Basically, you put after-tax money into it, then it grows tax-free, and if spent on legitimate college (or med school) expenses, it comes out of the account tax-free. Preferably would like to pay cash for our retirement home in 8-9 years. You can Tax-Loss Harvest: Basically, if a fund in your taxable account loses value, you can sell it and use the loss (up to $3000 per year) to reduce your taxable income. Assuming a retirement age of 60, my general rule of thumb is to use [age-20] for bond allocation, obviously titrating up or down based on risk tolerance. Asset Allocation 60% Total Stock Market 40% Total Bond… Choosing the best Vanguard funds for taxable accounts requires more of a strategic approach than the fund selection process requires for tax-deferred accounts like IRAs and 401(k)s. It's important to analyze the tax efficiency of the funds, which … Avoid balanced funds (stocks and bonds) in taxable accounts. Use tax-managed or tax-efficient index funds in taxable accounts. Other versions vary by percentages and slice and dice the assets different ways, but this is a great place to start. Mueller's article actually gave a good summary of what Bogleheads believe, which is also available elsewhere on the internet. So you can see that when you have accounts … We’ll cover more about tax loss harvesting in future posts, but for now you can read more about it in the bogleheads wiki . I will admit I am nervous about munis right now due to Covid. I understand that it is best to have bond allocation in tax advantaged accounts--however, since I will only be 40, I will plan to live off my taxable Vanguard investments for as long as possible before needing to touch the 401k and Roth investments. Tax Breaks. Christine Benz This information packed podcast with guest Christine Benz, CFP®, Morningstar’s Director of Personal Finance, covers a lot of important material. My thoughts were: VTSAX Total Stock Market Index - $2000 VBTLX Total Bond Market Index - $2000 VWIUX Intermediate-Term Tax-Exempt Fund - $2000. Keep taxable fund turnover low to avoid capital-gains taxes. The investor is encouraged to choose their own based on time horizon and tolerance for risk. The Bogleheads’ Guide to Investing, The New CoffeeHouse Investor, or; my latest: Investing Made Simple. In looking at the bogleheads wiki on tax-adjusted asset allocation (http://www.bogleheads.org/wiki/Tax-adjusted_asset_allocation) stock in a taxable account is generally worth about 15-20% less than a roth because of future taxes. In general, you would want to have stocks in your taxable account, while having bonds in your retirement account, because of the higher tax efficiency of the stock funds. A 529 plan is a state-sponsored way to help you save for your kid's college. Surely that amount is not insignificant? Avoid short-term gains by holding for more than 12 months. I was able to accomplish this, but it won't be long until I need to add more bond and REIT investments to keep my asset allocation correct. Sell losing shares before year-end (tax-loss harvest). My Vanguard taxable account holdings are currently in VTSAX and VTIAX. Asset allocation wise I’m doing a variant of the … If, however, you’re starting to think seriously about getting all the retirement planning specifics nailed down, then I can’t recommend The Bogleheads’ Guide to Retirement Planning highly enough. Practically Impossible for Most People. Interestingly, the Bogleheads 3 Fund Portfolio does not have a specific one-size-fits-all prescription for asset allocation. $1,000.00 in a taxable account with $200.00 in unrealized long-term capital gains = $970.00 ($1,000.00 less 15% LTCG tax on the $200.00 gain). The we split the rest of our savings by investing in a taxable account and paying down the house (which has 3 more years on it), then the rest will go into a taxable account till I reach FIRE in about 5 years at the age 47. We have $6000 a month that I need to allocate in my taxable account. A first practical flaw which you can almost miss if you’re … We discuss how 2018 tax reform impacts year-end tax planning, the double-whammy of taxes on mutual fund capital gain distributions in a year when funds lost money, tax loss harvesting and tax gain selling,… I added an allocation to REITs as well. The 60-40 Bogleheads portfolio is one simple iteration of a widely popular passive investing strategy named after Jack Bogle and discussed regularly on the forums at Bogleheads.org. During this re-allocation, I ran into the problem of trying to keep bond index funds and REITs in tax-deferred versus taxable accounts. 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