what do bogleheads do with taxable acct?

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lospecv
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what do bogleheads do with taxable acct?

Post by lospecv »

Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Last edited by lospecv on Sat Nov 21, 2020 5:00 pm, edited 2 times in total.
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geerhardusvos
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Re: what do bogleheads do with taxable acct?

Post by geerhardusvos »

lospecv wrote: Sat Nov 21, 2020 4:38 pm So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Stop trading and put it in VTI. Continue to contribute with extra money each month.

How much do you save per year? How much do you spend per year? How much do you want to spend in retirement?

Edit your post in this format to get better answers: Asking Portfolio Questions
Last edited by geerhardusvos on Sat Nov 21, 2020 4:46 pm, edited 2 times in total.
VTSAX and chill
rkhusky
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Re: what do bogleheads do with taxable acct?

Post by rkhusky »

Bogleheads would prefer Total Stock Market and/or Total International in taxable. If in a high tax bracket, some tax-exempt bonds would also work.
theorist
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Re: what do bogleheads do with taxable acct?

Post by theorist »

I have a taxable account, where I keep mostly low cost index funds and some municipal bonds (the bonds are below where they should be right now as a fraction of holdings due to the recent run up in stocks, but I target 30%). I use VTSAX for US stocks (total market), VTIAX for a core international holding (international index), and round it out with various tilts to e.g. smaller cap value stocks and emerging markets.

The general philosophy here is that buy and hold is the way to go. If you’re good about paying yourself first, saving as much as you can without cramping your lifestyle, and never panicking and selling, you’re doing everything right to give yourself the best chance of a solid financial future. Speculative trading may or may not work for you in the long run (I’m sure it doesn’t work for most — maybe you’ll be extraordinary), but isn’t the focus of this site.

Good luck!
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Re: what do bogleheads do with taxable acct?

Post by Broken Man 1999 »

DW and I do have a taxable brokerage account, but we have only $35 or so in it.

The only time we might have real money in it will be when we start RMDs in five years. We probably won't spend all of the RMDs. I might start buying Savings Bonds again to soak up the excess.

We only distribute from our TIRAs enough for expenses as needed, so we don't build up the taxable account at all.

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ThriftyGeorge
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Re: what do bogleheads do with taxable acct?

Post by ThriftyGeorge »

My taxable account has morphed mainly into a dividend/income fund, vs buying and selling individual stocks in which I hoped to time the market and make some money. That didn’t work out so well for me in the past. I’m in my 40s as well. My main goal is to have most all of my funds generate dividends or interest. My goal is to grow it over time, in hopes that it could pay the bills if something catastrophic happened with my job or help me transition to an early retirement if I ever choose to do so. I’ve tried to incorporate a good mix of funds that pay monthly and quarterly. Some are tax efficient and others are definitely not. Income is the main objective though.

Tax exempt municipals, VWAHX, VWITX, and VMSXX for emergency fund
Oil/GAS MLP-AMLP(great dividend, but getting killed on this one)
Domestic & International- VV and VXUS
Utilities-VPU
Dividend-VYM
BDC-MAIN
REITS- O, LTC, STAG
Preferred Stock-PGX

I only have a few individual stocks that I bought when the market crashed. I always keep a small percentage of fun/gambling money to satisfy the itch, but I try to keep myself in check. Not sure what else to add. If anybody has any recommendations...let me know!
“Advertising has us chasing cars and clothes, working jobs we hate, so we can buy sh*# we don’t need.”...Tyler Durden
dcabler
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Re: what do bogleheads do with taxable acct?

Post by dcabler »

My taxable account is all stock funds. Many choices for that but mainly choose something reasonably broad and tax efficient. No not all bogleheads choose a total stock fund, SP500 or total international for this. Many roads to Dublin..
Last edited by dcabler on Sat Nov 21, 2020 6:20 pm, edited 1 time in total.
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Re: what do bogleheads do with taxable acct?

Post by jebmke »

I don't have a unique strategy with taxable account except as it relates to taxes. All other things equal, I try to avoid generating income in my taxable account since it creates a tax expense. Beyond that, I look at the whole portfolio in entirety as it relates to asset mix and investments.
When you discover that you are riding a dead horse, the best strategy is to dismount.
retired@50
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Re: what do bogleheads do with taxable acct?

Post by retired@50 »

I hold US and international stock index funds in my taxable account.

When I was working I contributed on a regular basis with every paycheck, now that I'm retired, I take most of the dividends for monthly spending.

Regards,
This is one person's opinion. Nothing more.
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GerryL
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Re: what do bogleheads do with taxable acct?

Post by GerryL »

retired@50 wrote: Sat Nov 21, 2020 6:23 pm I hold US and international stock index funds in my taxable account.

When I was working I contributed on a regular basis with every paycheck, now that I'm retired, I take most of the dividends for monthly spending.

Regards,
I did the same with Balanced Index fund. Just kept growing it with regular share purchases and auto-reinvestment of dividends. Now in retirement I move quarterly dividends to my checking account if I need extra cash or reinvest if not. It was a welcome source of income before I started SS at 70.
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dodecahedron
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Re: what do bogleheads do with taxable acct?

Post by dodecahedron »

Use the appreciated securities held in my taxable account for the bulk of my charitable giving. (That approach is likely to change after I become old enough to do Qualified Charitable Donations at age 70 1/2.)

Use the cash in my taxable account for expenses, including paying income taxes on opportunistic Roth conversions.
Dave55
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Re: what do bogleheads do with taxable acct?

Post by Dave55 »

VTI
VXUS
Short Term Muni
Short Term Bond


Dave
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dodecahedron
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Re: what do bogleheads do with taxable acct?

Post by dodecahedron »

lospecv wrote: Sat Nov 21, 2020 4:38 pm
So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Anything is *possible.* E.g., you could buy state lottery tickets and IF you get extremely lucky, you could wind up with $1Mil in your account by age 60. OR you could buy longshot stocks and hope to stumble on to the next Tesla.

Of course, there are no guarantees you will wind up with $1 million. You could wind up with much less than your started with or even zero.

Personally, what I would do in your shoes is buy Vanguard Total Stock in your taxable account and just hold. You may or may not hit $1 million but you will sleep better at night.
ivgrivchuck
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Re: what do bogleheads do with taxable acct?

Post by ivgrivchuck »

lospecv wrote: Sat Nov 21, 2020 4:38 pm
So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Stop the swing trading immediately! You are basically playing high stakes poker with top pros. You've been lucky for a couple of rounds, but that luck won't last forever.

1M at 60: You have a reasonable chance of reaching this target with disciplined budget and buy&hold approach. Of course it depends on how the stock market does for the next 15 years.

VTI/VXUS is the way to go. You probably shouldn't be 100% in stocks since you are approaching your planned retirement age. At least it's now time to start adjusting.
44% VTI | 36% VXUS | 10% I-bonds | 10% EE-bonds
AlohaJoe
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Re: what do bogleheads do with taxable acct?

Post by AlohaJoe »

lospecv wrote: Sat Nov 21, 2020 4:38 pm So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?
Why would Bogleheads do something different with their taxable account than they do with their other accounts?
UpperNwGuy
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Re: what do bogleheads do with taxable acct?

Post by UpperNwGuy »

AlohaJoe wrote: Sat Nov 21, 2020 8:23 pm
lospecv wrote: Sat Nov 21, 2020 4:38 pm So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?
Why would Bogleheads do something different with their taxable account than they do with their other accounts?
Exactly!
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Re: what do bogleheads do with taxable acct?

Post by leenaerts »

lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
just get some leverage on there. Poor that 300k in UPRO. If you did that a couple years ago you would have had 1 mil already
000
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Re: what do bogleheads do with taxable acct?

Post by 000 »

Vanguard Total US Stock Index, Vanguard Developed Markets Stock Index, Gold ETF.
TravelGeek
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Re: what do bogleheads do with taxable acct?

Post by TravelGeek »

lospecv wrote: Sat Nov 21, 2020 4:38 pm
My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Sure, why not?

I put "boring" stock index funds in our taxable accounts, and we were able to FIRE years before age 60 without even knowing what swing trading is. It's mostly a matter of controlling how much you spend and investing enough that you have a good chance of reaching your goal.
larmewar
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Re: what do bogleheads do with taxable acct?

Post by larmewar »

I use taxable accounts for $$ I can't fit in tax free/differed and/or don't want in IRA/TSP. All stock MFs except a couple of legacy positions in balanced funds. Total is a bit under 10% of portfolio. Small position in Primecap Odyssey Aggressive Growth is in taxable, because it wasn't practical to put in an IRA.

Lar
checkyourmath
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Re: what do bogleheads do with taxable acct?

Post by checkyourmath »

I am crushing it in my money market account. The return percentage has been trending down. I think with all the buybacks ending in 2020 the next best thing is options trading. 2020 is not the best year for profiteering in the stock market. You will sleep a lot better with just buying index funds even though I don't own any. I sold at a Buffet indicator of 140 because I thought the world was going to explode and I deeply regret it. I didn't realize that we were going to have a pandemic that pushed the US 2020 death rate to nearly 2.9 millions deaths. Market timing is impossible!
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Re: what do bogleheads do with taxable acct?

Post by Affable at 50 »

I use my taxable account to invest in a mix of low cost, tax efficient total stock market index ETFs and Fidelity index funds. I automate my investing as much as possible by having a portion of my paycheck deposited directly at Fidelity and schedule automatic investments in FSKAX (Fidelity Total Stock Market Index Fund) twice a month. When I have had excess lump sums to invest I have leaned toward buying either VTI or ITOT. I feel comfortable that I can continue to buy and hold any of these investments for the next couple of decades or until they are needed to support my lifestyle.

In recent years I have focused primarily on keeping my taxable account fully invested and on minimizing my taxable transactions.

To this point in time I use my 401k to hold enough fixed income and international stock funds to balance out my desired asset allocation.
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Re: what do bogleheads do with taxable acct?

Post by abuss368 »

lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
I would own low cost total market index funds in taxable and stop trading.
John C. Bogle: “Simplicity is the master key to financial success."
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anon_investor
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Re: what do bogleheads do with taxable acct?

Post by anon_investor »

abuss368 wrote: Sun Nov 22, 2020 10:12 am
lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
I would own low cost total market index funds in taxable and stop trading.
+1. VTSAX or VTI is all that is needed.
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Re: what do bogleheads do with taxable acct?

Post by Rudedog »

VTI very tax efficient.
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Re: what do bogleheads do with taxable acct?

Post by Explorer »

Broad Stock ETFs + Broad short term bond ETF + low cost active mutual fund (Wellington)
Vtsax100
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Re: what do bogleheads do with taxable acct?

Post by Vtsax100 »

I have 200K in a taxable account. Its mostly in VTSAX. I keep a little in cash for emergency. I try to just let VTSAX do its thing and forget about it.
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Re: what do bogleheads do with taxable acct?

Post by Figuring_it_out »

You can run one of many online retirement planning apps and estimate you future gains. it all comes down to how much you save and how much do you want to spend in retirement for living expenses (house note, car notes, food) which vary by state and part of town (slums vs mansions).
Then consider entertainment. Hobbies, travel, etc. Estimate what that cost today, look back at what it costs 10 years ago then estimate what it will cost in 25 more years. Everything has its own inflation rate. Typical rule of thumb is 3%/year but some things are much higher (college @ ~ 7%/year) and some are lower than 3%

Next is medical expanses, ask your parents or other folks in their 60s,70s how much medical costs for them. Then ask yourself if you think you'll have similar expensive issues. Diabetes management is expensive (insulin, glucose monitor test strips, etc), post cancer treatments (drugs to help you recover from chemo or radiation treatments), mental disorder medicine. etc.

account for all of that when you hit your number.

As for the 1 million dollar target, at 350 today, if you keep investing regularly you will most certainly reach that goal. Question is, is that enough?

The very crude rule of thumb is 4% withdrawal rate on your accounts will last 30 years. so 1 million will get you 40K in withdrawals. If these are from retirement accounts that require you to pay taxes, you will pay on average 15% of that in taxes (~ 6000). so $34K after taxes. Respectable. but not swanky. :)

As the others have said, invest in wide market index funds. With a quick calculation, if you start with $360 add in $12K/year ($1000/month) and get an average market return of 7% (reasonable). assuming your are 45 and do this until 60 (15 years) you will have almost $1.4 million at 60.

The typical ages of interest are
62 - earliest you can get social security
65 - earliest you can get Medicare
67 - full retirement age for social security (your monthly check goes up 8%/year for every year you wait after 62)
70 - max social security age (max SS monthly check)

For this simplistic calculation your numbers are the following

62 = 1.6 mil
65 = 2.1 mil
67 = 2.3 mil
70 = 3 mil.

All of this assumes you SAVE at the same rate of 1K/month and you return 7% on average.
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Re: what do bogleheads do with taxable acct?

Post by abuss368 »

anon_investor wrote: Sun Nov 22, 2020 10:14 am
abuss368 wrote: Sun Nov 22, 2020 10:12 am
lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
I would own low cost total market index funds in taxable and stop trading.
+1. VTSAX or VTI is all that is needed.
Excellent advice. If I recall from the Jack Bogle - Two Fund Portfolio thread, do you have a simple Two Fund Portfolio?
John C. Bogle: “Simplicity is the master key to financial success."
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anon_investor
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Re: what do bogleheads do with taxable acct?

Post by anon_investor »

abuss368 wrote: Sun Nov 22, 2020 12:11 pm
anon_investor wrote: Sun Nov 22, 2020 10:14 am
abuss368 wrote: Sun Nov 22, 2020 10:12 am
lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
I would own low cost total market index funds in taxable and stop trading.
+1. VTSAX or VTI is all that is needed.
Excellent advice. If I recall from the Jack Bogle - Two Fund Portfolio thread, do you have a simple Two Fund Portfolio?
Yes, for the most part. Although I am using CDs and I Bonds instead of total bond right now; and I do keep a play money allocation that is in VGT and VUG. But most of my equities are in VTSAX or S&P500 + a completion index (held in proportion to mimic the total stock market).

Outside my play money allocation, I basically buy into VTSAX in my taxable every pay check.

My play money allocation has done well this year, but I know full well it was luck.
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Re: what do bogleheads do with taxable acct?

Post by abuss368 »

anon_investor wrote: Sun Nov 22, 2020 12:40 pm
abuss368 wrote: Sun Nov 22, 2020 12:11 pm
anon_investor wrote: Sun Nov 22, 2020 10:14 am
abuss368 wrote: Sun Nov 22, 2020 10:12 am
lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
I would own low cost total market index funds in taxable and stop trading.
+1. VTSAX or VTI is all that is needed.
Excellent advice. If I recall from the Jack Bogle - Two Fund Portfolio thread, do you have a simple Two Fund Portfolio?
Yes, for the most part. Although I am using CDs and I Bonds instead of total bond right now; and I do keep a play money allocation that is in VGT and VUG. But most of my equities are in VTSAX or S&P500 + a completion index (held in proportion to mimic the total stock market).

Outside my play money allocation, I basically buy into VTSAX in my taxable every pay check.

My play money allocation has done well this year, but I know full well it was luck.
The markets have been all US and then the rest a distant second. Within US, it has been all technology and then the remaining 10 sectors a distant second.

I am not surprised your Vanguard Technology fund has performed very well.
John C. Bogle: “Simplicity is the master key to financial success."
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ruralavalon
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Re: what do bogleheads do with taxable acct?

Post by ruralavalon »

You are doing great in my opinion.

lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have 1Mil by the age of 60. Is that possible for me?
My suggestion is stop swing trading. Invest for the long-term, in your taxable account use Vanguard Total Stock Market ETF (VTI). To fully automated investing you might use Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX).

We use just Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) in our joint taxable account.

"1Mil by the age of 60" is plausible in my opinion. To see the range of possibilities try one of these calculators:
1) www.firecalc.com; or
2) www.i-orp.com.
Last edited by ruralavalon on Sun Nov 22, 2020 2:27 pm, edited 1 time in total.
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Re: what do bogleheads do with taxable acct?

Post by abuss368 »

lospecv wrote: Sat Nov 21, 2020 4:38 pm Mid 40's and work two jobs (no college and somehow got thru Highschool) and make about $95k.

401k and SEP IRA (from FT and PT job)
Image


above is about 90% vinix and 10% VTSNX


I also have taxable in vanguard. I’ve been swing trading last couple months and went from about 60k to 104k. I basically did this to offset a loss I had from couple years ago (about 30k loss).

I have a EF at local bank about $15k... after paying bills i save 1k a month which just goes to bank account.

only debt i have other than home is a car loan. $15k @ 0%

So my Question is what should I do with taxable account going forward? Should I just keep swing trading or should I just buy something like VOO or VTI and hold?

My goal is to have maybe 1Mil by the age of 60. Is that possible for me?
Stay the course and buy Total Stock and a bond fund if needed.
John C. Bogle: “Simplicity is the master key to financial success."
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