What to do after maxing out all tax advantaged options?

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raptor001
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What to do after maxing out all tax advantaged options?

Post by raptor001 » Fri Jun 02, 2017 3:59 pm

Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?

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DaftInvestor
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Re: What to do after maxing out all tax advantaged options?

Post by DaftInvestor » Fri Jun 02, 2017 4:01 pm

ibonds (which are tax-advantaged) and taxable for me.
You mention REITS - if you hold them - you should do so in tax-advantaged.

mcraepat9
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Re: What to do after maxing out all tax advantaged options?

Post by mcraepat9 » Fri Jun 02, 2017 5:07 pm

Taxable account in accordance with your predetermined asset allocation (taking into consideration tax efficiency, of course).
Amateur investors are not cool-headed logicians.

retiredjg
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Re: What to do after maxing out all tax advantaged options?

Post by retiredjg » Fri Jun 02, 2017 5:14 pm

Some people use an HSA as a "stealth IRA", but this assumes you have a high deductible health insurance plan available for you that offers an HSA and that such an insurance plan is suitable for your family health situation.

I Bonds if you want.

Taxable investing. Or paying off debt at an accelerated rate.

jebmke
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Re: What to do after maxing out all tax advantaged options?

Post by jebmke » Fri Jun 02, 2017 5:23 pm

Don't underestimate the value of a tax-efficient taxable account. Nearly 2/3 of our holdings are in taxable.
When you discover that you are riding a dead horse, the best strategy is to dismount.

livesoft
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Re: What to do after maxing out all tax advantaged options?

Post by livesoft » Fri Jun 02, 2017 5:27 pm

Max out your taxable account option.
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RRAAYY3
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Re: What to do after maxing out all tax advantaged options?

Post by RRAAYY3 » Fri Jun 02, 2017 5:35 pm

livesoft wrote:Max out your taxable account option.
is there a legal maximum? or just personal max [i.e. Roth/tIRA 5500 per year ... taxable doesn't have an annual limit does it?]

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Re: What to do after maxing out all tax advantaged options?

Post by jebmke » Fri Jun 02, 2017 5:50 pm

RRAAYY3 wrote:
livesoft wrote:Max out your taxable account option.
is there a legal maximum? or just personal max [i.e. Roth/tIRA 5500 per year ... taxable doesn't have an annual limit does it?]
it is only limited by your imagination.
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Re: What to do after maxing out all tax advantaged options?

Post by triceratop » Fri Jun 02, 2017 5:53 pm

RRAAYY3 wrote:
livesoft wrote:Max out your taxable account option.
is there a legal maximum? or just personal max [i.e. Roth/tIRA 5500 per year ... taxable doesn't have an annual limit does it?]
Of course there is no annual limit, livesoft is being cheeky. (and stealing my joke!)
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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raptor001
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Re: What to do after maxing out all tax advantaged options?

Post by raptor001 » Sat Jun 03, 2017 7:34 am

Thanks guys. It's always nice to get different perspectives on things.

JimmyD
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Re: What to do after maxing out all tax advantaged options?

Post by JimmyD » Sat Jun 03, 2017 7:43 am

We're almost to that point as well and I was thinking we'd start throwing half the excess at our mortgage and the other half in taxable.

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Re: What to do after maxing out all tax advantaged options?

Post by letsgobobby » Sat Jun 03, 2017 8:03 am

I, EE, 529, HSA, variable annuity in some cases, taxable

staythecourse
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Re: What to do after maxing out all tax advantaged options?

Post by staythecourse » Sat Jun 03, 2017 8:12 am

In my opinion, it should the expectation to max out tax advantage plans and not the goal. The only way to be wealthy is make enough to save enough. The more you save the more wealth development occurs. Now everyone can't do it, of course, but it should still be the expectation. Good for you for getting there.

Now it is time to invest in taxable which based on your asset allocation my require some thought to asset LOCATION to be the most tax efficient.

Good luck.

p.s. You are allowed 14k per child PER person for the annual gift tax exemption so that may be a good place to start IF you are considering that avenue, i.e. paying for expensive colleges.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: What to do after maxing out all tax advantaged options?

Post by oldcomputerguy » Sat Jun 03, 2017 10:48 am

raptor001 wrote:Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
I-bonds up to the max annual allowed (if you don't think you'll need the funds for at least five years), taxable account, build up the emergency fund, maybe take that vacation you've been putting off...
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: What to do after maxing out all tax advantaged options?

Post by BenfromToronto » Sat Jun 03, 2017 12:21 pm

I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

staythecourse
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Re: What to do after maxing out all tax advantaged options?

Post by staythecourse » Sat Jun 03, 2017 1:03 pm

BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Yes you are missing A LOT.

1. Just because it worked out randomly picking what you thought was going to be a great stock and having it work out for you does NOT make it a great plan. I would say you were just plan lucky. No more and no less. Look at Legg Mason Trust under Miller. It destroyed SP500 for 15 some years then was a dog after that. Confirmation bias is a dangerous thing.
2. Just because something is highly diversified, i.e. lowers its nonsystematic risk does NOT mean you get the same return. For example, throwing 20-30 large stocks together supposedly lowers the nonsystematic risk close to the level of index fund, BUT that does not mean you are guaranteed the same return.
3. In your example if you are just looking for the same risk, return, and correlation of a "boglehead portfolio of 60/40" then why not just invest in index funds that match 60/40 in a tax efficient manner? Meaning if you are going to be an ACTIVE investor then it should be to do BETTER then the return and not mimic it.
4. One has to invest as all their accounts are one portfolio for purposes of maintaining the same risk/ return AND tax efficiency. Can't just buy stocks in taxable and not have to consider its impact on the whole portfolio.
5. Congrats and guessing right on berkshire and for the OP and others just remember for every one of those lucky guessers there are MANY, MANY more enrons out there.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: What to do after maxing out all tax advantaged options?

Post by staythecourse » Sat Jun 03, 2017 1:03 pm

Deleted as it was a double post.
Last edited by staythecourse on Sat Jun 03, 2017 2:05 pm, edited 1 time in total.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

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Re: What to do after maxing out all tax advantaged options?

Post by FiveK » Sat Jun 03, 2017 1:56 pm

raptor001 wrote:Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
See Prioritizing investments - Bogleheads, and for a similar perspective, Investment Order.

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Re: What to do after maxing out all tax advantaged options?

Post by livesoft » Sat Jun 03, 2017 3:28 pm

BenfromToronto wrote:If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.
[...]
Am I missing something?
I want to point out a couple of things:

1. If you are never going to sell any of these stocks, why wait to die for your heirs to enjoy the fruits of your labor? You can give them shares now and see the joy of how your money enriches their lives. Sure, they will probably owe some taxes, but so what?

2. In your shoes, I would tell my children: Don't be sentimental about the BRK stock that you will inherit. My asset allocation is not your asset allocation and if you want to sell BRK after I die, then please go ahead. Do not be like those folks who keep inherited stock without ever selling because of some sentimental feelings for dear ol' mom's shares. These shares are for you to use as you see fit, so sell them if that's what you want to do and buy something else with the money including other investments that match your desired asset allocation or spend the money.
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Re: What to do after maxing out all tax advantaged options?

Post by Silly Wabbit » Sat Jun 03, 2017 3:41 pm

Are you maxing out the full 54k in 401k contributions? If not, consider contributing after-tax funds and converting to Roth (IRA or 401k).. AKA Roth mega backdoor. Assuming your 401k plan supports these features.

I've found this to be great. I get tax free gains with the optionality of pulling the original contribution out tax, and penalty tax, free.

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Re: What to do after maxing out all tax advantaged options?

Post by imbogled » Sat Jun 03, 2017 4:04 pm

If you have any debt pay that down! After that, it's time to invest in taxable accounts but do so efficiently.. see Boglehead wiki article link listed below to help you understand how to do so.

https://www.bogleheads.org/wiki/Tax-eff ... _placement
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burnout454
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Re: What to do after maxing out all tax advantaged options?

Post by burnout454 » Sun Jun 04, 2017 7:40 pm

BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Seems like feedback was too negative. I think this is one smart/reasonable option.

NiceUnparticularMan
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Re: What to do after maxing out all tax advantaged options?

Post by NiceUnparticularMan » Mon Jun 05, 2017 7:35 am

HSA if available, then maybe being a little generous with 529s, then taxable.

As an aside, I think a lot of people here err too much on the side of trying to avoid paying some taxes on realized returns. Tax-deferral is nice for people planning to reinvest realized earnings, so to the extent you can get it for such investments you might as well use it. Same with actual tax avoidance--tax deductions, Roth treatment, avoidance of tax on earnings for qualified expenses, and so on.

But the "normal" result of investing and having to pay some taxes on realized earnings is not some great tragedy. So when you have run out of convenient alternatives, you shouldn't view it as a big deal.

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Re: What to do after maxing out all tax advantaged options?

Post by NiceUnparticularMan » Mon Jun 05, 2017 8:02 am

burnout454 wrote:
BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Seems like feedback was too negative. I think this is one smart/reasonable option.
So I think you could see BRK.B as having been something like a megacap value fund. That would make an appropriate proxy something like Vanguard's megacap value ETF MGV, and as you can see here that is indeed a pretty close proxy:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

MGV does end up with a higher Sharpe Ratio, however, because it has a bit higher return and a bit lower Stdev.

So I gather the argument is if this is the right sort of investment for you to begin with (megacap value), BRK.B might be more tax-efficient. I would counter that with suggesting there is a lot more risk of BRK.B not behaving as expected in the future (e.g., what happens when Buffet is gone?).

One might note that is sort of the history of conglomerates in general--they can cruise along for long periods of time, then go through massive structural changes in a short period of time, often as triggered by management changes. Consider what happened to GE, for example:

Image

The Immelt version of GE was not the same as the Welch version of GE. Maybe Welch got a bit lucky too, but the bottom line is there was a point when you could argue GE was just as good as a megacap growth fund, and then it became something else (and was not nearly as successful).

So personally, I do not trust conglomerates to behave as expected in the long run.

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Re: What to do after maxing out all tax advantaged options?

Post by mcraepat9 » Mon Jun 05, 2017 10:29 am

NiceUnparticularMan wrote:
burnout454 wrote:
BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Seems like feedback was too negative. I think this is one smart/reasonable option.
So I think you could see BRK.B as having been something like a megacap value fund. That would make an appropriate proxy something like Vanguard's megacap value ETF MGV, and as you can see here that is indeed a pretty close proxy:

https://www.portfoliovisualizer.com/bac ... ion2_2=100

MGV does end up with a higher Sharpe Ratio, however, because it has a bit higher return and a bit lower Stdev.

So I gather the argument is if this is the right sort of investment for you to begin with (megacap value), BRK.B might be more tax-efficient. I would counter that with suggesting there is a lot more risk of BRK.B not behaving as expected in the future (e.g., what happens when Buffet is gone?).

One might note that is sort of the history of conglomerates in general--they can cruise along for long periods of time, then go through massive structural changes in a short period of time, often as triggered by management changes. Consider what happened to GE, for example:

Image

The Immelt version of GE was not the same as the Welch version of GE. Maybe Welch got a bit lucky too, but the bottom line is there was a point when you could argue GE was just as good as a megacap growth fund, and then it became something else (and was not nearly as successful).

So personally, I do not trust conglomerates to behave as expected in the long run.
Welch wasn't a genius, there was just lax oversight of earnings management ("smoothing") during Welch's tenure that became a huge regulatory focus during Immelt's tenure.
Amateur investors are not cool-headed logicians.

sambb
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Re: What to do after maxing out all tax advantaged options?

Post by sambb » Sat Jan 12, 2019 11:15 am

im thinking of an index growth fund with lower dividend rates would be preferable in taxable

staythecourse
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Re: What to do after maxing out all tax advantaged options?

Post by staythecourse » Sat Jan 12, 2019 11:29 am

For the high saver it is all about how much you save in taxable. If you considering private school, paying for expensive colleges, grad school in future (for yourself or your kids), etc... keep on plowing money into your 529. The gift tax exemption per year is 14k/ year per person per kid. That is 28k per couple per kid. That is A LOT of tax deferred space still to save IF it fits your expected needs.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

gowest
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Re: What to do after maxing out all tax advantaged options?

Post by gowest » Sat Jan 12, 2019 11:42 am

raptor001 wrote:
Fri Jun 02, 2017 3:59 pm
Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
For us, personally, our next steps after maxing the items you mention include:

--Contributing max to I-bonds ($10k per year each, which is $20k total).
--College savings in a taxable account (we funded 529 plans until they reach $50k for each kid (in contributions), and beyond that we invest in a taxable account (to a total of $200k per kid), partly because I don't want too much money restricted via 529 plans. There are many other posts on the subject of college savings within a 529, outside a 529, or split (as we do) and I'm not trying to re-open that discussion.
--Additional retirement savings in our taxable account. "Max" this as livesoft says. Every dollar you can throw at it.
--If you have debt, then consider tackling that as well. We have a mortgage at a low rate and so we don't pay very much extra on it because, for us, we'd rather invest per the above. Some would prefer to eliminate ALL debt. To each his/her own. Every now and then I'll throw $5k at it just to chip away.

YMMV.

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Re: What to do after maxing out all tax advantaged options?

Post by PhilosophyAndrew » Sat Jan 12, 2019 12:12 pm

raptor001 wrote:
Fri Jun 02, 2017 3:59 pm
Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
If you find that you have excess cash after executing your thoughtful IPS, there is no BH law that you must invest that excess; you might also find it worthwhile either to spend the excess to enhance your present life or to give it away to charities you value. There’s no sense ending up with too much deferred spending.

If you don’t want to spend or give away the excess, investing it in taxable according to your IPS is fine.

I’m assuming you have a solid IPS and the excess is avid what you need to meet your current savings and future retirement goals. If you don’t yet have that, establish that planning so you can be confident about whether you need to invest this cash to meet your goals.

Andy.

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Re: What to do after maxing out all tax advantaged options?

Post by tibbitts » Sat Jan 12, 2019 12:19 pm

burnout454 wrote:
Sun Jun 04, 2017 7:40 pm
BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Seems like feedback was too negative. I think this is one smart/reasonable option.
I don't think it was too negative. The loss of diversification vs. a low-dividend fund (tax-managed, etc.) or even a total market fund makes BRK.B a horrible idea. You hear about how it's diversified in itself - almost like a mutual fund - which was exactly what everybody said about GE a few years ago.

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Re: What to do after maxing out all tax advantaged options?

Post by tibbitts » Sat Jan 12, 2019 12:25 pm

raptor001 wrote:
Fri Jun 02, 2017 3:59 pm
Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
My school of thought is that it's good to have a balance of account types. Most Bogleheads would put every cent that had in deferred if they could - then years later complain that they'd missed out on favorable tax treatment for dividends and capital gains, and complain about the RMDs their strategy created. Not to mention how they'll feel if tax brackets are completely different and less favorable to them in retirement. Plus there are issues with how deferred accounts vs. taxable are treated when passed as part of an estate, too.

Basically when it comes to tax-favored accounts and strategies... be careful what you wish for.

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Re: What to do after maxing out all tax advantaged options?

Post by jj » Sat Jan 12, 2019 12:26 pm

burnout454 wrote:
Sun Jun 04, 2017 7:40 pm
BenfromToronto wrote:I have been a Bogleheads for the past 25 years but I did not discover this forum until a couple of years ago.
I finally decided to register today to respond to this post and ask a couple of questions.

Once one has maxed out all his or her tax-advantaged accounts, why not buying Berkshire Hathaway stock (BRK.B) in a low-cost brokerage account?
I have done this monthly for the past 20 years and accumulated almost $1M in this stock.
I have never paid one $ in taxes and will not pay taxes if/until I sell some stocks.
If I sell some stocks, I will only pay taxes on capital gains (i.e., at a much lower rate that I would pay on distributions from an IRA).
If I do not need to sell any of these stocks, my children will inherit them, the cost basis will be reset and no taxes will ever been paid.

I read Bogle's books in the early 1990's and I have been an indexer from the get go, mostly using Vanguard funds.
Thus, I am generally not in favor of owning single stocks and, even less so, of having a large proportion of one's net worth invested in one single stock.
However, I consider BRK different: its past performance has been spectacular but now it is so large and diversified that it behaves like a US index fund of large stocks and I expect it to yield a return highly correlated with a typical Boglehead portfolio ("60/40").

Am I missing something?
Seems like feedback was too negative. I think this is one smart/reasonable option.
I agree. I have a position in BRK for the reasons stated, one of only two stocks owned. However, I would not allow this to be more than 5% of our portfolio, maybe 10%. In my mental bucketing I see this stock position to be liquidated if long-term-care is needed. Otherwise to be inherited with a stepped-up basis on death.

In addition to paying down any debt, I use an HSA as the retired person's only access to tax-free space and max-out I bonds as I have a fear of unexpected inflation and appreciate the tax-deferred nature of the interest. The $20k annual limit is a shame (per couple, I don't want to mess with trusts) but we've managed to amass over $400k which a goodly chunk of our fixed income investments, and diversifies our bond holdings. Taxable stock holdings in Total Stock Market VTSAX, Tax Managed Small Cap VTMSX (legacy) and FTSE All World Ex US VFWAX (tax loss harvested some time ago from VTIAX) round out the taxable holdings, along with municipal bond funds. We have a 529 plan for our youngest child, not over-funded, and we 'may' be in a position to use I bonds for education at college time.
...it is madness to risk losing what you need in pursuing what you simply desire. Warren E. Buffett

FinancialRookie
Posts: 37
Joined: Wed Nov 14, 2018 1:37 pm

Re: What to do after maxing out all tax advantaged options?

Post by FinancialRookie » Sat Jan 12, 2019 12:30 pm

gowest wrote:
Sat Jan 12, 2019 11:42 am
raptor001 wrote:
Fri Jun 02, 2017 3:59 pm
Me and my wife max out our def comps, Roth IRAs, and 529 ( Up to state credit - 10,000 ). Is there a boglehead school of though on the next logical move for excess savings? Ibonds to the max allowed, taxable account, reits, etc, etc....?
--Contributing max to I-bonds ($10k per year each, which is $20k total).
You could look at EE Savings Bonds as well. If held for 20 years they guarantee a 3.53% (not adjusted for inflation) return with taxes deferred on the interest. Like I-bonds, they are capped at $10k per SSN.

MotoTrojan
Posts: 2954
Joined: Wed Feb 01, 2017 8:39 pm

Re: What to do after maxing out all tax advantaged options?

Post by MotoTrojan » Sat Jan 12, 2019 1:27 pm

livesoft wrote:
Fri Jun 02, 2017 5:27 pm
Max out your taxable account option.
Queue the “does anyone max out all taxable accounts without a high income” thread.

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