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Old 01-28-2010, 07:54 PM   #21
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For what it's worth, I decided I might try some tax-efficient strategies, but will not invest in lower-returns tax-managed funds like municipal bond funds.

However after reading what LOL says above I think that's a better idea. All my IRA and after-tax funds are at Vanguard, so I could easily exchange funds as LOL describes.
BigMoneyJim, I actually did put money into "municipal bond Mutual Funds" because I was trying to:

Have low risk with the money
Get some returns more than money markets are paying
Not tie money up in CDs that are also paying low
and...it's tax efficient.

If I am making a mistake here someone set me straight. I know there are no right answers but this doesn't seem to be a bad decision on my part unless I'm missing something.
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Old 01-28-2010, 10:20 PM   #22
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Originally Posted by dessert View Post
BigMoneyJim, I actually did put money into "municipal bond Mutual Funds" because I was trying to:

Have low risk with the money
Get some returns more than money markets are paying
Not tie money up in CDs that are also paying low
and...it's tax efficient.

If I am making a mistake here someone set me straight. I know there are no right answers but this doesn't seem to be a bad decision on my part unless I'm missing something.
It was a personal strategy and judgment call. I don't think tax efficient funds are necessarily a mistake, but some people might try too hard to avoid taxes and might end up with lower overall returns. My tax liabilities aren't worth possibly counterproductive cleverness to avoid. It might make sense in somebody else's portfolio.
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Old 01-29-2010, 12:20 PM   #23
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Originally Posted by BigMoneyJim View Post
It was a personal strategy and judgment call. I don't think tax efficient funds are necessarily a mistake, but some people might try too hard to avoid taxes and might end up with lower overall returns. My tax liabilities aren't worth possibly counterproductive cleverness to avoid. It might make sense in somebody else's portfolio.
Yes, I agree. My reasons were that I had money in a money market account that was paying like I had it stuffed into my matress at home.
Just trying to find "something" that would provide dividends without a lot of risk for the money. I think for those reasons, it makes sense for me.
No doubt....everyone's different in what works for them.
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Old 01-29-2010, 03:01 PM   #24
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Originally Posted by dessert View Post
BigMoneyJim, I actually did put money into "municipal bond Mutual Funds" because I was trying to:

Have low risk with the money
Get some returns more than money markets are paying
Not tie money up in CDs that are also paying low
and...it's tax efficient.

If I am making a mistake here someone set me straight. I know there are no right answers but this doesn't seem to be a bad decision on my part unless I'm missing something.
I do the same for my short term (< 5 years) savings AND immediate emergency fund needs.
I'm still accumulating albeit FIREd with a steady fixed income (not an ordinary situation) at age 51.
I like the "lower risk" and moderate return aspects of munis versus other choices and have instant checkwriting privileges with clearing in 3 business days.
So I use TE muni bond mutual funds to get some nice 30 day interest payments while I do ongoing DCA into same funds.
If inflation kicks in and clobbers me, I have something to tap into in the short term and can avoid messing with my long term retirement portfolio.
Call me crazy , but it w*rks for my situation.
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Old 01-29-2010, 03:31 PM   #25
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I do the same for my short term (< 5 years) savings AND immediate emergency fund needs.
I'm still accumulating albeit FIREd with a steady fixed income (not an ordinary situation) at age 51.
I like the "lower risk" and moderate return aspects of munis versus other choices and have instant checkwriting privileges with clearing in 3 business days.
So I use TE muni bond mutual funds to get some nice 30 day interest payments while I do ongoing DCA into same funds.
If inflation kicks in and clobbers me, I have something to tap into in the short term and can avoid messing with my long term retirement portfolio.
Call me crazy , but it w*rks for my situation.
Yes, I'm doing the same with that money. I have a different risk factor for the non-qualified account than I do for the 401K. If the 401k goes down I consider that long term investing norm. The after tax account is money that I have already been taxed on and I really don't want it going down as much. I plan to spend it down in retirement and perhaps not touch the 401K (much).
I enjoyed seeing your picture by the way. I'm too chicken to do that.
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