Great article. I would argue that if you have to keep some of your retirement savings in a taxable account, it would be more tax efficient to invest your bond allocation in your taxable account (via munis), and invest in stocks using your IRA (whether traditional or Roth). On a risk adjusted, after-tax return basis, municipal bonds compare favorably to both treasuries and other taxable bonds. Vanguard has many low-cost muni bond funds tailored to different investors’ objectives (e.g. duration, credit quality, state specific). The reason to have stocks in IRAs is that the expected long-term return of equities is so much higher than bonds. Having stocks in your IRA allows you to take greater advantage of the tax benefits of an IRA. The tax advantages are greater in a Roth, but would still be true in a traditional IRA.
I'm not a fan of Citibank's customer service, but I think your criticism of how they handled your checking account is unfair. Like most banks, Citi does not allow people to open bank accounts with the primary address being a PO Box or anything other than the account holder's actual, residential address. You did not give them your real residential address, which was outside the US. Instead, you used a virtual mail box, which would appear on its face to be a real, physical address. Citi did not initially detect this, but did catch this shortly thereafter. The only valid criticism of Citi would be that they should have caught this before opening your account, but hardly a scandal. Once Citi identified your account as having a possible compliance issue, it is not surprising that you had a bureaucratic headache to deal with, as you likely would at any financial institution. The fact that you were able to open credit cards and savings accounts with other banks using your virtual mail box, does not mean that Citi did anything wrong. It is likely that those other banks simply have not detected this yet, and may never. If they do, you are likely to have a similar problem.
Since 9/11, governments have enacted legislation to limit money laundering and tax evasion. I'm sure you are not engaged in either of those. But someone opening a checking account from outside the US using a virtual mail box inside the US looks quite suspicious to a bank and their regulators. I think a key take away is if you plan to move outside of the US, for even a few years, you should open any accounts before you leave, and let them know if you if need to change your address to a foreign one. Some banks are better about this than others.
Comments
I think most people only need 1 fund for their equity inventment: Vanguard Total World Stock, VT or VTWAX. (EFT or Mutual Fund)
Post: If you could buy just three funds or less, what would they be?
Link to comment from September 30, 2023
Great article. I would argue that if you have to keep some of your retirement savings in a taxable account, it would be more tax efficient to invest your bond allocation in your taxable account (via munis), and invest in stocks using your IRA (whether traditional or Roth). On a risk adjusted, after-tax return basis, municipal bonds compare favorably to both treasuries and other taxable bonds. Vanguard has many low-cost muni bond funds tailored to different investors’ objectives (e.g. duration, credit quality, state specific). The reason to have stocks in IRAs is that the expected long-term return of equities is so much higher than bonds. Having stocks in your IRA allows you to take greater advantage of the tax benefits of an IRA. The tax advantages are greater in a Roth, but would still be true in a traditional IRA.
Post: Mix and Match
Link to comment from December 4, 2021
I'm not a fan of Citibank's customer service, but I think your criticism of how they handled your checking account is unfair. Like most banks, Citi does not allow people to open bank accounts with the primary address being a PO Box or anything other than the account holder's actual, residential address. You did not give them your real residential address, which was outside the US. Instead, you used a virtual mail box, which would appear on its face to be a real, physical address. Citi did not initially detect this, but did catch this shortly thereafter. The only valid criticism of Citi would be that they should have caught this before opening your account, but hardly a scandal. Once Citi identified your account as having a possible compliance issue, it is not surprising that you had a bureaucratic headache to deal with, as you likely would at any financial institution. The fact that you were able to open credit cards and savings accounts with other banks using your virtual mail box, does not mean that Citi did anything wrong. It is likely that those other banks simply have not detected this yet, and may never. If they do, you are likely to have a similar problem. Since 9/11, governments have enacted legislation to limit money laundering and tax evasion. I'm sure you are not engaged in either of those. But someone opening a checking account from outside the US using a virtual mail box inside the US looks quite suspicious to a bank and their regulators. I think a key take away is if you plan to move outside of the US, for even a few years, you should open any accounts before you leave, and let them know if you if need to change your address to a foreign one. Some banks are better about this than others.
Post: Time Not Well Spent
Link to comment from July 17, 2021