Do you reinvest distributions from FTSE all-world ex-US?

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cflannagan
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Do you reinvest distributions from FTSE all-world ex-US?

Post by cflannagan »

In a taxable account?

Is my understanding correct that I do not have to pay 0.25% purchase fee on reinvested shares, and instead try to add new money elsewhere to rebalance?

I guess I would have more lots to keep track of in terms of cost basis, on the other hand, if I need to do TLH.
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indexfundfan
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Re: Do you reinvest distributions from FTSE all-world ex-US?

Post by indexfundfan »

cflannagan wrote:In a taxable account?

Is my understanding correct that I do not have to pay 0.25% purchase fee on reinvested shares, and instead try to add new money elsewhere to rebalance?

I guess I would have more lots to keep track of in terms of cost basis, on the other hand, if I need to do TLH.
I don't think it is worth the hassle of tracking the additional cost basis, especially if you want to do specific ID sale in future. This is from my personal experience with reinvesting shares in VEIEX (Emerging market fund) until someone pointed out to me that the savings is really minimal.

For example, suppose you have $100k in FTSE all-world ex-US. Now, say it distributes $2k of dividends a year (2% rate). What is the purchase fee saving? You will be saving 0.25% x $2k = $5 a year in purchase fee. Yupe, a whole $5 per $100k of investment a year.
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cflannagan
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Re: Do you reinvest distributions from FTSE all-world ex-US?

Post by cflannagan »

indexfundfan wrote:
cflannagan wrote:In a taxable account?

Is my understanding correct that I do not have to pay 0.25% purchase fee on reinvested shares, and instead try to add new money elsewhere to rebalance?

I guess I would have more lots to keep track of in terms of cost basis, on the other hand, if I need to do TLH.
I don't think it is worth the hassle of tracking the additional cost basis, especially if you want to do specific ID sale in future. This is from my personal experience with reinvesting shares in VEIEX (Emerging market fund) until someone pointed out to me that the savings is really minimal.

For example, suppose you have $100k in FTSE all-world ex-US. Now, say it distributes $2k of dividends a year (2% rate). What is the purchase fee saving? You will be saving 0.25% x $2k = $5 a year in purchase fee. Yupe, a whole $5 per $100k of investment a year.
Good point. Thanks for making me see the error of my way. :)

There are funds incoming for the FTSE fund for the first time (new fund), so I wasn't sure how to set the distributions option. Will set it up accordingly to have distributions go toward MMF, just like other index funds.

Thanks agian.
dp_giants
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I currently

Post by dp_giants »

have money in a target retirement fund at vanguard

in a few weeks i will be setting up my portfolio differently....i will have money in a taxable account, 401k, and also my roth...

when i set everything up...should i have it reinvest the dividends and capital gains automatically?

was wondering the same thing as the original poster

also..when i do want to get rid of target retirement fund..do i do a simple exchange? or do i have to sell it and then once sold and then buy the stuff i need

im a newbie
waitforit
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Post by waitforit »

in a few weeks i will be setting up my portfolio differently....i will have money in a taxable account, 401k, and also my roth...

when i set everything up...should i have it reinvest the dividends and capital gains automatically?
Deferred accounts (401k, Roth) = yes
Taxable = no
when i do want to get rid of target retirement fund..do i do a simple exchange? or do i have to sell it and then once sold and then buy the stuff i need
Again, if its in taxable (which is a poor choice for a taxable holding for most people), you'll have to sell and purchase something else, along with the tax accounting.

In a deferred account, you can just exchange for another fund.
dp_giants
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...

Post by dp_giants »

thanks for the quick response

the target retirement fund is in my roth ira right now
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cflannagan
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Re: I currently

Post by cflannagan »

dp_giants wrote:have money in a target retirement fund at vanguard

in a few weeks i will be setting up my portfolio differently....i will have money in a taxable account, 401k, and also my roth...

when i set everything up...should i have it reinvest the dividends and capital gains automatically?

was wondering the same thing as the original poster

also..when i do want to get rid of target retirement fund..do i do a simple exchange? or do i have to sell it and then once sold and then buy the stuff i need

im a newbie
As waitforit mentioned, normally you put fund distributions into money market fund in taxable account, and reinvest into the same fund for funds in tax-deferred accounts.

The only reason I asked specifically for FTSE All-World Ex-US is because they charge a 0.25% purchase fee for new money into the fund, but not for reinvested distributions. But as indexfundfan pointed out, the benefit I get from reinvesting distributions back into FTSE is not worth it for the trade-off of increased # of lots for cost-basis tracking if I want to do TLH (Tax-Loss Harvesting).
waitforit
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Post by waitforit »

The only reason I asked specifically for FTSE All-World Ex-US is because they charge a 0.25% purchase fee for new money into the fund, but not for reinvested distributions
I apologize - sometimes I assume everyone is doing the same thing as me. I invest in the etf (VEU) and so that does not factor in to my decision.
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cflannagan
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Post by cflannagan »

waitforit wrote:
The only reason I asked specifically for FTSE All-World Ex-US is because they charge a 0.25% purchase fee for new money into the fund, but not for reinvested distributions
I apologize - sometimes I assume everyone is doing the same thing as me. I invest in the etf (VEU) and so that does not factor in to my decision.
No worries - my reply was addressed toward dp_giants who said he was wondering the same as the original poster (where to place distributions), so I only wanted to point out my question is a bit different (because it factors in the purchase fee).

But your reply to dp_giants was spot-on. Thanks!
Tatupu
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Post by Tatupu »

Just to follow up ...

I have about $10,000 annually of new money going into FTSE All-World Ex-US in my taxable account.

Prior to making this switch recently, I used to reinvest all dividends and had set up systematic monthly purchases in my taxable account.

How do you recommend I invest this new money into FTSE All-World in my taxable? Just divert all taxable money into my Prime Money Market Account and then make 1 purchase during my annual rebalancing effort?

Sorry for the ignorance. Have come a long way thanks to this forum but still have a ways to go ...

Thanks!
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tdhg566
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Post by tdhg566 »

I NEVER reinvest dividends or cgs in either taxable or deferred/qualified accounts. On the taxable side, it simplifies the problem of tracking the basis (already mentioned). But in both situations, there are two additional reasons. First, why would you assume that you would want to purchase more shares on the date of the dividend and/or cg distribution? What if otherwise you would NOT have made a purchase (AA in balance, etc). Why let the reinvestment process make that purchase for you. Second, and this is even more important during retirement when you're not in the accumulation phase, you'll eventually need cash to rebalance your account. Unless you turn dividends and cgs into cash, you'll need to sell something. At Vg if you sell an open-ended mf, you semi "lock" that fund for 60 days. Worse, in a taxable account you may generate a tax event if you have to do an exchange rather than just a purchase.
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