I agree that switching to a one fund in-all would be ideal, and what I’m aiming for, but I won’t pay the massive imbedded LTCG in taxable with VTI and VXUS to get there. I’m planning that during times of cap losses to sell the aforementioned and buy the chosen one-fund, in taxable. And, new investments, I’ll purchase that one-fund as well. I’ll save my redemptions and paying some LTCG when we eventually roll our 401k to IRA and then convert to Roth.No, not at all. I was responding to the suggestion that one could use tax-efficient asset location pre-retirement and then switch to a one-fund approach when nearing retirement, and I was pointing out that such a switch is likely to be very expensive due to cap gains. I'm more of a one-fund, mirrored allocation guy, for all the reasons stated by the OP.GaryA505, are you disputing a fundamental claim of this thread? I may have missed your point or context (it's a longgggg thread) so thanks in advance for clarifying.
Using tax-efficient asset location usually means keeping mostly (or all) stock in the taxable account. Wouldn't switching to an "equal location" (mirrored allocation) setup or a single fund would mean selling stock with a lot of taxable gains?
From OP, post #1:
<<< A mirrored asset allocation is good enough in presence of a taxable account : proof and explanation. >>>
<<< So-called "tax-efficient" asset location strategies are a mirage; they silently increase after-tax risk. In contrast, a mirrored allocation strategy delivers outcomes which are consistent with the chosen asset allocation, before and after tax, regardless of future asset returns, future tax law changes, and future investor circumstance changes: post 1 (data 1) and post 2 (data 2). Analysis in presence of a taxable account: post 3 (data 3). >>>
While our overall AA is almost 80/20 (AOA in DW’s and my Roth IRAs), I’m beginning to analyze my risk tolerance and realize that even if my investment horizon is my young young kids’ timeframe, I’m not that comfortable with the potential risk associated with AOA vs AOR (60/40). Thus, I’m going to rebalance in our tax-free (from AOA to AOM) and our 401k (to a target date fund with a corresponding AA of 40/60) to get us to an overall AA of between 60/40 - 70/30.
And it was serendipitous that I learned of this thread awhile back. Thank you, Longinvest. Just wish I knew about it when I began investing in taxable.
Statistics: Posted by bbrock — Tue Oct 01, 2024 9:20 pm — Replies 978 — Views 281122