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  • Sell to Simplify

    Good morning!

    I have a relatively simple modified 3 Fund Bogleheads portfolio (spread between my taxable, 403/401, and Roth IRAs) with a very low expense ratio (around 0.1%). Spread out through Fidelity and Vanguard. My current taxable account value is around 60k, total investment accounts around 550k. I'm still very early in my attending career.

    On the side, my parents had a custodial account that they had set up for me as a child in the Eaton Vance Growth Fund A (almost 100% US equity with 61 companies). The expense ratio is around 1.1% (!!!!). It is worth about 13k. Needless to say, I think the fees are high. I also get annoyed by the fact that their 1099 always seems to be the last one I wait on for taxes every year.

    Do you think it is worth selling the fund now (now meaning this year after my 3 month waiting period written in our financial) given its high expense ratio and placing the money into my taxable fund (which is currently 100% VTSAX)? I'm in the 15% LTCG bracket. I figured paying the 15% and then investing the remaining 11k after taxes into VTSAX, I'll likely come out ahead in the long run, given at least 18 more years until I retire.

    Thoughts?


  • #2
    yes, I'd sell since it's not a lot of money. You may be hit with NIIT as well as LTGC so it might be I think 18.3% instead of 15%. Just be aware. But either way I'd sell

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    • #3
      Sell.

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      • #4
        It’s less than 2% of your portfolio in something you don’t want. I’d sell it now, pay the tax and buy VTSAX.

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        • #5
          Thank you everyone for your responses. Second quick question. Does the NIIT apply to stocks that I sell? Or does it apply to qualified and non qualified dividends from my index funds that I’m holding as well?

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          • #6
            Currently worth $13k? Why is this even a debate? The tax bill can't be more than a thousand bucks. If it's a bad investment, get it in something you like and forget about it.

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            • #7
              Thanks

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              • #8
                Originally posted by livtex View Post
                Thank you everyone for your responses. Second quick question. Does the NIIT apply to stocks that I sell? Or does it apply to qualified and non qualified dividends from my index funds that I’m holding as well?
                NITT is added onto capital gains tax based on your income, not your dividends/other capital gains. This tax only applies to single filers who make more than $200,000 and married couples who make more than $250,000, as well as certain estates and trusts.

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                • #9
                  I'd get rid of those shares. Don’t forget charitable contribution instead of selling, as well, if you already give to charity. This can be DAF or individual shares (DAF is easier/more flexible). I'm letting the kids pick their own charity for $X, and then they have to agree on one charity together for $Y. Tax loss harvesting to offset sales would work too, if you don't donate.
                  Last edited by gap55u; 02-05-2022, 05:19 AM.

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