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Help with Portfolio being taxed
Old 05-03-2008, 12:46 AM   #1
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Help with Portfolio being taxed

Any advice for a slice and dice guy ready to ER in 2 years with the majority of the portfolio in a taxable account? Doesn't seem like there is much I can do. I gained the majority of my savings from cash distributions from my business over the last 5 years. Living in WA, no state tax, but Federal crushes me.

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Old 05-03-2008, 03:18 AM   #2
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This is an issue. Due to the tax laws... if one is using taxable accounts, they need to consider the portfolio structure when they shift from accumulation to decumulation. If you wanted different mix of investments, you incur cap gains.

Index funds are fairly tax efficient.

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Old 05-03-2008, 05:19 AM   #3
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Standard answer is VTI and VEU in taxable for equities, but for fixed income you have the option of tax-exempt bonds. For real estate you might wish to think about a low-cost variable annuity from Vanguard. This is discussed in William Bernstein's The Four Pillars of Investing in the 'taxable Ted' scenario. It's pretty straightforward stuff.
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Old 05-03-2008, 06:42 AM   #4
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Here's a few questions-

1) How large is portfolio?
2) What is asset allocation?
3) what is desired income and SWR?
4) what is desired asset allocation for FIRE?
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Old 05-03-2008, 06:53 AM   #5
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Shabber, like your avatar! Most of our portfolio is in taxable accounts. When I retired we just kept plugging along the same as we had done before. So far, we get enough income kicked out to keep us just fine without incurring capital gains at a time when we don't want to incur the gains. Plus, we have kept sufficient cash/liquid assets so that if their is a big downturn we won't have to liquidate when we don't want to liquidate.

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