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Learning, Sharing, and Teaching => Investor Alley => Topic started by: FIreSurfer on May 14, 2017, 04:11:19 PM

Title: Take A Capital Gains Hit + Move to Vanguard OR Watch My Green Soldiers Languish
Post by: FIreSurfer on May 14, 2017, 04:11:19 PM
Hi Folks,

I know this is a variation of the old "should I just move every penny I have to Vanguard Total Stock Market?" but everyone's situation is different and special right? Maybe?

So back before I read all the Boglehead stuff etc etc, I at least knew enough to put the bulk of my meager savings into mutual funds, which I did w Fidelity, because that's where my meager 401k was with my first real job.  Over time I got burnt by individual stocks, found MMM and now I'm rolling deep with Vanguard, but I still have a chunk of change in Fidelity mutual funds specifically FBIOX.

I put $7500 into FBIOX in 2013 - it was my "you're still alive!" insurance payout after hospital bills after some guy ran a stop sign and used my helmetted motorcyling head  to break his windshield.  At the time it was the largest sum I'd ever had.

Fast forward to today:
$7500 has become about $17500 but FBIOX took a huuuge dive in 2015 with the whole GILEAD controversy (and rightly so) and now it's just languishing, hasn't even thought of retaken its former highs.

Do I:
1. Just sit on it anyway? It's around 8.5% of our portfolio roughly calculated.  Assume it won't languish forever?
2.Sell it, take the tax hit now and put the soldiers back in formation with the other regiments at Vanguard?
3. Sit on it (we are starting to look for our first real estate investment) and then pull it for a downpayment on a property  --- is there a tax benefit to this?

Maybe I'm just being antsy because I'm not pissing money away on Fidelity trade commissions any more and it's boring? Or maybe I just want to look at one big round Vanguard number?

If nothing changes w my work sitch, I am roughly estimating an Escape from NYC FIRE date of 2022, if that helps w the above?

Advise please -

Title: Re: Take A Capital Gains Hit + Move to Vanguard OR Watch My Green Soldiers Languish
Post by: FIreSurfer on May 15, 2017, 07:44:51 AM
Thanks L.A.S. ----
   There is a possibility that when you FIRE in 5 years you're LT gains rate could be zero, in which case you could be at an advantage by waiting and paying the 0.75% expense ratio for 5 years (~$650 if your position does not appreciate any more) and then selling at a point in time when you are not paying taxes on the gains.  There is also a chance the fund does poorly and you loose money, or it does well and you somehow end up paying taxes on a larger gain because you are not in the 0% bracket for LTCG.  However, if it were me, I'd just sell it now and be done with it.

This is what I was trying to think through - albeit with fuzzier less precise newbie investor math. 
The plan of course is to FIRE and keep the earnings (married and filing jointly) under the limit so the gains rate would be zero, but I feel like in the general scheme of things the "sell it and be done with it" approach seems cleaner and clearer, maybe 5 years is ambitious, maybe Biotech goes haywire again, etc. and Vanguard just has less variables - the account just chugs along slowly uphill like the little Bogle Engine that Could.....

So unless anyone pipes up with some left field reasoning in the next few days, I'm following your advice -