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Post by steadyeddy on Nov 18, 2023 21:40:45 GMT
What do you do with typically sizeable year-end CG in the funds you own?
Do you take cash? reinvest? What factors should one consider?
Both Wellington and Wellesley have decent CG coming this year and I am trying to make up my mind.
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Post by chang on Nov 18, 2023 21:47:06 GMT
What do you do with typically sizeable year-end CG in the funds you own? Do you take cash? reinvest? What factors should one consider? From a tax perspective, it makes no difference. Cash or reinvest is a decision based on your income needs and AA. Personally, I reinvest almost everything (except dividends from two legacy stocks that I don't want more shares of). |
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Post by Mustang on Nov 18, 2023 22:33:25 GMT
I agree. I reinvest everything. The more shares you own the greater the dividend and capital gain distributions later.
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Post by steadyeddy on Nov 19, 2023 4:14:30 GMT
chang, Mustang, thanks for the repsonses. It makes sense to keep reinvesting. Duh!
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Post by fritzo489 on Nov 19, 2023 5:03:33 GMT
My thought, depends if one thinks the fund will go up after CG's or down. If down , take the cash & then buy more shares after it drops, thus you get more shares per dollar spent. If one is getting started with investing, use the CG's & buy more shares. Time is on your side.
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Post by keppelbay on Nov 19, 2023 7:35:37 GMT
A different point of view:
Capital gains, being a forced tax event, gives you the opportunity to reconsider your allocation. You might not want to sell to take gains on a winner but a distribution forces your hand, taxwise. If you take the cash, you are free to put it where opportunity seems greatest at the moment, rather than just 'holding'. You might want to do some rebalancing. Of course, this depends on the nature of your portfolio. Probably irrelevant, if the CGs are in an allocation fund like VWELX. The issue is analogous for monthly distributions from the fixed income funds/CEFs that I use. Rather than just rolling them over to more shares of same, I prefer to take the cash and decide what I most want to buy at the moment. Sometimes it is more of the same, but often not. Transaction costs are no longer a factor. |
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Post by oldskeet on Nov 19, 2023 8:31:34 GMT
Hi guys. There is no correct one way approach to do this.
For me, being retired and in the distribution phase of investing, I take all mutual funds distributions in cash. Part of these distributions find their way to my wallet with the residual buying additional shares somewhere within my portfolio on a best fit basis thus maintaining my asset allocation. Most purchases within my portfolio are at nav.
In my son's and grandkids' portfolios their mutual funds distributions are set to auto reinvest since they are in the accumulation phase of investing. Then new money purchases are used to keep their portfolio's asset allocation on bubble.
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Post by FD1000 on Nov 19, 2023 13:17:08 GMT
The correct way for most, including retirees (several years for me) is to reinvest and sell when you need it, especially in deferred accounts. In taxable accounts it doesn't matter either for taxes. Most of our money is in deferred account.
I like that all my money is invested in my brokerage accounts, the only cash is the bank.
MM, CD, Treas are not a place I want to stay in long term because I can make more in other categories.
Lastly, CG is part of your total return.
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