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Old 12-14-2015, 05:08 PM   #61
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Your Roth withdrawals will be tax free in Canada. But note the bit I underlined about contributions after you moved to Canada.



https://www.irs.gov/pub/irs-pdf/p597.pdf

Thank you Alan. I will look at the doc later but it looks like I will no longer contribute to Roth IRA (Roth IRA conversion every year will make no sense if I get taxed.) but I am glad to see the withdrawal will stop be tax free.



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Old 12-14-2015, 06:27 PM   #62
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if you take the dividends and do not reinvest them the dollars you have compounding for you is reduced for the start of the next quarter when the opening bell rings .

what ever your investment dollars were the night before the reset on the price , they would be less if you pocket the dividend and the same if you reinvested it .the dollars compounding is what matters , number of shares that make up that value is a moot point .

all compounding is on dollars invested , always .
Perceptive glimpse of the obvious mathjak.

Go back an read the post that I was responding to. That poster stated that technically if you take dividends in cash you are not leaving your stock alone and that by taking dividends in cash that you are liquidating shares both of which are not true.

If you take dividends in cash you are simply deciding not to reinvest them in that ticker... you might well reinvest them in a different ticker that performs better or worse than the fund you received the dividends from... or you might use the cash to avoid selling shares for living expenses.
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Old 12-14-2015, 07:55 PM   #63
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fact . if you don't reinvest the dividends you have less money in that investment than you had before the payout , compounding for you at the opening bell . .

what you do with the money is a different issue . if it is spent than overall you have less money in equity's then you had working for you . if you reinvest it in another growth vehicle then you have the same amount working for you again .

it also depends what you were going to liquidate if you reinvested the dividends . if it is cash or bonds and you used the dividend money instead then yes you have less in equity's taking that dividend money out and not reinvesting it . if you were going to liquidate equity's but spent the dividend instead then it is a wash and the same thing .
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Old 12-14-2015, 07:59 PM   #64
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fact . if you don't reinvest the dividends you have less money in that investment than you had before the payout compounding .

what you do with the money is a different issue . if it is spent thn overall you have less money in equity's then you had working for you . if you reinvest it in another growth vehicle then you have the same amount working for you again .
"What you do with the money is a different issue....."

No, it's the only issue.
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Old 12-14-2015, 08:04 PM   #65
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there are a few issues

not reinvesting the dividend means less dollars in that stock compounding .

so the next issue is if you do not reinvest the money in that stock what do you do with it .

if you reinvest it in something else with equal or better growth potential , great , you maintained your allocation in equity's


if you spend it , then you lowered your allocation in equity's .


but the next issue is if you spend those dividends and you were going to liquidate other equity's instead then you are even steven as far as what you would have .

but if you spent the dividend money instead of liquidating cash or bonds then you have less compounding in your higher growth investment .
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Old 12-14-2015, 08:08 PM   #66
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Yep, what you do with the money is THE issue.......
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Old 12-14-2015, 08:10 PM   #67
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fact . if you don't reinvest the dividends you have less money in that investment than you had before the payout , compounding for you at the opening bell . .

what you do with the money is a different issue . if it is spent than overall you have less money in equity's then you had working for you . if you reinvest it in another growth vehicle then you have the same amount working for you again .

it also depends what you were going to liquidate if you reinvested the dividends . if it is cash or bonds and you used the dividend money instead then yes you have less in equity's taking that dividend money out and not reinvesting it . if you were going to liquidate equity's but spent the dividend instead then it is a wash and the same thing .
As many noted earlier that they did not auto reinvest, but used dividends to for re-balancing or buying some other investment. Yes if you take dividends and don't reinvest them in the equity they came from, then you have less $ in that equity. But if the goal is to re-balance, the you are trying to shift the dollar weighting back to your desired allocation, then that is what you are trying to do.
On a side note -- non-qualified dividends can come from fixed income securities... so all dividend may not be coming from equities. Remember that standard deductions and exemptions can offset a bit of non-Qdiv distribution in a taxable account.
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Old 12-15-2015, 08:54 AM   #68
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Sorry, no idea. Don't even know what a Roth IRA is. Will depend on the tax treaty.
Roth is the similar TFSA once you are in Canada.
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Old 12-15-2015, 06:57 PM   #69
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Have to have something to live on. When RMD's come around & full SS kicks in, maybe not.
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Old 12-16-2015, 09:00 AM   #70
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Roth is the similar TFSA once you are in Canada.
Thanks. Yes, I have been told how the US retirement accounts work many times, but always forget which one is which.
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Auto reinvest continues the benefits of DCA
Old 12-16-2015, 10:22 AM   #71
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Auto reinvest continues the benefits of DCA

I auto-reinvest for two additional reasons:
1. Doing so continues the benefits of Dollar Cost Averaging in the fund, rather than keeping the number of shares static by withdrawing the income, and
2. Doing so, since it grows the number of shares in the holding, means the next dividend is paid on a greater number of shares, so dividend income is compounding over time.
I schedule withdrawal for income from whichever fund I am rebalancing.
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Old 12-16-2015, 11:15 AM   #72
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I find it simpler to reinvest all dividends and capital gains. At the end of the year, I re-balance taking out next year's money from whatever asset needs to be reduced the most.
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Old 12-16-2015, 12:42 PM   #73
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Reinvesting dividends is no different than taking the cash and immediately rebuying, only it is done a day or two more quickly if you do it automatically. There is no tax advantage to reinvesting. You report the dividend income no matter what, at 0% or 15% depending on your bracket. Whether you reinvest has no bearing on the taxes.

If you want to rebuy what you're getting dividends on, reinvesting is fine. If you want the flexibility to invest in whatever you want, or spend that cash and hold other investments, don't reinvest. I like the flexibility. If I really want more of the fund that gave dividends, I can rebalance.

It really doesn't matter that much. If you reinvest but decide that's not what you really wanted to do, you can quickly sell (with SpecID basis) and probably have very little short term gain or less.

I just prefer to keep it simple. I need a certain amount of cash throughout the year. I can get much of it with the dividends. Then I look at how I want my investments to be, and rebalance if needed.
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Based on our asset allocation, I will auto reinvest dividends in areas that require it, otherwise take the cash to invest as we wish, or just spend it. Most of our dividends go right back into portfolio, as we keep a large cash bucket. The one thing that I do like about auto reinvesting (at fido at least) is that there are no trade charges, as there would be if I took it all in cash and then reinvested myself.
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Old 12-16-2015, 03:20 PM   #74
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I auto-reinvest for two additional reasons:
1. Doing so continues the benefits of Dollar Cost Averaging in the fund, rather than keeping the number of shares static by withdrawing the income, and
2. Doing so, since it grows the number of shares in the holding, means the next dividend is paid on a greater number of shares, so dividend income is compounding over time.
I schedule withdrawal for income from whichever fund I am rebalancing.
The dividends do nothing for dollar cost averaging .

You have the same dollars and value in the investment both before and after reinvesting the dividend. The compounding is all on dollars invested not number of shares.

More shares at a lower value at the ring of the bell is a wash.

Your cost basis is the adjusted lower share price plus the dividend which pretty much equals what you had the night before.
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Old 12-16-2015, 04:50 PM   #75
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[QUOTE=mathjak107;1670485]The dividends do nothing for dollar cost averaging .


Ah, but it does. Your reinvested div buys shares, or fractional shares, at the strike price on the transaction date. That purchase price will vary throughout the quarters so sometimes your reinvest transaction is buying at high closing price, sometimes at low = DCA
You are right that it does not change your internal fund balance, but it does affect the price at which you gain shares.
And gaining additional shares will earn you divs on those new shares at the next div distribution.
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Old 12-16-2015, 05:02 PM   #76
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Not really. Just think of a mutual fund . Your new cost basis is the reduced price plus the dividend. Each transaction through the year is the same thing .
reinvesting dividends do not really lower your cost basis.

Just think of having 10k in a stock. You get a 200 dollar dividend and reinvest it ,exchange rules have the stock open at an offset price.

If i bought 10k worth of stock at the open and missed the dividend i would have the same amount of shares and value as you who reinvested the dividend.

If the stock goes up 6% we are identical in value,and cost basis
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Old 12-16-2015, 05:45 PM   #77
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Those of you not doing DRIP, are you letting the dividends and cap distributions accumulate before rebalancing or withdrawing or rebalancing quarterly as they're distributed?

Whatever cash accounts VG has that you can put them in can't be paying much in interest.
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Old 12-16-2015, 05:50 PM   #78
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In my case Vanguard sends the dividends directly to my checking account for my taxable account. for my tax-deferred account they go into a low paying MM until I reinvest them, but the drag isn't very much because I don't keep much in there (0-3% of the total on average).
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Old 12-16-2015, 05:55 PM   #79
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Those of you not doing DRIP, are you letting the dividends and cap distributions accumulate before rebalancing or withdrawing or rebalancing quarterly as they're distributed?

Whatever cash accounts VG has that you can put them in can't be paying much in interest.
80+% of my distributions are paid in late Nov and Dec, so we aren't talking much time delay before the Jan 2 withdrawal.

Earlier dividends I sweep into a high yield savings account.
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Old 12-16-2015, 08:01 PM   #80
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[QUOTE=mathjak107;1670541]Not really. Just think of a mutual fund .

Excerpt from:
The Virtues of Dollar-Cost Averaging
Consistency Pays
by Virginia B. Morris, But I don't find a date on this column:
......
"More Than a DRIP in the Bucket

The simplest and most cost-effective way to buy stock using dollar-cost averaging is to enroll in the dividend reinvestment plan of a holding in your portfolio."
.......
Although:
"Keeping Track Over Time

One potential headache with dollar-cost averaging is calculating the capital gains taxes you might owe when you sell the investment. To figure the tax liability, you’ll need the cost basis of shares you purchased in small increments over time."
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