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Do you allocate investments for tax purposes?
Old 09-22-2008, 08:35 PM   #1
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Do you allocate investments for tax purposes?

If you have a brokerage account, an IRA and a 401k. Do you allocate types of investments to each account?

Stocks may work best in a brokerage account (non IRA) since ordinary dividends are taxed at 15% max.

Tips and money markets may be best in an IRA since the tax rate on interest is probably higher than dividends and it can be deferred.

Mutual funds?

Would like to know about tax planning ideas.

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Old 09-22-2008, 08:46 PM   #2
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the last time i listened to tax advice on investments it was: don't sell your mom's house while she's alive because you'll lose too much money on capital gains tax.

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"life should begin with age and its privileges and accumulations, and end with youth and its capacity to splendidly enjoy such advantages."~~mark twain - letter to edward kimmitt 1901
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Old 09-22-2008, 08:47 PM   #3
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Equities in taxable and bonds in tax sheltered if possible.
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Old 09-22-2008, 09:30 PM   #4
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Absolutely. I used to pay about $10K more in taxes than I do now. I even have my emergency fund in a tax advantaged account as described here: Placing Cash Needs in a Tax-Advantaged Account - Bogleheads

See also Category:Tax Considerations - Bogleheads
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Old 09-22-2008, 10:34 PM   #5
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As others have said, I keep more fixed income in sheltered accounts and more equities in taxable accounts. I think it's wise to always have some fixed income in the taxable account as well, so there are some stable assets to live off of in hard times without being forced to sell. (Keeping emergency funds in a tax advantaged account as described above is a clever approach to this, but does require some transactions and care to implement correctly.).
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