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One thing I just thought of is that although the expenses for both are the same (.05%) a trailing stop loss execution on a stock that falls say, 7%, may actually cost you more in taxes down the road, since it's short term capital gains instead of long term capital gains. Unless the stock keeps sliding down like it did during the Great Recession, it would cost potentially cost more money in taxes on any gains, than protection from any loss. That would really depend on the stop loss percentage set and the capital gains at sale vs. how much further loss was prevented. It's a flip of a coin toss in this scenario.
One thing I just thought of is that although the expenses for both are the same (.05%) a trailing stop loss execution on a stock that falls say, 7%, may actually cost you more in taxes down the road, since it's short term capital gains instead of long term capital gains. Unless the stock keeps sliding down like it did during the Great Recession, it would cost potentially cost more money in taxes on any gains, than protection from any loss. That would really depend on the stop loss percentage set and the capital gains at sale vs. how much further loss was prevented. It's a flip of a coin toss in this scenario.
Why can't this be in a retirement account?
I only buy VTI ETF. I have mutual funds for non index funds, managed funfds.
Is that for just direct deposit to my account from my paycheck (which I don't do) or for dividends as well?
Has nothing to do with a paycheck. Money moved from either a bank account you've set up to do electronic transfers -or- using the money in your Vanguard settlement fund are equally valid for funding as far as Vanguard is concerned. IF you want auto-investments made for you, that can only be done with their mutual funds. Dividends will reinvest automatically if you selected that option.
E.g. You want $500/month to be invested into Vanguard Total Stock Market Index on the 15th of every month. You set this up in automatic investments and as part of the setup process you specify where Vanguard should get the money to make the investment, and what mutual fund you want the monies to purchase (VTSMX in this example). Your choices for the source of monies are: a linked bank account or your settlement fund.
Back to the point of your topic: you can't specify an ETF as the fund to invest into/out of automatically. It can ONLY be a mutual fund. And that's one reason why purchasing a mutual fund is better than an ETF -- because it's your only option if you are auto-investing at Vanguard.
Back to the point of your topic: you can't specify an ETF as the fund to invest into/out of automatically. It can ONLY be a mutual fund. And that's one reason why purchasing a mutual fund is better than an ETF -- because it's your only option if you are auto-investing at Vanguard.
I see. I found this really good article on bogleheads that talks about the pros and cons of VTI and VTSAX (ETF and MF). This was one category where the MF won. The majority of the rest of the points were in favor of the ETF. I think I will go with the ETF, despite liking the reinvestment option available with the MF.
You're mixing things up. Reinvestments can happen with either MF or ETFs. I don't know why you've gotten stuck on the topic of reinvestments. Your question only had to do with why one might go with the mutual fund vs the ETF. I gave you one specific reason.
You're mixing things up. Reinvestments can happen with either MF or ETFs. I don't know why you've gotten stuck on the topic of reinvestments. Your question only had to do with why one might go with the mutual fund vs the ETF. I gave you one specific reason.
I'm not mixing anything up, you're the one that said automatic reinvestment can only be done with MF's not ETF's...The post is below. Now you are saying something different??
I don't even use Vanguard, I use a different brokerage.
Quote:
Originally Posted by lottamoxie
If you want to make auto-investments on a scheduled basis in Vanguard you can only set those up with mutual funds, not ETFs.
I never talked about reinvestments and dividends. I only mentionedauto-investments. That means automatic investing, which means set up on a schedule that the account holder chooses to buy shares.
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