Ping Cathy

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Posted by Investor on November 06, 2009 at 07:40:14:

Sorry, I was too busy and did not post regarding the funds in taxable and retirement accounts.

I suggest you look at your taxable and retirement accounts not as different portfolios but one portfolio (as long as they are for the same common goal - retirement). In this case, part of the asset allocation exercise becomes asset placement.

In taxable account you should look for funds that you can live for a long time and funds that generate low taxable income.

So, regular taxable bond funds are not really preferred unless you are in lower tax brackets. You may choose to place the bulk of your taxable bonds in retirement accounts. In other words, not all accounts needs to have your target equity/bond allocation but rather the overall of your portfolio should be. Also, value funds, reits are not preferred in taxable accounts in general. Typically, you will want the fund to have low turnover characteristics.

But if you really need bond funds in taxable account you can look for Municipal/Tax-Exempt bond funds. I prefer short/intermediate municipal bonds as opposed to long duration ones. Interest rates can only go high from here. High duration bonds will lose more when interest rates go up.

As for equities held in taxable account, look for low turnover, low yield funds. Broad index funds works very well in taxable accounts.

VTWSX (Vanguard Total World Stock Index) is a good candidate for all in one stock holding. It is nothing fancy but it is well diversified and has a slice of all world. The ETF version of this fund is ticker VT if you prefer the ETF for lower cost (and can buy ETF in any brokerage account).

Another alternative combination that may work for you is VTSMX (Vanguard Total Stock Market Index) and VFWIX (Vanguard FTSE All-World ex-US Index). With this two you can adjust your domestic/foreign allocation to your liking but rebalancing can generate some taxes. Again, you might want to hold the ETF versions of these two funds (VTI and VEU respectively).

Among the actively managed funds I think PRPFX (Permanent Portfolio) is a good one to consider.

Follow Ups:

Re: Ping Cathy - ETF or MUTUAL FUND? Cathy 01:43:36 11/07/09 (2)
- Re: Ping Cathy - ETF or MUTUAL FUND? Investor 12:45:44 11/07/09 (1)
  - Re: Ping Cathy - ETF or MUTUAL FUND? Cathy 06:31:18 11/08/09 (0)

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Comments: : Sorry, I was too busy and did not post regarding the funds in taxable and retirement accounts. : I suggest you look at your taxable and retirement accounts not as different portfolios but one portfolio (as long as they are for the same common goal - retirement). In this case, part of the asset allocation exercise becomes asset placement. : In taxable account you should look for funds that you can live for a long time and funds that generate low taxable income. : So, regular taxable bond funds are not really preferred unless you are in lower tax brackets. You may choose to place the bulk of your taxable bonds in retirement accounts. In other words, not all accounts needs to have your target equity/bond allocation but rather the overall of your portfolio should be. Also, value funds, reits are not preferred in taxable accounts in general. Typically, you will want the fund to have low turnover characteristics. : But if you really need bond funds in taxable account you can look for Municipal/Tax-Exempt bond funds. I prefer short/intermediate municipal bonds as opposed to long duration ones. Interest rates can only go high from here. High duration bonds will lose more when interest rates go up. : As for equities held in taxable account, look for low turnover, low yield funds. Broad index funds works very well in taxable accounts. : VTWSX (Vanguard Total World Stock Index) is a good candidate for all in one stock holding. It is nothing fancy but it is well diversified and has a slice of all world. The ETF version of this fund is ticker VT if you prefer the ETF for lower cost (and can buy ETF in any brokerage account). : Another alternative combination that may work for you is VTSMX (Vanguard Total Stock Market Index) and VFWIX (Vanguard FTSE All-World ex-US Index). With this two you can adjust your domestic/foreign allocation to your liking but rebalancing can generate some taxes. Again, you might want to hold the ETF versions of these two funds (VTI and VEU respectively). : Among the actively managed funds I think PRPFX (Permanent Portfolio) is a good one to consider.

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Comments:	: Sorry, I was too busy and did not post regarding the funds in taxable and retirement accounts. : I suggest you look at your taxable and retirement accounts not as different portfolios but one portfolio (as long as they are for the same common goal - retirement). In this case, part of the asset allocation exercise becomes asset placement. : In taxable account you should look for funds that you can live for a long time and funds that generate low taxable income. : So, regular taxable bond funds are not really preferred unless you are in lower tax brackets. You may choose to place the bulk of your taxable bonds in retirement accounts. In other words, not all accounts needs to have your target equity/bond allocation but rather the overall of your portfolio should be. Also, value funds, reits are not preferred in taxable accounts in general. Typically, you will want the fund to have low turnover characteristics. : But if you really need bond funds in taxable account you can look for Municipal/Tax-Exempt bond funds. I prefer short/intermediate municipal bonds as opposed to long duration ones. Interest rates can only go high from here. High duration bonds will lose more when interest rates go up. : As for equities held in taxable account, look for low turnover, low yield funds. Broad index funds works very well in taxable accounts. : VTWSX (Vanguard Total World Stock Index) is a good candidate for all in one stock holding. It is nothing fancy but it is well diversified and has a slice of all world. The ETF version of this fund is ticker VT if you prefer the ETF for lower cost (and can buy ETF in any brokerage account). : Another alternative combination that may work for you is VTSMX (Vanguard Total Stock Market Index) and VFWIX (Vanguard FTSE All-World ex-US Index). With this two you can adjust your domestic/foreign allocation to your liking but rebalancing can generate some taxes. Again, you might want to hold the ETF versions of these two funds (VTI and VEU respectively). : Among the actively managed funds I think PRPFX (Permanent Portfolio) is a good one to consider.
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