rsingh6675
Recycles dryer sheets
- Joined
- Nov 16, 2008
- Messages
- 126
This question is for Income Investors. Do you take Long Term and Short Term Capital gains as cash or do you reinvest them back in Mutual Funds?
I've set my taxable accounts to distribute dividends and CG distributions to my checking account. ... Those distributions are exposed to taxes anyway so I figure I'll use them first.
In my tax-advantaged accounts I've got everything set to reinvest.
The OP didn't mention if he/she is working or retired?
When I was working, I reinvested ALL dividends & STCG. Now that I am retired and want to generate income from my portfolio, I take all dividends from my taxable account to minimize selling funds to meet our withdrawal requirements. There's no difference in tax impact in reinvesting or taking dividends from taxable, so they should be the first sources of portfolio income for most retirees.
I don't reinvest capital gains because I use them to rebalance the portfolio after I do my annual withdrawal. I am a total return investor.
In my IRA accounts, i have all dividends, ST and LT gains reinvested back into the fund.
In my taxable accounts, I have all these items paid out into my sweep/MM account. I then decide how to invest/redeploy this additional capital.....into a different fund or purchase individual stocks or set it aside to meet a personal need.
So: does anyone else view them as a sort of lumpy, unpredictable "dividend" that may or may not be used for income or do you view them in a different light?
For our taxable accounts, we take dividends and capital gain distributions in cash. However, our living expenses exceed these dividends and capital gain distributions, so when I rebalance I replenish cash by selling equities in our taxable accounts with the proceeds going to our online savings account, so the capital gains are not reinvested.
I then balance to my target AA by selling fixed income and buying equities in our tax-deferred account. All dividends and capital gain distributions for tax-deferred and tax-free accounts are reinvested.