Taxable Portfolio Suggestions Please

Essentials Popular Topics

My Favorite Forums Join Discuss to setup a list of your favorite forums.

Forums > Mutual Funds > Taxable Portfolio Suggestions Please

All Posts Forums Blogs Experts Sharing Topics Join

JohnHenryBonham 05-14-2008, 7:53 PM | Post #2517903 | 4 Replies

I posted this on another M* board but haven't gotten any responses yet...maybe here?

I am trying to set up a taxable portfolio with about 10 years to go until retirement. I will receive a COLAd pension upon retirement. I do already have a 401K and Roth IRAs set up. They however will be used much later (if ever) in retirement. So far my thoughts are either or a combo of the following:

1. Invest all (or at least a very large portion) in VG Wellington (VWELX) and live on the dividends and reinvest the capital gains distributions.

2. Invest all (or at least a very large portion) in a fund like Oakmark Equity and Income (OAKBX) and take 4% per year of the total balance. Yes, I realize I would be dealing with market fluctuations by I think this is doable.

3. Invest a large portion in VG High Yield Tax Exempt Fund and the rest in a collection of mutual funds. I was thinking of DODWX, PRPFX, OAKBX, etc. Then use a portion of the yearly capital gains distributions to up my bond fund balance and therefore increase my monthly dividend checks to keep up with inflation.

Any thought or suggestions would be appreciated. Thanks. JHB

Related Topics 401(k)High Yield IRAs Tax Exempt

Reply Quote Contact Flag Favorites Print Thread

Page 1 of 1

Re: Taxable Portfolio Suggestions Please

mwleach 05-14-2008, 8:24 PM | Post #2517913

Hi, John.

I could quibble about details, but from a big picture perspective, I think your ideas sound good.

Personally, I would feel more comfortable with your options 1 or 2 rather than 3. Not that I have anything against VG High Yield (I own some), but not for a "large portion". Also, given where tax rates might go in the future, you might consider anything you do invest in the "high yeild" fixed income category to go to the Vanguard High-Yeild Muni fund vice VG High Yield. (I am thinking of switching myself.)

One other point: You might think about putting a small amount into a gold or precious metals fund - or maybe a commodity ETF or mutual fund (though the latter options are not very tax-efficient.) The reason I say this is because you mentioned you have a COLA'd pension. You could look at this as equilavent to a big position in TIPs or I-bonds. Then consider what might make the position less attractive? That would be rapidly rising inflation where the "official" numbers did not really track actual inflation (or, perhaps, if COLA's on government pensions were capped some time in the future - unlikely any time soon but possible eventually IMO). I'm not saying this is going to happen - but it could.

For such contingencies, you would want an inflation "hedge" for at least 5% and maybe 10% of your portfolio. The GLD ETF might be worth considering; the mining shares ETF (GDX) might even be better, as it would be more volatile and give you more 'bang for the buck" IMO (and a lower tax rate on sales - any cap gains from GLD are taxed at the collectibles rate, currently 28%).

A gold position is non traditional, and it might be tough to stomach buying in now after the recent runups in precious metals and commodities. But that's my 2 cents. Regards.

MWL

Related Topics precious metals High Yield pension tax rate

Reply Quote Contact Flag Favorites

Re: Taxable Portfolio Suggestions Please

Exactduke 05-17-2008, 4:18 AM | Post #2518790

I would probably go with your 1st choice, and Wellington. For myself, in a taxable fund, I might use all index funds - s&p500 index, extended market index, international index, and lastly intermediate term bond index.

Related Topics funds Index Funds bond index

Reply Quote Contact Flag Favorites

Re: Taxable Portfolio Suggestions Please

kerryvan

05-17-2008, 5:48 AM | Post #2518795

With the info you shared no one can give good advise on your portfolio!

What you need to do is look at all your investments, not just that you have money stashed in different accounts, it doesn't really matter where the money is stashed, except for tax reasons..

remember, just because you retire, that doesn't mean your money should. So a % in each fund and indicating if taxable or tax free is needed to get a good picture. Also, the rules of investment strategy change depending on the total holdings. Someone wanting to retire with 300K will have different needs than someone with 1 Mil. concerning how to make investments.

until you share more any advise would be as good as play the lottery

Related Topics funds Portfolio investment tax Tax Free

Reply Quote Contact Flag Favorites

Re: Taxable Portfolio Suggestions Please

Limoman 05-17-2008, 6:25 AM | Post #2518804

posted this on another M* board but haven't gotten any responses yet...maybe here?

RE: Probably since it was in the Retirement Board and it was during most of their Siesta time...LOL

Re: Taxable Portfolio Suggestions Please Limoman 20 hours, 38 minutes ago | Post #2518477 VoteControl.prototype.SetVoteStatus('unvoted','2518477');

IMHO? since I've only been doing this ( retired) for a few yrs..

Guess it all depends on at least what your Tax Bracket is vs what your CPA says?

>If your in a high Tax bracket and only need Barely Inflation rtns, play the TE fund

And me thinks it's kinda early to go the conservative route yet.. ( maybe in 5 yrs B4 Retirement, not 10 )

Thus at the Least?

OAKBX only ( 12% apy/10 yr Outperformer )

I'd go with 2 least 2 Balanced funds> Adding PRWCX if not adding a 3rd, like FPACX

Why? It's all done for you and has a very high TE rating ( 4/5) and Reinvest Divs/CG's now and when that time comes, just go cash, take out what you need and reinvest the net balance..vs Reinvesting Divs/CG's..

and why counter point yourself with a VWELX? a 7.3% apy /10 yr underperformer and leave $ on the table?

Then of course: If you have more than enough $? Maybe you should consider "going for the Gold" and try to increase it for a Legacy account..to support your favorite Chariities, or who's to say, your kids, grandkids may need it . (let alone the wife may want to get another husband after your gone and have some real fun with him...LOL)

Myself? I'd rather pay15- 28% taxes on a 12% vs on a 7.3% vs 0% on a 3-4%..

And I ck the Funds 'After Tax" Rtns.. not there Pre-Tax.. and compare them to the comparable Index fund..

and I use the 2% difference Rule > willing to pay More Taxes on a Higher Rtn Fund ( 2% + apy) than Less taxes on a Lower Rtn Fund.. works for me..

EG; Which would you Want to pay more taxes on ? A CGMFX that did about +80% rtn last yr or pay less on a Index that did only 7%-12%...?

I Loved having to pay $13,800 in Cap Gain taxes last yr! Since it Was one of my biggest Gross and Net Income yrs since retiring... (Thanks to Funds like CGMRX, CGMFX, FLVCX , PRLAX,WWNPX and their top 5 stocks got the job done... again..)

As the old saying > Thank you PaneWebber..

For Index Fund advice? Try the > Vanguard Diehards Discussion Board

Bogleheads :: View topic - Asking Portfolio Questions

ck out this site as well..

FundAdvice.com - Suggested Portfolios

have fund...