Author Topic: should i sell these two mutual funds and buy vtsax in my brokerage?  (Read 690 times)

MikeJones2001

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I started investing in index funds about 3 years ago and I've never sold any shares in my brokerage account before.

For some reason instead of buying vtsax like a good mustachian should, I bought 10k worth of VSIAX (vanguard small cap value) and I bought 10k of VIGAX ( vanguard growth index ) . I am having buyers remorse now. Pretty much all my other investments are VTSAX or FSKAX. My question is, should I sell these two mutual funds and buy more VTSAX or should I just hold  them?. This is my brokerage account so it would be a taxable event I believe.

nereo

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #1 on: January 15, 2022, 11:30:13 AM »
I started investing in index funds about 3 years ago and I've never sold any shares in my brokerage account before.

For some reason instead of buying vtsax like a good mustachian should, I bought 10k worth of VSIAX (vanguard small cap value) and I bought 10k of VIGAX ( vanguard growth index ) . I am having buyers remorse now. Pretty much all my other investments are VTSAX or FSKAX. My question is, should I sell these two mutual funds and buy more VTSAX or should I just hold  them?. This is my brokerage account so it would be a taxable event I believe.

I would first decide what kind of asset allocation you would like.  Then, buy and sell funds to match your AA.  Repeat 1-2x each year to maintain this AA (i.e. “rebalancing”). 

THere’s nothing wrong with owning VSIAX, per se. I own some as part of my four-fund portfolio.  Question is, does it match what YOU want your AA to be?  Only you can answer that.

Morning Glory

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #2 on: January 15, 2022, 11:40:51 AM »
If the expense ratios are low I would just hold them and invest new funds according to your desired aa.

DaTrill

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #3 on: January 15, 2022, 12:41:41 PM »
Buy ETFs and avoid capital gains taxes until you sell. 

Dee18

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #4 on: January 15, 2022, 01:50:29 PM »
So this means if I never expect to need the money in my brokerage and it will be passed on to child when I die I should have ETFs that will be stepped up?  I started my brokerage (before MMM) with index funds, but could easily change for the future investments.

markpst

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #5 on: January 16, 2022, 06:50:38 AM »
I don't know how much that $20k makes up as part of your portfolio - that could impact the decision, but I would suggest also diversifying outside of just VTSAX. VIGAX has the exact same top 7 holdings as VTSAX, so that is somewhat redundant other than having an expense ratio of 0.05% instead of 0.04%. Maybe turn off dividend reinvestment and just ride as is? I probably wouldn't take the tax hit.

VTSAX has been on a great run, mostly due to the FANG stocks (Facebook, Apple, Amazon, Google). Will that continue? Maybe. It isn't quite the diversified basket of 3,000+ stocks it is made out to be, since it is market cap weighted. Most of the 3,000 stocks have such a small percentage of the portfolio they basically are irrelevant. The top 10 stocks make up 25.2% (yahoo says 22.3%) of the entire fund (source is the links below). I have more in VTSAX but also put some in small cap and mid cap, etc.

https://investor.vanguard.com/mutual-funds/profile/portfolio/vtsax
https://finance.yahoo.com/quote/VTSAX/holdings/

Wow - Apple makes up 10% of VIGAX
https://finance.yahoo.com/quote/Vigax/holdings/

MikeJones2001

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #6 on: January 17, 2022, 03:21:09 PM »
I appreciate the responses from everyone. I can always count on this forum to give sound financial advice. I think I am just going to hold on to those two funds I have and look to diversify more in the coming years.

MustacheAndaHalf

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Re: should i sell these two mutual funds and buy vtsax in my brokerage?
« Reply #7 on: January 18, 2022, 08:50:51 AM »
For some reason instead of buying vtsax like a good mustachian should, I bought 10k worth of VSIAX (vanguard small cap value) and I bought 10k of VIGAX ( vanguard growth index ).
Look for their "cost basis" so you know the impact of selling.  You would owe tax on gains, which are shown on Vanguard's "cost basis" screen.  You could sell just enough to reach the next tax bracket, so you aren't paying taxes at a higher rate on the sales of assets.

I would ignore them and keep your Vanguard Total Stock Market investments going.  You invested the same amount in value and growth, which cancels out: you're left with a blend in the middle.  Small and value also cancel, but market weight for small caps is 10% (although Vanguard's "Small" Cap only has 2/3rds small cap).  You could invest another $45k in large and mid cap stocks if you want, to cancel out the small cap weight.