Author Topic: Worth Selling Mutual Funds for Index funds?  (Read 1442 times)

Frugal_NYC

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Worth Selling Mutual Funds for Index funds?
« on: June 02, 2015, 03:26:17 PM »
I have transitioned the vast majority of my investments to Fidelity Spartan funds like FSTVX/FSGUX etc.  The only investments remaining are in my taxable account which are invested 23% in FAMRX (Fidelity 85/15 mutual fund) and 77% in FFNOX (Fidelity Four in One).  I'm currently sitting on about $3,300 long-term capital gains between the two so if I sold now it looks like I would be on the hook for about $500.  I figure the expense ratio savings over time would greatly outweigh the $500 hit I would incur now, any reason not to sell? 

forummm

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Re: Worth Selling Mutual Funds for Index funds?
« Reply #1 on: June 02, 2015, 03:28:38 PM »
How much is the ER on your old funds and how much do you have invested on the funds?

One rule of thumb is that if the extra expense over 10 years is more than the capital gains, then it's worth it to switch.

Frugal_NYC

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Re: Worth Selling Mutual Funds for Index funds?
« Reply #2 on: June 02, 2015, 03:39:20 PM »
How much is the ER on your old funds and how much do you have invested on the funds?

One rule of thumb is that if the extra expense over 10 years is more than the capital gains, then it's worth it to switch.

FAMRX is .75%
FFNOX is .22% but then it invest in 4 funds with subsequent ERs

About $31K total in them
« Last Edit: June 02, 2015, 03:41:02 PM by Frugal_NYC »

forummm

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Re: Worth Selling Mutual Funds for Index funds?
« Reply #3 on: June 02, 2015, 04:18:25 PM »
Well I'll continue to be lazy and not look up the total ERs for you. But, assuming the funds are all 0.75% $31k * 0.75 is $2325 over 10 years if there's no growth. That amount is far bigger than the taxes you'd owe. I would sell.