Buy VTSAX today (dividend record date)?

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leviathan
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Buy VTSAX today (dividend record date)?

Post by leviathan »

I was about to buy VTSAX this afternoon with a significant of money which just became available.
Then I realized that today (9/22) is dividend record date of VTSAX. I am wondering whether I will get dividend if I buy VTSAX today.
If not, I may buy VFIAX instead.
livesoft
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Re: Buy VTSAX today (dividend record date)?

Post by livesoft »

If you buy mutual fund shares on the record date, then you will get the dividend. Whether you get the dividend or not would not matter if you are buying in a tax-advantaged account and would only matter a little bit in a taxable account.
Last edited by livesoft on Wed Sep 22, 2021 2:11 pm, edited 1 time in total.
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dukeblue219
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Re: Buy VTSAX today (dividend record date)?

Post by dukeblue219 »

Are you wanting the dividend or not?

You'll never truly lose out on a dividend. The system doesn't work that way. However, some people would rather not pay taxes on a dividend and would rather wait a day for the market price to adjust slightly and buy then.
Topic Author
leviathan
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Re: Buy VTSAX today (dividend record date)?

Post by leviathan »

dukeblue219 wrote: Wed Sep 22, 2021 2:10 pm Are you wanting the dividend or not?

You'll never truly lose out on a dividend. The system doesn't work that way. However, some people would rather not pay taxes on a dividend and would rather wait a day for the market price to adjust slightly and buy then.
I want to get dividend.
livesoft wrote: Wed Sep 22, 2021 2:09 pm If you buy mutual fund shares on the record date, then you will get the dividend. Whether you get the dividend or not would not matter if you are buying in a tax-advantaged account and would only matter a little bit in a taxable account.
It is in t-IRA. I just do not want to (lose dividend and then next day see the price drop because of dividend payout).
tomsense76
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Re: Buy VTSAX today (dividend record date)?

Post by tomsense76 »

Most people try to avoid the dividend in taxable as it creates some tax. So buy after the record date. Though as livesoft said, it is not that much tax.

Recently had money to deploy and debated waiting until I wouldn't get the dividend, but decided to buy anyways. In the grand scheme of things missing or getting one dividend over decades of investing just isn't going to move the needle.
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Topic Author
leviathan
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Re: Buy VTSAX today (dividend record date)?

Post by leviathan »

I took word of livesoft. I will buy VTSAX today. I am trying not to market time.
livesoft
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Re: Buy VTSAX today (dividend record date)?

Post by livesoft »

leviathan wrote: Wed Sep 22, 2021 2:20 pm
livesoft wrote: Wed Sep 22, 2021 2:09 pm If you buy mutual fund shares on the record date, then you will get the dividend. Whether you get the dividend or not would not matter if you are buying in a tax-advantaged account and would only matter a little bit in a taxable account.
It is in t-IRA. I just do not want to (lose dividend and then next day see the price drop because of dividend payout).
An investor will never make an unfair buy: They will get any dividend they paid for and they will not get any dividend they did not pay for. So if there is a price drop the next day because of going ex-dividend, then surely the investor will get that dividend.
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Topic Author
leviathan
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Re: Buy VTSAX today (dividend record date)?

Post by leviathan »

livesoft wrote: Wed Sep 22, 2021 2:34 pm
leviathan wrote: Wed Sep 22, 2021 2:20 pm
livesoft wrote: Wed Sep 22, 2021 2:09 pm If you buy mutual fund shares on the record date, then you will get the dividend. Whether you get the dividend or not would not matter if you are buying in a tax-advantaged account and would only matter a little bit in a taxable account.
It is in t-IRA. I just do not want to (lose dividend and then next day see the price drop because of dividend payout).
An investor will never make an unfair buy: They will get any dividend they paid for and they will not get any dividend they did not pay for. So if there is a price drop the next day because of going ex-dividend, then surely the investor will get that dividend.
Thanks for clarification. I wasn't sure exactly how it works. I just submitted the order.
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OhTheHueManatee
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Re: Buy VTSAX today (dividend record date)?

Post by OhTheHueManatee »

Curious where it says the record date for VTSAX distributions is today. The "Distributions" tab on Vanguard's site doesn't mention it yet: https://investor.vanguard.com/mutual-fu ... ions/vtsax (though obviously it's sometime this week)
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tashnewbie
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Re: Buy VTSAX today (dividend record date)?

Post by tashnewbie »

OhTheHueManatee wrote: Wed Sep 22, 2021 2:38 pm Curious where it says the record date for VTSAX distributions is today. The "Distributions" tab on Vanguard's site doesn't mention it yet: https://investor.vanguard.com/mutual-fu ... ions/vtsax (though obviously it's sometime this week)
See this link posted in this other thread from today (viewtopic.php?f=1&t=358577): https://advisors.vanguard.com/insights/ ... tributions. Use search function to look for "VTSAX" (it's page 38 of the PDF, I think)
Thesaints
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Re: Buy VTSAX today (dividend record date)?

Post by Thesaints »

leviathan wrote: Wed Sep 22, 2021 2:20 pm
dukeblue219 wrote: Wed Sep 22, 2021 2:10 pm Are you wanting the dividend or not?

You'll never truly lose out on a dividend. The system doesn't work that way. However, some people would rather not pay taxes on a dividend and would rather wait a day for the market price to adjust slightly and buy then.
I want to get dividend.
Then, only invest 99.5% of the amount and keep the rest, but do it the following day.
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OhTheHueManatee
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Re: Buy VTSAX today (dividend record date)?

Post by OhTheHueManatee »

tashnewbie wrote: Wed Sep 22, 2021 2:41 pm
OhTheHueManatee wrote: Wed Sep 22, 2021 2:38 pm Curious where it says the record date for VTSAX distributions is today. The "Distributions" tab on Vanguard's site doesn't mention it yet: https://investor.vanguard.com/mutual-fu ... ions/vtsax (though obviously it's sometime this week)
See this link posted in this other thread from today (viewtopic.php?f=1&t=358577): https://advisors.vanguard.com/insights/ ... tributions. Use search function to look for "VTSAX" (it's page 38 of the PDF, I think)
Thanks!
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Goldilocks
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Re: Buy VTSAX today (dividend record date)?

Post by Goldilocks »

In the event of a market downturn within 61 days, VTSAX shareholders who bought now can harvest tax losses. In that case, it's better not to have the Q3 dividend or any other distributions on taxes. I see 2 issues here:
1)a minor increase in income tax on non qualified dividends--no big deal and
2)potentially more accounting chores when filing. :annoyed I have not done this yet. As a lazy investor, I avoid events that trigger more tax work. The VTSAX's distributions are only dividends and not capitol gains so maybe that makes the accounting simpler. Bogleheads, please chime in if you've had tax filing experience with Mutual fund or ETF distributions when TLHing--are they easy to deal with?
The 1st mix was too volatile, and the 2nd was too idle. But the 3rd allocation was just right!
livesoft
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Re: Buy VTSAX today (dividend record date)?

Post by livesoft »

Goldilocks wrote: Fri Sep 24, 2021 8:39 pm In the event of a market downturn within 61 days, VTSAX shareholders who bought now can harvest tax losses. In that case, it's better not to have the Q3 dividend or any other distributions on taxes. I see 2 issues here:
1)a minor increase in income tax on non qualified dividends--no big deal and
2)potentially more accounting chores when filing. :annoyed I have not done this yet. As a lazy investor, I avoid events that trigger more tax work. The VTSAX's distributions are only dividends and not capitol gains so maybe that makes the accounting simpler. Bogleheads, please chime in if you've had tax filing experience with Mutual fund or ETF distributions when TLHing--are they easy to deal with?
My recent dividend from Vanguard Total US Stock Market Index fund will remain qualified even if I sold them on Monday.
Do you understand why? That is, your premise "1)" probably does not apply to many people who received the dividend.

As for accounting chores, there are no accounting chores with regards to taxes if one uses tax-prep software that imports the 1099 info that one will have available early next year.

Have I had tax filing experience with mutual fund distributions? Yes. I posted an entire thread about it to demonstrate how trivial it is: viewtopic.php?t=179414

You should sell some shares just for the practice I think.
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grabiner
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Re: Buy VTSAX today (dividend record date)?

Post by grabiner »

Goldilocks wrote: Fri Sep 24, 2021 8:39 pm In the event of a market downturn within 61 days, VTSAX shareholders who bought now can harvest tax losses. In that case, it's better not to have the Q3 dividend or any other distributions on taxes. I see 2 issues here:
1)a minor increase in income tax on non qualified dividends--no big deal and
2)potentially more accounting chores when filing. :annoyed I have not done this yet. As a lazy investor, I avoid events that trigger more tax work. The VTSAX's distributions are only dividends and not capitol gains so maybe that makes the accounting simpler. Bogleheads, please chime in if you've had tax filing experience with Mutual fund or ETF distributions when TLHing--are they easy to deal with?
If the market doesn't move, the share price will decline by the amount of the loss, so you have an increased capital loss equal to the amount of the distribution.

However, there are several issues with a distribution when harvesting a loss.

If you reinvest the distribution in the fund and sell within 31 days of the reinvestment, you will have a wash sale unless you also sell the share bought with the reinvested distribution. This can usually be avoided with no tax cost; the reinvested distribution is probably also at a loss.

If you held a share less than 61 days, any dividend on that share becomes non-qualified. (This is the most relevant issue for VTSAX.) You would get a capital loss equal to the market decline plus the amount of the dividend, but the dividend would become taxed at a higher rate.

If a share distributes a long-term gain, and you hold the share for six months or less, an amount equal to the long-term gain must be reclassified from short-term loss to long-term loss. This causes the long-term gain and share price decline to be tax-neutral. I have once encountered this with an ETF; Vanguard didn't make the adjustment, so I had to correct the type of loss on Form 8949.

If a share of a fund which does not accrue dividends daily distributes a tax-exempt dividend, and you sell that share for a loss after holding it six months or less, the capital loss must be decreased by the tax-exempt dividend. This affects investors holding muni ETFs, and those muni funds which do not accrue daily, such as Vanguard Tax-Managed Balanced Fund.
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