Our financial system is crumbling this week.

[Arthur Dent]

If it's a taxable account, ETFs are advantageous because they produce fewer capital gains distributions allowing you defer more of that tax until the investment is sold.

In a tax sheltered account, what Michael said. Not a huge difference. Mutual funds will have a minimum balance and ETFs will have different logistics e.g. where you may need to deal with reinvesting dividends. Could be different fees if bought through E-trade or something like that.

[Michael]

If it's a taxable account, ETFs are advantageous because they produce fewer capital gains distributions allowing you defer more of that tax until the investment is sold.

That's not true with Vanguard funds:

ETFs have an inherent tax efficiency advantage due to their share redemption process (see ETF Taxes). Other things equal, an ETF can be expected to distribute less capital gains than its mutual fund equivalent, often none at all.

Mutual funds can only rarely eliminate capital gains in the same fashion. The exception is Vanguard's dual-share fund structure, which allows their index funds to be just as tax-efficient as ETFs. In addition, index funds in general have very low turnover, limiting the extent of the problem.

Advantage: ETFs, or tie if Vanguard.

https://www.bogleheads.org/wiki/ETFs_vs ... efficiency



I <3 Vanguard.


Also, I steal the following statement:

*Michael LLC is not a licensed financial adviser and provides investment advice for entertainment purposes only. Not available in all 50 states. Void where prohibited.

[G. Keenan]

*Michael LLC is not a licensed financial adviser and provides investment advice for entertainment purposes only. Not available in all 50 states. Void where prohibited.

Hell no. I'm holding you and AD to your fiduciary duties under the GRB Terms & Conditions I agreed to back in 2006.

[Arthur Dent]

If it's a taxable account, ETFs are advantageous because they produce fewer capital gains distributions allowing you defer more of that tax until the investment is sold.

That's not true with Vanguard funds:

ETFs have an inherent tax efficiency advantage due to their share redemption process (see ETF Taxes). Other things equal, an ETF can be expected to distribute less capital gains than its mutual fund equivalent, often none at all.

Mutual funds can only rarely eliminate capital gains in the same fashion. The exception is Vanguard's dual-share fund structure, which allows their index funds to be just as tax-efficient as ETFs. In addition, index funds in general have very low turnover, limiting the extent of the problem.

Advantage: ETFs, or tie if Vanguard.

https://www.bogleheads.org/wiki/ETFs_vs ... efficiency

Interesting! Did not know that.

Reading a bit, it seems like this mostly allows their mutual funds to get ETF in-kind exchange tax benefits while, in principle, exposing ETF investors to potential tax consequences from churn on the mutual fund side. But it also has scale benefits from combined asset pools, and in general, it seems like the ETF tax benefit for index investing is pretty small and not worth worrying too much about compared to other factors.

[AWvsCBsteeeerike3]

I....disagree with so much about the underlying approach of Michael's and Ads approach. But I generally agree with the intermediate decisions and thought process after deciding to invest in etfs or funds.

...

That said....no. for [expletive] sake. No. Immediate control is worth a ton. Hopefully in 25 years it's worth geeking out over the maybe percent or two a year gained by picking the right path. But most of them generally follow the stock market.

To get to [expletive] you money in 25ish years you almost have to start with [expletive] you money or live like a pauper. I mean starting at 25 and getting to 2.5 mil (not accounting for inflation) by the time you hit early 50s is saving at 25ishk per year at 10ish % without fees. If you've got a free 25k per year you've basically got [expletive] you moneynright now and or the ability to generate it whenever you want.

Anyway on to my main beef, using the past performance of the stock market to predict future gains is foolhardy. Has it been stable from a point some 100 years ago up til now? Sure.

Has the country been stable in that time frame? Absolutely not. The us of a won a couple world wars, extinguished Nazism, beat out the ussr to the moon/cuba/nuclear power/manners/Rocky, became a superpower, went through an industrial revolution, went through an internet revolution, and in general did quite well. By God the usa is the most clear cut winner of any 100 year span ever. Maybe atilla the hun or Alexander the great had better stretches but they didn't last this long.

[AWvsCBsteeeerike3]

Now america has lost its rank as #1 gdp in the world to china. The dollar is at some point, possibly, going to face pressure as us debt rises. And the economy is increasingly global. America is awesome. But to expect the next 100 years to go as well as the past 100 went is a pipe dream imo. And in those 100 years the average ror was something like 12%

[AWvsCBsteeeerike3]

All that said i agree that timing the market is a mistake so if you're going to blindly put faith into the stock market then follow Michael and AD advice.

[AWvsCBsteeeerike3]

Alsonif you want to do something not totally above board but that will never get caught, use a hsa as a tax shield.

Step 1. Open hsa and collect untaxed money
Step 2. Send in a letter unverified or undocumented that you have spent money on undisclosed medical costs.
Step 3. Collect untaxed laundered miney amd deposit it into yout account.

I obviously don't do this as it's illegal and impossible since I spend all my hsa money in rx s. But if I didn't no one would EVEar know.

[Michael]

Now america has lost its rank as #1 gdp in the world to china. The dollar is at some point, possibly, going to face pressure as us debt rises. And the economy is increasingly global. America is awesome. But to expect the next 100 years to go as well as the past 100 went is a pipe dream imo. And in those 100 years the average ror was something like 12%

If you look at my posts I repeatedly recommend a 3 fund portfolio which has international and bond exposure. Sure, past performance may not reflect future performance which is why I strongly believe in diversifying with low cost index funds. The goal is to not beat the market but basically replicate it along with your risk strategy.

I....disagree with so much about the underlying approach of Michael's and Ads approach. But I generally agree with the intermediate decisions and thought process after deciding to invest in etfs or funds.

...

That said....no. for [expletive] sake. No. Immediate control is worth a ton. Hopefully in 25 years it's worth geeking out over the maybe percent or two a year gained by picking the right path. But most of them generally follow the stock market.

To get to [expletive] you money in 25ish years you almost have to start with [expletive] you money or live like a pauper. I mean starting at 25 and getting to 2.5 mil (not accounting for inflation) by the time you hit early 50s is saving at 25ishk per year at 10ish % without fees. If you've got a free 25k per year you've basically got [expletive] you moneynright now and or the ability to generate it whenever you want.

Anyway on to my main beef, using the past performance of the stock market to predict future gains is foolhardy. Has it been stable from a point some 100 years ago up til now? Sure.

Has the country been stable in that time frame? Absolutely not. The us of a won a couple world wars, extinguished Nazism, beat out the ussr to the moon/cuba/nuclear power/manners/Rocky, became a superpower, went through an industrial revolution, went through an internet revolution, and in general did quite well. By God the usa is the most clear cut winner of any 100 year span ever. Maybe atilla the hun or Alexander the great had better stretches but they didn't last this long.

There's a ton of research that backs to my boglehead approach which includes the easy to follow 3 fund portfolio. I agree we don't know what will happen in the future which is why I diversify and keep my costs low!

Really, what investment strategy are you suggesting ? Hiding your money under a mattress? What if inflation happens? Doing research on individual stocks and buying them? If hedge fund and mutual funds have trouble beating the market, what chance do you have?

As for saving, yeah I'm a saver that lives below my means, but I don't live like a pauper (I drive a Buick, yo). If I see opportunities to save I do as opposed to buying to buying dumb [expletive]. I understand I'm more fortunate than some others, however that doesn't mean a boglehead investment strategy can't apply to them.

Anyway, it's an interesting convo. I'm glad we don't have the AD/Michael echo chamber anymore.

edit - also you seem to be criticizing tax deferred plans like Roth's or 401ks, however I've noted if you want to buy a house, etc you shouldn't use them. That said, tax deferred plans are very, very awesome.

[AWvsCBsteeeerike3]

Perhaps I should wait until I have access to a computer. I got fired the other day after giving 2 weeks notice and they took my lappy. So it's difficult to post images and what not.

But I'm not criticizing the vehicles you all mention. Obviously tax deferred plans have enormous appeal as do roths.

I'm just saying you all are way down in the details regarding how to invest with an eye toward the golden years with the assumption that the stock market is going to continue to produce whatever % returns it has.

My point is that I wouldn't be so quick to make that assumption. I also wouldn't be so quick to give up control of my cash. Beyond that it's going to take a computer.

Aldo, completely different point... yes, timing the stock market is foolhardy but it doesn't take a genius to understand simple values (like the market cap of the stock market is more than the gdp) and while past performance isnt indicative of future results, common sense suggests that isn't sustainable.