Author Topic: TRow Price mutual funds: Leave as is or switch?  (Read 254 times)

travel2020

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TRow Price mutual funds: Leave as is or switch?
« on: May 24, 2020, 04:13:01 PM »
Hello felllow MMMs,

I have several TRow Price mutual funds (Balanced, Capital Appreciation, Health sciences, Science & Tech)  that I started contributing to many years ago before I discovered Vanguard & index funds. Some are in an IRA  and others in a taxable account.

For the IRA the issue is higher fees. For the taxable account ones, I get hit with capital gains and dividends every year + the fees vs. typical index funds.

Questions:
1) For the IRA, based on what Iíve read, it looks there will be no tax impact if I sell those and just rollover IRA to Vanguard - is my understanding correct on this?

2) For the taxable account, even with the COVID declines, it shows unrealized gains of roughly $5K for two funds and $24K and $35K for the other two. Should I bite the bullet, pay capital gains on the first two and move those over so I can stop paying the 0.7% fee or just leave everything alone? 

Any other suggestions/ideas?

Thanks!


CoffeeR

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Re: TRow Price mutual funds: Leave as is or switch?
« Reply #1 on: May 24, 2020, 04:37:08 PM »
1) For the IRA, based on what Iíve read, it looks there will be no tax impact if I sell those and just rollover IRA to Vanguard - is my understanding correct on this?
Correct.

2) For the taxable account, even with the COVID declines, it shows unrealized gains of roughly $5K for two funds and $24K and $35K for the other two. Should I bite the bullet, pay capital gains on the first two and move those over so I can stop paying the 0.7% fee or just leave everything alone? 
For taxable only.. depends on a number factors. How much total invested in taxable? If, say $150K, then that's $1050/year so in fees or about $1000/year more than a low cost index fund. Adds up over time. What is your time horizon for the money? What is your capital gains tax bracket? So, how much in taxes if you sell and how long to make up that difference? Of course, if the taxes come from the gains you will invest less back into the index fund meaning you have less invested at a lower fee, but it will take time to make that up. (Maybe someone has a spreadsheet for this?) Then there is the psychological factor(s) such as, are you going to be annoyed every time you see those funds and the fee you pay?

Many will dismiss the psychological factors, but those to me would probably be the number one reason I would sell, if I did not like the funds.

My advice, go slow and start moving all new money into index funds. Also, for taxable accounts, maybe used ETF's not funds (tax reasons).
« Last Edit: May 25, 2020, 07:51:10 AM by CoffeeR »

travel2020

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Re: TRow Price mutual funds: Leave as is or switch?
« Reply #2 on: May 24, 2020, 10:10:04 PM »
Thanks CoffeeR, good suggestions on all counts.

Looking at the funds, the smallest unrealized gains are in the two funds that I have most % invested in so hit should be fairly small tax wise. Iíll do some more calculations and plan to move those out to Vanguard ETFs and then evaluate the others.