Search found 21 matches

by Kelty
Tue Jul 02, 2013 4:37 am
Forum: Personal Investments
Topic: Bonds within LifeStrategy Funds
Replies: 2
Views: 665

Bonds within LifeStrategy Funds

I have a 5-10 year horizon and am trying to decide between LifeStrategy Moderate Growth and LifeStrategy Conservative Growth. Should rising interest rates be factored into my decision? That is, would LifeStrategy Moderate Growth be a safer choice in today's market because it has a smaller percentage of bonds?
by Kelty
Wed Apr 03, 2013 9:37 am
Forum: Personal Finance (Not Investing)
Topic: placing home in irrevocable trust -- what to ask lawyer?
Replies: 15
Views: 8018

Re: placing home in irrevocable trust -- what to ask lawyer?

MBMiner and Dulocracy: Very helpful comments. Thank you.
by Kelty
Tue Apr 02, 2013 10:54 am
Forum: Personal Finance (Not Investing)
Topic: placing home in irrevocable trust -- what to ask lawyer?
Replies: 15
Views: 8018

Re: placing home in irrevocable trust -- what to ask lawyer?

Penguin wrote (immediately above): "They then found out that it was possible to reverse the irrevocable trust!"

How was this done?
Can an irrevocable trust be reversed in any state?
What is the process?
by Kelty
Sun Mar 31, 2013 8:24 pm
Forum: Personal Investments
Topic: Irrevocable Trust Asset Allocation
Replies: 17
Views: 3214

Re: Irrevocable Trust Asset Allocation

Whether or not an irrevocable trust should have been set up in the first place I do not know. At this point it seems that all that can be done is to manage the trust as well as possible.

The trust is designed so that the trustee can at any time distribute funds to a beneficiary who could then use the funds for the benefit of the grantor (and would be morally expected to do so). The beneficiary would pay taxes on such a distribution.

I very much appreciate your comments, which are all helpful, and welcome any further comments.
by Kelty
Sun Mar 31, 2013 12:51 pm
Forum: Personal Investments
Topic: Irrevocable Trust Asset Allocation
Replies: 17
Views: 3214

Re: Irrevocable Trust Asset Allocation

The trust is irrevocable. Its purpose is Medicaid planning. The five-year qualification period has not yet been met. No distribution to the beneficiaries (ages 50s and 60s) is expected. The trust ends with the death of the grantor (age 90s and still healthy) at which time the assets will be distributed among the grantor's heirs. Does this give you enough information to advise me about asset allocation of the irrevocable trust funds?
by Kelty
Sun Mar 31, 2013 2:13 am
Forum: Personal Investments
Topic: Irrevocable Trust Asset Allocation
Replies: 17
Views: 3214

Irrevocable Trust Asset Allocation

Should the asset allocation of an irrevocable trust that ends with the death of the grantor be based on the age of the grantor, the age of the beneficiaries, or neither?
by Kelty
Wed Jan 30, 2013 8:14 am
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

If and when I decide to sell part of a mutual fund, would it be too complicated for me to figure out for myself (without an accountant) which cost basis is most cost effective at that particular time? No, it won't be a problem. If you buy the fund now, Vanguard will keep a record of your cost basis; if you have older (non-covered) shares, you can keep a record in accounting software such as Quicken, or in a spreadsheet. It is almost always right to sell the highest-basis shares, so if your records indicate that you have shares bought at $25 and shares bought at $30, you should sell the shares bought at $30, and specify those shares when you sell online. The fog seems to be lifting. I see that the share price of all my Vanguard transactions...
by Kelty
Tue Jan 29, 2013 9:40 am
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

grabiner wrote:But it can save you hundreds of dollars, so it's worthwhile whenever you sell part of a fund. When I needed to sell $5000 of a mutual fund a few years ago, FIFO would have sold shares for which I had paid $3000 ($300 tax), and average basis would have sold shares for which I had paid $4000 ($150), while specific ID allowed me to sell shares for $5032 for which I had paid $5000 ($32 short-term gain, $8 tax in my 25% bracket).
Your example helps a lot toward my understanding of cost basis.

If and when I decide to sell part of a mutual fund, would it be too complicated for me to figure out for myself (without an accountant) which cost basis is most cost effective at that particular time?
by Kelty
Mon Jan 28, 2013 8:34 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

grabiner wrote:You should use specific identification, so that you can sell shares to minimize your overall tax burden. Usually, you will want to minimize gains, but there are some exceptions. If you are in the 15% tax bracket and not taking Social Security, you will pay no tax on capital gains that leave you in the 15% bracket, so you might want to take more gains than necessary when you sell. In another year, when you are in the phase-in of Social Security taxation, every $1 of capital gains is taxed at 0% but makes 85 cents of Social Security taxed at 15%, so you want to minimize gains in that year. And any unrealized gains you still have when you die will not be taxed at all.
Uh-oh. There's another steep learning curve in my future. :)
by Kelty
Mon Jan 28, 2013 12:21 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

SpringMan wrote:To switch to admiral shares do NOT do an exchange. Do a convert to admiral shares. You can do this on the website or call Vanguard and have them do it. Conversion will not be a taxable event. If your fund drops below the minimum for admiral shares due to market conditions, Vanguard will generally not demote your fund to investor shares, although they have the right. If you sell shares or exchange out shares resulting in dropping below the minimum they will, but first they will send you a letter giving you an opportunity to add funds. No penalties are involved just demotion of the share class.
Thank you very much for providing this very important information.
by Kelty
Mon Jan 28, 2013 9:37 am
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

* Is there a tax consequence for switching from Investor to Admiral? * Am I penalized if a Vanguard fund drops below its minimum ($3,000 or $10,000 or whatever) due to market fluctuation? * Should I use FIFO instead of AvCost for my cost basis? Answers to my three questions: * A Vanguard site says there is no tax consequence for switching from Investor shares to Admiral shares. Does this mean that the Investor shares are not actually sold when they switch to Admiral shares? * A Bogleheads thread says I should switch to Admiral shares as soon as a fund reaches $10,000 and that those shares will remain Admiral shares even if the market drops the fund below $10,000. Therefore, a market drop to below $10,000 apparently would not incur a penalt...
by Kelty
Mon Jan 28, 2013 12:07 am
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

If you want a portfolio which requires no management, are in a low tax bracket, and the allocation will be correct for the rest of your life , then the LifeStrategy Moderate Growth is fine for a one-fund taxable portfolio. You won't have to worry about rebalancing because the account will stay balanced. Note the italics. If you might want to change to a more conservative allocation later, then you should either use a Target Retirement fund (which becomes more conservative automatically) or the three individual funds. If you switch from LifeStrategy Moderate Growth to LifeStrategy Conservative Growth, you will pay capital-gains tax on the whole thing; if you have a 60/40 portfolio of individual funds and change to 40/60, you will pay capita...
by Kelty
Sun Jan 27, 2013 1:04 am
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

Many thanks to all three of you for un-confusing me.

During this process my thinking has evolved. Now I am debating between LifeStrategy Moderate Growth and a 60/40 combination of Total Stock, Total International, and Total Bond. LifeStrategy would be easier, but I think I would enjoy watching the fluctuations of the three individual index funds.

Even harder will be deciding WHEN.

8-)
by Kelty
Sat Jan 26, 2013 9:17 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

You asked about tax consequences. The consequences are different for short and long. To know the consequences, you need both numbers for selling today, but the distributions from December are irrelevant. Perhaps you could reveal all four numbers: long December, long today, short December, and short today. Then ignore anything from December. Thank you for bearing with me. Short December = $18 and Long December = zero Short Today = $288 and Long Today = zero So if I had sold the Target Retirement Income Fund yesterday, then I would pay short-term capital gains taxes on $288. And the amount of that tax would be the total cost of exchanging the Target Retirement Income Fund for another Vanguard fund. (Except I assume that whatever fund I excha...
by Kelty
Sat Jan 26, 2013 8:14 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

What happened in the past is irrelevant; only the future will affect your returns. The best time to switch funds is when the new fund will go up more than the old fund; since you are switching to a higher stock allocation, you want to do this before the market goes up. However, I have no ability to predict whether the market will go up, and neither does anyone else who is offering advice. Whether the exchange is right or wrong depends on the rest of your portfolio and your needs. I don't like this specific change; if you want a more aggressive one-fund portfolio, there are better diversified options. If you are not yet retired, you may want a Target Retirement fund other than the income fund, which will drop to 30% stocks several years aft...
by Kelty
Sat Jan 26, 2013 7:57 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

sscritic wrote:I am not sure, but I think you might be confusing capital gains paid by the fund and capital gains you would realize if you sold your fund at a gain. VTINX paid a short term capital gain generated by its own sales of stocks and bonds that it holds of $0.021 a share on 12/27/2012. If you bought shares in July for $3000 and sell them today for $5000, you will have a $2000 gain. I am guessing the $18 refers to the distribution, but I could be wrong.

What do you see when you click on cost basis under balances and holdings? Those are what your gains would have been if you had sold yesterday.
The total gain is $288--is this what you mean?
by Kelty
Sat Jan 26, 2013 6:25 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

If you have no capital gains there should be no tax consequences to selling VTINX and buying whatever you want. You will pay tax on any dividends you have received. In order to have long term capital gains you need to hold the fund for at least a year. During the first year any gains would be short term gains. From what you say, I must have got short-term and long-term capital gains backward. VTINX did have short-term capital gains. So my question is this: If I switched to VBIAX, would the time period for short-term capital gains start all over again? If you have no capital gains and therefore no tax consequences to selling, I see no reason why you should not switch funds to achieve the proper AA. I assume you purchased this fund recently?...
by Kelty
Sat Jan 26, 2013 5:41 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Re: Exchanging One Vanguard Fund For Another

Is this in an IRA, or a plain old taxable account?
It's just a plain old taxable account. With VTINX I have had no long-term capital gains. Would I have long-term capital gains with VBIAX during the first year?

What is the thinking behind your wanting to switch?
I am considering the switch in order to attain a better asset allocation. However, if exchanging is not wise, I could get a better asset allocation by keeping the VTINX and adding something like VTSAX. However, I am more interested in VBIAX than I am in VTSAX.
by Kelty
Sat Jan 26, 2013 4:55 pm
Forum: Personal Investments
Topic: Exchanging One Vanguard Fund For Another
Replies: 27
Views: 12841

Exchanging One Vanguard Fund For Another

Hello.
I am considering exchanging all of my VTINX (about $10,500) for VBIAX.
What is the cost of such an exchange?
What are the tax implications of such an exchange?
How do I decide if it is wise or foolish to make such an exchange?
How do I decide the timing of making such an exchange?
by Kelty
Sat Feb 18, 2012 7:12 pm
Forum: Personal Investments
Topic: CitiGroup Reverse Split
Replies: 5
Views: 974

Re: CitiGroup Reverse Split

What I am hearing so far is that it will not hurt to hang on to CitiGroup
but that I could save money by transfering it to Vanguard.
by Kelty
Sat Feb 18, 2012 3:01 am
Forum: Personal Investments
Topic: CitiGroup Reverse Split
Replies: 5
Views: 974

CitiGroup Reverse Split

I am a new Vanguard investor but still have investments with another financial organization. Through the other organization I bought about 100 shares of CitiGroup a couple of years before the crisis of 2008. In May 2011 CitiGroup did a Reverse Stock Split, leaving me with about 10 shares at about 10 times the price (a virtual wash). It also left me with a Capital Loss of about $500 that I am taking on my 2012 federal tax return. On the surface this Capital Loss seems to be an okay thing since it is saving me a small amount of money on my 2012 taxes. However, although I seem to understand what has happened, I do not understand the implications. Should I have sold my CitiGroup before the Reverse Split? If I hold CitiGroup and by some miracle ...