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  • Taxable account question

    I just took the first step in firing my financial advisor. I have a modest sized taxable account that I am trying to simplify. I have quite a few funds with a high expense ratios and I want to primarily buy more VTSAX index funds with vanguard. I'm assuming I'll be taxed on these sells. Any way around that? Should I just leave these funds where they are and just look to add more lower expense index funds as time progresses. This might be a dumb question. I appreciate your help!

  • #2
    Assuming there are gains, you will be taxed. Your marginal tax bracket, whether they are long term gains or short term gains, and the relative size of the account are all things to consider if you decide to sell. If you have any losses you can use that to offset the gains.

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    • #3
      Sell those with minimal/no gains and/or losses
      Sells those whose gains can be offset by any losses
      Carry others forward in portfolio as historic holdings, consider donating if long-term (>1yr) and you're into that

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      • #4
        Turn off reinvestment.

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        • #5
          You can hold, sell, or donate. Your call.

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          • #6
            If you sell for gains, I would make sure you hold them long enough to be long term cap gains for lower tax rate.

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            • #7
              1. Turn off any automatic reinvestments of dividends
              2. Sell anything with a loss

              The rest of your actions depends on how much you have in gains, current tax bracket, and time horizon. Things that would push me to sell things to incur a tax hit: small long-term capital gains, no short-term gains, low tax bracket currently, and longer time to retirement.

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