First I’d like to introduce myself. I am a 28-year-old engineer and have always been frugal and have a similar outlook on money as MMM. However, I am just now learning the importance of optimizing investments. I have roughly $50k in post tax investments in a brokerage account. They are in actively managed mutual funds: AWSHX, CWGIX, and AGTHX. I inherited this money as a child and my parents put it into these funds. From this site and bogleheads I see that actively managed funds are not only inferior to the index funds but are also less tax efficient. So if I want to transfer the money to an index fund would I have to liquidate, pay capital gains, and then reinvest? It is my understanding that if your AGI is above the 15% tax bracket you have to pay 15% on capital gains up to a certain income level that I am not close to hitting. For 2014 after deductions my AGI was 36,600 so maybe I can still save taxes on $300 of capital gains if I sell before I file taxes? But in 2015 even with maxing out my HSA and 457(b) my AGI will be above the 15% tax bracket so it looks like I will have to pay capital gains tax. Are there recommend manners for changing an after tax investment vehicle in an efficient manner. Or maybe a trick I should use to lower my AGI even more? Right now I own my current home, paid off in full ☺, so I just use the standard deduction but will probably buy another house in the not so distant future and possibly will need some of this $ for the down payment. Any and all advice or face punches welcome. Thanks!