TDIF/ 3 fund portfolio (ETF v. index fund) in brokerage?

#1

Hi,
I have a vanguard brokerage account.
I was putting money into a target date index fund in my brokerage, but I started to put money into the VTSAX AND VTIAX.
BUT I am thinking of putting money into VTI AND VXUS. The problem is that I can’t buy vti and vxus automatically in vanguard.
I don’t want to switch to fidelity where you can buy etf’s automatically.
Should I just stick with vtsax/vtiax/vbtlx ?

What would my savings me if I switched to VTI/VXUS vs vtsax/vtiax?

Also, with rebalancing portfolio yourself is there any way to do that without selling and incurring capital gains tax?
I’m assuming you just buy more of the underperforming asset and transfer dividends to underperforming asset to reallocate.

SORRY for all of the questions!!!
Thanks in advance! :smiley:

#2

Hi Ala,
May I ask why you want to switch to the ETF versions? There is not a huge difference between the ETF and index fund versions, and we believe that the index fund version is more convenient since it can be automated.
And yes, when rebalancing your portfolio, avoid selling shares to avoid capital gains tax!

#3

How can i rebalance without selling shares?

I guess im going to stick with index funds since they are automated.
Etfs were only attractive due to the lower expense ratio.

Thanks Vivi!

#4

Sounds great! The difference in expense ratio is so small that it really is not a big deal!

To answer your question, it’s exactly what you said. Buying more of the underperforming asset with either new contributions or dividend payments. :slight_smile:

#5

Hi, wouldn’t it make sense to just buy VTWAX here? That way its automated and you dont have to worry about rebalancing and selling shares? assuming this is for a long term investment

I am in the same boat, I want to just automated money monthly into a Vanguard TDIF, but the recent capital gains distros scare me in taxable accounts. I have TDIF’s already in my roth & 401k.

#6

I have the same dilemma. But i started buying vtsax and vtiax instead of funding the tdif that i have in my brokerage. Im staying with tdif in my 403b because i dont have the option of vtsax and vtiax.

#7

VTWAX is great! And you are correct about not having to worry about rebalancing :slight_smile: But if you don’t like the allocation of VTWAX, you’d be able to customize it by buying the two funds individually.

In terms of the capital gains distribution, watch this video that Jeremy made! :slight_smile: Huge Tax Bill From Vanguard Funds?! - YouTube

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