Author Topic: Consolidating my taxable account and avoiding cap gains taxes  (Read 1968 times)

jeromedawg

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Consolidating my taxable account and avoiding cap gains taxes
« on: December 04, 2014, 12:20:18 PM »
Hey guys,

So I've consolidated more as far as my non-taxable retirement funds and pretty much have everything invested (via Fidelity) in Spartan funds roughly at a 75 US stock/25 intl stock mix based on current risk. 

Now I need to think about how to tackle my taxable investments - primarily in Fidelity but I do have investments elsewhere like about $5k in American Century REACX and $30k in various stocks in Scottrade. I also have a UBS account for my company's ESPP, for which I probably have around $15k vested currently.

I initiated a transfer of the REACX from American Century over to Fidelity so that it's consolidated and managed there instead. I'm considering transferring the stocks from Scottrade back to Fidelity as well but we'll see.

For starters, I'd like to just focus on what's in the Fidelity account. I recently purchased into some Spartan funds as shown below but everything else was either purchased beforehand when I was mostly dabbling and not too serious about the research part or given to my by my dad. I have a large amount in FCFXX which I'm considering moving into Betterment (or elsewhere) for a "safety net/rainy day" fund.

Here's what the current portfolio looks like (with the $5k of REACX coming soon):

FCFXX**
FIDELITY CALIFORNIA MUNI MONEY MARKET
$1.00 $0.00   
n/a
n/a
n/an/a
$44,063.70   44,063.700   
n/a   n/a
--

FDVLX
FIDELITY VALUE
$115.30 +$0.91   
+$188.68
+0.80%
+$13,022.45+119.64%
$23,907.10   207.347   
$52.49/Share   $10,884.66ac
$98.85$116.06

FEQIX
FIDELITY EQUITY INCOME
$63.35 +$0.26   
+$14.61
+0.41%
+$345.29+10.74%
$3,560.77   56.208   
$57.21/Share   $3,215.49a
$55.55$63.51

FGMNX
FIDELITY GNMA FUND
$11.65 -$0.01   
-$3.21
-0.09%
+$82.59+2.26%
$3,732.46   320.383   
$11.39/Share   $3,649.87a
$11.21$11.68

FSCGX
FIDELITY SELECT INDUSTRIAL EQUIPMENT
$42.07 +$0.46   
+$238.60
+1.11%
+$8,935.92+69.35%
$21,822.04   518.708   
$24.84/Share   $12,886.13ac
$37.30$47.64

FSEVX
SPARTAN EXTENDED MKT INDEX FID ADV CLASS
$56.04 +$0.47   
+$420.01
+0.85%
+$80.43+0.16%
$50,080.42   893.655   
$55.95/Share   $50,000.00a
$49.92$56.56

FSGDX
SPARTAN GLOBAL EX US INDEX FID ADV CL
$12.24 $0.00   
$0.00
0.00%
-$284.33-0.57%
$49,715.67   4,061.738   
$12.31/Share   $50,000.00a
$11.55$13.22

FSTVX
SPRTN TOTAL MKT INDX FID ADVANTAGE CLASS
$60.88 +$0.30   
+$247.64
+0.50%
+$255.89+0.51%
$50,255.89   825.491   
$60.57/Share   $50,000.00a


I'd like to dump the FGMNX and FEQIX which I purchased prior to everything. The FDVLX and FSCGX were passed down to me by my dad (probably for him to avoid taxes) a long time ago so those have the most gains I think, and it would be nice to get rid of those. I'd of course use these funds to buy into more Spartan funds in this account, most likely.

Is there any reason I should just hold onto these for now? I'm afraid of the capital gains tax implications of selling any of these funds (well, maybe with the exception of FGMNX since it's pretty low-yield so far) at this point. The same can generally be said for some of my stocks in Scottrade. And for the REACX, I'm also pretty unsure what this would look like. I'm pretty sure we're still going to be in the 20-something percentile this year. I was trying to see if we would ever be able to get down to the 15% bracket, which may be possible next year. Based on what I've read, if I were able to get in the 15% percentile for income, I'd be able to sell all this stuff and not get hit with capital gains taxes?

I previously had FEXPX which was slightly in the red so I sold that as a loss so that I can deduct that, and then reinvested in Spartan funds. This definitely isn't the case with the rest of the funds though - I'm just kind of scratching my head at what the best move is next.

« Last Edit: December 04, 2014, 12:29:11 PM by jplee3 »

ClaycordJCA

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Re: Consolidating my taxable account and avoiding cap gains taxes
« Reply #1 on: December 07, 2014, 05:59:32 PM »
You need to also factor in lost opportunity costs into the equation. M* is not high on FEQIX, look at it's returns compared to the category average for EI funds. FEQIX also underperforms Fidelity Growth & Income and Equity Dividend Income - expense ratio on each is .63 per Fidelity Monitor & Insight.  Sell the funds in January to delay the tax hit until April 2016, if Capital Gains are a concern.

Why move that significant of an investment to Betterment?  You could open an account with Vanguard and save the Betterment .25% management fee.  Or, leave it in Fidelity and look at no-cost iShare ETFs.

jeromedawg

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Re: Consolidating my taxable account and avoiding cap gains taxes
« Reply #2 on: December 11, 2014, 11:59:58 AM »
You need to also factor in lost opportunity costs into the equation. M* is not high on FEQIX, look at it's returns compared to the category average for EI funds. FEQIX also underperforms Fidelity Growth & Income and Equity Dividend Income - expense ratio on each is .63 per Fidelity Monitor & Insight.  Sell the funds in January to delay the tax hit until April 2016, if Capital Gains are a concern.

Why move that significant of an investment to Betterment?  You could open an account with Vanguard and save the Betterment .25% management fee.  Or, leave it in Fidelity and look at no-cost iShare ETFs.

Thanks! FEQIX and FGMNA are the ones I'm eyeing towards just selling now. The gains will only total a few hundred bucks I think, which is minor compared to FSCGX and FDVLX (which my dad gave to me a long time ago). I'm just wondering if there's any reason *not* to sell those now if the gains on them is relatively minimal.

Thanks for the advice on Betterment - I think I may go ahead and research some of those iShares from Fidelity and see what makes sense. What would you say are some good iShares for just starting out with ETFs?

EDIT: I realized I put "avoiding" capital gains taxes in the title... now that I read it though, I think it makes better sense to ask how I can *minimize* on cap gains taxes. Or what makes the most sense in terms of 'spreading the floor' if I don't want to get hit too hard when it comes time to pay the piper. I'm thinking Claycord's advice to sell the funds in the next tax year might be one means to do this. But if I'm able I get get myself into the 15% tax bracket, wouldn't I also avoid cap gains taxes all together when selling any of these funds?
« Last Edit: December 11, 2014, 12:11:08 PM by jplee3 »