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Baxate posted:Not necessarily. Everyone has read the news that the Fed is planning to raise rates this year, so that's "priced in" as it were. Eh, it's hard for me to believe the market is 100% efficient. Just... mostly. Paul Proteus posted:Also - I assume the $6000 backdoor rothed amounts count against the amount here too for the total $40,500? I'm not really clear enough on how her plan works to help with the other questions, just wanted to note that contributions have limits, not conversions. So the $6k counts against the $6k IRA contribution limit, but converting it to Roth doesn't affect anything else. Duckman2008 posted:Other than their website and app always kind of sucking , vanguard hasn’t given me any concerns or indications on being worse than the others. So like, I guess a good concern, but vanguard is both the OG and client owned. I think the main point is that there's no reason to fanboy over any of them, and Vanguard should be partially judged on their bad website/app and phone-only support. As someone who only uses Vanguard right now, I agree.
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Jan 4, 2022 06:43
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Duckman2008 posted:Other than their website and app always kind of sucking , vanguard hasn’t given me any concerns or indications on being worse than the others. So like, I guess a good concern, but vanguard is both the OG and client owned. Being technologically behind isn't just about a pretty website. I remember being annoyed back when I first opened an account that they were limited to a 10-character password, & I feel like it took them a while to get on the ball with 2FA. No complaints about where they are today, though, and phone support has been good the few times I used it.
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Jan 4, 2022 06:52
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I pushed Vanguard to my friend over the other two specifically because of the co-op nature, and because I've had a good experience in the 8+ years I've been with them. But if they can't get their poo poo together for multiple months and my friend can't even open an account with them without hours of hold time on the phone (if that's even successful), I see no reason for them to wait for Vanguard like it's going to come back home from the war. I wouldn't blame someone for choosing Schwab or Fidelity at that point, since they'll actually let you, you know, use their platform and start making your money work for you.
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Jan 4, 2022 06:56
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GoGoGadgetChris posted:The current conventional wisdom that bonds lose money and stocks only go up will eventually, suddenly, and without warning, no longer be true Well if bonds suddenly start yielding a bunch more then all these bonds I bought will surely be worth something!
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Jan 4, 2022 06:58
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Vox Nihili posted:Well if bonds suddenly start yielding a bunch more then all these bonds I bought will surely be worth something! i think more people should be looking at tmf, personally
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Jan 4, 2022 09:23
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SpelledBackwards posted:I pushed Vanguard to my friend over the other two specifically because of the co-op nature, and because I've had a good experience in the 8+ years I've been with them. But if they can't get their poo poo together for multiple months and my friend can't even open an account with them without hours of hold time on the phone (if that's even successful), I see no reason for them to wait for Vanguard like it's going to come back home from the war. Yeah, if that’s the issue they’re having I would agree with that.
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Jan 4, 2022 14:12
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Vox Nihili posted:Well if bonds suddenly start yielding a bunch more then all these bonds I bought will surely be worth something!
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Jan 4, 2022 14:20
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I've had a Schwab account for years... can't remember why I opened it instead of vanguard. But they've never given me a reason to want to switch. I had a question about Roth IRAs a couple weeks ago & I had someone on the phone with an answer in like 10 minutes. I also didn't feel like they were trying to rush me off the call to meet metrics or anything dumb like that.
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Jan 4, 2022 14:27
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spf3million posted:Not how bonds work Yeah, bonds go down due to rates flattening, and they also go down when rates go up. So right now, with rates at 0... they can still only go down. (I don't know how bonds recover from their current state, beyond how I bonds are tied to consumer price index combined with the set rate)
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Jan 4, 2022 14:32
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Space Fish posted:Yeah, bonds go down due to rates flattening, and they also go down when rates go up. So right now, with rates at 0... they can still only go down. yall need to clean up bond terminology - when you say bonds "go down" do you mean that coupon rates on newly issued bonds go down, that yields on bonds go down, or that the price of various bond funds go down?
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Jan 4, 2022 16:09
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You guys are Goofus Maloofuses if you didn't catch ol Vox Nihili being a jokester there
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Jan 4, 2022 17:21
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I have a Traditional IRA from a rollover 401k that I don't contribute to, and a Roth IRA that I max each year. If I want, say, an 80:20 mix of stocks:bonds, do I want each of those accounts to generally be around 80:20, or is there a strategy of loading up one with stocks and one with bonds (relatively) so you can have options in how to take distributions down the road?
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Jan 4, 2022 17:55
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Here are a lot of words on Bogleheads about tax-efficient fund placement
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Jan 4, 2022 18:05
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Happiness Commando posted:Here are a lot of words on Bogleheads about tax-efficient fund placement Thanks. It looks like these two passages essentially answer my question. quote:If your investments are all in tax-advantaged accounts, fund placement will not have a large impact on your returns. quote:If all else is equal (and it often isn't, because you may have different options in your 401(k) and your Roth IRA), it is slightly better to have the fund with the highest expected return in your Roth account or HSA, because these accounts are free from Required Minimum Distributions (RMDs), [note 6] are not counted as income for making Social Security taxable, and probably are less subject to the risk of changing tax rates.
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Jan 4, 2022 18:35
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I have a few accounts through Vanguard (Roth IRA and a roll-over 401k), my current job's 401k is through Alerus, but I have Vanguard funds in them. Is there a way I can see the current Alerus accounts in my Vanguard account without looking at them independently?
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Jan 4, 2022 20:48
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Space Fish posted:Yeah, bonds go down due to rates flattening, and they also go down when rates go up. So right now, with rates at 0... they can still only go down. The federal funds rate is near zero, but that doesnt make bond yields zero. If you are holding bonds with an appropriate duration, yields going up is a good thing. Yes, prices go down in the short term, but over time the increased interest payments more than make up for it. There's a good bogleheads thread with graphs about this, Just watch out for duration mismatch. If you are saving money for a purchase in 1-2 years by holding a bond fund with a 10 year average duration, you are exposing yourself to interest rate risk. If you're holding the same fund in a retirement account you wont touch for 30 years, just ignore the short term noise, you'll be fine. edit: here's the thread with the graphs: https://www.bogleheads.org/forum/viewtopic.php?f=10&t=360575 drk fucked around with this message at 21:18 on Jan 4, 2022 |
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Jan 4, 2022 20:51
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My only gripe with Vanguard is they make having your personal accounts set up in your trust a massive PITA compared to TD Ameritrade (who only requires some forms faxed in). Vanguard needed phone calls, copies of the trust docs, etc etc etc and then they have to set up a new account with the dumbest name imaginable like "Keyser Von Sozestein, UA 04-14-2011 UA 04-11-2011 Keyser Von Sozestein Living Trust—Trust Brokerage—8842069*". When I tried to have my Mom's TDA Trust Account transferred to Vanguard so she didn't have to pay $75 to buy VTSAX, it was going to be even worse and would also be including conference calls with her so I just kept her at TDA and had her get VTI instead.
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Jan 4, 2022 21:04
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Any Vanguard people who invest in target-date funds within their regular brokerage accounts get some kind of massive LT cap gain that they don't recognize? I checked in on my account today, there's a transaction on my account history for VFORX that shows -$20k as "Reinvestment (LT gain)" on 12/29/21, with a subsequent $20k "Capital gain (LT)" on the same date. I only sold around $1200 worth of VFORX in all of 2021 and $8000 worth in 2020, nowhere near that much in the previous 3 years. On hold with Vanguard now but it's attempt #2 thanks to disconnects in the handoff from their triage people.
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Jan 4, 2022 21:32
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MJP posted:Any Vanguard people who invest in target-date funds within their regular brokerage accounts get some kind of massive LT cap gain that they don't recognize? This will happen most years and is a reason you should not hold funds-of-funds in taxable accounts. VFORX is a fund that just holds 49% VTSAX, 32% VTIAX, etc. Those percentages shift a little every year as we get closer to 2040, and also those component funds will all have different returns every year, so every year the fund has to sell some of those and buy others to rebalance. This causes capital gains tax and is not optimal for a taxable account. Better to just buy the components yourself so you can decide exactly when you want to incur gains taxes.
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Jan 4, 2022 21:43
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MJP posted:Any Vanguard people who invest in target-date funds within their regular brokerage accounts get some kind of massive LT cap gain that they don't recognize?
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Jan 4, 2022 21:46
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BaseballPCHiker posted:Best explainer I've seen on this - https://old.reddit.com/r/financialindependence/comments/rsidow/vanguard_target_date_funds_dropped_as_much_as_14/ good post and a massive, lovely surprise for anyone holding a vanguard TDF in a taxable account. quoting it: quote:Why did this happen? and from VFORX’s history, Capital Gains History Capital Gains History Additional Information Date Per Share Amount Reinvestment Price 12/29/21 $4.9931 $46.97 12/30/20 $0.0961 $45.36 12/28/18 $0.028 $32.31 12/28/17 $0.0097 $36.30 just a totally unprecedented mega cap gains distribution for all their TDFs. someone out there must be researching “why” to get a better answer than the reddit dude.
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Jan 4, 2022 21:51
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Eyes Only posted:This will happen most years and is a reason you should not hold funds-of-funds in taxable accounts. Yeah, they finally got on the line - their explanation was that this is the long-term capital gains that the fund has realized by selling profitable shares thanks to the funds-of-funds doing their fund-of-fund things. I have VFORX in my post-tax because I didn't go whole hog into my 401k for a long time, and am presently whole-hogging it and maxing the 401k + HSA. I recall doing some number crunching a while ago, and it didn't really make much sense to sell VFORX at this point due to capital gains - my total unrealized gain is around $25k. Should I be selling that VFORX in my brokerage to do something more long-term advantageous with it? It's entirely retirement money, along with $157k unrealized gains from VXUS (on $82k cost, holy poo poo) - I have no qualms letting it sit untouched for the next 15 years while I keep slamming the pretax contributions. Likewise I don't want to do something hasty and stupid because of a one-time 'rona bump. Once it's tax time I'll be sitting down with the accountant to see what my LT rate looks like, and hopefully having like $14k in charitable contributions will help soften the blow. MJP fucked around with this message at 21:54 on Jan 4, 2022 |
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Jan 4, 2022 21:52
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MJP posted:Yeah, they finally got on the line - their explanation was that this is the long-term capital gains that the fund has realized by selling profitable shares thanks to the funds-of-funds doing their fund-of-fund things. bogleheads, naturally, has been all over this. I just found a decent explanation. and it’s more complicated than a simple “it’s a fund of funds”: vanguard adjusted share class details for available TDFs, causing redemptions in your class of TDF, meaning they could not rebalance via inflows as in every other year. essentially, they helped one institutional class of customer, and you paid dearly in the process. from the last post in https://www.bogleheads.org/forum/viewtopic.php?f=10&t=362699&start=50 quote:Thank you. This post was very useful. Connecting your dots, effectively you are saying their change to a lower minimum of $5M (vs $100M before) on the institutional class target retirement fund likely triggered big redemptions from regular class to fund the institutional class in non-taxable accounts, as evidenced by the annual report through Sep-2021, and perhaps may continue until it reaches equilibrium, during which time it will create huge cap gain distributions to all that hold these TD funds, in the process hitting those with high tax brackets in high tax states double extra hard for their sin of having held these in taxable accounts. There is nothing you can do at this point - if you sell you trigger more tax, and if you don't they may trigger more tax for you in 2022 as well. I am perplexed why Vanguard is even offering such a tax-inefficient product in a taxable account.
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Jan 4, 2022 22:08
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drk posted:If you are holding bonds with an appropriate duration, yields going up is a good thing. Yes, prices go down in the short term, but over time the increased interest payments more than make up for it. There's a good bogleheads thread with graphs about this, This is true, though I would clarify: If you are holding bond funds with an appropriate duration, yields going up is a good thing. Math aside, it's pretty simple, over time the lower-yield bonds held by the fund are replaced with higher-yield bonds. MJP posted:Should I be selling that VFORX in my brokerage to do something more long-term advantageous with it? It's entirely retirement money, along with $157k unrealized gains from VXUS (on $82k cost, holy poo poo) - I have no qualms letting it sit untouched for the next 15 years while I keep slamming the pretax contributions. As you're seeing now, holding the target date fund in a taxable account introduces significant tax drag, although it's not usually anywhere near as much as this particular instance. But having to pay taxes on $25k in gains to get out of it is not great either, and I'm not sure we can tell you whether it makes sense to sell. I certainly wouldn't invest any more into it. pmchem posted:bogleheads, naturally, has been all over this. I just found a decent explanation. and it’s more complicated than a simple “it’s a fund of funds”: vanguard adjusted share class details for available TDFs, causing redemptions in your class of TDF, meaning they could not rebalance via inflows as in every other year. essentially, they helped one institutional class of customer, and you paid dearly in the process. Thanks for sharing, was very interested in finding out more about this.
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Jan 4, 2022 22:10
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pmchem posted:good post and a massive, lovely surprise for anyone holding a vanguard TDF in a taxable account. quoting it: One suggestion down further in the linked reddit thread was that the annual report indicated each target date fund had a very large swing in capital share redemptions between 2020 and 2021: quote:The reason why is in the annual report. These target date funds saw a large percentage of shares redeemed over the course of the year. Search for "Capital Share Transactions" to see the relevant entries in the table for your particular fund.
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Jan 4, 2022 22:12
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God drat, Vanguard must have heard me singing its praises and said Hey Hold My Beer RIP to retail traders as always No cap gains on their Life Strategy with the same-ish holdings so it definitely wasn't just a rebalance of domestic/Intl.
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Jan 4, 2022 22:20
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So essentially Vanguard lowered the minimum for institutional class accounts, which caused everyone to buy the institutional shares and sell their old, non-institutional shares, which triggered cap gains? Seems like I must be missing something?
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Jan 4, 2022 22:30
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I remember seeing a lot of articles around Thanksgiving about "target fund investors in for capital gains surprise" but didn't think much of it. Looks like they said this was happening back in November, but who the hell reads the news on their fund-and-forget accounts! https://advisors.vanguard.com//iwe/pdf/taxcenter/FAPYEEST.pdf Fidelity burned its investors a couple years ago doing the same thing, and it turned out to be because they completely sold off their shares of Fidelity's Total Stock Market to buy Fidelity's New Version of Total Stock Market. Considering Vanguard's Institutional funds didn't have the payout, it must be a result of of tons and tons of employers "upgrading" from the 0.15% to the 0.09% expense ratio classes Chasing basis points sure can be costly
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Jan 4, 2022 22:45
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Maybe this is part of the reason they decided to merge their target retirement share classes next month? The scary thing is that I would think it's technically possible for this to happen with any mutual fund, however unlikely. Another point in favor of ETFs I suppose.
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Jan 4, 2022 23:11
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Residency Evil posted:So essentially Vanguard lowered the minimum for institutional class accounts, which caused everyone to buy the institutional shares and sell their old, non-institutional shares, which triggered cap gains? nope that's pretty much it. see this blog post for a summary take on it (also mentions the upcoming 2022 TDF share class merger): https://www.mymoneyblog.com/vanguard-target-retirement-funds-nav-drop-cap-gains-distribution.html runawayturtles posted:Maybe this is part of the reason they decided to merge their target retirement share classes next month? yeah, until ETF tax laws are changed, they have a huge benefit in this regard due to the creation/redemption process also, in another vanguard "yikes-a-roo", that blog post linked above also mentioned this, which I did not know about : https://www.inquirer.com/business/vanguard-ceo-mortimer-tim-buckley-rma-retiree-medical-account-employees-20211009.html vanguard severely cut medical benefits for employees and retirees with no notice in the middle of a pandemic, lol jesus christ. the CEO had to walk it back and apologize. "The email and video mea culpa represented an abrupt about-face after Monday’s announcement that Vanguard was terminating the retiree medical accounts that very same day." can you imagine any of this happening when bogle was in charge?
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Jan 4, 2022 23:26
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The taxable distribution, if reinvested, has bought more shares of the asset at a higher price, resetting the cost basis of those shares higher, lowering your eventual cap gain in those shares, do I understand that right? If so, then it's important to remember in the midst of all of this that all assets you hold in long-term non-tax-advantaged accounts will eventually cost you their net appreciation in cap gains taxes, unless you die before you sell them. E.g. if you planned to sell those funds during retirement, you'd have paid this cap gains tax at that time. Maybe your cap gains tax rates will be lower then! Or maybe they'll be higher. But you'll be taxed something, now or later. It sucks to pay tax now instead of later, generally speaking, because by not paying tax now, you can take that money and grow it more. So this still really sucks. But it might take the sting off a bit if you keep all of the above in mind; at least some of that tax you're paying now, is instead of paying later. Disclaimer: I'm still not certain I understand exactly what happened, so the above may not be correct. As far as MJP's question: you can decide when to sell VFORX (and pay taxes on your gains) whenever it makes sense, perhaps in consultation with your tax preparer; but in the long term, yes, you should consider shifting to tax-efficient investments in your taxable account, and shift investments within your tax-advantaged accounts to restore the overall portfolio asset balance that you want to have, year by year. I do not think target retirement funds are generally appropriate for people to hold in taxable accounts.
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Jan 4, 2022 23:26
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pmchem posted:
Hmm, I thought this sounded like ragebait so I dug in a bit. Vanguard used to have a "Retirement Medical Account" benefit where employees over 40 got $5,500 per year (or $1,000 if retired). Balance was inaccessible until retirement, could not be invested, and every penny was forfeit if you left the company for non-retirement reasons. It has been replaced by an annual $2,400 employer contribution to an HSA (or $4,800 for Families). Huge upgrade! Not terribly relevant to the thread, but nice to see them take good care of their own I guess
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Jan 5, 2022 00:18
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Dueling thoughts: both glad and sad I'm not rich enough to worry about tax efficient fund structuring.
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Jan 5, 2022 00:24
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Jows posted:Dueling thoughts: both glad and sad I'm not rich enough to worry about tax efficient fund structuring. Millions of americans don't have employer-sponsored plans and are stuck with just the $6k of IRA deposits annually; if they are able to scrape together some more money, they will need to eventually worry about tax-efficient fund structuring. That we rely on employers to voluntarily provide the bulk of the tax-advantaged savings options to people is total bullshit, but there it is.
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Jan 5, 2022 00:36
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I'm doubting myself on this but my employer gave me a huge 65,000 RSU grant number over 4 years. They're doing a sell to cover agreement so I'm guessing I don't need to worry too much about taxes? They're suppose to start vesting every quarter. Our stock price is hovering around $20-22 these days. This might be a better question for the income tax thread. cheese eats mouse fucked around with this message at 02:22 on Jan 5, 2022 |
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Jan 5, 2022 02:18
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Can someone point me in the right direction on understanding how "tax efficient" structuring works? As someone who only has a Roth IRA in a TDF fund, a roll-over from a precious place and a small brokerage account, is this something I need to play around with?
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Jan 5, 2022 02:35
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obi_ant posted:Can someone point me in the right direction on understanding how "tax efficient" structuring works? As someone who only has a Roth IRA in a TDF fund, a roll-over from a precious place and a small brokerage account, is this something I need to play around with? Basically some types of investments generate income or have "internal" buy/sell activity that triggers capital gains taxes. But you don't pay capital gains taxes on those events on investments that are inside a tax-advantaged retirement account, like IRAs and 401(k)s. So, if your total portfolio of assets includes some categories that are "more tax efficient" and some that are "less tax efficient," then you try to make sure you're doing the more tax efficient stuff in your taxable brokerage account and the less efficient stuff in your tax-advantaged account where it doesn't matter. Beyond that, you can actively seek investments within a given asset class, that are more tax efficient. There are mutual funds specifically structured to be tax-efficient, both stock and bond funds, and there are also actual government bonds (not funds, but just the bonds themselves) that are tax-free. Your Roth IRA is tax advantaged. Your roll-over might be tax advantaged depending on what it is. Your small brokerage account probably isn't. What's your desired asset allocation? It might be possible to just hold the least-tax-generating asset in your brokerage account. e. Also it's worth noting that if you don't have a large total portfolio size, you're probably not paying a lot in taxes on it regardless, so trying to save a few points of tax may not be worthwhile.
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Jan 5, 2022 02:51
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cheese eats mouse posted:I'm doubting myself on this but my employer gave me a huge 65,000 RSU grant number over 4 years. They're doing a sell to cover agreement so I'm guessing I don't need to worry too much about taxes? They're suppose to start vesting every quarter. Our stock price is hovering around $20-22 these days. That's big, are you sure you're talking shares and that isn't the dollar amount that will become shares, based on the stock price at X time right before the grant is actually made? I'm not saying I don't believe you but that's a lot. My four year grants are 20x smaller than what you're talking about lol. In any case, sell to cover should have you... covered in terms of appropriate withholding unless you've given your company bad info. If you sell the shares you will be responsible for paying capital gains on any increase in value, it's not magic free money that you already paid taxes on.
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Jan 5, 2022 03:04
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cheese eats mouse posted:I'm doubting myself on this but my employer gave me a huge 65,000 RSU grant number over 4 years. They're doing a sell to cover agreement so I'm guessing I don't need to worry too much about taxes? They're suppose to start vesting every quarter. Our stock price is hovering around $20-22 these days. Do NOT assume you're good. Sell to cover could be as little as 22% federal, which could easily be lower than your marginal tax bracket.
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Jan 5, 2022 03:05
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obi_ant posted:Can someone point me in the right direction on understanding how "tax efficient" structuring works? As someone who only has a Roth IRA in a TDF fund, a roll-over from a precious place and a small brokerage account, is this something I need to play around with? For IRAs, 401ks and similar you don't pay any taxes until you start to take money out during retirement. Dividends or other cash payouts stay in the account and don't affect your taxes right now. For a normal taxable brokerage account you do have to pay taxes on dividends or other cash payouts, even if they are automatically reinvested for you. You should get a Form 1099-DIV from the broker every year listing how much income you got from that stuff so you can report it on your taxes. That could be up to maybe a couple of percent of your balance as reportable income every year, depending on how you have your money invested. You can choose funds that are designed to minimize this if you want. Target-date funds will generate a lot more of this of taxable income money because they have to buy & sell stocks more often to keep their target balance where it should be. That is why everyone recommends that you not use target-date funds in a taxable account. The situation that started this discussion was a worst-case scenario where a target date fund did stuff that resulted in an unusually high amount of taxable money generated, which is going to be a nasty surprise on April 14 for people who were holding that fund in a taxable account. It had no effect on people holding it in a tax-advantaged account. For most people the only real strategy you need is to not have target-date funds in a taxable account. If you really want to minimize taxes then you can pick funds designed for that, but gains may be lower in the long run. withak fucked around with this message at 03:25 on Jan 5, 2022 |
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Jan 5, 2022 03:09
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