I understand when you sell index funds, as long as you hold your fund for a year or longer, the tax rate is long-term capital gains.
My question: When I continually buy shares of VTI (Vanguard ETF) on a monthly basis, how can I accurately determine how many shares I could see without being penalized my the short term vs. long term cap gains tax rate?
HypotheticL example: if I buy 10 shares of VTI every month, and I’ve been doing this for 5 years. I have 600 shares after 5 years. If I wanted to sell everything at once, Does this mean I can only sell 480 shares for the long term capital gains tax but would have to pay short term cap gains tax on the shares that I recently bought within that year?
Apologize for the winded question, but haven’t been able to find a straight answer anywhere.
I think you aren't finding a straight answer because there is more than one answer.
I believe you can use one of two methods to determine taxable gains - FIFO or LIFO
Here's an article from Zacks that can explain it better than I can. It's not specifically about the tax but more-so about the cost basis:
Hopefully this helps.
@Geordy Rostad never heard of FIFO or LIFO before. Seems like this is a big planning factor that could be overlooked. Thanks for the link
Found answers to my own question:
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