Hi all, first time poster.
I was wondering what your opinions were as far as going from low cost index funds to ETFs. Here's my situation.
I am currently sitting on about 120k in mostly cash that needs to go into some index funds. I was considering opening a vanguard account purely to access the low cost funds. Generally I keep the money in TD Waterhouse.
Instead I thought a better idea might be to immediately allocate this money into ETFs through TD (since commission is only 11$ as opposed to 30$ at vanguard) since its a lump sum. Then, as I accumulate more, I add it to the low cost funds available at TD (a few dreyfus funds, a TD or American S&P fund etc) then when it gets to be a big enough amount, maybe 10k per fund) dump the funds and again move into the lower cost ETFs. (since I def don't want to dollar cost average into an ETF!)
Basically, I have read 2 good points for this.
1. the easiest, is lower cost funds. Lower cost = more returns over the long run.
and 2. The most important reason, Tax loss selling. As I understand it, I can simply sell off a bad performing ETF, and buy a similar ETF, take it as a tax loss against income and capital gains. This is of course much harder to do with funds.
Any opinions? Is it not worth the tax efficiency? I understand that 3k can be used against income and the rest can basically be brought from year to year. It seems like a very sweet benefit that can squeeze out a few more percentage points per year! (unless I have oversimplified something)
Any opinions would be greatly appreciated!
Olav
I was wondering what your opinions were as far as going from low cost index funds to ETFs. Here's my situation.
I am currently sitting on about 120k in mostly cash that needs to go into some index funds. I was considering opening a vanguard account purely to access the low cost funds. Generally I keep the money in TD Waterhouse.
Instead I thought a better idea might be to immediately allocate this money into ETFs through TD (since commission is only 11$ as opposed to 30$ at vanguard) since its a lump sum. Then, as I accumulate more, I add it to the low cost funds available at TD (a few dreyfus funds, a TD or American S&P fund etc) then when it gets to be a big enough amount, maybe 10k per fund) dump the funds and again move into the lower cost ETFs. (since I def don't want to dollar cost average into an ETF!)
Basically, I have read 2 good points for this.
1. the easiest, is lower cost funds. Lower cost = more returns over the long run.
and 2. The most important reason, Tax loss selling. As I understand it, I can simply sell off a bad performing ETF, and buy a similar ETF, take it as a tax loss against income and capital gains. This is of course much harder to do with funds.
Any opinions? Is it not worth the tax efficiency? I understand that 3k can be used against income and the rest can basically be brought from year to year. It seems like a very sweet benefit that can squeeze out a few more percentage points per year! (unless I have oversimplified something)
Any opinions would be greatly appreciated!
Olav