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re: Recommendations on index funds for taxable account?
Posted on 10/31/14 at 10:03 am to Books
Posted on 10/31/14 at 10:03 am to Books
It is not necessarily a bad move. If you are making systematic investments and take advantage of tax loss opportunities as they arise. You would have a tax lot with each investment, pick those with the highest cost and sell them to minimize gains. You will always have a cost basis in the investment which is netted against the sale proceeds, then you may have LTCG which may or may not be taxed depending on your tax situation, and/or tax losses to net against gains. The total market funds are very efficient. If someone is trading/churning in a taxable account, yeah they are going to pay a lot more in taxes than you would with your approach as they are not benefiting from LTCG rates...if they are successful.
It is good to diversify the types of accounts you invest in, ie tax deferred, Roth, taxable and what you are asking about is a good addition to your long term investment plan. If you put in a little work understanding tax impacts you will be able to minimize tax costs.
It is good to diversify the types of accounts you invest in, ie tax deferred, Roth, taxable and what you are asking about is a good addition to your long term investment plan. If you put in a little work understanding tax impacts you will be able to minimize tax costs.
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