Mutual Funds vs. ETFs: What Are the Tax Implications in a Taxable Account?

ETFs and mutual funds look pretty similar, but they have a few distinct differences. Does it matter if you invest in mutual funds or ETFs in taxable accounts or do they both work the same?

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[TeddyAlexanderv]

Tax laws can be so complex, and it’s super helpful to break them down like this. Understanding how different policies can impact our finances is crucial for making informed decisions.

[jdmulloy]

The problem wasn't so much that it was a mutual fund as much as it was a target date fund. I think Vanguard assumed it was only being used in tax sheltered retirement accounts. Lesson seems to be, dont use TDFs in taxable accounts. If you want them replicate the asset allocation with individual index funds/etfs. TDF rebalancing can also cause taxes, so better to control allocation yourself in taxable accounts.

[voodootrois]

Mutual funds were historically all actively managed. ETFs were historically all passive/indexed. But now both have both.

Tax efficiency isn't about mutual fund vs. ETF, it's about active vs. passive management.

[briandadude]

If your Vanguard mutual fund also has an ETF (for example, VTSAX and VTI), the index fund has the same tax advantages as the ETF.

[chucknorris]

My wife had her Roth in a Vanguard TDF. She looked at the performance at each time frame in comparison to VFIAX and the TDF lost at every timeframe. She didn't feel as though the risk increased much to switch to the ETF so she moved it. She's 50 so plenty of time until retirement.

[LoadedSavior]

If I have a question for you guys, where can I post it to see if you can answer it? My company I work for has a Roth and traditional 401k with a 4% match. Just trying to figure out which I should invest in. I’m 32. With next to nothing in retirement. New to FOO as well.

[stitch]

Are you shielded from turn over ratio costs if you put a fund like VITAX in a roth ira?

[Jason-omif]

VTSAX makes it easier to DCA. Any reason to choose its ETF equivalent (VTI) for a taxable brokerage?

[romanprzybylinski]

Love the show! Is there a difference between a high yield money market account and a high yield avings account? Is one better than the other. Looking to park my emergency fund which is 20k. Thanks

[Because]

People worry about taxes too much. Buy and hold the S&P 500 forever. Sleep like a baby

[thedude]

I'm having a white people taco night.

We're getting taco shells from the grocery store
And ground beef from the grocery store
And shredded cheese from the grocery store
And Ortega sauce from the grocery store

And I can't wait to sit at my table
And sprinkle everything on into my shells
And eat each taco as fast as I can
So I can have another taco (Or two, or three, or four!

It's a white people taco night
White people taco night
It's not limited to only white people
But white people love it the most

And we like lettuce, and we like cheese (We like cheese)
And we like tomatoes, and sour cream (Sour cream)
And we like to pretend we work at Taco Bell
But nobody wants to work at Taco Bell
We got our thanks to give to the grocery store
And mom and dad for going to the store
And to ourselves for helping unload the car
And to tacos themselves, hey, we love you, tacos

White people taco night
White people taco night
It's not limited to only white people
But white people love it the most
White people taco night
White people taco night
It's not limited to only white people
But white people love it the most
White people taco night
White people taco night
It's not limited to only white people
But white people love it the most

[Drivingbangers]

Who buys mutual funds anymore? Do the money guys buy them? Needle in a haystack that outperforms spy