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This has a cute type of psychological lock-in built into it thanks to capital gains tax: ETF shareholders in this are financially penalized for “changing their
by idorosen 5y ago
This has a cute type of psychological lock-in built into it thanks to capital gains tax: ETF shareholders in this are financially penalized for “changing their mind” because moving their money into other ETFs is a taxable event.
(Just an opinion. Not tax advice - I’m not an accountant.)
- mikestew 5y agoHow does this not apply to any other financial instrument that I might buy? I buy a stock, sell it to buy another stock, tax event. Sell any ETF to buy a house, tax event. Sell mutual fund shares to buy an ETF...oh, you get the idea. IOW, what other things makes this ETF unique amongst the gazillion other instruments I might buy with my account holdings? Because capital gains is not one of those things.
- hrez 5y ago> sell mutual fund shares to buy an ETF it's not always the case, check vanguard MF to ETF conversion for details
- perl4ever 5y ago>ETF shareholders in this are financially penalized for “changing their mind” because moving their money into other ETFs is a taxable event I think the point of ETFs is that big investors aren't penalized because they can trade "in-kind". They can exchange a large chunk of shares in the ETF for approximately the portfolio of stocks it corresponds to. Or vice versa.