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Old 12-18-2010, 08:09 AM   #61
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Marc, if it were me, I wouldn't worry about it. There is always going to be tuituion to pay when learning. It's a small amount of money and you now have peace of mind; not only with the diversification but also by having decided on your asset allocation. Enjoy your vacation!

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Old 12-18-2010, 08:22 AM   #62
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One last thing: Be very careful with the 1099DIV that you will receive in February-March. It is likely that at that time your holding period may not allow some of your dividends to be designated at Qualified. However, if you keep holding the shares, the dividends may become qualified. In that case, you may need to have a corrected 1099DIV issued. Your broker may do this automatically, so I would not file my tax return until this was clearly sorted out one way or the other.

This may all be a red herring, but it is something to watch out for.

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Old 12-27-2010, 02:52 PM   #63
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Thanks for the tip regarding the 1099DIV, LOL. I might have overlooked the mistake and overpaid my taxes.

Regarding the overall mistake of buying the dividend, sometimes it's better to be lucky than good. After refining my calculations to include a higher tax rate for the non-qualified portions of each dividend, I see that each of the four ETFs I bought on 12/16 gained more to the close of the day before each ETF's Ex-Date than the tax on its dividend. Collectively the gain was 3.7 times the tax bill.

Regarding the question of selling at the close of the day prior to the Ex-Date and buying at the open of the Ex-Date, my taxes would have been 20% higher if I had done that for all four ETFs. That said, I could have lowered the tax bill by 30% if I had done a sell/buy for VEU and VWO only. That's a theoretical observation -- I was out of the country and not in a position to manage that complication.

At any rate, I feel pretty good about making a mistake, avoiding paying for it, and learning a lot that will be useful in the future. In particular, I see now that each Ex-Date is an opportunity to optimize, and I look forward to managing them in a hands-on fashion going forward.

Many thanks to all for the information, feedback, and support. You guys are great!

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