Capital gains on Total Bond Market Index Fund?

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fastrak99
Posts: 20
Joined: Tue Jul 31, 2018 10:02 pm

Capital gains on Total Bond Market Index Fund?

Post by fastrak99 » Thu Nov 08, 2018 12:33 pm

Still playing around with numbers and trying to get my head around the investing game -

Its correct to assume that capital gains apply to VBTLX as long as its held for 365 days or longer?

How does that work when its time to 'rebalance' the portfolio (If have to sell or buy some shares) - do I wait 366 days each time?

magicrat
Posts: 459
Joined: Sat Nov 29, 2014 7:04 pm

Re: Capital gains on Total Bond Market Index Fund?

Post by magicrat » Thu Nov 08, 2018 12:43 pm

fastrak99 wrote:
Thu Nov 08, 2018 12:33 pm
Still playing around with numbers and trying to get my head around the investing game -

Its correct to assume that capital gains apply to VBTLX as long as its held for 365 days or longer?

How does that work when its time to 'rebalance' the portfolio (If have to sell or buy some shares) - do I wait 366 days each time?
Your question is confusing. If you are asking if capital gains on shares held for more than a year are treated as long-term gains, the answer is yes. If you sell shares that have capital gains, you have to pay the tax (of course these gains can be offset by realized capital losses).

fastrak99
Posts: 20
Joined: Tue Jul 31, 2018 10:02 pm

Re: Capital gains on Total Bond Market Index Fund?

Post by fastrak99 » Thu Nov 08, 2018 1:03 pm

magicrat wrote:
Thu Nov 08, 2018 12:43 pm
fastrak99 wrote:
Thu Nov 08, 2018 12:33 pm
Still playing around with numbers and trying to get my head around the investing game -

Its correct to assume that capital gains apply to VBTLX as long as its held for 365 days or longer?

How does that work when its time to 'rebalance' the portfolio (If have to sell or buy some shares) - do I wait 366 days each time?
Your question is confusing. If you are asking if capital gains on shares held for more than a year are treated as long-term gains, the answer is yes. If you sell shares that have capital gains, you have to pay the tax (of course these gains can be offset by realized capital losses).
Yes I should have been more clear - it is long term capital gains tax, and whether they apply to Bonds (not just stocks).

Also - does that mean that rebalancing the porfolio should happen after waiting more than 1 year each time?

Silk McCue
Posts: 1308
Joined: Thu Feb 25, 2016 7:11 pm

Re: Capital gains on Total Bond Market Index Fund?

Post by Silk McCue » Thu Nov 08, 2018 1:41 pm

fastrak99 wrote:
Thu Nov 08, 2018 1:03 pm

Yes I should have been more clear - it is long term capital gains tax, and whether they apply to Bonds (not just stocks).

Also - does that mean that rebalancing the porfolio should happen after waiting more than 1 year each time?
Capital gains and losses both apply to Bonds upon sale.

You do not have to wait more than 1 year each time that you rebalance to avoid short term gains after the first year. You do need to sell from lots that are older than one year each time you sell to avoid short term gains.

Cheers

magicrat
Posts: 459
Joined: Sat Nov 29, 2014 7:04 pm

Re: Capital gains on Total Bond Market Index Fund?

Post by magicrat » Thu Nov 08, 2018 1:42 pm

fastrak99 wrote:
Thu Nov 08, 2018 1:03 pm
magicrat wrote:
Thu Nov 08, 2018 12:43 pm
fastrak99 wrote:
Thu Nov 08, 2018 12:33 pm
Still playing around with numbers and trying to get my head around the investing game -

Its correct to assume that capital gains apply to VBTLX as long as its held for 365 days or longer?

How does that work when its time to 'rebalance' the portfolio (If have to sell or buy some shares) - do I wait 366 days each time?
Your question is confusing. If you are asking if capital gains on shares held for more than a year are treated as long-term gains, the answer is yes. If you sell shares that have capital gains, you have to pay the tax (of course these gains can be offset by realized capital losses).
Yes I should have been more clear - it is long term capital gains tax, and whether they apply to Bonds (not just stocks).

Also - does that mean that rebalancing the porfolio should happen after waiting more than 1 year each time?
Do you have tax-advantaged accounts? Much better to re-balance using them rather than paying taxes to re-balance. I have never paid capital gains tax to re-balance.

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