Investment locations?

General Discussion on the Permanent Portfolio Strategy

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mathjak107
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Re: Investment locations?

Post by mathjak107 » Thu Oct 17, 2019 2:10 am

i go by the research from michael kitces as far as location goes . as kitces found :

" the traditional asset location strategy “rule of thumb” is that tax-inefficient bonds go into an IRA, while equities eligible for preferential tax rates go into a brokerage account, the reality is that for investors with long time horizons the optimal solution may be the opposite. Once stock dividends and portfolio turnover are considered, the ongoing “tax drag” of the portfolio can be so damaging to long-term returns that placing equities into an IRA may be more efficient, even though they are ultimately taxed at higher rates!

In fact, it turns out that almost any level of portfolio turnover will eventually tilt equities towards being held in IRAs given a long enough time horizon (and especially while today’s low interest rates result in almost no benefit for bonds to gain tax-deferred growth inside of retirement accounts). Which means in the end, good asset location decisions depend not only on returns and tax efficiency, but an investor’s time horizon as well!"

https://www.kitces.com/blog/asset-locat ... e-horizon/


also not all index funds have the same tax efficiency .. most are not like spy which is the purest form in structure ...some dont own the index as is they swap minor stocks around , some loan equities out or buy and sell calls ... this list is an older list and the numbers have changed but it shows you even being an index fund the fund can have a pretty poor tax efficiency .

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vnatale
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Re: Investment locations?

Post by vnatale » Thu Oct 17, 2019 8:02 am

Sorry for my wording. I was not saying you'd said it was recommended by the book. I was just making a statement that the book was not recommending it.

Vinny
Xan wrote:
Wed Oct 16, 2019 9:33 pm
vnatale wrote:
Wed Oct 16, 2019 8:21 pm
I am reading the book that was previously recommended. What you are doing is NOT recommended by the book:
I didn't say it was recommended by the book. In this case, I'm the investment advisor, and I do it out of my own convenience.

It's just too much predicting the future for me to arrange things as one big PP. For example, does the professional consensus consider how negative interest rates will affect whether bonds should be in taxable or tax deferred? What will the tax regime look like in 40 years? Who knows!
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ochotona
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Re: Investment locations?

Post by ochotona » Thu Oct 17, 2019 9:38 am

vnatale wrote:
Thu Oct 17, 2019 8:02 am

Vinny
I think having a complete Permanent Portfolio in every type of account is fine. There is enough uncertainty about the future that my plans and opinions might be wrong. I'm going to keep doing what I do, but I'm prepared, as always, to end up totally humiliated.
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