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Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 6:55 pm
by Jaymac1212
Ok so here’s the situation: A close friend just received his inheritance and gifted me $100,000. In order for me to get the money the fastest he had me open a Vanguard Personal Investor Account. Soon after opening it the money was in my account. But if was in the form of 6,693.3... shares of VTINX and placed into a Vanguard Target Retirement Income Fund Account. From My understanding my friend got his inheritance the same way.

Now I am looking to cash this money out. When I go to sell the shares it asks me to “Choose a cost basis method for your Target Retirement Income Fund.” My chooses are: FIFO, Highest in First out, specific identification and average cost. They also state that Vanguards default method is Average Cost.

As mentioned above I received 6,693.4410 shares. It states that the cost per share is $12.35, with a Total cost of $82,637.92 and a market value of $100,468.55. It also reports a Long Term Capital gain/loss Total of $17,830.63.

I plan on immediately investing the money into cryptocurrency, which is why I’m cashing it out of the vanguard account. My question is what is the best way to do this? And what method, from the ones listed above, would be recommended in this situation?

I hope that I provided any and all necessary information. If any more is needed I will respond ASAP.

Thanks

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 7:18 pm
by LadyGeek
Welcome! You've received what's known as a windfall. Please see the wiki: Managing a windfall

Before you do anything drastic, let's take a step back. Stop and think about this for a while.

May I suggest you post your portfolio information in this thread using the Asking Portfolio Questions format? It will make you think about the "big picture" while giving us the information we need to point you in the right direction.

If you have any questions, ask them here.

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Regarding cost basis, I don't think it would matter in this situation. See the wiki: Cost basis methods

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 7:24 pm
by sycamore
LadyGeek wrote: Sat Jan 09, 2021 7:18 pm ...Regarding cost basis, I don't think it would matter in this situation. See the wiki: Cost basis methods
+1. As you're selling all shares it doesn't matter method which you pick. You'll have the same total capital gains that you'll owe taxes on.

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 7:25 pm
by mhalley
Selling this and investing in bitcoins is not a boglehead thing to do, but if you are selling all of it the basis method doesn’t matter. Averag3 is fine in this very risky situation. You will owe cap gains taxes on the 17k.

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 7:30 pm
by GerryL
A thought. If this was the friend's inheritance, shouldn't the cost basis be set to what ever the value was at the time the friend got the inheritance? And the OP said the friend "just got his inheritance."

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sat Jan 09, 2021 7:43 pm
by Jaymac1212
Wow! You guys are super fast!!! Thank you so much! I think I Now have access to all the information that I’ll need to make a good decision. I really appreciate the help and hopefully I’ll be back.
Thanks again and stay safe.

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sun Jan 10, 2021 12:10 am
by anon_investor
GerryL wrote: Sat Jan 09, 2021 7:30 pm A thought. If this was the friend's inheritance, shouldn't the cost basis be set to what ever the value was at the time the friend got the inheritance? And the OP said the friend "just got his inheritance."
It could be it was just distributed, but the decedent's date of death was a while ago, and the market has been nuts lately...

Re: Vanguard: Cashing out on Target Retirement Income Fund

Posted: Sun Jan 10, 2021 12:22 am
by inverter
You should spend more time on this forum before you put it in a cryptocurrency.