What do you do with dividends?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Topic Author
renue74
Posts: 1655
Joined: Tue Apr 07, 2015 7:24 pm

What do you do with dividends?

Post by renue74 » Fri Dec 28, 2018 8:08 pm

Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?

livesoft
Posts: 67318
Joined: Thu Mar 01, 2007 8:00 pm

Re: What do you do with dividends?

Post by livesoft » Fri Dec 28, 2018 8:13 pm

A timely question as I have written down this afternoon what is going to happen to our late December dividends:
1. Pay annual property taxes.
2. Pay annual MUD taxes.
3. Pay income taxes.
4. Pay credit card bills.
5. Make car and medical loan payments.
6. Make 2019 Roth contributions.
7. Pay Spring college tuition payment.
8. Pay annual property/car insurance bill.
Wiki This signature message sponsored by sscritic: Learn to fish.

User avatar
CyclingDuo
Posts: 2412
Joined: Fri Jan 06, 2017 9:07 am

Re: What do you do with dividends?

Post by CyclingDuo » Fri Dec 28, 2018 8:20 pm

renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
Before retirement: Reinvest the dividends during the accumulation years (we have all of ours set on automatic dividend reinvestment).
"Everywhere is within walking distance if you have the time." ~ Steven Wright

Triple digit golfer
Posts: 3321
Joined: Mon May 18, 2009 5:57 pm

Re: What do you do with dividends?

Post by Triple digit golfer » Fri Dec 28, 2018 8:24 pm

Reinvest automatically. I'm 33 and working.

UpperNwGuy
Posts: 2223
Joined: Sun Oct 08, 2017 7:16 pm

Re: What do you do with dividends?

Post by UpperNwGuy » Fri Dec 28, 2018 8:24 pm

I do not automatically reinvest them in the same funds. The dividends from four mutual funds and two money market funds dump into my settlement fund, and I usually invest them in one of my funds.

Dottie57
Posts: 6544
Joined: Thu May 19, 2016 5:43 pm

Re: What do you do with dividends?

Post by Dottie57 » Fri Dec 28, 2018 8:46 pm

Since not working this year, dividends may go to insurance and property tax .

mortfree
Posts: 1696
Joined: Mon Sep 12, 2016 7:06 pm

Re: What do you do with dividends?

Post by mortfree » Fri Dec 28, 2018 8:47 pm

Age 41.

Dividends in retirement accounts are automatically reinvested.

Dividends in the taxable account come from VTI, Apple and Sirius satellite. They are used for various things. But I do reinvest the Sirius dividend automatically.

The last two dividends from VTI will be put towards my Roth contribution in 2019. Only $200 total for the last two dividends.

User avatar
Peter Foley
Posts: 4923
Joined: Fri Nov 23, 2007 10:34 am
Location: Lake Wobegon

Re: What do you do with dividends?

Post by Peter Foley » Fri Dec 28, 2018 8:53 pm

Retired 6 years.

Reinvest dividends and capital gains in tax deferred accounts and Roth.

Dividends and capital gains in taxable accounts go to money market fund, then transferred to checking account. I do not want small purchases messing with the cost basis of the fund I hold in our taxable account. This could create a situation where the sale of shares could have short term capital gains in addition to long term capital gains.

delamer
Posts: 8404
Joined: Tue Feb 08, 2011 6:13 pm

Re: What do you do with dividends?

Post by delamer » Fri Dec 28, 2018 8:57 pm

We spend a big chunk of ours from the taxable account, including using them to pay down debt.

Anything not spent goes into a savings account.

Tax-advantaged earnings are still being reinvested.

We are semi-retired.

Van
Posts: 616
Joined: Wed Oct 27, 2010 9:24 am

Re: What do you do with dividends?

Post by Van » Fri Dec 28, 2018 9:11 pm

All dividends from funds in my taxable account go into the companion tax-free money market account. I use this money to rebalance early in January each year.

Dividends from funds in my non-taxable account are reinvested.

harvestbook
Posts: 671
Joined: Sat Mar 18, 2017 7:12 pm

Re: What do you do with dividends?

Post by harvestbook » Fri Dec 28, 2018 9:50 pm

Tax-deferred are all reinvested in the same funds. Taxable account dividends are saved for the HSA and Roth contributions in January.
I'm not smart enough to know, and I can't afford to guess.

User avatar
Sandtrap
Posts: 7978
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: What do you do with dividends?

Post by Sandtrap » Fri Dec 28, 2018 9:55 pm

renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
Yes.
I reinvest toward a diversification of the fixed side of the allocation (CD Ladder, Treasuries, etc). What this does is change the allocation over time. Similar to a target date fund, or age in bonds formula, etc. Some of it pays for retirement expenses since DW and I are retired. I suspect that it depends on the size of one's portfolio and the amount of dividends it is producing.

In your case, if doing the above moves you toward your target allocation from what it is now to what you want in 12 years at retirement, then that might work for you.
j
Wiki Bogleheads Wiki: Everything You Need to Know

User avatar
GerryL
Posts: 2371
Joined: Fri Sep 20, 2013 11:40 pm

Re: What do you do with dividends?

Post by GerryL » Fri Dec 28, 2018 10:11 pm

I had my taxable fund set to automatically reinvest dividends for over 20 years. When I retired and put off taking social security, I started taking dividends as income to supplement the cash I had set aside from my severance package. I'd never withdrawn a penny from my taxable fund and had never touched the dividends, so it was a bit unnerving at first to not be reinvesting, but I quickly adapted and had no second thoughts. That's what the money is for. Still have never made a withdrawal.

Just started taking SS, so once the cash pile is built back up I will revisit. I may set to reinvest, but since I will be reinvesting a portion of my RMD into that fund, I may just keep the dividends coming into savings and reduce the amount of the RMD I move to cash. It's all fungible.

What anyone does with dividends will depend on their stage in life and financial needs.

DorothyB
Posts: 99
Joined: Wed Oct 17, 2012 6:17 pm

Re: What do you do with dividends?

Post by DorothyB » Fri Dec 28, 2018 10:37 pm

I'm retired, so in the withdrawal phase. So, all dividends go to my money market account within the IRA and become part of my quarterly withdrawals.

User avatar
grabiner
Advisory Board
Posts: 24796
Joined: Tue Feb 20, 2007 11:58 pm
Location: Columbia, MD

Re: What do you do with dividends?

Post by grabiner » Fri Dec 28, 2018 10:52 pm

Since I am still accumulating, dividends are money to be reinvested, in the appropriate fund. I take them in cash so that I can determine the appropriate fund; if I am overweighted in US stock, I don't want the dividend from Total Stock Market to go back into that fund.

I leave the December dividends in my account until January, and use them to make my IRA contribution for the next year.
Wiki David Grabiner

FireHorse
Posts: 135
Joined: Sat Nov 25, 2017 7:03 pm

Re: What do you do with dividends?

Post by FireHorse » Fri Dec 28, 2018 10:58 pm

Since we are retired, we are using the dividends to pay the daily expenses including taxes, insurance and medical premiums.
Tax deferred dividends will be reinvested

retiredflyboy
Posts: 136
Joined: Sun Dec 02, 2018 10:02 pm

Re: What do you do with dividends?

Post by retiredflyboy » Fri Dec 28, 2018 11:49 pm

I have the dividends distributed direct deposit to my b&m bank which I pay bills from. I am retired. Prior to retirement, I reinvested my dividends.
Facts are stubborn things. Everything works until it doesn’t.

stimulacra
Posts: 599
Joined: Wed Dec 21, 2016 3:50 pm
Location: Houston

Re: What do you do with dividends?

Post by stimulacra » Sat Dec 29, 2018 12:38 am

Set to cash. I'll typically rebalance into whatever is down. Sometimes I'll let it build up a bit if the market is a little too “even keel”.

ImmigrantSaver
Posts: 268
Joined: Tue Nov 22, 2016 6:24 pm

Re: What do you do with dividends?

Post by ImmigrantSaver » Sat Dec 29, 2018 12:46 am

Typically reinvest manually (for TLH convenience) to whatever sector is lagging. This year I decided to partially fund my 2019 Roth contribution with 4Q dividends. The rest of the roth will be funded with interest earned in the savings account and through sale of some equities. I am 35 and still accumulating for another 20+ years..

Wakefield1
Posts: 1039
Joined: Mon Nov 14, 2016 10:10 pm

Re: What do you do with dividends?

Post by Wakefield1 » Sat Dec 29, 2018 1:04 am

Mostly reinvested dividends until a year ago although I had accumulated some of them in the Credit Union as a downpayment towards a house (potentially)
as of about a year ago realized that I might need to buy a house outright and since have been hoarding most of them (taxable) into the Credit Union. Still haven't touched the IRA,Roth or 457. Between all of those,probably enough to buy a nice house but I want to keep them for future income.
Would probably make more sense to have them (dividend proceeds) in Vanguard money market or short bond fund but I feel better at having them somewhere in walking distance ("no penalty" CDs and "money marketing savings")

sf_tech_saver
Posts: 193
Joined: Sat Sep 08, 2018 9:03 pm

Re: What do you do with dividends?

Post by sf_tech_saver » Sat Dec 29, 2018 1:14 am

Age 40 -- goal to be retirement possible by 50, but to keep working for life.

I hold VTI and VTEB in a Schwab account and do not set it to reinvest either the monthly bond income or dividends. Went conservative after an IPO exit and have a 60% bond portfolio. I will rebalance completely in the future but for now I invest any yield into the Schwab Total Market Fund (SWTSX).

Because any Schwab ETF investments are commission free this allows me to keep a separate bucket from VTI for tax loss harvesting. At the end of 2018 in fact I sold off all of my SWTSX and will stay out of it until the wash period is up for a loss harvest.

This approach also motivates me to save to increase my overall portfolio as I aspire to retire and live off of only the yield/dividends so that I can leave a nest egg to my son. I've read the posts on why there is nothing magical about a dividend only withdrawal strategy but I still find the psychology powerful. Instead of buying 'things' I enjoy buying more portfolio to get more dividends 'forever!" as I say to my wife.
VTI is a modern marvel

User avatar
whodidntante
Posts: 5852
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: What do you do with dividends?

Post by whodidntante » Sat Dec 29, 2018 1:20 am

I do not automatically reinvest as I find it hurts my ability to do tax management and also leads to undesirable partial shares. I treat them the same as any other income. Spend what I need, invest the rest.

User avatar
nedsaid
Posts: 12134
Joined: Fri Nov 23, 2012 12:33 pm

Re: What do you do with dividends?

Post by nedsaid » Sat Dec 29, 2018 1:31 am

renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
What I would do is automatically reinvest your dividends. At age 44 you have some years until retirement and shouldn't need them for living expenses yet.

I have a brokerage IRA account and most all of my dividends from individual stocks and ETFs go to cash. The last several years, I have mostly used the proceeds to buy bond funds or bond ETFs. My mutual funds are all set to reinvest except for the one fund that is in a taxable account.

I do have one mutual fund in a taxable account. I have taken the cash from the distributions and used that for IRA contributions. This year, I may use it for living expenses.
A fool and his money are good for business.

22twain
Posts: 1952
Joined: Thu May 10, 2012 5:42 pm

Re: What do you do with dividends?

Post by 22twain » Sat Dec 29, 2018 2:02 am

I'm starting my third year of retirement. All my taxable dividends go into my money market sweep account, and they ultimately get spent. They currently make up about 1/3 of my spending, with another 1/3 coming from a short-term retirement payout from my former employer, and the final 1/3 coming from sales of shares. I'm still a few years from starting Social Security and having to take RMDs from my tax-deferred accounts.
My investing princiPLEs do not include absolutely preserving princiPAL.

The Wizard
Posts: 13355
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: What do you do with dividends?

Post by The Wizard » Sat Dec 29, 2018 3:56 am

I'm retired and am growing my taxable account investments on an irregular basis as excess retirement income from elsewhere happens.

So when dividends occur, they sit in my MM settlement fund for a while. I sometimes add additional $$ and then buy a larger single lot of VTSAX on a down day...
Attempted new signature...

User avatar
sperry8
Posts: 1798
Joined: Sat Mar 29, 2008 9:25 pm
Location: Miami FL

Re: What do you do with dividends?

Post by sperry8 » Sat Dec 29, 2018 5:17 am

grabiner wrote:
Fri Dec 28, 2018 10:52 pm
Since I am still accumulating, dividends are money to be reinvested, in the appropriate fund. I take them in cash so that I can determine the appropriate fund; if I am overweighted in US stock, I don't want the dividend from Total Stock Market to go back into that fund.

I leave the December dividends in my account until January, and use them to make my IRA contribution for the next year.
Also - taking them as cash (assuming a taxable account) helps simplify your taxes. So you don't have to worry about all these different priced lots should you reinvest and worry about tax reporting decades later. That's why I take them as cash - and then either use them for spending or reinvest in a lump sum in one or a small # of funds.
BH contest results: 2018: #150 of 493 | 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

A440
Posts: 432
Joined: Mon Sep 02, 2013 7:46 am
Location: NJ

Re: What do you do with dividends?

Post by A440 » Sat Dec 29, 2018 6:42 am

We use our taxable dividends to pay for family vacations. Capital gains are reinvested.
I don't know what the future holds, but I know who holds my future.

Longdog
Posts: 1325
Joined: Sun Feb 09, 2014 6:56 pm
Location: Philadelphia

Re: What do you do with dividends?

Post by Longdog » Sat Dec 29, 2018 7:08 am

I have a few actively managed, albeit not horrible, stock mutual funds that I acquired before becoming aware of the virtues of indexing. They have significant unrealized capital gains, and I am currently in a high tax bracket. If I could do so without a significant tax liability, I'd sell them and move them to Vanguard Total Market. Because of other, more beneficial priorities, that may never be possible, but every time they make a distribution, I reinvest it in Vanguard Total Market. So, over time, my portfolio will shift more and more toward indexing.

I reinvest dividends from Vanguard Total Market. Eventually, they will be spent when I am no longer in the accumulation phase.
Steve

User avatar
oldcomputerguy
Moderator
Posts: 5208
Joined: Sun Nov 22, 2015 6:50 am
Location: In the middle of five acres of woods in East Tennessee

Re: What do you do with dividends?

Post by oldcomputerguy » Sat Dec 29, 2018 7:31 am

I'm retired, DW still working another year before retiring (still gathering those last few pension points). Everything is set to reinvest. Likely will change a year from now.
"I’ve come around to this: If you’re dumb, surround yourself with smart people; and if you’re smart, surround yourself with smart people who disagree with you." (Aaron Sorkin)

dcabler
Posts: 1025
Joined: Wed Feb 19, 2014 11:30 am

Re: What do you do with dividends?

Post by dcabler » Sat Dec 29, 2018 7:33 am

renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
Still w*rking…
Bond funds have dividends reinvested
Stock funds have dividends/cap gains deposited into the cash position and I then move that into whichever fund(s) are below target.

User avatar
tennisplyr
Posts: 2263
Joined: Tue Jan 28, 2014 1:53 pm
Location: Sarasota, FL

Re: What do you do with dividends?

Post by tennisplyr » Sat Dec 29, 2018 8:13 am

All of my dividends and capital gains are reinvested into same funds....yeah I know it's not perfect but it's what I do.
Those who move forward with a happy spirit will find that things always work out.

aristotelian
Posts: 5921
Joined: Wed Jan 11, 2017 8:05 pm

Re: What do you do with dividends?

Post by aristotelian » Sat Dec 29, 2018 8:20 am

I distribute them to cash, main reason being so they do not create wash sales.nthen either spend or invest in anything that is underweight in my portfolio.

anil686
Posts: 931
Joined: Thu May 08, 2014 12:33 pm

Re: What do you do with dividends?

Post by anil686 » Sat Dec 29, 2018 8:30 am

Currently I reinvest them and then rebalance with new contributions. It makes it simpler for me in that I do not have to manually do it as I am not as organized as some...

Call_Me_Op
Posts: 7335
Joined: Mon Sep 07, 2009 2:57 pm
Location: Milky Way

Re: What do you do with dividends?

Post by Call_Me_Op » Sat Dec 29, 2018 9:20 am

I reinvest them in tax-deferred but in taxable, I have them paid into sweep account. The latter makes tax-loss harvesting less prone to unintended wash sales.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein

stan1
Posts: 7214
Joined: Mon Oct 08, 2007 4:35 pm

Re: What do you do with dividends?

Post by stan1 » Sat Dec 29, 2018 9:24 am

I have them go to the settlement account because I find its a good way to make next year's Roth IRA Contributions (direct or via Backdoor) a few days later.

AlwaysaQ
Posts: 523
Joined: Fri Apr 13, 2007 7:37 am

Re: What do you do with dividends?

Post by AlwaysaQ » Sat Dec 29, 2018 9:56 am

Retired. Taxable dividends and capital gains go to my checking account to pay bills and add to savings. Funds in my IRA are set to reinvest.

exigent
Posts: 894
Joined: Fri May 07, 2010 8:49 am

Re: What do you do with dividends?

Post by exigent » Sat Dec 29, 2018 10:12 am

We let ours go to cash for periodic reinvestment. This helps reduce the number of tax lots, and also minimizes the need to rebalance — just direct dividends to whatever is low. The downside is that it requires manual intervention, and I sometimes forget (or am too lazy) to deal with it in a timely manner.

radiowave
Posts: 2238
Joined: Thu Apr 30, 2015 5:01 pm

Re: What do you do with dividends?

Post by radiowave » Sat Dec 29, 2018 10:21 am

4-5 yrs from retirement, taxable dividends and interest go to high yield savings and then CDs and tax-deferred get reinvested in same fund.
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

desafinado
Posts: 154
Joined: Wed Dec 28, 2016 3:14 am

Re: What do you do with dividends?

Post by desafinado » Sat Dec 29, 2018 1:12 pm

it’s all fungible, but for taxable i send to the settlement account. this quarter i will use them as part of my roth contribution, the last 3 quarters i reinvested into international as it was falling.
Last edited by desafinado on Wed Apr 03, 2019 9:35 pm, edited 1 time in total.

User avatar
goingup
Posts: 3594
Joined: Tue Jan 26, 2010 1:02 pm

Re: What do you do with dividends?

Post by goingup » Sat Dec 29, 2018 1:20 pm

Reinvest all dividends because it's automatic and easy. Because of TLHing, some taxable dividends are directed to other funds.

User avatar
GerryL
Posts: 2371
Joined: Fri Sep 20, 2013 11:40 pm

Re: What do you do with dividends?

Post by GerryL » Sat Dec 29, 2018 3:07 pm

exigent wrote:
Sat Dec 29, 2018 10:12 am
We let ours go to cash for periodic reinvestment. This helps reduce the number of tax lots, and also minimizes the need to rebalance — just direct dividends to whatever is low. The downside is that it requires manual intervention, and I sometimes forget (or am too lazy) to deal with it in a timely manner.
If I knew then ...
When I started my taxable account more than 20 years ago I knew nothing about cost basis, TLH or anything like that. I just knew that I should automate. As a result, I have a lot of little lots: one for each automated monthly $100 investment, one for each dividend and one for each occasional extra purchase when I got a bonus or tax refund. If I were starting out now, maybe I'd be more thoughtful about how many different lots I was creating and how that might affect future planning. But I don't worry about it now.

exigent
Posts: 894
Joined: Fri May 07, 2010 8:49 am

Re: What do you do with dividends?

Post by exigent » Sat Dec 29, 2018 4:35 pm

GerryL wrote:
Sat Dec 29, 2018 3:07 pm
exigent wrote:
Sat Dec 29, 2018 10:12 am
We let ours go to cash for periodic reinvestment. This helps reduce the number of tax lots, and also minimizes the need to rebalance — just direct dividends to whatever is low. The downside is that it requires manual intervention, and I sometimes forget (or am too lazy) to deal with it in a timely manner.
If I knew then ...
When I started my taxable account more than 20 years ago I knew nothing about cost basis, TLH or anything like that. I just knew that I should automate. As a result, I have a lot of little lots: one for each automated monthly $100 investment, one for each dividend and one for each occasional extra purchase when I got a bonus or tax refund. If I were starting out now, maybe I'd be more thoughtful about how many different lots I was creating and how that might affect future planning. But I don't worry about it now.
On the bright side, you probably have more money than if you hadn't done it this way. Also, this isn't as much of a concern nowadays because of the change to mandatory cost basis recording/reporting in 2012.

User avatar
changingtimes
Posts: 193
Joined: Mon Jul 24, 2017 9:28 am

Re: What do you do with dividends?

Post by changingtimes » Sat Dec 29, 2018 4:45 pm

Still accumulating. Divs don't get reinvested automatically. This year they are going right to my checking account because the vast majority of my paycheck is going to my 401k and then mega backdoor Roth'ing, so I am replacing my paycheck with taxable account money.

Trader Joe
Posts: 939
Joined: Fri Apr 25, 2014 6:38 pm

Re: What do you do with dividends?

Post by Trader Joe » Sat Dec 29, 2018 4:48 pm

renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
I always reinvest.

User avatar
Artsdoctor
Posts: 3966
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: What do you do with dividends?

Post by Artsdoctor » Sat Dec 29, 2018 5:05 pm

Nearly everything (equity and fixed income dividends) gets dumped into a settlement fund. Each month, I then distribute the dividends to where they're needed most. It's a form of rebalancing, it cuts down on the number of specific lots, it may streamline tax-efficiency, and it never complicates tax-loss harvesting.

User avatar
Toons
Posts: 13357
Joined: Fri Nov 21, 2008 10:20 am
Location: Hills of Tennessee

Re: What do you do with dividends?

Post by Toons » Sat Dec 29, 2018 5:08 pm

We Reinvested for about 3 decades.
Retired Now.
Time to take em en cash in the taxable accounts.
Enjoying the fruits of our labor.
Share with family,,,etc.
:mrgreen:
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

arf30
Posts: 525
Joined: Sat Dec 28, 2013 11:55 am

Re: What do you do with dividends?

Post by arf30 » Sat Dec 29, 2018 5:11 pm

Auto reinvest until I hit the withdrawal phase of life, it's only 4 extra tax lots per year.

SGM
Posts: 3003
Joined: Wed Mar 23, 2011 4:46 am

Re: What do you do with dividends?

Post by SGM » Sun Dec 30, 2018 4:49 am

Before retirement I reinvested dividends and allowed my investments to compound over time. As a retiree I use taxable dividends to pay expenses. If there are any dividends left over after expenses they are reallocated. In my Roth account I keep dividends in a settlement account and reallocate them as a way to rebalance. I don't reinvest dividends if I expect to do TLH and want to avoid a partial wash sale.

Electrum
Posts: 65
Joined: Tue Nov 06, 2012 9:39 am

Re: What do you do with dividends?

Post by Electrum » Sun Dec 30, 2018 4:48 pm

Hi -

We reinvest dividends in our tax deferred accounts. In taxable, we let dividends from equity mutual funds accumulate as cash, withdraw from that cash pool as needed during the year and rebalance iusing the remainder once a year. Interest rates are rising, so we reinvest the dividends in bond funds. Our reasoning is that dividend reinvestment allows faster recovery from the effects of rising interest rates.

Cheers

3funder
Posts: 1009
Joined: Sun Oct 15, 2017 9:35 pm

Re: What do you do with dividends?

Post by 3funder » Sun Dec 30, 2018 4:55 pm

Trader Joe wrote:
Sat Dec 29, 2018 4:48 pm
renue74 wrote:
Fri Dec 28, 2018 8:08 pm
Yes...it's that time of year again. Dividends automagically appear in my Vanguard settlement account.

This isn't a "what should I do," post. I know what I do. I sweep any dividend income from my various Vanguard funds (small cap fund, int'l funds, etc.) and this year, I buy the Total Market Fund with 100% of my dividend $. It's a good way to make sure my AA stay's true.

I'm 44...and am looking out about 11-12 years before I consider retirement.

But, I'm interested in what other folks do with dividends? I know there's a lot of talk about keeping X years of income outside the market when retired. So do retirees cash out their dividends and put in money market accounts or CDs?
I always reinvest.
+1

Post Reply