No. of Recommendations: 0
Would you be buying more of that fund today? If so, it is reasonable to reinvest dividends.

I try to buy when the NAV is reasonable. So yes I might buy junk now and not more of the muni fund.

Would you be buying more of another fund today and not adding to this fund? If so, it may be more reasonable to take the dividends and use them to buy more of the desired fund.

To meet allocations goals, this could change like the wind.

Do the funds have front loads or back loads?

No. Thank heavens.

What I am doing is allowing all dividends to be reinvested, and then I am nudging my taxable investments back to balance by directing new money towards the fund the most lacking as per my asset allocation plan. However, if my porfolio gets out of balance enough (off by more than 5%) and new money wouldn't have a hope of making a dent, I would consider redirecting dividends to the funds most lacking.

I intend to keep proceeds invested "per my asset allocation plan" just like you. I have some but not a lot of new money.

New money and redirecting dividends are more tax efficient than actually selling appreciated shares in a personal (taxable) account.

Beyond the question of timing (hmm, that word raises a flag) new purchases vs. reinvesting, that sounds like a good reason to take distributions.

BTW for core stock holdings I intend to reinvest.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.