Tax efficient brokerage investments

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Fizzlefazzle
Posts: 8
Joined: Sat Jan 09, 2021 5:31 pm

Tax efficient brokerage investments

Post by Fizzlefazzle »

Hello,

This is my first year maxing all my possible tax advantaged accounts (401k, HSA, Roth IRA) and am looking to start a brokerage. In the past I’ve dumped extra funds into student loan prepayments, but those are now refinanced to a 2.1% and my mortgage is at 2.99%. I’ve decided to split the extra monthly between extra payments and a brokerage. I am in the 35% tax bracket. I am about (Hopefully) 19 years from planned retirement in which I’m sure my tax bracket will be lower. I would like to open my brokerage at Vanguard. What are tax efficient ETFs or MFs I should look at?
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retiredjg
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Re: Tax efficient brokerage investments

Post by retiredjg »

Total Stock Market Index and/or Total International Stock Index are the usual suggestions. If you need bonds in taxable, a tax-exempt bond fund...possibly half in a fund specific to your state.

Welcome to the forum. :happy
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ruralavalon
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Location: Illinois

Re: Tax efficient brokerage investments

Post by ruralavalon »

Fizzlefazzle wrote: Fri Jan 28, 2022 6:18 pm Hello,

This is my first year maxing all my possible tax advantaged accounts (401k, HSA, Roth IRA) and am looking to start a brokerage. In the past I’ve dumped extra funds into student loan prepayments, but those are now refinanced to a 2.1% and my mortgage is at 2.99%. I’ve decided to split the extra monthly between extra payments and a brokerage. I am in the 35% tax bracket. I am about (Hopefully) 19 years from planned retirement in which I’m sure my tax bracket will be lower. I would like to open my brokerage at Vanguard. What are tax efficient ETFs or MFs I should look at?
I suggest very tax-efficient stock index funds like Vanguard Total Stock Market Index Fund (VTSAX) or the ETF share class (VTI), and Vanguard Total International Stock Index Fund (VTIAX) or the ETF share class (VXUS), and Vanguard Tax-Managed Capital Appreciation Fund Admiral Shares (VTCLX).

You could also consider a tax-exempt bond fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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grabiner
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Re: Tax efficient brokerage investments

Post by grabiner »

ruralavalon wrote: Fri Jan 28, 2022 6:24 pm You could also consider a tax-exempt bond fund.
In particular, if Vanguard has a fund for your high-tax state, that fund is particularly attractive. If you live in a high-tax state and are in a high tax bracket, you have a higher tax cost than most taxpayers on stock dividends, but no higher tax cost on munis from your state. (The tax cost of munis is not zero; it is the amount you lose in yield by avoiding the tax, which is the difference between the yields on muni and corporate bonds of comparable risk.)
Wiki David Grabiner
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Re: Tax efficient brokerage investments

Post by placeholder »

I work it so that the allocation is implemented by what is available and makes sense for various containers so in taxable I just have stock index funds with the fixed income in tax deferred.
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