It works well if the large majority of your accumulation savings is in tax deferred so lets say you have 100% stock in the early going until you start getting into 7 figures and as you de-risk toward retirement into a one fund solution. Or even if you sliced and diced that whole time.No, not at all. I was responding to the suggestion that one could use tax-efficient asset location pre-retirement and then switch to a one-fund approach when nearing retirement, and I was pointing out that such a switch is likely to be very expensive due to cap gains. I'm more of a one-fund, mirrored allocation guy, for all the reasons stated by the OP.GaryA505, are you disputing a fundamental claim of this thread? I may have missed your point or context (it's a longgggg thread) so thanks in advance for clarifying.
Using tax-efficient asset location usually means keeping mostly (or all) stock in the taxable account. Wouldn't switching to an "equal location" (mirrored allocation) setup or a single fund would mean selling stock with a lot of taxable gains?
From OP, post #1:
<<< A mirrored asset allocation is good enough in presence of a taxable account : proof and explanation. >>>
<<< So-called "tax-efficient" asset location strategies are a mirage; they silently increase after-tax risk. In contrast, a mirrored allocation strategy delivers outcomes which are consistent with the chosen asset allocation, before and after tax, regardless of future asset returns, future tax law changes, and future investor circumstance changes: post 1 (data 1) and post 2 (data 2). Analysis in presence of a taxable account: post 3 (data 3). >>>
But yeah if your mostly in taxable I could see this being a painful tax event trying to suddenly switch to a lifestrategy fund at 55 or 60.
Statistics: Posted by cosmos — Tue Oct 01, 2024 10:04 pm