Join Early Retirement Today
Thread Tools Search this Thread Display Modes
learning about tax efficiency
Old 11-22-2008, 10:12 AM   #1
Recycles dryer sheets
Keyboard Ninja's Avatar
Join Date: Apr 2008
Posts: 157
learning about tax efficiency

Ok so now I'm on to John C. Bogle's "The Little Boof of Common Sense Investing". After reading the first six chapters I believe I am going to get rid of my Fidelity Freedom 2040 Fund {FFFFX} and put the money into the Fidelity Four-in-One Index Fund {FFNOX}. The buy and hold forever thing is just alot easier to manage.

For the sake of learning...

The question is about tax-efficiency. Apparently managed funds like the FFFFX trade often and therefore incure capital gains taxes. So would this be better in a traditional IRA? Also would the opposite be true for the FFNOX?

Instead of getting angry I just LOL. Can't waste time with stupid people.
Keyboard Ninja is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-02-2008, 07:47 PM   #2
Dryer sheet aficionado
Join Date: Feb 2008
Posts: 29
I'm not sure about FFFFX, but... FFNOX is roughly 15% bonds, so it's not particularly tax efficient.

nickel is offline   Reply With Quote
Old 12-02-2008, 09:44 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
harley's Avatar
Join Date: May 2008
Location: Following the nice weather
Posts: 5,796
Anything that is a good investment but not tax efficient should go into a Roth, IMHO. If you put it into a traditional IRA you may end up with something that currently might throw off a 15-25% taxable load (short and long term CGs, dividends, interest, etc) into a vehicle that you might end up paying 35-?% in the future. At least at this point, the Roth will negate all of that damage if you can afford the up front tax on the original investment.
"Good judgment comes from experience. Experience comes from bad judgement." - Will Rogers
DW and I - FIREd at 50 (7/06), living off assets
harley is offline   Reply With Quote
Old 12-02-2008, 11:12 PM   #4
Full time employment: Posting here.
Urchina's Avatar
Join Date: Feb 2008
Location: Central Coast, California
Posts: 879
I really liked the Boglehead's Guide to Investing for their description of tax-efficiency and how to maximize it. It finally helped gel everything for me. I think they did a better job than Bogle's Little Book in this particular area.

No comment on your proposed securities switch -- I don't know anything about either of those funds.

Good luck!
"You'd be surprised at how much it costs to look this cheap." -- Dolly Parton
Urchina is offline   Reply With Quote
Old 12-03-2008, 04:32 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,019
Morningstar has a relatively new data item, Tax Cost Efficiency (TCE) for mutual funds.
you can go there for free, enter your funds in a dream portfolio and see what numbers are assigned. if you search on "Tax Cost Efficiency" it will give you a definition. you can also look at Turnover Ratio for funds.
with all the panicking and redemptions in mutual funds this year, i doubt any funds will be at their normal TCE.
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Advice on retirement accounts: tax efficiency Lusitan FIRE and Money 7 07-22-2008 07:05 PM
High Efficiency Furnace? saluki9 Other topics 35 05-09-2008 07:22 AM
SP500 Index fund tax efficiency prgsdw FIRE and Money 4 04-13-2008 07:46 PM
Market Efficiency Q devo FIRE and Money 17 12-17-2006 11:51 AM
ETF in taxable account (tax efficiency) fire5soon FIRE and Money 0 09-17-2004 11:55 AM


All times are GMT -6. The time now is 05:17 PM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2016, vBulletin Solutions, Inc.