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Mutual Fund Distributions Appear Headed Up This Year
FYI: Successful investors know that mutual fund distribution season is approaching, and 2014 is shaping up as the fifth year in a row of increased largesse by mutual funds. The potential downside would be higher taxes for shareholders in accounts held outside of tax-deferred retirement accounts like IRAs or 401(k)s. Regards, Ted http://license.icopyright.net/user/viewFreeUse.act?fuid=MTg1NTM3OTg=
What's the reason for significantly increased distributions from stock mutual funds over last year? In 2013, the market was up 32.4%, so naturally actively managed stock mutual funds had tons of realized capital gains from selling appreciated winning positions. Regarding stock dividend distributions, the 30 day SEC yield of VFIAX is 1.99%.
From the article: "Also, your cost basis can rise because the distribution counts in your basis, even if it's paid out and not reinvested. That higher basis can reduce your future cap gains tax on a profitable sale of shares."
Wrong. Only money that is used to buy shares contributes to the cost of those shares.
Comments
In 2013, the market was up 32.4%, so naturally actively managed stock mutual funds had tons of realized capital gains from selling appreciated winning positions. Regarding stock dividend distributions, the 30 day SEC yield of VFIAX is 1.99%.
Wrong. Only money that is used to buy shares contributes to the cost of those shares.