My great plan was to sell a couple stocks that went down the least over the last couple months, and start rolling the money into something that went down more.
A few days ago, I sold a couple stocks that were still close to their 52wk highs.
Today, I logged in to buy some Vanguard S&P 500 index shares. No can do. Got a rude message on my screen that I can’t buy no-load funds in that account.
Steve
Forget that. Transfer the money to your bank account and buy directly from Vanguard.
Forget that. Transfer the money to your bank account and buy directly from Vanguard.
If I have a gonzo of a mutual fund position in a cash account, the potential for unpredictable short/long term cap gains and divis makes estimating estimated tax payments more risky. Do you know of a means to mitigate that risk?
Steve
Sure. I have several ideas. First keep in mind you have the tax same issues with buying Vanguard funds from your broker who is giving you a bolt job* as with Vanguard. Unless you are already in an tax-advantaged account. In that case, you should just move your tax advantaged account to Vanguard, Fidelity, or some other reputable brokerage who isn’t actively trying to bolt you over. Personally, if a broker only allowed loaded funds my relationship with them would be measured in milliseconds.
But if it is a regular brokerage account, Vanguard has a number of low cost, tax-managed funds designed to minimize dividends and capitals gains and the performance is similar to index funds. Or you could simply buy BRK.B which does not pay dividends and again, has performance similar to the broader market. Except this year, when it is up 31% vs. 6.5% for the S&P 500.
And IRS has fair harbor rules. You don’t have to be perfect on your estimated taxes, just close enough.
*TMF doesn’t allow words that describe certain types of fasteners. To project the children, you see.
Close the account and transfer it to a more accommodating place. Even Vanguard itself if you like. Or Fidelity, Schwab, etc.
More than 50 years ago, as an 18-year-old Freshman in engineering school, I took a 3-day course called “Investment Philosophy” that was taught by a young Army Captain who was an instructor in the ROTC program. He brought in a Stock Broker, Insurance Agent, Mutual Fund Salesman and Estate Planning Attorney and had then make a pitch for their services. Then after they were gone, the Captain pointed out what kind of fees they were charging you and where you were getting screwed.
Among the most memorable lines from the course was, “Never pay a load” (e.g., back in the 1970’s it was common for a mutual fund purchase to come with a 5% to 8% commission to the sales broker.)
Good advice 50 years ago and good advice today.
intercst
I’ve learned that it is OK to say that you’re preventing yourself from being “improperly fastened”, but it is prohibited to suggest that others be “improperly fastened”.
intercst
A bit of additional information: the account is a conventional IRA. That is why I would rather have the fund in that account, so I don’t need to deal with estimated taxes. The brokerage charges $6/trade on common stocks. Hardly a helically ridged rod, compared to the human broker I used 30 years ago. I rarely do more than four or five trades per year. There have been years I started to wonder if they were thinking I had gone toes up due to the lack of activity.
Steve
Reputable brokers charge $0.00/trade. It would probably take you less than three minutes to move your account. Which is pretty good ROI even if you only make one trade ever.
In this day and age there is no reason to pay extra for low service brokers.
If the account is an IRA then,
the above would not be factual. There are no gains or divs on an IRA. It is all income and only when you take it out.
You missed this line?
That is why I would rather have the fund in that account, so I don’t need to deal with estimated taxes.
Steve
This is the hardest thing for me to believe … you pick up a old discarded printer on the street, clean it up, and use it, so you can have a free printer, yet you pay some schmucks $6 a trade and they won’t even do the trades you want to do???
lol, you get points for remembering that story. I have had my rescue Canon for several years now.
Steve