The hyperlink you referenced, and throughout this thread, the phrase "after tax riskiness" makes fairly frequent appearances.I'm very glad to have found this thread and the arguments. I find them very persuasive with regard to placement of funds in traditional vs. Roth accounts. However, I think your case is not as strong with regards to taxable accounts. When you are most precise and argue that mirroring in taxable with one ETF is "good enough" for some, I have no objections. However, when statements about tax-efficient fund placement being a "mirage" appear* to apply to taxable accounts, we're off the mark. Your own example (viewtopic.php?p=7483189#p7483189) shows that when matching risk, using tax-efficient fund placement in taxable does (slightly) better. This means that whatever Exchme explained about tax-efficient fund placement increasing portfolio risk must not be precisely stated.In the first post, I've identified a series of flaws prevalent in arguments against using all-in-one funds and ETFs in all accounts, including taxable ones. In later posts, I've provided a mathematical proof that a mirrored asset allocation will never be the worst asset location strategy, as well as analyses explaining how "tax-efficient fund placement" is mostly a mirage as it silently increases portfolio risk. Forum member Exchme also explained why, mathematically, it's necessarily so.
* I emphasize "appear". Note also that this is most prevalent when I see posts in other threads referencing the argument.
An investor who was following the nontraditional "mirrored approach" utilizing a Vanguard target retirement fund in their taxable account in 2006 would have found themself with a riskier portfolio through the "tinkering" of Vanguard.
That certainly changed the risk profile, and through no initiation by the investor.
Before placing an all-in-one fund into their taxable account, investors should remember that the asset allocation of a fund is not set in stone.
"History repeats itself, and that's one of the things that's wrong with history." -- Clarence Darrow
OP has provided a valuable thread for those who are thinking through these decisions.
Statistics: Posted by AlwaysLearningMore — Sun Feb 18, 2024 1:30 pm — Replies 851 — Views 227321
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