Hi all,
I'm a bit of an investing neophyte, so please go easy on me if my terminology is off or if I've got some crackpot ideas I need to be disabused of!
A few years ago, I was fortunate to age into a trust that my grandparents created for me. As a result, I now have about $220,000 in a managed account (this was how my grandparents chose to invest the funds in the trust). This is not a mutual fund, but a collection of equities (mostly US common stock) managed by an investment manager.
As you can imagine, the fees associated with this type of account are somewhat hefty. I'm charged a quarterly management fee of a little over $800 at this point, or around 1.5% annually. I know I should be striving for lower fees, but I'm unsure of the proper mechanics for doing this. Since this is a taxable account, I'm worried I'll get nailed with a huge tax bill if I liquidate and move the funds into something more reasonable like an index fund. I'm showing an unrealized gain of over $93,000 on the account. At the very least, won't I get stuck paying long term capital gains on that amount? At 15%, that's almost $14,000 in taxes.
I realize that, all things considered, this is a relatively good problem to have, but adding $14,000 in taxes to my 2013 budget makes me a little queasy. Do I just suck it up and count on the fact that the lower fees of an index fund will more than make up for the taxes, or is there another way?