Every year in December some of my mutual funds seem to have some big capital gains distributions.

Some funds I haven't invested in in years, but I'm still over 100% return and growing from just re-investing the capital gains, dividends, etc.

Here's my question...

Doesn't it make sense to put money into funds that historically have big capital gains distributions in December? If you're worried about risk, just pull out not long after the ex div date.

Every time I try to research this, all I get is a bunch of articles about taxes and shite. I don't give a frick since I'm doing this in a 401K and Roth.

Thoughts?

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Posted by PillPusher

Gulf Coast

Member since Oct 2009

5706 posts

Posted on 12/1/17 at 5:07 pm to ghost2most

I was under the impression the price of the fund drops the size of the distribution making it a moot point. Hence the reason everyone doesn't do it.

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Posted by Twenty 49

Shreveport

Member since Jun 2014

18726 posts

Posted on 12/1/17 at 10:24 pm to ghost2most

quote:
Doesn't it make sense to put money into funds that historically have big capital gains distributions in December?

No. Those end of year distributions aren’t the good kind of gains. They are required by tax laws to recognize sales of stocks,,earlier in the year, within the fund that resulted in gains. You can’t time the market on them and make money. Some folks actually bail out on a mutual fund in about October to avoid the tax consequences of the year-end “distributions.”

This article has a pretty good explanation. LINK

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Posted by simonizer

Member since Oct 2008

1647 posts

Posted on 12/3/17 at 9:49 pm to ghost2most

if the funds are in a tax deferred account,it doesnt matter. 401k- you will only pay taxes when you withdraw money. roth- you will never pay taxes unless you have non-qualifying distributions.

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