The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Crumpet on June 07, 2016, 11:36:41 AM
-
I have VTSAX and VBTLX investments. Both are Admiral.
Right now (June 7th), the VTSAX are near their 52-week high. Should I wait for them to dip down before sending more cash in or is this just pure foolishness?
No, I usually don't speed ages trying to game the system, but when it gets this close to a high I am reluctant to purchase right away.
-
I have VTSAX and VBTLX investments. Both are Admiral.
Right now (June 7th), the VTSAX are near their 52-week high. Should I wait for them to dip down before sending more cash in or is this just pure foolishness?
No, I usually don't speed ages trying to game the system, but when it gets this close to a high I am reluctant to purchase right away.
Not to be too harsh, but it's pretty much pure foolishness to try to time buying or selling. You should be in this for the long term, not for what happens in the span of a few days. This ground has been covered at least one million time before: You stand NO CHANCE of reliably predicting the future. So go ahead and buy now, and thank yourself 10, 20, 30 years from now :-)
-
Dollar cost average it in if you're worried about the market being too high. Everyone here is going to remind you that you shouldn't try to time the market.
-
Quit trying to time the market. In 20 years you won't care if it was $.20 a share cheaper (or more expensive) today than next week.
-
Thanks -- yes, I agree, timing the market is a fool's errand. I only paused when I saw we were at $0.10 away from the 52 week high.
-
Price as of 06/06/2016 $52.70
52-week high 06/23/2015 $53.89
52-week low 02/11/2016 $45.05
Not sure where you saw only $0.10 lower than 52-week high
-
Price as of 06/06/2016 $52.70
52-week high 06/23/2015 $53.89
52-week low 02/11/2016 $45.05
Not sure where you saw only $0.10 lower than 52-week high
I got it from the Vanguard website when I looked under my own holdings. It said the 52 week high was $52.90 (I was off by $0.20). Still does.
-
Yay, flat for a year! This might be the cheapest you ever find it. It's a good thing that the thing you are buying is as expensive as it ever has been. That means it going up in value. You don't want to buy something that will be cheaper tomorrow?
I bought more VTSAX just today. My autoinvest is once per month.
-
Historically, the market is at or near an all-time high most of the time. Nobody can predict when the next dip will be, and even when that dip happens the price may never be lower than it is right now. Invest when you have the money to invest.
-
The best time to buy is whenever you have the money. The market goes up over time. Your expectation is that it will be more likely to go up tomorrow (next month, next year) than to go down.
Plus trying to time the market is work and makes you feel bad. In addition to losing money.
-
Analogy:
- When is the best time to plant a tree?
- 10 years ago
- o_O, ok so when is the second best time to plant a tree?
- TODAY
-
Thanks -- yes, I agree, timing the market is a fool's errand. I only paused when I saw we were at $0.10 away from the 52 week high.
The market goes up more than it goes down. If not why would anyone invest in it. So logically most of the time it's close to a "high". Unless there was just a market crash this will always be the case. Things that increase are near their high... I'm confused why this have any meaning as to whether or not to invest :S
-
Dollar cost average it in if you're worried about the market being too high. Everyone here is going to remind you that you shouldn't try to time the market.
But probably don't do that and just buy in now, since the value of DCA is questionable at best.
-
I've been feeling the same way. I needed this pep talk to remind me to think in broader terms!
-
I get paid next Friday.
I'll be buying more VTSAX next Friday.
-
Don't get suckered into speculating when you want to be focused on investing for the long term
-
Yup. Don't time, just buy. And wait. 30 years.
-
...when it gets this close to a high I am reluctant to purchase right away.
Chances are that you will still do at least as well as Bob (http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/).
-
Buy in now so you can receive the June dividend. You don't know when/if the price will come down from near the 52 week high.
-
Buy in now so you can receive the June dividend. You don't know when/if the price will come down from near the 52 week high.
+1
-
Buy in now so you can receive the June dividend.
Buying so that you get the dividend doesn't makes sense. The share price just goes down by the amount of the dividend. And then you pay tax on the dividend.
Buying because it's most likely to go up over the short and long term is a good idea. Just not dividend timing :)
-
Buy in now so you can receive the June dividend.
Buying so that you get the dividend doesn't makes sense. The share price just goes down by the amount of the dividend. And then you pay tax on the dividend.
Buying because it's most likely to go up over the short and long term is a good idea. Just not dividend timing :)
+1,000
Given the option, I would much rather purchase just after a dividend payment, not just before. If I was trying to maximize my tax burden, I might think otherwise.
-
...when it gets this close to a high I am reluctant to purchase right away.
Chances are that you will still do at least as well as Bob (http://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/).
No matter how often I read about Bob, every time I see a link to his story I go over and read about him again.
-
Buy in now so you can receive the June dividend.
Buying so that you get the dividend doesn't makes sense. The share price just goes down by the amount of the dividend. And then you pay tax on the dividend.
Buying because it's most likely to go up over the short and long term is a good idea. Just not dividend timing :)
+1,000
Given the option, I would much rather purchase just after a dividend payment, not just before. If I was trying to maximize my tax burden, I might think otherwise.
I think you have to look at where you are in comparison to the record date. Using March VTSAX dividend, even with accounting for tax, you would be better off purchasing from on any day from March 1 - March 10 than if you purchased on either March 14th, 15th, or 16th. (March's dividend had a record date of March 11, Reinvestment date of March 14, and payable date of March 16.) And you will continue to be better off if the dividend is reinvested due to the compounding of the additional shares.
-
Buy in now so you can receive the June dividend.
Buying so that you get the dividend doesn't makes sense. The share price just goes down by the amount of the dividend. And then you pay tax on the dividend.
Buying because it's most likely to go up over the short and long term is a good idea. Just not dividend timing :)
+1,000
Given the option, I would much rather purchase just after a dividend payment, not just before. If I was trying to maximize my tax burden, I might think otherwise.
I think you have to look at where you are in comparison to the record date. Using March VTSAX dividend, even with accounting for tax, you would be better off purchasing from on any day from March 1 - March 10 than if you purchased on either March 14th, 15th, or 16th. (March's dividend had a record date of March 11, Reinvestment date of March 14, and payable date of March 16.) And you will continue to be better off if the dividend is reinvested due to the compounding of the additional shares.
True story. I don't recommend dividend timing, and the tax effect of a quarterly dividend is not neglibible, but pretty small. I'm just not a dividend fan, and investing simply to get or avoid a dividend is silly. When I say I'd rather buy right after a dividend is doled out, that doesn't mean I would wait. I'd just prefer that it worked out that way.
I've written about the effect of tax drag (http://www.physicianonfire.com/drag-getting-taxed/), and if you invest in a tax efficient manner, it's pretty small. For me, currently in a high tax bracket, it's about 0.6% per year, or 0.15% per quarter. Since the market usually moves more than 0.15% per day, timing around a quarterly dividend isn't particularly useful. I'd rather not pay the tax, but I'm not going to wait to invest to do so.
Best,
PoF
-
Buy in now so you can receive the June dividend.
Buying so that you get the dividend doesn't makes sense. The share price just goes down by the amount of the dividend. And then you pay tax on the dividend.
Buying because it's most likely to go up over the short and long term is a good idea. Just not dividend timing :)
+1,000
Given the option, I would much rather purchase just after a dividend payment, not just before. If I was trying to maximize my tax burden, I might think otherwise.
I think you have to look at where you are in comparison to the record date. Using March VTSAX dividend, even with accounting for tax, you would be better off purchasing from on any day from March 1 - March 10 than if you purchased on either March 14th, 15th, or 16th. (March's dividend had a record date of March 11, Reinvestment date of March 14, and payable date of March 16.) And you will continue to be better off if the dividend is reinvested due to the compounding of the additional shares.
Thanks for providing this example which illustrates the point I was making. The market went up during that time period. Of course it was better to buy earlier in a market increasing time period. And the odds are the market will be going up at any given time. Which is the point I made. It has nothing at all to do with when a dividend is issued.
-
Interestingly, Vanguard warns against buying the dividend (https://personal.vanguard.com/us/insights/article/june-dividends-062016?utm_content=sf28133050&utm_medium=spredfast&utm_source=twitter&utm_campaign=Personal+Investor&cid=sf28133050+sf28133050) and that it may be advisable to wait until after a dividend has been distributed. The higher the dividend is as a percentage of the asset, the more likely you are better off waiting.
-
Thanks for that link POF.
So given the information presented in this thread, how do you determine when to purchase now vs wait until the dividend. I personally will wait if it is less than 5 business days. Not that I think any term is better or worse, just a personal preference.
-
Thanks for that link POF.
So given the information presented in this thread, how do you determine when to purchase now vs wait until the dividend. I personally will wait if it is less than 5 business days. Not that I think any term is better or worse, just a personal preference.
I would buy every time I got paid. I wouldn't worry when the dividend date was unless I had a really huge amount of money come in for some reason (maybe an inheritance or something). Then I might think about it. But I would probably just buy when I had the money anyway.
-
I've never paid much attention to be honest, but if I knew a dividend was coming within a few days, I might roll the dice and wait.
I typically invest in the taxable account once a month, and the amount I invest is about 0.5% of my invested assets, so we're talking about avoiding about a 0.15% tax on 0.5% of my assets. It's not zero, but it's not enough to hold out very long over.
-
I've never paid much attention to be honest, but if I knew a dividend was coming within a few days, I might roll the dice and wait.
I typically invest in the taxable account once a month, and the amount I invest is about 0.5% of my invested assets, so we're talking about avoiding about a 0.15% tax on 0.5% of my assets. It's not zero, but it's not enough to hold out very long over.
Well, let's assume 7% average return per year. If you wait 15 days in March (just as an example for VTSAX payout) to buy after the div it will "cost" you on average (7/252)*15 = 0.4%
-
I've never paid much attention to be honest, but if I knew a dividend was coming within a few days, I might roll the dice and wait.
I typically invest in the taxable account once a month, and the amount I invest is about 0.5% of my invested assets, so we're talking about avoiding about a 0.15% tax on 0.5% of my assets. It's not zero, but it's not enough to hold out very long over.
Well, let's assume 7% average return per year. If you wait 15 days in March (just as an example for VTSAX payout) to buy after the div it will "cost" you on average (7/252)*15 = 0.4%
That's a good way of looking at it. A lot can change in 15 trading days (3 weeks). There will be many days where the market will be + 0.4% or more, and others where it will be down by a similar amount.
I'm not a market timer, and I wouldn't wait more than a few days to avoid a dividend unless I was investing a very large sum. If I'm investing $10,000, the tax on a 0.5% quarterly dividend is about $14. Not enough to worry about. I guess it probably wouldn't make much sense to wait even a couple days.
It still doesn't make any sense to be in a rush to "buy the dividend" though.
-
Wow I never read about Bob but I realized that's sort of exactly my investing philosophy. I dollar cost average into 100% VTSAX and never sell. Just a buy and hold investor. I'm lazy and don't like to think about my investments. I'll tell you in 20-30 years how I do. It's easy to have balls of steel when you have no idea what's going on in the finanacial markets, lol.