Date: Fri, 1 Dec 2006 20:55:11 -0600
From: joetaxpayer 
Subject: Re: Question about re-investing returns...
Newsgroups: misc.invest.financial-plan
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	=Lrbq



Elizabeth Richardson wrote:

>>The key parameter related to the case that JOE was talking about is the
>>total return. For the taxable account, the annual return is reduced by
>>0.22% (1.5% dividends taxed at 15% rate). For the tax-deferred account,
>>the total return is reduced by 1% assuming greater expense ratio.
> 
> 
> 
> And if you have Vanguard funds in your tax-deferred account? Why are we
> assuming greater expense ratio in the tax-deferred accounts?
> 
> Elizabeth Richardson
> 

Because to answer the question "should I fund my pre-tax account as much 
as I can or invest post-tax (but not Roth)?" I proposed that it would be 
good to know the expenses within the pre-tax account. Then I ran a 
spreadsheet or two, and found that holding tax rates even, (going in and 
comming out) that the pre-tax account was favorable unless its expense 
was about .85% higher. It wasn't an assumption, it was a calculated 
breakeven point (for a 20 year time horizen).
JOE