Help Understanding MF Gain/Loss

[roninop]

Hi Folk's,

I have a question regarding a MF I bought last year, VWIAX -
Vanguard Wellesley Admiral.

My initial investment was 391,708.

My current balance is 377,593

MY VWIAX is showing an unrealized gain/loss of - 21,750

In 2014, I did not reinvest dividends/CG's and had the money transferred to my checking account. The total was 12,989.

In 2015, I started to reinvest dividends/CG's again and to date the total is
8,384.

Since I took Div/CG's of 12,989 in 2014 my "loss" is really only 1,126 is
that correct or am I not understanding this ?

 

[pb4uski]

Yes, your "economic" loss ignoring the time value of money is $1,126.... the $391,708 you invested less the $12,989 of dividends that you received less what you would receive if you sold today of $377,593.

However the unrealized gain is what would show up on your tax return if you sold. It should be the $377,593 of proceeds from sale less the $391,708 originally invested less the $8,384 of dividends reinvested... it is $749 different from the $21,750 for some reason.

 

[Looking4Ward]

... it is $749 different from the $21,750 for some reason.

Could the $749 be the fund expense costs?

 

[pb4uski]

No, fund expenses would be embedded in the NAV. I suspect that there is probably a distribution missin in the OP numbers.

 

[roninop]

Hi Folk's,

Thank you for your replies. I spoke with Vanguard this morning, my original investment in this fund was in the Investor class.

VWINX > 390, 957

2 days later it was converted to Admiral Class VWIAX > 391,708

I double checked my distributions and they are correct.

2014 > Div/CG to MM = 12,989

2015 > Div/CG Reinvest = 8,384

Original Investment 390,957 - 377,593 = 13,364

13,364 - 12,989 = 375

So my "loss" is only $375 ? Sorry, I just don't understand cost basis/ step up, etc. very well.

Thank You !

 

[RunningBum]

As pb4 said, there are multiple definitions of "loss". You need to be specific about what you are asking for.

If you are tracking to measure your performance, $375 loss is correct.

If you were to sell, you (and the IRS) care about the capital gains loss (or gain) that you report on your taxes. Note that all of your dividends were already taxed. Your basis is the original 390,957+ $8384 reinvested. The capital gains/loss is that less the sales proceeds, which would be $377,593, which gives you a cap loss of $21,748. I don't know why this is $2 off what VG shows, maybe you rounded numbers and VG doesn't?

Step up has to do with inheritance. Don't make this more complicated than it is with that or any other etc.

 

[roninop]

Thank You ! Yes, I just rounded the numbers. Thanks for the clarification on cost basis and I will take your advice not to make it more complicated. I appreciate your help.