VTIAX or VTSAX for taxable

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Topic Author
Crow Hunter
Posts: 905
Joined: Wed Jun 27, 2012 12:05 pm

VTIAX or VTSAX for taxable

Post by Crow Hunter » Fri Jan 11, 2019 9:51 am

I tax loss harvest by selling VTIAX or VTSAX in my taxable account and buying Prime MM while simultaneously selling bonds in my tax advantaged accounts and buying a FTSE or SP500 index. When my 31 days have elapsed, I reverse the trade.

I have a fairly significant amount (low 6 figures) of cash sitting in Prime right now and I need to decide to either go back into VTIAX or VTSAX.

Which would you do, and why?

Thanks B.org!

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

Re: VTIAX or VTSAX for taxable

Post by livesoft » Fri Jan 11, 2019 9:56 am

I'd do both. Why? Because I cannot predict the future and have an asset allocation to both US and foreign equities.
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BoggledHead2
Posts: 108
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Re: VTIAX or VTSAX for taxable

Post by BoggledHead2 » Fri Jan 11, 2019 10:01 am

both, according to whatever your desired US/INT'L allocation is. the nice thing about predetermining your AA is that the market does the work for you. I'm at 55 US/45 INT'L with 5% bands (keeps me 50/50, 55/45, 60/40 at all times, and very easy to rebalance).

US drifted below your desired range? Buy more US at reduced prices. iNT'L nosedived and your AA out of wack? Buy Int'l. Your AA is within your desired range but you have extra funds? Feed both.

Then ignore it until you have more money to put in.

phantom0308
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Re: VTIAX or VTSAX for taxable

Post by phantom0308 » Fri Jan 11, 2019 10:09 am

Both. Read up on tax efficiency of fund placement here
https://www.bogleheads.org/wiki/Tax-eff ... _placement

livesoft
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Re: VTIAX or VTSAX for taxable

Post by livesoft » Fri Jan 11, 2019 10:16 am

At least for my tax situation, some years VTSAX seems to be more tax-efficient and some years VTIAX seems to be more tax-efficient. Or splitting VTIAX into large / small and putting small foreign in tax-advantaged is more tax-efficient.

However, the tax-efficiency numbers are close enough that other factors are more important nowadays to me. For example, the one that loses the most money for me I would prefer to have in taxable and not in a Roth IRA. There is no way that I can predict that ahead of time though although perhaps this year since foreign did much more poorly recently, maybe I can?

So that's a reasoning for why I do both and don't worry too much about it.
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Topic Author
Crow Hunter
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Re: VTIAX or VTSAX for taxable

Post by Crow Hunter » Fri Jan 11, 2019 10:21 am

I will keep my International/Domestic allocation no matter what, I was just trying to decide if it still made sense to keep the International in taxable (my previous method) or keep it in tax advantaged.

I have read several arguments for both.

VTIAX in taxable gives you the foreign tax credit but exposes you to more dividends.

VTSAX in taxable give you less dividends but you lose the foreign tax credit.

Since I was able to liquidate a big chunk of both in my taxable, I can now switch strategies if it makes sense to.

Topic Author
Crow Hunter
Posts: 905
Joined: Wed Jun 27, 2012 12:05 pm

Re: VTIAX or VTSAX for taxable

Post by Crow Hunter » Fri Jan 11, 2019 10:25 am

livesoft wrote:
Fri Jan 11, 2019 10:16 am
At least for my tax situation, some years VTSAX seems to be more tax-efficient and some years VTIAX seems to be more tax-efficient. Or splitting VTIAX into large / small and putting small foreign in tax-advantaged is more tax-efficient.

However, the tax-efficiency numbers are close enough that other factors are more important nowadays to me. For example, the one that loses the most money for me I would prefer to have in taxable and not in a Roth IRA. There is no way that I can predict that ahead of time though although perhaps this year since foreign did much more poorly recently, maybe I can?

So that's a reasoning for why I do both and don't worry too much about it.
This was one of the other factors I was considering. Since VTIAX is much closer to its 2008 lows than VTSAX, maybe putting VTSAX in taxable would be better.

Just wondering what everyone's opinion was.

Slow day at work. :D

BoggledHead2
Posts: 108
Joined: Tue Jun 12, 2018 6:50 pm

Re: VTIAX or VTSAX for taxable

Post by BoggledHead2 » Fri Jan 11, 2019 10:44 am

Crow Hunter wrote:
Fri Jan 11, 2019 10:21 am
I will keep my International/Domestic allocation no matter what, I was just trying to decide if it still made sense to keep the International in taxable (my previous method) or keep it in tax advantaged.

I have read several arguments for both.

VTIAX in taxable gives you the foreign tax credit but exposes you to more dividends.

VTSAX in taxable give you less dividends but you lose the foreign tax credit.

Since I was able to liquidate a big chunk of both in my taxable, I can now switch strategies if it makes sense to.
not sure it'll make a huge difference either way, but I'd put iNT'L in tax advantaged if in a higher bracket/concerned about current taxation. As long as your maxing out tax advantaged/IRAs/etc., just feed the funds according to your AA and go on about your weekend. Happy Friday!

Topic Author
Crow Hunter
Posts: 905
Joined: Wed Jun 27, 2012 12:05 pm

Re: VTIAX or VTSAX for taxable

Post by Crow Hunter » Fri Jan 11, 2019 11:17 am

BoggledHead2 wrote:
Fri Jan 11, 2019 10:44 am
Crow Hunter wrote:
Fri Jan 11, 2019 10:21 am
I will keep my International/Domestic allocation no matter what, I was just trying to decide if it still made sense to keep the International in taxable (my previous method) or keep it in tax advantaged.

I have read several arguments for both.

VTIAX in taxable gives you the foreign tax credit but exposes you to more dividends.

VTSAX in taxable give you less dividends but you lose the foreign tax credit.

Since I was able to liquidate a big chunk of both in my taxable, I can now switch strategies if it makes sense to.
not sure it'll make a huge difference either way, but I'd put iNT'L in tax advantaged if in a higher bracket/concerned about current taxation. As long as your maxing out tax advantaged/IRAs/etc., just feed the funds according to your AA and go on about your weekend. Happy Friday!
That is a good point and there is a possibility that come March that we might bump up a tax bracket and we will need to start putting a lot more in our taxable account.

rkhusky
Posts: 6065
Joined: Thu Aug 18, 2011 8:09 pm

Re: VTIAX or VTSAX for taxable

Post by rkhusky » Fri Jan 11, 2019 12:52 pm

Crow Hunter wrote:
Fri Jan 11, 2019 10:21 am
I will keep my International/Domestic allocation no matter what, I was just trying to decide if it still made sense to keep the International in taxable (my previous method) or keep it in tax advantaged.

I have read several arguments for both.

VTIAX in taxable gives you the foreign tax credit but exposes you to more dividends.

VTSAX in taxable give you less dividends but you lose the foreign tax credit.

Since I was able to liquidate a big chunk of both in my taxable, I can now switch strategies if it makes sense to.
Plus VTSAX has a higher percentage of qualified dividends, which are taxed lower.

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Clever_Username
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Location: Southern California

Re: VTIAX or VTSAX for taxable

Post by Clever_Username » Fri Jan 11, 2019 2:32 pm

Depending on your tax bracket, it might make more sense to keep municipal bonds in taxable and have a higher stock allocation in tax-advantaged accounts.

Also, are there tax-managed versions of these? I'm at the point where, in a few months, I think my stock portion of my portfolio is likely to outgrow my tax-advantaged space, so I'm going to have to move into taxable with stocks too. That may be a separate post when the time comes though.
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