April 6, 2007

Income Dividends vs. Long Term Cap Gains

I received my first Roth IRA transaction statement today, and I must admit: I’m baffled. It lists income dividends at the end of each month, which I understand: as your fund makes money, you get dividends paid out which are just reinvested in the same stock or bond if you choose not to take the money out. Yes? So, what’s this other thing, the long term capital gains thing?

This statement has a lot more information than my usual Vanguard statements. It lists the Year-to-Date Income Dividends, the ST/LT cap gains, the contributions/distributions, and the total income year-to-date separately and neatly. It’s even got my 30-day yield, share prices, trade dates, and total shares owned. Yet, I understand so little!!

I’m really writing this post to serve as a big fat reminder that I need to look all this up and figure it out. But I’m not going to do it right this second because it’s ten til midnight and I’m old and tired. Better luck tomorrow.