Yes I did this. Sold out of a lot of shares, cashed out of my existing Vanguard retail fund, and combined the whole thing into a Vanguard wholesale fund.
Best people to talk to about this are Vanguard. They're very helpful and answered all my dumb questions over the course of a few months.
Of course, is this the optimal approach to go in respect of minimising fees? Or asset allocation? probably not. But it pays an extraordinary good time saving dividend which I have come to value.
Will do, thanks. Just curious what the CGT ramifications were for you?
CGT ramifications were varied. In short, I paid CGT. But your own CGT ramifications will reflect your own personal circumstances.
But to give you some idea here are few issues I remember.
Firstly, I was sitting on accumulated CGT losses of a few thousand so I had a bit of wriggle room.
I had the Vanguard retail fund for less than a year, but it made a profit in that period - as i needed the funds to get into the wholesale account I sold out and had CGT assessable on this relatively small profit. In retrospect I should've held it for a year and then I would have qualified for the 50% discount BUT if I had held it for a year, I would have made a loss!
(I only had the retail account cos I didn't know there were letting in the great unwashed by allowing people into wholesale with $100k instead of the advertised $500k). Only after I called them did they mention that they would let me in.
I had some AMP shares that had made a profit after 12 years, and so realised a capital gain there. I also sold out of some other shares QBE, SGM and some otehrs - happily I haven't checked to see if they've gone up or down since.
I had some really terrible shares in which I realised capital losses, LYNAS, and so used these to offset my capital gains from other shares.
I also sold a number of shares that had increased by 100 or more%. I basically sold half of these holdings to put into vanguard, and left the remainder to sit there and give me dividends indefinitely - Resmed, Harvey Norman, wish there had been more of these.
All these accrued CGT.
In the end I aimed to carry over a capital loss but due to:
- some bad maths
- forgetting that the Vanguard Retail fund and the ETFs also accrue capital gains, but can't tell you the exact amount until after the Financial year is over
- not realising that the 50% discount doesn't apply when offsetting against capital losses
i ended up making a small profit. It's annoying, but its only small. The proceeds were reinvested.
What the exercise has taught me is that there is no one size fits all approach unless you are truly starting from scratch. I still have about 28% of my net worth still in direct shares which are likely to stay there due to CGT reasons until I scale down my income/take a sabbatical and don't work for a year or something and have a tax holiday. I would like to sell out and put this into Vanguard, but the tax benefits don't make it worthwhile and I still have the belief (although it may be mistaken) that some of these direct holdings may have a bit more upside than an index - especially after being beaten down so hard over the past year.
I hope this helps!