Taxable Account dividend reinvestment setting?

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cbr shadow
Posts: 164
Joined: Wed Jul 10, 2013 2:12 pm

Taxable Account dividend reinvestment setting?

Postby cbr shadow » Fri May 19, 2017 12:00 pm

There was a reason when I setup my Vanguard taxable account that I did not allow for reinvesting dividends. Is there any reason to NOT reinvest dividends? I have almost 100% VTSAX in that taxable account and every quarter I notice I have money in the money market account just sitting there rather than working for me.
Any advice is much appreciated.
-CBR

Yossarian
Posts: 123
Joined: Thu May 31, 2007 6:19 pm

Re: Taxable Account dividend reinvestment setting?

Postby Yossarian » Fri May 19, 2017 12:21 pm

reasons not to reinvest dividends:

you plan to tax-loss harvest, and an auto-reinvest might mess up the wash sale window
you want to use the dividends to invest in a new fund, possibly to rebalance
you want cash

I'm sure there are others.

goingup
Posts: 2422
Joined: Tue Jan 26, 2010 1:02 pm

Re: Taxable Account dividend reinvestment setting?

Postby goingup » Fri May 19, 2017 12:21 pm

The only reason not to reinvest is because you have some place else to use the money. I reinvest dividends in all accounts. Some people send dividends to a settlement/MM account in order to make a decision later. I'd rather not make decisions and prefer to get the cash reinvested immediately.

e5116
Posts: 270
Joined: Mon Oct 05, 2009 11:22 am

Re: Taxable Account dividend reinvestment setting?

Postby e5116 » Fri May 19, 2017 12:27 pm

I don't re-invest dividends in taxable accounts because of it possibly messing up tax loss harvesting opportunities and it making it much more complicated come tax time when those situations arise. (As mentioned above, but thought I'd give another person's opinion). I do re-invest in retirement accounts.

rkhusky
Posts: 3906
Joined: Thu Aug 18, 2011 8:09 pm

Re: Taxable Account dividend reinvestment setting?

Postby rkhusky » Fri May 19, 2017 12:32 pm

I don't reinvest dividends in taxable, except in my money market account, to reduce the number of small dollar amount transactions. I wait until there is a few $1K to move to my IRA.


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