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Have extra money to invest, looking for most tax efficient vehicle
Old 09-25-2014, 10:48 AM   #1
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Have extra money to invest, looking for most tax efficient vehicle

I am in the 25% fed tax bracket and have $90k in savings account and looking to move $50k-$60k. I would not like to generate any interest or dividend income that would be taxed. I already invest in both Roth and 401k. I would also like to invest part of each paycheck in the same manner.

Are municipal bonds or municipal bond funds my only choice? I am in my mid 50's and have 30% of portfolio allocated to bonds, so not sure if I should increase allocation.

Would appreciate any feedback regarding best investment choices.


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Have extra money to invest, looking for most tax efficient vehicle
Old 09-25-2014, 11:05 AM   #2
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Have extra money to invest, looking for most tax efficient vehicle

I think your best bet would be to investigate individual growth stocks. They would not be taxable until you sell them. However, I think you're making a mistake trying to totally avoid taxes. If you can find a dividend paying growth stock, I think your overall return has a chance to be better than a "tax efficient" investment. You should be concerned with your after tax return, not avoiding taxes in my opinion.

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Old 09-25-2014, 11:41 AM   #3
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Just curious, do you have a kid in the 11th grade?
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Old 09-25-2014, 11:49 AM   #4
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I assume that you have no credit card debt, and have a low (<4%) mortgage rate. If not, pay down debt that is more than ~5% first.

Then, look at index ETFs. Growth stocks are fine, but sometimes they do not grow. Look at IVW (S&P 500 growth) as a free ETF trade at Fidelity if you want growth, Or even IVV (S&P 500)
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Old 09-25-2014, 12:00 PM   #5
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Deferred compensation account if available to you.

Charitable giving account is tax deductible and tax free coming out.

Stocks taxed favorably and deferred.

Ibonds are tax deferred.

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Old 09-25-2014, 01:30 PM   #6
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I'd buy muni bonds that take you to a 60/40 ratio of stocks to bonds, especially if you're in an income tax State. I'd be careful of a long term mutual unless you'll plan on hanging on to them for a long time.
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Old 09-25-2014, 01:40 PM   #7
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Perhaps the most tax efficient investment is one that loses money because then you get to take a tax deduction for that. Is that really what you want?

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