SMAs), while considering factors such as investor behavior, portfolio management, turnover and trading strategies, and cost.

9. Why tax-managed funds still make sense by: George U. Sauter date: 12/31/2003
Vanguard offers five tax-managed funds, none of which has made capital gains distributions to investors even as the funds have closely tracked the performance of their respective benchmarks. George U. "Gus" Sauter, Vanguard's chief investment officer, explains why these funds remain attractive.

10. What Professionals Must Know to Tax-Manage Bonds by Ravi Agrawal, AAMS date: 02/2005
Bond tax swaps can be an effective way of enhancing returns over a buy-and-hold strategy, but a comprehensive understanding of newer tax laws is essential to the outcome.

11. Portfolio Construction for Taxable Investors by Scott J. Donaldson, CFA, CFP, and Frark J. Ambrosio, CFA, Vanguard Investment Counseling & Research
Most investment portfolios are designed to meet a specific future financial need—either a single goal or a multifaceted set of objectives. To
reach those goals and objectives, a disciplined method of portfolio construction must be established that balances the potential risks and returns of various types of investments. This paper reviews various aspects of our research involving five major investment decisions that need to be made, in successive order, in the portfolio construction
process. The decisions are:

Asset allocation—Choosing asset-class weights: equities, fixed income, cash, and so on.

Sub-asset allocation—Choosing investments within an asset class, such as U.S. or international equities; or large-, mid-, or small-capitalization equities.

Active and/or passive allocations—Choosing indexed and/or actively managed assets.

Asset location—Deciding on the placement of investments in taxable and/or tax-advantaged accounts.

Manager selection—Choosing individual managers, funds, or securities to fill allocations.

contributed by: PiperWarrior

12. Vanguard - Taxable Equivalent Yield Calculator
Calculate the potential yield you'd have to get from a taxable investment to match that of a Vanguard� tax-exempt fund

contributed by: Simba

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Post by Plainsman » Thu Mar 06, 2008 10:26 am

Another option for taxable account investing is Direct Stock Purchase.

LINK to list of companies that offer direct stock purchase plans.

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Post by looking » Wed Dec 09, 2009 6:59 pm

what about the prime cap core