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  • Conversion to Index funds

    f you have to convert mutual fund class A shares from companies like Prudential/Chase to low cost index funds, should you do it when the markets are low or when they are high or the market fluctuation does not matter?

  • #2
    I emphasize getting the plan in shape over market timing, so imo the market fluctuation doesn't matter, just do it. Of course, if there are other factors at play in the case of a taxable account, my advice might change.
    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      just do it asap

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      • #4
        I would agree; go ahead and do it.  If the $ is in a taxable account, you may take some capital gains at the time of the sale.  If you have any opportunities to tax loss harvest over the remaining 11 months of the year, you may be able offset some or all of those gains.

        By selling now, you will avoid the quarterly capital gains that would continue to be generated by actively managed funds.  Vanguards index funds (S&P 500, total stock) have only qualified dividends of about 2% per year, and no capital gains as long as you're not selling.

         

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        • #5
          Thank you for all your advice. Sorry, I did not make it clear. I am planning to transfer Roth account from Prudential to Vanguard. Prudential funds are actively managed and have high

          expense ratios. Some of the Prudential funds in Oil & Natural Gas have suffered up to 50% losses overall. That's why I was wondering whether I should wait for the market to turn around to make up for the losses or just go for the conversion to index funds?

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          • #6




            Thank you for all your advice. Sorry, I did not make it clear. I am planning to transfer Roth account from Prudential to Vanguard. Prudential funds are actively managed and have high

            expense ratios. Some of the Prudential funds in Oil & Natural Gas have suffered up to 50% losses overall. That’s why I was wondering whether I should wait for the market to turn around to make up for the losses or just go for the conversion to index funds?
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            It's the same difference. If you sell now (while they're low), you'll get into other funds while they're low. What you need to ask yourself is: If I had the money today instead of this fund, would I buy it again? If not, then you have your answer. By holding onto it, you are effectively answering, "Yes!"

            Never try to time the market - it will eat you up and spit you out.
            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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