Buy stocks in taxable or IRA?

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Hayden
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Buy stocks in taxable or IRA?

Post by Hayden » Wed Mar 25, 2020 11:02 am

I’ve passed my rebalancing band, so I should be buying stocks. Question is whether to buy them in my taxable account or IRA.

If I buy in IRA: If I get lucky, buy low and the market rises, I’ll have to sell them to rebalance. I won’t have to pay CG taxes to rebalance. On the other hand, if the markets drop further, I won’t be able to tax loss harvest.

I’m leaning towards making the purchase of US stocks in the IRA, and making the purchase of international stocks in the taxable account in order to take the foreign tax credit for the international stocks.

Thoughts?

livesoft
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Re: Buy stocks in taxable or IRA?

Post by livesoft » Wed Mar 25, 2020 11:13 am

Buy stocks in taxable and in IRA.

Where is the money coming from to buy these stocks?
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Hayden
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Re: Buy stocks in taxable or IRA?

Post by Hayden » Wed Mar 25, 2020 11:18 am

livesoft wrote:
Wed Mar 25, 2020 11:13 am
Buy stocks in taxable and in IRA.

Where is the money coming from to buy these stocks?
In the IRA, the money would come from the Fidelity US Bond Index Fund.
In the taxable account, the money would come from the Vanguard Intermediate Term Tax-Exempt Fund.

livesoft
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Re: Buy stocks in taxable or IRA?

Post by livesoft » Wed Mar 25, 2020 11:22 am

With money coming from these bond funds, I think it really doesn't matter what you do. You can use a dice roll to decide. The outcome just won't matter that much.
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grabiner
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Re: Buy stocks in taxable or IRA?

Post by grabiner » Wed Mar 25, 2020 12:39 pm

The main issue is which account you would prefer to hold stocks in; this depends on your tax situation. If you are in a high enough tax bracket that you hold munis, you probably prefer to hold bonds in your taxable account and stocks in your IRA, because you are likely to pay higher tax cost than most investors do on stock returns (18.8% on qualified dividends with the Net Investment Income tax, or 23.8% if you are in the top tax bracket).
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