JLCollinsnh

The Simple Path to Wealth

  • Stock Series
  • Homeownership
  • Case Studies
  • Stuff I recommend
  • Books
  • Interviews
  • About
You are here: Home / Money / My move from VMMXX to VBTLX

My move from VMMXX to VBTLX

by jlcollinsnh 66 Comments

In my recent post Taking Advantage of Mr. Bear, I described how this current decline offered me the opportunity to move from VTSAX (stocks) to VMMXX (cash) in my taxable account while simultaneously moving an equal amount of VBTLX (bonds) to VTSAX in my IRA.

This had the effect of maintaining my stock & bond/cash asset allocation and freeing up cash without a capital gains tax due.

Now (Friday March 27th) I’ve moved that money from VMMXX to VBTLX*.

Here’s why…

Why I moved from VMMXX to VBTLX

Basically for a lower cost and a higher yield.

VMMXX  has an ER (expense ratio) of .16% and a current yield of 1.25%.  VBTLX’s ER is .05% and its yield is 1.90%.

On the other hand, VMMXX is a money market fund (think cash) and its share price is fixed at $1.00. A key advantage is that there is no volatility in the share price. 

As a bond fund, the share price of VBTLX can and does move up and down with interest rates. So there is some volatility, but it is fairly minor.

But wait, some of you may be thinking, with interest rates at rock bottom levels, aren’t bonds risky these days?

For individual bonds this is true and it is called “interest rate risk.” When rates rise, the price of bonds falls. The longer the bond term, the greater this risk is. Many believe, at this point, rates have no where to go but up over time.

But VBTLX has two great advantages that mitigate this risk.

  1. As a total bond fund, it holds bonds of all different maturities. Those with shorter maturities are less subject to interest rate risk.
  2. Since it holds thousands of bonds, all bought at various times, some are always maturing. This means the fund can reinvest in new bonds at the higher rates if  rates climb.

If this last part has you scratching your head, this post will explain interest rate risk and bonds in general.

Why VBTLX instead of BND?

BND is is the ETF (exchange traded fund) version of VBTLX. In a future post, I’ll talk about the differences between mutual funds and their ETF versions and the advantages of each. (If you can’t wait, you’ll find links in this post that will help.)

In this case, only one the advantages of ETFs has any value to me: The lower ER of BND, .035% vs. .05% for VBTLX. But that is only a .015% difference.

Still, .015% is .015%.

But VBLTX gets the nod because…

  • At the moment I am not set up to buy ETFs through Vanguard on-line. It would require a phone call, and with this bear market their phone lines are jammed. 
  • I can buy VBTLX with a couple of mouse clicks and be done with it.
  • After all these years of talking about VBTLX, were I to change to BND, I would be faced with an endless stream of questions as to why from new readers who didn’t read this post. 🙂

*To be clear, we moved only the money from the previous move. The money that was already in VMMXX remains the same so our allociation also remains the same.

***********************************************************

Related

Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where we featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Personal Capital is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.
  • Vanguard.com

Filed Under: Money

« COVID-19: The unvarnished truth from Doc G.
Why I will no longer be writing this blog »

Comments

  1. Chad says

    March 29, 2020 at 2:59 pm

    I always enjoy your articles because you explain the reasoning of why you did things.

    Reply
    • jlcollinsnh says

      March 29, 2020 at 3:25 pm

      Thanks Chad!

      Reply
  2. josh mason says

    March 29, 2020 at 3:31 pm

    Hello, I enjoy your blog and all the common sense advice.
    Not sure if you have noticed, but Vanguard Money Market NAV has actually fallen below $1 last week.
    See Daily market value column on the page below:
    https://investor.vanguard.com/mutual-funds/profile/portfolio/vmmxx

    Would love to hear your thoughts – what do you make of it?

    Reply
    • jlcollinsnh says

      March 29, 2020 at 3:56 pm

      Hi Josh…

      That’s interesting and I am not sure what to make of it.

      I can tell you my trade on Friday the 27th went through at $1 per share. Plus, if VMMXX were to “break the buck” it would be major financial news.

      My guess is, just as it was slightly higher in previous months and the price remained $1, these are just techical variations that don’t change the price.

      Reply
  3. Ignacio Lopez says

    March 29, 2020 at 3:34 pm

    Some additional thoughts on these two securities that may help. The average maturity of VMMXX is 37 days vs. 8.3 years for VBTLX so you are acquiring more interest risk. Also VMMXX has only US government paper vs. mortgage backed and corporate securities in VBTLX. I would compare VMMXX to what banks can give you on their savings accounts.

    Reply
    • josh says

      March 30, 2020 at 4:13 pm

      Ignaco – it is incorrect to say that VMMXX (Prime Money Market) has “only US government paper”. Per Vanguard disclosure as of 2/29/2020 about 30% of the fund was invested in Treasury bills/government obligations while 61.8% was invested in a category called “Yankee/Foreign”. See Distribution by issuer on the link below.

      https://investor.vanguard.com/mutual-funds/profile/portfolio/vmmxx

      Do you know what “Yankee/Foreign” refers to? How do you get comfortable having your money invested in this category?

      Reply
  4. Dave @ Accidental FIRE says

    March 29, 2020 at 3:59 pm

    “I can buy VBTLX with a couple of mouse clicks and be done with it.”

    Amen brother. Time is money, it’s not worth wasting lots of it fiddling around with investments. Folks who claim to beat the market buying individual stocks are so often not counting the endless hours they spend researching, and then filing horrendous tax returns the next year detailing all their transactions. They probably didn’t beat the market after that “time tax” is accounted for. Unless it’s your idea of fun, it’s not worth it.

    I have a huge chunk in VBTLX and will always keep it. Right now I’m just holding tight.

    Reply
  5. Brian Catalano says

    March 29, 2020 at 4:08 pm

    excellent and informative as always, thank you. For clarification, the move from VMMXX to VBTLX is also in your taxable account?

    Reply
    • jlcollinsnh says

      March 29, 2020 at 4:22 pm

      Yep!

      Reply
      • Crew Dog says

        March 30, 2020 at 1:29 am

        Ah, but Mr. Collins, I thought you told us not to hold bonds in our taxable accounts. Will the greater yield be eaten up by taxes?

        Reply
        • jlcollinsnh says

          March 30, 2020 at 1:41 am

          I did and you should.

          But seeing in this case the money has to be in a taxable account so I can easily spend it, it is.

          If the government is only going to let me keep ~2/3rds of the yield, I’d rather is be ~2/3rds of 1.90% than 1.25% 😉

          Reply
          • Crew Dog says

            March 30, 2020 at 9:16 am

            Fair enough.

  6. Alfie says

    March 29, 2020 at 4:16 pm

    Hey Jim,

    Thanks for all you to to share your knowledge with the world!
    I’m wondering why hold cash in VMMXX versus a savings account with an online bank that offers a better interest rate. For example, Capital One 360 offers 1.50% on a savings account. Am I missing something?

    Thanks,
    Alfie

    Reply
    • jlcollinsnh says

      March 29, 2020 at 4:21 pm

      Good point, Alfie…

      …I probably should do that. But I like having most everything in one place: Vanguard.

      Reply
      • Alfie says

        March 29, 2020 at 4:41 pm

        Ok, thanks Jim! I was expecting to be schooled on something I failed to realize. Whew! Stay safe!

        Reply
        • scott says

          March 30, 2020 at 10:45 pm

          Looks like Amex offers a no fee savings account at 1.7%. Not bad!

          Reply
    • Nate says

      March 29, 2020 at 6:02 pm

      What are the differences in Vanguard Money Market funds? Why do you invest in VMMXX over any of the other money market funds?

      Reply
      • jlcollinsnh says

        March 29, 2020 at 7:20 pm

        Vanguard only has one other MM fund: https://investor.vanguard.com/mutual-funds/profile/VMFXX

        It invests only in US government securities, as the name suggests. As such it is a bit more conservative and pays a bit lower interest rate.

        VMMXX is also very conservative, if not quite as much as VMFXX. So the higher interest rate is worth it to me.

        Reply
        • Jake says

          March 29, 2020 at 10:48 pm

          What about the municipal money market funds? Often not that interesting unless you’re in a high tax bracket but they have been behaving very oddly lately (as have the Schwab and Fidelity municipal MM funds). I expect these to come back to reasonable levels soon but have yet to see a decent explanation of why they are so high right now e.g., current 7-day yields of 3.79% for the national fund and 4.37% for the Pennsylvania fund as of 3/26?!? The Fed’s MMLF applies to almost all MM fund assets so not sure why that should have such a large effect on just the muni funds?
          https://investor.vanguard.com/mutual-funds/list?filterAllAssetClasses=false&filterMoneyMarket=true&filterFiftyThousandAndUp=true&filterLowCostInvestor=true#/mutual-funds/asset-class/month-end-returns

          Reply
          • jlcollinsnh says

            March 30, 2020 at 12:04 am

            As I confessed to Todd in our conversation below, I never really considered a muni-bond fund and so hadn’t noticed the high yields. Until you pointed them out.

            This also means I haven’t looked into what might be going on with them.

            That said, when yields are higher than normal, it typically means investors perceive more risk and therefore demand more compensation for taking it.

            That’s what I’d look for first.

        • josh says

          March 30, 2020 at 4:19 pm

          Mr. Collins,

          The Distribution by issuer for Prime money market shows that on 02/29/20 61.8% of the Fund was invested in a category called “Yankee/Foreign” (vs. only about 30% in US treasury bills).

          https://investor.vanguard.com/mutual-funds/profile/portfolio/vmmxx

          Could you please explain to me what that means? I am trying to get comfortable investing in this fund, but with almost 2/3rd of all the assets in this category I feel like I should know what that means.

          Thank you!

          Reply
          • jlcollinsnh says

            March 30, 2020 at 5:26 pm

            Hi Josh…

            Here is the best, most complete description I’ve found:

            Hi Josh…

            Here is the best, most complete description I’ve found:

            https://www.investopedia.com/terms/y/yankeebond.asp

  7. JC says

    March 29, 2020 at 4:23 pm

    GoCurryCracker has gone in the other direction…

    https://www.gocurrycracker.com/coronavirus-course-correction/

    Reply
    • jlcollinsnh says

      March 29, 2020 at 4:25 pm

      Yeah, I saw that.

      But he is in a different position that I, both in allocation and spending.

      Reply
  8. BC says

    March 29, 2020 at 5:19 pm

    always been a bit wary of placing VBTLX in taxable for tax efficiency purposes. To maintain overall AA, we have some short (VBIRX) and intermediate term in our Vanguard taxable (401K, IRA are all bonds) with our entire stock allocation in VTSAX. The bonds make up years 4 and 5 of our “cash” needs as we head into FIRE within the next year. Would prefer the simplicity of all in one fund like VBTLX for the bonds but probably just splitting hairs at this point?

    Reply
    • jlcollinsnh says

      March 29, 2020 at 7:24 pm

      Yeah, VBTLX is not ideal for taxable accounts. But I am holding money in it I might spend shortly.

      Being a total bond market fund also means, in effect, VBTLX balences out to be an intermediate bond fund. (The long bonds and short bonds offset each other.)

      So it is much the same as what you are already doing.

      Reply
      • BC says

        March 29, 2020 at 7:29 pm

        got it, thanks and we appreciate all your posts.

        Reply
  9. Todd says

    March 29, 2020 at 5:51 pm

    Did you consider Vanguard Tax-Exempt Bond Index Fund Admiral Shares (VTEAX)?

    Reply
    • jlcollinsnh says

      March 29, 2020 at 7:28 pm

      I didn’t Todd…

      …and I probably should have.

      In many ways VTEAX would be the better choice in a taxable account for us.

      I’d have to think about how I feel about muni-bonds a bit as I’ve never considered owning them.

      You and Alfie above are taking me to school. 🙂

      Reply
      • Dave says

        March 30, 2020 at 10:08 am

        JL No worries about being taken to school. If school is open near you it will soon be closed!

        Another good post with logic that is easy to follow. Thanks!

        Reply
        • jlcollinsnh says

          March 30, 2020 at 2:17 pm

          Ha!

          I’m being home schooled!

          Reply
  10. TJ says

    March 29, 2020 at 6:10 pm

    I am in the process of reducing my risk as I’m already retired, without the recommended back-up funding. Was all in on VTSAX. It’s time for me to build up my bond and cash allocations, though it isn’t time to sell any VTSAX. I’m still adding to my portfolio and not having to withdraw anything today. For me, that means new money being invested goes to cash or bonds. With return rates as low as they are, cash wins this month, and probably will for the next few months, at least. Have been fortunate the last couple of years and purchased some CDs, some paying as high as 3%, and locked those in for the next five years. CD’s today aren’t paying that much so keep mostly to cash. When CD rates come up a little, I throw a little that way when I can.

    It seems the trick is to put new money where it makes the most sense for wherever someone is on the road to financial independence. I’m fortunate to be in a position where I’m still funding my retirement buckets and not withdrawing from them. If I was younger, I would still be investing in VTSAX with my eye on 30-40 years into the future, and loving the current correction. I can purchase stocks today for 25% less than I had to pay a month or two ago. Have been building my VTSAX holding for years now so even at todays corrected cost, my cost basis is below that, and in my ROTH. It makes no sense to me to even consider selling any of it.

    Have chosen VMMXX. Your argument for VBTLX is a good one and has me thinking. I have to go back to the age old question “Which one helps me sleep better at night?” For me, today, that answer is VMMXX.

    It seems the goal keeps changing with time and more information. I’m okay with putting new retirement money into cash and CD’s monthly, and simply letting my VTSAX do what it’s going to do. Have a plan, that if VTSAX goes a lot lower than it is today (not likely), I will purchase a few shares. If it doesn’t, will simply keep adding to VMMXX until that bucket is filled (5 years expenses). I’m also working on getting my income stream, from cash and bonds, up. That works well with filling them up.

    From what I can see, it looks like you are doing your annual filling up of the cash (in your case bond) bucket. Is that close?

    Have loved and followed this site for a few years now. Have learned so much. I didn’t realize I needed to learn that much and am very grateful you have put this information out for all to see, and still maintain it. Thank you.

    Would you make different choices? Why?

    Reply
    • jlcollinsnh says

      March 29, 2020 at 7:33 pm

      Hi TJ…

      What you are doing makes sense to me and seems a fine way to change your allocation without having to sell your VTSAX at an inopportune time.

      “From what I can see, it looks like you are doing your annual filling up of the cash (in your case bond) bucket. Is that close?”

      Not with the move I describe in the post. However, we are and have been building our cash position from income flow. But this is not new with or because of the bear.

      Reply
  11. Mo says

    March 29, 2020 at 9:44 pm

    Hi Jim,
    For me I have noticed money market funds have high fees in general so I have been buying CD’s and rolling them over. Right now about one percent yield. Your move is a good choice since the Fed is now buying bond ETF’s and the yields might go negative soon. I think they will start buying stock ETF’s soon, maybe VOO like bank of Japan does for their markets to stabilize it. This market might start to get really scary soon and then they will come to the rescue , SP500 1600-1800.

    Reply
  12. nice joy says

    March 29, 2020 at 11:32 pm

    Hi Jim
    What you think about the 2 trillion that is in the market now.? What is your take on this? Just curious.

    Reply
    • jlcollinsnh says

      March 30, 2020 at 12:15 am

      That is a very big question and tough to answer without getting political. And that is something I avoid here.

      It will, of course, further increase our national debt which was already approaching a stunning 24 trillion.

      That debt, in my view, is the most dangerous thing facing our country today. It disturbs me that none of our political leaders seem to pay it much heed.

      In the past, when a major event like WWII dramatically ballooned the debt, it was pared back in the good times that followed. That didn’t happen after the fiscal crises of 2007-8 and, well, now here we are.

      Reply
      • Nice joy says

        March 30, 2020 at 12:25 am

        Thanks Jim.

        Reply
  13. Nick P says

    March 30, 2020 at 9:18 am

    Hi Jim,

    Thanks for all you do for the personal finance community. I noticed a reply above where you mentioned you probably would move to a higher yielding online savings account if you didn’t prefer Vanguard so much. Could be inconsequential but would you also enjoy another advantage of a Vanguard money market mutual fund in the form of qualified dividends tax rate, versus regular interest income on a savings account? Just curious if that’s how it works. Thanks!

    Reply
    • jlcollinsnh says

      March 30, 2020 at 2:23 pm

      Interesting thought, Nick…

      …but money market funds don’t hold stocks that pay dividends.

      VMMXX, for instance, holds things like CDs, short term bonds and US treasuries that pay interest.

      Reply
  14. Isaac says

    March 30, 2020 at 1:11 pm

    Hey Jim, big fan of your site and your book. Despite having read your book (multiple times… Kind of like a bible… Its a classic!), still feel like I should have transferred my workplace vtsax 401k into bonds… If only could have seen how bad would get! When the market goes back up, will definitively do some sort of 80-20 or 70-30 split between bonds and index to make me sleep better at night. Thanks for being the voice of reason Jim!

    Reply
    • jlcollinsnh says

      March 30, 2020 at 2:16 pm

      Thanks for the kind words, Isaac!

      It is one thing to hear about a bear and another to live through one.

      Seems this one has been a learning experience and you now have a much better sense of your own tolerance for volatility. That’s very valuable.

      Sounds like you are doing exactly the right thing by staying the course until the market recovers and then adjusting your allocation when things are calm again.

      Reply
  15. Rob says

    March 30, 2020 at 3:18 pm

    Wow! What an awesome resource you’ve provided!!

    Just recently heard of choosefi and then your Simple Path book. Scrambling to digest it all so I can open a Vanguard account ASAP.

    I am old enough to have known better than to be at this point in my financial life. Thankfully I have relatively little car/cc debt left.

    Thank you so much for sharing!

    Reply
  16. Mike says

    March 30, 2020 at 3:21 pm

    I’m a little confused. Couldn’t you just sell VTSAX to buy VBTLX, avoiding to allocate the money in the VMMXX? I’m still pretty new about finance, so I appreciate your explanation.

    Mike

    Reply
    • jlcollinsnh says

      March 30, 2020 at 5:32 pm

      Hi Mike…

      Yes, I could have.

      But, for reasons mentioned in the post, I like to place orders near the end of the trading day.

      In this case I was cutting it too close and, since I didn’t have VBTLX set up in my taxable account, I just moved it to VMMXX.

      Reply
      • Corey says

        September 9, 2020 at 12:58 am

        “But, for reasons mentioned in the post, I like to place orders near the end of the trading day.”

        I didn’t see where you mentioned that in the post. Why do you like to place orders near the end of the trading day?

        Thanks!

        Corey

        Reply
  17. Jeff says

    March 31, 2020 at 12:22 am

    Thanks for explaining this Jim

    I’m about to start VBTLX in my asset allocation. I really like how easy your model is and thanks for the explanation on why. Gives me the warm fuzzies on execution.

    One questions tho, I didn’t know you had to call Vanguard to buy an ETF. Did something change? When I bought VTI in my taxable brokerage, I just did it through the app. I do love vanguard but they do need to hire a web/app designer. It is super clunky, I will attest to that. Haha.

    Reply
    • jlcollinsnh says

      March 31, 2020 at 12:37 am

      Hi Jeff…

      The fault is mine, not Vanguard’s.

      Since I haven’t bought individual stocks in a number of years and have never bought an ETF, I no longer have a brokerage account with them. That’s what I would have had to call to set up.

      You have one, so you can buy and sell with a few clicks. 🙂

      Reply
      • Jeff says

        March 31, 2020 at 7:09 am

        Oh copy that, yeah I don’t blame you. I make it sound like it’s super easy, but their interface is just archaic. Migrating my account was the easiest part, picking and navigating their funds from the inside was not. Good luck Jim. Thanks again!

        Reply
        • Kim says

          April 2, 2020 at 2:57 pm

          I agree about Vanguard’s UI. I primarily use Fidelity, but I recently opened a Vanguard account to purchase a particular mutual fund. I have been on the phone a couple times with Vanguard representatives trying to find certain information that is readily available at Fidelity, but I was told that I would have to calculate it myself. However, the Vanguard reps did say they are revamping their website with a potential rollout in July 2020 (this was before the pandemic so might be pushed out). Hopefully it will be a better experience after the redesign.

          Reply
          • Jeff says

            April 2, 2020 at 8:43 pm

            That would be awesome. I referred a friend to Fidelity to get started since I didn’t feel like coaching Vanguards interface step by step. I’m excited for this roll out now, that literally is probably the only downside to Vanguard that I can think of.

  18. Dionisio says

    March 31, 2020 at 4:41 pm

    Hi Jim,

    In short, in intl sales for 30 years (age 56) and just invested money without sophisticated knowledge or a plan…uh, until I just read your book…great stuff!

    Getting ready to retire with plans to live life fully and set and forget my investments, rebalancing (60/40) once a year. This is what I’ve done so far after reading: basically have VTI (60% in taxable) and still have the rest (40%) in IRA CDs maturing soon. I (hopefully) have a 30-40 year time horizon.

    I’d like to move away from CDs for my so-called fixed income portion and want to go with one bond fund (BND…(w/Etrade…no trading fees)). If I understand your approach, when the CDs mature, I should buy BND with that cash regardless if BND is at 52-week highs or interest rates are wherever. Again, once I buy I plan on looking where things stand once a year and rebalancing. I dislike overthinking and when I started reading elsewhere, there is so much “on the one hand…” stuff. Have I got it?

    Thanks,
    Dennis

    Reply
    • jlcollinsnh says

      March 31, 2020 at 7:28 pm

      That would be my approach, Dennis. 🙂

      Reply
  19. cristina says

    March 31, 2020 at 8:44 pm

    You Rock.
    Just wanted you to know that in these really uncertain economic times, I so very much look forward to your wise posts….even if some of them are over my head!! LOL I’m learning through you, thank you.

    Reply
    • jlcollinsnh says

      April 1, 2020 at 1:32 am

      You are too kind, Christina…

      …But thank you!

      You rock too, and before long you’ll be rocking the concepts here just fine. 🙂

      Reply
  20. scott says

    April 1, 2020 at 10:57 am

    Are the VTI dividends 100% Qualified? Just curious. I have tried looking this up but still not 100% sure.

    Reply
  21. D says

    April 2, 2020 at 11:47 pm

    My only problem with your bond fund plan is that 1.85% return guarantees that you lose. Even before taxes you are only matching inflation, and after taxes you lose by around 0.3%. Why guarantee a loss?

    Reply
    • D says

      April 2, 2020 at 11:48 pm

      Actually probably more like 0.5% loss rather than 0.3%

      Reply
  22. Jordan Mantel says

    April 5, 2020 at 1:24 am

    Hi Jim!

    Love the blog- thanks for all the insight!

    I’m thinking of making a change in terms of where I’m directing the majority of my cash savings.

    As of now, I’m spreading roughly $2K across my Roth, 401k, and taxable account every month, and 4k in an online savings.

    My question is: should I be putting the 4K of cash savings in my taxable account and load up even more on VTSAX? I was thinking of keeping 20K in an online savings, and then dumping everything else.

    Would love to hear your thoughts!

    Thank you.

    Reply
    • Jordan Mantel says

      April 5, 2020 at 1:44 am

      Hi Jim,

      I forgot to mention I’m 26 years old. Thank you 😊

      Reply
  23. Stephen McNamara says

    April 5, 2020 at 8:20 pm

    This is a very interesting post, and raises a question for me that (I suspect) may prove to be a no-brainer; however, it will help immensely to make sure I understand how to apply your advice to my situation.

    I have $150k cash in a non-taxable account (won’t go into why at this point). I would like to “move” that cash into my taxable account (and as a side matter preferably access it without paying taxes). So I wonder if this is correct: By converting VTSAX to cash in my taxable account (which would be at a slight loss) and then then buying VTSAX with cash in my non-taxable account, it would seem I won’t truly suffer much if any “loss” (ignoring what is expected to be a small difference between “buy” and “sell” given the proximity of the transactions).

    I am aware of the “wash” rules, but do they apply if you don’t try to apply the loss to your taxes (and if I’ve simply “moved” VTSAX to the non-taxable account in exchange for cash, I could forego the “loss”). It just strikes me I end up the same position vis-a-vis VTSAX, but now I have access to the cash without having to withdraw it from a non-taxable account.

    “If it sounds too good to be true…” So is there something I’ve overlooked, other than potential “wash” issues?

    Thanks,

    Reply
  24. Mark says

    April 15, 2020 at 5:02 pm

    Jim, ive been sitting sidelines with funds over and above rainy day funds. would vbtlx be a substitute to a money market account. I may use funds to purchase real estate investment home in the next year or 2.

    Reply
  25. Francesco says

    April 21, 2020 at 12:15 pm

    Hi Jim. I hope you and your family are doing well and staying safe.
    I’ve discovered your book a couple of weeks ago. I finished to read it and recommended to a friend of mine too. I loved your advices and I am happy to be more comfortable with the “investment world”. I meant to invest for long time but I was never able to understand how. It was always a tricky subject.
    So, thanks to you, I am educating myself; I read a lot, listen to podcasts, explore what Mr. Bogle says, and more.
    Few days ago I opened a Vanguard account. I am now ready to buy a VTSAX where I’ll put some money I had sitting and doing nothing for long time. I will hold it forever, put some money in it anytime I can, and forget about it.
    Some may argue that this isn’t the right time to start investing but I don’t care. I am fine with that and I have faith that things will go better.
    I’ll remember the “Coronavirus-time” as the period of my life that got me into investment.
    Thank you.

    Francesco

    Reply
  26. Elmir says

    May 10, 2020 at 8:22 pm

    Hello, Mr. Collins,
    I am 33 and my 401k account is 90% invested in VTSAX. I am a bit concerned about the amount of cash that has been injected to the economy lately by the government. The probability of the next recession happening in a near future is very high. Should I just stay the course or switch to VBTLX until this storm passes?

    Reply
  27. josh mason says

    May 11, 2020 at 8:57 am

    Hi Elmir,

    To clarify, when you say “next recession” are you referring to the one that we are already in which started in mid March and has so far resulted in over 20 million lost jobs? If so, let’s hope it will remain a recession and not a depression.

    As Warren Buffett said at the Berkshire annual meeting last weekend, a year into the Great Depression people did not know they were in a Great Depression, they thought it was just a normal recession.

    Only in hindsight did we know…

    Reply
    • Elmir says

      May 11, 2020 at 10:09 am

      Hi Josh,

      Thanks for taking the time to comment. Not sure if it has been officially labeled as a recession yet, I would agree with you that we are in one. However, what’s perplexing is that the stock market’s behavior. As you said, 20 million jobs lost due to the great shutdown or lockdown whatever you would like to call it, yet stock prices are continuing to climb up.

      Reply
      • Dave says

        May 11, 2020 at 11:10 am

        Hi Elmir, At the age of 33 a big drop in the market can be a blessing as a 401k invester. When the market is down your payroll deductions to the 401k will get you many more shares than when the market was high. That would be the time to be sure to max out your contributions if at all possible.
        Sounds like you might think about your asset allocation though. If 90% in stock is going to keep you awake at night or possibly cause you to sell if the market would drop in half, it may be time to consider a safer allocation. This comes down to your risk tolerance.
        Technically we are not yet in a recession but that is only because that definition is that we have two straight quarters of GDP contraction. The first quarter of 2020 was down 4.8% which is bad, the second quarter which is not yet complete will be much worse. At that point it will be officially be a recession so at this point it is a foregone conclusion. What is not known is how bad it will get and for how long. Some say it will be just a recession while others say it will rival the “Great Depression”.
        Given what has already happened the stock market has done surprisingly well, reinforcing the idea that timing the market is next to impossible.

        Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

The Simple Path to Wealth Book by JL Collins

Important Resources

  • Talent Stacker or My Review
  • Recommended Credit Cards
  • Personal Capital or My Review
  • Betterment or My Review
  • NewRetirement
  • Tuft & Needle or My Review
  • Vanguard.com

More Helpful Links

  • My Manifesto
  • Financial Calculators
  • Ask Jlcollinsnh

Subscribe to New Posts

Follow JLCollinsNH on TwitterJLCollinsNH On Twitter

  • Latest
  • Popular
  • Comments
  • When Your Country Becomes a Global Outcast When Your Country Becomes a Global Outcast
  • Staying the Course in War-Time Staying the Course in War-Time
  • Pathfinders update from Hh Pathfinders update from Hh
  • A New Chapter for Chautauqua A New Chapter for Chautauqua
  • Season’s Greetings!! Season’s Greetings!!
  • Fun with numbers: Historic Stock Market Returns Fun with numbers: Historic Stock Market Returns
  • Let’s talk about what’s up with Bonds, and what ever else you’d like to ask me Let’s talk about what’s up with Bonds, and what ever else you’d like to ask me
  • Today Week Month All
  • Stocks — Part 1:  There’s a major market crash coming!!!!  and Dr. Lo can’t save you. Stocks -- Part 1: There's a major market crash coming!!!! and Dr. Lo can't save you.
  • Why your house is a terrible investment Why your house is a terrible investment
  • How I failed my daughter and a simple path to wealth How I failed my daughter and a simple path to wealth
  • Stocks — Part VI:  Portfolio ideas to build and keep your wealth Stocks -- Part VI: Portfolio ideas to build and keep your wealth
  • Stocks — Part II:  The Market Always Goes Up Stocks -- Part II: The Market Always Goes Up
  • Why you need F-you money Why you need F-you money
  • Stocks — Part V:    Keeping it simple, considerations and tools Stocks -- Part V: Keeping it simple, considerations and tools
  • Today Week Month All
  • When Your Country Becomes a Global Outcast When Your Country Becomes a Global Outcast
  • Staying the Course in War-Time Staying the Course in War-Time
Ajax spinner
Categories
  • Annual Louis Rukeyser Memorial Market Prediction Contest
  • Business
  • The Book: The Simple Path To Wealth
  • Cars and Motorcycles
  • Case Studies
  • Chautauqua
  • Education
  • Guest Posts
  • Homeownership
  • How I Lost Money in Real Estate before it was Fashionable
  • Life
  • Money
  • Q/A Posts
  • Random cool things that catch my eye
  • Stock Investing Series
  • Stuff I Recommend
  • Travels

Archives

  • ► 2023 (3)
    • ► January (3)
      • When Your Country Becomes a Global Outcast
      • Staying the Course in War-Time
      • Pathfinders update from Hh
  • ► 2022 (12)
    • ► December (3)
      • A New Chapter for Chautauqua
      • Season's Greetings!!
      • Fun with numbers: Historic Stock Market Returns
    • ► October (1)
      • Let’s talk about what’s up with Bonds, and what ever else you’d like to ask me
    • ► August (1)
      • The Price of Security
    • ► July (1)
      • Case Study #17: Buying into the market right before a Bear
    • ► June (1)
      • Case Study #16: Helping dad with an inheritance
    • ► May (1)
      • Just inked a contract for my next book, and I want you to be a part of it!
    • ► April (1)
      • The Dinky Diner
    • ► March (1)
      • Chautauqua: A terrible business model
    • ► February (2)
      • Chautauqua is back for 2022!
      • JLCollinsnh.com Enters New Era
  • ► 2021 (14)
    • ► December (1)
      • Season's Greetings!!
    • ► November (2)
      • The new book is out!
      • Are bonds done?
    • ► October (1)
      • Guess what I just finally read for the first time...
    • ► September (1)
      • The negligence that led me to DIY investing
    • ► August (3)
      • Chainsaws and Credit Cards
      • Part XXXVI: Estate Planning 101 -- The Simple Path to an Estate Plan
      • The Simple Path to a Lucrative Career
    • ► July (1)
      • Help Wanted: a new book
    • ► June (1)
      • The Top 9 (Bad) Arguments Against Bitcoin
    • ► May (2)
      • Collins on Crypto
      • The Alfred Hitchcock Path to FI
    • ► April (1)
      • Time to sell?
    • ► February (1)
      • Mariah International: All that glitters…
  • ► 2020 (11)
    • ► December (1)
      • Season's Greetings!!
    • ► June (1)
      • How to give when you have a business
    • ► April (4)
      • Investing with Vanguard for Europeans: 2020 update
      • Part XVII-B: ETF vs. Mutual Fund -- What's the difference?
      • Reviewing the comments on my post of April 1st
      • Why I will no longer be writing this blog
    • ► March (4)
      • My move from VMMXX to VBTLX
      • COVID-19: The unvarnished truth from Doc G.
      • Chautauqua sits out 2020
      • Taking advantage of Mr. Bear
    • ► February (1)
      • Mr. Bear, Podcasts, a good book and why I should be in 100% stocks
  • ► 2019 (11)
    • ► November (4)
      • How we bought our new car
      • The House Hacking Strategy
      • What does buying a new car really cost over the years?
      • Why we bought a brand new car
    • ► August (1)
      • A Guided Meditation for When the Stock Market Is Dropping
    • ► June (2)
      • 7 Days in Heaven: or Why Slowing Down Will Get You There Sooner
      • Quit Like a Millionaire
    • ► March (1)
      • Stocks -- Part XXXV: Investing for Seven Generations
    • ► February (1)
      • Chautauqua 2019 - UK & Portugal - Tickets Now Available
    • ► January (2)
      • Mr. Bogle passes
      • "I wanted the unreasonable"
  • ► 2018 (16)
    • ► December (1)
      • Happy Holidays! and a bit on Mr. Market
    • ► November (3)
      • Truly Passive Real Estate Investing
      • Car Talk: An update on Steve and looking at Leafs
      • Chautauqua 2018 Greece: A week for the gods!
    • ► October (1)
      • On Twitter, gone for Chautauqua and dark on comments till November
    • ► September (2)
      • What we own and why we own it: 2018
      • Tuft & Needle: Our Walnut Frame and Mint Mattress
    • ► August (1)
      • Kibanda Part 5: Pretty, and pretty much done
    • ► June (3)
      • Stocks--Part XXXIV: How to unload your unwanted stocks and funds
      • Tracking your holdings
      • Stocks -- Part XXXIII: Optimism
    • ► May (2)
      • Kibanda Part 4: Quicksand!
      • My Talk at Google, Playing with FIRE and other Chautauqua connections
    • ► March (1)
      • Stocks -- Part XXXII: Why you should not be in the stock market
    • ► February (1)
      • Chautauqua 2018: Mt. Olympus, Greece
    • ► January (1)
      • An International Portfolio from The Escape Artist
  • ► 2017 (15)
    • ► December (2)
      • The Bond Experiment: Return to VBTLX
      • How to Invest in Bitcoin like Benjamin Graham
    • ► October (1)
      • Kibanda Part 3: Running the numbers
    • ► September (1)
      • Sleeping soundly thru a market crash: The Wasting Asset Retirement Model
    • ► August (2)
      • Stocks -- Part XXXI: Too hot. Too cold. Not pure enough.
      • Kibanda, Part 2: Negotiating the deal
    • ► July (2)
      • Time Machine and the future returns for stocks
      • Kibanda: Mr. Anti-house buys his dream house
    • ► June (2)
      • Is there an interior designer in the house?
      • The Simple Path to Wealth goes Audio!
    • ► May (1)
      • Life on the Beach
    • ► April (1)
      • Sell! Sell!! Sell!!! Sell?
    • ► March (1)
      • Vicki comes to Chautauqua: United Kingdom
    • ► January (2)
      • Chautauqua - Ecuador 2017 open for reservations
      • Chautauqua - United Kingdom: August 2017
  • ► 2016 (22)
    • ► December (3)
      • Season's Greetings and other cool stuff
      • Angel Investing, or Angel Philanthropy?
      • Mr. Bogle and me
    • ► November (1)
      • Where did you learn about money?
    • ► October (2)
      • Buy Your Freedom; Rent the Rest
      • So, what do you drive?
    • ► September (2)
      • Stocks -- Part XXX: jlcollinsnh vs. Vanguard
      • A visit to the Frugalwoods
    • ► August (1)
      • What the naysayers are missing
    • ► July (1)
      • Reviews of The Simple Path to Wealth; gone for summer
    • ► June (2)
      • The Simple Path to Wealth is now Published!
      • A peek into The Simple Path to Wealth
    • ► May (1)
      • It's better in the wind. Still.
    • ► April (3)
      • Cool things to check out while I'm gone
      • Stocks — Part XXIX: How to save money for college. Or not.
      • Help Wanted: The Book
    • ► March (1)
      • F-You Money: John Goodman v. jlcollinsnh
    • ► February (2)
      • Q&A - V: The Women of Amphissa
      • jlcollinsnh gets a new suit
    • ► January (3)
      • Chautauqua 2015 Reviews, 2016 registration open
      • Case Study #15: The Scavenger Life -- Freedom first, then Financial Independence
      • 3rd Annual (2015) Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2016
  • ► 2015 (18)
    • ► December (2)
      • Q&A - IV: Strawberry Patch
      • Seasons Greetings! and other cool stuff
    • ► October (2)
      • Personal Capital; and how to unload your unwanted stocks and funds
      • Stockchoker: A look back at what your investment might have been
    • ► September (2)
      • Case Study #14: To Dream the Impossible Dream (and then realize it)
      • Hotel Living
    • ► August (1)
      • Mr. Market's Wild Ride
    • ► June (4)
      • Gone for Summer, an important note on comments and random cool stuff that caught my eye
      • Around the world with an Aussie Biker
      • Case Study #13: The Power of Flexibility
      • Stocks — Part VIII: The 401(k), 403(b), TSP, IRA & Roth Buckets
    • ► March (2)
      • Stocks -- Part XXVIII: Debt - The Unacceptable Burden
      • Chautauqua October 2015: Times Two!
    • ► February (2)
      • YNAB: Best Place to Work Ever?
      • Case Study #12: Escaping a soul-crushing job before you're 70
    • ► January (3)
      • Case Study #11: John, a small business owner in transition
      • Trish and Stan take an Intrepid Sailing Voyage
      • 2014 Annual Louis Rukeyser Memorial Market Prediction Contest results, and my forecast for 2015
  • ► 2014 (29)
    • ► December (2)
      • Diamonds and Happy Holidays!
      • Micro-Lending with Kiva
    • ► November (3)
      • Chautauqua February 7-14, 2015: Escape from Winter
      • Stocks -- Part XXVII: Why I Don’t Like Dollar Cost Averaging
      • Jack Bogle and the Presidential Medal of Freedom
    • ► October (3)
      • Tuft & Needle: A better path to sleep
      • Nightmare on Wall Street: Will the Blood Bath Continue?
      • Help Wanted
    • ► September (1)
      • Chautauqua 2014: Lightning strikes again!
    • ► August (2)
      • Stocks -- Part XXVI: Pulling the 4%
      • Stocks -- Part XXV: HSAs, more than just a way to pay your medical bills.
    • ► July (3)
      • Stocks -- Part XXIV: RMDs, the ugly surprise at the end of the tax-deferred rainbow
      • Summer travels, writing, reading and other amusements
      • Moto X, my new Republic Wireless Phone
    • ► June (1)
      • Stocks -- Part XXIII: Selecting your asset allocation
    • ► May (1)
      • Stocks -- Part XXII: Stepping away from REITs
    • ► April (3)
      • Q&A III: Vamos
      • Q&A II: Salamat
      • Q&A I: Gaijin Shogun
    • ► March (2)
      • Top 10 posts
      • Cafe No Se
    • ► February (4)
      • Chautauqua 2014 preview, closing up for travel and other random cool things that caught my eye of late.
      • Case Study #10: Should Josiah buy his parents a house?
      • Case Study #9: Lars -- maximizing some good fortune and considering "dollar cost averaging"
      • Case Study #8: Ron's mother - she's doin' all right!
    • ► January (4)
      • roundup: Some random cool things
      • Stocks — Part XXI: Investing with Vanguard for Europeans
      • Case Study #7: What it looks like when everything financial goes wrong
      • 1st Annual Louis Rukeyser Memorial Market Prediction Contest 2013 results, and my forecast for 2014
  • ► 2013 (41)
    • ► December (4)
      • Closing up for the Holidays, see you in 2014
      • Betterment: a simpler path to wealth
      • Case Study 6: Helping an ill and elderly parent
      • Stocks -- Part XX: Early Retirement Withdrawal Strategies and Roth Conversion Ladders from a Mad Fientist
    • ► November (3)
      • Death, Taxes, Estate Plans, Probate and Prob8
      • Case Study #5: Zero to 2.6 million in 25 years
      • Case Study #4: Using the 4% rule and asset allocations.
    • ► October (3)
      • Republic Wireless and my $19 per month phone plan
      • Case Study #3: Let's get Tom to Latin America!
      • The Stock Series gets its own page
    • ► September (2)
      • Case Study #2: Joe -- off to a fast start!
      • Chautauqua 2013: A Week of Dreams
    • ► August (1)
      • Closing up shop plus an opening at Chautauqua, my new podcast, phone, book and other random cool stuff
    • ► July (1)
      • They Will Kill You For Your Shoes!
    • ► June (4)
      • Stocks -- Part VIII-b: Should you avoid your company's 401k?
      • Shilpan's Seven Habits to Live More with Less
      • Stocks -- Part XIX: How to think about money
      • My path for my kid -- the first 10 years
    • ► May (5)
      • Why your house is a terrible investment
      • Stocks — Part XVIII: Investing in a raging bull
      • Dining with the Ghosts of Sarah Bernhardt and Alfons Mucha
      • How we finally got the house sold
      • Stocks — Part XVII: What if you can't buy VTSAX? Or even Vanguard?
    • ► April (4)
      • Greetings from Prague & a computer question
      • Swimming with Tigers, a 2nd chance on the Chautauqua, a financial article gets it wrong and I'm off to Prague
      • Storage, Moving and Movers
      • Homeless, and a bit on the strategy of dollar cost averaging
    • ► March (4)
      • Wild Turkeys, Motorcycles, Dining Room Sets & Greed
      • Roots v. Wings: considering home ownership
      • How about that stock market?!
      • The Blog has New Clothes
    • ► February (5)
      • Meet Mr. Money Mustache, JD Roth, Cheryl Reed & me for a Chautauqua in Ecuador
      • High School Poetry, Carnival, cool ads and random pictures that caught my eye
      • Consignment Shops: Best business model ever?
      • Cafes
      • Stocks -- Part XVI: Index Funds are really just for lazy people, right?
    • ► January (5)
      • Social Security: How secure and when to take it
      • Fighting giraffes, surreal landscapes, dancing with unicorns and restoring a Vanagon
      • My plan for 2013
      • VITA, income taxes and the IRS
      • How to be a stock market guru and get on MSNBC
  • ► 2012 (53)
    • ► December (6)
      • See you next year....until then: The Origin of Life, Life on Other Worlds, Mechanical Graveyards, Great Art, Alternative Lifestyles and Finding Freedom
      • Stocks -- Part XV: Target Retirement Funds, the simplest path to wealth of all
      • Stocks -- Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks Part XIV: Deflation, the ugly escort of Depressions.
      • Stocks -- Part XIII: The 4% rule, withdrawal rates and how much can I spend anyway?
      • How I learned to stop worrying about the Fiscal Cliff and you can too.
    • ► November (2)
      • Rent v. owning: A couple of case studies in Ecuador
      • So, what does a month in Ecuador cost anyway?
    • ► October (4)
      • See you in December....
      • Meet me in Ecuador?
      • The Podcast: You can hear me now.
      • Stocks -- Part XII: Bonds
    • ► September (6)
      • Stocks -- Part XI: International Funds
      • The Smoother Path to Wealth
      • Case Study #I: Putting the Simple Path to Wealth into Action
      • Tales of Bolivia: Calle de las Brujas
      • Stocks -- Part X: What if Vanguard gets Nuked?
      • Travels in South America: It was the best of times....
    • ► August (1)
      • Home again
    • ► June (4)
      • Yellow Fever, closing up shop for the summer and heading to Peru y Bolivia
      • I could not have said it better myself...
      • Stocks -- Part IX: Why I don't like investment advisors
      • Happy Birthday, jlcollinsnh; and thanks for the gift Mr. MM!
    • ► May (6)
      • Stocks -- Part VIII: The 401K, 403b, TSP, IRA & Roth Buckets
      • Mr. Money Mustache
      • The College Conundrum
      • Stocks -- Part VII: Can everyone really retire a millionaire?
      • Stocks -- Part VI: Portfolio ideas to build and keep your wealth
      • Stocks -- Part V: Keeping it simple, considerations and tools
    • ► April (6)
      • Stocks -- Part IV: The Big Ugly Event, Deflation and a bit on Inflation
      • Stocks -- Part III: Most people lose money in the market.
      • Stocks -- Part II: The Market Always Goes Up
      • Stocks -- Part 1: There's a major market crash coming!!!! and Dr. Lo can't save you.
      • You can eat my Vindaloo, mega lottery, Blondie, Noa, Israel Kamakawiwo 'Ole, art, film and a ride on the Space Shuttle
      • Where in the world are you?
    • ► March (7)
      • How I lost money in real estate before it was fashionable, Part V: Sold! and the taxman cometh.
      • How I lost money in real estate before it was fashionable, Part IV: I become a Landlord.
      • How I lost money in real estate before it was fashionable, Part III: The Battle is Joined.
      • How I lost money in real estate before it was fashionable, Part II: The Limits of the Law.
      • How I lost money in real estate before it was fashionable, Part I: Impossibly Naive.
      • You, too, can be conned
      • Armageddon and the value of practical skills
    • ► February (6)
      • Rent v. Owning Your Home, opportunity cost and running some numbers
      • The Casanova Kid, a Shit Knife, a Good Book, Having No Regrets, Dark Matter and a bit of Magic
      • What Poker, Basketball and Mike Whitaker taught me about Luck
      • How to Give like a Billionaire
      • Go ahead, make my day
      • Muk Finds Success in Tahiti
    • ► January (5)
      • Travels with "Esperando un Camino"
      • Beanie Babies, Naked Barbie, American Pickers and Old Coots
      • Selling the House and Adventures in Staging
      • The bashing of Index Funds, Jack Bogle and a Jedi dog trick
      • Magic Beans
  • ► 2011 (22)
    • ► December (1)
      • Dividend Growth Investing
    • ► November (2)
      • The Mummy's head, Particle Physics and "Knocking on Heaven's Door"
      • "It's Better in the Wind" or why I ride a motorcycle
    • ► October (1)
      • Lazy Days and School Days
    • ► July (2)
      • The road to Zanzibar sometimes goes thru Ecuador...
      • Johnny wins the lotto and heads to Paris
    • ► June (16)
      • Chainsaws, Elm Trees and paying for College
      • Stuff I’ve failed at: the early years
      • Snatching Victory from the Jaws of Defeat
      • The. Worst. Used. Car. Ever.
      • Top Ten reasons your future is so bright it hurts my eyes to look at it
      • The Most Dangerous Words Your Customer Can Say
      • How not to drown in The Sea of Assholes
      • What we own and why we own it
      • The Ten Sales Commandments
      • My ever so formal and oh so dry CV
      • How I failed my daughter and a simple path to wealth
      • The Myth of Motivation
      • Why you need F-you money
      • My short attention span
      • Why I can’t pick winning stocks, and you can’t either
      • The Monk and the Minister

© Copyright 2022 jlcollinsnh.com Privacy Policy Disclaimers