Any downside to changing cost basis method?

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percy
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Any downside to changing cost basis method?

Post by percy » Mon Aug 12, 2019 11:41 pm

I have a Vanguard account, with two funds set to average cost basis, but I realize now that specID would be better (more flexibility for TLH, etc). Any downsides, major headaches this could cause, other than the new method not applying to past purchases?

rkhusky
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Re: Any downside to changing cost basis method?

Post by rkhusky » Tue Aug 13, 2019 7:50 am

When you sell, you have to specify the shares. And it is more difficult to sell a nice round dollar amount, like $5000.

But the advantages greatly outweigh those annoyances.

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Sandtrap
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Re: Any downside to changing cost basis method?

Post by Sandtrap » Tue Aug 13, 2019 8:07 am

Spec' ID gives you more options going forward.

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dwickenh
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Re: Any downside to changing cost basis method?

Post by dwickenh » Tue Aug 13, 2019 8:44 am

percy wrote:
Mon Aug 12, 2019 11:41 pm
I have a Vanguard account, with two funds set to average cost basis, but I realize now that specID would be better (more flexibility for TLH, etc). Any downsides, major headaches this could cause, other than the new method not applying to past purchases?
If you are re-investing dividends, quit due to TLH and multiple lots being a headache.
Have dividends sent to your sweep account and invest once or twice a year to re-balance.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Lee_WSP
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Re: Any downside to changing cost basis method?

Post by Lee_WSP » Tue Aug 13, 2019 11:06 am

Unless you've never sold any shares, you'd have to sell & rebuy in order to change the basis method.

livesoft
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Re: Any downside to changing cost basis method?

Post by livesoft » Tue Aug 13, 2019 11:14 am

I've seen glitches reported. Before you change, document the transaction info of every single purchase: Date acquired, shares purchased, total price for those shares. And that means EVERY.SINGLE.PURCHASE including any reinvestment of dividends. Generally all this info is found in your statements that are accessible online. Download them and save them.

Then after the change of method, compare to what you have documented.
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kaneohe
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Re: Any downside to changing cost basis method?

Post by kaneohe » Tue Aug 13, 2019 12:39 pm

Lee_WSP wrote:
Tue Aug 13, 2019 11:06 am
Unless you've never sold any shares, you'd have to sell & rebuy in order to change the basis method.
don't know about VG specifically but typically you can change cost basis methods for any new shares purchased after the change.
The older shares would retain the AVB method unless, as you point out, no shares had ever been sold.

Lee_WSP
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Re: Any downside to changing cost basis method?

Post by Lee_WSP » Tue Aug 13, 2019 1:43 pm

kaneohe wrote:
Tue Aug 13, 2019 12:39 pm
Lee_WSP wrote:
Tue Aug 13, 2019 11:06 am
Unless you've never sold any shares, you'd have to sell & rebuy in order to change the basis method.
don't know about VG specifically but typically you can change cost basis methods for any new shares purchased after the change.
The older shares would retain the AVB method unless, as you point out, no shares had ever been sold.
I couldn't find the button when I tried to change it at Vanguard. You may be able to do it if you call them, but I never tried. I ended up just liquidating the position for other reasons.

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Sandtrap
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Re: Any downside to changing cost basis method?

Post by Sandtrap » Tue Aug 13, 2019 1:45 pm

livesoft wrote:
Tue Aug 13, 2019 11:14 am
I've seen glitches reported. Before you change, document the transaction info of every single purchase: Date acquired, shares purchased, total price for those shares. And that means EVERY.SINGLE.PURCHASE including any reinvestment of dividends. Generally all this info is found in your statements that are accessible online. Download them and save them.

Then after the change of method, compare to what you have documented.
Good point.

What kind of glitches?

J
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Xrayman69
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Re: Any downside to changing cost basis method?

Post by Xrayman69 » Tue Aug 13, 2019 3:17 pm

dwickenh wrote:
Tue Aug 13, 2019 8:44 am
percy wrote:
Mon Aug 12, 2019 11:41 pm
I have a Vanguard account, with two funds set to average cost basis, but I realize now that specID would be better (more flexibility for TLH, etc). Any downsides, major headaches this could cause, other than the new method not applying to past purchases?
If you are re-investing dividends, quit due to TLH and multiple lots being a headache.
Have dividends sent to your sweep account and invest once or twice a year to re-balance.
It was my understanding that vanguard provided a specific ID for purchases made with dividend reinvestment similar to any other purchase?

livesoft
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Re: Any downside to changing cost basis method?

Post by livesoft » Tue Aug 13, 2019 3:34 pm

Xrayman69 wrote:
Tue Aug 13, 2019 3:17 pm
It was my understanding that vanguard provided a specific ID for purchases made with dividend reinvestment similar to any other purchase?
That is true.
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Lee_WSP
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Re: Any downside to changing cost basis method?

Post by Lee_WSP » Tue Aug 13, 2019 3:55 pm

Sandtrap wrote:
Tue Aug 13, 2019 1:45 pm
livesoft wrote:
Tue Aug 13, 2019 11:14 am
I've seen glitches reported. Before you change, document the transaction info of every single purchase: Date acquired, shares purchased, total price for those shares. And that means EVERY.SINGLE.PURCHASE including any reinvestment of dividends. Generally all this info is found in your statements that are accessible online. Download them and save them.

Then after the change of method, compare to what you have documented.
Good point.

What kind of glitches?

J
https://www.inquirer.com/business/vangu ... 90813.html
https://www.barrons.com/articles/vangua ... 1565663400

https://www.google.com/search?q=vanguar ... 20&bih=937

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dwickenh
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Re: Any downside to changing cost basis method?

Post by dwickenh » Tue Aug 13, 2019 7:45 pm

Xrayman69 wrote:
Tue Aug 13, 2019 3:17 pm
dwickenh wrote:
Tue Aug 13, 2019 8:44 am
percy wrote:
Mon Aug 12, 2019 11:41 pm
I have a Vanguard account, with two funds set to average cost basis, but I realize now that specID would be better (more flexibility for TLH, etc). Any downsides, major headaches this could cause, other than the new method not applying to past purchases?
If you are re-investing dividends, quit due to TLH and multiple lots being a headache.
Have dividends sent to your sweep account and invest once or twice a year to re-balance.
It was my understanding that vanguard provided a specific ID for purchases made with dividend reinvestment similar to any other purchase?
Yes they do, but it creates many small lots with specific ID. It just seems easier to me to not reinvest in taxable to make it simpler.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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grabiner
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Re: Any downside to changing cost basis method?

Post by grabiner » Tue Aug 13, 2019 9:07 pm

percy wrote:
Mon Aug 12, 2019 11:41 pm
I have a Vanguard account, with two funds set to average cost basis, but I realize now that specID would be better (more flexibility for TLH, etc). Any downsides, major headaches this could cause, other than the new method not applying to past purchases?
As long as you haven't sold, you can use the new method for past purchases as well.
Wiki David Grabiner

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