Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
We already have most of our Roth funds with Vanguard in the VTSMX so your recommendation makes sense to me. Now that I know I can just set things up to go into what Vanguard calls a 'general' mutual fund (vs. IRA or UMT)what should I expect regarding taxes? If I request the dividends to be reinvested do I still pay taxes on those reinvested dividends or is it deferred until we take the money out? Just thinking ahead for our taxes next year. We expect to invest for the long term, hopefully 20 properous years or so.
Not sure what a 'Tax-Managed Fund will do for me, I am unfamiliar with how they work. I would love to hear about its pros and cons.


Yes, just indicate that you wish to open a regular, taxable account in which you will invest in VTSMX (or whatever). Assuming that you hold the shares and do not sell, your taxes arising from this investment will be minimal. Yes, you will have to pay taxes on reinvested dividends/distributions, but they will likely be miniscule unless you develop a very large portfolio (millions). If you are buying and holding an index fund, I cannot imagine that a "tax managed" fund would be much better.
Print the post  


What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.