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?
Tax efficient brokerage investments
Re: Tax efficient brokerage investments
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.
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- ruralavalon
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Re: Tax efficient brokerage investments
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).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?
You could also consider a tax-exempt bond fund.
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Re: Tax efficient brokerage investments
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.)
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Re: Tax efficient brokerage investments
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.