Are Vanguard Index Funds/ETFs improperly weighted?

[Jeff W]

One last thing: Should I be putting money in a SEP-IRA or do I have less to gain if I use tax-efficient funds and a 100% equity portfolio? I don't love the idea of locking up money for over 3 decades, especially as my expenses could change or I might need to convert investments to cash if I wished to move back to high limits in poker.

I guess I'll have to do some more research/thinking.

[BeL0wMe]

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One last thing: Should I be putting money in a SEP-IRA or do I have less to gain if I use tax-efficient funds and a 100% equity portfolio? I don't love the idea of locking up money for over 3 decades, especially as my expenses could change or I might need to convert investments to cash if I wished to move back to high limits in poker.

I guess I'll have to do some more research/thinking.

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Jeff you can take your initial investment out of a Roth with no penalties, so there really is no reason not to have one, unless you hate money.

Also I like the portfolio alot, three things you might look at adding are a good Mid-Cap Growth fund, like FBRVX, FBR Small Cap, which has a turnover rate of around 3%, and is ridiculously tax efficient, an int'l growth fund, I like JAOSX (Janus Overseas), but since you seem to like Vguard, you could always add VWIGX, and some REIT exposure, but with subprime now is NOT the time.

[Jeff W]

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Jeff you can take your initial investment out of a Roth with no penalties, so there really is no reason not to have one, unless you hate money.

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I'm over the income limit for a Roth IRA.

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Also I like the portfolio alot, three things you might look at adding are a good Mid-Cap Growth fund, like FBRVX, FBR Small Cap, which has a turnover rate of around 3%, and is ridiculously tax efficient

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I'll take a further look into it but the ER ratio is very high for my taste(1.38)--I know that there are possible benefits to picking the best active funds but the higher the ER the less inclined I am to gamble.

How important is midcap exposure btw? Basically every site ignores midcaps. I'm also somewhat comfortable with the value slant of my portfolio as Value has beaten Growth long term.

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an int'l growth fund, I like JAOSX (Janus Overseas)...

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Looks interesting as a complement to DODFX--moderate ER(for an active fund anyway) .91 and solid tax cost ratio (0.66). How much would you allocate to this for the International Growth+moderate International Midcap exposure?

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some REIT exposure, but with subprime now is NOT the time.

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No to mention REITs suck tax-efficiency wise (VGSIX is 2.01% Tax Cost ratio for last 10 years).

[MatthewRyan]

Jeff, your plan looks good. I would put as much money into your IRA as you feel comfortable with.

I also wanted to leave you with one last thought:

'All roads lead to Dublin'

[Jeff W]

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Jeff, your plan looks good. I would put as much money into your IRA as you feel comfortable with.

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Now that I realize I can put money in a SEP IRA it makes my life a lot more complicated because of extra cost/benefit analysis I have to do. If I put $44,000 into a SEP IRA for the 2006 tax year, I basically am getting $44,000*My Tax Rate as an interest free loan for a few decades(with liquidity restrictions). Additionally, it will allow me to better diversify my portfolio by putting money in Small and Large Value index funds which I'd have to forego in a taxable account because of losses to capital gains tax.

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I also wanted to leave you with one last thought:

'All roads lead to Dublin'

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Good point. I'm at least 90% of the way there. I've spent 70 hours researching this week(1 week ago I didn't know what ER was). I've got my choices narrowed down to just a few funds and in all likelihood the EV difference for the choices is probably pretty small and no amount of research/thinking is going to really make me sure whether I should include BRSVX or VTMSX in my portfolio(lower ER vs. liquidity & improved value emphasis).

[BDaws]

Jeff, where do you find the information on tax efficiency? I have never seen that mentioned with funds before.

[Jeff W]

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Jeff, where do you find the information on tax efficiency? I have never seen that mentioned with funds before.

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http://www.fool.com/school/mutualfun...efficiency.htm

You can find Tax Cost Ratios for funds on Morningstar.com under the Tax Analysis tab.

Whenever possible, look at the 10-year tax cost ratios for the fund. Many funds have enjoyed low Tax Cost Ratios in recent years because of market conditions that they won't necessarily continue in the future.

Example:

VIVAX

The 5-year TC average for VIVAX is 0.44%, but the 10-year average is 1.21%. I would avoid that fund(and the related ETF VTV) in a taxable account even at the cost of losing value diversification.

Value Index Funds and Small Cap Index Funds have higher TC Ratios than Large Blends. If you want to diversify with Value or Small Cap funds in a taxable account, my advice is to go with a tax managed fund. Bridgeway has a number of tax managed Small Cap and Value funds. Vanguard has VTMSX Tax Managed Small Cap, but there is a 1% redemption fee for sold shares that are <5 years old.