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Is there ever a time to sell shares of mutual funds?

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  • Is there ever a time to sell shares of mutual funds?

    I'm a beginning investor and recently deposited $1000 into a Vanguard Roth IRA and bought a 2060 Target Retirement Fund. My question is this: I have currently made $80 gains and the current VTTSX price is $28.97. Let's say on day one I see the price drop to $28.45, another drop the following day to $27.00, and I see the market as a whole falling in prices as well. Should I sell all my VTTSX shares and make a positive gain and then later re-purchase at a price, say, $26 if it gets to that point? I know the common Boglehead strategy is to never ever sell no matter what since the prices will come back up eventually and to never time the market, but I've recently dabbled with individual stocks and made some small gains as a swing trader. And I wouldn't accrue any type of taxes as long as all my money stays in my Roth IRA. What do you guys think? Should I apply my swing trader knowledge to mutual funds in a Vanguard Roth IRA? Thanks.

  • #2
    Index fund investing is for the long haul.  You cannot even harvest losses from a roth account.  It is true that you do not pay capital gain taxes on Roth money so if you want to buy individual stocks you avoid that tax but you lose the ability to use losses that will be more common than the gains.

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    • #3
      The worst thing that can happen to a day trader is to have some early success. That gives you a false sense of competence. Hey, If I made this much with a little money, how much could I make if I used a lot of money? Then 2008 happens. Stay the course!

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      • #4
        You're one of millions of people to think along those lines. Seems intuitive.

        The vast majority fail to match market returns. Plus, do you really want to be making those decisions day to day? Should I sell now? Buy back in yet? Is this a bottom? And then you're wrong, and there's just a lot of stress and regret.

        If you know the Boglehead way, follow it. Those people have decades of investing experience. You've got months?

        I can't blame you for being tempted. I felt the same way when I was one and twenty.

        Best,

        -PoF

         

         

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        • #5
          Yes, the best time to sell shares of mutual funds is when you are rebalancing annually.

          How to Rebalance Your Portfolio

          A Target-Date Fund is not a Plan

           
          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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          • #6




            The worst thing that can happen to a day trader is to have some early success. That gives you a false sense of competence. Hey, If I made this much with a little money, how much could I make if I used a lot of money? Then 2008 happens. Stay the course!
            Click to expand...


            I'm not a day trader, but a swing trader. I hold longer than a day and up to a few months at a time.

             




            You’re one of millions of people to think along those lines. Seems intuitive.

            The vast majority fail to match market returns. Plus, do you really want to be making those decisions day to day? Should I sell now? Buy back in yet? Is this a bottom? And then you’re wrong, and there’s just a lot of stress and regret.

            If you know the Boglehead way, follow it. Those people have decades of investing experience. You’ve got months?

            I can’t blame you for being tempted. I felt the same way when I was one and twenty.

            Best,

            -PoF

             

             
            Click to expand...


            I definitely understand the psychological impact trading stocks on the daily can have on someone. So let's say I've made $80 profit and see the price drop to $78 and then hear news about the BREXIT. Knowing such event will most likely tank the stock market for at least a few days, which it did, I would have sold to make a $78 profit, and can buy back in at any price lower than $78 to make additional profits. And I'm a day trader meaning I hold longer than a day up to a few months. But I can see why buying and selling for a little profit wouldn't be worth my time in addition to Vanguards rules.




            Yes, the best time to sell shares of mutual funds is when you are rebalancing annually.

            How to Rebalance Your Portfolio

            A Target-Date Fund is not a Plan

             
            Click to expand...


            Regarding rebalancing, am I able to stay with a Vanguard 2060 Target Retirement Fund year after year if I like the asset allocation? Or am I forced to rebalance?

             

             

            Thanks everyone!

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            • #7


              Regarding rebalancing, am I able to stay with a Vanguard 2060 Target Retirement Fund year after year if I like the asset allocation? Or am I forced to rebalance?
              Click to expand...


              The fund will do it internally. I guess it depends upon how you define "forced to rebalance".
              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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              • #8
                Too little money too worry about really. I use stop loss limit orders so am periodically stopped out of positions after they rise and have a correction of sorts, then I buy back in. This is not with the whole portfolio, nor do I really time it beside noticing some positions have sold off and reinvesting them, usually in the same etf but if it was a particular play I may rotate it.

                 

                At such a small account level trading fees and such will crush any possible "profit", and then reality will pop back round and deal the final blow. At vanguard the commission is 10% of the trade, thats terrible.

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                • #9
                  If you want to try to make money off trading, don't use an index fund to do it.

                  Buy and hold--I made some (unrealized) gains as a student doing this.  I had a buddy in school who was doing real well day-trading...until the tech crash.  Why don't you just focus on school and then use your free time for mental and physical health?

                  Good luck!

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