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I'm talking only about mutual funds that have been purchased over a period of 25 years or more. I've been reinvesting dividends and cap gains since the beginning. Whenever I've had cap gains from sales, I've always used the average cost basis. My question is whether the Average Cost Basis is usually for most folks the best way to go. Thanks.
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Financially, I'm not sure anyone can answer or have an opinion without knowing the details of individual purchases. It generally will be simplier to use average cost basis

Bob
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Financially, I'm not sure anyone can answer or have an opinion without knowing the details of individual purchases. It generally will be simplier to use average cost basis

That seems to be what everything I've read says. I guess my question is this: If we assume that I consume my entire portfolio prior to death, will it all come out in the wash so to speak? I can see how it can make a difference what basis is used in a specific example or situation, but at the end of the day, will it really make any difference if you spend your portfolio down to zero, since all shares will end up being sold at some point in time.
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Whenever I've had cap gains from sales, I've always used the average cost basis. My question is whether the Average Cost Basis is usually for most folks the best way to go.

This is probably just for the benefit of lurkers, but once you've used average basis for a fund you must continue to use that method while you own that fund. (You can switch to average basis at any time.)

Phil
Rule Your Retirement Home Fool
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I guess my question is this: If we assume that I consume my entire portfolio prior to death, will it all come out in the wash so to speak?

Yes, it will. Assuming you do the calculations correctly, of course.

--Peter
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Thanks for all the reponses. I appreciate it.
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ResN,

will it really make any difference if you spend your portfolio down to zero

It may be different if your taxable income changes. If you move between different cap gains rates from year to year, identifying large cap gain lots while in a 0% range instead of in a 15% range can keep more money in your pocket.

Ex: You own 2 blocks of ABC. Lot A: 100 shr at $20/shr and Lot B: 100 shr at $50/shr

If you are at 0% this year, which lot would you sell?

Gene
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