Personal Investments • Tax inefficiency of holding International Index fund in taxable account?

I invest in taxable accounts with the assumption I will hold whatever I buy for the rest of my life. If that's your assumption too, I start with setting my desired asset allocation (US equity, Intl equity, bonds) and then look at where to hold an asset class (Roth, Traditional, Taxable).

I've ended up with Bonds in Traditional and CA Muni/Treasuries in Taxable (reside in California)
Domestic equity in Roth and Taxable (Total US Market, and I have a SCV tilt)
International equity in Taxable (VEA and VXUS)

If you are in an income level where your foreign tax credit could be limited that's a consideration too.

What I don't do is try to look at year to year optimizations such as a few basis point in tax efficiency. I assume that well constructed index funds like VTI, VIOV, VXUS, VEA will all be managed by Vanguard with relative tax efficiency and be "best of breed" among similar fund companies. Tax laws will change, yields will change, I might even live in a different state before I did. None of this I have control over so I focus on a well constructed and managed index fund that should persist no matter what else happens in the world.

Statistics: Posted by stan1 — Fri Feb 09, 2024 12:32 pm — Replies 9 — Views 482

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