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Financial Planning / Tax Strategies


Subject:  Re: Dividend Stocks or Dividend ETFs Date:  1/28/2013  12:21 AM
Author:  op456op Number:  117565 of 129503

Hi Caroline,

I am far from an expert on tax strategies, but since no one else has answered, I'll take a stab at it.

First, I assume the ML & Fidelity accounts are after tax accounts and not an IRA type account.

With regard to the CEF's, I know of one REIT (mainly because I own it) that is pretty straight forward on dividends and that is VNQ (also from Vanguard, more on that later). It is a open-end index fund of REITS so that makes it simpler. You don't have to worry about a Return on Capital event or K-1. Their dividends are just straightforward dividends and I've been collecting them since Dec 2004 (in an IRA). Being a REIT they do generate lots of dividends, but it sounds like that's what you want to supplement your current income. Partnerships as you seem to know are more complicated so if your goal is to keep your taxes simple, steer clear.

The 2 Vanguard dividend ETF's you mention also will be straightforward.

Now, what follows is my personal opinion but I would move my funds to Vanguard. A couple of reasons:

1. Merrill Lynch is a full service broker and as such their fees are much higher than a discount broker like Vanguard. I think Fidelity is OK on fees, but still higher on commissions
2. I think Vanguard is the most shareholder friendly broker there is. They manage their ETF's at cost, AND...... there are NO COMMISSIONS!!!!.... on their ETF's when held at Vanguard. That's right, it doesn't cost to buy and sell their ETF's.

It's pretty easy to transfer to another broker. Vanguard does lots of hand holding during the process but if you're in all cash it makes it even easier, no proprietary ML funds to liquidate, etc. I suggest you take a look at them on or call them @ 800-962-5209. Be sure to mention it is a Trust Account you have. To make it even simpler for you you could transfer the Fidelity account to them as well and have everything consolidated at one broker with one brokerage 1099 at the end of the year to deal with. If Vanguard doesn't appeal to you and you are happy with Fidelity, them I'd move the ML funds to them. I've never heard anything bad about them, and heard a lot of good. They will charge commissions on Vanguard ETF's. I'm not sure if they have their own commission free ETF's or not.

At either Vanguard or Fidelity you'll also be able to buy & sell any of the Stock Advisor/RuleBreaker/SuperNova stocks that interest you. And any that pay dividends will be on the same 1099 statement @ year end.

Good Luck and Welcome. If you have other questions, please post them and if I've made any mis-statements one of the experts will be along to correct me.
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