Required Sell Question

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Topic Author
Adren
Posts: 6
Joined: Tue Mar 15, 2016 7:47 am

Required Sell Question

Post by Adren »

So I'm in a pickle. I have to sell something to payoff credit cards I thought were being paid off monthly which I've realized haven't been. :annoyed While its not $100k its certainly more then a few thousand. :( Thankfully they haven't been turned over to collections yet allowing me to pay them off and take control of the cards. Moving on and that aside....

At Vanguard I have a mix of VBTLX, VTABX, VTIAX, VTSAX and SUI in a taxable account. My Voyager Select Account was opened maybe 3 years ago, money was invested into each and mainly ignored. I've not sold anything nor have I reinvested any of these Dividends back into these funds but have moved them elsewhere. Total investment returns have been roughly $95k over this time frame. Looking at the 5 investments VTSAX and SUI bring in the most returns followed by VTIAX. What little is in VTABX doesn't cover what I need to sell. Looking at VBTLX I see its actually down nearly $1k from when I bought it 3 years ago, again, dividends were never reinvested back into it.

Looking at this I've decided I'd like to sell off enough of the VBTLX to fully pay off the 3 credit cards. Again, I've never sold off any funds before and I'm looking to do so as simplistically here as I can. My entire portfolio, Vanguard and elsewhere, is fairly simple, my vehicles are all purchased cash and (what I thought :oops: was my only debt) a mortgage.

With the above info can I sell off what I need of VBTLX using "Average Cost" as a safe and simple option?

Thanks
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: Required Sell Question

Post by mhalley »

That is safe and simple, but perhaps not the best way to do it. You might be better off using individual tax lots and selling the shares with loses and or the least gains in order to minimize taxes. I believe this is called specific ID.

https://investor.vanguard.com/taxes/cos ... on?lang=en
Topic Author
Adren
Posts: 6
Joined: Tue Mar 15, 2016 7:47 am

Re: Required Sell Question

Post by Adren »

mhalley wrote:That is safe and simple, but perhaps not the best way to do it. You might be better off using individual tax lots and selling the shares with loses and or the least gains in order to minimize taxes. I believe this is called specific ID.

https://investor.vanguard.com/taxes/cos ... on?lang=en
But since I haven't purchased, sold or reinvested wouldn't the entire fund still be a single lot? Every share in it I own was purchased at the same time and the cost per share remains the same for all. Thus the reason I was wondering about Average Cost in this case. Spec ID would be more appropriate if it wasn't still a single lot. or at least that's my understanding of it.
mhalley
Posts: 10424
Joined: Tue Nov 20, 2007 5:02 am

Re: Required Sell Question

Post by mhalley »

Sorry, missed the part about the one time purchase. It might still be worthwhile to do the spec ID to have it setup that way if you buy more of the fund in the future. It looks like it wouldn't change the taxes owed since it is all one lot, and perhaps it would make selling more tax effecient in the future. Or maybe I'm wrong and it doesn't matter, as I have always had multiple lots. Most articles I have read talk about using the spec ID method, having only one tax lot is a little unusual.
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