Author Topic: Sell My Current Stocks and Mutual Funds for Vanguard?  (Read 4516 times)

GoingConcern

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Sell My Current Stocks and Mutual Funds for Vanguard?
« on: April 01, 2015, 07:34:02 PM »
Lately I have been reading about Vanguard and their low expense ration index funds and it got me thinking if I should sell all of my stocks and current mutual funds.

Currently my portfolio is worth a little under $57,000 and my total gain is $9,678.65 (vast majority of is LTCG) and I estimate my tax effect of selling all of my stocks would be around $1,750. 

I have roughly $28k in FCBFX and FFANX (expense ratio is roughly .45, I recently put my money here and my gain is only $200.)   Maybe it would be best to sell this account and play around with Vanguard with these funds? 

Also Microsoft yearly dividend is around 2.5%

See below for a summary:



What would you do?

forummm

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #1 on: April 01, 2015, 08:02:44 PM »
I would definitely sell the funds and move to Vanguard. You'll save a lot more over the decades.

http://www.bogleheads.org/wiki/Paying_a_tax_cost_to_switch_funds

forummm

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #2 on: April 01, 2015, 08:03:36 PM »
The individual stocks are your call. I personally would hold just a couple stocks.

innerscorecard

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #3 on: April 01, 2015, 08:09:14 PM »
You need to educate yourself more until you can answer the question yourself. You do not want to have unknown people on the internet make your decision for you. That way, you will not know why that decision was correct or not, and you will change your mind again in the future undoubtedly, wrecking yourself.

innerscorecard

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #4 on: April 01, 2015, 08:27:54 PM »
Read A Random Walk Down Wall Street (you could read The Bogleheads' Guide to Investing, too, but I dislike it as I think it's unfairly biased). I have a review of the book on my blog, if you want to read that review to see why I recommend the book.

Think about how many hours you worked to get that money you are thinking of investing. You should devote at least the amount of time to read a serious book or two on the topic before deciding what to do with that money.

You should be able to say, I will buy VTSAX for reasons A, B and C, or I will not buy it for reasons X, Y and Z, before you make the buy decision. You should also say that you are selling your existing investments because they are inferior in so-and-so respects.

NorCal

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #5 on: April 01, 2015, 09:14:40 PM »
My recommendation is to do the math yourself.  You'll learn about investing.

You've already figured out what your tax cost of selling is, which is half the work.  Now compare the difference in expense ratios between your current funds and comparable Vanguard funds to figure out how long it would take (after counting for lost dividends from the tax hit) to break even.

One option is to make the change sometime in the next downturn.  No one knows when it will happen, just that it will.  That would be a great opportunity to re-balance into a different account while avoiding the tax hit.

thedayisbrave

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #6 on: April 02, 2015, 08:22:31 AM »
I would call Vanguard directly and ask the rep which funds / stocks in your account can be transferred directly, or "in kind".  The individual stocks definitely can be, and they do allow most funds but there are a few funds that I've found out cannot be transferred in kind. 

I'd still advocate switching to Vanguard funds, but doing the in kind transfer will be a stepping stone and you will have a little more time to figure out the tax implications of selling each fund.

Wolf359

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #7 on: April 02, 2015, 08:24:28 AM »
You need to educate yourself more until you can answer the question yourself. You do not want to have unknown people on the internet make your decision for you. That way, you will not know why that decision was correct or not, and you will change your mind again in the future undoubtedly, wrecking yourself.

+1

humblefi

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #8 on: April 02, 2015, 09:02:52 AM »
Asking questions is the first step to enter a learning phase. Best of luck in your journey.

As others have indicated, Vanguard is a good long term option. There is a fund for most areas that other company funds (Fidelity, etc) map to.
And VTSAX/VTSMX is a nice option..especially for the long term.

But, before you dive in, there are a couple of things you may want to think about.
+ When will you need the money back? If you need the money back in less than  3 months, then a CD is best perhaps....in 5 years, then VTSAX is good enough, .....
+ What is your tax bracket? If you are in a high tax bracket, then look into some of the tax managed funds that Vanguard provides....VTCLX, VTMGX, etc.
+ What is your asset allocation and what is your financial plan? I would just pay $250 to a Vanguard financial planner, get a thorough look into your finances and goals and form a plan first before investing. The plan may lead you into different investments rather than everything in one bucket.

And MOST IMPORTANTLY, if you decide to withdraw money, please look into the REDEMPTION cost for each fund. When you withdraw, it is not just taxes that is paid...there is a penalty depending on the fund. For example, for FMCSX (a fund you own), here is the redemption cost.

    http://financials.morningstar.com/fund/expense.html?t=FMCSX&region=usa&culture=en-US
    Redemption      
    0 - 30 Days    0.75%
    More Than 30 Days    0.00

So, to avoid redemption cost, I would stop buying this fund for 31 days and then sell it so that there is no redemption cost.

Hope that helps.

forummm

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #9 on: April 02, 2015, 10:32:29 AM »
I would call Vanguard directly and ask the rep which funds / stocks in your account can be transferred directly, or "in kind".  The individual stocks definitely can be, and they do allow most funds but there are a few funds that I've found out cannot be transferred in kind. 

I'd still advocate switching to Vanguard funds, but doing the in kind transfer will be a stepping stone and you will have a little more time to figure out the tax implications of selling each fund.

I'm not sure why the OP would want to transfer funds in kind. The idea was to lower ER by getting of higher ER funds and into lower ER funds. The stock transfers could make sense if OP was only wanting to have assets with one firm and still wanted to own individual stocks.

danny9m

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Re: Sell My Current Stocks and Mutual Funds for Vanguard?
« Reply #10 on: April 02, 2015, 10:21:50 PM »
I have done several account transfers to vanguard and what I realized after doing a few is you don't have to sell your stocks and mutual funds usually to transfer these to vanguard. Just call them and they can tell you what they can transfer.

As far as your holdings I'd keep the Facebook,  and I'd sell Alcatel and Freddie..  Just my opinion.

Several good book recommendations provided.

I personally would go with the majority in index funds so you don't have individual stock risk, but then again there is nothing like a 10 bagger to increase your net worth.

I personally like vanguards active funds as well.

Fidelity has some good funds but in my opinion they let the good funds get huge and then they blow up, ie Magellan fund. The same thing  could be happening with contra.  My employer has our 401k with fidelity and I've been heavily invested in contra, but as it has grown over the past few years it's outperformance has stalled I've been moving into the indexes with fidelity.


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