Tax Efficient Growth ETF's

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
jmassie18
Posts: 1
Joined: Thu Sep 13, 2018 8:42 pm

Tax Efficient Growth ETF's

Post by jmassie18 » Thu Sep 13, 2018 9:26 pm

My new employer does not offer a 401(k). So after maxing out my ROTH IRA I need to invest in a non qualified brokerage account. I am looking for ETF's that offer good growth but low yields to avoid taxes. Any suggestions?

livesoft
Posts: 62336
Joined: Thu Mar 01, 2007 8:00 pm

Re: Tax Efficient Growth ETF's

Post by livesoft » Thu Sep 13, 2018 9:39 pm

Be careful for what you wish for. :)

I recommend sticking with a Total US Stock Market Index fund and a Total International Stock Market Index fund. Tickers might be VTI, VXUS, VEU, VEA, VV, IXUS, and similar ones. All stock funds and ETFs are not un-growth funds.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
triceratop
Moderator
Posts: 5579
Joined: Tue Aug 04, 2015 8:20 pm
Location: la la land

Re: Tax Efficient Growth ETF's

Post by triceratop » Thu Sep 13, 2018 9:41 pm

I would not select my equity asset allocation based on the tax cost of dividend yields. However, I would, and do, avoid VXUS in favor of IXUS for international stocks in taxable brokerage accounts.

My recommendation: VTI, ITOT, IXUS.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

User avatar
whodidntante
Posts: 3936
Joined: Thu Jan 21, 2016 11:11 pm

Re: Tax Efficient Growth ETF's

Post by whodidntante » Thu Sep 13, 2018 9:50 pm

Welcome to the forum.

Growth doesn't mean what some people think it means. It doesn't mean "grow faster." It means a preference for relatively expensive stocks. You really don't want to overweight growth stocks because while they have done well lately, they tend to perform worse than value stocks over a very long time frame like your lifetime. This can easily crush any tax benefit you may get by holding them.

Depending on your tax bracket, deductible contributions may be a better deal than a Roth. If you're eligible, also open an HSA and max it each year but just let it grow.

Equity index ETFs are remarkably tax efficient. There is a spreadsheet where you can compare a few popular funds from a holding cost perspective. Triceratop made it.

User avatar
indexfundfan
Posts: 2179
Joined: Tue Feb 20, 2007 11:21 am
Contact:

Re: Tax Efficient Growth ETF's

Post by indexfundfan » Fri Sep 14, 2018 6:10 am

jmassie18 wrote:
Thu Sep 13, 2018 9:26 pm
My new employer does not offer a 401(k). So after maxing out my ROTH IRA I need to invest in a non qualified brokerage account. I am looking for ETF's that offer good growth but low yields to avoid taxes. Any suggestions?
You could buy "growth" funds with low dividends in the taxable account, balanced by "value" funds (with higher dividends) in the Roth IRA.

Look for growth index funds like VUG, SCHG, SPYG and IUSG.
My signature has been deleted.

Post Reply