Each time you buy shares in a taxable account it’s considered a separate lot. So, each time you reinvest dividends, you get a new lot of shares. Over the years that can add up to a large number of lots, especially for bond funds that pay monthly, less so for stock funds that pay quarterly. Some people don’t mind the number of lots, some do.What do you mean by, "reduce tax lots?" How can dividends in a taxable account reduce someone's taxes?AFAIK you can reinvest dividends in ETF’s. It’s a personal choice to reinvest dividends, neither good or bad.
Some people direct dividends in taxable accounts to other places for spending, to invest in something else, or to reduce tax lots. In a tax-advantaged account, not reinvesting has limited value.
(You get the same number in a tax-advantaged account, but they don’t really matter there)
Statistics: Posted by rkhusky — Tue Aug 20, 2024 9:11 pm — Replies 7 — Views 452