Consolidating my betterment ETF's into Vanguard index funds

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Sairam
Posts: 16
Joined: Tue Feb 11, 2020 10:24 pm

Consolidating my betterment ETF's into Vanguard index funds

Post by Sairam » Fri Feb 14, 2020 11:16 pm

Hi I am in the process of moving my funds from Betterment into Vanguard.
This is a taxable account, so I was able to do in in Kind.
As you know my funds in Betterment are held in multiple primary and secondary stock and bond ETF's.
I want to keep things simple and follow a 2-3 fund AA portfolio so it is easy to manage.
I know if I sell any of these ETF's I would incur capital gain taxes.
How can I do this with least amount of capital gains?
I would appreciate some insight into this.

123
Posts: 5535
Joined: Fri Oct 12, 2012 3:55 pm

Re: Consolidating my betterment ETF's into Vanguard index funds

Post by 123 » Fri Feb 14, 2020 11:27 pm

Capital gain taxes are a sign of investment success. They are much better than having to deal with capital losses. Pay the tax and enjoy your success. Markets are at all-time highs, a great time to sell. If you hold out and wait you could end up with losses, is that what you want?
The closest helping hand is at the end of your own arm.

mega317
Posts: 3198
Joined: Tue Apr 19, 2016 10:55 am

Re: Consolidating my betterment ETF's into Vanguard index funds

Post by mega317 » Sat Feb 15, 2020 12:44 am

123 wrote:
Fri Feb 14, 2020 11:27 pm
Capital gain taxes are a sign of investment success. They are much better than having to deal with capital losses. Pay the tax and enjoy your success. Markets are at all-time highs, a great time to sell. If you hold out and wait you could end up with losses, is that what you want?
I get the sense the OP doesn't want to eliminate stocks but rather consolidate/simplify.

It's not really possible to make recommendations without knowing anything about your positions or the rest of your financial picture.
https://www.bogleheads.org/forum/viewtopic.php?t=6212

dbr
Posts: 31523
Joined: Sun Mar 04, 2007 9:50 am

Re: Consolidating my betterment ETF's into Vanguard index funds

Post by dbr » Sat Feb 15, 2020 10:17 am

If you want to liquidate all of the previous positions, then you have to take the gains that are there. What you can do is make partial changes in different years in order to distribute income where the tax cost might be least given what your other income is. If you are making charitable donations you can also donate shares instead of cash and avoid paying capital gains on donated shares. It might or might not be worth the gamble to wait until a particular investment loses some value in the market and then jump on the opportunity to sell. That is a gamble, of course. In any case if you are reinvesting dividends, then stop doing that. If you have an opportunity to take a tax loss you can look at offsetting the gain in something else, keeping in mind that often the most effective use of tax losses is offsetting ordinary income rather than long term gains.

A first step is to get together an organized list of all your holdings with the basis, the current value, and the gain so you can see what should best be sold first to liquidate and still keep tax costs down. You will want to set up all transaction tax methods as Specific ID and have the data by tax lot. If you have been reinvesting dividends there will be many tax lots.

A lesson for investors in general is to be very careful what you start investing in with taxable accounts as you can paint yourself into a corner taxwise.

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