Does it matter when I buy Vanguard?
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Does it matter when I buy Vanguard?
My understanding is you have to be careful when you buy mutual funds because you want to buy them after the date the fund distributes capital gains towards the end of the year. If I'm going to buy Vanguard mutual funds, should I wait until after December 31? Is there a date each fund will distribute cap gains? How can I find that out?
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Re: Does it matter when I buy Vanguard?
That seems like it would be quite expensive. Is Vanguard for sale?
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FlyOverState
Re: Does it matter when I buy Vanguard?
Might depend on which fund you pick, but in general the view here is to not do market timing. I rolled my IRA over exactly one year ago today on Halloween. I did not have any capital gain distributions last year.
Re: Does it matter when I buy Vanguard?
Vanguard funds generally now distribute dividends every three months, so "buying the dividend" tends to be much less of an issue now. In general, at the beginning of each quarter (January, April, July, October) is a good time to buy.
Note that "buying a dividend" only applies to taxable accounts. In tax advantaged accounts it doesn't matter when you buy.
Note that "buying a dividend" only applies to taxable accounts. In tax advantaged accounts it doesn't matter when you buy.
Most of my posts assume no behavioral errors.
Re: Does it matter when I buy Vanguard?
I don't even recall any distributed capital gains from Total stock, international, & emerging markets, at least for a number of years. The dividends would be distributed quarterly but I might wait if just a few days before distribution in taxable accounts. Also they are mostly qualified, so lower or no tax anyway (same as LT Capital Gains). Active funds might be different.
- nisiprius
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Re: Does it matter when I buy Vanguard?
1) I am concerned by your phrasing, "buy Vanguard." Vanguard is just a brand name. I like it, it's my favorite brand, all my mutual funds are Vanguard funds, go Vanguard, Vanguard rocks... but there are twenty things far more important than that. Your order of decision-making could go something like this:
a) I choose to save $x a year toward retirement.
b) Of that, looking at my own risk tolerance and my best understanding of the risks of stocks, I choose to put y% in stocks, and the rest in lower-risk investments such as bonds.
c) I choose to buy my "stocks" in the form of mutual funds or ETFs, not individual stocks.
d) Looking at all the arguments on active versus index funds, I choose for most of my main mutual funds or ETF holdings to be index funds.
e) Looking at what's available in my 401(k), how big the company match is, and what I can get in my Roth IRA, paying attention to costs and convenience, I make my decisions.
f) In my 401(k) I may have to make the best of an imperfect set of choices, because the company match is too good to pass up, and because I want more tax-advantaged space than I can get in my Roth alone.
f) In my Roth, I see that I have a totally free choice of any mutual fund or ETF I like, and looking at costs, "reputation," and anything else, I choose... Coke or Pepsi, Starbucks or Peet's, Toyota or Honda, Whirlpool or Kenmore.... Fidelity or iShares or ---> Vanguard <---- or Schwab or...
2) To see how often each fund distributes dividends, and the date of the last distribution,
https://investor.vanguard.com/mutual-fu ... b=overview
and click the "distributions" tab. You may have to fiddle with the checkboxes to see everything you want to see.
3) I don't happen to think the date of dividend distribution is a big deal, even in a taxable account, although Vanguard itself does say:
a) I choose to save $x a year toward retirement.
b) Of that, looking at my own risk tolerance and my best understanding of the risks of stocks, I choose to put y% in stocks, and the rest in lower-risk investments such as bonds.
c) I choose to buy my "stocks" in the form of mutual funds or ETFs, not individual stocks.
d) Looking at all the arguments on active versus index funds, I choose for most of my main mutual funds or ETF holdings to be index funds.
e) Looking at what's available in my 401(k), how big the company match is, and what I can get in my Roth IRA, paying attention to costs and convenience, I make my decisions.
f) In my 401(k) I may have to make the best of an imperfect set of choices, because the company match is too good to pass up, and because I want more tax-advantaged space than I can get in my Roth alone.
f) In my Roth, I see that I have a totally free choice of any mutual fund or ETF I like, and looking at costs, "reputation," and anything else, I choose... Coke or Pepsi, Starbucks or Peet's, Toyota or Honda, Whirlpool or Kenmore.... Fidelity or iShares or ---> Vanguard <---- or Schwab or...
2) To see how often each fund distributes dividends, and the date of the last distribution,
https://investor.vanguard.com/mutual-fu ... b=overview
and click the "distributions" tab. You may have to fiddle with the checkboxes to see everything you want to see.
3) I don't happen to think the date of dividend distribution is a big deal, even in a taxable account, although Vanguard itself does say:
The whole concept of "buying a dividend" really refers to an unscrupulous way stockbrokers used to trick naïve investors into buying individual stocks, closing the sale by saying that it was a particularly good time to buy the stock because with their amazing access to special knowledge they just happened to know that the stock was just about to pay a dividend.Don't "buy a dividend"
Before you invest a large amount in a mutual fund, ask about the realized gains in its portfolio. If they represent a significant portion of the fund's net asset value (NAV) and the record date of the next capital gains distribution is near, you may want to delay your purchase until after the record date. Otherwise, you'll "buy the dividend," and that can cost you money in taxes.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- bertilak
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Re: Does it matter when I buy Vanguard?
It only makes a difference in taxable accounts. In an IRA there are no tax consequences to a dividend.marloweusa wrote:My understanding is you have to be careful when you buy mutual funds because you want to buy them after the date the fund distributes capital gains towards the end of the year. If I'm going to buy Vanguard mutual funds, should I wait until after December 31? Is there a date each fund will distribute cap gains? How can I find that out?
So, if you are dealing with a taxable account then it might be better to wait until after the dividend and, instead of collecting a taxable dividend, get the fund a little cheaper -- theoretically a wash except for taxes and except for the (presumably) short time your money is not invested. The other considerations above (qualified dividends, etc.) and your tax bracket come into play in establishing how much of a difference it really makes. Unless you are dealing with big numbers it probably is trivial.
BTW, timing things for tax purposes is not "timing the market" and it is not, per se, a bad idea. Biggest example of tax timing: Wait for long-term gains before selling a winning position.
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
Re: Does it matter when I buy Vanguard?
In some cases, with taxable accounts and very large balances or even with smaller balances in active funds, buying the dividend can be a significant up-front tax hit. VG announces distribution dates and estimates somewhat in advance, so you can check when getting near the end of the quarter or year to see exactly when the dividend is likely to occur.
Currently you can search for:
vanguard distributions 2014 december
Among other things that should lead you to:
https://personal.vanguard.com/us/insigh ... ule-102014
That won't get you the actual distribution estimates yet, but it will provide a schedule for when estimates and exact dates will become available.
Having said that, for a fund distributing quarterly, it might be counter-productive to delay an investment at the beginning of november until the end of december. It might be something to consider more as distribution dates get closer.
Currently you can search for:
vanguard distributions 2014 december
Among other things that should lead you to:
https://personal.vanguard.com/us/insigh ... ule-102014
That won't get you the actual distribution estimates yet, but it will provide a schedule for when estimates and exact dates will become available.
Having said that, for a fund distributing quarterly, it might be counter-productive to delay an investment at the beginning of november until the end of december. It might be something to consider more as distribution dates get closer.
Re: Does it matter when I buy Vanguard?
Personally I do not pay attention to the dividend distribution dates. I add new $$ when I have it, and I take it out on a date based on when I need it.
I may be missing out on something by not paying attention. But it does not seem worth the efforts to pay attention to the dividend distribution dates. (or at least I am unaware of what difference it would make). I put a value on my time to sort it all out.
From your readings, how much of a difference do you think it would make if you bought or sold at the wrong time regarding dividends?
Maybe I will change my ways if I can be convinced it does matter.
lafder
I may be missing out on something by not paying attention. But it does not seem worth the efforts to pay attention to the dividend distribution dates. (or at least I am unaware of what difference it would make). I put a value on my time to sort it all out.
From your readings, how much of a difference do you think it would make if you bought or sold at the wrong time regarding dividends?
Maybe I will change my ways if I can be convinced it does matter.
lafder
Re: Does it matter when I buy Vanguard?
As a long time owner/investor @ Vanguard I am livid that I was not advised that the company was for sale. Thanks for the heads up.
Part-Owner of Texas |
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“The CMH-the Cost Matters Hypothesis -is all that is needed to explain why indexing must and will work… Yes, it is that simple.” John C. Bogle
Re: Does it matter when I buy Vanguard?
It's owned by the investors in its funds...so the more you invest in the funds, the more of the company you will own!mickeyd wrote:As a long time owner/investor @ Vanguard I am livid that I was not advised that the company was for sale. Thanks for the heads up.
Most of my posts assume no behavioral errors.
Re: Does it matter when I buy Vanguard?
You can get an approximation by looking at the dates in previous years. I don't remember the timing, but VG usually provides dates and dividend/CG estimates as we get close to the end of the year.
Lar
Lar
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Re: Does it matter when I buy Vanguard?
Thanks for everyone's input! For the record, I don't think I can afford to buy Vanguard the company quite yet, but I'm pretty sure I can swing a few shares of some of the mutual funds it offers.
Re: Does it matter when I buy Vanguard?
Vanguard doesn't run a profit and has no intention of every doing so. I'd say the value of their stock would be pretty darn close to zero unless you changed their business model.marloweusa wrote:Thanks for everyone's input! For the record, I don't think I can afford to buy Vanguard the company quite yet, but I'm pretty sure I can swing a few shares of some of the mutual funds it offers.
All that value gets returned to the investors. People ask where's Bogle's billions of dollars? It's in the pockets of Vanguard investors over the last 40 years.