S & P 500 Fund

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jamesb89
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Joined: Wed Dec 14, 2016 11:00 am

S & P 500 Fund

Post by jamesb89 » Tue Jul 16, 2019 7:03 am

I have 50k to invest after a real estate sale. I'm thinking of a Vanguard S& P 500 fund but I don't know about how it will be taxed, meaning now or later. Really just looking to put he money in and leave it for about 10 years.

DarkHelmetII
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Re: S & P 500 Fund

Post by DarkHelmetII » Tue Jul 16, 2019 7:18 am

Cap gains rate on growth and dividends, assuming you hold for one year

tibbitts
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Re: S & P 500 Fund

Post by tibbitts » Tue Jul 16, 2019 7:32 am

jamesb89 wrote:
Tue Jul 16, 2019 7:03 am
I have 50k to invest after a real estate sale. I'm thinking of a Vanguard S& P 500 fund but I don't know about how it will be taxed, meaning now or later. Really just looking to put he money in and leave it for about 10 years.
It can be taxed both now and later (every year for dividends and - theoretically - internal capital gains, and later, if you realize capital gains.) Obviously you might have capital losses (yes, even over ten years) and those you could deduct when you sell (and could apply the losses to ordinary income, up to annual limits.) The fact that you're asking suggests you might not be investing in something you fully understand, so you should make sure you know the risks of the fund, and realize that by itself it has limited diversification.

dbr
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Re: S & P 500 Fund

Post by dbr » Tue Jul 16, 2019 9:12 am

You can read here: https://fairmark.com/investment-taxation/ or otherwise find books or an internet tutorial on the taxation of investments. This is a necessary task for any investor.

Vanguard Fan 1367
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Re: S & P 500 Fund

Post by Vanguard Fan 1367 » Thu Jul 18, 2019 2:53 pm

I think that if you do what another poster says and read up on the taxation you will find the S & P 500 Fund to be a relatively tax friendly investment if you hold onto it for 10 years. Your dividends will be "qualified" which means they get taxed at a lower rate. You won't have to pay taxes on the increase of the fund's value other than dividends until you sell it and that gain after 10 years will be at the capital gains rate, which can be fairly low if your income isn't past a certain level.

I feel sorry for my day trader friend who has a nice 70K increase but has to pay taxes as income taxes on that 70K increase.

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willthrill81
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Re: S & P 500 Fund

Post by willthrill81 » Thu Jul 18, 2019 3:10 pm

jamesb89 wrote:
Tue Jul 16, 2019 7:03 am
I have 50k to invest after a real estate sale. I'm thinking of a Vanguard S& P 500 fund but I don't know about how it will be taxed, meaning now or later. Really just looking to put he money in and leave it for about 10 years.
If you're planning on pulling it out in 10 years, then you may want to buy a target date fund, probably a 2030 fund. Vanguard's VTHRX is a 2030 fund, and it's AA is currently 75/25, and it will glide down to about 55/45 by 2030. The ER isn't bad at all at just .14%.

But if you'd rather be all stock for the full decade, just get a low cost ETF like VOO (S&P 500 index fund, ER of .03%) or VTI (TSM index fund, ER of .03%).
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

MotoTrojan
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Re: S & P 500 Fund

Post by MotoTrojan » Thu Jul 18, 2019 4:27 pm

It may lose money over 10 years. Is that okay?

PinotGris
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Re: S & P 500 Fund

Post by PinotGris » Thu Jul 18, 2019 4:50 pm

I like the fund. My first taxable investment into Vanguard along with extended market as a partner. Then I started to invest in to Total Stock market - VTSAX= because it is, well, total market.
We are now retired and in high tax bracket - well higher than we thought we would to be at. I find IX500 dividends more tax efficient, 100% at cap gain tax rate 15%
VTSAX is only 95%
I have made a few TLH with the VTSAX last year and put all that money into Index 500. Large cap. it has done very well.
But you also need to capture the Med and small market.

MotoTrojan
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Re: S & P 500 Fund

Post by MotoTrojan » Thu Jul 18, 2019 4:51 pm

PinotGris wrote:
Thu Jul 18, 2019 4:50 pm
I like the fund. My first taxable investment into Vanguard along with extended market as a partner. Then I started to invest in to Total Stock market - VTSAX= because it is, well, total market.
We are now retired and in high tax bracket - well higher than we thought we would to be at. I find IX500 dividends more tax efficient, 100% at cap gain tax rate 15%
VTSAX is only 95%
I have made a few TLH with the VTSAX last year and put all that money into Index 500. Large cap. it has done very well.
But you also need to capture the Med and small market.
VG large-cap (VV is ETF, not sure MF) is also 100% qualified dividends but has more companies than S&P500.

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ruralavalon
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Re: S & P 500 Fund

Post by ruralavalon » Thu Jul 18, 2019 5:54 pm

jamesb89 wrote:
Tue Jul 16, 2019 7:03 am
I have 50k to invest after a real estate sale. I'm thinking of a Vanguard S& P 500 fund but I don't know about how it will be taxed, meaning now or later. Really just looking to put he money in and leave it for about 10 years.
Another good choice could be a total stock market fund such as Vanguard Total Stock Market Index (VTSAX) or Vanguard Total Stock Market ETF (VTI). Both are very stock when held in a taxable brokerage account. A S&P 500 index fund should also be very tax-efficient in a taxable brokerage account.

There are tax-advantaged accounts you might use.

Do you have an IRA or a work-based account such as a 401k, 403b, 457, SIMPLE IRA or TSP?

The tax effect depends on the type of account used.
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