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- Joined
- Jun 25, 2005
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- 10,252
It also doesn't matter if the special tax rates go away. That's a red herring as well. If the special rates go away, then taxes on dividends from stocks will be the same as taxes on dividends from bonds, so you will not hurt yourself if you have tax-efficient index funds in a taxable account. If the lower cap gains tax rates go away, they will still be lower than your marginal income tax rate and you will still benefit from tax efficient stock index funds in your taxable account. Plus you can use your carryover losses to offset the gains anyways.
Like I said, these things thrown in by CFB are simply red herrings and do not affect the outcome of holding only (if possible) tax-efficient investments in taxable accounts.
If you have $5MM portfolio of which only $100K is in tax-advantaged accounts, you are gonna have to have some bonds in your taxable account. They will likely be tax-exempt muni bonds. But if you are like many folks with more assets in tax-advantaged accounts than you have in taxable accounts, then your taxable accounts can be filled with tax-efficient stock index funds while your tax-advantaged accounts will have both tax-inefficient assets like bonds and bond funds as well as tax-efficient stock index funds.
Like I said, these things thrown in by CFB are simply red herrings and do not affect the outcome of holding only (if possible) tax-efficient investments in taxable accounts.
If you have $5MM portfolio of which only $100K is in tax-advantaged accounts, you are gonna have to have some bonds in your taxable account. They will likely be tax-exempt muni bonds. But if you are like many folks with more assets in tax-advantaged accounts than you have in taxable accounts, then your taxable accounts can be filled with tax-efficient stock index funds while your tax-advantaged accounts will have both tax-inefficient assets like bonds and bond funds as well as tax-efficient stock index funds.