Just a quick FYI for Vanguard clients. I have a legacy Vanguard taxable account. It contains two funds with uncovered shares and very high unrealized gains. These go back over 20 years. Not knowing better at the time I got locked into average cost basis method.
Anyway, back in 2017, I got good advice here to stop reinvesting the gains for these two funds and instead have them invest in a different fund inside the account which was set to specified ID with covered shares. Great advice. I went online to Vanguard, navigated to where you can change the reinvestment options, made the changes, then went back to the page and confirmed they were reinvesting into a different fund. That was 7 years ago.
Since then I've gone online many times to look through my funds in the taxable account to see what to sell with low realized gains. What I mean is, I check the long term unrealized gains page in order to find the lots I want to sell before actually making a transaction. Naturally, I never saw any transactions on these older funds because no dividends were reinvesting in them and I wasn't touching them at all. Of course I knew they were still increasing in value.
Well, wrong. lol. I just realized that all this time they were still reinvesting in themselves. Sorting by activity, I looked back all the way in my transactions for these funds and not once did they reinvest in the other fund with spec ID. I guess the changes just never took place. Furthermore, looking at the unrealized gain page, I guess because the shares are uncovered, Vanguard never showed any transactions for dividends reinvesting unlike with my spec ID funds which showed every transaction. So each time I went to these pages to see what to sell, seeing no activity from the high unrealized gain funds, I keep getting false affirmations nothing was being reinvested into them. My guess is no activity was shown either because the shares were uncovered?
I can't believe I missed this. My fault for not noticing. Still, I'm a simple long term buy and hold index investor, so it's mostly hands off. Still, I am 100% sure I made the reinvestment changes on the website and confirmed them.. by confirm I mean I saw those funds listed as investing those dividends in a different fund.
So, if you're reading this and have a legacy account like me, and you know you changed your reinvest dividend options, you might just want to confirm by looking at the actual activity/transactions page to see where those dividends are going.
The funny part is, I've already had to pay extra for my legacy account twice and the reason I kept it was mostly because I wanted my dividends to invest into another fund, and it wasn't even doing that. lol. (Upgraded accounts don't support reinvesting dividends from one account into the other.)
Last thing. So, yesterday I corrected the mistake and I now have one of my high unrealized gain accounts reinvesting dividend into a spec ID account. I know, I know, they will force me to upgrade my legacy account soon, but I figure I might as well use the feature as they just made me pay for it again on 8/21.
Weird thing is, one of my accounts, Vanguard Extended Market Fund (which has about 80% unrealized gain) was not listed as an account I could do anything with regarding reinvesting dividends. I couldn't even have the dividends go into a money market. I'll have to call Monday and see why it's a problem. Even after they force me to upgrade, I'll certainly want to divert those dividends somewhere besides reinvesting.
Anyway, back in 2017, I got good advice here to stop reinvesting the gains for these two funds and instead have them invest in a different fund inside the account which was set to specified ID with covered shares. Great advice. I went online to Vanguard, navigated to where you can change the reinvestment options, made the changes, then went back to the page and confirmed they were reinvesting into a different fund. That was 7 years ago.
Since then I've gone online many times to look through my funds in the taxable account to see what to sell with low realized gains. What I mean is, I check the long term unrealized gains page in order to find the lots I want to sell before actually making a transaction. Naturally, I never saw any transactions on these older funds because no dividends were reinvesting in them and I wasn't touching them at all. Of course I knew they were still increasing in value.
Well, wrong. lol. I just realized that all this time they were still reinvesting in themselves. Sorting by activity, I looked back all the way in my transactions for these funds and not once did they reinvest in the other fund with spec ID. I guess the changes just never took place. Furthermore, looking at the unrealized gain page, I guess because the shares are uncovered, Vanguard never showed any transactions for dividends reinvesting unlike with my spec ID funds which showed every transaction. So each time I went to these pages to see what to sell, seeing no activity from the high unrealized gain funds, I keep getting false affirmations nothing was being reinvested into them. My guess is no activity was shown either because the shares were uncovered?
I can't believe I missed this. My fault for not noticing. Still, I'm a simple long term buy and hold index investor, so it's mostly hands off. Still, I am 100% sure I made the reinvestment changes on the website and confirmed them.. by confirm I mean I saw those funds listed as investing those dividends in a different fund.
So, if you're reading this and have a legacy account like me, and you know you changed your reinvest dividend options, you might just want to confirm by looking at the actual activity/transactions page to see where those dividends are going.
The funny part is, I've already had to pay extra for my legacy account twice and the reason I kept it was mostly because I wanted my dividends to invest into another fund, and it wasn't even doing that. lol. (Upgraded accounts don't support reinvesting dividends from one account into the other.)
Last thing. So, yesterday I corrected the mistake and I now have one of my high unrealized gain accounts reinvesting dividend into a spec ID account. I know, I know, they will force me to upgrade my legacy account soon, but I figure I might as well use the feature as they just made me pay for it again on 8/21.
Weird thing is, one of my accounts, Vanguard Extended Market Fund (which has about 80% unrealized gain) was not listed as an account I could do anything with regarding reinvesting dividends. I couldn't even have the dividends go into a money market. I'll have to call Monday and see why it's a problem. Even after they force me to upgrade, I'll certainly want to divert those dividends somewhere besides reinvesting.
Statistics: Posted by bobsmith — Sun Sep 01, 2024 6:58 am — Replies 1 — Views 247