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First in, first out method

This method is available for all types of investments, and it's the default method for all investments other than mutual funds.

How it works

The shares you bought first will automatically be the first shares we sell. It will appear on your statement as FIFO.

Why you might prefer the first in, first out method

It's easy to understand

Shares are sold in the same order they were bought—it's that simple.

You can be hands-off

You don't need to hand-select which shares to sell because we'll automatically sell the oldest shares first.

A few things to consider

It could be less tax-efficient

Sales and transfers are based on acquisition date and don't consider potential gains or losses.

More recordkeeping may be required

For noncovered mutual fund shares, we'll continue to report the basis to you using average cost. If you're eligible to use a method other than average cost for noncovered shares, you can use your records to report earliest lots acquired on your tax return. Vanguard only keeps the average cost basis, so we can't assist you in determining the earliest lots. However, we won't report cost basis for the noncovered shares to the IRS.

For all other noncovered shares, we'll first sell the shares for which we don't have an acquisition date, followed by the shares with the earliest acquisition date. As with mutual fund shares, we'll report the basis of the noncovered shares to you, if we know it, but won't send it to the IRS.

REFERENCE CONTENT

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Noncovered shares

Shares bought before the regulatory changes took effect on January 1, 2012 (or January 1, 2011, for stocks).

Cost basis reporting for noncovered shares will be sent to you alone; it will not be sent to the IRS.