When to open Vanguard account?

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palciparum
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When to open Vanguard account?

Post by palciparum » Wed Nov 29, 2017 4:31 pm

I want to invest in Vanguard Total Stock Market Index Fund. I am thinking of investing in Admiral shares to keep expense ratio low and keep investing every week or month into the same account at a fixed amount rate.

Since one has to rebalance at the end of year, I have a question. Should I open my account now or should I open it in January?

Thanks.

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Taco Knight
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Re: When to open Vanguard account?

Post by Taco Knight » Wed Nov 29, 2017 4:37 pm

I want to eat a sandwich, should I eat one now or later?

We would need to know a lot more about your current situation and your options to begin to answer that question. You may not even need to rebalance, but there'd be no way anyone could know given the lack of data.

rbaldini
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Re: When to open Vanguard account?

Post by rbaldini » Wed Nov 29, 2017 4:39 pm

Invest now. One doesn't "have" to rebalance at any particular time, including January. If you buy now, you will not have to rebalance in Jan, unless the markets move in a big way.

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Sandtrap
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Re: When to open Vanguard account?

Post by Sandtrap » Wed Nov 29, 2017 4:40 pm

Today.
Do it now. Just do it.
You can open the account with a dollar. :D

dbr
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Re: When to open Vanguard account?

Post by dbr » Wed Nov 29, 2017 4:47 pm

palciparum wrote:
Wed Nov 29, 2017 4:31 pm

Since one has to rebalance at the end of year, I have a question. Should I open my account now or should I open it in January?
This is not true and not necessarily even a good choice. Many people would advocate keeping an allocation in balance by first directing contributions to lagging assets and second by selling and buying only when things get out of balance by a set amount, say 5% of allocation. Actually selling and buying might only happen once in a few years.

If there is an end of year consideration it would only be that there is some tax consideration about whether a certain sale should best go in this year or next year. This wouldn't usually be something that comes up as most rebalancing would happen in tax protected accounts.

palciparum
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Re: When to open Vanguard account?

Post by palciparum » Wed Nov 29, 2017 4:52 pm

Thanks for replies.

I was wondering from income tax aspect, whether I should open account now or in January?

mega317
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Re: When to open Vanguard account?

Post by mega317 » Wed Nov 29, 2017 4:55 pm

palciparum wrote:
Wed Nov 29, 2017 4:52 pm
Thanks for replies.

I was wondering from income tax aspect, whether I should open account now or in January?
If you wait until January, what would you do with the money in the meantime?

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Toons
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Re: When to open Vanguard account?

Post by Toons » Wed Nov 29, 2017 4:58 pm

You can start now if you so choose,
I would :mrgreen:

https://personal.vanguard.com/open-acco ... app/triage#/
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

dbr
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Re: When to open Vanguard account?

Post by dbr » Wed Nov 29, 2017 4:58 pm

palciparum wrote:
Wed Nov 29, 2017 4:52 pm
Thanks for replies.

I was wondering from income tax aspect, whether I should open account now or in January?
Well, it does mean one less account to deal with this year, but if you were also going to close some other account, then now it will still be around next year unless all the money is kept under your mattress for awhile. An actual tax cost would have to be due to something subtle that I am not quite imagining at the moment.

retiredjg
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Re: When to open Vanguard account?

Post by retiredjg » Wed Nov 29, 2017 5:03 pm

palciparum wrote:
Wed Nov 29, 2017 4:31 pm
Since one has to rebalance at the end of year, I have a question. Should I open my account now or should I open it in January?
Welcome to the forum.

This is kind of a curious question. If you only own this one fund, there is nothing to rebalance.

Even if you have other funds, rebalancing has little or nothing to do with end of the year or waiting until January. You should invest when you have the money. If you are out of balance (stocks to bonds) you should invest in such a way as to bring your portfolio back toward what you have too little of.

I'm wondering just what it is you have misunderstood. Perhaps if you tell us more, people can help you get headed in the right direction.

palciparum
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Re: When to open Vanguard account?

Post by palciparum » Wed Nov 29, 2017 6:39 pm

I was wondering pay any tax on it. In that case, I would start from January and skip this year.

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CABob
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Re: When to open Vanguard account?

Post by CABob » Thu Nov 30, 2017 12:07 am

Where is the money currently? If it is invested or in a savings account there will be taxes due on any earnings on it.
The Total Stock Market fund will have a distribution sometime near the middle of December. You might want to wait until after that occurs.
Bob

retiredjg
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Re: When to open Vanguard account?

Post by retiredjg » Thu Nov 30, 2017 6:04 am

palciparum wrote:
Wed Nov 29, 2017 6:39 pm
I was wondering pay any tax on it. In that case, I would start from January and skip this year.
Perhaps you are talking about "buying the dividend". This fund has 4 distributions each year and will have a distribution (pay a dividend) in December. That could cause you to pay a small amount of taxes. If you'd prefer to avoid that, just wait till after that occurs.

But I'm not sure I would bother to wait - it sounds like you plan to start small and add regularly. The amount of tax may be so small that it does not matter.

Here's more information.

https://www.bogleheads.org/wiki/Timing_ ... duce_taxes

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ruralavalon
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Re: When to open Vanguard account?

Post by ruralavalon » Thu Nov 30, 2017 11:55 am

palciparum wrote:
Wed Nov 29, 2017 4:31 pm
I want to invest in Vanguard Total Stock Market Index Fund. I am thinking of investing in Admiral shares to keep expense ratio low and keep investing every week or month into the same account at a fixed amount rate.

Since one has to rebalance at the end of year, I have a question. Should I open my account now or should I open it in January?

Thanks.
Just go ahead and invest this year.

If you have a lump sum of cash you want to invest, then I don't think its a good idea to invest in stages, instead just invest all at once.

If you are talking about investing an amount out of your income each pay period, then that is different and a good idea.

Which are you referring to when you say "keep investing every week or month . . .".

What sort of account will you be using, a work-based account (like a 401k, 403b, 457, TSP, etc.), an IRA, or a regular tax account?

You could just add this to your original post using the edit button, so that all of your information is in one place.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

inbox788
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Re: When to open Vanguard account?

Post by inbox788 » Thu Nov 30, 2017 12:27 pm

palciparum wrote:
Wed Nov 29, 2017 6:39 pm
I was wondering pay any tax on it. In that case, I would start from January and skip this year.
Opening an account shouldn't trigger any tax consequences. If you buy a fund now, you might get a dividend in 2017, so this alone would make me wait till January so I wouldn't have to worry about tax preparation issues.

Are you sitting on cash or transferring from another account? AA is a more important question.

BTW, you don't have to balance at the end of the year (unless that's your IPS). You can balance anytime, or choose to not balance very often. Also IRA account has less tax issues than taxable.

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