Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

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Gardener
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Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by Gardener » Thu Mar 26, 2020 7:17 am

I know it looks like market timing :? But, I'd be happy to sell and have some additional funds to put a bigger down payment on a house (but I don't have to). Feel free to blast me! But, my thought was I'd be happy to take a small ~$5k profit during the volatility or leave it in the market for an infinite amount of time..

Question:

1. I bought $50k VTSAX on 3/17/2020 for $58.01
2. Is it possible to put an order in Vanguard where I sell at an automatic set price, say $64? How do I mechanically do this on Vanguard? Did I need to have an ETF?
3. What kind of fees, penalties would I pay if I were to sell in say the next 30 days?

Thank you!

livesoft
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by livesoft » Thu Mar 26, 2020 7:25 am

2. No, it is not possible since it is a mutual fund. While you didn't need to have an ETF even if you did you would not be able to sell it at a price higher than the buyer was willing to pay. With ETF shares you could set a price that you were willing to accept by using a limit order, but that would not mean that a buyer would step up and buy your shares at that price. In such a case, your limit order would simply expire.

3. No fees whatsoever if your broker is Vanguard. You would likely realize some capital gains and eventually might have to pay some tax on those realized gain.

I would not be surprised to see VTSAX have an NAV at today's close between $58 and $59. It also paid a dividend of about 30 cents a share, so you got that and will have to pay tax on that dividend money.

What is the math on your profit? It looks to me like you may make $500 and not $5,000 if you sell today, so you have a ways to go for $5,000.
Last edited by livesoft on Thu Mar 26, 2020 7:39 am, edited 1 time in total.
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Topic Author
Gardener
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by Gardener » Thu Mar 26, 2020 7:36 am

Thanks Livesoft.

It sounds like if/when I sell in the short term, since I didn't use an ETF, when I go to sell, I won't necessarily be guaranteed a minimum price.

When I do put in a sell order, would the transaction usually go through right away, or the same day?

livesoft
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by livesoft » Thu Mar 26, 2020 7:41 am

Mutual fund transaction happen at the close the market. If you submit an order anytime before the next close, then you get the price at that close. So submit on Friday evening with Monday a holiday, then you get the price on Tuesday at the market close.

Be careful because Vanguard doesn't let one typically cancel a submitted mutual fund order even if it is submitted days or hours before it will be executed.
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PaunchyPirate
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by PaunchyPirate » Thu Mar 26, 2020 7:47 am

When you sell, the order will not execute until well after the trading hours. It will wait until the day's final price is established for the fund and then your order will be processed at that price. So, no, you won't know exactly what price you got until that evening or perhaps overnight.

What you CAN do is to follow the changing price of the equivalent EFT version of the mutual fund -- VTI. You can monitor the VTI price during the day to somewhat assess whether the day will be up or down for VTSAX. At the end of the day, the VTI percentage price change will be nearly the same as what VTSAX will be. Make sure you track the % change and not the price change, because the 2 don't have the same prices. But you can't time your sale to match a particular time of the day.

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Gardener
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by Gardener » Thu Mar 26, 2020 8:09 am

Ah, I appreciate it very much.

It sounds like the safest way is to sell maybe 15-30 minutes before close at a price I'm comfortable with.

livesoft
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by livesoft » Thu Mar 26, 2020 8:14 am

Gardener wrote:
Thu Mar 26, 2020 8:09 am
It sounds like the safest way is to sell maybe 15-30 minutes before close at a price I'm comfortable with.
Your wording is imprecise. One cannot sell 15-30 minutes before close. One can submit an order to sell which is not the same thing. Things can happen in the intervening 15-30 minutes before the actual NAV is determined.
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by David Jay » Thu Mar 26, 2020 8:15 am

Gardener wrote:
Thu Mar 26, 2020 8:09 am
Ah, I appreciate it very much.

It sounds like the safest way is to sell maybe 15-30 minutes before close at a price I'm comfortable with.
Yes, watch VTI after 3PM to see what percentage it is up or down. That will give you an idea of what VTSAX will do that day (VTSAX price will not change during the day, that is why you need to look at VTI). Then place your order.
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by galawdawg » Thu Mar 26, 2020 8:34 am

The NAV of VTSAX is determined after the market closes, usually by about 6-7pm each trading day. You have to place your order prior to 4pm on trading days (except on some holidays when the market closes early in which case the cut-off is also earlier).

Realize that you'll be subject to Vanguard's frequent trading limitation:
Because excessive transactions can disrupt management of a fund and increase the fund’s costs for all shareholders, the board of trustees of each Vanguard fund places certain limits on frequent trading in the funds. Each Vanguard fund (other than money market funds and short-term bond funds, but including Vanguard Short-Term Inflation Protected Securities Index Fund) limits an investor’s purchases or exchanges into a fund account for 30 calendar days after the investor has redeemed or exchanged out of that fund account. ETF Shares are not subject to these frequent-trading limits.

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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by oldcomputerguy » Thu Mar 26, 2020 8:45 am

One thing I think bears mentioning: if you do decide to watch VTI in order to get a sense of where the index is heading, don't be concerned over the difference in share price between the two funds. The price of one share of VTI will not be the same dollar amount as the price of one share of VTSAX. For example, VTI closed yesterday at a market price of $123.61 per share, while VTSAX closed at $60.17 per share. The reason for this is that one share of VTI encompasses a different amount of the underlying holdings than does one share of VTSAX. However, the change in VTI should be a fairly good indication of what the end-of-day change will be for VTSAX.
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by retire2022 » Thu Mar 26, 2020 8:46 am

Op

While I have not done this personally, a friend of mine suggested their is an Exchange function where you could exchange VTSAX for VTI and then youcould sell VTI which will allow you for a preciser pricing.

In the website it is

my Account>buy Sell> invest with Vanguard mutual funds> Buy funds>sell Funds>exchange funds

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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by Housedoc » Thu Mar 26, 2020 8:53 am

Don't forget to figure in short term capital gains, another bite out of your profit.

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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by e5116 » Thu Mar 26, 2020 8:56 am

Gardener wrote:
Thu Mar 26, 2020 7:36 am
Thanks Livesoft.

It sounds like if/when I sell in the short term, since I didn't use an ETF, when I go to sell, I won't necessarily be guaranteed a minimum price.

When I do put in a sell order, would the transaction usually go through right away, or the same day?
Just to be clear, it's not like having the ETF version would magically get you the price you want....You can choose to SET a price certainly with an ETF, but it may not execute. It could take days, weeks, months, or never. The ETF and mutual fund perform identically -- only difference is mutual fund you "sell" is you get the price that's the net asset value at the end of the day and ETF you get intraday prices and have to submit the order during trading hours. It shouldn't really make much of a difference in your case. Vanguard even offers conversion from the mutual fund to the ETF (cannot go the other way) if you want the ability to set a limit order.

To be honest, "looking for a price that's acceptable" is quite an odd approach as either you need the money or not. If you need it for a large purchase, sell it. If not and you want to invest for the long-term, don't sell it.

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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by livesoft » Thu Mar 26, 2020 8:59 am

e5116 wrote:
Thu Mar 26, 2020 8:56 am
...and ETF you get intraday prices and have to submit the order during trading hours.
One definitely does NOT have to submit an ETF order during trading hours.
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e5116
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by e5116 » Thu Mar 26, 2020 9:01 am

livesoft wrote:
Thu Mar 26, 2020 8:59 am
e5116 wrote:
Thu Mar 26, 2020 8:56 am
...and ETF you get intraday prices and have to submit the order during trading hours.
One definitely does NOT have to submit an ETF order during trading hours.
Sorry, I misspoke. Thanks for the correction. I guess I should re-phrase to say it's recommended to submit ETF orders during trading hours but perhaps with high volume/liquid ETFs, there's not much risk to doing off hours orders. I personally always submit them with limit orders during trading hours regardless whereas I'm comfortable submitting MF orders off hours (or having auto-investment on). Maybe others have different experiences though.

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Gardener
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by Gardener » Thu Mar 26, 2020 9:14 am

Thanks folks.

I understand now that if I sell within the next 12 months (is that correct) I will get hit with 15% capital gains (is this correct?)

Also, if I sell on the short term, Vanguard could restrict me for a certain amount of time from purchasing Vanguard Total Stock Market again?

Thanks- this is really informative.

livesoft
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by livesoft » Thu Mar 26, 2020 9:15 am

Gardener wrote:
Thu Mar 26, 2020 9:14 am
I understand now that if I sell within the next 12 months (is that correct) I will get hit with 15% capital gains (is this correct?)
This is an incorrect understanding on more than one count.
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BigJohn
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Re: Bought Vanguard Total Stock market 2 weeks ago, now ready to sell, how do I do this?

Post by BigJohn » Thu Mar 26, 2020 9:23 am

Gardener wrote:
Thu Mar 26, 2020 9:14 am
Thanks folks.

I understand now that if I sell within the next 12 months (is that correct) I will get hit with 15% capital gains (is this correct?)

Also, if I sell on the short term, Vanguard could restrict me for a certain amount of time from purchasing Vanguard Total Stock Market again?

Thanks- this is really informative.
Selling within a year is a short term capital gain and is taxed as ordinary income so the rate depends on your marginal tax bracket. If held more than a year, it becomes a long term capital gain and gets the more favorable tax rate. Depending on your income level, that could be 0%, 15% or 20%. Just do some googling on how capital gains are taxed for a more complete understanding.

Yes, VG frequently trading policy will restrict you from buying again for a while (30 days I think). You should get a warning message about it before you hit submit.

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