It's not just for intergenerational transfer. It also allows for higher withdrawals in retirement (via portfolio loan or margin) and lower risk of going busto.

See https://www.kitces.com/blog/are-the-...es-overstated/. The total tax benefit of no dividends, never selling appreciated stocks, and never paying capital gains via step-up at end of life is worth an extra 0.9% a year over a fund that has 10% turnover and 2.5% dividend. Add in the increased opportunities to tax-loss harvest plus saving the 0.04% expense ratio and let's call it 1% a year. $1 million compounded 30 years at 6% turns into $5,743,491, whereas at 5% it's only $4,321,942. That's a pretty big deal, and the benefits would be even bigger for residents of states with income/capital gains tax of course.

Granted VTI has been able to avoid capital gains distributions and yields 1.85% -- not 2.5% -- so the benefits there are maybe half that; but that still results in $5,743,491 vs $4,983,951 after 30 years.

Anyone know why Vanguard is so hot on getting me to vote my shares (or give them permission to vote, or whatever...)? I've gotten multiple calls and this has never happened before.

Me too. I thought that was pretty weird.

n00b,

Doesn't Vanguard offer some really good TLH pairs already? My plan was to use these pairs in my taxable (e.g. VTI = VOO + VXF, VB = VBR + VBK).

Isn't a benefit of etfs that they do the rebalancing for you? In your case, I guess you could always use new contributions to rebalance for yourself (buy the stock that's performed the worst since your last deposit), but if you ever hit a prolonged period where you don't have disposable income, you may find your portfolio off balance. I guess this isn't too huge of a deal if you believe the EMH and that every large cap stock's EV is very similar. I'd also imagine that owning half the S&P is reasonably close to owning the full S&P in terms of variance.

Do you not own international stocks?

Interesting stuff, thanks for sharing.

They need a quorum.

http://www.reuters.com/article/us-va...-idUSKCN1BU2G9

"
Vanguard Group needs its hands-off investor base to pay attention.

On Nov. 15 the world’s largest mutual fund company will stage its broadest shareholder meeting in eight years and needs enough individual investors to vote on measures such as installing three new fund board members including Tim Buckley, who is set to take over as Vanguard chief executive in January.

The most difficult part will be getting a quorum of shares to pass the measures. The voting will include 195 funds and the Pennsylvania-based company needs investors representing a third of the value of each of those funds to cast ballots.

If Vanguard does not garner enough votes it likely would have to hold one or more follow-up events for funds that missed quorum, creating an administrative headache and extra expense. "

The board (whoever they are) recommends voting against Proposal 7, which is:

A shareholder proposal to "institute transparent procedures to avoid holding investments in companies that, in management’s judgment, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights. Such procedures may include time-limited engagement with problem companies if management believes that their behavior can be changed."

Any idea why? Does releasing transparent procedures make it easier for people to exploit Vanguard's stock transactions or something?

Probably just because it would be a huge pita.

Those ETFs have much less variance than a bunch of individual stocks, meaning the opportunities to tax loss harvest are greatly reduced. Especially in a rising market like we've had, you can't TLH the ETFs at all; owning the constituent stocks individually, however, you're sure to have at least a few losers in the bunch.

My portfolio automatically stays properly weighted (on a market-cap basis) over time, unless a stock moves into/out of the mega-cap index. DUCY?

This strategy doesn't really work for international stocks since 1) taxes generally get withheld from their dividends even in tax-advantaged accounts and 2) there's no comparable mega-cap index to emulate (and corresponding extended market index to cover the rest) for international stocks. It's better to just hold international ETFs in taxable, so that's what I do.

I have a noob question. Is it possible to make money by buying a stock right before the dividend is distributed, sell it after you get the dividend, and then keep doing that on and on for as many stocks as you can? Or does the stock price always drop after the dividend is paid out and so you'll basically be even minus the broker fees and things like that? Though it seems like if this was +EV then all the big investors would be shuffling money in and out of dividend stocks.

The stock does drop by the amount of the dividend on ex dividend date.

Sent from my SAMSUNG-SM-G925A using Tapatalk

So if the value of the dividend always comes directly out of the stock price, what is the rationale in buying a dividend stock vs a non-dividend stock if all other factors are equal?

Some people like to get paid a return to hold a stock. If it is a mature company that generates a lot of cash but can't grow much a dividend or stock buy back is a pretty good use of excess cash.
People aren't always rational about such things and often don't like to sell shares to realize the money a dividend would give them, even though it is more cost efficient on a long term holding.

I understood that the whole point of Vanguard's low-cost index fund mechanisms is to avoid management needing to make judgments about which stocks to invest in.

To my in-expert and layman's point of view, requiring the fund to make judgments undermines the whole point of index fund investing in the first place. If you want fund management to make judgments like this, go and invest in a fund that provides that service.

To my mind, it's like choosing a budget airline carrier and then complaining that there's no first class. If you want the first class service, go to an airline that provides it, and pay for it, you schmucks.

Yes, it is this exactly.

Then vote against it or you (possibly, assuming the other side gets sufficient votes) won't be holding an index fund.

Do we really think that many public companies are "substantially contributing to genocide or crimes against humanity, the most egregious violations of human rights"?
I voted against it because I'm against shareholder activism and didn't want the clucks rewarded by actually getting something through. It's just noise and a waste of time to put this stuff on the ballot.

*For the record, I'm against genocide.

I voted with management recommendations, but only because they actually called me, lol. I definitely wasn't going to mess with returning the mailer.

Any free online courses someone could link to me that will get my feet wet for someone with with literally no practical experience in anything financial past opening a a savings or checking account? A good source for general information on how things work would be great. Sorry probably been asked a million times but I suck at the search bar and never find anything

Here is a good place to start:
https://www.bogleheads.org/wiki/Getting_started

That is a bit advanced, given the question.

Really?
"This kit includes many topics on personal finance, they are listed in the sections below.

There are a few basic financial steps that are important to get correct early:

1.Finance planning starts with a sound financial lifestyle (Video).
2.Track your expenses and stay within your budget. (Household budgeting).
3.Is your needed insurance coverage up to date?
4.Pay down bad debt (credit cards, other high interest debt). Paying off a 20% interest rate credit card debt will free up your money far faster than purchasing a stock fund.
5.Start saving for the emergency fund. Once you have debt under control, create an emergency fund. An established emergency fund can provide an individual with needed funds whenever an unforeseen event occurs so that one does not need to tap investments held for long term goals.
7.Take advantage of any employer match on a retirement savings plan even as you work towards the above goals."

If you follow the links you come to this:
"Tutorial
Easy to understand, fundamental information about stocks. From Investopedia

Stocks Basics: Introduction
http://www.investopedia.com/university/stocks/ "

Post a better one. if you have one.

If You Can is a brief, no-nonsense introduction that includes some recommendations for further reading if you'd like to go deeper. It's available for free in a few different formats here: http://efficientfrontier.com/ef/0adhoc/2books.htm

What % of the US population do you all believe are overall better off with a financial advisor that is in the top 25% of advisors at a brokerage firm (assume he charges .8% of AUM) instead of doing it himself/herself and following one of those free online guides or reading a book?

0%, if they are willing to use a robo advisor or a target retirement date fund. I doubt an adviser can overcome a .8% drag on performance., especially since most advisers are tied to high cost products on top of their fee.

Hey thank you very much for the responses. I honestly appreciate it. I have bookmarked both sites and look for to diving in to them.