Taxable Fidelity Account - FSTVX vs ITOT

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ACA
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by ACA »

triceratop wrote: Wed Jan 10, 2018 10:43 am
Why? The title clearly states "Taxable".
Because many others wade through all the information trying to figure out what applies to their own situation.
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grabiner
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by grabiner »

House Blend wrote: Wed Jan 10, 2018 11:56 am
CppCoder wrote: Tue Jan 09, 2018 10:28 pm The real problem with a forced capital gains distribution is not that you pay the tax but that it is forced and uncontrollable.
+1.

If you lose $100 to Federal tax on a distribution of LTCG, and you sell the shares three years later at a profit, it means you paid $100 of the tax three years early. (Assuming your rates haven't changed.) So what you've lost isn't $100, it's the 3 years of growth on the $100.

And the immediate Federal tax cost of a $0.10/share LTCG distribution is not always the same as a $0.10/share distribution of qualified dividends. The former can be cancelled by carryover losses.
This actually makes the LTCG distribution even worse for some investors. I still have carryover losses from 2008-2009. If I receive $1000 in qualified dividends, I pay $150 in tax. If I receive a $1000 long-term capital gain, I pay no immediate tax, but I lose $1000 of carryover losses offsetting ordinary income. When those carryover losses run out, I will pay an extra $240 (now) or $280 (if rates go back up in 2026) in tax.
Wiki David Grabiner
ny_knicks
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by ny_knicks »

Well I made the mistake of purchasing FSTVX today in my taxable...

Should I back it out immediately on Monday and then reinvest it all into ITOT? Obviously have short-term capital gains. Anything else I am missing?
codedude
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by codedude »

ny,

Does FSTVX have short term trading fees? If it does, I would wait until it is over before moving out of it.

codedude
ny_knicks
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by ny_knicks »

codedude wrote: Fri Mar 09, 2018 8:59 pm ny,

Does FSTVX have short term trading fees? If it does, I would wait until it is over before moving out of it.

codedude
Contacted Fidelity. No redemption fees but it is considered a "round trip" and too many of these types of trades will result in restrictions on the account.

Anything I am missing from a tax perspective? The gain/loss will be so small I don't mind the short-term capital gains to get it all in ITOT from the start.

Wish I saw this 6 hours ago...
codedude
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by codedude »

You are fine. One round trip trade should be fine and the tax if any should be minimal.
rennale
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by rennale »

FWIW, back in 2015 Morningstar was recommending FSTVX for taxable accounts:

http://www.morningstar.com/articles/714 ... -fide.html
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grabiner
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Re: Taxable Fidelity Account - FSTVX vs ITOT

Post by grabiner »

rennale wrote: Sat Mar 10, 2018 10:12 am FWIW, back in 2015 Morningstar was recommending FSTVX for taxable accounts:

http://www.morningstar.com/articles/714 ... -fide.html
This article specifically discussed designing a Fidelity portfolio. If your account is at Fidelity, and you don't want to use ETFs, the Fidelity index funds are probably the best investments. (The article did mention the possibility of using iShares ETFs, which are commission-free at Fidelity.)
Wiki David Grabiner
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