How it works
When you sell shares of a company you bought on multiple dates, the shares bought at the highest price will automatically be the first shares we sell. It will appear on your statement as HIFO.
Taxes
Highest in, first out method
This cost basis method is available for mutual funds, ETFs, and stocks as a way to manage capital gains.
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Why you might prefer the the highest in, first out method
It may save you on taxes
This method will sell shares with the highest cost first. This will generally allow you to maximize any losses and minimize any gains with respect to your holdings. However, please see considerations below with respect to holding period.
You can be hands-off
You don't need to select which shares to sell because we'll automatically sell the highest cost shares first.
Something to consider
This method doesn't consider holding period. Therefore, it may sell shares with a short-term gain before selling shares with a long-term gain. While the overall gain will be lower under this method, the tax due may not be minimized in all circumstances. Noncovered mutual fund shares, generally those acquired prior to January 1, 2012, will continue to be tracked using average cost and sold when the average cost basis is higher than the basis of any covered lot.
Select a cost basis method
This information isn't intended to be tax advice and can't be used to avoid any tax penalties. We recommend you consult a tax advisor.