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  • Moving International Stock

    Based on recent responses on another thread saying to not hold international stocks in a taxable account... I found the following post by POF and have been reading more on the topic as well. https://www.physicianonfire.com/international-stock/

    I now see that I should have my international in a tax deferred account. I originally had planned it for my taxable based on the boglehead recommendation.

    The problem is that I already have ~$45k of international in my taxable brokerage account. In the whole scheme of things it is not that big of a deal since I don't have much in there right now. Glad that I found this info before I have more in my taxable account. What should I do with these stocks (leave, sell, something else)? Right now my total loss is ~1,200.



    Additionally, my 401k options for international is VTMNX (VG Developed International Index). I wanted to have Total international. Looking at the correlation, they seem to track pretty similar? So I think it would be ok to go with the developed index?
    Last edited by mamaham; 04-05-2022, 02:11 PM.

  • #2
    Originally posted by mamaham View Post
    Based on recent responses on another thread saying to not hold international stocks in a taxable account... I found the following post by POF and have been reading more on the topic as well. https://www.physicianonfire.com/international-stock/

    I now see that I should have my international in a tax deferred account. I originally had planned it for my taxable based on the boglehead recommendation.

    The problem is that I already have ~$45k of international in my taxable brokerage account. In the whole scheme of things it is not that big of a deal since I don't have much in there right now. Glad that I found this info before I have more in my taxable account. What should I do with these stocks (leave, sell, something else)? Right now my total loss is ~1,200.



    Additionally, my 401k options for international is VTMNX (VG Developed International Index). I wanted to have Total international. Looking at the correlation, they seem to track pretty similar? So I think it would be ok to go with the developed index?
    Are all your lots at a loss? Don't sell any that have gains
    Like you said not a big deal with 45K from tax perspective.
    I like having both US and INT in taxable for TLH as POF suggests. However yeah the math is interesting at high marginal tax rates

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    • #3
      You can’t have the optimal portfolio all the time, nor should you spend significant time chasing it. Do the best you can and don’t worry about it.

      Comment


      • #4
        Depending on how much you can put into your tax deferred accounts , eventually you may need to put international in taxable also. Its a 1% ers problem, its ok to have. I wouldnt lose any sleep over it. Invest what you can in tax deferred and if you need more room, taxable it is.

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        • #5
          I don't think it's black/white that international should not be taxable. Yes it's not as tax-efficient as US total stock but it's not bad either. Putting all your international in tax-deferred accounts means you cannot tax-lost harvest them. Depending on your tax situation TLH can be a useful tool in offsetting gains.

          For example I'm in a group practice. Every time a new associate buys into the practice I have a taxable long-term gain which I offset with my harvested losses in my brokerage account.

          You can TLH the $1200 loss and buy VXUS. You can deduct up to $3k off your personal income with harvested losses every year and they carry forward until you die.

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          • #6
            Originally posted by childay View Post

            Are all your lots at a loss? Don't sell any that have gains
            Like you said not a big deal with 45K from tax perspective.
            I like having both US and INT in taxable for TLH as POF suggests. However yeah the math is interesting at high marginal tax rates
            I bought the entire amount at one time. So that is one lot, right? Under lot details, there is only one line. I know that should be a simple question that you asked, but I only just opened the taxable account.

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            • #7
              Originally posted by CordMcNally View Post
              You can’t have the optimal portfolio all the time, nor should you spend significant time chasing it. Do the best you can and don’t worry about it.
              tell the perfectionist that....

              sometimes I wonder if I should get a financial advisor because I way overthink it. Also, I want it to be "perfect" and simple. Maybe I should just leave the international where I have it. Use it for TLH and then if it gets to be significant, start putting some in the spouse's 401k. My solo 401k is already full with international and this taxable account is the "extra" to meet the AA target %.

              Comment


              • #8
                Originally posted by zlandar View Post
                I don't think it's black/white that international should not be taxable. Yes it's not as tax-efficient as US total stock but it's not bad either. Putting all your international in tax-deferred accounts means you cannot tax-lost harvest them. Depending on your tax situation TLH can be a useful tool in offsetting gains.

                For example I'm in a group practice. Every time a new associate buys into the practice I have a taxable long-term gain which I offset with my harvested losses in my brokerage account.

                You can TLH the $1200 loss and buy VXUS. You can deduct up to $3k off your personal income with harvested losses every year and they carry forward until you die.
                I don't think I can buy VXUS to TLH. That is essentially the same as VTIAX? would violate wash rule... but I have my TLH partners as VFWAX and VEMAX (if I want emerging markets).

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                • #9
                  Originally posted by mamaham View Post

                  I don't think I can buy VXUS to TLH. That is essentially the same as VTIAX? would violate wash rule... but I have my TLH partners as VFWAX and VEMAX (if I want emerging markets).
                  You do not want to buy the same mutual fund-ETF equivalent. So VTIAX = VXUS.

                  So buy IXUS (ishares international) instead. Schwab also has a low-cost international index ETF called SWISX. Either works.

                  I don't invest in a separate emerging market ETF. One international + TLH partner is what I use.

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                  • #10
                    Originally posted by mamaham View Post

                    I bought the entire amount at one time. So that is one lot, right? Under lot details, there is only one line. I know that should be a simple question that you asked, but I only just opened the taxable account.
                    Exactly right. Be sure you have cost basis in taxable set to specific lots in future For me TLH international is vxus to VEU to IXUS and then you can split it up with emerging/developed several different ways

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                    • #11
                      Originally posted by childay View Post

                      Exactly right. Be sure you have cost basis in taxable set to specific lots in future For me TLH international is vxus to VEU to IXUS and then you can split it up with emerging/developed several different ways
                      good to know. I did not know about that. In VG, it is called "specific identification method" for cost basis it looks like.

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                      • #12
                        Originally posted by mamaham View Post

                        good to know. I did not know about that. In VG, it is called "specific identification method" for cost basis it looks like.
                        Yeah a bit annoying to find on the site and annoying that you have to set for every fund/ETF

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                        • #13
                          Originally posted by mamaham View Post

                          tell the perfectionist that....

                          sometimes I wonder if I should get a financial advisor because I way overthink it. Also, I want it to be "perfect" and simple. Maybe I should just leave the international where I have it. Use it for TLH and then if it gets to be significant, start putting some in the spouse's 401k. My solo 401k is already full with international and this taxable account is the "extra" to meet the AA target %.
                          The million dollar question is will INTL outperform the US by more than the higher dividends net of the foreign tax credit. I suppose it will and maybe not.
                          The point is that yes you are overthinking this. Tax efficiency is great. TLH is a good thing. Don't let the tax tail wag the dog.

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                          • #14
                            Originally posted by Tim View Post

                            The million dollar question is will INTL outperform the US by more than the higher dividends net of the foreign tax credit. I suppose it will and maybe not.
                            The point is that yes you are overthinking this. Tax efficiency is great. TLH is a good thing. Don't let the tax tail wag the dog.
                            Thanks! Yes, working hard to keep it simple seems to make it more complicated... couple that with a perfectionist that has no idea what she is doing and well it's complicated "investing is simple but not easy"

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