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Old 03-27-2012, 07:05 PM   #1
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I have a taxable account do I keep putting extra money in there. When do you buy I-bonds?
Do you use these to re-balance
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Old 03-27-2012, 07:19 PM   #2
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I have a taxable account do I keep putting extra money in there. When do you buy I-bonds?
Do you use these to re-balance
If you have additional money to invest consider buying equities or index equity mutual funds. They won't throw off alot of income while you are working that gets taxed. Then when you do liquidate them in retirement any gains that have been acheived gets taxed at long-term capital gains rates which (for now) are taxed lower than income.

You may also consider keeping your bond component inside the tax-deferred accounts so that the income that they generate doesn't get txed right away and can snowball until you retire.

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Ideal investments for tax deferred and tax advantaged accounts: Taxable bonds, commodity funds, REITS (Real Estate Investment Trusts), Individual TIPs (Treasury Inflation Protected Bonds), and individual stocks that pay a large dividend. These investments may face unfavorable tax treatment in a taxable account and therefore are better suited for tax advantaged accounts. If you actively trade stocks (not recommended) it may be beneficial to do so in an IRA to avoid short-term capital gains, which are taxed at ordinary income tax rates.

Ideal investments for taxable accounts: Individual stocks that pay no dividend, or a small dividend, index stock funds and ETFs, tax managed funds, and any tax-free investments such as municipal bonds and funds.
Ideally you would want to hold taxable account assets for longer than 1 year to be eligible for long term capital gains treatment. Investment assets eligible for long term capital gains or are tax-free should be held in taxable accounts.

The details may seem trivial, but where an asset is placed can make a significant difference in the net amount your investments are worth. Paying fewer taxes and allowing years of compounding to work in your favor can really increase your net investment returns.
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Old 03-27-2012, 07:21 PM   #3
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Buy Berkshire Hathaway stock in a taxable account. It pays no dividends at all. When you cash it out, you'll only pay long term capital gains tax.
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Old 03-27-2012, 07:30 PM   #4
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I do all rebalancing in tax-advantaged accounts so that there are no tax consequences.

In a taxable account, I only do tax-loss harvesting in order to reduce my taxes.

One can also attempt to put the bulk of their international funds in taxable (only if tax-advantaged is full of other things) in order to make the most use of the foreign tax credit. That is, your international fund dividends are going to be reduced by the foreign taxes that are taken out whether you hold the shares in taxable or tax-advantaged, but only if the shares are in taxable can you claim a credit for those foreign taxes that you paid.
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Old 03-27-2012, 07:54 PM   #5
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I am more or less in the same boat!
When doing my AA, I discovered I have a lot of cash in my taxable accounts.

I need to add bond funds to meet the right AA. I am leery because of
bond trends and interest rate!

Vanguard suggested Minicipal BF short term. Are there any other options for me for (Bond funds) in a taxable account?

Thanks.
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Old 03-27-2012, 08:29 PM   #6
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Vanguard suggested Minicipal BF short term. Are there any other options for me for (Bond funds) in a taxable account?

Thanks.
I Bonds would be a good idea up to your limit of 10k for an individual or 20k for spouses. See Life, Investments & Everything: If You Want To Earn 3% Risk Free On Your Cash, Hurry Up

After that, pick something high quality and very short duration, floating rate funds, or perhaps some junk.
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Old 03-27-2012, 09:10 PM   #7
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I Bonds would be a good idea up to your limit of 10k for an individual or 20k for spouses. See Life, Investments & Everything: If You Want To Earn 3% Risk Free On Your Cash, Hurry Up

After that, pick something high quality and very short duration, floating rate funds, or perhaps some junk.
+1

They are also tax deferred.
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